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Training in the U.S. lodging industry: Perception and reality
Human Resources
j/
Training in the U.S. Lodging Industry:
Perception and Reality Although most hoteliers say that training is important, few budget much money for it.
by George Conrade, Robert Woods, and Jack Ninemeier IN 1992, a total of more than $45 billion was spent on training by U.S. businesses. This amount represents a 4-percent increase over 1991 in expenditures for training. In other words, in spite of the fact that the United States was in one of the deepest recessions since the 1930s, American companies increased their training expenditures overall. © 1994, Cornell University
While U.S. companies in general m a y have increased their training budgets in recent years, training is still less important to American business than it is to that of other countries. For example, while employees of Fortune 500 companies spend only slightly more than 2 percent of their total work time in training, workers in Germany and J a p a n spend as much as 10 percent. 1 ASTD, the American Society of Training and Development, 1 "Retraining America--Worker Skills Are Outdated," transcript 23 from Moneyline (CNN), September 7, 1992.
16
recommends that companies spend 4 percent of their payroll on training employees. But this level of expenditure is rarely accomplished in American companies. Although some companies allocate as much as 3 - 4 percent
George Conrade, C.H.A., is executive vice president of the Educational Institute of the AH&MA. Robert Woods, Ph.D., is an associate professor at the Michigan State University School of Hotel, Restaurant, and Institutional Management, where Jack Ninemeier, Ph.D., C.H.A., is also a professor. THE CORNELL H.R.A. QUARTERLY
of their payroll on training, American business as a whole spends about 1 percent of payroll costs on training? In addition, most of that cost is devoted to the training and development of white-collar and technical workers, while production and service personnel generally receive considerably less training. In fact, service employees are among the least trained American workers. What American lodging companies spend on training has been the subject of much conjecture. The hospitality industry has long been regarded as slower than other industries in recognizing the value of training and spending money on it. However, this perception has been based more on assumption than it has on fact, because little empirical research has focused on training in the hospitality industry. Using two sets of surveys, we set out to first examine how corporate executives, general managers, department heads, supervisors, and employees of lodging companies perceive the value of training and, second, how that perception correlates to their company's actual training expenditures. The perceptions of industry personnel are reported first.
Perception Lodging properties are typically labor-intensive. Employees of varied skills in many different positions are required to produce and deliver products and services. Hotel managers view traini n g - b o t h for entry-level and other employees--with a wide range of priority. Is this because managers in some organizations researched and studied the relationship between training and 2 Anthony P. Carnevale, "The Learning Enterprise," Training and Development Journal, Februrary 1989, pp. 26-33.
OCTOBER 1994
selected variables and decided to train (or not train) based on their findings? Do hotel managers base their perception of training on their own experience? Do some managers judge the importance of training on common sense alone? The present study attempts to answer those and related questions by examining the perceptions held by corporate- and property-level personnel about the relationship between training and selected factors and how those perceptions may have been formed. A review of generic business and hospitality-specific training articles and other resources reveals that experts perceive a strong correlation between training and many other factors. It is generally accepted, for example, that training does the following: • Improves employees' productivity; • Improves employees' work quality; • Improves customers' overall perception of an organization; • Increases properties' profit levels; • Increases employees' on-the-job skills; • Increases employees' level of self-awareness; • Increases employees' job satisfaction; • Attracts new employees; • Improves employees' attitudes; • Reduces labor turnover; • Reduces costs; and • Promotes teamwork. Despite those clear benefits, a large number of lodging properties do not offer planned, quality training programs and spend far less than non-hospitality businesses on employee-training activities. If training is so beneficial, it is paradoxical that lodging properties have not made a commitment to it. 17
