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The Low Level of Organizational Social Capital in Hotels—A New Zealand Case Study

Anthony Brien ^a , Nicholas Thomas ^b & Ananda Hussein ^c

a Faculty of Commerce , Lincoln University , Lincoln , New Zealand

b Driehaus College of Business , DePaul University , Chicago , Illinois , USA

c Faculty of Economics and Business , Brawijaya University , Malang , Indonesia

Published online: 07 Aug 2013.

To cite this article: Anthony Brien , Nicholas Thomas & Ananda Hussein (2013) The Low Level of Organizational Social Capital in Hotels—A New Zealand Case Study, Journal of Human Resources in Hospitality & Tourism, 12:4, 400-413, DOI: 10.1080/15332845.2013.790260

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The Low Level of Organizational Social Capital in Hotels—A New Zealand Case Study

ANTHONY BRIEN

Faculty of Commerce, Lincoln University, Lincoln, New Zealand

NICHOLAS THOMAS

Driehaus College of Business, DePaul University, Chicago, Illinois, USA

ANANDA HUSSEIN

Faculty of Economics and Business, Brawijaya University, Malang, Indonesia

Hotels, like other organizations, are constantly seeking to increase productivity; however, achieving this can be more challenging for service sectors organizations. Developing and maintaining a pos- itive level of Organizational Social Capital (OSC)—an organiza- tions soft asset—is said to be a productivity enhancement strategy;

therefore, measuring and monitoring OSC is important. This re- search presents the New Zealand hotel industry’s first measurement of OSC level. This is the initial stage within a longitudinal study to understand how OSC impacts productivity. A total of 509 employees from 31 hotels participated in this research, with the major finding and concern being the low level of OSC.

KEYWORDS Organizational Social Capital, productivity, hotels, New Zealand

INTRODUCTION

This article reports the findings of the first stage of a longitudinal research project within the New Zealand hotel industry, where the research question is: Does a hotel’s Organizational Social Capital (OSC) impact productivity?

The significance of this study is that this is the first time OSC has been measured across the New Zealand hotel industry, and, to the authors’ knowledge,

Address correspondence to Anthony Brien, Department of Business Management, Mar- keting and Law, Lincoln University, P.O. Box 84, Lincoln 7647, New Zealand. E-mail: anthony.

[email protected]

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in any other country, thus providing a benchmark for future research and international comparisons.

The theoretical foundation for this research is drawn from Coleman’s (1988) initial linking of Social Capital (SC) to Human Capital (HC) (Cohen, 1988; Coleman, 1988; Putnam, 2000; Requena, 2003; Svendsen & Sorensen, 2006), with SC being said to encompass the elements of participation, net- works, reciprocity, and trust. SC theory is not a new concept—a plethora of available literature exists that spans many years. However, it was not until 1999 that Leana and Van Buren (1999) first linked OSC to SC, highlight- ing stakeholders’ benefits—benefits that can include increased organisational productivity. As a theory, OSC sits alongside other research themes such as employee empowerment, exchange theory, and employee perceptions, but its point of difference is that it is a more holistic approach to the pulse of an organisation. The more recent advancement of OSC as a concept now includes, to varying degrees, the variables of: commitment, communication, influence, trust, and social relations (Bolino, Turnley, & Bloodgood, 2002;

Carmeli, Ben-Hador, Waldman, & Rupp, 2009; Helliwell & Huang, 2010;

Requena, 2003).

Though the authors intuitively support many of the aforementioned researchers’ views and findings that there is a link between OSC and productivity, this research sets out to be the first benchmark of OSC in the hotel industry, which, as part of a longitudinal study, could then hypothesize the OSC link to productivity. Such an independent benchmark of a hotel’s OSC as de- scribed above has not previously been undertaken in New Zealand, although many hotels often conduct in-house employee satisfaction/perception questionnaires, which could be said to include some OSC variables. The authors acknowledge independent research into some OSC variables in hotels, for example, communication, trust, and commitment (Chen, 2007; Kim, O’Neill,

& Jeong, 2004; Puth & Ewing, 1998; Sigala, 2003; Worsfold, 1999), but note the lack of a complete OSC benchmark methodology.

