Principles of Management

for the Hospitality Industry

 Principles of Management
for the Hospitality Industry

Dana Tesone

Rosen College of Hospitality Management,

University of Central Florida

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10 11 12 10 9 8 7 6 5 4 3 2 1
 Contents
Preface vii

PART 1 Management Knowledge 1

Chapter 1 Managing Service Enterprises 3
Chapter 2 Management Practice, Evolution and Ethics 17
Chapter 3 Strategic Planning, Problem Solving and Decisions 43
Chapter 4 Systems, Development and Structures 63

PART 2 Management Functions 95

Chapter 5 Productivity and Value-Added Management Practices 97
Chapter 6 Organizing Resources, Structure and Systems 119
Chapter 7 Human Resource Management and Influence Skills 137
Chapter 8 Managing Technology and Marketing Systems 161
Chapter 9 Management Control Functions 187

PART 3 Strategic Applications 207

Chapter 10 Tactical Productivity Strategies 209
Chapter 11 Tactical Growth Strategies 233
Chapter 12 Tactical Turnaround Strategies 253

PART 4 Leadership Applications 273

Chapter 13 Leadership Awareness 275
Chapter 14 Leadership Practice 293
Chapter 15 Organizational Behavior and Leadership Development 311

PART 5 Sustainability 329

Chapter 16 Sustainable Hospitality Marketing Management 331
Chapter 17 Development of a Sustainable Tourism Hospitality
Human Resources Management Module 337
Glossary of Terms 365
Index 383
 Preface
This book is designed to provide the readers with the planning, organizing, influencing,
and control functions associated with management in service enterprises, especially
with hospitality organizations. It is presented from the standpoint of a practitioner’s
perspective, which means it is applicable to the actual tasks, duties and responsi-
bilities that are performed by line and staff managers alike. The book may be used for
educational programs in any service industry, but is particularly focused on managing
hospitality organizations. The information that is presented includes all of the activi-
ties performed by management practitioners.
The objective of the manager in the hospitality service industries is to learn the
practice of professional management. This practice includes building a solid founda-
tion of management and leadership knowledge, the development of appropriate skills,
and the reflection and self-awareness of personal attitudes about management and
leadership. The operating manager who is in possession of this knowledge and these
skills will benefit in three ways. First, the operating manager who has a thorough
knowledge of professional management and leadership concepts has a foundation on
which to develop his or her skills. Second, this combination of knowledge and skills
better prepares the operations manager to successfully run, grow and fix any opera-
tion within any enterprise. Third, the operations manager who possesses this knowl-
edge and these skills, and who regularly contemplates how his or her actions and
behaviors reveal his or her attitudes about management and leadership is more likely
to enjoy a rapidly progressive career. In essence, this person will be a better manager
for any organization.
This book is written in a straightforward and condensed manner designed to provide
the reader with an inclusive, yet precise presentation of the material. The intention is to
virtually place the reader in the imaginary workplace to work through items of discus-
sion in each chapter. At the beginning of each chapter, a vignette entitled IN THE REAL
WORLD… sets the stage for the reader to embark on a given topic. The chapter then
concludes with the outcome of the applied role-play with the vignette called IN THE
REAL WORLD…(Continued), to provide reinforcement of the material absorbed through
reading the chapter.
A section called Discussion Questions appears after each vignette to provide
thoughtful consideration of the topics presented in each chapter. The questions are
arranged in variable formats ranging from open-ended to specific right and wrong
answers. Marginal Definitions are included throughout each chapter to reinforce the
vocabulary of terms associated with professional management practices. A Glossary
of Terms provides an alphabetical listing of vocabulary and definitions.
Principles of Management for the Hospitality Industry

The book consists of seventeen chapters, arranged within five parts. The figure
below shows a diagram of the relationships and rationale for the book.

Part III

Reflection
KEY
Experience from
knowledge

Knowledge from Self-awareness

experience

Part IV

Sustainability
PART V
Knowledge Experience

Part I Part II

The chapters in Part I of the book focus on the evolution of management and gen-
eral descriptions of management functions, strategies and activities.
Chapter 1 provides an overview of service enterprise management and provides
comparisons and contrasts between service and other industries. Chapter 2 walks us
through a historical evolution of management practices and theories to demonstrate
the use of all previously discovered ways of managing enterprises in current practice.
There is also an inclusive discussion of management and business ethics toward the
end of the chapter. Chapter 3 presents a thorough discussion of procedures used for
enterprise strategic planning, problem solving and management decisions used to
proactively and reactively manage operations. Chapter 4 addresses service enterprise
systems, development and structures for the purpose of establishing a foundation
through which managers may view the operations within service enterprises.
At this point in the book, we have established a foundation of management knowl-
edge that will be applied throughout the remainder of the text. The reader is now
prepared to enter Part II of the book.
Part II contains chapters that present the reader with a snapshot of duties and
responsibilities associated with the practice of professional management. There is a
thorough discussion of productivity models and the practice of value-added manage-
ment in Chapter 5. Chapter 6 walks us through the functions associated with organ-
izing resources, structures and systems within the service enterprise. An overview of
the human resource management function is the topic of discussion in Chapter 7
of the text. Chapter 8 presents management practices associated with information
technology applications and marketing systems. Chapter 9 addresses management
accounting and financial control functions within service enterprises. At this stage we
have absorbed a combination of knowledge and practices that will prepare us to expe-
rience management diagnostics and interventions used to perform tactical strategies.

viii
 Preface

Part III demonstrates applied strategies and tactics required for effective strategic
management. In these chapters, we will reflect on our existing foundations of knowledge
and practice to enact management interventions in three major categories. Chapter 10
begins with an overview of strategic diagnostics and interventions and concludes with a
demonstration of productivity enhancement tactics that result in value-added manage-
ment practices. We engage in discussions of corporate and property level growth strate-
gies in Chapter 11 of the text. Chapter 12 provides the reader with practices used to
turnaround under performing departments within a service enterprise. At this point, we
have accumulated and reflected upon a holistic blend of management knowledge, prac-
tices and experiences. We are now ready to enter an examination of ourselves for the
purpose of learning how managers may become leaders.
Part IV covers the theories, practices and development aspects of leadership in
organizations. Chapter 13 provides an in-depth discussion of leadership awareness
for the reader. We convert that knowledge into leadership practices in Chapter 14 of
the text. We use our powers of reflection and self-awareness to generate strategies
for personal leadership development in Chapter 15. Part V presents information con-
cerning sustainable competitive advantage from both marketing and human resource
management perspectives. As we near the completion of the final chapter, we reflect
upon all we learn by reframing a summary of major knowledge and experiences pre-
sented throughout the text.
It is recommended that readers reflect on actual scenarios in the workplace or class-
room role-play while digesting the content of this book. If the book is being used as
part of a college course, the facilitator may encourage discussions of actual events
to bring each topic to life. The reader is encouraged to convert the knowledge from
this book into actual skills to be applied in the workplace. This may be accomplished
through two activities. First, apply the knowledge immediately. Turning knowledge into
skills requires practice. Practice the knowledge within 24 to 48 hours after reading
it. Second, teach these concepts to someone else. We learn through teaching. As one
presents this new information to another person, the exchange process will reinforce
the knowledge and that ‘teacher’ will be better prepared to use the knowledge in the
workplace. Like the first suggestion, this technique should be applied within 24 to 48
hours after reading and discussing the information.

ix
 PART 1
Management
Knowledge
 CHAPTER 1
Managing Service
Enterprises
OB J EC T IVE S
In this chapter you will learn to:
1. Describe service, service enterprises and servant leadership.
2. Identify management hierarchy levels and management functions.
3. Describe an overview of management and supervisory practices.

R E A L WO R LD E XP E R IENCES
It has been a long time since you and your friends started attending classes
at the College of Hospitality Management. Finally, you are all taking courses
in the final semester of your senior year. While talking with some friends,
the topic of postgraduation plans comes up.

Many of your friends are sharing concerns about leaving school to enter the
real world. While the prospect seems scary, it also appears to be an exciting
time for all of you. The conversation turns toward different opinions con-
cerning the ‘ideal job’ after graduation.

To be continued…

INTRODUCTION
This chapter provides us with an overview of management and leadership in hos-
pitality enterprises. We will discuss the nature of services provided to customers,
guests and clients, and how we may learn the skills required to effectively manage
these services. Why do we need to know about management? The answer to this
question comes from the career opportunities that exist for college graduates and
Principles of Management for the Hospitality Industry

entry-level employees. Where are the higher paying jobs? In our business, all of
these jobs have title of ‘manager’ attached to the position description.

Some individuals may intend to pursue careers in service operations such as res-
taurant, lodging, recreation, entertainment, events and other sectors. In this case,
the objective would be to become an operations manager. Others may prefer to work
in human resources, marketing, sales, accounting, finance or information technol-
ogy specializations. The best jobs in these areas include titles of manager, director
or vice president. So we can see that careers in hospitality, tourism or other service
industries will inevitably involve being promoted into management positions.

