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  • Subject area(s): Hospitality
  • Price: Free download
  • Published on: 15th October 2019
  • File format: Text
  • Number of pages: 2

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1.0 Introduction

1.1 Authorisation

The report is conducted and written for the subject, BBHM307 Managing Rooms Division authorised by the lecturer Sophie Kinloch.

1.2 Scope of report

The purpose of writing this report is to deliver the understanding of student on how outsourcing may be affecting an organisation performance in hospitality industry, typically in Rooms Division.

1.3 Limitations

Student’s understanding on case studies given during tutorial classes are able to deliver the outcome accurately and appropriately. The lecturer will see through any transparent attempt of student to complete the report.

2.0 Outsourcing Trends

Outsourcing services are no longer uncommon in hospitality industry where a large amount of labour is needed in order to ensure the overall performance of the hotel. Outsourcing is a service involving operating contract which is controlled and carried out by another company to run their business (Jaume 2015). Outsourcing is the function of management concerned with promoting and enhancing the development of work effectiveness and advancement. However, there are potential downsides causes results unacceptable to the hotel.

3.0 Reasons

3.1 Human Resources

Human Resource has been the key reason for establishing the relationship between both management and employees to bring organisational success which is critical and need to be identified clearly and implemented appropriately.

3.1.1 Training

Typically, employees are induced from outsourcing company to a hotel. Although employees are trained professionally to service, the hotel is also often providing training for new starters to reach full productivity. However, many hotels have been recognizing this challenge with regard to outsourced employees that lies in training. Outsourced employees are working in different places. Each hotel has its own procedures and standards where it came to be a big challenge for the employee to works in (Boucher 2017). In fact, technology innovation is one of the key problems where the outsourced employees not performing effectively (Pratap 2014). Whenever there is a new technology, a full training is required. Undeniable, outsourced employee is more likely to be confused and might be challenging for them to learn a new skill. If re-training is given again, it is time-consuming and costs related due to the expenses on training. Yet, sometimes training cannot control some unexpected results where the hotel cannot control if they choose to outsource. As an example, Hyatt hotels have outsourced some of their customer services to India in 2010. However, the results came out with many customer and employee complaints were received because of the guests have their difficulties in understanding the accents of Indian people which turned out an issue of taking longer time to receive accurate services (Smith 2012). Thus, a manager is required to understand the possible problems before deciding.

3.1.2 Underpayment

Payroll has been the concern of employees in both parties in outsourcing as it is the largest cost for companies. Outsourcing is a legitimate business arrangement but it also increases the risk that workers will be underpaid. Fair Work Ombudsman has targeted few hotel chains as they have received intelligence about the employment practices from underpaying the employees in Australia. Employers cannot reduce minimum wages no matter how, even if the employees said so – and accurate time-and-wages records must be kept at all times (Barth 2012). If a business is found underpaying workers, a broad range of action are taken such as fines and termination of contracts (Fair Work Ombudsman 2017). Indeed, electronic time-keeping systems to record working hours of employees are encouraged. With this, the hotel is more likely to prevent failure in delivering payrolls and also reduced the time in processing and cost in investigating the accurate payment. Also, with the technology, the hotel is able to cover a wide field of competencies in ensuring a positive outcome with efficiencies presence.

3.1.3 Employee Morale

Employees would prefer to work in a happy environment. However, employees are often confusing when outsourced employees are actually employed by another company. It creates a disturbance in sense of unity where outsourced employee is not treated as a part of the team which reduced the effectiveness of outsourcing. A hotel is to ensure that the employees have high commitment to service a common goal. In this case, perception of both employees in acting like they both have their bosses to decide what to do and who is right which is decreasing the effectiveness of working as a unity (Smith 2012). This immediately creates different services which is not benefiting the hotel in reducing time and costs but extending the concerns of both companies in continuing corporate. If outsources employees are welcomed into the team then they will act like a family instead of the feeling isolated (CleanLink 2006). Employees are to be given empowerment and everyone work together as a team creates loyalty to both companies and wanting to service guests with better satisfaction. Also, this increases the guest satisfaction in core competencies as employees are more likely to perform beyond expectations with higher morale identified (Stanley 2016).

