Comparing personnel management and HRM

Human resources must be appreciated, located and recovered, organised and managed with great care. Sound human resource management practices are necessary for retaining effective workforce.

The HR function of Hilton Hotels focuses on actions that build workforce competencies and motivation that in turn positively influence their corporate strategies and gives them a competitive advantage.

INTRODUCTION

2.1 Terms of reference

According to some authors, Human Resource Management (HRM) is no different from personnel management and maintains that the obvious change is a “relabeling process” (Legge 1989, Torrington 1989). However, the new terminology may at least rid personnel management from its unfortunate welfare image and other “negative connotations” Sisson (1990) and thus save the ailing function from marginalisation.

Some Human Resource academics argue and maintain that new labels on “old bottles” may have their uses even if it is only for marketing purposes. (Armstrong 1987, Guest 1989).

The aim and objective of this report is to critically analyse the human resource strategies and policies of Hilton Hotels. In order to critically analyse and evaluate the human resource methods of Hilton Hotels critically, human resource management theories and models have been discussed and related to the success of Hilton Hotels The main themes for this report are General HRM overview of Hilton Hotel, learning and development, reward systems and training and development. The ways in which their strategies and policies support organisational goals have been evaluated. Recommendations have been made in areas that require improvements.

2.2 Overview of HRM

Human Resource Management emerged in the 1990’s.It can be traced to Drucker, McGregor and Bennis Drucker (1955) who introduced management by objectives (MBO) proposing that managers should direct employees towards a common goal through directed leadership. McGregor (1960) advocated management by integration and self control – a strategy for managing people which increases motivation and pervades the whole business.

Bennis (1964) introduced the idea of organisational development (OD). He argued that people have complex cognitive and social need, they respond better to collaboration and reason rather than power based on coercion and threat; and an organisation should be based on humanistic, democratic ideas, replacing the mechanistic value system of bureaucracy.

Factors such as globalisation, competition and technological innovation caused the fading of personnel management. This change increased people management which addressed more strategic issues that personnel management ignored. There was therefore the need for managers to be more strategic in terms of managing their work force hence a new way of managing people strategically.

Human Resource Management can be defined as “the planning, acquisition and development of human resources necessary for organisational success”. (Kreitner, 1995, p. 331).

French (1964) expressed the importance of human resources by saying “it creates organisations and make them survive and prosper”. He advocated that it is the talent and skill of employees in using other materials and energy that result in the creation of useful products and services.

(Braton and Gold 2003) defines HRM as a strategic approach to managing employment relations which emphasizes that leveraging people’s capabilities is critical to achieving sustainable competitive advantage, this being achieved through a distinctive set of integrated employment policies , programmes and practices.

Human Resource Management involves five key models;

The Michigan model of HRM (USA) ( Tichy, Fombrun & Devanna (1982), Fombrun, Tichy & Devanna 1984)

The Harvard model (USA) (Beer, Spector, Lawrence, Quin Mills & Walton 1984)

Guest’s (1987) Model of HRM (UK)

The Warwick model of HRM (UK) (Hendry and Pettigrew ,1990)

Storey’s (1992) Model of HRM (UK) (lecture notes)

2.3 Background

Hilton Hotels Corporation is recognized around the world as a pre-eminent lodging hospitality company, offering guests and customers the finest accommodations, services, amenities and value for business or leisure. The Hilton brand has, for more than 80 years, been synonymous with excellence in the hospitality industry. Hilton is able to offer guests the widest possible variety of hotel experiences, including city center hotels, convention properties, all-suite hotels, extended stay, mid-priced focused service, destination resorts, vacation ownership and airport hotels. (Hilton webpage ).

Hilton Hotels was founded in 1919 by Conrad Hilton. Hilton has 2,645 hotels offering over 485,000 rooms to the general public. Currently Hilton employs 135,000 members worldwide. Positions at Hilton range from receptionists to general managers to CEO’s. The company manages property holdings under different names around the globe. These include Hilton Hotels, Conrad Hotels and Hampton Inn and Suites.

