DASHARATH.SHIRASHYAD ROLL.NO.

:- 09 MBA II SEM

HRM Case Study Beachsidehotel human capital dilemma This is a case of two competing hotels, Sunrise Hotel and Beachside Hotel that are both located in a medium sized, tourismbased town in the Northeast U.S. The hotels are both competing for the same set of guests, as well as the same set of potential employees. They are both budget hotels, right next door to each other, with 60 guest rooms each and a view of the beach. The occupancy during peak season for the Sunrise Hotel is 98%, but during the winter months goes down to 65%. The Beachside Hotel has peak season occupancy of 90% and off peak occupancy of 50%. Joe is the General Manager of Sunrise Hotel and has been in his current position for 5 years. He has been with Sunrise Hotel for a total of 10 years. He worked his way up at Sunrise Hotel from front desk agent to front desk supervisor, and finally to Assistant General Manager before he became the General Manager. He does a good job of screening potential employees for his front desk area of the hotel because he realizes the importance of that area of the hotel, especially in tourist areas. He also has incentives set up for excellent performance of the

front desk agents and training and development programs designed to give everyone information that will help them do their job better. There is a sense of teamwork at Sunrise Hotel and that helps everyone want to do a good job. His guest satisfaction ratings for his hotel are overall excellent. On a rating scale of 110, his hotel averages a 9. The average length of tenure of his employees is 4 years, and his current front desk supervisor was promoted from within, along with his Assistant General Manager. Because of the small size of the hotel, Joe is actually involved with all of the hiring decisions and helps to give training programs himself, along with his leadership team. The employee turnover at the Sunrise Hotel is 25% overall and that is primarily when hourly employees graduate high school or college and leave the Sunrise Hotel for a career somewhere else. Brian is the General Manager of the Beachside Hotel and deals with a very different situation. Brian was brought in from another hotel in the same hotel group about 6 months ago. He was told by his boss that he needed to fix this hotel so that it would start having better customer satisfaction ratings and more return guests. Despite the fairly high occupancy noted during peak seasons, the off peak season occupancy is only 50%. Also noted by his boss, the occupancy should be as good as the Sunrise Hotel. Brian has been with his hotel group now for 2 years and he came out of the accounting and finance department in his old hotel. He has a great understanding of the numbers in the lodging industry, but has not been involved with the human resource aspects of the job. The turnover of hourly employees at Beachside Hotel is 120% and that means that Brian is constantly running the hotel

short handed and with new employees. The Beachside Hotel has been doing the hiring through a human resource practitioner in the hotel that was put in the position because she really could not handle serving guests at the front desk very well. Mary was promoted to human resources a year ago after she had one too many altercations with the guests at the front desk. The owner of the hotel wanted to make sure that she would not make any of the other guests angry, so he promoted her to a human resources practitioner. Since that time, she has been busy trying to keep up with hiring and she has had no time for training employees. Because she is so busy, paychecks often come out to employees late, there are no policies written down for employees to use as a guide for performance, customers are treated badly by new and poorly trained employees, and the departments of the hotel do not communicate very effectively and therefore everyone blames everyone else when things go wrong. The average length of tenure of the front desk agents at the Beachside Hotel is 3 months and the customer satisfaction rating at the Beachside is a 6 out of a 10 possible rating. Most of the front desk agents that are hired come from other hotels in the area after they quit or are fired. Brian is not involved in the hiring for the hotel at all, and does not get involved with training and development. He spends most of his days looking at the financial reports for the hotel and analyzing average daily rate, occupancy rates, and REVPAR. Brian knows that he has many problems to deal with and so he goes to the Sunrise Hotel to observe things over there for a while. He sees a happy crew and talks to Joe about how he is making that happen. Joe is happy to help, but wants Brian

to go back and observe his employees first and come up with ways that he specifically can help guide Brian.