3.1.4 Significance of legislation in Human Resources


Employee transfers is a legislation that both companies should pay close attention to. This legislation covers outsourcing and clients’ obligations in employment such as recognising the employees’ entitlements, wages and superannuation. Keeping employees’ documentations updated and make sure the obligations on termination or expiry of the agreement is clearly listed in the contract. This allows effective employees engagement in showing good HR management by reducing the fear and resistance of employees. In addition, transparency of contract with this legislation allows better working relationship and legality which avoid the company from legal issues. Legal issues can cause many concerns for a company and result in court legal actions. Many companies do not want this to happen also concerning the possible issues with customer service scores. Therefore, a legislation fosters both companies from avoiding legal issues due to employment (ICHM 2017).

3.2 Standards

People belief outsourcing leads to “higher levels of quality”. Unsurprisingly, outsourcing has driven the standards of a company to be inconsistent. Customer drives the demand for standards in hospitality industry. Therefore, it is vital for both company to understand the needs of a hotel in outsourcing.  

3.2.1 Quality

Quality of service is the flourishing service of hospitality industry. Guests enjoy simultaneal services that is produced as they are being consumed, that are, making a loss of control in quality. This is because exceptional services must be very careful especially when they are directly dealing with customers (Phillips 2017). In outsourcing, quality often unsatisfying due to the failure in delivering a complete standard operations procedures (SOP) of a particular hotel in which leading to decrement of guest’s satisfaction. In Hilton, brand standards and core competencies as a base and built up an extremely comprehensive manual by giving particular ‘how-to-do’ methods in operation (Lellman, 2017). Indeed, a manager needs to be professional and fully equipped with every single knowledge in delivering quality standards and provide a specific guideline for the outsourced employee to follow to avoid any uncertainty which reduced the achievement in quality assurance. Also, consistent meeting with clear KPIs and supervising are required to ensure outsourcing service has performed effectively with improvement on efficiencies which reduced the time and costs in altering their performance.

3.2.2 Confidentiality Issues

Outsourcing is easy to be replicated by the competition. Disturbance of confidentiality is the concern of both companies especially the client. A study has shown that 10 percent of companies that outsource had already been faced with this issue. Outsourced employees are initially trained in order to deliver quality services. However, when the contract ends, the tendency of employees in revealing the standards in is high when the outsourcing employees are rehired by the other hotel as the new hotel is able to oversee the standards of the hotel from the outsourcing company (Wickford 2017). Concerns the risk of competing properties using the same external vendors that could bring better experience from other properties. Thus, the core competencies are at risk where efficiencies are rarely to be achieved (Mourdoukoutas 2011). Obviously, this concern will drive a company in continuously ensuring improvement and innovation being practice in order to overcome this issue. A manager needs to be wise in analyzing the market and transforming the weakness of competitors into your strength to remain competitive (Hotel News 2017). Indeed, considering the reduction in time and costs to remain competitive is important before a manger decided to outsource.  

3.2.3 Significance of legislation in standards

Contractor’s obligation is one of the legislation in ensuring quality and efficiency with reasonable guidance given from the client. Equipment and personnel obligations have to stated clearly with guidance to avoid any unnecessary conflicts or legal issues involving wrong usage or equipment and unsatisfied performance of employees. Both companies have to understand and be specific on the agreements by ensuring services are taken with accordance to the guidelines provided by the clients. Also, compliance with any policies and procedures are important in ensuring no confidential will be revealed (ICHM 2017).

4.0 Conclusion

In a nutshell, client know-how in implementing the required actions is important in ensuring the results came out to be accepted by both parties. To be further elaborate on a manager role in outsourcing, understanding on legislations are in critical as it could affect the business of both parties and thus creating negative outcomes which they do not want to encounter. In order to perform efficiently on innovative methods introduced to the companies, they have to consider all aspects of potential problems in driving the effectiveness of outsourcing. The approaches have shown that the costs and time plays an indispensable role in enhancing the outsourcing services which also allows the client company to focus more on core competencies to remain competitive. Also, it drives the process of a business in achieving a better outcome in sales goals and customer satisfactions. All in all, understanding and analysing problems and current situations are vital to better-utilising outsourcing service.   

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