Many service enterprises do not provide thorough training for management

knowledge, skills and abilities. Their expectation is for individuals to enter the
workforce with this level of training from universities, colleges, schools and voca-
tional institutions. In most cases, an individual will be promoted from a service or
production position into management. But without proper training that person will
be unlikely to become a successful manager. The reason this is so is that service
jobs and management are two different practices. Service jobs require technical
skills to perform job functions. When we become managers, however, we are respon-
sible for other people who perform these functions. This is a totally different skills
set and one that every service enterprise worker needs to learn in order to enjoy a
successful career. Even if you do not want to manage large groups of people, the
success of your career will rely on your ability to manage yourself and administrative
assistants.

This chapter begins our journey of attaining knowledge, skills and abilities in
service management. It provides an overview of services and the management
of those services that will become the template for exploration in every aspect of
becoming a manager and a leader in service enterprises.

WHAT IS SERVICE?
If someone were to ask the question ‘what is service’? The manager’s initial
answer would be to say, ‘it depends…’ In this case, it would depend on the nature
of the industry providing the service. Most businesses focus on the distribution of
products to customers. So in manufacturing, wholesale, and retail sales, customer
service is ensuring product delivery to the customer and handling any problems
that may arise with the performance of the product. This is not the case in the
service sector of business. In this sector, the physical product is really a by-product
of the services being rendered. For instance, in a quick service restaurant (QSR),
the product is the meal provided. The service consists of those interactions and
transactions that occur between the customer and members of the staff from the
time of entry to the restaurant through the time of departure from the restaurant.
Hence, service consists of interactions and transactions that result in relation-
ships among customers and staff members, which is called customer relationships.
Hospitality service enterprises are organizations that regularly engage in customer
relationships.

4
 Managing Service Enterprises

High
Physician Cruise
luxury hotel

Hair stylist

Resort hotel
Full service restaurant
Intimacy

Full service hotel

Event planner
Theme park

Retail

QSRs Limited service lodging

Airline/coach
Low High
Duration

FIGURE 1.1 Customer service relationship model

Customer relationships may be measured by two factors. The first is the intimacy
or the intensity of the interactions. For instance, a QSR or retail worker merely
takes the order and packages the product, so the intimacy with the customer is lim-
ited. However, a physician or a luxury hotel operator must know every detail about
the client to provide the expected levels of service; thus a high level of intimacy
exists with the customer during these interactions.
The second factor used to measure the level of customer service is duration of
time spent with the customer. The customer spends a few minutes with the QSR
or retail worker, while she or he spends 30 minutes or so with a physician or a
tax accountant, spends hours in an airplane or full-service restaurant and perhaps
days in a luxury hotel. Figure 1.1 demonstrates examples of customer interactions
in terms of intimacy and duration.

THE HOSPITALITY INDUSTRY

While all service enterprises focus on service as the main product, the epitome of a
service operation falls within the domain of the hospitality industry. The hospital-
ity industry includes services in the areas of lodging, food service, travel, tourism,
recreation, entertainment, personal health and fitness, attractions, social events,
meetings and conventions. The complexity of these services is quite high in both
intimacy and duration levels relative to the interaction with the customer (who is
referred to as a ‘guest’) in this industry. While the information in this book pre-
pares all service industry personnel to practice effective management and leader-
ship, the examples presented in it are taken from the hospitality industry. This is
because a person with the ability to manage in this industry is capable of effective
management in any industry of choice.

5
Principles of Management for the Hospitality Industry

COMMITMENT TO SERVICE
Workers in any industry are famous for slogans and campaigns claiming quality
service. The focus is usually on customer service. Very little emphasis seems to
be placed on services provided to members of other stakeholder groups (sharehold-
ers, employees, the community). Interestingly, some hospitality/tourism organi-
zations that claim high levels of customer service provide the exact opposite to
their employees. Managers in some firms say they focus on the worker as an inter-
nal customer.1 Closer inspection of these companies often reveals unrealistically
limited resources, antiquated systems and stagnating bureaucracy. In fact, one of
the incentives for promotion in some organizations is the opportunity to escape
the customer by dwelling in offices and managing reports. Reports and forms,
while necessary to some degree, serve as diversions from the ‘business of the busi-
ness’, which is to provide service to internal and external customers.2
In some cases, reports and forms are used to feed an already bloated corporate
bureaucracy that is upheld by senior-level managers. As the bureaucracy grows, the
business becomes inverted, focusing inward toward the senior management group
and away from the customers and other stakeholders. Because these organizations
are out of touch with the stakeholder groups, they are reactive to changes in the
external environment (factors outside the organization). This is contrary to the
proactive approach of healthier competitors. Fortunately, this scenario is becoming
more and more the exception to the rule; …or is it? You decide the answer based
on your own customer service and work-related experiences.

SERVICE VERSUS SERVITUDE

One term used to describe the services provided by leaders is called ‘stewardship’.3
Stewardship describes the intrinsic duty of leaders to provide services to their fol-
lowers every day without being asked for assistance. They do this because they are
truly concerned with the welfare of those individuals with whom they interact. In
the hospitality/tourism industry, we are trained to anticipate the needs of our guests
(customers) and proactively act to satisfy those needs.4 We don’t do this because
we ‘have to’ do it; we do it because we personally and professionally enjoy the chal-
lenge of creating memorable experiences for our guests. That is why we hire new
people for ‘attitude’ in our industry. We seek those individuals who genuinely like
other people enough to engage in providing them with intimate levels of service for
long durations of time. These individuals possess the security within their being to
recognize the difference between making a professional choice to serve others, as
opposed to an insecure attitude of being in a position of servitude, in which they feel
they ‘have to’ serve others. The difference is a mental paradigm of personal security
versus personal insecurity. The insecure individuals will move toward bureaucratic
industries and positions that are mostly self-serving, as they pursue their careers.
Think for a moment about the great leaders in history throughout the world.
Without exception, they all practiced ‘servant leadership,’5 regardless of their spe-
cific calling. Now think about those not-so-great names in history. Were they indi-
viduals who provided services primarily for the benefit of others or just themselves?
Those who choose to provide service to others have chosen the highest path to

6
 Managing Service Enterprises

self-fulfillment. They join the ranks of the likes of Buddha, Tao, Christ, Gandhi,
Mohammad, Abraham, Socrates and others. Consider the status of current
day professions; the physician provides service by touching sick people in pecu-
liar places; the teacher is a servant of knowledge; the architect creates aesthetic
structures for peoples’ enjoyment, while ensuring their safety and so on. A path of
service is a choice we make, while one of servitude is forced upon us.

WHAT IS MANAGEMENT?
Simply defined, management is the accomplishment of an organization’s objec-
tives through the activities of others. This leads us to ask the question, ‘What is
an organization?’ An organization is a collection of individuals brought together
to achieve a common set of goals or objectives, which for our purposes mean the
same thing. An organization is made up of people, who provide goods and services
to customers. These people perform their job functions in physical locations such
as offices, lodging facilities, restaurants and storefronts.
When groups of people work together in an organization, there are certain expec-
tations for behavior and thinking. The organizational culture consists of the shared
values, attitudes and beliefs of workers within a specific organization. These shared
values, attitudes and beliefs cause workers to engage in behaviors that are consist-
ent with the expectations or ‘norms’ of that organization. You may identify the
nature of an organizational culture by observing the staff members while they are
at work. The way they present themselves, their attire, interactions, work hab-
its, and treatment of the customers or guests are all telltale signs of the unwritten
codes for behavior that come naturally to the staff members. Other factors that
impact the culture are the traditions, historical stories and leadership styles of cor-
porate figureheads. For instance, the Ritz-Carlton hotel chain embodies a strong
guest service culture that is evident in the saying, ‘We are ladies and gentlemen
serving ladies and gentlemen.’ The majority of employees at these properties take
great pride in the culture of the organization. The opinions of individuals con-
cerning the organizational culture are called organizational climate. In the case of
Ritz-Carlton, the climate seems quite positive, with many staff members indicating
they are proud to be associated with that service philosophy. Negative perceptions
of the culture within other service enterprises would indicate the need for manage-
ment diagnostics and problem-solving interventions.
When you become a staff member of a service enterprise, you occupy a job,
which is really referred to as a position. For each position, there are tasks, duties,
and responsibilities, which are items that are listed in a job description to articu-
late the activities of individuals within that job classification. These become the
expectations for the job holder’s performance. There are two broad categories of
employees in service enterprises called line and staff workers. Line workers produce
products and/or services (chefs and front desk agents, for instance) and/or directly
generate revenues (hotel sales personnel, for instance). Staff workers perform tasks,
duties and responsibilities intended to support the line workers (accounting, human
resources and purchasing personnel, for instance). Management positions also fall
within the classifications of line and staff. Line managers work in operations or
sales, while staff managers oversee functions that support the line positions.