Data collection. To determine their perception of the value of training, we queried lodgingindustry personnel at two organizational levels about training and its relationship to selected factors. Corporate- and propertylevel survey participants were randomly selected from a database of both AH&MA member properties and non-member properties maintained by the Educational Institute of the AH&MA. Corporate- and property-]evel participants were, for the most part, in the highest-level positions within their organizations. Respondents' opinions, then, should reflect their companies' stated philosophies. Eightytwo percent of the corporate officials and 62 percent of the property managers had more than ten years of lodgingindustry experience. R e s u l t s . The primary question addressed to both corporate and property respondents was: Which of the following factors are influenced by training? Indicate whether your response is based upon experience or observation only, or whether you or other persons in your organization have objectively studied the influence of the factor. Results that summarize the perceptions of corporate executives are shown in Exhibit 1, while the perceptions of property managers are shown in Exhibit 2. It is generally agreed that training can address issues relating to knowledge, skills, and attitudes. Interestingly, as Exhibit 1 indicates, almost all (97-98 percent) corporate respondents see a relationship between training and knowledge; 91-94 percent believe training could affect skill-levels; and 82-88 percent perceive that a relationship exists between training and attitudinal factors and other factors (for example, profits and
EXHIBIT 1 Corporate-level perception of factors influenced by training (Numbers indicate percentage of respondents in agreement) Is this factor influenced by training? Consistent Service Delivery Management Knowledge Employee Knowledge Suggestive Selling Management Skill Professional Development Employee Skill Repeat Business Employee Attitude Profits Employee Turnover Empowerment Motivation Level Reduced Operating Costs Management Attitude
Yes 98 98 97 95 94 93 92 91 88 87 85 85 85 85 82
How Do You Know? Experience Study Both 86 87 85 3 85 84 85 82 84 82 79 83 87 82 88
8
11 12 13 12 13 14 13 12 11 13 12 13 10 10
4
8
3 1 2 6 2 2 3 6 5 5 9 5 4
EXHIBIT 2 Property-level perception of factors influenced by training (Numbers indicate percentage of respondents in agreement) Is this factor influenced by training? Consistent Service Delivery Employee Knowledge Repeat Business Management Knowledge Employee Skill Profits Suggestive Selling Management Skill Professional Development Motivation Level Reduced Operating Costs Employee Attitude Employee Turnover Empowerment Management Attitude
Yes 99 97 96 95 94 94 94 93 92 91 90 87 87 86 86
How Do You Know? Experience Study Both 84 85 84 84 90 77 83 84 76 89 78 92 79 79 89
5 7 5 4 4 11 9 6 12 3 11 2 12 9 2
18
11 9 11 13 6 12 8 10 12 8 11 6 9 12 9
reduced operating costs), which are likely affected by many variables in addition to training. On what do the corporate respondents base their opinions? In all cases, experience was the primary teacher. While some companies conducted their own studies to correlate training with the employee turnover rate (9 percent of respondents) and reduced operating costs (8 percent of respondents), no other factor has been formally studied by more than 6 percent of the respondents. Property-level respondents identified knowledge and skill domains to be most influenced by training, while attitudinal and multi-variable issues were considered less influenced by training--results that reflect those from corporate-level respondents. Interestingly, of the top-five factors rated by both corporatelevel and property-level personnel, three were the same: consistent service delivery, management knowledge, and employee knowledge. In fact, consistent service delivery was ranked the highest by both groups. We also observe such consistency in the factors judged to be least influenced by training. Of the five factors ranked last, four are identical in the responses of both groups: reduced operating costs, employee turnover, empowerment, and m a n a g e m e n t attitude. Note also that m a n a g e m e n t attitude specifically was ranked last by both groups. The results, then, suggest a fairly high level of agreement between the two levels of management. Although most property-level respondents agree with corporate-level respondents that their perceptions are based primarily on experience, formal study has been u n d e r t a k e n at the property THE CORNELL
H.R.A. QUARTERLY
level more frequently than at the corporate level for all factors except: • Management attitude; • Employee attitude; • Motivation level; and • Repeat business. Perhaps property managers have more reason or opportunity to analyze information relating to such quantifiable factors as employee turnover, operating costs, and suggestive selling than their corporate-level counterparts. Likewise, operations managers under the stress of staying within budgets may be less inclined to study such "soft issues" as employee attitude and motivation than are corporate personnel looking at the big picture.
