Abstract
Acknowledgement
Finally the time of graduation has come after a year of studying, developing, experiencing, enjoyment and hard work. Writing this thesis has been a great experience, of course with the necessary faced difficulties, however certainly worth it.
1 Introduction
In a world of growing international business, multinational companies (MNCs) and their subsidiaries have become important players in the global economy and management practices have thus attracted interest from researchers. Globalization created a number of important human resource (HR) challenges for multinational companies. International human resource management (IHRM) strategists are especially tasked with developing and implementing HR policies and practices across different national, institutional and cultural contexts. These need to be responsive to local economic, institutional and cultural conditions, while at the same time integrating and supporting its global activities (Budhwar, 2012). Hence, it can be questioned whether and to what extent multinational companies (MNCs) in the service industry should standardize their HR practices.
HRM is increasingly regarded as fundamental for the company’s overall strategy. Some authors even argue that it is the glue that holds global organizations together. Hence, MNCs often try to transfer their HRM practices to their foreign subsidiaries (Chiang, Lemański and Birtch, 2017; Teagarden and Von Glinow, 1997). Despite significant country-of-origin effects in many areas of management, previous research has shown that national culture, political and institutional characteristics inhibit the transfer of HRM practices, resulting in adaptation of HRM practices by MNCs to the host environment, hence showing localization (Geary and Aguzzoli, 2016; Myloni, Harzing and Mirza, 2004; Khilji, 2003). Moreover, according to Cogin and Williamson (2014) customization can play a vital role in building adaptation and customer-oriented behaviors inside subsidiaries, creating a culture that satisfies customers, especially in an environment coping with high levels of uncertainty. Variations of standardization exist on the operational and organizational level. Reasons for these differences include the industry, strategic choice and administrative heritage (Dickmann, Müller-Camen and Kelliher, 2008). Additionally, Colling and Clark (2002) add that industry influences can be more influential in comparison to home country factors in HRM.
context. This makes me wonder whether the development of e-HRM leads to standardization and making customization increasingly difficult in an ever changing and globalizing world.
The research question for this study will be: To what extent, can MNCs in the service industry standardize its human resource practices considering the different internal and external environment of the foreign subsidiaries? The outcome of the thesis should provide new insights into MNCs in the service industry, its standardization practices, and have significant practical implications by doing a case study in the hotel industry and more specifically in a hotel chain named NH hotels. As the hotel industry has a high concentration of international business and tourism playing a salient role in international business globally (OECD, 2017), it’s the perfect setting to explore the extent to which a MNC in the service industry can standardize its HR practices. Thus, the goal of this study is not to generalize, as this is impossible applying a single case study, but explore and understand the research phenomenon. Prior research has not sufficiently taken the service industry into account when it comes to standardizing HR practices, especially not in the hotel industry.
The literature review revealed that there is still much uncovered in academic research in the service industry regarding the standardization of HR practices. Being aware of the internal and external influences of standardization of HR practices it can be concluded that IT systems, globalization and the industry have a positive influence and political, cultural and institutional influences have a negative influence on the standardization of HR practices. A theoretical framework has been developed which confirmed this. However, an additional internal influence, internationally oriented workforce, has not been discussed in the literature so far. This is a theoretical contribution that has been made to this research, while internationally oriented workforce have a lot of experiences with foreign policies, customs and traditions which leads to more open-minded and flexible workforce, making standardization of HR practices less complicated.
This introduction described the research topic and design; the next section will review the literature and thereby discussing the relevant topics, leading to the theoretical framework. It is followed by the methodology, explaining the method used for this research and subsequently background information about the case company is provided. Lastly, a discussion and conclusion about this research as well as its limitations and recommendations for future research are provided.
2 Literature review
Why and to what extent do MNCs in the service industry choose to standardize or customize its HR practices, especially in an increasingly global world with more and more MNCs? This is a phenomenon that is rather contradicting, while certain MNCs rely more on standardization and others on customization instead. There are several reasons to either standardize or customize HR practices in subsidiaries. Therefore, the literature review will follow with different theories explaining this phenomenon by among others looking at the internal influences being IT systems and the external influences being political, cultural and institutional influences, globalization and the industry. In addition, a theoretical framework based on the literature has been developed in order to explain the extent MNCs in the service industry can standardize its human resource practices considering the different internal and external environment of the foreign subsidiaries.
2.1 International Human Resource Management (HRM)
Strategic alliances such as mergers, acquisitions, joint ventures, franchises and contracts have become more frequent in recent years and remain a regular source of cross-cultural clashes and often resulted in dramatic failures (Hofstede et al., 2010, p. 304). In the international context, the quality of management appears to be even more critical in comparison to domestic operations. Mostly, because it involves the complexities of operating in different countries and employing different national classes of employees. Despite this recognition Scullion (1994) point out, “that many companies underestimate the complexities involved in international operations”. Likewise, Maurais and Morris (2003) add that global communication challenges are becoming more and more prominent in a rapidly changing world characterized by growing interdependence, which makes HRM essential for successfully doing business internationally.
consistent with the organizational goals of the firm. However, according to the study of Rowley and Warner (2007) different concepts of HRM exist due to cultural, political, social, economic and institutional differences. Hence, a critical approach to HRM is necessary.
