A conclusive advice for leaders in the crisis prone hotel industry could be: A credible leader will not protect his staff from turbulence but rather prepare them for and lead them through the turbulence. Based on that these “members of an organisation will be able to accept and embrace turbulence as part of their life experience, making them better equipped to address the challenges born out of turbulence”231.
2.3 Stakeholder Management Specifics within the Hotel Industry
2.3.1 Prerequisites for Stakeholder Relationship Management supporting Crisis Management Processes within the Hotel Industry
A saying that applies not only to private but also to business life says: “You can choose your friends, but not your family.” In business life the ”family” (the stakeholders) can often not be chosen deliberately either. Therefore it is important to find a professional framework which allows constant and promising work on these relationships. Whereas stakeholder relationship management has become a key discipline in business administration in various industries, it is still treated as an orphan in great parts of the hotel industry.
However, being part of the service industry the hotel industry is naturally embedded in a stakeholder environment. Besides internal stakeholders such as employees and managers who “produce” the hotel services, external stakeholders are unconditionally vital for a hotel company’s success. Crucial sample hotel industry external stakeholder groups are customer/guest, competitors, suppliers, stockholders, distribution partners, media, local community regulators and natural environment. All crucial stakeholder groups are graphically outlined in a hotel company stakeholder map in fig. 2.3.
Further evidence for the importance of the application of the stakeholder theory to organisational theory is given by Reynolds et al.: “Considering and satisfying a stakeholder group is instrumentally valuable for the organisation because it garners legitimacy and trust
231 Quist, Allen H, “A Credible Leader for Turbulent Times : Examining the Qualities Necessary for Leading into the Future,” Journal of Strategic Leadership, 2 (2001), 1–12, p. 8.
from that group and thereby improves the likelihood that the organisation will achieve its goals.”232 Scott and Lane enhance this statement by claiming that stakeholders are constructing
a cognitive image of the organisation by perceiving and interpreting organisational images. Hence they are identifying with the organisation when they perceive an overlap between their self-identity and the cognitive image they are constructing of an organisation.233
Pearson and Clair found out that generally organisations building alliances, achieving coordination, and sharing accurate information with its stakeholders may be able to benefit from early detection of warning signals, minimal downtime, effective containment of damage, and positive effects on corporate reputation.234
Table 2.2. introduces characteristics of the relevant stakeholders groups as displayed in the hotel organisation stakeholder map. The overview of the variety of characteristics may be seen as one indicator for the necessity of a subsequent tactics matrix for managing stakeholders. According to their characteristics as well as on individual organisational aspects stakeholders have to be classified, prioritised and evaluated regarding their influence, power and cooperation. This means that instead of conducting “the” stakeholder relationship management the relationship to and with each individual stakeholder group has to be tailor-made if nothing else due to their diverse characteristics.
Table 2.2.
Hotel Organisation Stakeholder Characteristics Hotel Organisation
Stakeholder Group Characteristics
Managers • management trainings for an increase in stakeholder awareness • international hotel corporations tend to launch their own
management training schools
Employees • cultural value and labour law distinctions within multinational corporations
• rising struggle for well-educated employees - rising competition for talent among hotel companies and with other industries • as employees represent one of the most important assests of the
hotel industry it is inevitably important to realise a working atmosphere where everybody feels comfortable
• understand the changing nature of employee needs and expectations
Customers • includes customers themselves as well as sales intermediaries • Customers are inceasingly included in internal processes or
partnerships - "treat customers as partners"
232 Reynolds, S. J., Schultz, F. C., Hekman, D. R., “Stakeholder Theory and Managerial Decision-Making: Constraints and Implications of
Balancing Stakeholder Interests,” Journal of Business Ethics, 64 (2006), 285–301, p. 293.
233 cf. Scott, S. G., Lane, V. R., “A Stakeholder Approach to Organisational Identity,” Academy of Management Review, 25 (2000), 43–62, p.
48.