Reality Because corporate- and propertylevel managers agree that training is related to the important factors noted in Exhibits 1 and 2, it should follow that training activities are strongly emphasized by lodging operations. In fact, the opposite is the case, as we discovered from our second survey, which looked at how much time and money lodging companies actually devote to training. Exhibit 3 reports demographic information about the respondents. As this table indicates, 38 percent of the respondents in the study were line employees, a notable percentage considering that this group is often excluded from participation in similar studies. Also notable is that most of the participants (80 percent) work for lodging companies with 50 or fewer properties. As Exhibit 4 indicates, most lodging companies (62 percent) spend b e t w e e n one-half percent and 1 percent of their payroll on training, and 15 percent spend
OCTOBER 1994
EXHIBIT 3 Demographics of Respondents Position Held Chairman/President VP-Human Resources VP-Other GM/Assistant GM Human Resources Director Department Head Supervisor Houriy Employee Other
Respondents by Company Size Number of Properties Fewer than 10 10-50 51-100 101-200 Mere than 200
Lodging-Industry Experience
Number
Percentage
38 13 23 93 19 48 29 150 7
9 3 5 22 5 11 7 36 2
Number
Percentage
159 176 34 13 38
38 42 8 3 9
Percentage Corporate
Percentage GM/Dept.Head
Percentage Supervisory/Employee
18 34 48
38 45 17
71 29 0
Fewer than 10 years 10-20 years More than 20 years
EXHIBIT 4 Lodging Industry Expenditures on Training Percentage of Payroll Spent
Percentage of Companies
Less than .5 Greater than .5 but less than 1 1-1.5 Greater than 1.5
15 62 23 0
19
even less. In other words, only 23 percent of our respondents indicated that their companies spend more than 1 percent of total payroll costs on training, a figure strikingly below even the low average for U.S. businesses. The relatively low level of training expenditures by lodging companies is troublesome because of the important role that service plays in the hospitality industry. In lodging, as in most service industries, a customer's entire impression of an organization is often based solely on contact with line-level employees. Failure on the part of lodging organizations to develop the skills, knowledge, and behaviors of these employees can have a dramatic impact on the viability of the entire organization. As we noted earlier, the results presented in Exhibit 4 indicate that lodging companies are spending less, overall, on training than other companies in the United States. The one bright spot is that lodging companies appear to be dedicating more training dollars to line employees (60 percent) than is common in other U.S. industries. However, the high level of turnover in the lodging industry may simply require that more training dollars be spent on developing new employees.
Training: Who and Why We noted that lodging companies spend most of their training dollars on line employees. While this is an important statistic, it does not fully explain who lodging companies train or what kind of training the employees receive. For instance, our study revealed that 61 percent of
lodging companies' training expenditure goes to providing new employees with the basic knowledge and skills needed for their jobs. This means that only about 39 percent of training dollars are spent for training existing employees. To assess the impact of this approach, we asked participating employees whether training would have any influence on their performance. Interestingly, 93 percent (141 people) indicated that training programs devoted to improving their skills, knowledge, and behavior would encourage them to stay at a property. In contrast, 63 percent (95 people) reported that they would be more likely to leave an organization if they were not involved in long-range training programs. Both of these findings appear to correlate with the results of other studies that indicate that training discourages turnover. We also learned from our research that 81 percent of the money spent on training existing employees goes to making employees better at their current jobs while only 19 percent is devoted to training employees for new positions or responsibilities. This finding suggests that the lodging industry may not recognize the value of crosstraining and personnel development in reducing employee turnover. Type of Training Preferred We also investigated the type of training preferred by lodging companies. The responses indicate that managers of lodging companies prefer on-the-job training for employees about 20
68 percent of the time. Additionally, only about 27 percent of training expenditures are spent on formal training methods such as lectures, seminars, videos, role playing, and simulations. In addition to the large emphasis on on-the-job training, we found that employees subjected to such programs may not be receiving quality training. For instance, 50 percent of the time on-the-job training consists of replacing an employee with a trainee in the normal schedule rather than adding a trainee to the existing staff, thereby compromising both organizational service standards and the ability of the trainee to learn. As with other training methods, the effectiveness of on-thejob training is often determined by who does the training. In our study we found that 38 percent of the time employees received on-the-job training from either a supervisor or a manager. The rest of the time employees were trained by either another employee (35 percent) or a group of other employees (27 percent). Research has indicated that employees trained by either a supervisor or a training specialist are more apt to deliver the type of service intended by the organization. 3
Paying for Training Only 51 percent of the corporatelevel participants indicated that their organizations have any type of training accounted for in their corporate budgets, including professional conferences and 3 Robert H. Woods, "When Services Meet Customers: An Analysis of the Role of R e s t a u r a n t Servers," Hospitality Research Journal, Vol. 14, No. 2 (1990), pp. 541-542.