2.2 Standardized versus customized human resources
The level op standardization indicates if a company’s product or service is adapted to local markets or standardized at a global level. Whether to standardize or customize human resource practices is a controversial issue. Generally, standardization has been popular in manufacturing industries while it helps management to control, predict and minimize mistakes and deviations among employees. On the other hand in service industries human beings are essential to the success of the firm, among others through excellent customer service. Moreover, characteristics of people in different countries tend to be distinctive and should be taken into account (Sandoff, 2005). It is therefore imperative to create the right balance between standardization and customization of human resource practices. Since HRM deals with managing people, it is often seen to be a function that is less likely to standardize its practices. Yet, increasing globalization and the ever-growing presence of MNCs might reduce the need for customized HR practices (Pudelko and Harzing, 2007). Multinational companies (MNCs) are known to build regional headquarters that are country specific in order to create and transfer knowledge to improve coordination and control of their operations and enable knowledge sharing between all affiliates (Budhwar, 2012). Transferring this knowledge is perceived to be more challenging for MNCs that have greater institutional distance in the host-country vis-à-vis the home country (Geary and Aguzzoli, 2016). Thus, MNCs with subsidiaries all over the globe, in countries with different institutional profiles are challenged with successfully standardizing HR practices.
2.3 Key factors in standardizing human resource practices
2.4 Key factors in customizing human resource practices
An important challenge faced by MNCs is to what extent and whether to customize HRM practices to local needs. Standardization seems desirable due to its efficiency, whereas customization generally leads to higher costs. However, when institutional and political environments are restrictive in a certain country, customization could be more realistic in terms of strategy in comparison to standardization (Farndale and Paauwe, 2007). In addition, Jun, Jiang, Li and Aulakh (2014) found that if the level of governmental influence is high, the positive effect on MNCs using standardization practices diminishes leaving local companies to customize their HRM practices. Likewise, they suggest that the decision to standardize or customize is a mutual decision that depends on the multinational company’s relative power over their subsidiaries.
When looking at the perspective of institutional theory, several studies have shown that partial customization enhances the legitimacy of MNCs in the home and host countries (Hultman, Robson and Katsikeas 2009; Shoham et al. 2008; Tempel and Walgenbach 2007). Other results suggest that the customization of HRM practices can play a vital role in building adaptation and customer-oriented behaviors inside subsidiaries, creating a culture that satisfies customers, especially in an environment coping with high levels of uncertainty (Cogin and Williamson, 2014). Accordingly, MNCs should investigate whether it is beneficial to customize or not, by looking at the internal and external environment.
2.5 Convergence versus divergence debate
Several authors following the convergence approach pose that in management best practices can be seen as universally valid and applicable, regardless of national culture or institutional context. Imperatives for efficiency and an increasingly comparable global competitive environment are left to force MNCs to adopt such practices to increase their competitiveness following a cross-national convergence of HR practices (Geary, Aguzzoli and Lengler, 2017; Gupta and Bhaskar, 2016; Sablok et al., 2017).
2.6 Industry factors
Ever since HRM has arrived in the digital age, MNCs are affected. Without the use of IT systems the implementation and integration of HR information, policies and procedures are nearly impossible across geographically dispersed subsidiaries (Burbach and Royle, 2014), making e-HRM of particular importance in the international context. This makes me wonder whether the development of e-HRM leads to standardization and making customization increasingly difficult in an ever changing and globalizing world.
2.9 Global expansion
Foreign direct investment (FDI) is a mode of entry commonly used in manufacturing firms in order to exploit their ownership advantages in brands and proprietary technology. Due to high tariffs, trade barriers and transaction costs FDI is generally preferred over exporting, licensing and franchising. Yet, international growth in non-manufacturing sectors, specifically services, and in particular hotels, is much less explored in the literature (Quek, 2012). Controversy exists towards whether it can be argued that FDI theories apply to both manufacturing and service industries, despite differences between various dimensions of host country characteristics, such as home and host country regulations (Dunning, 1998). Others argue that it cannot be generalized across service industries due to its unique characteristics such as intangibility, inseparability, heterogeneity and levels of human capital intensity and specialized know-how (Bouquet, Hébert and Delios, 2004; Lee, Hong and Makino, 2016).
2.10 Culture
2.11 Globalization of the hotel industry
Governments have played a significant role in the globalization process of the hotel industry. After World War II, relationships were built and solidified and visa requirements were loosened to promote business and leisure travel, being a major driver of international growth in many countries. In addition, increased living standards and changes in lifestyle were important growth factors, since vacationing became more accessible and not exclusively for the wealthy individuals. At the same time, reduced flight prices and ease of mobility between countries facilitated a convergence of consumer preference for vacations and hotel rooms. Similarly, the reduction of ticket cost and ease of mobility between countries facilitated a convergence of consumer preference for holidays and standardized hotel rooms, pushing the industry into globalization. On the other hand, restrictions such as visa requirements implemented by certain South American governments slowed international growth in tourism (Quek, 2012).
