To attract and retain people, it might help to look at the management of people not just as an HR duty but as a managerial deliverable.
People equals capital
The use of the term human capital to designate an organisation’s human resources reorientates and sharpens managers’ attention to this very important resource. Labour costs are not insignificant; in fact, they’re constantly growing. Paying attention to the application of this investment in ways that demand accountability from all responsible for the nurturing of this resource will enhance efficiency.
In any business environment, although in especially in highly competitive ones such as hotels, successful managers understand how to effectively use scarce resources. Managers must be made to understand that the sum total of the competency of their human resource is a “capital” resource similar to money. It is important that this human capital is used in a manner that produces optimal return-on-investment. As each speaker at the recent Hotelier India HR conference noted, the Indian hospitality industry is facing a major human resource crunch. It is imperative that managers understand the concept of human capital and its application in the industry.
Rethink filtering strategies
Dr Covey’s prescription for success (The Seven Habits of Highly Effective People) is to start projects with the end in mind; this applies equally well to hotels. Deciding on one or a set of a team or property’s goals is the first step. The most obvious goal is profitability but the trick is to be more specific: at a given time the goal could be growth, customer satisfaction, employee satisfaction or cost containment. This is the strategic goal of the organisation and each goal requires different organisational systems, structures, and more importantly, staff’s competency sets for its achievement. The organisation’s Human Capital Value Chain (HCVC) can be designed or redesigned based on a selected goal.
HCVC refers to all value-adding activities that are performed throughout the organisation by human capital to achieve organisational goals. For example, Company A, which considers growth as a goal, will have a different HCVC than Company B, which emphasises cost containment. Company A will acquire, develop and apply human capital that is willing to take risks, be innovative, and, in general, be growth orientated. Company B will develop and apply human capital that is unwilling to take risks, and is more committed to exploring means of cutting costs in existing systems, rather than investing in new and risky systems. Budget hotel brands such as Formule 1 or Ginger should have a very different HCVC to luxury brands like Four Seasons or Vivanta by Taj.
Brands that compete as low-cost producers of a hospitality product must focus, for example, on cross-trained employees with skills and knowledge sets that are very different to employees at hospitality organisations that compete on offering a differentiated product, where more specialisation may be required in order to deliver a higher-quality service. The typical hospitality product is a bundle of tangible and intangible elements. Compared to luxury hotels, budget properties include fewer intangibles in the product mix, and consequently the amount and quality of human capital and its distribution on the value chain differs.
Where to start
Managers can develop an HCVC analysis for each component of the product mix by asking about the flow of activity and who participates in it — for example, preparing coffee for the guest. The impact on operational costs and RoI depends on the number and quality of individuals involved or the value of human capital invested. It is important that RoI estimates take into account cost contributors such as training, selection and turnover costs, not just the server’s wage and direct costs.
The analysis of individual processes can be aggregated into the organisational level to provide managers with an understanding of the value of human capital in their organisation and make the required changes.