Given the need for the research previously discussed, the following research objectives were established: (1) Develop an OSC measurement tool for use in the hotel industry; (2) issue the measurement tool to all member hotels of the New Zealand Hotel Council; and (3) establish the OSC benchmark of individual participating hotels and the overall OSC position for the New Zealand hotel industry.

Compared with other countries, the New Zealand hotel industry is rel- atively small; therefore, in 2011, the researchers were able to invite the majority of hotel employees within the country to participate in this employee OSC perception study via a questionnaire. The results reported to the participating hotels enabled them to celebrate the success of high OSC variables scores, or take any necessary action to enhance lower-scoring OSC variables. On-going analysis continues to refine correlations between

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OSC variables, participant demographics, and, lastly, hotel productivity measures that may, in time, lead to increased productivity.

This article reports the findings of a study of OSC in the New Zealand hotel industry that is fundamentally drawn from employee perceptions, which, in the absence of any other research, presents a disturbing picture. It also highlights the OSC variable that has the greatest opportunity to increase productivity.

LITERATURE REVIEW

The literature related to OSC and its potential link to productivity has been briefly discussed. In this section, the reviewed literature relates to productivity in the hospitality/hotel sector and the said linkages to productivity from (1) education/qualifications, (2) employee turnover, and (3) employment status.

There appears to be no agreed measure of productivity in the hotel sector, although many elements of operations can be measured (i.e., employee-to-guest ratio); therefore, productivity means different things to different people. Research focused on hotel productivity is minimal, but the authors acknowledge the work of Kilic and Okumus (2005), Brown and Dev (2000), Ingram and Fraenkel (2006), Sasse and Richardson (1996), Baker and Riley (1994), and Witt and Witt (1989). The authors also acknowledge research related to productivity in the more generic area of hospitality such as Gr¨onroos and Ojasalo (2004), Reynolds (2003), Parasuraman (2010), Gummesson (1998), and Pickworth (1988). Potentially, productivity enhancement in the hotel and hospitality industry focuses on labor because of its significant costs, while other “drivers” for productivity are generally accepted as investment, innovation, enterprise, technology, and skills, and are no doubt used by hotels where possible. Outside these are the generic hotel measures of occupancy and revenue, though measuring productivity and factors that impact on it are less agreed upon.

Education/Qualifications

There is no agreed view on the link between educational level and commitment—that is, some researchers have indicated that the more qualified the employees, the more productive they are, but others researchers disagree with this (Iqbal, 2010). In terms of the link between educational level and trust, the British Social Attitudes Survey (Jordan, 2011) and the MORI Social Research Institute (Duffy, 2004) suggest that the higher a person’s educational qualification the more trusting they may be. However, it could be argued, though not yet proven, that the higher a person’s education level, the better they are at communicating, and holistically, they could be more influential. Based on the above lack of agreement, the authors hypothesized:

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Hypothesis 1: There is a significant effect on educational levels of the OSC variables, specifically: (H1a) the educational level on communication, (H1b), education level on commitment, (H1c) educational level on trust, and (H1d) educational level on influence.

However, the authors recognize that, given that the hotel industry is frequently considered an un-skilled or low-skilled industry, potentially, the various OSC variables above will be reported as low, thus impacting the ability to increase overall productivity.

Employee Turnover

Employee turnover is frequently researched in the hospitality industry for one major reason: its cost. Some research has shown that the cost of an employee leaving the company in the hospitality industry can exceed US$50,000.00 (Woods, 2006). In an era and industry of high economic uncertainty, the issue of employee retention could be the difference between and organization failing or succeeding—a direct link between OSC and productivity. There- fore, knowing if and how turnover affects OSC, or if OSC affects turnover, is critical.