7
Principles of Management for the Hospitality Industry

Regardless of whether a person is a line or staff manager, all managers are

expected to professionally manage the service enterprise. We recall that manage-
ment is defined as the accomplishment of the organization’s objectives through the
activities of others. Mismanagement occurs when managers prove to be negligent
in managing the enterprise to a reasonable standard. Different managers subscribe
to various styles of decision-making activities. Managers who believe in highly cen-
tralized decision-making without seeking input from others in the organization are
practicing autocratic management. Most autocratic managers are advocates of clas-
sical management thinking that embraces early engineering approaches of managing
organizations that did not consider the human factors involved with work.
Service enterprises, in particular those in the hospitality and tourism industries,
are quite labor intensive, meaning they employ large numbers of line and staff
employees. Managers who fail to focus on the human aspects of work tend to over-
look the needs of employees. This can be costly in labor-intensive businesses and
usually results in high levels of employee turnover. Employee turnover consists
of the total number of individuals who voluntarily (resignation) or involuntarily
(discharge) separate from employment in an organization over the course of a year.
Employee turnover is usually measured as a percentage of the total employment
population within the enterprise. So a turnover rate of 100% means that the equiv-
alent of every position in the company has had to be replaced over the past year.
The opposite of employee turnover is called employee retention, which describes
those employees who remain with the company over a period of one year. If an
organization has a turnover rate of 60%, then the employee retention rate would
be 40%. The combined turnover and retention percentages will always equal 100%,
which represents the total employee population. High rates of employee turnover
are costly to the organization, because each person who leaves the company must
be replaced with another person to fill the vacated position. Human resource activi-
ties to attract and hire applicants for positions are called recruitment and selection.
These activities are expensive and time consuming. Also, during the time that a
position remains vacant, waiting to be filled, there will be shortfalls in worker out-
puts. Worker outputs are units of production completed by each worker. When a
worker is missing, the associated outputs will be missed and in most cases, will
have to be made up by remaining workers, which places a burden on those staff
members. Most organizations also measure management turnover which is rep-
resented by the percentage of managers who voluntarily or involuntarily separate
from their positions with an organization relative to the total number of manage-
ment jobs over a period of one year. The cost of management turnover is quite
high in most service enterprises.
One goal of professional management is to increase employee retention rates
to a predetermined acceptable level. In order to do this, managers must decrease
turnover rates to an appropriate level. Sound human relations skills contribute to
enhanced employee retention and decreased turnover in organizations. The ulti-
mate human relations skill is the ability to influence others to willingly follow the
manager toward accomplishing the objectives of the organization. This practice is
called leadership.
Leadership comprises a number of influencing skills that contribute to the power
base of the professional manager, which is an important topic area addressed in
Part IV of this book. Managers must be trained in organizational diagnostics to iden-
tify the health of each work unit. They do this by comparing actual performance

8
 Managing Service Enterprises

levels to standards for performance. When a negative gap exists between actual per-
formance and standards, a problem exists in the organization. Managers must pos-
sess the ability to identify symptoms in an organization to determine the nature
of significant problems – a process called management diagnosis. Managers con-
tinually diagnose the health of the organization by wandering around, observing
performance and conducting diagnostic interviews, which are discussions with
individuals to identify symptoms of potential problems. Once the manager believes
a problem exists, he or she would engage in a practice called problem analysis to
identify causal relationships involving symptoms that will lead to problem identifi-
cation, which indicates the real problem at hand. Finally, the manager will identify
a group of alternative problem solutions and choose one for implementation – a
process called decision-making.

MANAGEMENT FUNCTIONS
So far we have discussed management activities, which are narrower in scope
than management functions. There are four functions of management. They are
planning, organizing, influence and control. All managers at all levels of a service
enterprise perform all of the management functions. However, the majority of time
spent performing certain functions will vary with the level of management within
the organization. Figure 1.2 describes the levels of management.
The pyramid shows us that three basic levels of management exist within the
service enterprise. The supervisory level is considered to be junior-level manage-
ment in which the supervisor, lead or assistant manager actually oversees a group
of line or staff workers. For instance, a dining room supervisor will be responsible
for ensuring that the service staff performs to the standards established for that
area of a restaurant. The positions being supervised in this case would include job
titles such as server, busser, host, bartender and bar-back.
The supervisor mostly performs a control function, since he or she is responsible
for making sure the actual performance of every person in the dining room meets
the established standards for performance. In order to do this, the supervisor or lead

Management skills Functions

Conceptual Planning
Senior

Influence Organizing

Middle

Technical
Control
Supervisory

FIGURE 1.2 Management hierarchy

9
Principles of Management for the Hospitality Industry

must possess the actual skills required of servers, bussers, hosts and bartenders.
These are called technical skills, which are the actual skills required to perform a
line or staff function. But technical skills are not enough for effective supervision.
As we have already discussed, there are people skills required of this job. So the
supervisor or lead must possess both technical skills and effective staff relations
skills, which means the ability to influence the staff to meet performance stand-
ards. When a supervisor performs well in this capacity, she or he may eventually be
considered for promotion to a middle management position.
Middle-level managers are usually responsible for the function of a sizeable work
unit, called a department, division or store in the case of chain restaurants. Middle
managers continue to supervise junior-level managers, supervisors and leads, who
in turn supervise the line or staff employees. Consider, for instance, the lobby area
of a full-service hotel. The front-office manager is the department leader for most
services that occur in and around the lobby. These services might include bell staff,
front desk agents, reservations agents (sometimes they report to the sales and mar-
keting director), concierges, door staff, PBX operators and valet employees. We can
see that this is a large area of responsibility, which means it would not be feasible
for a front-office manager to directly supervise each position. Instead there are man-
agers and supervisors for each of these areas who report directly to the front-office
manager.
The front-office manager has a limited number of direct reports who supervise
the rest of the staff. So what does the front-office manager do most of the time?
She or he does what all middle managers do – organize activities among other
departments. The middle manager spends most of the time performing the organ-
izing function of management, in which the manager coordinates activities within
and outside the department. In addition to the skills associated with supervisory
work, the middle manager must establish strong relationships with peers who hold
similar level positions in different departments. In our front-office manager sce-
nario, key department managers who will influence the success of the front office
include those in the areas of housekeeping, engineering, accounting, sales and mar-
keting, and food and beverage. So we can see that the job of a supervisor is very dif-
ferent from the job of a middle manager. The same is true when one is promoted
to a senior-level management position.
Senior-level managers occupy the top positions within a service enterprise. In the
hotel business, the senior management team is called the executive committee.
Members of this committee usually include the general manager, assistant general
manager (or rooms division manager), controller (accounting), human resources
director, chief engineer, food and beverage director, and the sales and marketing
director. Depending on the nature of a resort, other executive committee manag-
ers may also include director of security, director of sports and recreation, director
of retail, director of information technology, director of entertainment and other
specialized managers. The general manager is the chief operating officer (COO) of
hotel and resort properties. If the hotel is part of a chain, there will be a corporate
executive committee comprised of vice presidents for each of the areas represented
by the executive committee at the property level. The corporate president is the
chief executive officer (CEO) of the chain. Individuals who occupy the highest posi-
tions within management functions could also possess ‘chief officer ’ titles. These
might include chief officers called the CMO (marketing), CIO (information), CFO
(finance), CHRO (human resources) and others.

10
 Managing Service Enterprises

Senior managers are usually promoted from middle management positions.

When this happens, their management focus will change from performing mostly
organizing activities to engaging mostly in the function of strategic planning.
Planning is a strategic approach used to achieve future objectives. While senior-level
managers will continue to engage in the functions of control, organizing and influ-
ence, these individuals spend most of their time focusing on the future direction
and objectives of the organization. The most important people skills set for these
managers are called conceptual skills. These skills provide the senior manager with
the ability to articulate and influence workers toward achieving the mission and
vision of the organization.
Managers at all levels of the organization have the authority to make decisions
aimed at solving problems and contributing to the strategic direction of the work
unit. A manager’s span of authority will usually increase with each promotion
into higher levels of management. Management responsibility involves assuming
responsibility for an area of authority. Managers should be empowered with bal-
anced levels of authority and responsibility. This means that managers should not
delegate decision-making responsibility without granting the authority associated
with the job. When it comes to making decisions, there is an element of manage-
ment risk as the manager will be held responsible for the outcomes of each spe-
cific decision. Management risk, then, occurs when managers engage in behaviors
that may be detrimental to a manager’s standing in an organization. Management
decision-making is one such behavior.

HOW DO I BECOME A MANAGER?

Management is a practice, not an academic discipline. People with manager titles
are expected to become management practitioners. As we already discussed, mis-
management occurs when managers fail to manage their work units in a profes-
sional manner. How does this happen? Well, in many service enterprises, the best
technical workers are usually promoted to supervisory and ultimately manage-
ment positions. However, some organizations fail to provide the appropriate skills,
knowledge and abilities required of performing management functions. When this
happens, the manager will either learn these skills through trial and error, which
is a time-consuming and costly process, or that manager will not learn these skills
and mismanage the work unit. This results in bad managers occupying positions
of authority in service enterprises.
Professional management requires management training. Management train-
ing imparts skills in the functions of planning, organizing, influence and control.
Managers spend a good deal of time solving problems that exist within certain
work units. In organizations, a problem is defined as a negative gap between actual
performance and performance standards. As we already know, the symptoms of a
potential problem become diagnosed through the performance of the control func-
tion of management, which is really supervision. Management training should pro-
vide skills in intervention planning, which is a strategic problem-solving approach
used by professional managers. The goal of intervention planning is for the man-
ager to generate decisions aimed at solution optimization, which provides the best
possible solution to a problem through management decision-making activities.