Questions:1. What systems should Brian implement in order to start changing the human capital practices in the Beachside Hotel? 2. What could Brian learn from Joe in terms of the human capital aspects of running a hotel? 3. How could training and development programs be implemented in the Beachside Hotel in order to help with turnover and occupancy rates at the hotel? 4. How could a return on investment perspective help or hurt the Beachside Hotel in trying to compete with the Sunrise Hotel? 5. What other human resource initiatives could be undertaken by either the Sunrise Hotel or Beachside Hotel in order to help with the overall performance of their respective organizations?

Suggested Solutions
This case study gives many examples of issues that could be improved upon in order to help with the human capital performance in the Beachside Hotel. The Sunrise Hotel offers many good practices that help to ensure a return on investment in their human capital practices. The low turnover, length of service of employees, and the positive ratings regarding guest satisfaction all point to the positive, human capital focused culture of Sunrise Hotel. The above questions give some discussion points that will help to focus students and practitioners on some of the positive actions that can be taken by Beachside Hotel to help improve performance and the tone of the company. Here are some partial solutions to the case study questions. 1. In order to start changing the human capital practices at the Beachside Hotel, there needs to be a serious shift in the culture there. Since Brian did not have any human resources background, he does not get involved in hiring, training, and ensuring that these functions are used to build a stronger service culture. Mary, the HR practitioner, was put into place because she could not work with customers, yet she is now in charge of the internal customers in the organization, the employees. Brian needs to get involved in building a stronger culture by making sure that he works with Mary to make sure that she is focused on people and creating a positive atmosphere. Investments need to be made in training and development of the people currently employed at Beachside Hotel and also in the new people to build a committed workforce.

2. Brian should start out by learning more about the human capital in his own hotel first and getting himself immersed in the people of the company. The service profit chain starts internal to the organization and then looks to the external guest. Brian could then observe some of the human resource practices that are being used at the Sunrise Hotel and apply them to his own hotel. Joe gets involved in all of the hiring at the Sunrise Hotel as well as the training there. Brian should implement more of a focus in the top management of Beachside Hotel in order to emulate Joes focus on developing a culture of service and in taking pride in the people that work for him. 3. Brian needs to focus on hiring the correct people for the various jobs at the Beachside Hotel and should then work with each person to determine what it would take to get them to be satisfied in their jobs. Training and development not only give people the skills that they need to be successful in their jobs, but also they help to develop people in other facets of their life, i.e., time management skills, money management skills, and even tuition reimbursement for college classes. These development classes help people feel a sense of connection with their jobs and would help them to be satisfied in their overall lives. The more satisfied employees are, the more that they tend to stay at a place of employment and the more they tend to satisfy the guest that they serve. Having the top management in a company get involved with the training and development of their people, helps them commit to their future growth and helps the employee feel that their employers believe in them. 4. Since Brians job is to fix the Beachside Hotel, there will need to be an initial investment in order to get the human capital practices to a point where there are some significant improvements. These improvements will hopefully drive the service level up at the hotel and thus drive occupancy and repeat customers. There needs to be

a return on investment focus for the hotel as they try to change the culture. It appears that currently, there is not a focus on investment in human capital at all and the cost is the low customer satisfaction scores, high turnover, and a lack of repeat guests. This hotel needs to encourage a focus on the human capital areas as well as focusing on the return on investment in this area. It needs to be noted that the return on investment may take a period of time to show a positive return, but hopefully the effort will be worth it. 5. Some of the other human resource initiatives that could be undertaken by either or both properties are: regular and thorough performance reviews, 360 degree feedback programs, round table discussions with employees to focus on their needs, incentive programs to reward employees for positive performance toward the objectives of the organization, offer reward programs for guests in order to boost the level of repeat guests to the hotels, more open communication regarding progress toward the goals of the organizations in order to keep employees in the loop regarding performance, top management needs to focus on having a focus on the service profit chain regarding the internal guest satisfaction as well as the external guest satisfaction.