METHODS

3.1 Data collection methods

The data used in this research has been obtained mainly from secondary sources. Hilton’s corporate website, independent websites, online journals and text books have been used. These sources gave insight into Hilton’s human resource management strategies. Text books helped link HRM theory to the practices of Hilton.

3.2 Issues and challenges

The first challenge encountered by the group was deciding on which organisation to choose. Several organisations came up but eventually we decided on Hilton Hotels because they had a very attractive website with a lot of information we needed to complete the report. There was also the challenge that comes with working in a group.

The Elevator graduate scheme for this year has been postponed. This made it impossible for us to gather adequate information in that section for the report. There were also problems accessing information for the other graduate schemes because such information is only made available during recruitment times.

There was the issue of time constraints for the report due to other assignments due in the same week.

RESULTS

4.1 Business strategies

Traditionally, the firm had focused on place, product and promotion, by establishing the finest hotels in the most attractive, convenient and sometimes expensive places in the world. In the new millennium, particularly after the attacks on September 11th, Hilton has gone after the mid-priced client and the more affluent lodging clientele.

The Hilton hotels focuses on the brand identity and quality, structural growth, brand equity, operational efficiencies and 100% customer satisfaction guarantee when it comes to their business strategies. In 2006 a new strategy that boosted the hotels profits was to maintain management contracts rather than full ownerships. Another business strategy of the Hilton hotels was to ensure to keep up to the promises of all the connectivity demands of the Hilton guests. This was done in May 2009 as Hilton hotels connected with BT (British Telecom) and ensured high speed internet usage in 60 Hiltons across United Kingdom and Ireland. “This strategy ensured Hiltons commitment to extra ordinary levels of customer services” (Wolf G.M. Neumann, Area president UK). Hilton opened midsized hotel segments to mark 20 years of award winning leadership in 2004. Hiltons started carrying out 20% reductions in carbon dioxide emissions, waste output and energy consumption, 10% reduction in water consumption to prove themselves as environment and customer friendly.

4.2 HR Strategies Goals and Missions

The Hiltons want to establish themselves as a world premium choice of hotels and want Hilton to be a brand inclusive of everything. It wants to boost its international connections and mark many locations as Hilton. Hilton hotels want to operate the business in a way that provides for current needs as well as allowing future generations to meet their own needs.

Hilton hotels set their annual goals based on the prior year’s actual results and performance. At the end of the calendar year a hotel must have achieved their goals in each of the Key Performance Indicators of the Balanced Scorecard, the Hilton award winning performance measurement system. 

The Key Performance Indicators are 

Operational Effectiveness, 

Revenue Maximization, 

Brand Management, 

Loyalty, and 

Learning & Growth. 

Their mission is “To be the first choice of the world’s travelers, building on the rich heritage and strength of our brands by:

– Consistently delighting our customers

– Investing in our team members

– Delivering innovative products and services

– Expanding our family of brands

– Continuously improving performance in our balanced scorecard (Hilton hotels corporation).

The objective of Hilton is to matain a high standard in HRM and to create a business culture which everyone can grow and develop their careers. Giving themselves a 10 year time frame, Hilton is looking to add another 1000 properties to its international decision. They intend to move into areas such as Russia where they have never been before.

HR strategy involves a central philosophy of the way that people in the organisation are managed and the translation of this into personnel policies and practices.It requires personnel policies and practices to be integrated so that they make a coherent whole and also that this is integrated with the business or organisational strategy. Hilton offers comprehensive HR support for managed properties. This support includes but is not limited to all of the following areas: full review of HR systems and standards to ensure corporate and governmental compliance, compensation administration, team member relations, risk management, professional education and training, HR information systems, in-house benefits support, legal and labour compliance, HR communications and workforce planning and analysis. Our HR team is dedicated to the pursuit of excellence in every area of team member loyalty and support. Hilton follows different approaches to manage HR(Hilton webpage).

Ethnocentric approach: In which central values and business practices of home country are prelevant. The criteria for valuation and control are ascertained centrally from the headquarters.

Polycentric approach: In this, under the supervision of local managers, subsidiaries are developed in each every country which results in little communication between headquarters and subsidiary.

