The role of strategic groups in understanding strategic human resource management Judie M. Gannon Oxford School of Hospitality Management, Faculty of Business, Oxford Brookes University, Oxford, UK Liz Doherty Business School, Sheffield Hallam University, Sheffield, UK, and Angela Roper School of Hospitality & Tourism Management, University of Surrey, Guildford, UK Abstract Purpose – This article aims to explore how understanding the challenges faced by companies’ attempts to create competitive advantage through their human resources and HRM practices can be enhanced by insights into the concept of strategic groups within industries. Based within the international hotel industry, this study identifies how strategic groups emerge in the analysis of HRM practices and approaches. It sheds light on the value of strategic groups as a way of readdressing the focus on firm and industry level analyses. Design/methodology/approach – Senior human resource executives and their teams across eight international hotel companies (IHCs) were interviewed in corporate and regional headquarters, with observations and the collection of company documentation complementing the interviews. Findings – The findings demonstrate that strategic groups emerge from analysis of the HRM practices and strategies used to develop hotel general managers (HGMs) as strategic human resources in the international hotel industry. The value of understanding industry structures and dynamics and intermediary levels of analysis are apparent where specific industries place occupational constraints on their managerial resources and limit the range of strategies and expansion modes companies can adopt. Research limitations/implications – This study indicates that further research on strategic groups will enhance the theoretical understanding of strategic human resource management and specifically the forces that act to constrain the achievement of competitive advantage through human resources. A limitation of this study is the dependence on the human resource divisions’ perspectives on realising international expansion ambitions in the hotel industry. Practical implications – This study has implications for companies’ engagement with their executives’ perceptions of opportunities and threats, and suggests companies will struggle to achieve competitive advantage where such perceptions are consistent with their competitors. Originality/value – Developments in strategic human resource management have relied on the conceptual and theoretical developments in strategic management, however, an understanding of the impact of strategic groups and their shaping of SHRM has not been previously explored. Keywords Strategic groups, Strategic human resources, Strategic human resource management, International human resource management, Hotel and catering industry, International business Paper type Research paper The current issue and full text archive of this journal is available at www.emeraldinsight.com/0048-3486.htm The authors would like to express their thanks to the organisations who participated in the research and the reviewers and Editors who provided insightful and excellent feedback on early drafts. The role of strategic groups 513 Personnel Review Vol. 41 No. 4, 2012 pp. 513-546 q Emerald Group Publishing Limited 0048-3486 DOI 10.1108/00483481211229401
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The role of strategic groups inunderstanding strategic human
resource managementJudie M. Gannon
Oxford School of Hospitality Management, Faculty of Business,Oxford Brookes University, Oxford, UK
Liz DohertyBusiness School, Sheffield Hallam University, Sheffield, UK, and
Angela RoperSchool of Hospitality & TourismManagement, University of Surrey, Guildford, UK
Abstract
Purpose – This article aims to explore how understanding the challenges faced by companies’attempts to create competitive advantage through their human resources and HRM practices can beenhanced by insights into the concept of strategic groups within industries. Based within theinternational hotel industry, this study identifies how strategic groups emerge in the analysis of HRMpractices and approaches. It sheds light on the value of strategic groups as a way of readdressing thefocus on firm and industry level analyses.
Design/methodology/approach – Senior human resource executives and their teams across eightinternational hotel companies (IHCs) were interviewed in corporate and regional headquarters, withobservations and the collection of company documentation complementing the interviews.
Findings – The findings demonstrate that strategic groups emerge from analysis of the HRM practicesand strategies used to develop hotel general managers (HGMs) as strategic human resources in theinternational hotel industry. The value of understanding industry structures and dynamics andintermediary levels of analysis are apparent where specific industries place occupational constraints ontheir managerial resources and limit the range of strategies and expansion modes companies can adopt.
Research limitations/implications – This study indicates that further research on strategicgroups will enhance the theoretical understanding of strategic human resource management andspecifically the forces that act to constrain the achievement of competitive advantage through humanresources. A limitation of this study is the dependence on the human resource divisions’ perspectiveson realising international expansion ambitions in the hotel industry.
Practical implications – This study has implications for companies’ engagement with theirexecutives’ perceptions of opportunities and threats, and suggests companies will struggle to achievecompetitive advantage where such perceptions are consistent with their competitors.
Originality/value – Developments in strategic human resource management have relied on theconceptual and theoretical developments in strategic management, however, an understanding of theimpact of strategic groups and their shaping of SHRM has not been previously explored.
Keywords Strategic groups, Strategic human resources, Strategic human resource management,International human resource management, Hotel and catering industry, International business
Paper type Research paper
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0048-3486.htm
The authors would like to express their thanks to the organisations who participated in theresearch and the reviewers and Editors who provided insightful and excellent feedback on earlydrafts.
The role ofstrategic groups
513
Personnel ReviewVol. 41 No. 4, 2012
pp. 513-546q Emerald Group Publishing Limited
0048-3486DOI 10.1108/00483481211229401
IntroductionMost developments in strategic human resource management (SHRM) andinternational human resource management (IHRM) have drawn heavily on thestrategic management literature (Becker and Huselid, 2006; Schuler and Jackson, 2007).Some of the earliest models associated with SHRM (such as Fombrun et al., 1984; Beeret al., 1984; Hendry and Pettigrew, 1986 and Guest’s (1989) model) provide insights intohow leading HRM thinkers have approached the strategic dimensions of HRM. Suchinsights have focused on the links or fit between strategy and HRM, environmentalanalyses as the basis for strategic management informing (and in some cases informedby) HRM, and borrowing concepts and theories with their origins in the strategicmanagement literature, such as organisational and product life cycles, and competitivestrategies (Schuler and Jackson, 1987; Sanz-Valle et al., 1999; Miles and Snow, 1984).Despite the advances made in both areas there has been minimal consideration of theways that strategic groups, not only industries and firms, influence HRM strategiesand practices in the pursuit of competitive advantage (Boxall, 2003). Strategic groupresearch identifies how groups of firms engage in similar strategies in order to competeeffectively within industries and shape industry structure and competition. Panagiotou(2006 p. 440) defines strategic groups as:
[. . .] those groups of firms within an industry, which are characterised by similarities in theirstructure and competitive beliefs as well as their tendency to follow similar strategies alongkey strategic dimensions in a specific operating environment.
The performance differences between strategic groups are the focus for much of thisresearch, but mobility between groups and the structural dimensions of industrieshave also received attention (Ferguson et al., 2000; Leask and Parker, 2006; Porter,1980; Reger and Huff, 1993). As such strategic group research has developed as acentral research theme in strategic management. One of the most notable aspects ofstrategic groups research is that it highlights and reinforces the importance ofparticular industry contexts. This is an important consideration for the development ofSHRM research as there is now growing recognition of the value of industry and sectorspecific SHRM research where the nuances and structural dimensions of industries areemphasized (Boselie et al., 2009; Paauwe, 2008; Paauwe and Boselie, 2008; Tyson andParry, 2008).
The aim of this study is to explore how the strategic group concept can informSHRM approaches. Specifically it sets out to identify how strategic groups can help usunderstand why companies struggle to achieve sustainable competitive advantage.This aim is achieved by initially investigating the strategic group literature andevaluating where it adds insight and value to the SHRM approaches literature.Thereafter the findings from an in-depth empirical study of the HRM practices andstrategies deployed across a global industry are used to highlight the role of strategicgroups in constraining companies’ capacities to differentiate their SHRM approachesand practices. Accordingly this article also satisfies the demand for more sector ledSHRM research (Paauwe, 2008; Paauwe and Boselie, 2008; Tyson and Parry, 2008).
This article unfolds as follows. Initially an evaluation of the strategic groupliterature is provided followed by an analysis of the contemporary debates in SHRM(Boxall and Purcell, 2000, 2003, 2008; Boselie et al., 2002, 2003). The limitations of theSHRM literature are reflected on in light of the strategic group literature and the
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potential contribution this field towards a more nuanced understanding of SIHRMapproaches and practices. The research design for the study is subsequently outlinedalongside an overview of the context of the research, the global hotel sector. Thequalitative data analysis is then considered with the HRM practices and approacheswhich are found to be common across the whole industry, similar across particularstrategic groups and distinctive to specific companies explored sequentially. Theimplications of these various layers of HRM practices and strategies, and specificallythe strategic group dimension, are then discussed in relation to the extant research. Ofspecific note is the way such findings reinforce the challenges companies face whenpursuing competitive advantage through human resources and how the national,industry and strategic group pressures for assimilation limit opportunities to developidiosyncratic and integrated HRM interventions and strategic human resources.
Literature review: building bridges between strategic groups and SHRMapproachesStrategic groupsThe strategic group concept emerged within strategic management as an attempt tobetter understand the competitive backdrop and demands faced by companiesoperating in an industry (McGee et al., 1995; Porter, 1980; Short et al., 2007). Strategicmanagement analysis has typically taken place at the level of the firm and theindustry, and has omitted the interface of firm and industry competitor behaviour.Originating from the broader field of industrial organization economics in the 1970s,strategic groups were identified as clusters of companies within industries (Porter,1980). Such divisions arise because industries are not collections of heterogeneouscompanies but subsets of firms separated by mobility barriers limiting movementbetween groups (Ferguson et al., 2000; McGee et al., 1995). Strategic group research hasfacilitated a better understanding of how group structure can shape rivalry andultimately performance, as well as group identities and reputations. It has alsoillustrated how strategic group reputations serve to reinforce mobility barriers to otherindustry competitors (Dranove et al., 1998; Ferguson et al., 2000; Leask and Parker,2006; Peteraf and Shanley, 1997). The analysis of the business environment as anobjective reality, achieved classically through cluster or factor analysis of companydata (Reger and Huff, 1993), drives most investigations in this area. However,Panagiotou (2006, p. 441) summarises the problems of this prescriptive approach asleading to:
[. . .] a preoccupation by managers that strategic management is all about prescribingstrategies for positioning a business in a particular industry structure, having first carried outa thorough economic analysis based on the implicit notion that industry structures arerelatively stable and easily identifiable.
More recently a cognitive approach to strategic group research has emerged based onthe argument that managers’ simplification of their complex competitive environmentsand perceptions of similarities and differences among their rivals will shape strategicdecision-making (Panagiotou, 2006, 2007; Reger and Huff, 1993). Such managerialinsights into competitive groupings offer clearer conceptions of the waydecision-makers perceive their own organisations and their rivals and therefore howthese determine and implement strategies. These arguments suggest that strategists’
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understand (and approach) their competitive environments in similar ways, and arerelated to the ideas of institutional assimilation and isomorphism (DiMaggio andPowell, 1983; Powell and DiMaggio, 1991). Therefore, the capacity of firms to pursuedistinctive practices for competitive advantage may be limited by constraints, such asorganisational inertia and forms of isomorphism (Reger and Huff, 1993; Boon et al.,2009). Strategic groups are then another important aspect of the structural dimensionswhich foster this organisational sluggishness. These are critical insights where thepursuit of competitive advantage through human resources, HRM practices andstrategies has gained substantial support in recent years (Becker and Huselid, 2006;Boxall, 2003). However, this quest for distinctive or idiosyncratic HRM practices andstrategies to attain competitive advantage needs to be resolved against the pressures toconform and achieve social legitimacy within sectors. The next section evaluates thecontemporary SHRM approaches and highlights where the strategic group literaturecontributes to their enhanced understanding.
