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JEIT 28,6

Aspects of training and remuneration in the accommodation industry


A comparison between Australian and Singaporean providers
Ruth Taylor and Doug Davies
School of Management, Curtin University, Perth, Australia
Keywords Training, Remuneration, Hotels, Australia, Singapore Abstract It has long been recognised that effective staff training and remuneration allows an organisation to provide a unique and differentiating standard of service in industry, resulting in increased protability to service providers. The purpose of this research study is to investigate the training strategies, and hence the training prole, of organisations within the accommodation sector. The extent and role of training and remuneration is examined in local independent accommodation providers, and then compared to the larger, chain operations. The quantitative ndings are complimented with qualitative research undertaken through interviews with human resource (HR) managers from a number of international hotels in both Perth and Singapore. This mixed method of analysis approach is used to determine the extent of relationship between local accommodation providers and international chains. HR practices in the industry were viewed in Singapore as being very traditional in both the multi-chain hotels, failing to keep up with new practices and technology, and focusing on administrative rather than strategic goals. No comments on practices in Australia were forthcoming, but it is probable that practices are also very traditional.

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Received September 2003 Revised November 2003 Accepted December 2003

Journal of European Industrial Training Vol. 28 No. 6, 2004 pp. 466-473 q Emerald Group Publishing Limited 0309-0590 DOI 10.1108/03090590410542693

Introduction It has long been recognised that effective staff training allows an organisation to provide a unique and differentiating standard of service in industry, resulting in increased protability to service providers (Hays, 1999; Frabotta, 2000a). Many managers within the tertiary sectors of industry go so far as to prioritise the service quality of their employees as being paramount to end productivity, particularly in high client contact positions. Training allows an organisation to improve its standard and quality of service to customers through continual innovation (Schlesinger and Heskett, 1991; Mathews, 2002). As a result of the array of business management levers inuencing both quality and productivity within an organisation, it is of interest to investigate what dictates the training prole within an industry. According to the World Tourism Organisation, the worlds largest industry sector is the tourism and hospitality industry. Despite the issue of denitional qualication of tourism as an industry, for the purpose of estimating employment it is considered to be one and a half times larger than the next industry (Riley et al., 2002). Owing to the accommodation sector supporting a number of growth industries, such as tourism, it has continued to exhibit growth, albeit at various rates, over the last few decades, and is forecast to continue this growth both in development and employment numbers.

Hence, the purpose of this research study is to investigate the training strategies, and hence the training prole, of organisations within the accommodation sector. The primary aim of the project was to examine the training practices of locally owned and multi-national chain suppliers of accommodation services. Issues raised in the research relate to the independence of the multi-national hotel chains in their provision of training; devolution of training strategies and delivery systems; head ofce policy versus local business needs; and implementation of corporate training policy guidelines. Some perspectives from the literature The effective use of human resource (HR) practices is generally considered as a source of competitive advantage to an organisation (Huselid, 1998). Whether specic functions or a suite of HR practices are better used, or can add value more succinctly is debatable, but the agreement is that, if used effectively, the organisation will benet from implementation. Two of the core functions of HR, training and remuneration, have potential benet to organisations (Davies et al., 2001). There has been much research undertaken in acknowledging training with regards to output quality, however, it is of worth to investigate if there are differing standards of service as a result of training practices (Noble, 1997). It is also worth investigating process quality in an organisation in relation to training (Kandampully, 2002; Lehtinen and Lehtinen, 2002). However, many employers are still reluctant to provide this support to staff, despite the public policy discussions in a number of countries regarding the improvements that can be gained through training and development strategies (Noble, 1997). This commitment, or lack of, appears to be reciprocated. Thus it would appear that there is a connection between organisations developing training and development policies, which in turn lead to increased service standards through committed, satised staff, and ultimately increased productivity (Frabotta, 2000b; Hays, 1999). There is also a growing recognition that training has a signicant role in achieving competitive advantage (Frabotta, 2000b). It allows the organisation to provide a better quality of service, thus enabling them to develop a competitive niche market, which should in turn encourage repeat customers by developing a higher level of customer loyalty through good service quality provision (Schlesinger and Heskett, 1991). Extensive research undertaken in hotels within the human resources area has found that the majority of hotels engaging in innovative practice include training and knowledge building as key elements to attaining best practice (Enz and Sigauw, 2000). The accommodation sector is a people-based industry, where the end product is often produced by a number of employees, together delivering the end product for the organisation. This poses a major task for management of labour intensive industries due to the potential for signicant variability of performance of staff involved in the overall end product or service (Kandampully, 1997; Jeong and Oh, 1998). Therefore, the signicance of an appropriate training prole for all businesses within the accommodation sector is of considerable importance for both process quality and output quality by which that organisation is evaluated. Three signicant characteristics of the accommodation workforce are its mobile workforce with high turnover rates, young aged group of employees, the relatively low levels of formal education qualications, high proportion of low skilled jobs, and the reliance on a considerable proportion of multiple part-time/casual staff (Timo and