Geocentric approach: it tries to involve more integration between centre and subsidiaries to ensure close co-operation between the different parts of the chain, and implement both universal and local standards for evaluation and control. (Johnson 2003).

4.3 Overview of Hilton HR practices

Successful organizations keep people issues at the fore front of their thinking and at the core of their decision making and planning. At Hilton hotel they believe “Only those who feel valued can truly add value”. This is the ethos behind every decision they make. A highly successful organization is one that has a unique organizational culture. Hill& Jones (2001) described organizational culture as the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization. At Hilton, There is a culture of support and sense of belonging that all workers of the Hilton family of hotels are made to feel at the work place.

On their careers at Hilton page, emphasis has been laid on the fact that, recruits will be part of a growing company and a special family that is dedicated to a positive, productive and diverse working environment. Management looks forward to the special skills that individuals will bring to the job and at the same time, they have made an assurance that they are committed to the success and growth of their workforce.

This implies that, they have in place a very good employer employee relationship at a strategic and operational level which creates job satisfaction ( see appendix A).The word family has been used considerably in their site.

“And if you join us, what should you expect from Hilton Hotels? Yes, you should expect to work hard, but above all you should expect to be treated as an individual, be rewarded for good performance and giving the little extra touches to our customers – those ‘Hilton Moments’ – and, of course, enjoy your time with the Hilton family. So whether you are a seasoned professional or just starting out in this very diverse industry we would be delighted to welcome you to our family.” (Hilton Hotel website).

It clearly employs that there is an atmosphere of collectiveness of the workforce and a feeling of belongingness which does not only benefit the workforce but the organisation as a whole and effect contribute to satisfactory productivity, motivation and morale. It is therefore not surprising that they have one of the most enviable records of consistent international growth.

Their work force is also referred to as “team members”. Team consists of individuals with different skills, knowledge, ideas and capabilities drawn from different background to execute a particular task. (Stuster 1996). Hayes (2002) suggests that a team is unlikely to function well unless its members are able to communicate effectively with one another and unless it is able to get over the interpersonal problems and conflicts which arise between individuals.

Referring to the workforce as team members implies there is effective communication, engagement and also the influence of one another among employees and management, which enhances their performance. “Engagement can be seen as ultimately about performance, because harnessing the discretionary effort of people does improve performance. If individuals are performing at their top potential, then it makes sense that teams, divisions, departments and organizations will work more effectively. Customers will receive better service, efficiency will improve, waste will be reduced, and overall performance will be enhanced” (LGA, 2009:1). Hilton’s HR team is dedicated to the persuit of excellence in every area of team member loyalty and support.

4.4 Training and Development

The continuous learning and development of individuals are of crucial and strategic importance to organisations and thereby also to the overall economy. Organisational approaches vary greatly, but organisations that demonstrate a high commitment to HRM policies include as part of this commitment extensive training learning and development enabling them to achieve superior performance through their people. (Beardwell 2007:263).

Hilton relates the success of their business to the skills, energy, initiative and commitment of their employees and team members. There is constant review of benefits available to employees to make sure they are competitive and can attract and retain the best people. (CSR Report 2005). Esprit is a Human Resource Management Programme based on Hiltons brand service standards which are truly extraordinary, focuses on courtesy, communication and guest satisfaction. Esprit helps employees develop their skills through ongoing monthly reviews, evaluation, certificates, and rewards for improving their knowledge and skills. “This leads to higher employee satisfaction, higher standards of guest service and higher revenue and profits. With such great employee satisfaction Hilton International is able to recruit and retain the best in the industry and maintain high standards of people management” (David LeMan, Regional Director of Human Resources – Arabian Peninsula).(Hilton annual report 2002).

With this approach to human capital investment and development, Esprit sets Hilton apart. It is therefore not surprising they have the world’s best hotel brand.

Esprit focuses on the four Hilton core values expressed in its training manual;

Customer – to know who our customers are and provide them with the product and service they want.

Quality – that the customer is provided with an exceptional product by exceptional staff in terms of service and flexibility.