THE CORNELL H.R.A. QUARTERLY
off-site seminars. Additionally, only 43 percent of the propertylevel participants reported t h a t t h e i r companies have policies t h a t emphasize t r a i n i n g programs at the property level. T h a t lack of emphasis m a y be a direct result of the m e t h o d by which t r a i n i n g costs are accounted for w i t h i n lodging organizations. Only about h a l f the companies in our s t u d y include "training" as a line-item expense. F u r t h e r m o r e , only 26 percent of the participants at either the property or corporate level reported t h a t on-the-job t r a i n i n g specifically was considered a line item. Therefore, in n e a r l y threefourths of those lodging companies, on-the-job t r a i n i n g is either considered an e x t r a o r d i n a r y expense or it is simply not accounted for in the budget. We believe t h a t on-the-job t r a i n i n g is in most cases charged as a labor expense to the various d e p a r t m e n t s in which it is conducted. Obviously, allocating t r a i n i n g costs in t h a t m a n n e r drives up the labor costs of the organization. Labor costs are an item on which m a n y m a n a g e r s are regularly evaluated (and for which t h e y are indirectly rewarded, in the form of bonuses for increased profitability). W h e t h e r including t r a i n i n g as a line item would increase or decrease the a m o u n t of t r a i n i n g dollars spent is uncertain. But one could argue t h a t creating a line item for t r a i n i n g would lead to g r e a t e r accountability. In some cases such accountability would allow m a n a g e r s the opportunity to b e t t e r plan their t r a i n i n g expenses. OCTOBER 1994
W a r m b o d i e s . While lodging organizations appear to devote most of their t r a i n i n g dollars to line-level employees, t h e y m a y not do so in effective ways. Two f i n d i n g s - - t h a t lodging organizations devote most of t h e i r training to new employees and t h a t most of this is on-the-job traini n g - - s e e m to confirm the commonly held perception t h a t lodging is often more i n t e r e s t e d in getting "warm bodies" to fill v a c a n t positions t h a n in developing long-term skills. This conclusion is also supported by our finding t h a t m a n a g e r s in lodging companies only infrequently conduct the on-the-job t r a i n i n g themselves. We believe t h a t the failure to include t r a i n i n g as a line-item expense is a significant cause in diminishing the importance of (and the level of expenditures for) t r a i n i n g overall.
Emphasizing Training Given t h a t most corporate-level and property-level m a n a g e r s perceive t h a t m a n y i m p o r t a n t factors are related to training, why doesn't the lodging i n d u s t r y emphasize training? We believe t h a t the lodging i n d u s t r y m i g h t give t r a i n i n g a higher priority if the following conditions were met: • There are m e a s u r a b l e r e t u r n s for training. Our s t u d y indicates t h a t t r a i n i n g is often viewed as an expense r a t h e r t h a n an investment. It is i m p o r t a n t to establish a clear cost-benefit link between t r a i n i n g expenses and outcomes. • Individuals u n d e r t a k i n g t r a i n i n g responsibilities are r e w a r d e d for them. Perfor21
mance-appraisal procedures t h a t address effective t r a i n i n g could be helpful. Employee compensation systems could be revised to provide an incentive for effective training. • Studies are done to q u a n t i f y the benefits of t r a i n i n g in times of financial s t r e s s - and also d u r i n g good times. Currently, most t r a i n i n g is reduced the m o m e n t t h a t profits decrease. • T r a i n i n g becomes a line item in the budget. • Quality t r a i n i n g m a t e r i a l s c u r r e n t l y available are more widely used. M a n y i n d u s t r y officials either don't know about or don't know how to use t r a i n i n g materials. "Train-the-trainer" programs could be i m p l e m e n t e d at the property level. • Corporate executives set an example by doing more to t r a i n and develop their property managers. The lodging i n d u s t r y is not yet as serious as it should be about training. Previous research has confirmed t h a t t r a i n i n g is likely to reduce t u r n o v e r and t h a t the existence of good t r a i n i n g programs m a k e s it easier for companies to recruit valuable employees. 4 The failure of the lodging i n d u s t r y to adequately address these issues m a y cause higher levels of t u r n o v e r costs and lower levels of service t h a n would be the case if t r a i n i n g were properly emphasized and implemented, co 4 R o b e r t H. Woods a n d J a m e s F. M a c a u l a y , "Rx for T u r n o v e r : R e t e n t i o n P r o g r a m s t h a t Work," the Cornell Hotel a n d Restaurant A d m i n i s t r a t i o n Quarterly, Vol. 30, No. 1 (May 1989), pp. 7 8 - 9 0 .