2.12 Organizational performance
2.13 Theoretical framework
Ever since HRM has arrived in the digital age, MNCs are affected. Without the use of IT systems the implementation and integration of HR information, policies and procedures are nearly impossible across geographically dispersed subsidiaries (Burbach and Royle, 2014), making e-HRM of particular importance in the international context. This makes me wonder whether the development of e-HRM leads to standardization and making customization increasingly difficult in an ever changing and globalizing world with foreign and internationally oriented staff.
2.13.2 Globalization
Increasing globalization has led to more and more HRM practices and therefore plays a vital role today. The added value of the HR function in a MNC remains in its ability to manage the balance between overall coordination of systems and the awareness to local needs, including cultural differences. This should be aligned with both business needs and the philosophy of senior management (Brewster, Sparrow and Harris, 2005).
2.13.3 Political influences
The need for local responsiveness usually arises from differences in political environments in which MNCs operate. Governments’ differing regulations can impose political impediments that can affect a MNC subsidiary’s performance (Tieying, Subramaniam and Cannella, 2009). On the contrary, political landscapes have been changing within countries and MNCs have an increasing need for resources, primarily human resources. Changes in the political landscape are evidenced in many regions of the world including Europe, which formed the European Union and North America with its North American Free Trade Agreement (NAFTA) (Hitt, 2016).
2.13.4 Cultural influences
2.13.5 Institutional influences
Multinational companies (MNCs) are known to build regional headquarters that are country specific in order to create and transfer knowledge to improve coordination and control of their operations and enable knowledge sharing between all affiliates (Budhwar, 2012). Transferring this knowledge is perceived to be more challenging for MNCs that have greater institutional distance in the host-country vis-à-vis the home country (Geary and Aguzzoli, 2016). Thus, MNCs with subsidiaries all over the globe, in countries with different institutional profiles are challenged with successfully standardizing HR practices.
2.13.6 Industry
According to Colling and Clark (2002) industry influences can be more influential in comparison to home country factors in HRM. For example, an industry with high customization includes food, beverages and personal care items with high local responsiveness in the ingredients as well as marketing, whereas finance industries are more receptive to standardization, which can be illustrated by the harmonization of international financial reporting standards (IFRS). Due to its international nature and influences, standardizing HR practices should increase organizational performance when doing business in the hotel industry.
3 Methodology
This section will provide an explanation of the methodological approach to answer the research question of this thesis. Firstly, information about the single case study that has been conducted within the Spanish hotel chain: NH Hotel Group and secondly, a detailed description about the data collection and analysis of this thesis will be provided.
held with HR employees of different business units and hotel managers of several NH hotels in different countries such as the Netherlands, Germany and Spain. These hotels and resorts represent a sample of the hotel industry and are likely to serve as a benchmark and model for other MNCs in the hotel industry in countries where tourism plays a prominent role in the economy.
3.2 Data collection and analysis
In order to investigate this phenomenon, secondary qualitative data such as articles and books were used to frame the literature review. The articles were mainly retrieved from the online library databases of the university of Groningen using key words such as: foreign direct investment, (international) human resource management, multinational company, standardized versus customized human resources, globalization and convergence. Moreover, hotel and HR managers working at different business units and NH hotels within Europe were interviewed. This was relatively uncomplicated with the amount of hotels and resorts located in Western and Southern Europe. Besides, I have several contacts within NH hotels due to previous and current employment in Spain and the Netherlands, respectively. From the background information and literature review, semi-structured interview questions were developed in order to collect data regarding the extent to which NH Hotel Group standardizes its HR practices and what influences this. The data was analyzed using the QSR International’s NVivo 11 qualitative data analysis software, using a grounding theory approach where codes were extracted from the data, which were subsequently grouped into concepts and categories. Moreover, the intranet and additional documents such as annual reports of NH hotels were used to extract supplementary information. In addition, the face-to-face interviews were held in, Dutch, English and Spanish in order to receive valuable responses in the interviewee its fluent language. The interviews were audio recorded and transcribed in order to analyze the data. Most interviews were held face-to-face both in Spain and the Netherlands. The additional interviews were held via Facetime and Skype. The findings are based on the literature review, company documents and the interviews held. For the interview questions and a list of interviewees, their position within NH and country refer to appendix II and III, respectively.4 Background information
In order to understand the chosen research phenomenon, some background information about HR practices in the hotel industry, NH hotels and NH’s management practices in different countries are provided.4.1 HR practices in the hotel industry
Nowadays, tourism plays a vital role in the global economy, with a significant contribution to growth. Meeting the needs of tourists and business people requires an array of services, among others; accommodation, food, leisure and entertainment as well as other services (Ionel, 2016).