People – to work together and enjoy being part of a team and pulling together to provide excellent service.

Profit – to ensure that sales are maximized in answering the customer’s needs and that costs are controlled without compromising quality. (Hilton webpage)

Hilton has a history of promoting from within the company. They provide opportunities for personal and professional development. Hilton believes that with their mission of becoming the preeminent global hospitality company – the first choice of guests, team members and owners alike, they can only achieve this by constantly developing their workforce so that they can keep in tune with trends and developments in the hospitality industry.

Hilton University is a worldwide award winning online portal available for team members to learn, train and develop. With more than 700 courses to choose from, employees can discover the best way to welcome guests, manage their time or coach a team of co-workers. This is available in different languages and a wide range of subjects (700 courses) to offer learning opportunities for staff in order for them to develop their skills on the job. It ranges from management skills, personal development courses, learning a language or financial training covering a range of skills for the hotel industry, from operational and technical to finance and general management. (Treven 2001; Johnson, 2003; Data monitor 2004; Brochure)

It is a great way for staff to learn because it has been designed to help individuals learn at their own pace. It can be accessed from the hotel or office and even away from work. There are also virtual classroom sessions where staff can learn alongside other team members.

Over 10,000 Hilton employees around the world have completed more than 80,000 courses at Hilton University since its inception (CSR Report 2005). This is a clear indication that a large number of employees take active part in the development programmes (appendix B).

People are the only source of differentiation and sustainable competitive advantage. Essential to that is learning. Hence the director general for the IDP claimed that staff management and development will become the primary weapon available to managers to generate success (Rena, 200) cited in (Beardwell 2007: 263). The continuous learning and development of individuals are, therefore, of crucial and strategic importance to organisations and thereby also to the overall economy. (Beardwell 2007:263). Hilton has recognised the fact that majority of its team members are not English speakers. In 2003, the company gave 200 people the opportunity to improve upon their English by assessing an on line programme called Global English. This has benefited those employees involved. Most of those who had the opportunity of taking part are form developing and under-developed countries that did not have access to formal education which is often taken for granted in the West. (Brochure; Article, 2002; Cushing, 2004).

Elevator and premier class are also forms of training and development programs at Hilton (Appendix C for requirements).

The aim of elevator is to develop a group of talented, internationally mobile people and fast track them to General Management positions within 5-8 years of starting the Program.

It entails an initial 18 month training that consists of two international nine month placement. It is a combination of operational, all-round experience working in the 4 main areas of hotel business operations namely Business, development, Human resources and finance. There is also off the job training and business driven projects to complete.

During elevator, progress is constantly assessed to make individuals know how well they are developing. Participants take part in four residential courses during the period. They will also have access to “Hilton University” the online learning and development tool to make use of their online business library. The elevator programme helped Hilton win the ‘Best Development Program for Young Employees’ award at the 2005 World wide Hospitality Awards.

Premier class is a nine month management and development program for employees aspiring to be department heads within the business. It focuses on key management skills needed to drive personnel and business performance in their hotel. Topics covered in this program include managing people and improving quality.

We live in a changing world, new ideas and approaches emerge every day. Problems arise that need new solutions. This means constantly learning to keep up with the rapid change in the business environment. Hilton’s learning culture acts as a source of job motivation and job satisfaction for employees which in the long run benefits the organization.

4.5 Performance Management and Reward Systems

An organisations reward strategy is perhaps the area which, for employees provides the biggest bridge between rhetoric and reality. It is not only an essential tool in terms of retention, motivation and recruitment, it is an opportunity to demonstrate the culture of the organisation in a way that has real impact on employees. (Briscoe 1995; DAnnunzio-Green, 1997).

Hilton believes there is the need to recognize and reward deserving and outstanding employees for their hard work and success. Employee benefit package is made up of a wide variety of features depending on the division and grade of the employee. “Equilibrium” is a worldwide quality initiative developed by Hilton. The aim is to ensure that individual guest needs are met and because Service quality is central to this, “Esprit” has been developed to embrace the key principles of employee recognition, respect and reward.

