The impact of HRM practices on organisational performance in the Indian hotel industry
| Pages | 576-594 |
| Date | 09 October 2007 |
| Published date | 09 October 2007 |
| DOI | https://doi.org/10.1108/01425450710826096 |
| Author | Mohinder Chand,Anastasia A. Katou |
| Subject Matter | HR & organizational behaviour |
The impact of HRM practices on
organisational performance in the
Indian hotel industry
Mohinder Chand
Department of Tourism and Hotel Management, Kurukshetra University,
Kurukshetra, India, and
Anastasia A. Katou
Department of Marketing and Operations Management,
University of Macedonia, Thessaloniki, Greece
Abstract
Purpose – The study has a two-fold purpose: to investigate whether some specific characteristics of
hotels affect organisational performance in the hotel industry in India; and to investigate whether
some HRM systems affect organisational performance in the hotel industry in India.
Design/methodology/approach – A total of 439 hotels, ranging from three-star to five-star deluxe,
responded to a self-administered questionnaire that measured 27 HRM practices, five organisational
performance variables, and ten demographic variables. Factor analysis was performed to identify
HRM systems, one-way ANOVA was employed to test the association of the demographic variables
with organisational performance, and correlation analysis was used to test the relation between HRM
systems and organisational performance.
Findings – The results indicate that hotel performance is positively associated with hotel category
and type of hotel (chain or individual). Furthermore, hotel performance is positively related to the HRM
systems of recruitment and selection, manpower planning, job design, training and development,
quality circle, and pay systems.
Research limitations/implications – Single respondent bias may have occurred because a single
respondent from each organisation provided information on HRM practices and perceived measures of
organisational performance. The sample was drawn from the population of best performing hotels in
India, so is not representative of the hotel industry in India.
Practical implications – If hotels are to achieve higher performance levels, they should preferably
belong to a chain and increase their category, and management should focus on “best” HRM practices
indicated in the study.
Originality/value – The study makes a modest attempt to add information to the very little
empirical knowledge available referring to the link between HRM and performance in the hotel
industry.
Keywords Human resource management, Organizationalperformance, Hotel and catering industry,
India
Paper type Research paper
Introduction
Since the concept of human resource management (HRM) emerged in the early 1980s,
two basic paths of research have been developed in investigating the relationship
between human resource management practices and organisational performance. The
first was based on the assumption that there is a “direct” relationship betw een
individual HRM practices and/or internally consistent HRM systems of HRM practices,
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0142-5455.htm
ER
29,6
576
Employee Relations
Vol. 29 No. 6, 2007
pp. 576-594
qEmerald Group Publishing Limited
0142-5455
DOI 10.1108/01425450710826096
and organisational performance (e.g. Schuler and Jackson, 1999). The second was
based on the assumption that there is an “indirect” relationship between individual
HRM practices and/or HRM systems, and organisational performance (e.g. Ferris et al.,
1998; Edwards and Wright, 2001).
In relation to the first research path, three major perspectives emerge from the
existing literature:
(1) universalistic;
(2) contingency; and
(3) configuration (Katou and Budhwar, 2007).
The universalistic or “internal fit” perspective posits the “best practice bundle” of HRM
practices, implying that business strategies and HRM practices are mutually
independent in determining business performance (Arthur, 1994; Pfeffer, 1994; Huselid,
1995; Ichniowski et al., 1997; Brewster, 1999; Claus, 2003). The contingency or “external
fit” perspective emphasises the fit between business strategy and HRM practices,
implying that business strategies are followed by HRM practices in determining
business performance (Schuler and Jackson, 1987; Gomez-Mejia and Baklin, 1992;
Huselid, 1995; Youndt et al., 1996). The configurational perspective posits a
simultaneous internal and external fit between a firm’s external environment, business
strategy, and HRM strategy, implying that business strategies and HRM practices
interact according to organisational context in determining business performance
(Arthur, 1994; Guest and Hoque, 1994; Delery and Doty, 1996; Huselid and Becker,
1996; Ichniowski et al., 1997).
In relation to the second research path, although most studies speak of HRM
practices leading to performance, such a one-way line of “causation” is unsatisfactory
(Edwards and Wright, 2001). Thus, the general consensus developed among
researchers is that HRM practices and/or HRM systems do not lead directly to business
performance (Katou and Budhwar, 2006). Rather, they influence firm resources, such as
human capital, or employee behaviours, and it is these resources and behaviours that
ultimately lead to performance (Delery, 1998; Wright et al., 1994). This implicit model
assumes that there are variables that mediate a link between HRM practices and
business performance, although only a few researchers (Huselid, 1995; MacDuffie,
1995; Fey et al., 2000; Boselie et al., 2001; Park et al., 2003; Paul and Anantharaman,
2003; Katou and Budhwar, 2006) have measured these mediators and addresses their
importance.
Irrespective of the research paths followed, the majority of researchers have focused
on the manufacturing sector. For example, Arthur (1994) focused on steel mini-mills,
MacDuffie (1995) focused on the auto industry, and Katou and Budhwar (2006, 2007)
focused on the industrial sector as a whole. The literature also highlights that most
studies examining the relationship between HRM and a firm’s performance have been
conducted in the USA and the UK. Recently, a few investigations have been initiated in
other parts of the world, especially in emerging markets such as China (e.g. Deng et al.,
2003; Ahlstrom et al., 2005) and transitional economies such as Slovenia (e.g. Zupan
and Kase, 2005). Nevertheless, although it is well accepted that HRM is positively
related to organisational performance, there is a great need for additional empirical
evidence to support the HRM-performance link (Gerhart, 2005) and investigations from
different contexts (Ericksen and Dyer, 2005; Wright et al., 2005). Furthermore, there has
The impact of
HRM practices
577
To continue reading
Request your trial