Studies have tested a plethora of potential catalysts that may impact on employee turnover, and a cursory overview found discussion on similar variables that are presented in the OSC research. The turnover cognitions of hotel employees were studied by Carbery, Garavan, O’Brien, and McDonnell (2003). They introduced a model which includes psychological and percep- tual attributes, that, when implemented in a hospitality operation, was able to highlight a relationship with turnover cognition. The perceived commitment to the organization, perception of psychological contract violations, and perceptions of managerial competencies were significant contributors to turnover. Research associated with an employee’s work-related emotions (Bartol, 1976), non-work-related conditions (Hom & Kinicki, 2001), life satisfaction (Ghiselle, La Lopa, & Bai, 2001), and the social aspects of the work environment (Allen & Meyer, 1990) have all been considered in analyzing the influence of turnover. Hotel size and rating have also been used as variables in turnover research (Carbery et al., 2003; Iverson & Deery, 1997;

Wood, 1997). Given the cost of turnover, which has a direct negative link to productivity, it can be assumed that this also negatively impacts OSC. Hence, the authors proposed:

Hypothesis 2: There is a significant effect of employee length of service on OSC variables, specifically: (H2a) length of service on communication, (H2b) length of service on commitment, (H2c) length of service on trust, and (H2d) length of service on influence.

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Employment Status

Concluding this article’s focus on the three impacts on productivity (and their proposed linkages to OSC), hotels are known to employ high levels of part-time staff, arguably to manage fluctuating business levels. This practice does, however, have serious downsides, such as job insecurity, short and split-shifts, unpredictability of hours, low wages, and the need to juggle mul- tiple jobs to earn a living wage contributing to stress and workplace problems of absenteeism, high turnover, and workplace conflicts (Zeytinoglu, Lillevik, Seaton, & Moruz, 2004). The summation of these outcomes is potentially lower organizational commitment and less trust. The results of the above study are supported by other studies (Bohle, Quinlan, & Williamson, 2004;

de Gilder, 2003; Way, Lepak, Fay, & Thacker, 2010; Yang, 2012), in that ex- cessive/high employment of part-time workers provides negative work–life conflict, poor health outcomes, lower organizational and team commitment, and less trust. This suggests that the high use of part-time staff can negatively impact OSC, reducing the opportunity for enhanced productivity. Therefore, the final hypothesis:

Hypothesis 3: There is a significant effect on employment status on OSC variables, specifically: (H3a) employment status on communication, (H3b) employment status on commitment, (H3c) employment status on trust, and (H3d) employment status on influence.

METHODOLOGY Research Instrument Development

To measure OSC in hotels, a questionnaire with the following sections was developed: 12 questions related to commitment (using Porter & Smith’s [1970]

Organisational Commitment Questionnaire), 9 questions related to communication (using Mount & Back’s [1999] Communication Satisfaction Question- naire), 14 trust-based questions (using Tzafrir & Dolan’s [2004] Trust Ques- tionnaire), 12 questions related to influence (using Yukl, Seifert, & Chavez’s [2008] Influence Behavioural Questionnaire), and 6 questions related to SC (drawn from Putman’s [2000] Families and Work Institute Survey). Sample items from these sections are listed in the Appendix.

The first four sections required participants to record responses to questions using a Likert Scale, where 1 indicated Strongly Disagree and 5 indicated Strongly Agree. The final section, Social Relations, was not scored in Likert form; participants were asked to indicate, for example, how many times they socialized with colleagues based on a range of number options provided, or if they looked forward to being with colleagues, which had the options

“yes” or “no.” Demographic information including age, gender, ethnicity, work area, length of tenure, and qualifications was also gathered.

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Participant Selection

In September 2011, all hotels (112) from the New Zealand Hotel Council database were invited to participate in this OSC benchmarking exercise. This database holds the majority of New Zealand hotels that maintain over 50 rooms and luxury lodges; therefore, it is almost a total population of the New Zealand major hotel stock. The hotels wishing to participate in this research advised the researchers on how many employees (both full and part-time) were employed and were subsequently supplied with that number of questionnaires in individual, unsealed envelopes. Envelopes contained a research briefing sheet and were handed out by supervisors and/or made available in break-rooms. Envelopes were addressed to the researchers with postage paid to ensure participant confidentiality and that no employees could be identified. Additionally, this method ensured no financial expense was incurred by the participants. Participants were asked to complete the questionnaire in four weeks, after which time the researchers cut off ad- ditional data. Data were loaded into SPSS, where they were subjected to descriptive and inference analysis and AVOVA (confidence level of 5%) to determine differences of means between groups.

