Human resource management (HRM) departments of hospitality companies are often criticized for being a cost center. This criticism is raised because it is not clear to see the results of employee management and difficult to measure outcomes of HRM efforts. Human resource outcomes are generally measured with intangible factors such as employee satisfaction, customer satisfaction, customer complaints, etc. Thus, results of these measurements are often too blurred to see the impact on bottom line. A rapidly changing business environment, featuring a tight labor market, changing customer demands, and increasing competition, has been a challenge for many of today's hospitality companies. Moreover, rapidly changing technologies make it easier to share information and to replicate competitors’ strategies and work practices.
To address these challenges, academicians and professionals have emphasized the use of competitive strategies that account for core competencies and capabilities within human resources. The emphasis of human resources to improve organizational performance has become stronger, not only because they cannot be easily imitated by competitors, but because they provide an effective and rapid response to market demands (Huselid and Becker, 1996; Prahalad and Hamel, 1990; Stalk et al., 1992). Furthermore, numerous academicians have asserted that HRM issues are increasingly essential to organizational performance, under labels such as “core competence, intellectual capital, organizational capability, high performance work systems, process management, value-based teams, and high performing teams” (Ulrich et al., 1997, p. 1).
Becker and Gerhart (1996) argued HRM decisions influence organizational performance by either improving organizational efficiency or increasing business revenue. According to previous studies, HRM practices contribute to improving organizational performance including turnover rate (Huselid, 1995), labor productivity (Datta et al., 2003;