FACTORS THAT INFLUENCE ORGANIZATIONAL PERFORMANCE IN THE HOSPITALITY INDUSTRY

FACTORS THAT INFLUENCE ORGANIZATIONAL PERFORMANCE IN THE HOSPITALITY INDUSTRY

CHAPTER ONE

1.0 INTRODUCTION 

1.1 Background of the Problem

Greilling (2010) defines the concept of organizational performance is common in the academic literature; its definition is difficult because of its many meanings. Organizational performance has continually become an important field of management study. It was developed as a strategic orientation to overcome the external adaptation problems faced by firms, which have been looking for sustainable competitive advantage in global competition in the last thirty years. Researchers and practitioners have been interested in the concept since the early of 1980s because of its profitable effect on firms’ performance. The French and the Canadians were the first to use the Balance Score Card in a different form. The French began using a measure called “the tableau de board”, or the dashboard of measure, which included both financial and non-financial measures. The emphasis on quality in the American continent during the 1980s made Canadian companies to include non-financial measures also in evolving their business strategy. This was the initial conception of the balanced scorecard (Stewart & Hubin, 2001).

The balance score card gets its name from the need to balance the financial objectives with the non-financial objectives. Performance can be viewed as dynamic and therefore it requires understanding from management and line staff so that a decision can be made in the end as a result of interpretation of the subject. Performance may be illustrated by using a causal model that describes how current actions may affect future results. Performance may be understood differently depending on the person involved in the assessment of the organizational. To define the concept of performance is necessary to know its elements characteristic to each area of responsibility. To report an organization's performance level, it is necessary to be able to quantify the results (Lynch 2009). For any organization to achieve its objectives, there are key performance indicators in making sure that the organization is either meeting their goals or performing well by all standards.

In the hospitality industry it is important that when a hotel is setting their goals for the year, they should be achievable, measurable, specific, and realistic and most importantly time bound. When they base their decisions on these two factors, they fall short of examining their internal

environment therefore missing the mark on the vital components that helps their hotel function better and even reach their optimum by trying to meet and exceed guest expectations.

Organizational performance is defined as the ability of an organization to have proper governance and have managers who are objective in achieving the goals of the organization and being persistent in achieving the mission and vision of the organization (Richard, 2013). Organization performance is measured in the goals or objectives that have been set out by the management of any company. The performance is measured by the organization’s financial performance, market performance and the shareholders performance (Jones & Charles, 2010). The stakeholders that are taken into account are internal (employees, executive officer, managers and board members) and external stakeholders. In 2013, there was a survey conducted by a company, Mercer, in 53 countries globally was determine the internal and external factors that affect the performance of any organization had over 10,000 respondents. It found that the respondents were working in 1056 companies (non-profit, profit and government institutions). It also found that 51 percent of the respondents thought that the planning process needed improvement, 42 percent stated that an organization would perform better if their compensation and reward systems were revised and 41 per cent thought that the approach used by their management needs work. Out of the survey, one third of the respondents thought that with the change of the Chief Executive Officers in organizations, there is bound to be a lot of change in the styles of management and this affects how a company performs at local and international level in the case of a multi-national company. This is because the way the incumbent thinks and mode of operation is different from the outgoing. As a result, the organizational culture changes to suit the incumbent way of implementing the same strategy communicated by the Board of the companies that were studied.

In the United States of America, performance of organizations is done by the top management to ensure that the non-financial measures are looked into to steer the organization to success. The top level management ensures that they are setting up their employees for success by having personal development plans. The Hilton Hotel and Accor brand give their staff a management code of conduct that controls their behavior. This impacts their culture such that all Accor and Hilton hotels have a specific culture that is developed. Consequently, they have a culture that is hard to change (Hilton, 2013). This has helped these brands develop a corporate identity and values which stem from how they do their things. The implementation system of the career development of their staff is deeply entrenched in their value system (Travel courier, 2010).

In the developing countries, hospitality firms check their performance by having regular strategy meetings to plan on their way forward in relation to their competition and make sure that they have proper strategies in place to beat their competition. As a result, they do a lot of market research to make sure that they are in first place at all times in terms of revenue generation and customer satisfaction. Hotels in Singapore and Malaysia gain their competitive advantage in low-cost leadership through discounting of their products and providing quality services to their customers to achieve customer loyalty. Having low cost strategy in the Asian market and other developing countries may have a positive effect on gaining market share in the short term, but has a negative impact on the profitability of a hotel in the long term. Studies done on the Malaysian market show that competition gives pressure to the managers in the hospitality firms to make sure that they push down their costs in a labor intensive environment (Molina &Azori, 2008). Punniyamoorthy and Morali (2008) suggested the balance score card as a benchmarking tool for organizations, therefore a measure of performance. In a dynamic environment like the hospitality industry, managers do not have the time to respond to the current trends. As a result, they measure their performance based on the financial goals that they set and the customer satisfaction.

FACTORS THAT INFLUENCE ORGANIZATIONAL PERFORMANCE IN THE HOSPITALITY INDUSTRY

Chapters: 1 - 5
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Number of Pages: 75

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