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Human Resource Strategy for Quality Service: The Hilton Group plc
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MBA701 – Human Resource Strategy Assignment Questions
G. Maxwell & S. Quail
The purpose of the case is to map the relationship between HRM and service quality in an international organisation. The case in point here, The Hilton Group plc, is an instrumental case study. It is used to signal the issues inherent in developing human resource strategy for quality service in the international hotel sector.
Access to Hilton International Hotels, through 2000 and early 2001, was developed through the good (England based) offices of the Human Resource Vice-president (HR VP) for Hilton UK and Ireland. Material provided for the research included company communication and training videos, HR policy and training manuals, and quality system information. Preliminary face-to-face, unstructured interviews were held with the unit HR Manager and HR VP (UK and Ireland) in the Glasgow Hilton in Scotland. Thereafter, semi-structured telephone interviews were held with Hilton’s three of the four HR VPs (see company structure below), including the HR VP for the UK and Ireland, around the world. In the Europe, Middle East and Africa region, the Regional Training Manager represented the HR VP. Finally, a semi-structured telephone interview was conducted with the Customer Service Development Manager (UK and Ireland).
The Hilton Group plc is the hotel part of the Hilton International business that comprises hotels, betting and gaming, and Living Well fitness centers. It is not to be confused with the Hilton Hotel Corporation (HCC) of the US, although the Hilton Alliance does bind the two Hilton organisations in some ways and permits the usage of the ‘H’ logo for Hiltons around the world. The Hilton Group plc consists of some 500 hotels across the world, employing over 60 000 staff in 50 countries. All of these hotels are either owner/ managed or wholly owned by Hilton; none operate as franchises. Most Hiltons are cited by airports or in city centres. Headed by a main board and Chief Operating Officer, the Hilton Group plc is divided into four global regions: UK and Ireland; Europe, the Middle East and Africa; Asia Pacific; and the Americas. In each region, Area Presidents and Executive Teams run their operations.
In the UK, there are four operating regions: Scotland; the Midlands and West; London; and the South East and South Coast. These regions are encouraged to set up their own operating teams including HR, finance, sales and revenue, working in an cross-functional collaboration. The decentralised organisational structure in the Hilton Group, in the words of the UK HR VP, Gordon Lyle, “relies fundamentally on a clear brand direction – a strong frame – in values and behaviours.” The teams are currently at an early stage of development as their formation follows the integration of Hilton and Stakis plc in the UK in 1999 (to a company known at the time in the UK hotel units as ‘Stilton’). At the time of the integration there were 80 Hilton hotels in the UK and 54 Stakis hotels.
The integration of the two organisations meant a rationalisation of two different organisational cultures. Hilton was characterised by professionality, and being “systematised and process-led.” Stak is on the other hand was more characterised by its company “personality”, engendering customer loyalty by being “accessible and intuitive”, making service mistakes but overcoming them in a friendly manner. In the period February to July 1999, the senior jobs in the new, integrated organisation were filled in an organic way, mainly with the senior people from the Stakis organisation. It was recognised that there was then a need to create a new organisational culture, part of which was to make the Hilton Group in the UK “a number one employer, the first choice in the hotel business.” The development of the new culture was derived from an extensive market research exercise that was conducted in 1999 in order to establish what customers expect and want from the Hilton brand.
Service Quality through Equilibrium
The result of the market research was clear identification of the contemporary Hilton brand. Part of this is physical, the tangible aspects of the service offering in hotel units. As a result of specification of the tangible standards, thirteen of the Stakis units were considered unrepresentative of the brand Hilton customers expect so are now being disposed of along with a handful of Hilton hotels. The other part of the contemporary Hilton brand is intangible, the quality service element. Hilton customers expect a very high standard in this respect in that:
- staff will deliver a service;
- staff will deliver that service well and on time; and, most emphatically,
- staff will deliver the service with a smile.