The strategic HRM approachesThree main SHRM approaches have emerged as the keystone for understanding andachieving sustained corporate success through human resources (Purcell, 1999, 2001;Boxall and Purcell, 2003, 2008). While the opportunities for simultaneously enactingthese approaches are now well-rehearsed it is useful to revisit them briefly as part ofdeveloping the theoretical connection with the strategic group literature. The bestpractice SHRM approach encourages companies to adopt sophisticated or “highperformance” practices across their human resources in order to achieve competitiveadvantage (Pfeffer, 1998; Huselid, 1995). Considerable criticism of the best practiceSHRM approach occurs in relation to what actually represents “sophisticated” HRMpractices and the empirical basis on which these practices are suggested (Marchingtonand Grugulis, 2000; Boxall and Purcell, 2003, 2008). Furthermore, the conventional bestpractice SHRM approach suggests that these superior HRM practices should beadopted regardless of different industrial and national boundaries (Marchington andGrugulis, 2000; Boxall and Purcell, 2003, 2008). Recent evaluations of the “bestpractice” SHRM approach have emerged recognising that within industries there maybe certain HRM practices and approaches which are obligatory (Boxall and Purcell,2003, 2008). The “table stake” concept suggests there are established (HRM) practicesadopted by all businesses in an industry which serve to legitimise their position in thatindustry. This concept has thus been recognised as an adaptation of the “best practice”SHRM approach (Boon et al., 2009; Bjorkman, 2006; Boxall and Purcell, 2003; Paauweand Boselie, 2003). The “table stake” version of best practice SHRM approach is basedon the institutional assimilation literature where organisations struggle to distinguishthemselves from their industry associates while simultaneously achieving legitimacy(institutional fit) in their sector (DiMaggio and Powell, 1983; Powell and DiMaggio,1991; Oliver, 1997). Isomorphism is the process which constrains organisations’attempts to differentiate themselves within the same institutional context (DiMaggioand Powell, 1983). Isomorphism emerges in two broad variations; competitiveisomorphism where market pressures and performance targets are emphasised andinstitutional isomorphism where institutional factors associated with socio-cultural,technological and economic parameters are highlighted.
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The adoption of best practice SHRM approach across an international setting hasalso been roundly critiqued (Brewster, 1999, 2006; Sparrow et al., 2004) due to theingrained national institutional and cultural conventions, which are seen to regulatethe value of various high performance HRM practices in other countries (Brewster,1991, 2006; Sorge, 2004). However, this does not mean that across a country allindustries have the same HRM practices. Much of the IHRM literature could be seen asdisproportionately focused on the parent and host country cultures and systems inlight of the evidence on SHRM approaches and practices in hospitals, local governmentand hotels (Boselie et al., 2002, 2003). Such studies indicate that institutional andcompetitive isomorphisms differ across industry contexts creating distinct table stakeHRM practices in different industries within the same country (Boon et al., 2009;DiMaggio and Powell, 1983). Furthermore, such evidence recognizes that nationalinstitutional dimensions may have less of an impact than competitive institutionaldimensions on some industries and their resulting people management practices. Thislevel of industry interplay on the best practice approach is valuable but in light of thestrategic group insights it is clear that companies do not compete directly with everyother company in their industry. Instead they are likely to have particularly close rivalswhose practices, products, managers, innovations and initiatives will be of specificinterest to them (Panagiotou, 2006; Peteraf and Shanley, 1997). As such there may beanother layer of consistency and similarity in HRM practices due to the close rivalry ofstrategic groups, in addition to those identified by the “table stake” version of the bestpractice SHRM approach across an industry.
The “best-fit” SHRM approach suggests a firm’s market position and strategiesdrive and shape its HRM policies and practices. Within the “best fit” SHRM approach arange of theories have emerged from those that more simplistically link specificstrategy choices to HRM practices and policies (Delery and Doty, 1996; Miles andSnow, 1984; Schuler and Jackson, 1987) to more complex models (Fombrun et al., 1984;Hendry and Pettigrew, 1986) which envision a range of corporate characteristics(strategies, positions, portfolio characteristics) determining people managementpractices. Within the IHRM area, much of the research has also focused on theinfluential nature of national differences as well as strategic models (Perlmutter, 1969;Bartlett and Ghoshal, 1989, 2000; Edwards et al., 1996). For example: the models ofinternational orientation (Perlmutter, 1969; Heenan and Perlmutter, 1979); productlife-cycle phases (Adler and Ghadar, 1990); and international responsiveness versusintegration (Bartlett and Ghoshal, 1989, 2000; Edwards et al., 1996) are all based onstrategic choice arguments derived from the strategic management field. The mainthrust of the strategic dimension to IHRM has revolved around the question of whetherHRM practices are determined by corporate or business strategies and customised orstandardised across national boundaries with many authors providing detailedanalyses of the contingency of specific factors (Boselie et al., 2002, 2003; Coller andMarginson, 1998; Easterby-Smith et al., 1995; Ferner, 1994, 1997; Ferner andQuintanilla, 1998; Hannon et al., 1995; Newman and Nollen, 1996; Rosenzweig andNohria, 1994; Rosenzweig, 2006; Thompson et al., 1998).
The weaknesses of the “best fit” SHRM approach are its distorted attention on theexternal context as determining strategies and practices based on market positioning,cultural and institutional factors; and its inability to secure competitive advantagewhere several companies within the same sector pursue similar strategies and market
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positions (Boxall and Purcell, 2003, 2008; Kamoche, 2001; Wright and Snell, 1998). Suchcriticisms are similar to those voiced by contemporary strategic managementresearchers on the objective and prescriptive versions of strategic management beingthe primary influence on strategic thinking and decision-making at the expense ofmanagers’ and executives perceptions of positions and rivalries (Reger and Huff, 1993).Indeed Panagiotou’s (2006, 2007) research on executives’ perceptions, as opposed to theeconomic analysis of the competitive terrains, competitor strategies and industrydynamics shaping strategic groups, highlights that executives whose firms belong tothe same strategic groups react to events and market factors in similar ways. Thissuggests, that not only are companies constrained by the suggested strategies andmarket positions they develop, but that there are limitations to the options they cantake to distinguish themselves because of the added level of similarity strategic groupscreate.
Finally, the resource based view (RBV) SHRM approach has been proffered as analternative to the best practice and best-fit approaches due its internal focus based oncreating competitive advantage through the leverage of valuable, rare, inimitable,non-substitutable and rent achieving (human) resources (Morris et al., 2006; Wrightet al., 1994, 2004). The empirical research supporting the RBV SHRM approach (Boxalland Steeneveld, 1999; Leonard-Barton, 1995; Marchington et al., 2003) clearlyhighlights that human resources can fulfil the criteria of resources which delivercompetitive advantage. The most valuable human resources are those identified as the“strategic human resources” or “rainmakers” who fulfil the RBV criteria of addingexponential supplementary value to companies. By developing HRM practices, whichare idiosyncratic and interdependent, the RBV approach argues that companies cancapitalise on their proprietary knowledge and transfer it creatively and effectivelyacross its workforce. Several authors (Bonache and Fernandez, 1999; Harvey et al.,1999, 2000; Taylor et al., 1996) have adopted this approach and identified thatcapitalising on internal resources to achieve competitive advantage is quite differentfrom the best-fit SHRM approach because it surmounts the external views of thebest-fit approach. This view is neatly outlined in the frustrations of Cappelli and Singh(1992 in Wright et al., 2004 p. 11):
[. . .] many within strategy have implicitly assumed that it is easier to rearrangecomplementary assets/resources given a choice of strategy than it is to rearrange strategygiven a set of assets/resources, even though the empirical research seems to imply theopposite.
The RBV SHRM approach offers specific insights into the value of internal resources insecuring successful international operations (Bonache and Fernandez, 1999; Harveyet al., 2000). Specifically particular groups of human resources are seen to have anhonoured position within companies where they transfer tacit knowledge to newmarkets and provide sustainable competitive advantage (Prahalad and Hamel, 1990;Scullion and Starkey, 2000). Taylor et al.’s (1996) study used the RBV approach toidentify the critical role of HRM competence within international firms, the part seniormanagement play in identifying the company’s potential to develop HRM competenceand the different groups of human resources who constitute firm strategic humanresources. However, the weaknesses of this SHRM approach are its omission to clearlydepict the interplay between internal resources and environmental factors, and therecurring evidence that firms struggle with the challenges of their competitive sector to
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achieve distinctiveness and success through their human resources and HRM practices(Boxall and Purcell, 2003, 2008). Once again the strategic groups literature providesspecific insights here in querying whether the pursuit of competitive advantagethrough the leveraging of the firm’s distinctive resources is restrained by the influenceof their closest strategic group (Panagiotou, 2006, 2007).
Clearly each of the SHRM approaches (table stake best practice, best-fit and RBV)have some resonance and these perspectives are summarised in Table I in terms oftheir initial focus and the levels of context where their attention is directed. There is anoverall tendency across the SHRM literature for tensions, contradictions and imbalance(Boselie et al., 2009) as evidenced in the overly prescriptive best practice approach, thehighly contingent best fit approach (focusing on specific market or national contextfactors) and the RBV’s spotlight on the internal resources of the organisation.Individual adoption of these approaches is unlikely to provide a meaningful depictionof how companies might pursue competitive advantage via their human resources orHRM practices. Instead it is argued that companies can use a combined andsimultaneous version of the three SHRM approaches in an attempt to balance theexternal and internal perspectives adopted by the best-fit and RBV approaches, whilealso recognising the important influence industry isomorphism (table stakes) has onthe creation of a set of HRM practices (Boxall and Purcell, 2003, 2008).