When looking at the hotel education and in particular international programs, local employees with overseas experience are expected to effectively communicate in English since it is used as the medium of instruction in most programs. An important reason to recruit international staff is because of their contributions to the learning experience and help with the internationalization of staff. Employees with international experience are expected to have a deeper understanding of international aspects, thus likely to better understand and cope with diversity and different cultures (Eliassen and Berge, 2010).
4.2 NH Hotel Group
NH Hotel Group is one of the top 25 hotel chains in the world, currently operating close to 400 hotels with about 60,000 rooms in 31 countries in Europe, Africa and (Latin) America under the brand architecture: NH Collection, NH Hotels, nhow and Hesperia Resorts, see table 1. They stand out for its quality both in services and facilities, with carefully chosen interior, intending to satisfy all tastes and making guests feel welcomed and comfortable. Restaurants offer first-rate cuisine to guests, making it one of NH its priorities. Moreover, NH Hotel Group is a socially responsible firm offering hotel services that are efficient and sustainable and which anticipate current and future needs of both, the communities where they operate as well as internal and external stakeholders such as: employees, clients, shareholders, suppliers and the environment. Additionally, NH has been awarded the Prince Felipe Award for Excellence in Tourism and been named the Best Place to Work in Spain, the Netherlands and Germany.
Brand
Segment Upscale 4*/3* Upper upscale Upper upscale (design) Upscale
Hotels 289 75 3 8
Rooms 41,702 11,779 828 2,330
% rooms 74% 21% 1% 4%
Table 1 NH Hotel Group Brands: Urban positioning towards the upper segment.
It was founded in 1978, when the first establishment opened its doors in Ciudad de Pamplona. Four years later, the chain moved beyond the region of Navarra, where its origin Navarra Hoteles (NH) comes from. It is currently headquartered in Madrid, has over 10,000 employees worldwide and is listed on the Madrid Stock Exchange. NH is constantly growing and has significantly expanded worldwide in the last two decades. It acquired Sotogrande, a stake in Jolly Hotels and formed a strategic alliance in MERCOSUR for investing in Latin American. In 2000, the company acquired the Dutch hotel chain, Krasnapolsky Group and thereby doubling its size. It continued growing with the acquisition of the Mexican hotel chain Chartwell and in 2002 NH continued its M&A-led international growth strategy by merging and acquiring various other hotel chains and is still growing, see appendix IV for more information. NH moved its customer management operations forward by centralizing reservations for its main operating markets and received several prices including its employee-motivation initiatives (NH Hotel Group, 2018).
4.3 NH’s business model and HR practices
5 Findings
The case of NH hotels illustrates that standardized HR practices and policies can have a positive influence on the performance of a company. This section analyzes the findings of the literature review, company documents and the interviews held in order to answer the research question. Since the literature review revealed that there is still much uncovered in academic research in the service industry regarding the standardization of HR practices. The purpose of this single case study analysis was to provide more insight into the boundary of MNCs in the service industry standardizing its human resource practices considering the different internal and external environment of the foreign subsidiaries. It focuses on the internal influence of IT systems and the external influences such as globalization, cultural, political and institutional influences as well as the industry. An additional internal influence, internationally oriented workforce will be discussed, an influence that the literature has not come up with so far.
5.1 Internal influences: IT systems
The interviewees argue that IT systems definitely have an influence on the increasing standardization of HR practices. The HR Business Partner of Northern Europe mentioned:while it is most likely rooted in a complicated IT system. As one assistant front office manager mentioned: “Helemaal in een keten als NH kun je niet zomaar even iets anders doen omdat de situatie daarom vraagt. En als iets vastgelegd is met een IT systeem is dat helemaal moeilijk dan als je een wat kleinschaliger bedrijf bent.”
English translation: “Especially in a chain like NH you can’t just do something different
because the situation demands it. And if something is fixed within an IT system it is especially difficult in comparison to a small-scale company.”
It can therefore be said that IT systems certainly have an influence on the standardization practices implemented in MNCs. Besides, NH has an Internal Communication Plan with among others an internal communication channel called: “Tell The World”. The plan has focused on the digital strategy applied to all its environments and channels (Annual Report, 2016). It was especially designed for regularly sharing progress, achievements and success stories concerning key projects. IT makes it possible to connect and share with anyone around the globe, which makes communication throughout the whole network of hotels easier. Back in the day you couldn’t just have a meeting with someone from HQ, if you would’ve liked so, nowadays this isn’t a problem anymore.
5.2 Internal influences: Internationally oriented workforce
internationally oriented workforce, which at the same time helps to implement and maintain standardized HR practices.