• customer relationship management (CRM) techniques are essential
• tracking frequent guests' preferences supports meetig their needs more effectively
• business is subject to sudden and unforeseen changes in demand Competitors • may be other hotels, time-share, restaurants or other hotel
companies within the same complex, region or marketplace; or it may be another hotel company at the other side of the world offering similar services.; therefore a competitor analysis has to be conducted by each individual hotel in order to determine their specific competitive set; this may even differ for various target groups
• competitors may join forces by forming allicances for
technological advancement, new product development, entering new or foreign markets and pursuing a wide variety of other opportunities
• because of the geographic dispersion of individual properties, competitor cooperation among the hotel industry results easier and more effective as in other industries
Suppliers • isolated geographical locations may restrict choice of suppliers and frequency of supply
• long-term contracts with benefits for both parties - limited number of suppliers
• efficient supply-chain-management can increase corprorate performance
• Suppliers can provide knowledge, technical assistance and joint problem solving
• outsourcing is a common hotel strategic management tool Stockholders • shareholder value still predominant in many companies
• difficulty caused by cultural, managerial and tax distinctions within multinational corporations
The Media • the Media influences relationship and reputation of a hotel organisation with society at large.
• it is rather difficult to pursue an inclusion or partnering strategy in the case of the Media. organizations usually employ public- relations experts who release an apprpriate amount of information that will place the company in a favorable light
Local Community • the hotel industry can profoundly affect communities and their citizens, not just as an employer but also in altering the physical surroundings and the economics of a location, it is important to involve communities maybe even before development begins • community activites are good for employee morale and company
image. In addition, financial and operating objectives may be achieved while satisfying a need in the local community
• hotel corporations frequently donate food and beverage, sponsor special events or even compensate employees for the time they spend volunteering
Regulators • foreign governement systems are often difficult to understand and to manage - a foreign partner who understands the system may help
• frequently the hotel industry and tourism ministries/governmental destination management share common goals - forming alliances may be prosperous for both parties
Natural Environment • activist groups are organizations formed with the purpose of advancing a specific cause (e.g. Greenpeace Int.)
• they are often seen in an adversarial role relative to other organizational stakeholders
• in order to achieve a win-win-situation for both parties,
organisations should generally operate in a manner consistent with the values of society and invite activist group members to
participate in strategic planning processes either as advisors or group members
Source: pepared by author based on Enz, Harrison & St. John, Harrison, Hwang and Lockwood235
Supporting this approach, table 2.3. offers a more detailed option to plan the tactics for the decisive hotel management related stakeholder relationships in the different steps throughout the crisis management circle. First of all, stakeholder groups are generally classified regarding their relationship and cooperation level. In a next step, their prioritization in crisis situation is evaluated – in some cases this prioritization might vary either from their general classification or based on the concrete crisis situation considered. The evaluation of the stakeholder groups’ economic and political power as well as of their influence lead to the determination of partnering and communicating tactics.
Table 2.3.
Tactics Matrix for Managing Tourism-Industry Stakeholders in Crisis Situations within the Hotel Industry Stakeholder Groups Classification Prioritization in Crisis Situation Economic/ Political Power Influence Partnering Tactics Communication Tactics Employees Managers Customers Competitors Suppliers Stockholders Distribution Partners Media Local Community Regulators Natural Environment
Source: pepared by author 236
235 cf. Enz, C. A., Hospitality Strategic management - Concepts and Cases, 2nd ed. (Hoboken, New Jersey: John Wiley & Sons, 2010);
Harrison, J. S., St. John, C. H., “Managing and Partnering with External Stakeholders,” The Academy of Management Executive, 10 (1996), 46–60; Harrison, J. S., “Strategic Analysis for the Hospitality Industry,” Cornell Hotel and Restaurant Administration Quarterly, 44 (2003), 139–152; Hwang, L. J., Lockwood, A., “Understanding the Challenges of Implementing Best Practices in Hospitality and Tourism SMEs,”
Benchmarking: An International Journal, 13 (2006), 337–354.
236 cf. Bourne, L., Stakeholder relationship management - A Maturity Model for Organisational Implementation (Farnham: Gower
Publishing Limited, 2009); Harrison, J. S., St. John, C. H., “Managing and Partnering with External Stakeholders,” The Academy of
It seems advisable that hotel companies – after identifying all relevant stakeholders – prepare and fill-in this matrix for each (macro-level) hotel crisis scenario. Stakeholder classification as well as prioritization or power and influence may differ significantly based on the respective crisis scenario. Some tactics might already be established as a crisis reduction or readiness tools, others might support the response or recovery phases.