For the HR VP for Asia, Rosie Holis, and quality service “is the customer package…we [Hilton] is not in the race if we are not delivering quality service.” Thus quality service depends heavily on employees, particularly those at the front line of customer contact. To differentiate Hilton service and meet Hilton customer needs, the brand new concept of “Hilton time” being “restorative” was developed. Putting this concept into practice means the implementation of a quality service strategy named ‘Equilibrium’. Essentially, Equilibrium aims to ensure all Hilton customers experience a stay at/ visit to Hilton that balances their wider life needs of work and leisure in a restorative way. Achieving such balance equilibrium – may mean relaxation for stressed business people or excitement for under-stimulated guests; these groups could, respectively, make use of the rest or rumpus rooms to be made available in all Hiltons. Equilibrium is summed up within Hilton as “putting back in a little of what life takes out” and, importantly, is attuned to individual guests through “brand promises”. Product icons reflecting Equilibrium include goldfish swimming across the television screens as guests enter their bedrooms, and seasonally selected essential oils in bathrooms. In addition, service standards and exchanges constitute the restorative, quality experience.
In large measure therefore, Hilton quality service is related to the behaviour of staff, mainly with guests but also with each other to create – directly and indirectly – the right type of organisational culture which will encourage appropriate employee/ guest exchanges. The main challenge identified by Hilton in developing this quality of service is expressed by the HR VP for the UK and Ireland as “an organizational cultural belief issue: do we really believe in it [Equilibrium approach to quality]?” Closely related to this challenge are two other important considerations, both of which signal the role of HRM.
Firstly, there is the development of the Equilibrium service culture throughout Hilton’s four global regions. The role of the UK and Ireland region is pivotal here: the Equilibrium strategy was not only developed here as a result of the Stakis merger, but it was also launched here – in the Glasgow Hilton – in January 2000. From its initiation in the UK, Equilibrium was presented last year to the other three Hilton regions, and advertised by Jeff Goldblum, the actor, to represent the new Hilton brand and image. Given the decentralised organisational structure, the senior management teams in each region were able to decide whether or not to adopt Equilibrium. Europe, Middle East and Africa had its official launch in January 2001. The Americas region is launching Equilibrium to its General Managers is May 2001 and to its regional hotels the following August. Asia is at an earlier stage, currently having a working party to “explore the philosophy of Equlibrium.”
The second important consideration in the implementation of Equlibrium is adapting the Hilton brand around the world to specific locations, which is seen as an issue of national culture: “quality in Japan is not necessary quality in London,” as Gordon Lyle illustrates. Beyond the standard Hilton company specifications of quality, local unit managers are expected to ensure their staff provide more localised dimensions of quality, a new approach for Hilton. In Asia especially, the translation of Equilibrium across a diverse range of cultures in different countries represents an important and complex challenge, from the underpinning philosophy through to language dimensions (Esprit – see below – means ghost in Chinese for example). In the Americas region, there is a difference between the expectations of North and South American customers, with the former generally enjoying a higher and more structured/ pressurised standard of living and the latter with less affluent but more relaxed lifestyles in general.
Thus the Equilibrium initiative is inextricably linked to employees and, as a consequence, their management. The bridge between customer service quality – Equilibrium – and the service performers in Hilton is the Esprit HRM initiative which complements Equilibrium.
Get Answer on HILTON Hotel: Financial Report and Company Assignment
Service Quality through Esprit
The contribution of HRM in the new service quality drive at Hilton is recognised formally in a newly devised, Stakis orientated, HRM policy initiative called ‘Esprit.’ This initiative builds on the four, inter-related Hilton core values as expressed in a Hilton training manual:
‘Customer: To know who are customers are and provide them with the product and service they want.
Quality: That the customer is provided with an exceptional product by exceptional staff in terms of service and flexibility.
People: To work together and enjoy being part of a team, pulling together to provide excellent service.
Profit: To ensure that sales are maximised in answering the customer’s needs and that costs are controlled without compromising quality. ’
Esprit has been designed to embrace demonstrably the key principles of employee recognition, respect and reward. The Regional Training Manager for Europe, the Middle East and Africa, Andrea Kluit, sums up the fundamental role of staff in Esprit, “Esprit puts employees in front. There will be no guest delight without employee delight.” Recognising the contribution of employees is not only important from an organisational perspective, it is, according to Andrea Kluit, also important because “employees more and more expect training, a good working environment etc., and not just a job.” Thus Hilton employment packages have to take account of internal and external factors.