RESULTS

Thirty-one hotels (27.6% of all hotels invited) agreed to make the OSC questionnaire available to every staff member. Two international hotel chains chose not to participate in this research. One cited a company policy to not participate in external research. The second felt that the OSC questionnaire was similar to their in-house employee-engagement questionnaire and did not wish to participate. Though the longitudinal research project will, in the future, investigate in detail linkages between OSC and productivity, interim analysis of such linkages is reported in this article together with the most important benchmark findings.

With the exception of Social Relations, all other OSC (variables) sections of the questionnaire were subjected to Cronbach’s Alpha reliability testing, with the following results: Commitment Alpha 0.860, Communication Alpha 0.882, Trust Alpha 0.891, and Influence Alpha 0.685. Though the first three sections fall within the “good” range of reliability for statistical purposes, that is, above 0.70, Influence falls within the tolerable range for psychological constructs. Table 1 presents the mean scores of the various OSC variables.

Knowing the overall position of the above variables is important, just as is knowing what, within these variables, are the key determinates. Table 2 presents the themes drawn from the three highest-scoring questions (summarized as a percentage of agree or strongly agree) and of all the lowest scoring questions, the top three (summarized as a percentage disagree or

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TABLE 1 OSC Variable Mean Scores

OSC Variable Mean Scores

Commitment Communication Influence Trust

All participants (n=509) 3.5202 3.5795 3.5134 3.4656

strongly disagree) in each OSC variable. In effect, Tables 1 and 2 provide a quantitative and semi-qualitative picture of the state of OSC in New Zealand hotels.

The OSC variableSocial Relationsreports on employee interaction, with 85% feeling they belong to a hotel community but only 47% answering “yes”

to looking forward to being with the people they work with, and the same percentage stating “sometimes.” Interaction with work colleagues “outside work” never happens for 41% of respondents, happens once or twice a week for 52%, and happens three or more times a week for 7%. Within the once or twice category, the most socially interactive work areas are rooms division operational employees(32%), followed byfood and beverage employ- ees (27%); less socially interactive are those holding managerial positions in rooms division (9%), food and beverage (11%), and administration (16%).

Across all work areas, females are the most socially interactive; in terms of age, 21–25 year olds are the most interactive.

TABLE 2 OSC Variable Themes

OSC variable High-scoring themes (Highest) Low-scoring themes Commitment Willing to put in a great deal of

effort (88%), care about the future of the hotel (72%), strong loyalty (68%)

Happy to work for another hotel (53%), particularly if their present role changed (51%), not much to gain by staying with that hotel (23%) Communication Encouraged to communicate

(78%), receive feedback about changes (65%), and can make suggestions (61%)

Lack of communication about how they are doing in their job (20%), communication between people lacks a community feel (18%), uncomfortable about making suggestions (18%)

Influence Working with highly motivated people (72%), following policy (72%), unnecessary orders (65%)

Not influenced by rewards (34%), or reciprocal work support by colleagues (30%), feel pressured due to lack of planning (25%) Trust Employees can be trusted

(77%), colleagues will help each other (72%), and employees would not do anything to hurt the hotel (71%)

Employees trust the majority of their colleagues (56%), colleagues will not take advantage of others (41%), and employees will not breach trust to get ahead (20%)

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TABLE 3 ANOVA for Qualifications, Length of Service and Employment Status ANOVA Analysis

Qualifications Length of Service

Employment Status

F Sig F Sig F Sig

Commitment 0.647 0.664 0.156 0.993 2.95 0.087

Communication 0.777 0.567 1.456 0.178 2.893 0.09

Influence 0.873 0.499 1.765 0.092 0.132 0.717

Trust 0.59 0.709 1.227 0.286 1.201 0.274

Table 3 summarizes the ANOVA results of the relationship between the OSC variables of Commitment, Communication, Influence, and Trust and the employment–biographical areas of qualifications, length of service, or employment status.