11
Principles of Management for the Hospitality Industry

Since management is a practice, the most effective management training pro-

grams permit new managers to ‘practice’ their newly forming management skills.
Unlike many academic disciplines, management skills may not be learned in a labo-
ratory. The best way to learn management skills is to mentally rehearse or physically
practice management practitioner techniques in the workplace. There are three tech-
niques for providing management training practice to individuals. These are trial-
and-error, modeling and mentoring activities. Trial-and-error practice is the least
efficient way to learn management and involves learning from actual mistakes and
successful outcomes from management scenarios. Modeling involves emulating the
visible behaviors of professional managers. Mentoring consists of coaching relation-
ships between mentors (experienced professional managers) and protégés (learners
of management) aimed at developing management skills. This is the most effective
learning technique for management development. Sound learning programs will
include all three of these techniques within the training activities. All of these tech-
niques reinforce the skills of new managers. Training reinforcement is intended to
habituate new behaviors resulting from training. The goal of all training is to create
new habits, which are behaviors that individuals do naturally without consciously
thinking about them. The goal of management training is to provide knowledge that
is continuously practiced, which results in experiences. It is the blend of knowledge
and experience that habituates professional management practices.

THE ROLE OF THE SERVICE SUPERVISOR

The first management position we are likely to occupy will be within the supervisory
ranks. These positions normally use titles such as supervisor, lead or assistant man-
ager. We have discovered that service consists of interactions that create relation-
ships with customers (both internal and external). So what is the role of the service
supervisor? At first glance it would appear that these individuals ensure positive
interactions that result in positive customer relationships. But how do they do that?
To answer this, we must consider the nature of supervision and management.
We already know that supervision is the first level of management that oversees
the work being performed by line and staff workers. As a person moves up the lad-
der, she or he spends less time supervising the performance of others and more
time engaged in planning and organizing activities. However, all managers must
practice supervision at every level of the corporate hierarchy when dealing with
individuals with whom they have direct reporting relationships.
Managers and supervisors are primarily responsible for achieving the objectives
of the organization through the activities of others. So what is an objective? An
objective is a target for performance. It is something you want to accomplish for
yourself, a department or an organization. For instance, the marketing objective
for a hospitality/tourism organization could be ‘the acquisition and maintenance
of guests’.6 In other words, every worker in the organization wants to keep the
guests to come back, while taking steps to acquire new guests to add to the overall
pool of guests who frequent the establishment. In the process of accomplishing
this objective, supervisors and managers ensure that actual performance levels are
consistent with established standards for performance. Notice that objectives drive
a number of activities in Figure 1.3.

12
 Managing Service Enterprises

Objectives

Evaluate/Revise
Strategies

Policies

Standards

Procedures

FIGURE 1.3 Objectives and strategies

STRATEGIES AND TACTICS

The objectives for the hospitality/tourism organization are executed through action
steps designed to reach the targeted goals (objectives). Broad range action steps are
called strategies, which are mostly practiced by senior and middle-level manag-
ers in the company. Supervisors are responsible for executing these strategies on a
daily, weekly, monthly and annual basis through narrow action steps called tactics.
So objectives drive strategies, which may be broad (strategic) or narrow (tactical) in
scope.
Strategies evolve into corporate policies, which are broad guidelines for perform-
ance throughout the organization. Supervisors convert these policies into standards,
or expectations for performance and procedures, which are daily action steps used
by all staff members to meet the standards. For each performance standard, there is
a list of procedures that show the workers how to meet that standard. The next step
is for the supervisor to compile standard operating procedure (SOP) documents for
the department and job lists for each position in the department that specify each
standard for performance and the procedures for meeting each standard. Finally,
the supervisor observes the staff members to ensure that actual performance is con-
sistent with the standards and procedures for the operation. This process is called
performance assessment or evaluation, which compares actual performance with
standards and procedures for performance.

TOOLS FOR PRACTICING MANAGEMENT

So far it has been established that managers achieve objectives and ensure the
practice of procedures designed to meet the standards for performance in the
department. The next step is to describe the tools used by managers to influence
staff members to make these things happen. Managers use their influencing skills
to maximize the performance of staff members. These influencing skills are essen-
tial for the practice of successful management.
Perhaps the most important tool for supervisors is the ability to effectively com-
municate with workers, peers and other managers. Communication involves active
listening, verbal and written expression skills and the interpretation of non-verbal
cues. One example of communication is the establishment of standards and proce-
dures, as well as job lists to guide worker performance.

13
Principles of Management for the Hospitality Industry

Managers must be adept at identifying and resolving conflicts in the workplace.

It is the job of the supervisor to maintain a work environment that is fair, uniform
and consistent for the workers. The ability to handle staff member complaints and
grievances is essential to maintaining a healthy work environment.
Also, managers must establish leadership roles with the staff members concern-
ing every aspect of job performance. For this reason, supervisors must possess solid
skills in the areas of coaching, counseling and discipline. These techniques are
required for effective motivation, training, teambuilding and leadership in the work-
place. Skills for management practice will be discussed thoroughly in Chapter 2.

SUMMARY
This chapter began with a discussion of service. We recognized that service con-
sists of customer relationships. Perhaps the most intimate customer relationships
exist within the many sectors of the hospitality and tourism industry, which pro-
vides many examples to be used throughout the text. We went on to discuss serv-
ice commitments, as well as intrinsic service attitudes. We learned that the desire
to provide service is the foundation of leadership.
We then moved into an overview discussion of management. We described the
practice and functions of management in this section. We identified the hierarchy
of management positions for both line and staff departments within a typical serv-
ice enterprise. We recognized the responsibility to practice certain influencing skills
in order to enhance employee retention and reduce employee turnover in our labor-
intensive organizations. We went on to describe specific practices of professional
management aimed at effective decision-making and problem-solving activities.
Our discussions concluded with an overview of how to become a manager. These
included functional knowledge, skills and abilities, as well as tools for the effective
supervision of staff members.

DISCUSSION QUESTIONS
1. Consider the customer relationship model presented in Figure 1.1. Think
about the operations within a luxury resort to include front office, food
and beverage outlets, meetings facilities and banquets. What aspects of
supervision do you think would be important to ensure proper customer
relationships with guests in each of these areas?
2. Consider the management hierarch pyramid described in Figure 1.2. Try
to identify the titles of all the managers who might reside in each of
the three layers for a full-service convention resort with two golf courses.
Which of those managers would be line and staff managers? Describe
how the jobs of these managers change with each increased level in the
management pyramid.
3. Assume that you are responsible for management training for a restaurant
chain. What methods might you use to teach managers about the functions

14
 Managing Service Enterprises

and practices of management? What would you do to reinforce that training?

How would the trainees have converted professional management practices
into habits?
4. Consider the information presented in Figure 1.3. Describe the differ-
ences and relationships between objectives, strategies, policies, stand-
ards and procedures. Describe how you would go about establishing
standards and procedures for the service staff in a full-service restaurant.

R E A L WO R LD E XP E R IENCES ( CONTI NUED)

All of you have completed your required industry internships as part of your
program. Monica mentions that she is being considered for a full-time posi-
tion with a meeting planning company. George reports that the restaurant
he has been working at for the past three years is willing to put him through
the chain’s management in training (MIT) program. Tara is nervous about an
upcoming interview for a few cherished MIT openings with a large hotel chain.

Eventually, the conversation focuses on the mixed reactions from a recent

career fair held at the school. Some of your friends express disappointment
that most of the companies were seeking applicants for line jobs, such as
front desk agents and restaurant servers. Your best friend, Alexis, tells eve-
ryone that she thought that was true as well, but mentions that she ran into
a contact she had met during a guest lecture series who invited her to apply
for a supervisory position at the local convention center.

After awhile, you start to notice that those classmates with work experience
and networks of contacts seem to be getting better job offers than your friends
with no work experience. You think to yourself, ‘Boy, I am lucky to have two
job offers to become an assistant manager in my sector.’ You continue to
think, ‘I guess that job experience and networking is really paying off.’

CASE STUDY
You are a supervisor for a small work unit consisting of five workers. The
previous two supervisors were fired for poor performance. Needless to say,
the workers are doubtful about whether you will be any more success-
ful than your predecessors. It is interesting that the work group has sort of
bonded as a result of poor leadership and is pretty self-sufficient when it
comes to doing the job. You know that the first thing you must do is to earn
their respect. Once this is done, you will want to build a team.

15
Principles of Management for the Hospitality Industry

Question
How will you earn their respect and then build a team?

Hint
Setting a good example and demonstrating stewardship could help with
both objectives.

ENDNOTES
1. Albrecht, B., 2003. Professor finds faith along rural highways with theme parks and sites
inspired by God [Final Edition]. The Plain Dealer, Cleveland, OH, p. E.1.
2. Ibid.
3. DePree, 1986. Leadership Is an Art, Doubleday, NY.
4. Ibid.
5. Ibid.
6. Wexler, P. 1986. Marketing Driven Management. Penguin Publishing, NY.

16
 CHAPTER 2
Management
Practice, Evolution
and Ethics
OB J EC T IVE S
In this chapter you will learn to:
1. Identify the stages and contributions of management evolution.
2. Apply ethical tests to management decision-making activities.
3. Describe an overview of managerial communications, change, behavioral
management and stress management.