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Davidson, 1999; DITR, 2002). It is also . . . affected by structural and cyclical inuences on employment and training demand (DITR, 2002, p. 4). Traditional management response to this situation is often to minimise efforts in relation not only to training, but also in remuneration, practices (Schlesinger and Heskett, 1991). Similarly, as with training, remuneration practices have the potential to elevate service levels in the industry. Organisations have become adept at calculating the costs of wages and training, however, far less procient in calculating the costs and benets of remuneration/reward and training programs. They appear to nd it easy to establish short-term savings through reductions in the areas of wages and training. However, these short-term strategies may in fact achieve differing outcomes to those actually sought, that is the short-term strategy may not be congruent with the long-term protability of an organisation (Frabotta, 2000a). An investigation into the tourism industry workforce and training, provides an indication of the relative employer training expenditure in Australia. An average of $88.11 per employee was spent on training in the retail trade sector; $251.20 per employee was spent on training in the transport and storage sector; with only $54.51 per employee being spent on training in the accommodation, cafes and restaurant sector (DITR, 2002). The report concluded with a statement highlighting the need for the tourism and hospitality industry to take . . . a more professional approach to the training/employer relationship . . . to meet the demands of a growing sector (DITR, 2002, p. 7). Aspects of the HR practices relating to remuneration within the hotel sector will be compared between the two countries of Singapore and Australia. The formal remuneration system in the Australian hotels context involves certain minimum levels of salary which are guaranteed under the various employment agreements in place. Whilst it is not a widely spread practice in the hotel sector of Australia, tipping does exist primarily in tourism nodes for international visitors. Australians, as domestic visitors, tend to be reluctant to tip service providers, such as room service staff, porters and food and drink attendants. In the vast majority of work situations within the accommodation sector, there are two sources of income employees rely upon - these are the formal and informal modes of payment. Whilst the relative proportion of these two forms of payment varies considerably on a global basis, it is of interest to investigate the relative reliance and thus importance of this remuneration situation within the accommodation sector. With the reduction in international travel, post 11 September, 2001, research is conducted in a small number of international hotel chains in Australia to determine what impact this may have had on the income of the hotel sector staff. This is then compared to the Singapore situation where there are similar guaranteed minima wages, but where staff may have a greater reliance on this additional income source to supplement their lower income levels. Owing to the changes in international travel, and thus the ow on effects to the informal remuneration systems for employees within the accommodation sector, it is timely to investigate any effects being felt due to the decline in international travel on staff remuneration levels. Methods The research begins with a review of the literature on training and remuneration issues at both the local and international levels, and examines the policies of multi-national

companies (MNCs) at the general level, through use of the 1999 Australian Price Waterhouse Coopers Craneld survey, before focusing on the Hotel industry. A survey of a number of independent providers in the accommodation services industry in Western Australia and Singapore is presented. Six hotels participated in this pilot research project. Three of the hotels were based in Singapore, two being multi-national and one being a boutique hotel. Similarly in Perth, Australia, three hotels were surveyed, again two being multi-national and one a boutique hotel. The survey instrument took the form of a questionnaire, sent to the HR manager in each hotel. This questionnaire consisted of twenty questions, and contained a number of short-answer questions in which specic information was sought, and a number of open-ended questions that allowed expansion of certain issues. Questions asked, apart from those seeking demographic data, were from issues raised in the literature. Quantitative data from the survey are presented. The extent and role of training and remuneration is examined in the local independent accommodation providers, and then compared to the larger, chain operations. These quantitative ndings are then complimented with qualitative research undertaken through interviews with HR managers from a number of international hotels in both Perth and Singapore. This mixed method of analysis approach is used to determine the extent of relationship between local accommodation providers and international chains. There are a number of limitations to the methodology. The small number of hotels surveyed in the two categories in both countries can provide only a micro perspective of the larger industry. The HR manager as the respondent to the survey presents only one view. A survey instrument sent to all staff within the hotels and interviews with selected hotel personnel would provide a better range of responses on the questions asked. This would give a more balanced analysis. Findings Demographic data and descriptive results Six hotels participated in this research. Three of the hotels were based in Singapore, two being multi-national and one being a boutique hotel. Similarly in Perth, Australia, three hotels were surveyed, again two being multi-national and one a boutique hotel (see Table I). As may be noted, Australian hotels use a higher proportion of casual and part-time labour in their organisations. Reasons for this may be varied, but the higher rate of pay given to Australian workers under the various industrial agreements could be a contributing factor in this nding. Also, penalty rates in Singapore for staff on weekends and on shift work are minimal compared to the Australian situation.
Aus1 Ba Staff total Permanent P/T Casual 35 18 12 5 Aus2 MNCb 100 30 20 40 Aus3 MNC 388 151 143 94 Sing1 B 108 104 2 2 Sing2 MNC 366 330 0 36 Sing3 MNC 308 308 0 10c