Even where such a combined and simultaneous model of SHRM has been advocated(Boxall and Purcell, 2003, 2008) there appears insufficient understanding of, andinsight into, the industry or sectoral level of analysis (Boselie et al., 2009; Boxall, 2003;Paauwe, 2008; Paauwe and Boselie, 2008). By exploring SHRM practices andapproaches across an industry, rather than across specific national or companycontexts, a better understanding of the internal and external challenges faced bycompeting organisations to achieving distinctive HRM strategies and practicesbecomes manifest. Alongside this evaluation of the SHRM approaches, the strategicgroups literature highlights that these clusters of close rivals may compound the
SIHRM approaches Primary focus Level
Resource based view (RBV)Competitive advantage achieved through developing resourceswhich are Valuable, Rare, Inimitable, Non-substitutable andRent achieving
Internal Company/firm
Best fitBased on crafting HRM practices tied to strategic managementmodels – typically through strategic analyses tools of marketposition
External Competitivemarket
Based on aligning HRM practices to different international anddomestic cultural and institutional contexts and companydemand for standardisation
National contextsand competitivemarket
Best practiceOriginally identified as sophisticated practices capable ofachieving competitive advantage
External Industry
Now associated with HRM practices which are “table stakes”essential for operating with social legitimacy within an industry
Table I.The initial focus ofSIHRM approaches
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challenges firms already face in realising differentiation through their humanresources and HRM practices. Indeed where industry analyses highlight theimportance of conformance of industry members, to particular HRM practices andsystems, strategic groups suggest another layer of orthodoxy among closest rivalswhich limit the pursuit of distinctive competitive advantage by firms.
Research designAnalysis of strategic groups requires an industry focus and this research wasundertaken within the context of the international hotel sector. This sector has beenidentified as international by nature (Litteljohn, 2003; Litteljohn et al., 2007) withcompanies achieving growth through a range of market entry modes, typicallyengaging with different equity partners (Whitla et al., 2007). Managing portfolios ofhotels with diverse ownership arrangements (such as the asset light options ofmanagement contracts, franchises and part equity agreements) has created challengesfor international hotel companies (IHCs) (Beals, 2006; Eyster, 1997; Gannon et al., 2010;Guilding, 2006). Traditionally hotel general managers (HGMs) have been seen asstrategic human resources (Boxall and Steeneveld, 1999; Marchington et al., 2003)responsible for creating profitable hotel units through their leadership and operationalexpertise in the hotel industry (Forte, 1986; Kriegl, 2000; Ladkin and Juwaheer, 2000).However, the asset light market entry modes developed more recently as a result ofIHC portfolio expansion have resulted in managers and executives experiencingdifferent challenges and requiring enhanced skills sets. At the heart of this study wasthe aim to explore how IHCs have developed IHRM strategies and practices to managetheir international managerial resources within the broader context of the sector’scompetitive forces, growing industry concentration and in the presence of strategicgroups (Curry et al., 2001; Litteljohn, 1999; Roper, 1995).
Any attempt to capture people management strategies and practices across anindustry, as well as at the firm level, involves the adoption of a comprehensive sampleof organisations. This study used an industry definition of global operations based oncompanies operating hotels across five out of the six economically viable continents, asa purposive sample technique (Saunders et al., 2000). This research stage comprisedsubstantial secondary data collection on the broader international hotel industry withinformation on service levels, ownership modes, brands, portfolios and geographicalpenetration and the information is captured in Table II. Only nine companies met theseglobal criteria and eight of these nine companies granted access to their senior humanresource executives (typically Vice Presidents of Human Resources) andadministrative teams, and HR systems and materials. The fieldwork interviews tookplace at the European corporate headquarters, regional offices and in hotel units for theeight companies. Interviews with the senior HR executives for each of the eightcompanies form the main part of the data. These interviews lasted around four hourson average. In addition, time was also spent with administrative teams, readingdocumentation and observing meetings. A checklist was developed to complement theinterview questions and data, and to systemise the collection of companydocumentation, observations and interactions with the administrative teams(Robson, 2002). Documentation included HRM policies, performance appraisal forms,training manuals, organisational charts, company communications, job descriptions,succession plans and demonstrations and hard copies of HR databases. The interview
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)
Table II.Profiles of global hotel
companies in sample
The role ofstrategic groups
521
Inte
rnat
ion
alh
otel
com
pan
ies
Nu
mb
erof
hot
els
Bra
nd
sN
um
ber
ofco
un
trie
sS
ug
ges
ted
stra
teg
yan
dm
eth
ods
ofg
row
th
Fra
nch
iseK
ing
2,30
0þ
Fiv
eb
ran
ds:
two
atm
idm
ark
etP
rest
ige
bra
nd
Bu
dg
etb
ran
dH
olid
ayre
sort
s
63H
yb
rid
stra
teg
yb
ased
onp
rese
nce
acro
ssa
ran
ge
ofm
ark
etse
ctor
sb
ut
com
pet
itiv
ely
pri
ced
inea
chse
ctor
.C
omp
any
doc
um
enta
tion
stat
esth
eai
mas
“To
be
the
pre
ferr
edh
otel
syst
em,h
otel
man
agem
ent
com
pan
y,a
nd
lod
gin
gfr
anch
ise
inth
ew
orld
.T
ob
uil
don
the
stre
ng
thof
the
Fra
nch
iseK
ing
nam
eu
tili
sin
gq
ual
ity
and
con
sist
ency
asth
ev
ehic
leto
enh
ance
it’s
per
ceiv
ed‘v
alu
efo
rm
oney
’p
osit
ion
inth
em
idd
lem
ark
et.”
Glo
bal
alli
ance
190
Pre
stig
eb
ran
dM
id-m
ark
etb
ran
d–
Nor
thA
mer
ica
70F
ocu
sed
dif
fere
nti
atio
nst
rate
gy
bas
edon
inte
rnat
ion
alex
pos
ure
and
exp
erti
sein
the
lux
ury
hot
elm
ark
et.
Gro
wth
thro
ug
hm
anag
emen
tco
ntr
acti
ng
,fr
anch
isin
gor
mar
ket
ing
agre
emen
tsan
dso
me
own
ersh
ip
US
Bon
usb
ran
da
700
Sev
enb
ran
ds
Tw
oat
bot
hm
idm
ark
etan
db
ud
get
lev
els
Pre
stig
eb
ran
dS
uit
esH
olid
ayre
sort
s
35D
eplo
ys
sev
eral
stra
teg
ies
incl
ud
ing
ah
yb
rid
stra
teg
yfo
rit
sd
omes
tic
un
its
and
ad
iffe
ren
tiat
ion
(wit
hp
rem
ium
pri
ce)s
trat
egy
for
mos
tof
its
inte
rnat
ion
alp
rop
erti
esat
the
pre
stig
ele
vel
.G
row
thth
rou
gh
man
agem
ent
con
trac
tin
gan
dfr
anch
isin
g,
wit
hli
mit
edow
ner
ship
US
mix
edec
onom
y46
0P
rest
ige
bra
nd
Mid
-mar
ket
bra
nd
–N
orth
Am
eric
a
63A
dop
tsa
var
iety
ofst
rate
gie
sin
clu
din
ga
hy
bri
dst
rate
gy
for
its
dom
esti
cu
nit
san
da
dif
fere
nti
atio
n(w
ith
pre
miu
mp
rice
)str
ateg
yfo
rm
ost
ofit
sin
tern
atio
nal
pro
per
ties
.G
row
thth
rou
gh
man
agem
ent
con
trac
tin
gso
me
own
ersh
ipan
dfr
anch
isin
g
Note:
aT
his
com
pan
yd
idn
otp
arti
cip
ate
inth
efi
nal
stag
esof
the
rese
arch
Table II.
PR41,4
522
transcripts, fieldwork notes and documentation allowed cases to be written for eachcompany which were sense-checked by industry informants and against the researchteam’s notes and observations.
Access was granted to the eight companies on the basis of offering confidentiality toparticipants and organisations. Each company was protected through the allocation ofpseudonyms and all data and notes collected removed company names and trademarksto provide confidentiality. This is in keeping with the widely acknowledged difficultiesof gaining access within this industry (Litteljohn et al., 2007; Ropeter and Kleiner,1997).
The cases built on the interview transcripts, observations and companydocumentation data meant that qualitative analysis was achieved through the toolsand computer aided techniques recommended by key authors (Miles and Huberman,1994; Silverman, 1997, 1999). The process of initial coding identified HRM practices,management criteria and company strategies and characteristics. Descriptive codingwas then used to highlight specific activities and relationships between HRMpractices and approaches, and company characteristics. Further interpretive codingand analytic coding were highlighted through the themes presented by therespondents and the theoretical relationships arising from the data and initialcoding (Silverman, 1997, 1999). Of particular importance were the themes of similarand distinctive HRM practices deployed by the companies, strategic groups andacross the sample.
ResultsAcross the sample of eight IHCs evidence of common HRM interventions deployedincluded: a reliance on strong internal labour markets for unit management positions;training programmes with universal components; the use of performance appraisal asa mechanism for monitoring and evaluating human resources talent, the deployment ofspecific contractual agreements and conventions; the recurrent use of corporatecommunications channels; and specific HRM responses to cultural and internationalchallenges. The shared aims of these practices indicated that the IHCs were adoptingthe table stake version of the best practice SHRM approach across their internationalportfolios (Boxall and Purcell, 2003, 2008; Boselie et al., 2003, 2009).
The next stage of data examination involved the identification of company specificHRM practices based on the best fit and RBV SHRM approaches. However, subsequentanalysis of the qualitative data began to identify another layer of similar HRMinterventions centred on the appearance of strategic groups within the sample. Thereappeared to be similarities between the companies based on strategic variables such asparent company ownership, the scope of the hotels organisations’ activities (levels ofinternationalisation, geographical coverage, and market segments); resourcecommitments (including size, brands and market entry modes); and centric andtransnational orientations. As a result the sample was demarcated into three strategicgroups. These are labelled the Multi-branders, Mixed Portfolio Purchasers andPrestige Operators. Table III summarises the strategic similarities and differencesbetween the three groups and their IHC members.
Patterns of HRM interventions across the three strategic groups are apparent fromthe data supplied by the executives, their teams and the documentation. These patternsfocus around six areas:
The role ofstrategic groups
523
(1) the levels where HRM is focused;
(2) different views about management skills and transferability across brands;
(3) how international and domestic operations function;
(4) extent of owner influence and cultural differences;
(5) how and where managerial talent is found; and
(6) where specific career interventions emerge.
Similarities Differences
Strategic Group 1 – The Multi-branders (two companies)FranchiseKing andEuromultigrow
Parent companies – related horizontallydiversifiedLarge size – 2,000 þ hotelsHigh levels of internationalisation butstrong domestic base (French and USA)Multiple brands (luxury to budget)Difficulties aligning parent company, brandnames and operationsHybrid strategiesRange of market entry modesEthnocentric orientationGlobal organisation
National cultural origins
Mid-market brand dominates inone company while distinctbrands used for different marketsegments by other
One company uses morefranchising
Strategic Group 2 – The Mixed Portfolio Purchasers (two companies)Britbuyer andUSmixedeconomy
Similar size (between 400 and 1,000 hotels)Mid-position in internationalisation indexStrong domestic presence and distinctiveinternational operationsRange of market entry modesAcquisitive growth of European prestigebrandsBrands offered at similar market levelsChallenges of aligning disparate domesticand international portfolios, corporatestrategies and new acquisitionsEthnocentric orientation but with somegeocentric aspirationsMultinational organisation
Diversification of parentcompanies is different
One company has moreownership/partial ownership ofhotels
One company has much smallerbudget brand domestic interests
Strategic Group 3 – The Prestige Operators (four companies)Anglo-AmericanPremiumContractmanInternationalEuroallianceGlobalalliance
Parent companies – related diversifiedSimilar size (between 50 and 202 hotels)Similar levels of low internationalisationFocus on luxury, first class hotel market(resort and business)Strategies broadly differentiation andfocused differentiationGrowth primarily through managementcontractingBroadly geocentric but with some aspects ofethnocentrismTransnational organisation
Two companies have separatedomestic operations
Two companies have grownthrough strategic partnerships
One company uses a broaderrange of market entry modes
Table IV captures some of the comments from interviews across these six levels andthe three strategic groups. The HRM interventions and features developed by the threestrategic groups are outlined in Table V along with the strategic variables whichdistinguish the groups.