R E A L-WO R L D E XP E R IENCES
You have been working part-time as a front-desk agent at a local resort for
a few months. When you first started the job, you were told to shadow an
experienced worker to learn how to perform front-desk transactions. Most
of the managers and supervisors were promoted through the ranks at the
resort. The front desk gets very busy at times. When this happens, the man-
agers are usually not available for help. The desk area continuously seems
disorganized and coworkers often miss their scheduled shifts. After work,
it is common for the managers to socialize with the hourly workers. There
seems to be favoritism between managers and certain staff members who
have become friends.

While you have become proficient in your job duties, you begin to wonder if
all resorts are run this way. It just seems to you that everyone’s job is harder
than it needs to be.

To be continued…
Principles of Management for the Hospitality Industry

INTRODUCTION
Chapter 1 provided us with an overview of management and service enterprises.
In this chapter, we take a closer look at management practices, as well as the evolu-
tion and ethical concerns for professional managers. We have already learned that
there are two types of managers – those who practice professional management
and those who mismanage organizations.

This chapter will provide a snapshot of the practices associated with professional
management in service enterprises. Our current practices have evolved over many
years of scientific inquiry concerning management practices. We will chart the
progress of management evolution that has led to current managerial practices.
As we already know, managers make decisions that impact large numbers of indi-
viduals. The effect of those decisions may be beneficial or harmful. Professional
managers temper their decisions by evaluating how those choices may impact other
individuals. The means for evaluating the correctness of decisions falls within the
domain of management ethics, a topic we will discuss as we work through the
chapter. Toward the end of the chapter, we will engage in discussion of management
competencies, such as managing behaviors, communication, change and stress
management.

MANAGEMENT PRACTICE
Management skills go beyond those used in supervision to include planning, and
organizing functions. Also, influence functions for managers who get promoted
beyond the supervisory ranks. We learned in Chapter 1 that there are three man-
agement levels within organizations. We also know that the emphasis of manage-
ment skills and functions change as we progress to each level of the management
hierarchy, as shown in Figure 2.1.

Management skills Functions

Conceptual Planning

Senior

Influence Organizing
Middle

Technical Control
Supervisory

FIGURE 2.1 Management hierarchy

18
 Management Practice, Evolution and Ethics

We know that technical skills are those skills required of workers to provide
interactions and transactions with internal and external customers. First line
supervisors use these skills the most. Middle managers spend most of their time
coordinating activities (organizing function) and thus rely mostly on people (or
influencing) skills. Executive managers spend most of their time in planning mode
and must be cognizant of the big picture for the organization in the present and
the future. Thus, they mostly use conceptual skills.
Management universality is the premise that management is an art and a science
that has applications across all industrial boundaries. That is why programs of study
in business management exist in institutions of higher learning. Programs that offer
applied management skills in specific technical environments are specialized man-
agement disciplines. For example, Hospitality Management programs apply man-
agement principles to the technical aspects of hospitality and tourism enterprises.
Management is a science in the sense that we use specific models for the func-
tions of planning, organizing and control. The art of management lies in those
practices that comprise the influencing function of management. The influenc-
ing function of management is based on knowledge from the fields of applied psy-
chology, sociology, cultural anthropology and organization theory. Collectively,
these fields provide academics and practitioners with a body of knowledge known
as organizational behavior. Organizational Behavior is the study of individual
and group behaviors within organizations. Historically, the practice of manage-
ment was viewed from the perspective of science and engineering. It was not until
the latter stages in the development of management thinking that the influenc-
ing function or behavioral aspects of managing organizations were identified. The
merging of behavioral and scientific processes is what makes management both
an art and a science in current practice. It would be appropriate for us to view the
historical evolution of management thinking to appreciate the holistic state of our
current practices.

MANAGEMENT EVOLUTION
It serves us to consider the history of management, as collectively it contains the
big picture of all aspects related to implementing conceptual, influence and tech-
nical skills within the functions of planning, organizing, influencing and control.
As academic disciplines, management and psychology are relatively young sci-
ences, beginning with studies in the early 1900s. The evolution of management
takes a timeline approach in which the management theories unfolded as distinct
approaches. All of these pose merit for today’s managerial practice. Figure 2.2 pro-
vides a timeline of the historical evolution that occurred from the 1900s through
the current time.
Management history is broken into five categories, starting with Scientific
Management and ending with Systems Management. Each category will serve as a
heading for the approaches that were developed chronologically. It is important to
keep in mind that management started as a very narrow science and has developed
into a broad interdisciplinary field of study. Therefore, each of the categories in the
history provides a piece of the picture to use in the practice of management today.

19
Principles of Management for the Hospitality Industry

1900s – 40s 1940s 1950s – 70s 1980s 1990s – 2000s

Scientific Management Human Human Systems

management science relations resource management
management

Hawthorne Leadership Situational

studies leadership

FIGURE 2.2 Evolution of management

CLASSICAL APPROACH (SCIENTIFIC MANAGEMENT)

Scientific Management focused exclusively on line supervision as opposed to the
overall organization. The goal of Scientific Management was to find the one best
way to do work. The goal of Scientific Management was to determine the most
efficient methods for performing tasks, duties and responsibilities. Efficiency
results when outputs are achieved using fewer inputs. Another way to define
efficiency is a process of doing things right. This approach to management did
not include consideration of effectiveness issues. Effectiveness is the process of
enhancing the quality and/or quantity of produced outputs. Some say that effec-
tiveness is doing the right things. We should commend Scientific Management for
introducing efficiency studies. However, we must realize that it is one-dimensional
in that it does not consider effectiveness issues.
Frederick Taylor is considered the Father of Scientific Management. He was an
engineer by training and used time and motion studies to identify the most effi-
cient way to do work1. We know that Scientific Management is solely focused on
enhanced efficiency. The particular area of interest was in the area of reducing
labor costs. Taylor would observe workers using various tools and time their move-
ments. One study focused on ditch diggers. Taylor timed their movements using
different-size shovels to determine the most efficient shovel for the work. Since his
studies focused on time and motion, the method became appropriately known as
Time and Motion Studies. Taylor also introduced piece-rate compensation. Piece-
rate compensation provides pay per unit of work produced (outputs).
Frank and Lillian Gilbreth were a husband-and-wife team of scientific manage-
ment researchers. They were also concerned with identifying the one best way to
do work. There is a movie about their life and work called Cheaper by the Dozen
(they had 12 children)2. The movie illustrates how their studies influenced their
home life, a highly efficient household. In one study, they worked with brick layers
and found that efficiency could be greatly improved by placing bricks on an adjust-
able plank to be raised to the level that at which the brick layers were working.
Lillian outlived Frank and continued their work until her death in 1972.
Henry Gantt created a zero-based approach to scheduling project activities using
horizontal bar graphs to represent time and vertical lines to represent resource
allocation. While Gantt was a proponent of Scientific Management, his project

20
 Management Practice, Evolution and Ethics

charts were later embraced by Management Scientists in the 1940s, long after
Henry Gantt’s death in 1919. These became known as Gantt charts and are still
used by management scientists today. Gantt also established bonus systems for
overproduction.
The French scientist Henri Fayol pioneered administrative management theory.
He was responsible for establishing a Comprehensive View of management in
organizations. He established a popular management edict called Fayol’s Fourteen
Points. These general principles included themes of authority, unity, centraliza-
tion, remuneration, equity, stability, initiative and harmony. Another pioneer of
administrative management was the researcher Max Weber, who is considered to
be the Father of Administrative Management. His work involved the separation
of line and staff employee functions. He was responsible for creating specialized
departments within organizations on the basis of job functions. This resulted in
the functional organizational structure, in which departments and reporting
relationships are categorized by functions (accounting, operations, marketing etc.).
Most service enterprises use functional organizational structures at the business-
unit level in current practice.
Scientific Management was the first movement to contribute to the develop-
ment of management models to be applied in various organizational settings.
The limitation of Scientific Management is that it was purely efficiency-based
and focused solely on front-line supervision, until the comprehensive models of
Fayol and Weber. Also, emphasis was on the one best way to do work. While the
Comprehensive View took a more holistic approach to administration, it was also
efficiency-based and like Scientific Management did not focus on human vari-
ables associated with work. Scientific Management, Administrative Management
and the Comprehensive View all fall within the category of Classical Management
approaches.

EARLY BEHAVIORAL STUDIES

Elton Mayo was the first to discover that human factors influence production.
This finding occurred by accident while conducting a funded scientific study. His
research was known as the Hawthorne Studies. One study took place in a relay
switch production room. The hypothesis was to develop a positive correlation to
the amount of lighting in the room and increased production (outputs). It was
determined that production increased when the lights were made brighter and
continued to increase when the lights were dimmed. Thus, there was no direct
correlation between work performance and the lighting. This was an unfortunate
finding for Mayo, since the research was being sponsored by a lighting company. It
was later discovered that the attention paid to the workers by the researchers was
the basis of the enhanced production. The supervisors were removed, which left
the workers to perform freely without fear, they started to enjoy their work and the
group began to psychologically bond. In this case, group cohesiveness and freedom
from controlled supervision resulted in increased production.
Another experiment took place in a wiring room at a bank. As part of this study,
individual pay incentives were offered to workers to increase personal produc-
tion. It was discovered that peer pressure from the group would motivate work-
ers to overlook personal monetary gain to preserve worker solidarity. This was

21
Principles of Management for the Hospitality Industry

contrary to the expectations of the study. The Hawthorne Studies were conducted
between 1924 and 1932 and were the first attempt to view the behavioral aspects
of management.
While Mayo’s work was quantum leap in his time, the mainstream management
research community was not receptive to behavioral aspects of management. This
may be due to the dominance in the field by engineers at that time. Behavioral
science did not become popular among management scholars until 20 years after
the completion of the Hawthorne Studies. When researchers finally embraced the
behavioral science aspect of management, Mayo was credited with performing the
groundbreaking studies in that area of management.