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Notes: a Boutique hotel. b Multi-national hotel. cAt Sing 3, an average of ten staff are hired on a casual, as needs basis

Table I. Demographic prole of hotel establishments

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Training The issue of training, due to its cost and the perceived high staff turnover in the industry leading to some reluctance to expend funds, is of interest. In one respect, if training is given to staff, their loyalty to the organisation may increase. However, although this strategy is pursued in some countries, it may not necessarily provide the outcomes required in the Australian context due the emphasis on casual employment in Australia. All hotels provided some form of induction and on-the-job training to their staff. The extent of this training varied between hotels, with no major difference between hotels in Singapore and Australia. In Australia and Singapore, the boutique hotels tended to give minimal training to their staff, while the larger hotels provided more comprehensive training. The irony is, of course, that the smaller hotels could quite feasibly have staff performing multiple duties, while the larger hotels could have more specialisation. Training, however, did not reect this task orientation. One of the hotels in Singapore used the facilities of the hotel association (SHATEC) to provide training for their staff after one year of service. Training policies tended to be corporate-based, with variation for local needs. Understandably, the boutique hotels had no corporate guidelines and so training was provided as the manager deemed necessary. Only one hotel had a required minimum provision for all staff, and training generally tended to be based on the needs of the section in which employees were located. This of course has the disadvantage of not allowing employees to broaden their skill base and subsequent career within the industry (see also Table II). Remuneration In Australian facilities, the salary/remuneration package is generally based on the award that covers the particular employee. In Singapore, the salary tends to be based on experience, and salary surveys of the industry. This brings in a component of external equity, although one hotel did base their salary level of staff on similar credentialed institutions, with the range of salary negotiated with the particular union covering the industry providing an ambit for negotiation. Apart from salary levels, working in a hotel environment does provide some fringe advantages to staff. In Australia, uniforms, accommodation, dry cleaning and meals tended to be the most common fringe benet provided. Apart from those benets, in Singapore an inclusion was medical and/or dental benets to staff. This could be reective of the high cost of medical services in Singapore, which, unlike Australia, has no free health care provision to its citizens. One of the ve-star hotels in Singapore also provided to its expatriate staff accommodation and airfares as a benet. Benets provided did, however, vary according to the staff category in which the employee was based.
Staff type Room staff Front-ofce staff Management/supervisory staff Food and Beverage staff Aus1 B Nil All All Nil Aus2 All All All All Aus3 All All Selected All Sing1 B Some Some Some Some Sing2 Various Various Various Various Sing3 12 hrs 12 hrs 12 hrs 12 hrs

Table II. Provision of training

Bonuses for service staff in the hotels in Australia were generally unknown of the hotels surveyed. Management staff only were entitled to a bonus if budget or protability targets were achieved. No information could be provided about tips within the industry in Australia, probably due to it being a one-on-one benet given to individual employees by a customer. Due to tax implications, it is doubtful that information would be volunteered if employees were asked. In Singapore, it is acknowledged that tips are given, but no rm data could be provided. However, it was said that many of the tips were pooled and shared equally among many of the employees. Bonuses were normally the annual wage supplement of one months pay for 12 months of service. Any supplementary bonus went to managers based on their meeting of performance objectives, although the boutique hotel in Singapore, due to the economic situation and its size, had not given any bonuses to staff apart from the one months supplementary pay. Regarding international factors, in Australia all the hotels expected recent events to have an impact on business. In Singapore, business at the time of the survey had not been affected, although as the survey was done just before the full impact of the SARS virus, if the same question was asked of the HR managers now, it is likely that the response would be different. No denite trend could be initially determined form the turnover data, with an Australian boutique hotel and a Singapore international hotel each having only 5 per cent staff turnover. Turnover in the other hotels was in the medium to high range, with a normal turnover in many other industries at around 10-12 per cent (see Table III). Reasons for staff turnover in Singapore were cited as better job opportunities and family reasons (no weekend work/shift work). In Australia, turnover was put down to the casual/part-time nature of the employment, with one hotel stating that employees leave to gain full-time employment for nancial security reasons. One interesting point was the admittance that a percentage of staff turnover was the result of poor selection decisions and the limited competence of some employees. In the multi-chain hotel, 10 per cent of turnover was related to career ambitions of staff leaving to work in other properties of the same chain.