Strategic group 1: Multi-brandersThe sheer size and scale of their multi-branded operations indicated parallels betweenthe HRM approaches taken by the Multi-branders (see comments in Tables IV and V).Both companies boasted a critical mass of hotels in key countries or regions of theworld resulting in more localised recruitment and development approaches. Forexample, they operated “UK only” management training schemes and then specificrecruitment initiatives tailored to educational systems, notably the French training andGerman apprenticeship schemes. The size of these two companies also meant theyallowed their distinct brands to develop individually which had apparently resulted insome specific brand HRM practices. Both companies recognised there were fewopportunities for managers to transfer between the different brands leading tobottlenecks in internal labour markets, where some brands grew more quickly andoffered extensive transfer and promotion possibilities.
The Multi-branders had attempted to deal with these issues in slightly differentways, though both now had structures, enabling moves between managerial levelsacross brands to achieve some overall parity across their company. In one company(Euromultigrow) there was a guide to the different positions within each brand toencourage internal brand transfers of human resources. This guide was based onextensive negotiations with managers across the company’s brands, although parentcountry nationals (PCNs) dominated among these managers and the company’sUniversity was responsible for the roll-out training for this guide.
Franchiseking had developed a competency-based HRM system designed toidentify common areas of expertise across its brands and as one HR executiveidentified all managers with line responsibilities had to attend and use this framework.The competencies were developed in accordance with a HRM consultant firm and usedexisting and future “high potential” managers across the company’s portfolio toidentify appropriate behaviours of successful managers. Competencies were heavilyinfluenced by the company’s existing management team comprising mainly PCNs. Thecompany then ran a series of training sessions for its senior managers so thecompetencies formed the basis for all selection, performance appraisal, promotion andtraining decisions and activities. These attempts to closely manage their largeportfolios of standardised brands across geographically disparate locations meant theMulti-branders adopted an ethnocentric orientation to internationalisation with PCNsdominant in subsidiary management positions, which runs somewhat counter to theircritical mass of units and attempts to localise too.
The Multi-branders commented less extensively, compared with the members of theother two strategic groups, on the level of interference from property owners wheremanagement contracts were used. They argued this was probably because their highlystandardised brands, even at full-service levels, meant owners knew what to expect,and they did not attempt to interfere in the day-to-day management of hotels. Theselection of managers for managed properties was also less troublesome for theMulti-branders. In most cases executives could appoint whomever they wanted and
The role ofstrategic groups
525
Mu
ltib
ran
der
sM
ixed
Por
tfol
ioP
urc
has
ers
Pre
stig
eO
per
ator
s
Th
ele
vel
sof
focu
sfo
rH
RM
“Ou
rar
ea,
reg
ion
alh
um
anre
sou
rce
exec
uti
ves
run
nat
ion
alv
ersi
ons
ofou
rco
mp
any
Un
iver
sity
trai
nin
gan
dre
cru
itm
ent
pro
gra
mm
esto
fit
wit
hn
atio
nal
voc
atio
nal
edu
cati
on.”
Ass
ista
nt
HR
dir
ecto
rfo
rE
uro
mu
ltig
row
EA
ME
“We
hav
ea
crit
ical
mas
sof
hot
els
ince
rtai
nco
un
trie
san
dh
ave
bu
ilt
real
pre
sen
ceso
we
nee
dto
adop
tso
me
ofth
eir
pra
ctic
esas
lon
gas
they
fit
now
wit
hou
rco
mp
eten
ces.
”C
orp
orat
eT
rain
ing
and
Dev
elop
men
tD
irec
tor
Fra
nch
iseK
ing
“Som
ear
eas,
wit
hm
ore
hot
els,
hav
ea
litt
leb
itm
ore
auto
nom
yth
anot
her
san
dw
eh
ave
them
do
thei
row
nm
anag
emen
tre
cru
itm
ent
and
trai
nin
g,
bas
edon
our
hea
d-o
ffice
mat
eria
ls.”
Vic
eP
resi
den
tH
RU
Sm
ixed
econ
omy
“In
Fra
nce
,G
erm
any
,th
eU
Kan
dth
eB
enel
ux
and
Sca
nd
inav
ian
cou
ntr
ies,
wh
ere
we
hav
ecr
itic
alm
ass,
they
hav
eso
me
flex
ibil
ity
for
recr
uit
men
tan
dtr
ain
ing
.It
has
bee
na
bit
ofa
stru
gg
lew
ith
our
acq
uis
itio
nof
Mto
get
this
rig
ht,
thou
gh
.”B
ritb
uy
erH
RE
AM
Ed
irec
tor
“We
run
ag
rad
uat
em
anag
emen
tp
rog
ram
me
toen
sure
we
hav
eou
rn
ext
crop
ofm
anag
ers
wai
tin
gin
the
win
gs.
We
also
hav
ean
exec
uti
ve
man
agem
ent
pro
gra
mm
ew
hic
hin
clu
des
anM
BA
–b
oth
are
des
ign
edto
get
us
the
GM
sof
the
futu
re.”
Cor
por
ate
Dir
ecto
rof
Hu
man
Res
ourc
esG
lob
alal
lian
ce
“Ou
rg
rad
uat
em
anag
emen
tp
rog
ram
me
isb
ein
gre
vit
alis
edfo
rn
ext
yea
ran
dw
e’ll
be
targ
etin
gth
eb
rig
hte
stfr
omth
eh
otel
sch
ools
inH
olla
nd
and
Sw
itze
rlan
dfo
rE
AM
E.
All
our
gra
du
ates
mu
sth
ave
lan
gu
age
skil
lsan
dm
eet
spec
ific
kn
owle
dg
ere
qu
irem
ents
.”A
ng
lo-A
mer
ican
Pre
miu
mV
ice
Pre
sid
ent
ofH
Rs
“Id
on’t
thin
kg
rad
uat
em
anag
emen
tsc
hem
esperse
wor
k.
Inst
ead
we
recr
uit
gra
du
ates
,mai
nly
from
Sw
itze
rlan
dan
dth
eD
utc
hsc
hoo
ls,
into
real
job
san
dal
thou
gh
they
’re
ah
otel
reso
urc
e,w
e(h
ead
qu
arte
rs)
mon
itor
thei
rp
rog
ress
and
targ
etth
emw
ith
spec
ific
cou
rses
totr
yan
db
rin
gth
emon
.”H
RV
ice
Pre
sid
ent
Eu
roal
lian
ce(continued
)
Table IV.Responses from HRexecutives from thestrategic groups
PR41,4
526
Mu
ltib
ran
der
sM
ixed
Por
tfol
ioP
urc
has
ers
Pre
stig
eO
per
ator
s
Vie
ws
abou
tm
anag
emen
tsk
ills
and
tran
sfer
abil
ity
acro
ssb
ran
ds
“No,
not
som
any
peo
ple
tran
sfer
red
.It
was
qu
ite
com
mon
bet
wee
non
eb
ran
dan
dal
soq
uit
eco
mm
onb
etw
een
(nam
estw
oot
her
com
pan
yb
ran
ds
atth
esa
me
mar
ket
lev
el)
bu
tn
otat
all
bet
wee
nth
eot
her
s.It
was
dif
ficu
lt,
not
goo
d.
Now
we
wil
lh
ave
ast
ron
ger
par
ent
com
pan
yfr
omth
isn
ewst
ruct
ure
.”H
RV
ice
Pre
sid
ent
for
Eu
rom
ult
igro
w
“We
hav
eb
een
trai
nin
gth
emin
the
use
ofb
ehav
iou
rale
ven
tin
terv
iew
ing
toh
elp
them
,...
tosp
otth
eco
mp
eten
cies
.T
his
allo
ws
us
tose
ew
her
ein
the
por
tfol
ioof
bra
nd
sth
eyca
nm
ove
to”
Cor
por
ate
Tra
inin
gan
dD
evel
opm
ent
Dir
ecto
rF
ran
chis
eKin
g
“We
had
tore
spec
tw
hat
was
ther
e.T
he
pre
dom
inan
tn
atio
nal
cult
ure
ofth
en
ewly
acq
uir
edco
mp
any
)m
ean
tth
atw
eh
ada
lot
ofco
mm
un
icat
ing
and
edu
cati
ng
tod
ow
ith
inou
rco
mp
any
and
wit
hin
thei
rs.
We
mov
edm
anag
ers
wit
hin
(nam
esth
eac
qu
ired
com
pan
y)
bet
wee
nu
nit
sto
giv
eth
ema
fres
hst
art
and
man
yof
them
are
stil
lw
ith
us.
Itw
ork
edou
tw
ell
real
ly.”
Reg
ion
alH
Rd
irec
tor
US
mix
edec
onom
y
“Wh
enw
eac
qu
ired
com
pan
y[M
]th
ere
was
ab
itof
ast
and
off
bas
ical
lyb
ecau
seth
eyw
ante
dto
be
acq
uir
edb
yso
meb
ody
else
...It
did
n’t
hel
pth
atth
eC
EO
ofou
rco
mp
any
wen
t‘r
oun
dth
eir
hot
els
say
ing
‘get
rid
ofth
is’o
r‘d
oth
at’.
Th
ing
sh
ave
chan
ged
now
,ag
ain
.T
her
e’s
mor
eap
pre
ciat
ion
ofw
hat
[acq
uir
edco
mp
any
]d
oes
rig
ht
onth
ein
tern
atio
nal
scen
ean
dw
e’re
alo
tm
ore
open
tole
arn
ing
from
them
.It
’sn
owtw
o-w
ay.”
Bri
tbu
yer
HR
EA
ME
dir
ecto
r
GM
ssk
ills
nee
ds
“fal
lin
tofo
ur
skil
lse
tsw
hic
h...
one
ism
anag
ing
my
self
bas
edon
the
pre
mis
eth
atif
Ica
n’t
man
age
my
self
then
Ica
n’t
real
lym
anag
ean
yb
ody
else
.T
hen
man
agin
got
her
san
dth
enth
eth
ird
one
isp
rob
lem
solv
ing
and
dec
isio
nm
akin
gan
dth
efo
urt
hon
eis
pro
-act
ive
ach
iev
emen
t.V
ery
dif
ficu
ltto
mea
sure
,b
ut
the
actu
alac
hie
vem
ent
lev
els
and
the
go
for
itan
dta
kin
gth
atex
tra
risk
,th
een
trep
ren
euri
alp
art.