The ANOVA results indicate that the level of qualification does not have a significant effect on all OSC’s variables (commitment F =0.647, p >0.05;

communication F=0.777,p >0.05; influence F=0.873; p>0.05, and trust F = 0.590, p > 0.05). This non-significant effect means hypotheses 1a, 1b, 1c, and 1d were rejected.

Like the effect of level of education on OSC variables, the ANOVA results also indicate that employee length of service does not have a significant effect on OSC variables in the alpha 5% (commitment F = 0.156, p > 0.05;

communication F=1.456,p >0.05, influence F=1.765, p>0.05; and trust F = 1.201, p > 0.05). These findings mean Hypotheses 2a, 2b, 2c, and 2d were rejected. However, in the alpha 10%, employee length of service had a significant effect on influence. Hence, it can be said that length of service has a moderate effect on influence.

The hypothesis testing also indicated that employment status does not have a significant effect on the OSC variables at the 5% level (commitment F = 2.95, p > 0.05; communication F = 0.090, p > 0.05; influence F = 0.132, p > 0.05; and trust F = 1.201, p > 0.05). These results suggest that Hypotheses 3a, 3b, 3c, and 3d were rejected. However, like length of service, employment status had a significant moderate effect (significant at alpha 10%) on commitment and communication. This moderate effect means there is a different perception between part-time and full-time employees, with respect to commitment and communication.

CONCLUSIONS AND IMPLICATIONS

Though 27.6% of New Zealand hotels participated in this research and those that did reported benefits in terms of identifying areas of OSC that could

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be improved, regrettably, the authors are unable to present a majority-of- industry result. Statistically, however, the result can be generalized as repre- sentative of the industry, which itself significantly highlights a neutral level of OSC and thus room for productivity improvement, in particular if hotels focus on lifting commitment, communication, influence, and trust.

The fact that the New Zealand hotel industry reports a neutral level of OSC, neutral being defined as “neither bad nor good,” implies it can be improved, which increases the opportunity for increased productivity. Within the OSC variables of commitment, communication, influence, and trust, (increasing) commitment should be the focus of the industry because the costs of employee turnover can be considered as a profitability–productivity measure. However, increasing employee commitment cannot be achieved by a single action; it also necessitates increasing the levels of communication, influence, and trust. Though increased commitment needs to be the end goal in terms of increased productivity related to HC, getting there is not straight- forward. Hotels have to be prepared to invest in new strategies to achieve this.

Increasing employee organizational commitment suggests reduced employee turnover, yet the internal-employee reporting of commitment being

“neither good or bad” is only slightly better than the external employee market perception, which is one of high employee turnover (Brien, 2000, 2001, 2004; Iverson & Deery, 1997) and an industry that you work in only till you find a “real job” or if you can find no other job. This stigma has been attached to the hotel industry for decades, with the industry accepting high turnover as standard business practice, which, by default, means they accept the high associated costs. The question the hotel industry must ask is, “Is this practice acceptable and sustainable?” The “doing what one has always done” approach will not enable hotels to increase productivity; fundamentally, hotels are not investing in the right areas to increase productivity. The authors suggest ways to change this as follows.

As mentioned above, organizational communication impacts organizational commitment, with communication reporting the highest (yet not

“good”) scoring OSC variable. However, taking into account the respondents collective make-up of the communication score, the results suggest this practice is potentially superficial—that is, hotels must be seen to communicate, and no doubt they do. There appears, however, to be a lack of genuineness in communication, as hotels fail to complete the loop and provide feedback, and a sizable percentage of respondents feel they cannot make suggestions or get feedback about their work. This can lead employees to feel less valued and thus less committed and, combined with a high level of “unnecessary orders” (negative influences), not trusted. The lesson for the hotels regarding communication is that communication must be meaning- ful and complete, and they must revisit how and when they communicate with employees. Additionally, if hotels want to see a positive impact on

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employee commitment, they must seek opportunities where employees can communicate with each other.