Also, NH Hotels has an international mobility program with its mission being committed to promoting international mobility among its employees in order to facilitate the crossing of borders and allow a career development within the firm. This international assignment is a period that an employee spends working internationally for the company in another country. With their vision being a global and multicultural firm, NH strongly believes in the importance of an international experience; supporting each assignee in a proactive way. According to NH the benefits of joining this program are: a good way to grow as professional, the possibility to experience different ways of working, an occasion to know other countries and cultures, a way to live different experiences, a good chance to leave your comfort zone and above all an opportunity to open your mind. According to an HR employee it is a great experience, learning and dealing with stuff usually you don’t go through in a regular hotel in your own business unit. One employee that joined the program stated:
“Different assignments in different countries in which NH Hotel Group is present, allowed me to gain new perspective on business practices, cultures, languages and other elements of day-to-day living abroad. It enriched my professional and personal experience and abilities and gives you a definite competitive advantage over those who do not possess this experience” (Employee portal, 2018).
increasing globalization in business. The HR Business Partner, when talking about the influence of globalization and IT on standardization, mentioned: “IT en globalisering hebben hier heel erg invloed op, kijk ik kan nu thuis werken ik heb VPN maar het is allemaal wel wat langzaam, Tijdens Skype meetings worden we de helft van de tijd eruit gegooid. Facebook en Google zijn daar veel verder in, die investeren zoveel meer in IT en systemen waardoor het veel makkelijker mogelijk is om samen te werken vanaf verschillende locaties.”
English translation: "IT and globalization have a lot of influence on this, I can work at home
now. I have VPN but it's all a bit slow. During Skype meetings we are thrown out half the time. Facebook and Google are much further in that, investing so much more in IT and systems and therefore making it much easier to work together from different locations" (HR Business Partner).
This means that NH hotels is not there yet, however companies are increasingly globalizing, and standardizing HR practices is one way of making this easier. It can therefore be seen as a two way influence, globalization and IT have an influence on standardizing HR practices but due to standardized practices IT systems can increasingly be used anywhere in the world.
5.4 External: Cultural influences
The corporate culture of NH Hotel Group is based on the pillars of equality and diversity. Thus, in 2017 NH employed 22,789 people of 124 different nationalities and 11.4 percent of them work in different countries from their country of origin (Annual Report, 2017). HR practices are divided among five business units. HR practices are standardized for the whole organization yet every business unit can implement HR practices in a slightly different way because of cultural differences as well as legislation. As one front office manager stated:
“Op HR gebied helemaal in China kan ik mij voorstellen dat cultuur invloed heeft en dat je niet zomaar alles kunt knippen en plakken en dan in China kunt invoeren. De bedrijfscultuur is helemaal anders en de mensen natuurlijk ook.”
English translation: “In the HR area especially in China, I can imagine that culture has an
influence and you cannot just copy paste it into China. The company culture is completely different as well as the people of course.”
A few years back NH Hotel Group was considering an expansion to China, negotiations were on the table and an HR meeting was already set up. Unfortunately, the expansion fell through, but you can imagine when NH would be operating in China, HR practices should be adapted to such a culturally and politically different country in comparison to the countries NH is currently operating in.
5.5 External: Political and institutional influences
NH Hotel Group is a MNC that has its HQ in Spain, with several business units over the globe with different institutional profiles and is therefore challenged with successfully standardizing HR practices. According to the HR Business Partner all HR practices are standardized until the point where local laws and other institutional influences appear. Even though HQ wants to standardize everything, there are certain areas of HR that just can’t be standardized. Looking at one example of the coordinator of the HQ in Madrid, considering a hiring practice: “No se que esa jefa en su día se hizo con que, pero vamos su hermano y novio trabajaban de siete a tres. Todo el mundo trabajaba 24 horas con turno de noche.”English translation: “I don’t know what this boss did in her days and with whom, but her
brother and boyfriend worked from 7AM to 3PM. The rest worked 24 hours including the night shift.”
English translation: “There were illegal working conditions until they created a syndicate four
years later. Employees couldn’t even go to the bathroom or take a visual break, which is obligatory by law.” This is another indication that political and institutional influences of a country have an effect on the standardization of HR practices. This is a difficult issue and makes standardization of all HR practices challenging. On the contrary, standardization of HR practices will most likely help prevent such hiring practices, while rules and regulations come from HQ and therefore difficult to circumvent. Likewise, even though Europe has several legislations that apply to every country such as the new privacy regulation namely: General Data Protection Regulation (GDPR). There are still differences in payment levels, vacation days, maternity and paternity leave, which makes complete standardization of HR practices impossible. One interesting example mentioned by an HR Business partner was that during the crisis in 2008 some Dutch employees went to Spain on holiday and when staying at one of the NH hotels Dutch employees started to notice that about half of the employees were not doing anything. How do you explain your Dutch employees that you have to fire half of the employees, when the company was hanging on a silk threat, but at the same time half of the employees in Spain were doing nothing. This had to do with Spanish law, back then Spain had to have a certain amount of employees when an x amount of guests were staying at the hotel. Nowadays, Spanish laws have changed, nonetheless it does show that you cannot apply the same HR practices at all times while the law might prohibit this.