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Training in the U.S. Lodging Industry:
Perception and Reality Although most hoteliers say that training is important, few budget much money for it.
by George Conrade, Robert Woods, and Jack Ninemeier IN 1992, a total of more than $45 billion was spent on training by U.S. businesses. This amount represents a 4-percent increase over 1991 in expenditures for training. In other words, in spite of the fact that the United States was in one of the deepest recessions since the 1930s, American companies increased their training expenditures overall. © 1994, Cornell University
While U.S. companies in general m a y have increased their training budgets in recent years, training is still less important to American business than it is to that of other countries. For example, while employees of Fortune 500 companies spend only slightly more than 2 percent of their total work time in training, workers in Germany and J a p a n spend as much as 10 percent. 1 ASTD, the American Society of Training and Development, 1 "Retraining America--Worker Skills Are Outdated," transcript 23 from Moneyline (CNN), September 7, 1992.
16
recommends that companies spend 4 percent of their payroll on training employees. But this level of expenditure is rarely accomplished in American companies. Although some companies allocate as much as 3 - 4 percent
George Conrade, C.H.A., is executive vice president of the Educational Institute of the AH&MA. Robert Woods, Ph.D., is an associate professor at the Michigan State University School of Hotel, Restaurant, and Institutional Management, where Jack Ninemeier, Ph.D., C.H.A., is also a professor. THE CORNELL H.R.A. QUARTERLY
of their payroll on training, American business as a whole spends about 1 percent of payroll costs on training? In addition, most of that cost is devoted to the training and development of white-collar and technical workers, while production and service personnel generally receive considerably less training. In fact, service employees are among the least trained American workers. What American lodging companies spend on training has been the subject of much conjecture. The hospitality industry has long been regarded as slower than other industries in recognizing the value of training and spending money on it. However, this perception has been based more on assumption than it has on fact, because little empirical research has focused on training in the hospitality industry. Using two sets of surveys, we set out to first examine how corporate executives, general managers, department heads, supervisors, and employees of lodging companies perceive the value of training and, second, how that perception correlates to their company's actual training expenditures. The perceptions of industry personnel are reported first.
Perception Lodging properties are typically labor-intensive. Employees of varied skills in many different positions are required to produce and deliver products and services. Hotel managers view traini n g - b o t h for entry-level and other employees--with a wide range of priority. Is this because managers in some organizations researched and studied the relationship between training and 2 Anthony P. Carnevale, "The Learning Enterprise," Training and Development Journal, Februrary 1989, pp. 26-33.
OCTOBER 1994
selected variables and decided to train (or not train) based on their findings? Do hotel managers base their perception of training on their own experience? Do some managers judge the importance of training on common sense alone? The present study attempts to answer those and related questions by examining the perceptions held by corporate- and property-level personnel about the relationship between training and selected factors and how those perceptions may have been formed. A review of generic business and hospitality-specific training articles and other resources reveals that experts perceive a strong correlation between training and many other factors. It is generally accepted, for example, that training does the following: • Improves employees' productivity; • Improves employees' work quality; • Improves customers' overall perception of an organization; • Increases properties' profit levels; • Increases employees' on-the-job skills; • Increases employees' level of self-awareness; • Increases employees' job satisfaction; • Attracts new employees; • Improves employees' attitudes; • Reduces labor turnover; • Reduces costs; and • Promotes teamwork. Despite those clear benefits, a large number of lodging properties do not offer planned, quality training programs and spend far less than non-hospitality businesses on employee-training activities. If training is so beneficial, it is paradoxical that lodging properties have not made a commitment to it. 17
