Krugman vs. Marriott: economic perspectives on hospitality

Economics

Comparing Krugman's and Marriott's Attitude Towards Labor

Paul Krugman (1998) has argued labor is treated as a commodity under capitalism, with employees treated as cogs in a machine and no consideration is given to their needs. By contrast Bill Marriott argues that for his firm; Marriott Corporation, employees matter, and that when they known they are important to the employer, who will listen to their concerns and ideas, they will be happier and deliver better service for their employers. These two approaches appear to be diametrically opposed, with one arguing there is a dehumanizing of workers, the other emphasizing the value from embracing the human elements of the employment relationship.

There is a plethora of proof that employees may be treated as commodities, with employer simply seeking to maximize the benefit they obtain from their labor. It may be argued that this was the core motivation behind the well-known time and motion studies undertaken by the Taylor and the development of scientific management and the time and motion studies of the Gilbreth brothers. Taylor undertook a number of studies including work at the Midvale Steel Works, where he significantly increased the efficiency of the workers by redesigning the task, where workers had previously shoveled 12.5 tons of a coal a day, after retraining they shoveled 47 tons a day (Taylor, 2003). This was a significant benefit to the employer, with the employees being treated as pieces of equipment whose labor could be maximized. However, there was also some benefit to some employees, as they were aid on performance, the wage increased from $1.15 a day to $1.85 a day. However, while some employees benefited, others lost out, as increased productivity meant fewer workers were needed.

When looking at today's world there are many other examples where employees are treated as commodities, in 2005 a well published case saw the airline caterer, Gate Gourmet, sacked 250 staff over a dispute regarding the use of agency staff, Gate Gourmets actions were based on reducing costs and maximizing labor input for the costs, and had no concern for the workers (BBC News, 2005). However this may be argued as a very capricious approach, when it is considered other employees in the firm where to facing the same issues; with good working conditions and above average pay provided for many white collar workers.

There appears to be a degree of hypocrisy by those in management positions, favoring better working condition for those who are closet to their own position and with whom they may identify. There are also many cases of employers who undertake measures that demonstrate care and consideration for the employees, but the results are often ascertained in terms of the improvement on the bottom line, with employee satisfaction seen as a way of improving financial performance. When Sears introduced a model of employee engagement in a single, struggling, merchandising department that department went from having a net deficit of $3 billion to a net income of $752 million (Cooke, 2008). The employees benefited, but the employers' motivation was to improve performance. This may be seen as a capricious, despite the success it was not implemented in a consistent manner with competing needs also resulting in other measures which were less 'employee centric', such as reducing working hours and reducing beneficial employment terms.

When looking at the argument of Bill Marriott, it appears that Sears found the same lesson that Marriott is advocating; that adopting a strategy which is employee centric is likely to improve employee satisfaction and as a result the level and quality of the employees work (Marriott, 1997). This is not a new idea, it was found within a number of motivational studies, such as Mayo's Hawthorne studies and the works of theorists such as Maslow and Herzberg (Buchanan and Huczynski, 2010). Marriott is advocating the idea that employees are central to their success and looking after them in beneficial. It is interesting that even in this context; the focus is on the benefits of happy employees and not an altruistic value. Furthermore, when looking at Marriott, there have also been problem associated with employee relations such as the 2011 strike at the Marriott Residence Inn Montreal-Westmount, due to dissatisfaction with working conditions, such as no pension or insurance provision (CTV News, 2011).