An
dth
enth
ere
isth
ela
ng
uag
esan
dcu
ltu
ralb
it.”
HR
Vic
eP
resi
den
tE
uro
alli
ance
“It
feel
sit
isd
iffi
cult
tose
ew
her
ea
you
ng
man
ager
’sn
ext
mov
eis
inan
inte
rnat
ion
alco
mp
any
wit
hou
tth
eri
gh
tla
ng
uag
esk
ills
toal
low
wid
enin
gof
tran
sfer
opti
ons.
”An
glo
-Am
eric
anP
rem
ium
Vic
eP
resi
den
tof
HR
s
“Th
ere
are
core
orcr
itic
alp
arts
toou
rb
usi
nes
s;m
ark
etin
gan
dsa
les,
man
agin
gh
um
anre
sou
rces
,fi
nan
cial
man
agem
ent,
crea
tiv
ed
ecis
ion
–m
akin
gan
dle
ader
ship
.T
hes
en
eed
tob
ed
isp
lay
edac
ross
cult
ure
sac
ross
pro
per
ties
tom
ake
itas
aG
M.”
Vic
eP
resi
den
tH
RC
ontr
actm
anIn
tern
atio
nal
(continued
)
Table IV.
The role ofstrategic groups
527
Mu
ltib
ran
der
sM
ixed
Por
tfol
ioP
urc
has
ers
Pre
stig
eO
per
ator
s
How
inte
rnat
ion
alan
dd
omes
tic
oper
atio
ns
fun
ctio
n“M
ost
ofth
ese
pot
enti
alG
Ms
do
ten
dst
ill
tob
eth
esa
me
nat
ion
alit
yas
the
com
pan
y,b
ut
Id
on’t
kn
oww
hy
.W
ed
on’t
nec
essa
rily
wan
tth
at,
atal
l.”H
RV
ice
Pre
sid
ent
for
Eu
rom
ult
igro
w
“All
GM
sar
ein
form
edth
atth
eb
est
way
tore
adan
db
ecom
efa
mil
iar
wit
hth
e(c
omp
eten
cy)
gu
ide
isto
read
the
En
gli
shv
ersi
onfi
rst
–th
isis
the
auth
orit
ativ
ev
ersi
on.”
Cor
por
ate
Tra
inin
gan
dD
evel
opm
ent
Dir
ecto
rF
ran
chis
eKin
g
“For
anin
tern
atio
nal
GM
you
nee
dla
ng
uag
esan
din
tern
atio
nal
exp
erie
nce
–th
atis
wh
yso
me
man
ager
sfr
omb
ran
ds
bac
kh
ome
don
’tm
ake
it.”
Vic
eP
resi
den
tH
RU
Sm
ixed
econ
omy
“Ou
rd
omes
tic
bra
nd
man
ager
sar
en’t
our
inte
rnat
ion
alm
ang
ers.
Th
ere
isn
otr
ansf
er,
wel
lok
Ica
nth
ink
ofon
eor
two.
You
nee
din
tern
atio
nal
exp
erie
nce
wh
ich
crea
tes
ab
itof
aca
tch
22–
bec
ause
itis
the
old
thin
gof
‘you
can
’tg
etth
ejo
bw
ith
out
the
exp
erie
nce
and
you
can
’tg
etth
eex
per
ien
cew
ith
out
the
job
’.”B
ritb
uy
erH
RE
AM
Ed
irec
tor
“Wh
yth
efo
ur
dif
fere
nt
par
tsof
the
wor
ld?
Wel
lea
chon
eh
asso
me
stre
ng
ths.
Im
ean
that
Sta
tes
you
tak
em
ark
etin
gan
dv
ery
dif
fere
nt
hu
man
reso
urc
es.
Asi
ay
oust
ill
hav
eth
elu
xu
ryof
bei
ng
able
toh
ave
alo
tof
emp
loy
ees
and
afa
rb
igg
erb
ud
get
bec
ause
cost
sar
elo
wer
.Ja
pan
bec
ause
the
way
,th
em
enta
lity
ofth
eJa
pan
ese
mar
ket
and
cust
omer
isd
iffe
ren
t,an
dE
uro
pe
tod
osa
me
thin
gb
ut
wit
ha
ver
yti
gh
tb
ud
get
bec
ause
cost
sar
eso
hig
h.”
Vic
eP
resi
den
tH
RE
AM
EC
ontr
actm
anIn
tern
atio
nal
“Afu
ture
GM
mu
sth
ave
wor
ked
outs
ide
his
orh
erh
ome
cou
ntr
yb
efor
eth
eyca
nb
ep
rom
oted
toth
isle
vel
.It
isim
por
tan
tfo
rm
anag
ers
toh
ave
lan
gu
age
skil
lsn
oton
lyto
hel
pth
emop
erat
ein
par
ticu
lar
loca
tion
sb
ut
also
bec
ause
ther
ear
efa
rm
ore
care
erop
por
tun
itie
sfo
rth
ose
ind
ivid
ual
sw
ho
can
dem
onst
rate
lan
gu
age
pro
fici
ency
.T
ran
sfer
sar
eth
enan
imp
orta
nt
asp
ect
ofd
evel
opin
ga
care
er.”
An
glo
-Am
eric
anP
rem
ium
Vic
eP
resi
den
tof
HR
s(continued
)
Table IV.
PR41,4
528
Mu
ltib
ran
der
sM
ixed
Por
tfol
ioP
urc
has
ers
Pre
stig
eO
per
ator
s
Ex
ten
tof
own
erin
flu
ence
and
cult
ura
ld
iffe
ren
ces
“Wel
lm
ost
ofth
eti
me,
itd
epen
ds
onth
eca
seof
cou
rse,
mos
tof
the
tim
e,th
esh
areh
old
erof
the
hot
elw
ill
be
anin
ves
tor
bu
th
ew
ill
not
be
anop
erat
ion
alac
tor.
He
isin
tere
sted
inth
eb
otto
mli
ne,
not
wh
atg
oes
onin
sid
eth
eh
otel
.”H
RV
ice
Pre
sid
ent
for
Eu
rom
ult
igro
w
“Ow
ner
inte
rfer
ence
dep
end
son
our
bra
nd
s,th
em
ore
excl
usi
ve
the
bra
nd
the
mor
ein
flu
ence
bu
tm
ain
lyw
ep
rop
ose
peo
ple
-‘t
his
can
did
ate
has
our
firm
sup
por
t’.
Ob
vio
usl
yth
eq
ual
ity
ofth
ere
lati
onsh
ipw
ith
the
own
eris
ver
yim
por
tan
tan
dy
oum
ust
resp
ect
thei
rw
ish
esp
erta
inin
gto
GM
sb
ut
itd
oesn
’tca
use
us
mu
chtr
oub
lere
ally
.”V
ice
Pre
sid
ent
for
HR
Fra
nch
iseK
ing
“We
hav
eow
ner
s,fo
rex
amp
le,...
bu
tw
eh
ave
own
ers
wh
oar
ev
ery
,ver
ycl
ear
abou
tth
ep
eop
lew
ho
we
are
lik
ely
,or
mor
eof
ten
than
not
,w
eca
n’t
emp
loy
.U
sual
lyit
’sin
term
sof
nat
ion
alit
ies
and
colo
urs
,ra
cean
dse
xu
alp
refe
ren
ces
they
don
’tli
ke.
Itis
thei
rh
otel
and
ifth
eysa
y‘I
don
’tw
ant
som
ebod
yw
ith
red
hai
r’th
eny
oud
on’t
pu
tso
meb
ody
wit
hre
dh
air
in,
it’s
assi
mp
leas
that
.”B
ritb
uy
erH
RE
AM
Ed
irec
tor
“Th
efr
equ
ency
ofm
oves
our
man
ager
sm
ake
are
also
dri
ven
by
how
tig
htl
yan
own
erw
ants
toh
ang
onto
them
.S
ow
e’re
con
stra
ined
by
har
dsh
ipfa
ctor
s,an
dow
ner
’sp
red
ilec
tion
san
dp
refe
ren
ces.
”R
egio
nal
HR
dir
ecto
rU
Sm
ixed
econ
omy
“Usu
ally
own
ers
inte
rvie
wth
eth
ree
can
did
ates
we
pu
tfo
rwar
dfo
rea
chG
Mp
osit
ion
and
inv
aria
bly
,w
ell
they
sele
ctth
eca
nd
idat
ep
refe
rred
by
the
com
pan
y,t
hou
gh
Vic
eP
resi
den
tsof
ten
hav
eto
use
som
ep
ower
sof
per
suas
ion
.”A
ng
lo-A
mer
ican
Pre
miu
mV
ice
Pre
sid
ent
ofH
Rs
“We
hav
eto
kn
owou
row
ner
sre
ally
wel
lto
giv
eth
emth
eG
Ms
they
wan
tan
dn
eed
.T
hat
’sa
tou
gh
call
wh
eny
ou’r
eg
row
ing
som
uch
.”V
ice
Pre
sid
ent
HR
Con
trac
tman
Inte
rnat
ion
al
“Som
eow
ner
sar
ere
ally
dif
ficu
ltan
dh
ave
tob
em
anag
edca
refu
lly
.T
hat
’sw
her
eou
rR
egio
nal
gu
ys
com
ein
.Oth
ers
are
gre
atan
dth
eyar
eou
rb
usi
nes
sp
artn
ers,
wit
hu
sfo
rth
elo
ng
hau
l.“
HR
Vic
eP
resi
den
tE
uro
alli
ance
“Ow
ner
sd
oh
ave
alo
tof
infl
uen
ceb
ecau
seif
we
giv
eth
emso
meb
ody
and
they
say
‘we
don
’tth
ink
this
gu
y’s
any
goo
d’,
wel
l!A
lth
oug
hw
eco
uld
forc
eth
emon
them
itis
n’t
av
ery
sen
sib
leth
ing
tod
o.S
oth
eow
nin
gco
mp
any
doe
sh
ave
ab
igb
eari
ng
onth
eG
Msl
ot.”
Cor
por
ate
Dir
ecto
rof
Hu
man
Res
ourc
esG
lob
alal
lian
ce(continued
)
Table IV.
The role ofstrategic groups
529
Mu
ltib
ran
der
sM
ixed
Por
tfol
ioP
urc
has
ers
Pre
stig
eO
per
ator
s
How
and
wh
ere
man
ager
ial
tale
nt
isfo
un
d“W
eh
ave
our
area
,reg
ion
alh
um
anre
sou
rce
peo
ple
hel
pou
rG
Ms
iden
tify
thei
rm
anag
ers
wh
om
igh
ton
ed
aym
ake
it,
wh
oh
ave
the
pot
enti
alto
be
GM
sto
o.T
he
area
hu
man
reso
urc
ep
eop
leth
enru
nso
me
cou
rses
and
do
the
trai
nin
gw
eh
ave
dev
elop
edth
rou
gh
our
com
pan
yu
niv
ersi
ty.”