Employee development is seen as crucial to Equilibrium and therefore to Esprit also. “At the root of employee development is a real understanding of what makes a good service giver at co-worker level,” asserts Gordon Lyle. He continues that quality service “starts with recruitment but relies more on appropriate [employee] development. Esprit training aims to change behaviours to deliver Hilton moments.”
New recruits are encouraged to understand Equilibrium from a guest perspective and feel positive about it before they officially join the company, by experiencing part of its service offering courtesy of Hilton (staff are also encouraged to act as mystery customers when they stay at Hiltons for preferential rates). Esprit training begins formally with The Spirit of Hilton, ‘My First Day’ (induction) training. Part of this orientation explores the new employee’s views on their Hilton experience. It also sets out Hilton standards and moments. Examples of Hilton moments include employee initiative in providing food bowls and dog biscuits for guests with dogs and, in a more extreme case, a night manager staying with the sister of a guest who had been hospitalised with a heart attack. More Spirit of Hilton training is carried out in the employee’s department before a personal development planning day spent with the HR department, covering sales technique and customer care for example. At each of the three stages, employees are invited to complete a questionnaire to evaluate the effectiveness of the training.
When the Spirit of Hilton training is completed, employees develop an individual training record, a Technical and Behavioural Skills record, which includes assessments, review and industry accredited training. After 12 weeks, employees take part in an Esprit workshop. This workshop checks understanding of and commitment to Hilton core values, Hilton brand standards (generic and departmental) and Hilton moments. On successful completion of this programme, employees become members of the Esprit Club which then entitles them to a range of employee benefits.
Thereafter, employees can tailor their own training through Hilton’s Pathway training ladder. In sum, staff (or Hilton people, as they are called within the company) entry into Esprit depends of the fulfilment of four specific conditions:
- Completion of the Spirit of Hilton Programme;
- Attendance at an Esprit Workshop;
- Completion of Technical and Behavioural Skills Training; and
- Participation in a one-to-one review with a manager.
Recognition is afforded to staff through the certification of achievement, employee of the month and year schemes, and Star Bond scheme, for example. This last scheme rewards Hilton moments through staff nominations to build teamwork. Nominations are heard by staff consultative committees in each hotel and Star Bond vouchers awarded according to the perceived value of the Hilton moment. For example, being cited personally (and favourably) in a guest’s letter could earn the member of staff a couple of Star Bonds which can be used for retailing.
Esprit training is based on technical and behavioural skills to support the identified brand standards and provision of Hilton moments. It is continuous to keep Equilibrium alive through all training and team meetings. In addition to directly supporting Equilibrium, continuous, individually-centred employee development is recognised as important to individual motives too:
“Good people need to grow intellectually and materially. So employee development has to be available to people [employees] so that they can feel they can do things. Some people [employees] may not want to progress but they have a choice. Employee development is not a company responsibility but an individual [one]. The company facilitates development” (Gordon Lyle).
The Esprit system is expected to be locally adapted. In Europe, Middle East and Africa, a ‘Championing Quality in the Teams’ programme, bringing quality awareness back to hotels, is launching Esprit at the beginning of 2001. The current round of appointments of training managers or co-ordinators in each hotel in this region underlines the commitment to employee development. In Asia, there are four “champions” of Esprit and Equilibrium, each representing different countries in the culturally diverse region. In the Americas region, Esprit is being managed by the Esprit Committee comprising the regional HR VP, two HR Directors, two General Managers and an Area Director for Sales and Marketing. Here, the goal is to have all hotels qualify for Esprit membership by mid-2002. Generally the Regional HR VP, Edwin Zephirin, considers that the North American employees will take more persuading of Esprit as it “takes more time to gain their hearts…there is less loyalty than in the countries in South America and the Carribbean.” In some contrast, employees in South America are “naturally more personal, intuitive givers of service”, the very essence of Hilton Moments.
In short, Equilibrium identifies Hilton quality and Esprit delivers it. Then, as the Customer Service Development Manager (UK and Ireland), Jason George, points out, quality has to be measured and audited.
