Strategic human resource management in Malaysian five star hotels: Human resource practices system differentiation and its outcomes
ABSTRACT Abstract This thesis explores the management of human resources (HR) in five star hotels located in a developing country (Malaysia). This study is particularly relevant to the hotel industry, known for its traditionally poor HR practices (e.g., a lack of employment security, training, and career development opportunity, low levels of employee involvement and an increasing number of casual employees who are paid hourly). These practices are often perceived as a solution to high labour costs and fluctuating demand prevalent in the hotel industry. However, it is often only "non-managerial" employees who are affected by poor HR practices, as more sophisticated approaches to HR practices are often taken with regard to managerial (strategic) level employees. HR practices system differentiation (HRPSD), or HR architecture, involves having more than one HR practices system within an organisation. HRPSD has been criticised in the hospitality management literature for the poor HR practices in the management of non-managerial employees, however despite this criticism, it is widely practiced by the industry. The continuation of HRPSD practices in the hotel industry suggests its importance to better understand, research and study. The aim of this research is to gain an understanding of HRPSD in a hotel industry context, and to better understand the immediate effects of such practices. While the existing literature concerning HR architecture in other industries provides some discussion of HRPSD, research and study of the concept focusing on the hotel industry is essential in providing a detailed explanation of the effect of this phenomenon, as HR practices between industries may vary. Central to this study, is an investigation of the nature of HRPSD, identification of HR intermediate outcomes, and the effects of HRPSD on hotel employees. Studying the effect of HRPSD on employees is important because employees are known to be a hotel organisations‟ most important resource. Developed based on the literature of SHRM and HR architecture, this study proposes a conceptual model that incorporates HRPSD in the SHRM model originally proposed by Schuler, Dowling, Smart, and Huber (1992). Guided by this model, this study seeks to answer the critical questions of “how organisations differentiate their HR practices systems” and “what are the corresponding HR intermediate outcomes?” A particular foci of this thesis relates to how the concept of a “strategic” (or managerial) job is conceptualised in the hotel industry, what the elements of HR practices systems in five-star hotels are, how and why hotel organisations differentiate their HR practices systems, what the HR intermediate outcomes of HRPSD are and how HRPSD relates to the identified HR intermediate outcomes. To answer these complex research issues, a multiple case research methodology is employed, utilising a series of in depth semi-structured interviews. This vi study focuses specifically on five-star hotels in Malaysia because HR practices vary among hotels of various sizes. The findings indicate a notable effect of HRPSD on employees‟ motivation, job satisfaction, organisational commitment and retention, and that excessive differentiation is not beneficial for a five star hotel. In this study only certain HR practices were found to be differentiated; selective staffing, extensive training, compensation and empowerment. HR practices that were applied to all employees without differentiation were a clear job description, orientation, employment security, objective performance appraisal, career development opportunity and effective communication. In addition, this study also provides a clear definition of the strategic job in the hotel industry, and demonstrates the importance of HR practices integration and the influence of internal and external environments on the formation of HR strategy. This research contributes to theory as well as hotel sector policy and practice. Theoretically, it has identified how HRPSD links to firm performance (in Malaysian five star hotels). In addition, it provides clear definitions and understanding of the strategic job concept as well as identification of HR practices system elements and their differentiation in five-star hotels. Furthermore, the theoretical framework developed can be useful for future quantitative studies which can test the model formulated in this study. For practitioners, the detailed examination of HR practices system elements and how they are differentiated may guide them in their future HR strategy formation.