Developing Organisational Social Capital in Hotels: A future Recession Proofing Approach

Abstract

In fighting for economic survival, hotels have diligently reduced as many costs as possible via the extensive use of systems, technology and efficiencies in all areas. While operating margins are thin and hotels have focused on reducing their largest costs item – labour, yet in doing so risk long-term business sustainability as service levels reduce, tacit knowledge leaves the company, and customers notice a less than expected experience. This article presents research conducted in New Zealand in 2007 – before the 2008/09 global recession, which focused on the management of contingent labour in five-star international hotels. The findings of that research are pertinent to this present recession and its recovery in that it suggests that building organisational social capital, that is, trust, communication, commitment, social relations, and influence (Requena, 2003), has significance general organisational sustainability, productivity and profitability enhancement benefits. Hotels who have built organisational social-capital in positive economic times will potentially being winners over those who have not when this recession subsides and into the future. This research highlights it will be effective social capital leadership which will bring about the much needed rapid response at the end of this recession and future proof an organisation; leadership not solely invested in that of the General Manager, but in particular by hotel middle managers – those how manage the majority of staffing on a daily basis. Key Words: Social Capital, Hotels, Recession, Leadership

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