HUMAN RELATIONS MOVEMENT

The first school of thought in the behavioral science approach to management was
called the Human Relations movement. The Hawthorne Studies paved the way
for the development of the Human Relations movement, which ultimately became
the Human Resource discipline of today. This movement focuses on human inter-
action and its impact on organization success. Human relations skills are used
to enhance productivity using people (influencing) skills. The Human Relations
movement was driven by psychologists who sought to understand drivers of behav-
iors in the workplace.
In the decade prior to the discovery of transpersonal psychology, Abraham Maslow
was responsible for popularizing humanistic psychology, which became prominent
in 1954. The Journal of Humanistic Psychology was established in 1958, result-
ing in the formulation of the American Association for Humanistic Psychology in
19643. The personal growth and potentiality focus of humanistic psychology was a
broad departure from previous paradigms (psychoanalysis and behavioralism) that
were preoccupied with pathology. Humanism was based on the assumption that
individuals possess a propensity toward self-actualization that could be achieved
through experience and reflective practice, as opposed to therapies aimed at cor-
recting pathological behaviors through logical analysis or behavior modification4.
Humanistic thinking spawned numerous studies in the late 1960s, which resulted
in popularizing broad interests concerning states of human consciousness among
behavioral scholars and practitioners for many years5. In more recent times, con-
sciousness studies have been embraced by some researchers within the domains of
neuroscience and physics6. Today, the human relations aspect of management falls
within the categories of leadership and human resource management.

MANAGEMENT SCIENCE
Management Science is not the same as Scientific Management. Management
Science uses the scientific method and mathematics to improve organization per-
formance. The steps in scientific method are: observation, model construction,
deduction of hypotheses, hypothesis testing and conclusions. This method is mostly
used in large organizations for complex and quantitatively oriented decisions. The
type of research employed in the decision-making process is called Operations
Research (OR). Management science became popular when the US military sought

22
 Management Practice, Evolution and Ethics

the assistance of quantitative researchers from universities to create models for

strategic initiatives that drove the allied forces during World War II. Management
Science models are applied to inventory control models and probability models are
applied to economic decision-making practices.
The major contribution of Management Science is its focus on decision-
making effectiveness, not simply efficiency, which is the emphasis of Scientific
Management. The strategic planning model that is a topic of discussion in Chapter
3 of the text is based on Management Science theoretical constructs. Service enter-
prise managers, especially those in complex environments like hospitality, use a
form of Management Science called action research to solve organizational prob-
lems. Action research consists of an informal process of data collection, analy-
sis, alternative solution generation, intervention selection, implementation and
evaluation aimed at solving problems in the organization. Since management is
a practice, we call these steps diagnostics, interventions and assessment, which
is a shortened version of the action research model used by managers to solve
problems – a topic of thorough discussion in Chapter 3.

CONTINGENCY APPROACH (SITUATIONAL LEADERSHIP)

This method is commonly known as Situational Leadership. Situational leadership
considers leaders, followers and the environment as variables for making manage-
ment decisions. The assumption is that the situation (environment) influences
management behavior. This has applications to each of the four functions of man-
agement and falls within the Transactional Leadership category of leadership prac-
tices, which will be discussed thoroughly in Chapter 14 of the text.

SYSTEMS MANAGEMENT
General systems theory provides the grounding for the Systems Management
viewpoint of organizations. Systems Management views the organization as an
entity that consists of interdependent relationships with internal and external sub-
systems. This is a view of ‘wholeness’ in which the organization is considered to be
a microcosm that exists within an interdependent macrocosm. Systems thinkers
realize that the interdependent relationships of subsystems requires ‘big picture’
thinking, since a change made in a subsystem will have an effect on the larger sys-
tem. A small number of scholars have applied quantum theories to organizational
systems thinking – an approach that could be called New Science Management.
We will discuss systems thinking for management in more detail in Chapter 4 of
the text.
Portions of the current management puzzle have been constructed over many
years. Each major breakthrough in management thinking and inquiry has rendered
an aspect of management that has implications for current-day practice, as Figure 2.3
demonstrates.
The value of management practices are currently defined by the efficiency and
effectiveness of outputs, which are goods and services that result from the transfor-
mation of inputs (resources). We will investigate the relationship of inputs, transfor-
mation processes and outputs thoroughly in Chapter 5 of the text. The triangular

23
Principles of Management for the Hospitality Industry

Management skills Functions

Conceptual Planning
Human
resources

Human relations Influence Organizing

Transformation

Technical Control
Efficiency Effectiveness

Scientific management Management science

FIGURE 2.3 Management practice

flow of management practice is the combination of applications from the Classical,

Behavioral and Management Science contributions from management history.
These practices are contained by the microcosm of the organization, which resides
in relationships to a dynamic macrocosm of external environments. Parts of the
organization are subsystems of a larger system and the organization itself is a sub-
system of an even larger system, as we will discuss in Chapter 4 of the text.

MANAGING INDIVIDUAL PERFORMANCE

JOB DESIGN, RESPONSIBILITY AND AUTHORITY
In order to effectively manage the implementation of plans, we must consider
the responsibility and authority aspects of organization design. The key point to
remember is that a balance between the two should exist in equal proportions.
Many organizations blatantly violate this premise by delegating responsibility
without granting authority to its managers. We know from Chapter 1 that respon-
sibility is defined as the obligation to perform assigned activities. Authority is the
right to perform or delegate tasks, duties and responsibilities. General and specific
tasks and duties are outlined in a document called the job description, which also
describes work environment, levels of legal accommodation, and should include
specifically how performance will be measured. Job descriptions evolve from an
activity called job analysis, which is part of the job design process. Job analysis
identifies tasks, duties, responsibilities, work environment and confidentiality
requirements associated with a position of employment.
While job descriptions are used as documents of expectations for workers, job
specifications are documents that list the knowledge, skills, attitudes and abili-
ties required to perform a position. This document is used by human resources
practitioners as a hiring guideline for each position in the organization. Figure 2.4

24
 Management Practice, Evolution and Ethics

Objectives Job
specification

Job analysis
Strategies

Job
Policies
description

Standards
Performance
Procedures management

Job design

FIGURE 2.4 Job design drivers

demonstrates the relationship between objectives with job analysis used to yield job
specifications, job descriptions and performance measurement.
Objectives drive required activities; these drive job design, which drives the
measurement of performance. A combination of approaches should be taken dur-
ing this activity on the basis of the nature of the organization and industry. For
service enterprises, these include observation, questionnaires, interviews and envi-
ronmental audits.
Some managers refer to the document articulating management responsibili-
ties as responsibility reference guides. In actual practice, the document is known
as a manager’s handbook, which unfortunately is not widely available in some
organizations. We know that authority is defined as the right to perform or del-
egate. So, here is the key concept of this section – managers are responsible for
achieving the objectives of the organization through the activities of others. They
should be granted a proportionally equal amount of resources and influence to get
this job done. Authority in and of itself will not necessarily be accepted by work-
ers. The manager must earn the workers’ respect for his/her levels of authority.
Line authority is the right to direct operational activities that generate products or
services or revenue. Staff authority is the right to advise members of the organiza-
tion. For instance, the controller is a financial advisor to the organization, there-
fore he/she has staff authority. The restaurant manager creates and sells products
and services, thus he/she has line authority.
Performance with regard to use of authority and living up to levels of responsi-
bility are measured by accountability. The manager is held accountable for his/her
performance through a control mechanism called the performance appraisal. This
compares actual performance to established standards for performance. There can
only be three outcomes. The manager meets, exceeds or does not meet standards
in each category. Delegation is the process of assigning both authority and respon-
sibility to individuals within the organization. A decentralized organization is high
in delegation, while a centralized company is low. A common mistake among
managers is the tendency to delegate responsibility and accountability without
granting equal levels of authority.