Data collection. To determine their perception of the value of training, we queried lodgingindustry personnel at two organizational levels about training and its relationship to selected factors. Corporate- and propertylevel survey participants were randomly selected from a database of both AH&MA member properties and non-member properties maintained by the Educational Institute of the AH&MA. Corporate- and property-]evel participants were, for the most part, in the highest-level positions within their organizations. Respondents' opinions, then, should reflect their companies' stated philosophies. Eightytwo percent of the corporate officials and 62 percent of the property managers had more than ten years of lodgingindustry experience. R e s u l t s . The primary question addressed to both corporate and property respondents was: Which of the following factors are influenced by training? Indicate whether your response is based upon experience or observation only, or whether you or other persons in your organization have objectively studied the influence of the factor. Results that summarize the perceptions of corporate executives are shown in Exhibit 1, while the perceptions of property managers are shown in Exhibit 2. It is generally agreed that training can address issues relating to knowledge, skills, and attitudes. Interestingly, as Exhibit 1 indicates, almost all (97-98 percent) corporate respondents see a relationship between training and knowledge; 91-94 percent believe training could affect skill-levels; and 82-88 percent perceive that a relationship exists between training and attitudinal factors and other factors (for example, profits and
EXHIBIT 1 Corporate-level perception of factors influenced by training (Numbers indicate percentage of respondents in agreement) Is this factor influenced by training? Consistent Service Delivery Management Knowledge Employee Knowledge Suggestive Selling Management Skill Professional Development Employee Skill Repeat Business Employee Attitude Profits Employee Turnover Empowerment Motivation Level Reduced Operating Costs Management Attitude
Yes 98 98 97 95 94 93 92 91 88 87 85 85 85 85 82
How Do You Know? Experience Study Both 86 87 85 3 85 84 85 82 84 82 79 83 87 82 88
8
11 12 13 12 13 14 13 12 11 13 12 13 10 10
4
8
3 1 2 6 2 2 3 6 5 5 9 5 4
EXHIBIT 2 Property-level perception of factors influenced by training (Numbers indicate percentage of respondents in agreement) Is this factor influenced by training? Consistent Service Delivery Employee Knowledge Repeat Business Management Knowledge Employee Skill Profits Suggestive Selling Management Skill Professional Development Motivation Level Reduced Operating Costs Employee Attitude Employee Turnover Empowerment Management Attitude
Yes 99 97 96 95 94 94 94 93 92 91 90 87 87 86 86
How Do You Know? Experience Study Both 84 85 84 84 90 77 83 84 76 89 78 92 79 79 89
5 7 5 4 4 11 9 6 12 3 11 2 12 9 2
18
11 9 11 13 6 12 8 10 12 8 11 6 9 12 9
reduced operating costs), which are likely affected by many variables in addition to training. On what do the corporate respondents base their opinions? In all cases, experience was the primary teacher. While some companies conducted their own studies to correlate training with the employee turnover rate (9 percent of respondents) and reduced operating costs (8 percent of respondents), no other factor has been formally studied by more than 6 percent of the respondents. Property-level respondents identified knowledge and skill domains to be most influenced by training, while attitudinal and multi-variable issues were considered less influenced by training--results that reflect those from corporate-level respondents. Interestingly, of the top-five factors rated by both corporatelevel and property-level personnel, three were the same: consistent service delivery, management knowledge, and employee knowledge. In fact, consistent service delivery was ranked the highest by both groups. We also observe such consistency in the factors judged to be least influenced by training. Of the five factors ranked last, four are identical in the responses of both groups: reduced operating costs, employee turnover, empowerment, and m a n a g e m e n t attitude. Note also that m a n a g e m e n t attitude specifically was ranked last by both groups. The results, then, suggest a fairly high level of agreement between the two levels of management. Although most property-level respondents agree with corporate-level respondents that their perceptions are based primarily on experience, formal study has been u n d e r t a k e n at the property THE CORNELL
H.R.A. QUARTERLY
level more frequently than at the corporate level for all factors except: • Management attitude; • Employee attitude; • Motivation level; and • Repeat business. Perhaps property managers have more reason or opportunity to analyze information relating to such quantifiable factors as employee turnover, operating costs, and suggestive selling than their corporate-level counterparts. Likewise, operations managers under the stress of staying within budgets may be less inclined to study such "soft issues" as employee attitude and motivation than are corporate personnel looking at the big picture.
