Webcase 2: Human Resources Management and Small Businesses

Annerigt Reijnen is a down to earth person, not surprising given that she grew up in
Terschelling, one of the five populated islands at the Northern shore of the Netherlands.
Nevertheless, she completed high school very successfully and her parents encouraged her
to study at a university. Although she liked the idea to study, she did not feel comfortable to
leave the island. Thus, she enrolled in a bachelor program in business at the University of
Groningen, a provincial city just 80 km from her home island, and returned home every
weekend. She enjoyed her study, but she always knew that she would return to the island,
the place of her friends and joy. The world of philosophical discussions and theoretical
reasoning was much too abstract for her and she preferred courses where she learnt things
that could be directly used. As Annerigt has always been interested in people, she
specialized in human resource management, graduated and moved back to the island.

Since high school days, Annerigt has been together with Tjalt, the only child of a small hotel
owner in Terschelling. Already in high school times, she and Tjalt earned some money with
doing jobs in the family hotel. Later on, during her study, she kept involved in the family
business and worked there during the weekends and in the vacations. Often she discussed
with Tjalt their future. It was obvious to them that she would return to the island after her
study and that Tjalt would take over the family business. However, they also knew that they
would run the hotel differently.

In the 1960's, Tjalt father Piet, a farmer like his father and grandfathers recognized that
farming would not provided a sufficient income in the long-run. Back then, tourism was
increasing, more and more people from the Dutch mainland spent vacations on the islands
and were looking for affordable accommodation. Rien, Tjalts mother, has worked as a maid
in Amsterdam before they married. Combining the growing demand and the capabilities of
Rien, they started a bed and breakfast in their farmhouse. Gradually, this bed and breakfast
grew out to a small hotel and developed to the main income source. In 1988, Rien and Piet
sold their remaining land and focused on the hotel. The stables became guest rooms and
vacation apartments, the ground floor of the main house was transformed to a small coffee
room / restaurant. Piet and Rien have successfully transformed a farming to a tourism
business, because they saw new demand opportunities - they understood that achieving
stability in a family business requires change. Tjalt and Annerigt wanted to continue this
legacy.

Tjalt and Anneright felt that the small three star hotel Tjalt's parents had built up, would need
to change and grow to survive in a changing market for vacations on the Dutch islands. Like
in many markets, Tjalt and Annerigt observed in the island's hotel market, that the market
polarized. Of course, in the high season - eight weeks in summer - their hotel was fully
booked like all other accommodation places on the island. But in the off-season, differences
became visible. The camping grounds were full from late April to early October and the only
four star hotel on the island was even in the winter time well booked. Thus, Tjalt and Annerigt
transformed the current three star family hotel into a four star hotel in a historic setting (the
farmhouse and some of the stables dated back to the 18th century) with a wellness area and
facilities for smaller meetings.

Transforming a three star family hotel to a four star hotel needs more than sufficient financial
capital to redecorate and rebuilt the hotel. It also needs a professionalising of the
management and work force. A family hotel can be run with the members of the family taking
over the main tasks and un-trained seasonal people doing things like making up the rooms
and restaurant service. A four star hotel requires a more professional management and
important tasks have to be done by non family people. Moreover to cover the larger
overhead costs, the new hotel offered twice as many beds as the former family hotel, namely
98.

The hotel industry is a service industry and how satisfied the guests are depends very much
on how well they are served. Tjalt and Annerigt could not run the hotel alone and had to hire
people. However, some of the jobs they needed to fill were very different from the jobs in the
old family hotel. They definitely needed a chef for the restaurant and some trustworthy
person for the reception desk and back office. Although Annerigt had run and co-ordinated
the restaurant service in the old hotel since she returned from Groningen, they felt that the
new restaurant would require a more professional guestlady. Annerigt and Tjalt ask
themselves: where to get these and all the other people needed to run the hotel, how could
you keep them despite the relatively low wages offered in the sector, how could you select
the best of those applying etc.

In Groningen, Annerigt had taken a course in hospitality management and she remembered
a model that divided the employees in three categories (a) full time personnel with crucial
and often complex tasks and difficult to replace, (b) employees with crucial tasks but easily to
replace and (c) employees which are only needed in peak times. One evening, she took her
old study books and notes and sat down in the living room to look through them hoping to get
some ideas how they could handle all the personnel problems they faced. She knew that the
hotel business was still managed by people who started young in the business and worked
up the ladder. People with a higher formal education even Bachelors were rare. The more
she read through her old study books and notes, the more she liked the idea that they could
make a difference by systematically adopting the HRM tools for their hotel and using them.
When Tjalt entered the room, she told him about her ideas and they started together thinking
about how HRM should look like in a hotel. They thought about their own hotel and they
thought about the other hotels on their and the neighboring islands. In the following week
they talked a lot with their colleagues from other hotels on the five Dutch islands and tried to
understand how they handled the selection of their personnel. One night, Annerigt talked
about systematic HRM; We are not systematic at all. Let's look at whether we can put
together all the information we have systematically. She switched on the laptop, started
excel and said: "What are the essential elements of HRM in the hotel business and how do
other hotels as far as we know run their businesses?" She and Tjalt filled in the excel sheet
and at the end of that night they had produced one (see webcase2_data files).

Case questions:
1. What do you think about building up a database purely from your knowledge, as
Annerigt and Tjalt did?
2. The management dilemma Annerigt and Tjalt face is getting, selecting and keeping
personnel. Formulate some research questions that provide answers to the
management dilemma and can be answered with information in the data files
3. Give some suggestions, how Annerigt and Tjalt could improve the quality of the
information?