5.6 External influences: The industry
5.7 Standardization
Since 2002 NH Hotel Group started centralizing all their HR departments and ever since policies and procedures are adapted to laws and current needs by looking at society. This is also one of the reasons NH hotels is at the point where it is currently at, not only by looking at HR but looking at the company as a whole. According to all interviewees NH Hotel Group has a high degree of standardization, even though some mentioned that they would like to be a bit more flexible and have a more differentiated approach to HRM. These individuals did say that they understand that for a Hotel chain like NH, it is almost impossible and even a very bad idea. Moreover, it can be noted that a lot of employees that got hired after 2002 have never known any different and might not be as resistant to the standardization of HR practices as employees that got hired before 2002. Having said that, employees interviewed that are working at NH before 2002 did not seem to be more resistant in comparison to employees hired after 2002. Looking at one of the pitfalls commented by a front office manager: “Toen ik in Amsterdam werkte motiveerden we het team met het aanmaken van NH rewards, we hielden dit bij en degene met de hoogste scores kregen dan iets. Dit was een hele goede stimulans. Maar goed die optie heb je hier niet (NH Groningen), dus het motiveren van mensen is vaak lastig want je krijgt iets opgedragen vanuit het hoofdkantoor en het enige wat je kunt doen is goed communiceren.”
English translation: “When I was working in Amsterdam, we motivated the team with the
creation of NH rewards, those with the highest scores got a reward. This was a very good incentive. But you don’t have that option here (NH Groningen), so motivating people is often difficult because you implement something imposed by headquarters (NL) and the only thing you can do is communicate well.”
work today, as a solidified team, would never have been possible without the centralization of HR departments. One human resource specialist in Germany mentioned:
“Everything is in a uniformed way, guests come to any hotel and they like to have the same treatment from employees, for the employees it does not matter in which hotel they are working. If they want to change hotel it is possible without needing a lot more training.”
This example shows that NH has very standardized HR practices, while NH would like their employees to be able to work in any hotel worldwide without having to adjust to different local practices. Several hotels that are located within a reasonable distance have employees working in two different hotels, which makes them more flexible. This could be useful for example when employees normally working in Groningen in the two different hotels have to work in Amsterdam at times of staff shortages.
6 Discussion and Conclusion
Today, one of the challenges faced by MNCs in a world of increasing globalization and growing international business is the opposing forces of standardization and customization of HR practices and policies across countries. Developing and implementing HR policies and practices across different national, institutional and cultural contexts and simultaneously integrating and supporting its global activities can be burdensome. However, HR is increasingly regarded as fundamental for the firm’s overall strategy and maybe even the glue that hold global organizations together. In addition, by having standardized HR practices and policies companies might gain a competitive advantage over their competitors.
The goal of the HR branch within NH is to optimize and standardize the processes of human resources, in line with the corporate strategy and observing local requirements. Meaning, to define, coordinate and provide support in the implementation of all the human resource technology projects around the world, with a global approach and analyzing the specific characteristics and requirements of each business unit (Employee portal, 2018). Therefore, most HR practices are standardized within certain business units, so no hotel has its own HR department except for a few hotels outside of Europe. However, complete standardized HR practices and policies are almost impossible due to cultural, political and institutional influences. Nevertheless, the increase of global IT systems, internationally oriented workforce, globalization and the industry increase the likelihood of standardized HR practices and policies.
In general, standardization of HR practices is the best option for NH Hotels as it outweighs the disadvantages. It is efficient, saves costs, and it can be applied to all business units. Therefore one can say that the boundary of MNCs in the service industry standardizing its human resource practices considering the different internal and external environment, lies on the periphery of choosing HR practices that can be implemented without interference of political, cultural and institutional influences. Accordingly, internationally oriented MNCs in the service industry with internationally oriented workforces are able to gain a competitive advantage by standardizing all their HR practices and policies except for some institutional forces and local legislation. As cultural differences are something to take into account it should not hamper successful implementation of standardized HR practices when having internationally oriented workforces.
7 Limitations and future research
One of the limitations of this study is that the case was drawn from a few of all countries that NH operates in, mostly being in Western and Southern Europe. Outcomes may differ in subsidiaries located in other regions such as South-America. Therefore using all countries where NH subsidiaries are located could create a better picture of the phenomenon. Additionally, there were some practical issues regarding the interview process, while it was not possible to fly to every country in all business units not all interviews were held face-to-face and instead a few interviews were held through Skype and Facetime. On the one hand, it was sometimes difficult to get in contact and arrange an interview with the right person, while everything is centralized at HQ and it sometimes happened that people tell you to contact someone else. On the other hand, differences in languages of the interviews held could cause translation errors or cause differences in interpretations.
Several other factors and influences could have been taken into account to see whether it has an influence on the standardization of HR practices, however due to time limitations this was not possible. Moreover, it would have been interesting to see what would happen if NH Hotel Group did expand its chain to China, while a comparison of the HR practices in China to the rest of the world NH operates in could have given more insight. As China is a culturally and politically distant country when looking at the other countries NH operates in. And lastly, the analysis is based on a single case study, making assumptions regarding a broader population of all MNCs in the service industry and their subsidiaries difficult, thus further research is required.