HR
Vic
eP
resi
den
tfo
rE
uro
mu
ltig
row
“Som
eof
our
app
roac
hto
iden
tify
ing
GM
pot
enti
alis
syst
emat
ic,
som
eis
opp
ortu
nis
tic.
We’
retr
yin
gto
bec
ome
mor
esy
stem
atic
,th
rou
gh
the
new
com
pet
enci
esp
roce
ss.
We’
ve
reco
gn
ised
we
hav
eto
hav
em
ore
loca
ln
atio
nal
san
dfe
wer
exp
atri
ates
.”C
orp
orat
eT
rain
ing
and
Dev
elop
men
tD
irec
tor
Fra
nch
iseK
ing
“Im
ean
Iam
ver
yco
nsc
iou
sfr
omth
isco
nv
ersa
tion
we
are
not
doi
ng
allw
eco
uld
tod
evel
opth
en
ext
gen
erat
ion
ofG
Ms.
Itis
par
tly
bec
ause
the
nu
mb
ertw
op
osit
ion
inso
me
un
its
has
dis
app
eare
d.
So
ther
ear
en’t
enou
gh
opp
ortu
nit
ies
for
hea
ds
ofd
epar
tmen
tsto
mov
eon
and
dev
elop
thei
rex
per
ien
ce.W
eh
aven
’th
ada
pro
ble
mso
far
bu
tas
we
incr
ease
(gro
w)
we
mig
ht
be
stru
gg
lin
gfo
rth
eri
gh
tca
lib
reof
GM
sin
afe
wy
ears
tim
e.”
Bri
tbu
yer
HR
EA
ME
dir
ecto
r
“You
mu
stre
alis
eth
attr
adit
ion
ally
we
hav
eco
nsc
iou
sly
dev
elop
edv
ery
goo
dre
sid
ent
man
ager
s/E
AM
s(E
xec
uti
ve
Ass
ista
nt
Man
ager
s)so
wh
enth
ese
ind
ivid
ual
sto
okov
erth
eir
own
un
its
ther
ew
asa
ver
ylo
wri
skof
fail
ure
.S
ince
our
pu
rch
ases
and
dow
n-s
izin
g,
how
ever
,th
ere
are
now
som
ep
rop
erti
esth
atn
olo
ng
erh
ave
an
um
ber
2m
anag
er.
Th
us
we
hav
eef
fect
ivel
yst
opp
edd
evel
opin
gth
is‘a
lmos
t’ri
skfr
eeh
um
anre
sou
rce
–it
may
cau
seu
sp
rob
lem
sin
the
lon
gte
rm.”
Vic
eP
resi
den
tH
RU
Sm
ixed
econ
omy
“How
do
we
man
age
our
GM
s?W
ell
we
incl
ud
eal
lm
anag
ers
her
e–
wel
lit
’sa
ver
yin
teg
rate
dap
pro
ach
toca
reer
dev
elop
men
t,or
man
agem
ent
dev
elop
men
tan
dth
ean
nu
alap
pra
isal
and
ital
lco
mes
tog
eth
erw
ith
succ
essi
onp
lan
nin
gan
dth
ew
ork
we
co-
ord
inat
eh
ere
(ges
ture
sto
the
corp
orat
eh
ead
-offi
ce).”
Cor
por
ate
Dir
ecto
rof
Hu
man
Res
ourc
esG
lob
alal
lian
ce
“We’
re[t
he
exec
uti
ve
team
]in
the
hot
els
alo
t,an
dth
eP
resi
den
tw
asre
ally
gre
at,
yes
terd
ayh
ew
assa
yin
g‘Y
ouk
now
ever
yb
ody
wh
eth
ery
ou’r
efi
nan
ceor
bu
sin
ess
dev
elop
men
tor
mar
ket
ing
,w
hen
you
’re
inth
eh
otel
san
dy
ousp
otp
eop
lew
ho
are
real
lyg
ood
,n
otic
eit
,y
ouk
now
get
an
ote
ofth
en
ame,
mak
esu
reth
atw
e’re
also
all
tale
nt
spot
tin
gou
row
np
eop
le.”
HR
Vic
eP
resi
den
tE
uro
alli
ance
“We
mu
stth
eref
ore
nu
rtu
reex
cell
ence
inev
ery
one
ofou
rem
plo
yee
s,es
pec
iall
you
rlo
cal
nat
ion
als
–th
ep
eop
lew
ho
liv
ein
the
cou
ntr
ies
wh
ere
we
oper
ate
hot
els.
”V
ice
Pre
sid
ent
HR
EA
ME
Con
trac
tman
Inte
rnat
ion
al
“At
the
Vic
eP
resi
den
tan
dd
ivis
ion
ald
irec
tor
lev
els
we’
real
way
str
avel
lin
g,
list
enin
gto
wh
atar
ep
eop
lear
esa
yin
gan
dte
llin
gth
emab
out
wh
at’s
hap
pen
ing
acro
ssth
eco
mp
any
.A
nd
spot
tin
gta
len
tto
o.”
An
glo
-Am
eric
anP
rem
ium
Vic
eP
resi
den
tof
HR
s(continued
)
Table IV.
PR41,4
530
Mu
ltib
ran
der
sM
ixed
Por
tfol
ioP
urc
has
ers
Pre
stig
eO
per
ator
s
Wh
ere
spec
ific
care
erin
terv
enti
ons
emer
ge
“Ou
rre
stru
ctu
rin
gof
bra
nd
san
dg
row
thin
fran
chis
ing
mea
ns
we
hav
eto
be
clea
rab
out
wh
atm
anag
ers
do
tom
ake
the
hot
els
succ
essf
ul.
Ou
rco
mp
any
un
iver
sity
iscr
itic
alfo
rtr
ain
ing
toou
rb
ran
ds
soal
lou
rm
anag
ers
kn
ow.”
Ass
ista
nt
HR
dir
ecto
rfo
rE
uro
mu
ltig
row
EA
ME
“Per
form
ance
ofou
rb
usi
nes
sis
cru
cial
and
that
isw
hy
som
uch
inv
estm
ent
and
dev
elop
men
th
adb
een
mad
ein
this
area
ofco
mp
eten
cies
and
per
form
ance
man
agem
ent.
Th
ere’
sb
een
acl
ear
gro
wth
inp
rofi
tssi
nce
the
com
pet
enci
esw
ere
firs
td
evel
oped
.”V
ice
Pre
sid
ent
for
HR
Fra
nch
iseK
ing
“In
fact
itis
incr
edib
lyin
cest
uou
san
dp
eop
leju
stse
emto
app
ear
orm
ater
iali
se.
We
wou
ldn
’td
irec
tly
poa
chso
meo
ne,
wel
l...
,b
ut
ifso
meo
ne
mad
eit
clea
rto
us
they
’db
ein
tere
sted
then
we’
dfe
elfi
ne
abou
tca
llin
gth
emu
p.”
Bri
tbu
yer
HR
EA
ME
dir
ecto
r
“Wh
enw
eg
oou
tsid
e,w
ell
we
stea
lfr
omth
eco
mp
etit
ion
and
just
rely
onth
eg
rap
evin
eor
may
be
on-s
pec
app
lica
tion
s.T
her
e’s
som
eu
seof
exec
uti
ve
sear
chb
ut
that
’sv
ery
exp
ensi
ve.
”R
egio
nal
HR
dir
ecto
rU
Sm
ixed
econ
omy
Pot
enti
alG
Ms...
“It’
sv
ery
inte
nsi
ve
(th
eas
sess
men
tce
ntr
e)w
ith
per
son
alco
un
sell
ing
,tes
tsto
see
wh
ere
thei
rst
ress
esan
dst
rain
sar
e,an
dm
anag
emen
tsk
ills
acro
ssth
eb
oard
,ru
nn
ing
from
8in
the
mor
nin
gto
10at
nig
ht.
It’s
real
lyv
ery
inte
nsi
ve
and
we
hav
ep
eop
lefr
omac
ross
the
wor
ld,
wit
hd
iffe
ren
tla
ng
uag
esan
dcu
ltu
res,
the
mix
ofp
eop
leis
seen
tob
eth
eb
est
elem
ent
ofth
ese
even
ts.”
An
glo
-Am
eric
anP
rem
ium
Vic
eP
resi
den
tof
HR
s
“For
the
asse
ssm
ent
cen
tre
are
por
tis
wri
tten
onth
emb
ased
onw
hat
we
feel
they
dem
onst
rate
d,
inth
ew
ayth
eyac
ted
du
rin
gth
eco
urs
e.W
hat
isok
ayan
dth
eri
gh
tw
ay,
wh
at’s
tob
ed
emon
stra
ted
and
wh
at’s
tob
ed
iscu
ssed
,w
her
eth
eyfe
elth
eyn
eed
dev
elop
men
tin
,an
dfr
omth
atw
eca
nm
ore
orle
ssd
eter
min
eth
eti
me
span
its
goi
ng
tota
ke
soth
atth
ey’ll
be
read
yto
be
aG
M,a
nd
wh
ath
asto
hap
pen
in-b
etw
een
soth
ein
div
idu
ald
evel
opm
ent
isp
lan
ned
.”C
orp
orat
eD
irec
tor
ofH
um
anR
esou
rces
Glo
bal
alli
ance
“Th
eyal
lg
oon
ale
ader
ship
dev
elop
men
tp
rog
ram
me
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den
tE
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ance
Table IV.