Measuring and Auditing Quality
There are five main company measures of quality in the Hilton Group: the systems of Richey, GSTS, Grip, balanced score cards, and mystery customers, each of which will be outlined in turn. (In addition to these individual hotels may have their own measures, for example in their restaurants.) The Richey system is that of an external company that specialises in international hotel. Except in the UK and Ireland, representatives of Richey visit each Hilton twice a year, unrecognised and armed with a definitive list of the Hilton quality standards, physical and people. They use all the available facilities then only at the time of their check-out do they reveal themselves to meet the hotel General Manager. At this meeting they outline the positive and negative aspects of their experience. Around four to six weeks later, a detailed and substantial report is submitted to the General Manager that measures adherence to every standard listed and yields a total percentage score for the service and facilities. These reports allow cross-hotel comparisons to be made.
GSTS is the guest satisfaction tracking system which measures (genuine) guests’ perceptions of service. Again, this is administered by an external company. After every guest stay at a Hilton, they receive a letter from the area President requesting that an enclosed questionnaire on their experience is completed and returned. Around 20-25% of questionnaires are usually returned. These form the basis of three-monthly reports on the customer perceptions. Although this measurement is relatively superficial due to its standardisation, it allows another comparison between hotels. In contrast, the Grip system is a more personalised approach. This system of feedback is administered within hotels. A questionnaire is left for guest completion in bedrooms, which guests can either leave in their bedrooms or at the front office. The unit General Manager follows each completed questionnaire as appropriate and personally replies to the respondent guest. Also administered within hotels is the balanced score card system. This system is derived directly from the Hilton core values of customers, quality, people (staff) and profit as outlined earlier. Specific measurements of each value can be made every month, for example the percentage of staff joining the Esprit club. The (score card) balance lies in customer experiences, staff performance and resultant profit. Again, league tables are produced on the basis of this data.
Lastly, the mystery customer approach is used in tow ways. Firstly when a mystery guest stays at a Hilton Hotel and uses all its services. These services are marked against the company brand standards. Secondly, a mystery phone call is made to the Conference and Banqueting Sales Department and the Room Reservations Department. The call response is measured against company brand standards too.
Again externally administered, this system results in reports on set standards observed and experienced, for example on response times to queries, and includes a transcript of the mystery call. In the UK and Ireland, eight mystery audits a year are carried out, together with eight test (telephone) calling exercises to specific hotel departments such as Conference and Banqueting (Sales) and room reservations. Points are awarded during each visit for standards met and for Hilton moments created by staff. The target is the achievement of a minimum of 85% of quality standards and a score of 75% in Hilton moments in each visit. When this minimum is met in two consecutive visits, the hotel gains its entry to the Esprit Club. HR Managers in hotels are then subject to evaluation of their achieving the identified People Standards, their functional brand standards.
Hilton’s performance is determined by the interaction of its core values – customer, quality, people and profit – in each hotel. These values are clearly inter-related but must be co-ordinated in a such a way so that the fundamental imperative of ensuring quality customer service results in profit. Thus the customer offering is the priority in order to achieve the end of profit, through the means of quality staff performance. In Equilibrium, Hilton has adopted a new strategic approach to ensuring quality which explicitly combines its service offering with employee performance, through the Esprit initiative. Therefore, it bases its quality drive on three essential dimensions: customers, service deliverers and strategists. Importantly in the international arena, the Hilton approach to quality service is adapted to national cultures.
Unlike many service quality initiatives, Hilton’s Equilibrium and Esprit, was initiated in the UK commercial sector and was precipitated by some organisational restructuring after the integration with Stakis. The restructuring focused the need to identify changing customer expectations and led to the market research exercise that was the very basis of Equilibrium and Esprit. Hilton can therefore be described as being market driven in its holistic perspective that recognises that managing quality and employee development are central to business success. Human resource management (HRM) and development are critical to the quality drive, contributing at strategic and operational levels, but are secondary to the quality service focus. HRM is not seen as important in itself, but is important because it supports – even defines – customer satisfaction. The Hilton case, in sum, illustrates that driving and striving for quality service has promoted the organisational status of HRM overall and that there is a co-dependency between HRM and quality service.