25
Principles of Management for the Hospitality Industry

MANAGING GROUP PERFORMANCE

This section addresses individuals as they interact in groups. Group interaction
brings about an added dimension to those aspects already discussed concerning
individual behavior. This aspect of behavior is called group dynamics. There are
two types of groups in organizations – formal groups and informal groups. Formal
groups are those established by the organization (departments, divisions, stores,
quality teams etc.). Informal groups are those groups that naturally develop with-
out organization design (social groups, bowling leagues, coffee clutches etc.). Both
types of groups evolve through membership in an organization.
There are various types of formal groups. An organization chart is a document
that depicts command groups, those that fall within the corporate hierarchy. Task
groups are those that are brought together to accomplish nonroutine tasks or
projects. This group is sometimes referred to as a task force. Members of a task
group may come from various departments and levels in the organization. A task
group that is formed to make decisions concerning policy issues is called a com-
mittee. A steering committee would oversee activities concerning a project. Ethics
committees are formed to develop codes of ethics and review compliance with the
code. Committees are not necessarily the most efficient means to making deci-
sions, as there are many people involved in the process. However, they can be
effective. Positive outcomes associated with committees include participation, rep-
resentation of varied interests, open-expression forums and quality-level decisions.
There are considerations to be made in developing effective committees. There
should be specific goals for performance and levels of authority should be specified.
A chair should be appointed who possesses effective meeting skills. Each meeting
should follow a prepared agenda and should be conducted in a timely fashion.
Sometimes groups become too cohesive. When a group begins to believe it is
invincible and members stop questioning processes and decisions, a phenomenon
called groupthink occurs. This causes bad decisions to be made. Many of the deci-
sions made by the Enron executives concerning auditing practices had disastrous
results. This was the groupthink phenomenon at work.
All groups are not teams. A team is a group of individuals who orchestrate activ-
ities in a manner that yields outcomes greater than the sum of the parts. In other
words, a team consisting of four members will achieve more with less than a simi-
lar group. This type of outcome is called synergy. Synergy is the only reason for
developing teams. In sports, we see champion teams that seem to effortlessly over-
come challengers. This is the result of each person performing the right function
in the right manner at the right time to gain synergistic outcomes.
There seems to be a trend toward the development of self-directed work teams
in service enterprises. These are teams of 5–15 people who are self-managed by
peers in the group. These teams are suited to certain types of tasks, usually those
that require flexibility and creativity. Self-directed work teams do not work well
with dull or mundane activities. The real motivators for self-directed work teams
are: (i) challenging tasks and (ii) recognition for contributions to the team.
There are stages in the development of formal groups7. The first stage is called
the acceptance stage in which members are getting to know each other and are
somewhat mistrustful. The communication stage is where members become famil-
iar with each other through group decision-making activities. The solidarity stage

26
 Management Practice, Evolution and Ethics

is that point in which the individuals are comfortable in respective group roles.
The control stage is where the group has become a cohesive functioning unit.
Individuals are brought together through the organization and develop friendships
and affiliations. We now know that these are called informal groups. An informal
group could consist of individuals from many areas and levels in the organization.
Informal group interactions satisfy social needs of individuals. Informal groups may
be formed on a common interest level, like a bowling league. Informal groups are
mostly healthy for organizations by adding a social component to the workplace.
Misdirected informal groups can become destructive to the organization.
Just as there are stages in the development of groups, there are also stages in
team development8. The first stage is the Forming stage, in which members
are brought together. Then conflict arises among members, this is called the
Storming stage. Next, members assimilate into specific roles as part of the team.
This is called the Norming stage. When the team is ready to perform, it is in the
Performing stage. And, as is the case with all teams, the group will eventually break
up, this is the Adjourning stage. There are three factors to consider with regard to
team effectiveness: the people, the organization and the tasks.

MANAGING THE SERVICE ENTERPRISE CULTURE

There is an amazing phenomenon in organizations called the corporate culture.
Researchers Boulton and Deal do some nice work in this area9. Corporate culture
is the shared values, attitudes and beliefs within the organization. Just as there are
shared values, attitudes and beliefs within a society, the same is true for organiza-
tions. These factors influence the behaviors and perceptions of the members of the
organization. To diagnose a culture, one must observe many factors, as the cultural
values are not written, but they are just understood and agreed to in a subcon-
scious manner.
Symbols are one symptom of the corporate culture. If we were to go to IBM
headquarters 15 years ago, we would see everyone dressed in dark blue suits with
red ties. Today, IBMers dress casually, like people did at Apple Computers. Dress
is one type of symbol. Others include pins, plaques, trophies, certificates, banners,
posters etc. Status symbols are those related to position within the organization.
Examples are office layout and furniture, preferred parking spaces etc.
The corporate culture is developed and maintained by the history and traditions
of the organization. The older the organization, the more established its culture.
Some managers believe that the evolution of organizations in this millennium will
severely mutter stayed traditional cultures, as newer organizations have weaker
cultures for the most part. On the other hand, there are those who believe that
commonly held values and traditions will become more important to workers as
time moves forward. Individuals assume informal roles in maintaining the tradi-
tions of the culture. Some are storytellers, others are priests or counselors, and
some are curators. Visit Walt Disney World in Orlando, Florida. If you were to
visit their training facility (Disney University), you would swear that Walt is still
alive. In fact, the orientation sessions for new cast members (employees) is called
Traditions.

27
Principles of Management for the Hospitality Industry

The physical environment of a property gives us clues concerning the corporate

culture, such as location, layout, neatness, furnishing, signage etc. It is important
to diagnose the culture of an organization before taking a position. One would
want a culture that does not clash with one’s personal values, attitudes and beliefs.
A bizarre, creative, chaotic, maverick manager would not do well in a button-down
culture. For instance, we do not see many Marriott managers leaving the company
to work for Hard Rock Hotel properties. The leadership styles of an organization
are influenced by its culture. Top-priority issues, crises management, training,
coaching, role modeling, rewards, status, recruitment, selection, promotion, retire-
ment are all influenced by the corporate culture.
As we discussed earlier in this chapter, values are core philosophies. They are the
essence of who we are. Values are mostly formulated during childhood and adoles-
cent development. The only thing that can cause a value shift in an adult is a life-
altering event, like a near-death experience. Beliefs are those convictions that arise
from past experiences compared with our value system. These are changeable,
as long as the person chooses a path of personal evolution. Attitudes are directly
related to current experiences and are subject to change. They are our current per-
ceptions of external stimuli and determine our reaction to a newer specific stimu-
lus. Thus, behavior is closely correlated with attitude. However, they are separate
issues. Attitude is not behavior. When someone says, ‘You have a bad attitude,’ he
is making a judgment statement about what he thinks, that a person’s attitude
is based on behavior. With the exception of recruitment and selection, managers
should not address attitude, only behaviors, which may be empirically observed.
Some managers suggest that job design approaches may be used to alter atti-
tudes. This is a very difficult endeavor. One would have to understand the per-
sonal aspirations of individuals and groups, and then be able to design work to
suit those aspirations. This is the stuff of transformational leadership, which
is a topic of discussion in Chapter 15 of the text. Another approach to attitude
adjustment is training. This is another difficult task. This type of training seeks
‘affective’ or emotionally changed outcomes, which are the hardest to achieve in a
learning environment. Why? Because attitude is just like motivation, actually they
are close cousins. We cannot change someone’s attitude. But, if we have a working
knowledge of applied psychology and learning theory, we can convince someone to
change his/her attitude. This will only occur if we are able to reinforce the learning
with environmental factors. Thus, we would be able to attain affective outcomes
through this type of training.

MANAGING BEHAVIORS
All things are created twice. Every behavior begins as a thought or an instinct. The
thought is converted into intentionality, which causes the behavior. Have you ever
heard someone say, ‘I could have, I should have _____?’ Those are thoughts with-
out intention. Intention is the gap that causes action, which is equal to behavior.
Attitude surveys are conducted by human resource practitioners to gauge employee
morale. There are two dangers to conducting these surveys. First, many surveys
are not statistically valid and reliable. Second, if we ask the questions, we must
address the issues of concern according to the responses. For instance, if we ask

28
 Management Practice, Evolution and Ethics

about the employee cafeteria and the employees say it is horrible, we would have
to fix the cafeteria. Otherwise, morale goes lower than if you had not asked in the
first place. Symptoms of poor morale run in stages: distrust, discontent, fear, anger,
sabotage (of corporate property) and finally apathy. When people just do not care,
there is a serious morale problem that requires a professional intervention, which
will likely include a good deal of attrition.
Attitude is the cause of learned defense mechanisms and explanations for behav-
ior. Perception is the filter through which we view the world as interpreted by our
attitudes. When someone says, ‘You have a bad attitude,’ that is attribution that
suggests a cause for a given behavior. Stereotypes are fixed generalizations about
people or groups. Halo effect is focus on one aspect of behavior, instead of all criti-
cal behaviors. Projection is assignment of one’s own traits onto others. Selective
perception filters out incongruent stimuli. Procedural justice is the perception of
fair treatment of employees. This is why every organization should have an effec-
tive due process procedure to guarantee that employees are treated in a fair, uni-
form and consistent manner.

