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Section 10. Economics of recreation and tourism
Qiqi Daniela, University of Gjirokastra Ph.D. (c), Faculty of Economics E-mail: daniela-qiqi@yahoo. com
THE ROLE OF THE OWNER MANAGER IN THE HRM -ORGANIZATIONAL PERFORMANCE RELATIONSHIP
Abstract: It is now a known fact that tourism is a labor intensive, service industry characterized by the staff behavior and performance, which are directly influenced by the definition, the level of application and the formalization of HRM practices, directly affect the organizational performance of the business.
Another feature of tourism is the existence of a large number of small and medium enterprises (SMEs) and as is known, the SME decision-making power is mainly focused on the owner manager, so his expertise can affect the level of application and formalization of the core HR practices.
This article suggests a conceptual model for measuring the impact that the expertise of a person who deals with HRM issues has in the application of these practices and the impact of the application of HRM activities in organizational business performance.
Keywords: HRM, expertise, owner-manager, organizational performance, tourism.
Introduction these businesses. However, the management of hu-
Imagine leading companies with impressive man resources in the tourism sector is still underde-
buildings and high offices without any talented em- veloped and lacking sophistication [3].
ployees; without doubt, these companies would The determination of HRM practices and their
crumble [1]. Thus, human resources are the only level of formalization and application depend on the
living factor of production which also influences type ofhuman resources (HR) within the company
other factors. [4]. It has been argued in a number of studies that
By nature, the hotel industry is a labor-intensive systems and practices of human resource manageservice industry and its success largely depends on the ment have a direct impact on employees, on their social and technical skills of its personnel, their intel- attitudes, behavior and performance which directly ligence, commitment and their attitude [2]. Since the affects organizational performance [5]. Human re-tourism industry is labor-intensive and requires inter- source practices have indirect effects on employee action with customers, the quality of service largely attitudes and behaviors through group behavior, depends on the quality of staff. Although it is a cliché, which then affect organizational culture [6]. it is true that people are its most important source. In fact, as early as before, a lack of a theoretical Therefore human resources management is thought basis for HRM practices, the results that they have to play a vital role in the economic performance of and the impacts that have practice in each other,
have been found in the HRM process and in PO [7,8]. Many authors have tried to find an answer on how this link works, which the factors that affect it are and what, this effect is. Trying to build different theoretical models and understand how these models really work, they call it the "black box "in a business [9]. The efforts to build a complete theoretical basis for HRM continue even later. Paauwe, argues that we need a better theory of HRM practices, results and connections between them [10]. There have been many studies conducted on companies within the same industry or companies belonging to different industries, in which a number of variables were included in the form of HRM results and different conceptual models were offered [11; 12; 13; 14; 15; 16]. According to Vlachos, literature is replete with studies that examine the relationship between the practices of human resource management and firms' performances and there is also a long list of the best human resources practices that could separately or all together influence organizational performance [17]. However, Guest explains that we are currently at the stage of "growing sophistication" and now the question is: "under what conditions does HRM influence performance" and "through what process does HRM influence the performance" [18].
In this article, I suggest a conceptual model which is the result of literature review and previous models offered by different researchers.
Literature and models review
Studies of HRM practices in small and medium enterprises have always attracted the attention of management researchers. Underlying assumptions for small firms say they are organized in an informal way and HRM practices are informal. Nevertheless, increasing investigation has shown that there are many exceptions to this pattern.
This article is mainly based on 3 different models from management researchers. Jan M. P. de Kok and Lorraine M. Uhlaner, [14] in their study attempted to clarify the relationship between organization contextual variables and human resource management
(HRM) practices in small firms [14]. They proposed a model that explained the level of formalization in HRM combining theoretical perspectives, including the resource-based approach, institutional theory, transaction cost economics (TCE), and concepts from strategic management. The "formalization" of HRM practices, was the dependent variable in their model. The resource-based view is used to highlight the importance of the environment in building up human resource capabilities. The authors argue that RBV is included in this model to emphasize the importance of the environment that HR gain the skills. The model includes several independent contextual variables: firm size, the presence of an individual or collective contract, collaboration with a larger supplier or client, and growth orientation as a strategy (called "growth strategy"). It is thought that these four contextual variables together, affect the degree of formalization of HRM practices. This model also includes a set of intermediary variables that are not directly measured, but are believed to affect the link between independent and dependent variables. The underlying assumption is that if the CEO of the firm has the resources, knowledge (know-how) and recognizes the importance of formal HRM practices then he or she will apply and develop them.
Another model is that built by Urbano, D., Yor-danova, D. (2007) [15], which was built to study the relationship that existed between the characteristics of touristic SMEs, the person responsible for HR and the application of HRM practices. This model is also based on RBV theory and considers 5 independent variables: firm size, the presence of an HRM department, cooperation with larger firms, the ownership by the larger company and the characteristics of the person responsible for HRM. These independent variables are considered resources, whereas the dependent variable is the application of HRM practices. In this study, it is argued that the characteristics of a person responsible for HR such as experience, education and training can affect the application of HRM practices to SMEs. From the results of the
study it was noted that SMEs are more inclined to apply HRM practices when the HRM person has previous experience in such positions. But it was also noted that the education or training of this person did not affect the application of HRM practices.
The third model to which this article refers, is that written by Marinela Dropuli'c Ruzi'c (2014) [19]. In this study, the direct and indirect impact of HRM on the performance of hotel businesses is measured. The theoretical basis of this model are: RBV theory, AMO (Ability - Motivation - Opportunity) framework and universalistic, contingency and con-figurational approach. This model considers HRM practices as its independent variables, the firm's OP as the dependent one and explains how HRM practices impact on firm's HR and performance. The results of the study confirm that HRM directly affects the performance of HR(at individual and organizational level) as well as the firm's performance.