Reality Because corporate- and propertylevel managers agree that training is related to the important factors noted in Exhibits 1 and 2, it should follow that training activities are strongly emphasized by lodging operations. In fact, the opposite is the case, as we discovered from our second survey, which looked at how much time and money lodging companies actually devote to training. Exhibit 3 reports demographic information about the respondents. As this table indicates, 38 percent of the respondents in the study were line employees, a notable percentage considering that this group is often excluded from participation in similar studies. Also notable is that most of the participants (80 percent) work for lodging companies with 50 or fewer properties. As Exhibit 4 indicates, most lodging companies (62 percent) spend b e t w e e n one-half percent and 1 percent of their payroll on training, and 15 percent spend
OCTOBER 1994
EXHIBIT 3 Demographics of Respondents Position Held Chairman/President VP-Human Resources VP-Other GM/Assistant GM Human Resources Director Department Head Supervisor Houriy Employee Other
Respondents by Company Size Number of Properties Fewer than 10 10-50 51-100 101-200 Mere than 200
Lodging-Industry Experience
Number
Percentage
38 13 23 93 19 48 29 150 7
9 3 5 22 5 11 7 36 2
Number
Percentage
159 176 34 13 38
38 42 8 3 9
Percentage Corporate
Percentage GM/Dept.Head
Percentage Supervisory/Employee
18 34 48
38 45 17
71 29 0
Fewer than 10 years 10-20 years More than 20 years
EXHIBIT 4 Lodging Industry Expenditures on Training Percentage of Payroll Spent
Percentage of Companies
Less than .5 Greater than .5 but less than 1 1-1.5 Greater than 1.5
15 62 23 0
19
even less. In other words, only 23 percent of our respondents indicated that their companies spend more than 1 percent of total payroll costs on training, a figure strikingly below even the low average for U.S. businesses. The relatively low level of training expenditures by lodging companies is troublesome because of the important role that service plays in the hospitality industry. In lodging, as in most service industries, a customer's entire impression of an organization is often based solely on contact with line-level employees. Failure on the part of lodging organizations to develop the skills, knowledge, and behaviors of these employees can have a dramatic impact on the viability of the entire organization. As we noted earlier, the results presented in Exhibit 4 indicate that lodging companies are spending less, overall, on training than other companies in the United States. The one bright spot is that lodging companies appear to be dedicating more training dollars to line employees (60 percent) than is common in other U.S. industries. However, the high level of turnover in the lodging industry may simply require that more training dollars be spent on developing new employees.
Training: Who and Why We noted that lodging companies spend most of their training dollars on line employees. While this is an important statistic, it does not fully explain who lodging companies train or what kind of training the employees receive. For instance, our study revealed that 61 percent of
lodging companies' training expenditure goes to providing new employees with the basic knowledge and skills needed for their jobs. This means that only about 39 percent of training dollars are spent for training existing employees. To assess the impact of this approach, we asked participating employees whether training would have any influence on their performance. Interestingly, 93 percent (141 people) indicated that training programs devoted to improving their skills, knowledge, and behavior would encourage them to stay at a property. In contrast, 63 percent (95 people) reported that they would be more likely to leave an organization if they were not involved in long-range training programs. Both of these findings appear to correlate with the results of other studies that indicate that training discourages turnover. We also learned from our research that 81 percent of the money spent on training existing employees goes to making employees better at their current jobs while only 19 percent is devoted to training employees for new positions or responsibilities. This finding suggests that the lodging industry may not recognize the value of crosstraining and personnel development in reducing employee turnover. Type of Training Preferred We also investigated the type of training preferred by lodging companies. The responses indicate that managers of lodging companies prefer on-the-job training for employees about 20
68 percent of the time. Additionally, only about 27 percent of training expenditures are spent on formal training methods such as lectures, seminars, videos, role playing, and simulations. In addition to the large emphasis on on-the-job training, we found that employees subjected to such programs may not be receiving quality training. For instance, 50 percent of the time on-the-job training consists of replacing an employee with a trainee in the normal schedule rather than adding a trainee to the existing staff, thereby compromising both organizational service standards and the ability of the trainee to learn. As with other training methods, the effectiveness of on-thejob training is often determined by who does the training. In our study we found that 38 percent of the time employees received on-the-job training from either a supervisor or a manager. The rest of the time employees were trained by either another employee (35 percent) or a group of other employees (27 percent). Research has indicated that employees trained by either a supervisor or a training specialist are more apt to deliver the type of service intended by the organization. 3
Paying for Training Only 51 percent of the corporatelevel participants indicated that their organizations have any type of training accounted for in their corporate budgets, including professional conferences and 3 Robert H. Woods, "When Services Meet Customers: An Analysis of the Role of R e s t a u r a n t Servers," Hospitality Research Journal, Vol. 14, No. 2 (1990), pp. 541-542.