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Implications and conclusion HR practices in the industry were viewed in Singapore as being very traditional in both the multi-chain hotels, failing to keep up with new practices and technology, and focusing on administrative rather than strategic goals. No comments on practices in Australia were forthcoming, but it is probable that practices are also very traditional. This may reect on the role of the corporate ofce in not providing a strategic direction for the hotels in the chain, or other reasons not given. While training has been devolved, corporate ofce still maintains its control over general training policy, which may or may not be consistent with the individual organisations direction.
Aus1 B Staff turnover (%) 5 Aus2 25 Aus3 34 Sing1 B 25 Sing2 18 Sing3 5 Table III. Staff turnover

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All of the hotels surveyed, however, did consider that training was essential to the provision of a good service culture within the industry. Training was generally provided in-house, although a number of the chains did provide some core focus in their training requirements, as directed by corporate ofce. A number of the hotels also provided training in multiple areas, thus giving the opportunity for staff to determine some career direction within the industry. This was reected in a comment on turnover, in which the HR manager stated that many staff went to other hotels in the chain, on promotion. It is indicative of the training process that employees took advantage of the options given. Remuneration aspects were found to be a phenomenon requiring additional and in depth comparative research. While the Australian system was generally award or agreement-based, and minimum levels were provided in Singapore, the issue of additional payments through tipping needs further research. Although tips do not incur any form of taxation in Australia and Singapore, due to the difculty in assessing their worth by government, they may give a substantial boost to salaries and wages in certain occupations. Inequities could clearly result from this supplementary income. To conclude, it is obvious that more research, both quantitative and qualitative, is required within the industry. Case study research could examine individual dimensions of HR practices in particular hotels, allowing a greater in-depth analysis to be performed through interviews and survey with staff from various levels within the organisation. Large-scale research, in which surveys would be sent out to specic hotel sectors, would allow the research to focus on trends within the industry.
References Davies, D., Taylor, R. and Savery, L. (2001), The role of appraisal, remuneration and training in improving staff relations in the Western Australian accommodation industry: a comparative study, Journal of European Industrial Training, Vol. 25 No. 7, pp. 366-73. Department of Industry, Tourism and Resources (DITR) (2002), Tourism Workforce and Training, Research Report Number 4, Tourism Division, DITR, Canberra, February. Enz, C.A. and Sigauw, J.A. (2000), Best practices in human resources, Cornell Hotel and Restaurant Administration Quarterly, Vol. 41 No. 1, pp. 48-61. Frabotta, D. (2000a), Human resources director praises culture at Marriott, Hotel and Motel Management, Vol. 215 No. 19, p. 136. Frabotta, D. (2000b), Investing in the future, Hotel and Motel Management, Vol. 215 No. 9, p. 4. Hays, S. (1999), Exceptional customer service takes the Ritz touch, Workforce, Vol. 78 No. 1, pp. 99-102. Huselid, M. (1998), The impact of human resource management practices on turnover, productivity and corporate nancial performance, in Mabey, C., Salaman, G. and Storey, J. (Eds), Strategic Human Resource Management: A Reader, Sage Publications, London. Jeong, M. and Oh, H. (1998), Quality function deployment: an extended framework for service quality and customer satisfaction in the hospitality industry, International Journal of Hospitality Management, Vol. 17, pp. 375-90. Kandampully, J. (1997), Quality service in tourism, in Foley, M., Lennon, J. and Maxwell, J. (Eds), Hospitality, Tourism and Leisure Management, Cassell, London. Kandampully, J. (Ed.) (2002), Services Management: The New Paradigm in Hospitality, Hospitality Press, Frenchs Forest.

Lehtinen, U. and Lehtinen, J.R. (2002), Service quality: a study of quality dimensions, in Kandampully, J. (Ed.), Services Management: The New Paradigm in Hospitality, Hospitality Press, Frenchs Forest. Mathews, J. (2002), Innovation in Australian small and medium enterprises: contributions from strategic human resources management, Asia Pacic Journal of Human Resources, Vol. 40 No. 2, pp. 193-204. Noble, C. (1997), International comparisons of training policies, Human Resource Management Journal, Vol. 7 No. 1, pp. 5-18. Riley, M., Ladkin, A. and Szivas, E. (2002), Tourism Employment: Analysis and Planning, Channel View Publications, Clevedon. Schlesinger, L.A. and Heskett, J. (1991), Breaking the cycle of failure in services, Sloan Management Review, Spring. Timo, N. and Davidson, M. (1999), Flexible labour and human resource management practices in small to medium-sized enterprises: the case of the hotel and tourism industry in Australia, in Lee-Ross, D. (Ed.), HRM in Tourism and Hospitality, Cassell, London.

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