This study's conclusion is that HRM, directly contributes to the HR performance, both at individual and organizational levels, as well as to the firm's OP.
The proposed conceptual model
Firms can adopt different HRM practices to improve their long-term competition. According to the RBV, resources that are valuable, rare, inimitable, and irreplaceable by other resources can be a source of sustainable competitive advantage [20]. Firms can adopt different HRM practices to improve their long-term competition. Some authors argue that the adoption ofHRM practices can lead to the creation of sustainable competitive advantage [21; 22; 23; 24]. The situation of basic human resources in a firm [25; 20], may help to better understand why some firms tend to apply HRM practices and some others do not. Studies of the business field support the general conclusion that small organizations are more likely to act in an informal and flexible way than larger firms [26; 27; 28; 29; 30; 31; 32; 33; 34]. It is often thought that given their limited activity they would not employ an HRM specialist so as to apply and develop sophisticated treatments. Furthermore, it is
possible for them to ask for HR policies that require some consideration, based on their circumstances or business situations. Therefore, in small firms, where the organizational structure is limited, there are usually few managers and ownership and control are often concentrated in the hands of a single person. Consequently, the Owner/Manager's attitudes and values will have a profound impact on the organization's organizational framework, policies and social relationships [35]. According to Lerner and Haber (2000) [36], the performance level of a small enterprise is mainly attributed to the education, entrepreneurial experience, the skills of entrepreneurs, as well as their personal entrepreneurial characteristics. Boer et al. (1997) claim that entrepreneurs generally appreciate their independence and exhibit dominant psychological features, which result in a managerial style that is usually autocratic, impulsive, egocentric, and unpredictable. For these reasons, HR practices vary widely between small firms, are often set by the ideology and pluralist goals of the small business owner and as a result of its informality are more sophisticated than usually expected [37]. In spite of everything said in theory, it is a fact that organizations need to manage their employees every day and become involved in the process of finding human resources, their distribution to the working positions and their development, so the expertise of the HR manager/owner -manager is the main factor in the application of HRM practices. Taking incentive from this reasoning, in the first box of this model the owner-manager's expertise is included, and two elements have been considered as measure for this expertise: his experience in this position, education and HR training.
There are some authors who claim that sustainable competitive advantage is the HR itself rather than the practices used for recruiting, using or retaining them [38; 22]. Just as there are other scholars who argue that HR practices can be considered as important elements of organizational behavior, taking into account the ability to motivate employees,
applying internal HR policies etc. [20; 39; 40] and HRM can be seen as an integral part of the company's overall strategy. In this regard, practices such as recruitment, training, performance appraisal and rewarding can contribute to the creation of an organizational knowledge base and HR can be seen as an important contributor to the firm's success. Generally though, there isn't a list of prescribed practices or systems for applicable human resources practices that make up HRM. Although the studies conducted have aimed at identifying the best HRM practices, many of these studies have dealt with the issue of human resource practices focusing only on certain variables. A review of the literature conducted by Khan (2010) [41], identified five major HRM practices which are: training and development, recruitment and selection, compensation and rewarding, performance appraisal, and employee participation. These five practices are part of ten practices that were used in another study from ALDamoe, F. M. A., et.al (2011) [42] to assess the impact of these HRM policies on organizational performance and it was concluded that there is a significant positive relationship between HRM practices and organizational performance (therefore there is a significant positive relationship between HRM practices and OP).
Hence, researchers can list a number of different practices, four of which, standing at the top of the list are: recruitment and careful selection, training and development, performance management (including assessment) and reward/compensation schemes. These four practices are reflected in the main objectives of most "strategic" HRM programs [43]. So, in order to identify and to recruit strong performers, they offer them the chance and confidence to work effectively, they monitor their progress towards the objectives of performance required, and the staff is duly rewarded for their realization or excess. Experience has shown that some HRM policies and practices provide better results than others, thus all organizations or companies should be interested in adopting the best practices. So, the definitions of the best practices are al-
ways led by research into four favorite sub functions of university students and personnel psychology: selection, training, performance evaluation and reward [44; 45]. However, it should be recognized that the best practices are widely accepted by researchers and practitioners [47; 44; 46; 45].
Based on the previously mentioned facts, in the model suggested in this article the practices selected are namely: recruitment/selection, training/development, performance evaluation and rewarding as the most important practices and those with the greatest impact on employees. Each of these practices has its importance and effect on the individual performance of the employee and furthermore on the firm's organizational performance.
Business performance is considered to be multidimensional. Dyer and Reeves's [48], researchers in strategic HRM, in their work have measured business performance with three main result groups which are related to HRM: HR results, operational results, and financial results. HR results are directly related to HRM in an organization, such as the skills and competencies of employees, attitudes and behaviors, as well as their turnover. Operational results are those connected to the objectives of an organizational operation, including productivity, product or service quality, developing new products or innovation, and customers' satisfaction. The financial results reflect the meeting of economic goals of the organization. Typical financial results include sales growth, profit growth, return on invested capital, and return on assets [49]. In this model, as a benchmark for organizational performance, several HR and operational results have been suggested, which are thought to have a direct impact on business' OP, as a result of the application of HRM core practices that are: Product/service quality and development [50; 47] Organization relationships (the relationship between management and other employees/relationship among employees in general) [50] and the ability to keep necessary employees (low turnover) [47]. The choice is based on the fact that financial
accountants in a tourism business can be affected tourist movements etc.) Schematically this pattern by factors that are not directly related to HRM (e. g. will be as reflected in (Figure 1).
Figure 1.
Despite being mostly considered for tourist businesses, this scheme may be valid for other businesses
that offer services as well as for small manufacturing firms.
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