HILTON INTERNATIONAL ESPRIT CLUB

‘Only those that feel value can truly add value’ (Hilton hotel website)

Human beings are diverse and complex and have different needs at a particular time. Therefore what satisfy one person will differ from another and also how a person is motivated depends on the needs, motive or drive of the individual. (Buchanan&Huzynski, 2004). Esprit encompasses a series of competitive training and development initiatives and a rewards program that gives colleagues a choice of benefits. Employees automatically become members of the Esprit club after completion of the training program. Employees are encouraged to create “Hilton moments”. The reward for this is Star points, bonds or certificates the currency for Esprit. This can be earned through Hilton as rewards for achievement and great guest service. The star points can be redeemed through a range of benefits. Examples are discounted hotel accommodation and food and beverage, health club membership, special rates on flights and car rental and mobile phones.

Other reward systems include the “the bright idea” award, employee of the year or month award. Employees can also be nominated to representatives of the Hilton exchange committee, a forum where team members share ideas with the management to improve the hotel.

In addition to the basic pay and remuneration received by employees, additional features are made available such as corporate discounts on hospitality services and travel.

4.6 Recruitment and Selection

According to Armstrong (2005) organizations require employees with the right skills to ensure and sustain competitive advantage. Hilton believes that although year after year independent research confirm that they are the world’s most powerful hotel brand operating over 2800 hotels worldwide in more than 80 countries, in order for them to remain number one, they need to attract and develop the right people to be regarded as an employer of choice.

Hilton relies heavily on the internet to advertise for candidates. They use websites like CatererGlobal.com, Milkround.co.uk, jorapido.co.uk and their own corporate website – careersathilton.com. Occasionally they advertise in their annual brochures.

Beardwell (2007) described outsourcing as a distinct business function from inside the business to an external third party. He goes on to say that outsourcing has become more and more common. Hilton receives over 1 million resumes annually. The company was therefore faced with the challenge of streamlining the hiring process in order for them to effectively assess viable candidates from among hundreds of applicants for specific positions. There was also the issue of administration being burdened with huge paper applications.

Hilton deployed Oracle’s PeopleSoft Enterprise Human Capital Management Suite as Hilton’s HR system of record worldwide, improving productivity, efficiency, and flow of critical data. (Oracle web site). This move helped them manage over 1.5million resumes annually, reduced administrative cost and burden, and helped to eliminate the paper based recruiting process enabling candidates to apply online.

One of the ways in which they achieve this is through their award winning fast track graduate development “Elevator” program.

THE ELEVATOR SCHEME

The elevator scheme comprises of four stages selection process

Stage 1-

Application form: an on-line application form will have to be filled at this stage. Information such as personal details, education and work experience will be required. Based on this form, you may be invited to progress to Stage 2 of the process.

Stage 2

Analytical reasoning tests: The applicant will have to go through a number of tests to assess his or her verbal and numerical reasoning ability. Based on the results at this stage, the applicant will be invited to complete Stage 3.

Stage 3

Psychometric tests: This stage entails a series of tests that measure the applicant’s values and preferences. Successful applicants will progress to the next stage.

Stage 4

Assessment Centre: At this stage, successful applicants will be accessed as in depth on several competencies. Only those who qualify will be offered a place on the elevator program. (Hilton.co.uk 28/11/09).

4.7 Managing the Employment Relationship

. Beardwell (2007) described the employment relationship as containing an economic component, the exchange of work for payment but also includes a sociological dimension centred by power and authority.

Hilton Hotels have their own in house team of attorneys and paralegals that provide various forms of legal support to their hotel management teams. Management of Hilton Hotels believes it is their responsibility to provide their employees with training in employment law, antitrust, privacy and ethics. Legal support is also provided in areas such as hotel operations and resources which include online answers to frequently asked questions and periodic newsletters.

A prewritten specialized form of agreement is made upon employment between employee and management .This is made up of pay, working hours, holidays, and notes on grievance and disciplinary procedures. Hilton has available a panel of qualified counsel that help manage both insured and uninsured litigation. They respond to government subpoenas like wage garnishments and other legal orders made by the government.