In moving to the tested hypothesis and reviewing employee tenure, the notion of an employee who stays with an employer for a long time is a committed employee is not true in hotels. Hotels that have relied on the general literature that says longer tenure equals commitment, have been misled with the implication that anyone can/will leave at any time, despite how they answer a direct question about loyalty. Indeed, in this research, only 68% of respondents said they had a strong loyalty to their hotel, which must have a direct impact on their willingness to increase overall productivity. In more detail, and to be clear, the view that full-time staff should be more committed than part-time staff is (at 5%) false. It is necessary to stretch the statistical acceptance, that is, weaken the view to 10%, to find a moderate relationship between tenure and commitment, which, at this point, also includes communication. However, such a stretch has little practical rel- evance. The implications for hotels from the above are that respondents are reporting a neutral level of loyalty. Though respondents may respond positively to specific questions on commitment, deeper analysis highlights a very different, negative, overall result. The aim for any hotel should be to provide an environment that productive employees “want” to stay and positively contribute.

The last hypothesis considered the relationship that qualifications have on OSC variables. It is noted, again, no matter what the level of qualification, that there is no relationship to communication, commitment, influence, and trust. Though it is generally agreed that productivity can be increased by en- gaging those with qualifications or increasing the skill of present employees, qualifications and differing levels of qualifications do not necessarily increase the level of commitment that, as discussed above, is a fundamental productivity enhancer. In presenting this finding, the authors are not suggesting to not engage qualified employees or reduce on-job-training, but rather not to assume that such actions will increase employee commitment. Additionally, there is the need to balance the investment in training with what is actually needed for the job.

The OSC variable ofSocial Relationswas not scored on a Likert scale, yet the authors believe the collective result of this variable influences the overall OSC results. In acknowledging that deeper analysis is needed, the social relations result highlights that the vast majority of employees feel they are part of a hotel community. However, nearly 50% of employees only “sometimes”

look forward to working with their colleagues. Every employee has off days with colleagues; this is possibly a breeding-ground for discontent and may link to the overall low OSC mean and area of trust. Hotels need to take the lead and ensure that social-relations-building opportunities are made available to ensure interaction happens between employees, if necessary, both inside and outside the hotel. Hotels need to consider such opportunities as

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barrier-breakers that enhance inter-organizational communication, influence, and trust that leads to increased commitment.

Understandably, hotels want answers about how to build commitment, if commitment is a driver for increased productivity. This research concludes that there is no single answer, but suggests that increasing the OSC variables scores of communication, trust, and influence will positively impact commitment, which is fundamental to organisational productivity growth. Com- mitment is potentially the root of the perception that external and internal stakeholders have, that is, the perception of a high-turnover, low-skilled industry leading to it not being an industry-of-employment-choice. To change this perception requires a change in approach by the industry’s management.

If the industry is not scoring an overall “good or very good” OSC score, in particular in the area of commitment, it is re-affirming the perception and moving backwards in terms of potential productivity gains.

In summary, the conclusions and implications for the hotel industry are that the road to productivity enhancement is via commitment. This may appear obvious; however, hotels have to understand that their workforce does not conform to known commitment enhancement strategies, thus the need to develop overall positive OSC, which will take creativity, time, and energy. Employees’ wants and needs are continually changing, and hotels need to take a more proactive approach to measuring their OSC levels on an on-going basis to have a benchmark from which to improve. Doing what has always been done is not a successful strategy for the future.

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APPENDIX

Sample Questions from the OSC Questionnaire Commitment:

I am willing to put in a great deal of effort beyond that which is normally expected in order to help this hotel be successful.

I would do almost any job asked of me in order to keep working for this hotel.

Communication:

The communication I receive about all sorts of things in this hotel is about right—not too much or too little.

There is a lot of communication between my colleagues (not job related or from management).

Influence:

I am influenced to do something when I know it is hotel policy.

People offer to do something for me in exchange for me doing something for them.

Trust:

My colleagues will keep the promises they make.

My colleagues’ actions and behaviors are not consistent.

Social Relations:

How many of these close friends are people you work with in this hotel?

Do you look forward to being with the people you work with at this hotel each day?