Future research should include all subsidiaries in all the countries that are part of the MNC. Furthermore, research should be done in other service industries, such as finance, entertainment, advertising and healthcare, to be able to validate and generalize the findings. Especially, the airline industry, which generally have internationally oriented workforce as well, should be researched in order to compare the findings with this current study. Additionally, future research should look at global HR practices that can be implemented instead of HR practices that are set by HQ that are not globally focused. And which elements are global to HR, such as corporate social responsibility (CSR) and the development of staff and which areas are not. Likewise, research should be conducted in other MNCs in the hotel industry in order to compare results, especially, hotels in areas such as Asia, with very different political and cultural influences.
References
Bondarouk, T. V., & Ruël, H. J. M. (2009). Electronic Human Resource Management: challenges in the digital era. The International Journal of Human Resource Management, 20(3), 505-514. Bouquet, C., Hébert, L., & Delios, A. (2004). Foreign expansion in service industries: Separability and human capital intensity. Journal of Business Research, 57(1), 35-46. Brewster, C., Sparrow, P. and Harris, H. (2005). Towards a New Model of Globalizing Human Resource Management, International Journal of Human Resource Management, 16(6), 949-970. Budhwar, P. (2012). Management of Human Resources in Foreign Firms Operating in India: The Role of HR in Country-Specific Headquarters, The International Journal of Human ResourceManagement, 23(12), 2514–2531.
Burbach, R., & Royle, T. (2014). Institutional determinants of e-HRM diffusion success. Employee
Relations, 36(4), 354-375.
Chiang, F. F., Lemański, M. K., & Birtch, T. A. (2017). The transfer and diffusion of HRM practices within MNCs: lessons learned and future research directions. The International Journal of
Human Resource Management, 28(1), 234-258.
Clark, K., & Lengnick-Hall, M. L. (2012). MNC practice transfer: Institutional theory, strategic opportunities and subsidiary HR configuration. The international journal of human resource
management, 23(18), 3813-3837.
Cogin, J. A., & Williamson, I. O. (2014). Standardize or customize: The interactive effects of HRM and environment uncertainty on MNC subsidiary performance. Human resource management,
53(5), 701-721.
Colling, T., & Clark, I. (2002). Looking for ‘Americanness’: Home-country, sector and firm effects on employment systems in an engineering services company. European Journal of Industrial
Relations, 8(3), 301-324.
Dickmann, M., Müller-Camen, M., & Kelliher, C. (2008). Exploring standardisation and knowledge networking processes in transnational human resource management. Personnel
Review, 38(1), 5-25.
Dunning, J. (1998). Multinational enterprises and the growth of services: Some conceptual and theoretical issues. Service Industries in the Global Economy, 2.
Egan, M. L., & Bendick, M. (2003). Workforce diversity initiatives of US multinational corporations in Europe. Thunderbird International Business Review, 45(6), 701-727.
Employee portal. (2018). Retrieved June 14, 2018, from https://employeeportal.nh hotels.com/sites/default/files/users/ME.DIAZ/05-hrwdwd_v1-abril_2018.pdf
Farndale, E., & Paauwe, J. (2007). Uncovering competitive and institutional drivers of HRM practices in multinational corporations. Human Resource Management Journal, 17(4), 355-375. Geary, J., Aguzzoli, R., & Lengler, J. (2017). The transfer of ‘International best practice’ in a Brazilian MNC: A consideration of the convergence and contingency perspectives. Journal of
International Management, 23(2), 194-207.
Geary, J., & Aguzzoli, R. (2016). Miners, politics and institutional caryatids: Accounting for the transfer of HRM practices in the Brazilian multinational enterprise. Journal of International
Business Studies, 47(8), 968-996.
Gupta, S., & Bhaskar, A. (2016). Doing business in India: Cross-cultural issues in managing human resources. Cross Cultural & Strategic Management, 23(1), 184-204.
Gupta, A. K., & Govindarajan, V. (2001). Converting global presence into global competitive advantage. The Academy of Management Executive, 15(2), 45-56.
Hitt, M. A. (2016). International strategy and institutional environments. Cross Cultural & Strategic
Management, 23(2), 206-215. Hofstede, G., Hofstede G. J. & Minkov, M. (2010). Cultures and Organizations: Software of the Mind, 3rd ed. New York: McGrawLHill. Hultman, M., Robson, M. J., & Katsikeas, C. S. (2009). Export product strategy fit and performance: An empirical investigation. Journal of International Marketing, 17(4), 1-23. Ionel M. (2016). Hospitality industry. Ovidius University Annals: Economic Sciences Series, 16(1), 187 191. Jun, X., Jiang, M. S., Li, S., & Aulakh, P. S. (2014). Practice standardization in cross-border activities of multinational corporations: A resource dependence perspective. Management International Review, 54(5), 707-734. Khilji, S. E. (2003). To Adapt or Not to Adapt' Exploring the Role of National Culture in HRM-A Study of Pakistan. International Journal of Cross Cultural Management, 3(1), 109-132. Knight, G. A., Riesenberger, J. R., & Cavusgil, S. T. (2012). International business: the new realities. 2nd ed. New Jersey: Pearson.
Lauring, J. (2013). International diversity management: Global ideals and local responses. British
Journal of Management, 24(2), 211-224.
