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MANA 298
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Talent Retention – LLC 4225 UNIT 9 TALENT MANAGEMENT IN CRISIS PERIOD (A CASE STUDY IN THE HOTEL SECTOR) Unit Structure 2.0 Overview 2.1 Learning Outcomes 2.2 Introduction 2.3 Organisational Crisis 2.4 The Human Impact of Organisational Crises 2.5 Aligning Crisis Management Strategy and Talent Strategy 2.6 The Need for Talent in Times of Crisis 2.7 Talent Planning 2.8 The Importance of Talent in the Hotel Sector 2.9 Developing Talent 2.10 Summary 2.0 OVERVIEW This unit gives an overview of crisis situations and how human resource and talents are managed in times of crises in order to be better prepared for any type of threat and how to tap opportunities. The recent economic recession and other crisis situations has been enumerated for a better understanding of this Unit. The hospitability sector has been used as case study to illustrate how talents are managed in times of crises. Unit 2 1 Talent Retention – LLC 4225 2.1 LEARNING OUTCOMES By the end of this unit, you should be able to do the following:- 1. Identify and explain the impacts of crises on talented human capital of an organisation. 2. Identify the role of talent management in managing human resources in time of crises. 3. Explain how people, through unique talent, can be used as a tool for competitive advantage and establish talent management strategies that may help to turn crisis into opportunities. 2.2 INTRODUCTION Today, in an era of increasingly interconnected world economy and fierce competition, crises have gathered greater importance. Thus, no matter how financially powerful and successful an organisation can be, it is still not immune from a crisis situation and the consequent long term damages it can cause. Examples of recent crises include the downfall of Enron, one of the world’s largest energy companies at that time and the recent world economic recession impacting on business activities. 2.3 ORGANISATIONAL CRISIS Crises come in many varieties, the “Homemade Crisis” (Zahn,1983), often initiated by mismanagement, fraudulent behaviour, injudicious expansion or diversification. One well-known case was that of Four Seasons Hotel Company. In the mid 1992, it acquired Regents Hotel; but this integration of the luxury hotel chains had left Four Seasons Hotel Company in high debt. Moreover, not only the company was financially in a difficult situation Unit 2 2 Talent Retention – LLC 4225 but it also had to face global economic downturn which started in 1990 and thus affecting the organisation’s profits (Angela Lanning and Robert Lewis, 1997). Therefore, crises can also be rooted in external negative events or changes in the market environment like the 2008/09 economic downturn which hindered business operations. I. Mitroff (2004) identifies seven potential groups of major crisis events: 1) Economic-related: Problems with labour force, the fall of the stock market, economic recessions, changes in trade policy, sharp decrease in organisation’s profits. 2) Informational: Lost and tampered data. 3) Physical: Long term breakdown and quality problem, product failures. 4) Human Resources: Vandalism by employees, corruption. 5) Reputation-related: Loss of goodwill. 6) Psychopathic acts: Criminal and terrorist acts such as the Marriott and Ritz Carlton Hotels’ Blast in Jakarta in July 2009. 7) Natural disasters: Fire, flood, and earthquakes damages. In December 2004, the tsunami hit hard the Asian tourism industry. Consequently, a crisis situation (Glaesser, 2003) is an unwanted, unusual situation for an organisation, a time of acute difficulty or danger which necessitates an immediate response by management. Krystek (1987) and Schulten (1995) have argued how a crisis can negatively impact, to a considerable extent, on the development of an organisation. A management view of crisis as defined by C.M.Pearson and J.A Clair (1998) is as follows: Unit 2 3 Talent Retention – LLC 4225 “An organisational crisis is a low probability, high impact event that threatens the viability of the organisation and is characterised by ambiguity of cause, effect, and means of resolution, as well as by a belief that decision must be made swiftly.” 2.4 THE HUMAN IMPACT OF ORGANISATIONAL CRISES Research on the impacts of crises on employees has received limited attention in literature (Rick.A.Myer, Christian Conte and Sarah Peterson, 2007). Perhaps, the first casualty of a downturn is the people who bring in revenues to the company. A survey conducted by the Boston Consulting Group (BCG) and the European Association for People Management (EAPM) between November 2008 to January 2009 to understand human resource challenges in times of crisis, showed that the most popular planned action in the current recession crisis is to cut down on recruitment. Likewise, a survey by the Chartered Institute for Personnel and Development (Autumn 2009) indicated that employees in UK are increasingly freezing pay, cutting back on training and slashing back hiring, in response to economic recession. The report also shows that fewer than a half of the employees feel that they were fully informed or fairly well informed about what was happening in their organisation during the ongoing economic downturn and more than half interviewed employees thought that it will indeed be difficult or very difficult to find a new job if they were to be fired. Thus, with many companies in distress, downsizing has become a common practice. The term “downsizing” has been referred (Cascio, 1993) as the reduction of a company’s employees through elimination of jobs or positions and is therefore seen as a faster way to reduce labour cost in a downturn. Organisations with the aim to adapt to uncertainties of the market environment and unexpected crisis situations, have favoured the flexibility strategy. Activity 1 Unit 2 4 Talent Retention – LLC 4225 Discuss what you understand by the term “organisational crisis”. Give relevant examples to support your answer. 2.5 ALIGNING CRISIS MANAGEMENT STRATEGY AND TALENT STRATEGY No organisational strategies in fact can be applied without the inclusion of Human Resources (Baird et al, 1983). Consequently, the fit model of HRM advocates the increased recognition of the critical role of people in the attainment of organisational strategies.
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