MANAGEMENT ETHICS
Managers are responsible and accountable to four distinct stakeholder groups.
They are shareholders, customers, employees and the community. These are pre-
sented in Figure 2.5.
Proactive managers realize that the interests of all the stakeholder groups are vital
to the long-term success of the organization, as well as their managerial careers.
There is currently a level of distrust regarding the practices of business owners and
managers among the members of American society. This level of distrust might be

ty Se
b ili rv
si ic
n e
po ex
s ce
l re lle
ca nc
s Shareholders Customers e
Fi

Stakeholders

Em y
Employees Community lit
pl
oy i bi
ee o ns
re
la e sp
tio a lr
ns ci
So

FIGURE 2.5 The diamond service model

29
Principles of Management for the Hospitality Industry

warranted given the activities of early industrialists and corporations throughout

the last century and into this one. The reason this attitude is significant is that the
people of this society empower legislators to regulate business enterprises. To para-
phrase the words of Patrick Henry, ‘when we fail to govern our freedom wisely, we
lose our liberties.’ Hence, businesses have lost the liberty to do business that was
once enjoyed in this ‘free enterprise’ economic system.
Since managers are employees of the organization, they are members of at least
one stakeholder group within that company. Perhaps, they may also be customers
or shareholder, in which case they represent more than one stakeholder group. As
such, they have personal ‘buy-in’ to the welfare of the organization in addition to
their own career aspirations. Hence, unethical activities may have adverse impacts
on these managers on both personal and professional levels.
Most managers are motivated to some degree by status and prosperity. The old
sayings, ‘what goes around, comes around’ and ‘live by the sword, die by the sword’
are too longstanding to not have some validity. By enhancing the practice of a man-
ager to a professional level, managers enhance their own status and prosperity.
The trade media frequently identify segments of the hospitality industry that
produce lackluster financial performance. Further investigations of these segments
often reveal incidents of mismanagement, shareholder greed, employee dissention
and community mistrust. Proactive organizations seem to have the ability to do
well even during difficult times for their particular segment. These organizations
also seem to display fewer cases of the negative symptoms associated with this
discussion. Hence, we may conclude that proactive organizations are economically
healthy entities that are capable of weathering difficult financial events. If this is
true, proactive management must make good business sense.
In the broadest sense, managers are members of society. They are also moral
beings. Some believe that otherwise morally sound and contributing members of
society become amoral individuals when acting in business management capaci-
ties. These amoral beings emerge from the workplace each day to resume their
roles as responsible citizens. Managers who subscribe to amoral professional prac-
tices are really cheating themselves. Since managers are motivated by challenging
and meaningful work, it is natural for them to practice in a manner that contrib-
utes to the social standing of their respective organizations. This is one reason
why when proactive managers are running organizations, those firms seem to reap
higher levels of success than their competitors. At the highest level, the manager is
a human entity. There are five aspects to the human composite: the physical, the
spiritual, the mental, the emotional and the social realms. Self-actualized individu-
als seek balance among these aspects of the composite10. The proactive manager is
a balanced individual who is passionate about the challenges and meaning of his/
her work. These are the qualities that make his/her a respected leader.

AWARENESS AND PARADIGM SHIFTS

One aspect of management ethics training is to generate awareness of ethical
issues and responsibilities associated with managerial decision-making activities.
Once this awareness is created, managers sometimes choose to enact shifts in their
own management paradigm. A paradigm is a model of a principle. For instance,

30
 Management Practice, Evolution and Ethics

consider a paradigm of public welfare that advocates providing assistance to those

members of society who are in need by providing food and shelter. Now consider a
second paradigm of job service, in which persons in need are provided with training
to become self-supporting. This second paradigm makes no sense in the absence of
the first. The first one provides a foundation (food and shelter) that permits the
implementation of the second paradigm (self-sufficiency training). An awareness of
the first paradigm is required before the second one may be realized. This is a para-
digm shift. The first paradigm may be illustrated by the proverb ‘Give a person a
fish and feed him for a day.’ The second paradigm might be stated this way, ‘Teach
him how to fish and feed him for a lifetime.’ Awareness of the first proverb gives
credence to the consideration of a shift into the second one. In management appli-
cation, the ‘awareness’ consists of who we are today and the ‘shift’ consists of who
we want to be tomorrow.
Why should there be paradigm shifts? The simple answer would be that we work
and live in an evolutionary world. It is apparent that managers are faced with new
problems that require creative solutions. For instance, the mentality that prevailed
among managers and venture capitalists during the 1990s, and certainly during
the 1980s, is no longer acceptable business practice in this society. At the same
time, the policies and practices that existed during those times continue to be used
in organizations today. In some cases, the thinking in the hospitality industry
has not changed in 50 years. The current environment is changing dynamically.
Proactive organizations are rethinking, restructuring and revitalizing operations
in efforts to respond to changes that exist in the environment11. These activities
require major paradigm shifts to establish new principles to guide the changes in
organizations. To paraphrase Albert Einstein, ‘significant problems in current day
cannot be solved with the same level of thinking that existed when the problems
were created.’ This helps to explain the reason for adopting new paradigms for
proactive hospitality and tourism management.
On a universal level, there must be a shift from traditional to modern manage-
ment thinking in hospitality organizations. In order to do this, managers must
shift from crisis management to mission-driven management. Next, managers
should shift from checklist management to strategic thinking. This will require
managers to shift from ‘talk’ mode to ‘listen’ mode in their communication styles.
Another shift for managers is from win-lose to win-win outcomes12. Also, manag-
ers must shift from individual productivity to team-oriented productivity to attain
outcomes that are greater than the sum of the parts. Finally, managers must shift
from stress inducement to stress management mode to maintain employee energy
levels. Are proactive managers ethical managers? Table 2.1 provides a moral evalu-
ation of proactive managers to help you answer this question.
Business ethics are components of the decision-making process that consider
the welfare of each of the four stakeholder groups. Advantages of ethical business
practices are listed in Table 2.2.
Codes of ethics are formal statements providing guidelines for ethical behav-
ior on the part of managers and other professionals. Ethics Committees are com-
posed of employees from multiple departments who create and maintain the codes
of ethics for organizations. Sometimes, they act as hearing boards for ethical com-
plaints from stakeholder groups. Ethical conduct should be included in commonly
distributed documents such as manager’s manuals, standard operating procedures
(SOP), employee handbooks and employment agreements.

31
Principles of Management for the Hospitality Industry

TABLE 2.1 Proactive Managers

1. Take charge of personal and professional destiny – they are not victims.
2. Are mission driven to align their personal goals with organizational goals.
3. Seek long-term outcomes, not short-term profits or other forms of
gratification.
4. Are empathetic listeners who care about the needs of others, especially
their staff.
5. Seek win/win/win for others, themselves and the organization.
6. Are synergistic by being team stewards.
7. Are spiritually, mentally, physically, emotionally, and socially balanced –
hence they are holistic beings in search of self-actualization.

TABLE 2.2 Advantages of Ethical Business Practices

Improved productivity, or at least, improved morale on part of employees who
are treated with respect and dignity.
Positive overall stakeholder relations.
Lessen the perceived need for society to create additional government
regulations of business.

SOCIAL RESPONSIBILITY
Corporate Social Responsibility is defined as the management obligation to take
action to protect and improve the welfare of society, as well as the interests of the
organization. We already know that social responsibility is our duty to the commu-
nity stakeholder group, which includes suppliers, neighbors, our industry and soci-
ety at large. There are various philosophies concerning social responsibility that
range from no social obligation to extremely proactive duties to contribute to the
welfare of society. In fact, these two views became evident in historical arguments
concerning the legal status of corporations.
A definition of the American corporation was established in the landmark US
Supreme Court case of Dartmouth College vs. Woodward13. In an opinion, the
then Chief Justice, Thurgood Marshall wrote, ‘…the corporation is an artificial
being, invisible, intangible, existing only in contemplation of Law.’
There are two legal views of corporations. One is called the Legal Creation view
and the other is the Legal Recognition view. The Legal Creation view states that
the corporation is created by the state (government). The state and law are cre-
ated by society. Therefore, the corporation is created by society to serve society.
When the corporation ceases to benefit society, society may destroy the corpora-
tion, according to this viewpoint.

32
 Management Practice, Evolution and Ethics

Moral

Ethical

Legal

Society

Peers

Individual

FIGURE 2.6 Legal, ethical, moral laws

The Legal Recognition view notes that the corporation is a free entity. The state
(government) merely registers the corporation. The corporation is not a state crea-
tion. Therefore, the existence of a corporation is not to serve the needs of society.
The two views represent extremes in philosophies concerning corporations. The
Legal Recognition view is a conservative approach to define the corporation. It is
in line with the free enterprise system. As a result, individuals who embrace the
doctrine of capitalism would subscribe to this viewpoint. Republican Party mem-
bers would have a tendency to view businesses and corporations from this frame of
reference. On the other hand, the Legal Creation view is a liberal interpretation of
the status of corporations. Socialistic or highly liberal Democratic Party members
might subscribe to this theory of corporations. The Legal Creation philosophy con-
tains the type of thinking that contributes to the current trend of business regula-
tion, which some individuals refer to as the ‘corporatization of society,’ indicating
that government places the burden of curing social problems on the business entity
through regulation.
Social responsibility has also been a matter of debate among philosophical
scholars. One model suggests that organizations possess social power and hence
are responsible to provide disclosure concerning business practices and to consider
social costs in the course of doing business14. The antithesis of this philosophy is
one provided by economist Milton Friedman, who claimed that corporations have
no duty to society. Friedman suggests that the only requirement of business is to
obey the law and pay taxes and that society should create laws to prevent busi-
nesses from doing harm to society15.
We can see that ethical behaviors are topics of interest from social, legal as well
as moral perspectives. In fact, Figure 2.6 provides a depiction of the relationship of
these three aspects of morality.

33