THE CORNELL H.R.A. QUARTERLY
off-site seminars. Additionally, only 43 percent of the propertylevel participants reported t h a t t h e i r companies have policies t h a t emphasize t r a i n i n g programs at the property level. T h a t lack of emphasis m a y be a direct result of the m e t h o d by which t r a i n i n g costs are accounted for w i t h i n lodging organizations. Only about h a l f the companies in our s t u d y include "training" as a line-item expense. F u r t h e r m o r e , only 26 percent of the participants at either the property or corporate level reported t h a t on-the-job t r a i n i n g specifically was considered a line item. Therefore, in n e a r l y threefourths of those lodging companies, on-the-job t r a i n i n g is either considered an e x t r a o r d i n a r y expense or it is simply not accounted for in the budget. We believe t h a t on-the-job t r a i n i n g is in most cases charged as a labor expense to the various d e p a r t m e n t s in which it is conducted. Obviously, allocating t r a i n i n g costs in t h a t m a n n e r drives up the labor costs of the organization. Labor costs are an item on which m a n y m a n a g e r s are regularly evaluated (and for which t h e y are indirectly rewarded, in the form of bonuses for increased profitability). W h e t h e r including t r a i n i n g as a line item would increase or decrease the a m o u n t of t r a i n i n g dollars spent is uncertain. But one could argue t h a t creating a line item for t r a i n i n g would lead to g r e a t e r accountability. In some cases such accountability would allow m a n a g e r s the opportunity to b e t t e r plan their t r a i n i n g expenses. OCTOBER 1994
W a r m b o d i e s . While lodging organizations appear to devote most of their t r a i n i n g dollars to line-level employees, t h e y m a y not do so in effective ways. Two f i n d i n g s - - t h a t lodging organizations devote most of t h e i r training to new employees and t h a t most of this is on-the-job traini n g - - s e e m to confirm the commonly held perception t h a t lodging is often more i n t e r e s t e d in getting "warm bodies" to fill v a c a n t positions t h a n in developing long-term skills. This conclusion is also supported by our finding t h a t m a n a g e r s in lodging companies only infrequently conduct the on-the-job t r a i n i n g themselves. We believe t h a t the failure to include t r a i n i n g as a line-item expense is a significant cause in diminishing the importance of (and the level of expenditures for) t r a i n i n g overall.
Emphasizing Training Given t h a t most corporate-level and property-level m a n a g e r s perceive t h a t m a n y i m p o r t a n t factors are related to training, why doesn't the lodging i n d u s t r y emphasize training? We believe t h a t the lodging i n d u s t r y m i g h t give t r a i n i n g a higher priority if the following conditions were met: • There are m e a s u r a b l e r e t u r n s for training. Our s t u d y indicates t h a t t r a i n i n g is often viewed as an expense r a t h e r t h a n an investment. It is i m p o r t a n t to establish a clear cost-benefit link between t r a i n i n g expenses and outcomes. • Individuals u n d e r t a k i n g t r a i n i n g responsibilities are r e w a r d e d for them. Perfor21
mance-appraisal procedures t h a t address effective t r a i n i n g could be helpful. Employee compensation systems could be revised to provide an incentive for effective training. • Studies are done to q u a n t i f y the benefits of t r a i n i n g in times of financial s t r e s s - and also d u r i n g good times. Currently, most t r a i n i n g is reduced the m o m e n t t h a t profits decrease. • T r a i n i n g becomes a line item in the budget. • Quality t r a i n i n g m a t e r i a l s c u r r e n t l y available are more widely used. M a n y i n d u s t r y officials either don't know about or don't know how to use t r a i n i n g materials. "Train-the-trainer" programs could be i m p l e m e n t e d at the property level. • Corporate executives set an example by doing more to t r a i n and develop their property managers. The lodging i n d u s t r y is not yet as serious as it should be about training. Previous research has confirmed t h a t t r a i n i n g is likely to reduce t u r n o v e r and t h a t the existence of good t r a i n i n g programs m a k e s it easier for companies to recruit valuable employees. 4 The failure of the lodging i n d u s t r y to adequately address these issues m a y cause higher levels of t u r n o v e r costs and lower levels of service t h a n would be the case if t r a i n i n g were properly emphasized and implemented, co 4 R o b e r t H. Woods a n d J a m e s F. M a c a u l a y , "Rx for T u r n o v e r : R e t e n t i o n P r o g r a m s t h a t Work," the Cornell Hotel a n d Restaurant A d m i n i s t r a t i o n Quarterly, Vol. 30, No. 1 (May 1989), pp. 7 8 - 9 0 .