The role ofstrategic groups
531
Strategic groups Strategic group variables HRM outcomes
Brands and market segmentationMulti-branders Hard brands, serving several
different market levelsAllows more localisation ofmanagement talent due tostandardisation and clear criteriafor operating brandsMovement within and betweenbrands facilitated to preventcareer bottlenecks
Mixed Portfolio Purchasers Some soft (international) and somehard (domestic) brands
Difficult to facilitate movementbetween international brands dueto recent purchases, no transferbetween domestic andinternational brands due to skillsmismatchImportance of communication toassimilate new acquisitions
Prestige Operators Softer brands Emphasis on transfers to developmanagerial experience of differentcountries/markets, and types ofhotelsEncourages and facilitatesemployees at all levels to gaininternational experience
Structure and organisationMulti-branders Large diverse organisations,
structured on the basis of brandsand some geographical factorsCritical mass of units in somelocations
Companies have developed guidesto articulate managementpositions and skills across brandsCritical mass allows multi-unitUGMs and more local recruitmentand selection activities
Mixed Portfolio Purchasers Organised on International anddomestic divisions. Slowassimilation of newly purchasedinternational brandSome critical mass of units
Some local recruitment andselection, less developmentthrough strong internal labourmarket and more acquisition ofmanagement talentCritical mass allows morelocalisation of management talentbut not co-ordinated effectivelythroughout the companies
Prestige Operators Smaller portfolios organised onregional linesLimited critical mass of units
Regional offices co-ordinatetransfers and HRM practices butalso learn from subsidiaries topass experience, knowledge andexpertise on across other regions.IT plays an important role hereAcross company recruitment anddevelopment schemes rather thanlocalised versions. Provides singleports of entry at (sub) departmentmanagement level to locals
(continued )
Table V.The IHC strategic groups,their strategic variablesand the HRM outcomes
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Strategic groups Strategic group variables HRM outcomes
seem to facilitate low reliance onPCNs at subsidiary level thoughthey are prevalent at executivelevel
Mixed Portfolio Purchasers Difficult to discern - bypassing ofstages through acquisitions(McKiernan, 1992)
PCNs still mainly in place foracquired companies, somelocations with HCNs (criticalmass) but dominated by Westernnationals
Prestige Operators Aspiring geocentric Attempts to harness managerialtalent from around the worldregardless of nationality throughco-ordinated and integrated HRMactivitiesUGMs still primarily fromWestern (European andAmerican) backgrounds,executives in particular
Methods of growth and market entry expertiseMulti-branders Growth through hard brands and
the development of suitableinvestors (master franchisees andowners)
UGMs have specific knowledgeand skills in operating highlystandardised hotel services andpassing knowledge onto others(franchisees)HRM mechanisms defineperformance and selection criteriafor managers and employees
Mixed Portfolio Purchasers Acquisition used alongside mixedmethods of market entry (mainlymanagement contracts)
UGMs are likely to have expertisein exploiting value frompurchased propertiesDe-layering of organisationalhierarchies (disappearance ofdeputy UGM position) and localrecruitment initiatives were seento help realise returns on theiracquisitions
Prestige Operators Growth primarily throughmanagement contracting, somemarketing agreements, and equityinvestment. Global but localoutlook
Managers demonstrate specificproficiency in managing moreluxurious and culturally adaptedhotels and their ownersMore extensive and integratedHRM interventions, whichsupport extensive transfers anddevelopment opportunities,throughout human resources, notjust managers Table V.
The role ofstrategic groups
533
only in a few hotels or in specific countries and with specific types of owners (forexample, governments) were there two or three managers presented to owners in a“beauty parade”.
The Multi-branders were more concerned about the co-ordination of franchiseoperators and training and communication were seen to be vital mechanisms formanaging these issues. These were the only companies who identified mandatorytraining courses for managers and held specific courses that their franchise partnerswere obliged to attend. Constant travelling by corporate executives was seen to furtherreinforce company values and assist in harmonization between geographicallydisparate franchised, managed and owned units. Both companies showed evidence ofstrong similarities associated with managing their multi-branded, and multi-marketentry strategies and large, diverse portfolios. Dividing their HRM interventions intoareas or countries where there was a critical mass of units was appropriate given thescale of their operations. Strong values, often based on the origins of the company,were communicated through frequent communiques and training opportunities furtherreinforced the brand standards and achieved appropriate levels of corporate synergy inthe face of competition from their smaller but potentially more nimble competitors.
Strategic group 2: Mixed Portfolio PurchasersThe Mixed Portfolio Purchasers had been through considerable periods of change andgrowth prior to the researchers’ fieldwork. In addition to acquiring smaller Europeanhotel chains they had substantially expanded their domestic and internationalportfolios through other acquisitions and mixed market entry methods. Both hadinternational and larger domestic sections which were managed almost completelyseparately, although they operated at similar market levels. While their existinginternational managers had primarily “worked their way up through the company” theexecutives and administrators interviewed indicated lower proportions of internalHGM appointments (75-80 per cent compared to 90-95 per cent in the companies of theother strategic groups). In addition, deputy HGM positions had previously provided a“risk free” training ground for HGMs but restructuring activities a decade earlier hadeliminated most deputy roles within the Mixed Portfolio Purchasers. The HRexecutives were resigned to such restructuring activities but held reservations aboutthe long-term implications for aspiring managers and talent development.
Both organisations took a “blanket” approach to recruitment combining everyaspect of coverage of potential hotel management talent. They relied heavily on the“grapevine” or industry network to identify possible external recruits at the senior unitmanagement level. They also recruited specifically from the international hotel schoolsin Switzerland and The Netherlands. One company positioned such recruits in juniormanagement jobs while the other provided a management development programme. Inaddition, the HR executives and their teams identified that speculative applicationswere encouraged from “second jobbers”, graduates who had undertaken some form ofinternational experience, and who were now ready to settle down and develop theircareers. Specific recruitment initiatives also existed for locations where the twocompanies had a critical mass of units (UK, Southern Europe and Germany) allowingthese units their own junior management recruitment initiatives. However, managersfrom their domestic hotel brands were not deemed appropriate for their internationalproperties as they lacked the necessary international experience and language skills.
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The acquisitions undertaken by the Mixed Portfolio Purchasers had resulted infervent attempts to build strong, coherent corporate cultures in their newly enlargedorganisations. While all the IHCs had mentioned corporate communication as animportant facet of managing international human resources the Mixed PortfolioPurchasers emphasised the value of communicating to their newly merged companies.Such communications still typically took place through top down processes; holdingregional and HGMs meetings where company values were disseminated. Newsletterswere also produced along with other documents informing staff of events, news andcompany priorities. Both Mixed Portfolio Purchasers were adamant that their acquiredbusinesses had developed some effective HRM interventions and attempts had beenmade to adopt and adapt these practices, with mixed success. They also highlightedproblems of over-staffing in their acquired firms and these had been dealt with throughrestructuring in an attempt to squeeze as much value out of the acquisitions aspossible. However, the respondents remarked that these activities had not always beenwell-timed or popular, and their long-term ramifications would have implications forfuture human resource and talent development.
Succession planning practices existed in this strategic group though one companytook a more sophisticated and IT-led approach to succession, linking it to theirperformance appraisal and a management training programme. Both Mixed PortfolioPurchasers had created profiles of their hotel units to help in the selection of HGMs.These were based on the location and size of the unit, owner relations, marketingneeds, customer groups, staff relations and the complexity and maturity of eachbusiness. However, the respondents were unsure as to how Regional OperationsDirectors exactly used these profiles to match managers to hotel properties. The MixedPortfolio Purchasers were large companies eager to grow further but their acquisitionshad provided considerable challenges to the effective development and management oftheir managerial resources. It was difficult to detect a clear international strategicorientation as they had leap-frogged stages through their acquisitions. Time toevaluate HRM practices and managerial talent was required but the executives andtheir teams were not afforded the resources (time or capital) to do this effectively. TheMixed Portfolio Purchasers were then positioned somewhere between theMulti-brander and Prestige Operator groups, in a state of flux. They were concernedwith realising the value from their acquisitions by reducing overheads andassimilating effective practices across their organisations, rather than harnessingthe resources and expertise of their HRM practices and managers to achievecompetitive advantage through human resources.
Strategic group 3: The Prestige OperatorsThe four companies in the Prestige Operators strategic group provided the mostextensive range of international and integrated HRM practices and approaches tomanage HGMs. Their focus on luxury hospitality facilities and a more selectiveportfolio of hotels in key gateway locations across the world influenced theirmanagement of human resources in specific ways. The four companies were veryproud of their international management cohort and the practices used to managethem, though they admitted that their recent corporate expansion plans made thesupply of managerial human resources more challenging. Specific HRM practices hadbeen enacted within the Prestige Operators to alleviate such issues and to ensure that
The role ofstrategic groups
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strategic objectives related to growth and the maintenance of standards were achieved.They recruited almost exclusively into their management development programmes ordirectly to junior management positions from European hotel schools. In addition, theyall ran management development programmes designed to advance the progress oftalented managers from their existing staff to HGM positions within eight to ten years.These development programmes identified junior staff via performance appraisalsystems and senior unit management reviews. They then attended assessment centresrun by corporate and regional HR and operational specialists. Two members of thisgroup had formal management training programmes where diploma and degreegraduates joined and were provided with insights into key hotel departments. Theother two organisations did not have such schemes but recruited the same calibre ofgraduates to junior management positions, though these recruits attended specifictraining courses and were tracked through regional and corporate HR systems.
The importance of mobility and international transfers were highlighted by allrespondents from the Prestige Operators group indicating that international flexibilityand cultural adaptability were vital for aspiring managers in line with their geocentricambitions. The value of international experience was prioritised based on the nature ofthe clientele, not only providing international hotel service standards but alsocustomising these sensitively to local traditions and conventions. Managerial staffwere not the only human resources encouraged to gain international experience, asthese IHCs had developed international transfer opportunities for staff at all otherlevels too. Three companies offered sabbaticals for operative staff, while the fourth wasabout to introduce such a scheme following feedback from their recent employeeattitude survey.
The Prestige Operators also exhibited more integration between their HRMpractices. For example, their succession planning, performance appraisal, training anddevelopment programmes, transfers and career management activities were allco-ordinated which led to a high level of consistency in terms of the managersidentified against the criteria set by the companies as future talent. One of the ways thecompanies achieved such integration was through the use of computerised systems ofmanagers’ details, where issues of mobility, succession planning, human resourceplanning and the level of managerial talent generally, could be discerned.
The HR executives in the Prestige Operators were themselves in much morepowerful positions, compared with their other strategic group counterparts, wheresenior operational managers often held the reins in HR decisions. The PrestigeOperators HR executives were more likely to work alongside their senior operationalcolleagues, have the power of veto over some appointments and moves, and generallyseemed to have a more positive and proactive influence in their companies. Despite thestrong similarities between the HRM practices and approaches taken to managingstrategic human resources the Prestige Operators all claimed that their tactics meantthey were breeding better managerial talent than the competition. Comments such as“It’s not what the rest of them are doing!” and “We’re producing managers who’lloutplay the competition” signified what they felt was their departure from theestablished practices used to manage and develop HGMs. There is some evidence tosupport these claims as they demonstrated more sophisticated, co-ordinated andcoherent HRM activities to ensure sufficient quantity and quality of internationalHGMs. However, these interventions took place in a more challenging context, as they
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reported more extensive problems of managing owner relations and coping with localand cultural differences, in line with their geocentric orientation (Perlmutter, 1969), andacknowledged in more detail the problems of standardising and customising HRMpractices within and across their hotel units. Such matters were seen to be due to theirmore sensitive and adaptive approaches to serving international customers anddeveloping partnerships through management contracts with local businesses. In shorttheir industry positions, as global and luxury hotel service providers also suggest awider range of challenges in managing and developing their human resources.