Hilton has a principle of equal opportunities based on merit. No employee or job applicant should receive less favor on the grounds of sex, religion, age, nationality, race, disability, marital status, or disability. Hilton strives to meet high ethical standards. They abide by the provision of Universal Declaration of Human Rights. Being a global hospitality and leisure company means Hilton operates in different communities and employs people with different cultures thus the workforce will be diverse. Having an equal opportunity policy works to the advantage of Hilton. This will ensure fair treatment of employees and the avoidance of discrimination. Hilton operates a whistle blowing policy which allows employees to bring acts of discrimination to the attention of senior management.

Health and safety throughout operations is practiced for the entire workforce. A culture of risk management to ensure accidents and incidents is kept as low as possible.

4.8 Employment Involvement

Hilton stresses much on employee involvement at all levels of the organization. For example, during the graduate development schemes, participants are assessed based on real life situations. Hilton outsourced giving Susan H.Lickert Hospitality Consulting Group (SHL) the responsibility of handling the assessment centre aspect of the recruitment process. SHL designed the process to take the form of a real hotel day to day experience. Candidates are given roles like receiving guests, taking orders etc and are assessed on their performance. This offers a true picture of the high demands in the industry that the selected candidates will go through. This level of training candidates go through prepares them for any situation they are likely to encounter when they take up their roles in the company. It also helps managers to know whether they are progressing the right and the expected way. It is not surprising Hilton has committed and talented managers in their hotels worldwide. Hilton’s goals and values are embraced from the very beginning by the trainees and this leads to them performing as a team rather than at the individual level.

With the SPARK Management program, employees are assigned senior management mentors who support and encourage them to get involved with projects and activities in the company. Employees are also invited to create career development review of what they have learned and what they hope to achieve in terms of career development within their respective departments.

5.1 HORIZONTAL INTEGRATION

Whichever major city one finds him or herself there is a big chance of coming across a Hilton Hotel. Hilton’s rapid expansion globally, example in the UK was based on the acquisition of competitor hotel chains like Statis. One of their strategies is gaining 1000 more properties within the next 10 years. This is linked to their HR practices. Their international expansion included the purchase of Scandinavian hotel chain Scandic. The acquired hotels are carefully evaluated to see whether their property profiles fit with the property requirements of Hilton Bran. Those that do not meet the requirements are sold. They enjoy economies of scale that lead to increased profit margins because they have the ability to leverage higher brand awareness by owning more hotels and spending more on marketing communications. They also have the opportunity of expanding operations more efficiently and quickly by gaining access to capital markets. (Bowie 2004).

5.2 VERTICAL INTEGRATION

To add value, HR needs to achieve vertical integration. Hilton’s business strategy, organizational culture and values impact the vertical fit. Hilton has very clear and certain strategic goals and this helps them in achieving a better vertical fit. They are able to merge their Business strategy into designing of HR practices that are compatible with their strategy. Hilton continues to demonstrate that building a satisfied and valuable workforce is not a quick-fix procedure, but an integrated approach that permeates through every aspect of the organization. Hilton tries to recognize the importance of employee approaches and heavily invests in them.

CONCLUSIONS AND RECOMMENDATIONS

Every Hilton is special because we care for the well – being, cultural diversity and motivation of our people. Working with Hilton is more than just coming to work.” Stated Mr. LeMan.( Hiltonworldwide)

Many hands they say are better than one therefore Hilton’s strategy of involving the whole workforce is a good idea. Hilton’s strategy on globalization has strongly had an effect on their approach to international human resource management. To ensure the development of their staff and to meet the demands of their consumers, Hilton and other global hotel chains have established HRM systems as a core component of general organization strategy and adopted a formalized approach to IMD emphasizing on job enrichment, commitment, job satisfaction through appropriate reward systems, training and development, performance related pay and participatory decision making enhancing a good working environment Hilton has focused on a holistic, long term approach rather than the individual, short term approach. Their centralized approach has helped optimize Hilton’s management as a competitive resource.

The main drawback realized is the fact that Hilton focuses mainly on graduates. It will be a great idea if Hilton could put in place measures for students who want to take gap years or placements.