Lee, I., Hong, E., & Makino, S. (2016). Location decisions of inward FDI in sub-national regions of a host country: Service versus manufacturing industries. Asia Pacific Journal of
Maurais, J. & Morris, M. A. (2003). Languages in a globalising world. Cambridge, UK: Cambridge University Press.
Myloni, B., Harzing, A. W., & Mirza, H. (2004). Human resource management in Greece: have the colours of culture faded away?. International Journal of Cross Cultural Management, 4(1), 59 76. NH Hotel Group. (2018). Retrieved April 4, 2018, from https://www.nh-hotels.com/corporate/about nh/history NH Hotel Group. (2018). Retrieved April 19, 2018, from https://www.nh-hotels.com/hotels OECD. (2017). Retrieved April 22, 2018, from http://stats.oecd.org/Index.aspx?ThemeTreeId=10&DatasetCode=tourism_entr_empl# Özbilgin, M. and A. Tatli (2008). Global Diversity Management: An Evidence-Based Approach. London: Palgrave. Parry, E., & Tyson, S. (2011). Desired goals and actual outcomes of E-HRM. Human Resource Management Journal, 21(3), 335-354. Price, A. (2004). Human Resource Management in a Business Context, 2nd edn. London: Thomson Learning. Pudelko, M., & Harzing, A. (2007). Country-of-origin, localization, or dominance effect? An empirical investigation of HRM practices in foreign subsidiaries. Human Resource Management, 46(4), 535-559.
Quek, M. (2012). Globalising the hotel industry 1946-68: A multinational case study of the intercontinental hotel corporation. Business History, 54(2), 201-226.
Raineri, A. (2017). Linking human resources practices with performance: the simultaneous mediation of collective affective commitment and human capital. The International Journal of Human
Resource Management, 28(22), 3149-3178.
Rowley, C., & Warner, M. (2007). Introduction: globalizing international human resource management. International Journal Of Human Resource Management, 18(5), 703-716. Sablok, G., Stanton, P., Bartram, T., Burgess, J., & Boyle, B. (2017). Human resource development practices, managers and multinational enterprises in Australia. Education Training, 59(5), 483-501.
Sandoff, M. (2005). Customization and standardization in hotels – a paradox or not? International
Journal of Contemporary Hospitality Management, 17(6), 529-535.
Shoham, A., Makovec, B. M., Virant, V., & Ruvio, A. (2008). International standardization of channel management and its behavioral and performance outcomes. Journal of International
Marketing, 16(2), 120-151.
Strohmeier, D. (2014). HRM in the digital age – digital changes and challenges of the HR profession. Employee Relations, 36(4).
Strohmeier, S. (2007). Research in e-HRM: Review and implications. Human resource management
review, 17(1), 19-37.
Sucher, W., & Cheung, C. (2015). The relationship between hotel employees’ cross-cultural competency and team performance in multi-national hotel companies. International Journal
of Hospitality Management, 49, 93-104.
Teagarden, M. B., & Von Glinow, M. A. (1997). Human resource management in cross-cultural contexts: Emic practices versus etic philosophies. MIR: Management International Review, 7 20.
Tempel, A., & Walgenbach, P. (2007). Global standardization of organizational forms and management practices: what new institutionalism and the business-systems approach can learn from each other. Journal of Management Studies, 44(1), 1–24.
Tieying, Y., Subramaniam, M., & Cannella Jr, A. A. (2009). Rivalry deterrence in international markets: Contingencies governing the mutual forbearance hypothesis. Academy of Management
HR practices 1. Have you worked in other MNCs in the service industry? if so, were HR practices standardized and to what extent? 2. How do you empower and motivate employees? Are there any incentives you use that are not imposed by HQ? 3. Does HQ decide how many employees you can hire? Does that bother you sometimes? 4. Is it possible to hire people through people you know without involving HQ? 5. Does HQ decide how many people can work in one shift/day? 6. How flexible are you in implementing your own HR practices? 7. Do you think it is more and more difficult to customize HRM practices due to increased use of global IT systems and globalization? 8. How many hours does a receptionist work a day and what is the maximum amount of days in a row? (Does not apply to CRO.) 9. How many days of holiday, paternity and maternity leave do employees get on a yearly basis? 10. Would you like to have more freedom in deciding what HR practices to implement? 11. In general, to what extent are your HR policies and practices been standardized or differentiated? High degree of standardization, standardized and differentiated or high degree of differentiation?
Appendix III: List of interviewees
Only first names are provided due to privacy reasons.Name Position Country Period Time
Annemarie HR Business Partner Netherlands & UK April 2018 0:54
Barry Front office manager Netherlands April 2018 0:26
Egbert Operations/hotel manager Netherlands April 2018 0:25
Fanni Human resource specialist Germany June 2018 0:28
Femke Assistant front office manager Netherlands April 2018 0:21
Marcel Assistant hotel manager Netherlands April 2018 0:43
Rossella CRO coordinator Madrid HQ Spain April 2018 0:36