DiscussionThe evidence of strategic groups, highlighted through the extensive similarities inHRM strategies and practices across the eight IHCs, presents a valuable insight intothe opportunities for and limitations to creating competitive advantage via humanresources and HRM practices. Overall the discussion of the results surfaces around twomain themes; those that refer to the strategic human resource management (SHRM)approaches, and those that emphasise the insights from the strategic groupsthemselves.
In relation to the SHRM approaches, the results support the latest arguments thatthe table stake best practice approach emerges via a set of HRM practices which firmsadopt in order to be socially legitimate in that industry (Bjorkman, 2006; Boxall andPurcell, 2003; Paauwe and Boselie, 2003). The common HRM practices implementedacross the IHC sample occurred because of the specific nature of companies’internationalisation and development within the industry, and the occupationalconventions and communities associated with managing hotels (Nickson, 1999; Roperet al., 2001). This is evidence that industry and competitive institutional forces(DiMaggio and Powell, 1983) play an influential role in creating conformity in HRMpractices across the IHCs (Boxall and Purcell, 2003; Morris et al., 2006; Paauwe andBoselie, 2003). While there was also evidence of the IHCs deploying integrated anddistinctive HRM practices it was not as compelling or as apparent as the similaritiesfound. Despite the claims of uniqueness made by all the HRM executives, their teamsand the documents they supplied, only three companies were judged to have developedsufficiently idiosyncratic and integrated HRM practices in line with pursuing a RBVSIHRM approach to achieving competitive advantage via their human resources.These three companies, comprising one Multi-brander (FranchiseKing) and twoPrestige Operators (Globalalliance and Contractman International), were singled out asperforming the RBV SIHRM approach not only due to their distinctive HRM practicesbut also because of their overall attempts to bundle practices and achieve coherenceand synergy between their human resource strategies and interventions (Kamoche,2001). Three companies demonstrating any semblance of the RBV SHRM approachsuggests that, although firms purportedly strive for competitive distinction throughtheir human resources and associated practices, the pressures for conformance arestrong (Bjorkman, 2006; Boselie et al., 2002, 2003).
The specific nature of an industry is important here as it suggests that differentindustries will be influenced in contradictory ways by the institutional and competitiveinfluences at play. Previous studies on the international hotel industry havehighlighted a lower level of national institutional impact in comparison to other sectors(Boselie et al., 2002, 2003). In addition, the dominance of American companies at key
The role ofstrategic groups
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stages in the industry’s expansion (Nickson, 1999) has also led to a suggestion of anAmerican model of growth across the industry. Further research is required tounderstand how the American model has evolved more recently and whether otherindustries and sectors have experienced similar heritage issues within HRM and otherareas of management.
It is not only the “table stake” version of the SHRM approach but another level ofconvention, identified through strategic groups, which limit companies’ capacity todifferentiate themselves through their HRM practices and strategic human resources.The “best fit” SHRM approach may suggest that HRM practices and strategies aredetermined by firms’ strategies and market positions, but within close and competitiveindustries distinction via market position and strategies may be insufficient. Therespondents identified how their HRM practices and policies for developing theirmanagers were justified by their strategies, portfolio characteristics and marketpositions. However, the eight IHCs fell into three strategic groups based on their similarmarket positions, international orientations, portfolio characteristics and strategies andcommon HRM practices and approaches. Such findings suggest an additional level ofinstitutional assimilation and conformity among companies and their HRM practiceswithin industries (Powell and DiMaggio, 1991; Oliver, 1997). The findings suggest thatstrategic approaches used to manage human resources can be understood in relation tostrategic groups functioning in an industry, not just at the firm or industry levels.
The second theme of strategic groups shaping SHRM practices and approaches raisesimportant considerations for a more nuanced understanding of SHRM. Thecharacteristics which help delineate the three strategic groups are familiar in strategicmanagement, and specifically the best fit SHRM approach, as helping to determinepeople management approaches and practices (Boxall and Purcell, 2003, 2008). Forexample, the international strategic orientations (Perlmutter, 1969) of the strategicgroups as well as their predominant market entry modes, parent company interests andmain strategic choices at corporate and business levels (Johnson and Scholes, 2005),highlight that the original best fit SHRM arguments for how people should be managedneeds to challenged in relation to the opportunity they offer companies to differentiatethemselves within certain industries. There is then value in exploring companies’corporate and business strategies at an industry level for a more fine grainedunderstanding of how competition shapes people management strategies and practices.
The cognitive approach to identifying strategic groups suggests that the insights ofcorporate executives into competition shape strategies and practices (Reger and Huff,1993; Peteraf and Shanley, 1997; Panagiotou, 2006, 2007). In this study, the HRrespondents mentioned their competitors when explaining their own organisation’sresponses to industry developments and ways of managing human resources. It isevident that what “the others” are doing shapes the management of strategic humanresources resulting in the detection of similar HRM practices within the three strategicgroups in the international hotel industry. However, the implications of these commonpractices are less clear. There are positive and negative consequences of strategicgroup membership (Peteraf and Shanley, 1997). The positive outcomes of strategicgroup membership include coordination effects (where there are interdependentbenefits from members’ actions); efficiency effects (where information exchangebetween members increases efficiencies and innovation); and reputation effects (wherethe identity of members helps to reduce search costs) (Peteraf and Shanley, 1997).
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These outcomes need to be explored directly in HRM terms to see whether there are, forexample, more movements of human resources between strategic group members,similar levels of adoption of HRM techniques and technologies, and similar employerreputations achieved within strategic groups. Conversely the negative consequences ofstrategic group identity are: “reduced flexibility, strategic myopia and suboptimizingbehavior” (Peteraf and Shanley, 1997, p. 180). Likewise, such obstructive rigidities andstagnant thinking and behaviour in HRM interventions, needs to be investigated inrelation to the links between strategic groups and SHRM.
Another feature of strategic group research is the appearance of transient groups(Panagiotou, 2006), which are firms (Reger and Huff, 1993 p.117) who “are changingfrom one strategic position to another, but along dimensions common to other firms inthe industry.” The Mixed Portfolio Purchasers strategic group is suggestive of justsuch a transient group, moving from the strategic position associated with PrestigeOperators towards that of the Multi-branders. The mobility barriers associated withaccessing new strategic groups are highlighted in the literature (McGee et al., 1995;Reger and Huff, 1993) and appear evident in the HRM challenges and changingpriorities the Mixed Portfolio Purchasers encountered as they attempted to realise thebenefits of their newly enlarged organisations. The real difficulty in achieving theadded value of their acquisitions, and subsequent moves to become international hoteloperators of multiple brands, occurs where both Mixed Portfolio Purchasers were preyto hostile takeovers just after the research was completed. Transient groups also reflectthe broader repositioning of an industry (Panagiotou, 2006, 2007) and subsequentmoves in the international hotel industry support this suggestion as three of the eightfirms have now secured membership of the Multi-branders strategic group by movingalong a similar strategic path to the Mixed Portfolio Purchasers, but with more success.
Conclusions and recommendationsWithin the SHRM literature the three main approaches (best practice, “best fit” andRBV) have traditionally been seen as independently pursued by firms. However, morerecent work has suggested that companies will simultaneously adopt variations ofthese approaches and so a combined view of SHRM is more appropriate and reflectsthe complex environments and competing perspectives companies face (Boxall andPurcell, 2003, 2008). This study has focused on the strategic human resources andassociated HRM strategies and practices in a global industry in order to explore howcompanies pursue competitive advantage in an industry. The literature hasacknowledged that different industries experience institutional factors to varyingextents (Boselie et al., 2002, 2003; Paauwe and Boselie, 2003) and as such in someindustries it may be that other institutional factors may take precedence over parentcountry aspects of influence. This study of the international hotel industry suggeststhis to be the case for strategic human resources, not only because of industry widefeatures, but also because of the prominence of strategic groups. This conclusionemerges amidst wider calls for HRM research focused more clearly on newinstitutionalism and the strategic balance theory (Boselie et al., 2009; Oliver, 1997), withlevels of analysis stretching beyond the firm and industry dimensions.
In the last 30 years SHRM theoretical and empirical research has advanced throughengagement with strategic management concepts and theories (Boxall and Purcell,2003, 2008; Storey, 1992). Within strategic management, strategic groups have been
The role ofstrategic groups
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seen as way of understanding the competitive environments firms face withinindustries (Porter, 1980; McGee et al., 1995; Dranove et al., 1998) and has taken aprescriptive approach to determining firms’ closest industry rivals. More recent studiesof strategic groups have adopted a cognitive approach asking executives andstrategists themselves to identify the strategic variables, which determine subsets ofindustry rivals (Reger and Huff, 1993; Peteraf and Shanley, 1997; Panagiotou, 2006,2007). This research asked HRM executives about the approaches they took tomanaging their strategic human resources across their international hotel portfolios,and strategic groups emerged through the strategic variables and HRM practices usedto manage HGMs as strategic human resources in the IHCs. Such evidence reinforcesthe (mobility) barriers companies need to overcome in their quest for competitiveadvantage through human resources and other strategic options. This link betweenSHRM approaches and strategic groups has not been identified previously andsuggests several important routes for further investigation. Future research directionsinclude longitudinal studies exploring the mobility of organisations between strategicgroups and the mobility of human resources between organisations and strategicgroups. Most significantly the emergence of strategic groups highlights another levelof institutional fit with more pressures for conformance among organisationssupposedly attempting to differentiate themselves from each other (Panagiotou, 2007).Managing these dualities of conformance and differentiation is challenging but asBoon et al. (2009) suggest not impossible with opportunities for innovative responsesapparent. Above all these studies highlight that strategists (executives from allfunctions) may benefit from greater awareness of industry and strategic grouppressures. If competitive advantage is achieved via differentiated and synergisticstrategies and practices then such decision-makers should be encouraged to see beyondthe conventional limitations of their industries and strategic groups. This may demandnew priorities and ways of educating and developing strategic management skills andthinking in the strategic management and SHRM fields (Panagiotou, 2006, 2007).
The results and conclusions from this study do need to be considered alongside thelimitations of the research where the perspectives of human resource executives andtheir teams were the prime focus. Finally, although the specific value of understandingcompetition within an international industry has been highlighted as a key featurethroughout this article, it is important to acknowledge that other industries mayprovide different insights into strategic groups and HRM strategies and practices.
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Further reading
Mueller, F. (1996), “Human resources as strategic assets: an evolutionary resource-based theory”,Journal of Management Studies, Vol. 33 No. 6, pp. 757-85.
Nickson, D. (1998), “A review of hotel internationalisation with a particular focus on the key roleplayed by American organisations”, Progress in Tourism and Hospitality Research, Vol. 4,pp. 53-66.
Panagiotou, G. (2008), “Conjoining prescriptive and descriptive approaches: towards anintegrative framework of decision making: a conceptual note”, Management Decision,Vol. 46 No. 4, pp. 553-64.
Pfeffer, J. (1994), Competitive Advantage through People, Harvard Business School Press, Boston,MA.
Corresponding authorJudie M. Gannon can be contacted at: [email protected]
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