Globalization in the Hospitality Industry: Quality and Standards

Understanding Quality in Service Industries

Quality is defined as the distinction of a product or service (Evans, 2011). The American National Standard Institute (ANSI) defines quality as the totality of features of a product or service that satisfy given needs. The current market has higher demand for quality products and services due to increased consumer buying power. This increased buying power has caused consumers to become less price-sensitive and to prioritize quality.

Organizations find quality to be crucial in determining their success. Many have moved from producing low-cost goods to producing quality goods to meet market demand. Meeting the quality expectations of guests is respectable, but exceeding those expectations guarantees customer loyalty, repeat business, and fewer complaints. Evans (2011) noted that quality, business stability, and customer loyalty must be aligned for a successful business.

Quality in manufacturing focuses on technical issues such as equipment reliability, inspections, and minimal defects. In contrast, quality in service industries focuses on interactions between the provider and customer, which do not directly produce a physical product. The service industry adopted quality practices later than manufacturing. Evans (2011) noted that 80 percent of the U.S. workforce is employed in the service industry.

Globalization and Hotel Chain Standardization

According to Das and De Groote (2008), 75 percent of the one hundred largest hotels worldwide are controlled by the top ten hotel chains. In the modern age, people travel with ease due to improved accessibility and global communications enabled by technology. Dreher (2006) noted that economists broadly believe the net effect of globalization to be positive. As stated by Knight and Wit (1999), globalization "is the flow of economy, knowledge, technology and even values across regional boundaries."

Globalization has enabled organizations to transcend geographic boundaries and enter international markets. Furthermore, improved global telecommunications make it easier for consumers to gather information about geographically distant goods and services and to compare them. The World Trade Organization (WTO) has accelerated globalization in recent decades (Brooks, Weatherston & Wilkinson, 2010). Large companies such as McDonald's and InterContinental Hotels Group have established chains worldwide. Globalization is valuable for managing large numbers of chain locations while maintaining consistent quality benchmarks. Globalization is sometimes confused with merely creating a brand presence worldwide; however, Go and Pine (1995) define it as a method of standardizing products and services.

Standard Operating Procedures and Employee Training

Standard Operating Procedure (SOP) is one key process for ensuring quality standardization on a global scale. SOP provides employees with information about job tasks, products, and how to perform work accurately (Setup My Hotel, 2014). International organizations can develop their own SOP and distribute them to establishments around the globe, helping to benchmark quality and identity since different organizations have different operational approaches. However, merely implementing SOP is insufficient. Employees may not understand the procedures and may implement them incorrectly. Training is therefore essential. Through proper training, employees grasp the SOP more easily and implement it with minimum error. Additionally, monitoring is crucial to ensure that employees follow the SOP.

Wage Challenges and Employee Retention

Despite globalization's benefits, it presents significant drawbacks. One major issue is generalized low employee wages. Working in food service and hospitality, especially fast food and hotels, is perceived as a low-paying job because most positions are skill-based. Society even defines these positions as McJobs (Gould, 2010). A McJob describes employment with low income, minimal skills required, and routine service industry work. Consequently, formal qualifications are not essential for hotel employment. Hotels are unwilling to pay higher wages due to a large labor pool. This results in high turnover rates as employees leave for competitors offering higher wages.

To address loyalty issues, hotels could implement profit-sharing plans that provide special payments to employees' profit-sharing accounts (NRAEF ManageFirst, 2007), thereby increasing their income. A designated percentage of annual company profit, determined by the employer, is contributed to employees' accounts. Employees can withdraw from these accounts upon termination or retirement. Profit-sharing plans increase not only employee loyalty but also productivity: as the company earns more, employees benefit directly. Motivated employees are more likely to produce high-quality work that meets quality expectations with minimal errors.

Balancing Global Standards with Local Adaptation

Douglas and Wind (1987) highlighted that globalization is not applicable to all organizations due to standardization barriers. Companies cannot ignore local needs, making standardization in remote locations somewhat difficult. Kenichi Ohmae's principle of "think globally, act locally" acknowledged that standardization barriers exist but could be overcome through changes based on customer demand (Ohmae, 1989). Veness (2012) noted that while globalization may obscure an organization's identity, localization can boost brand value among foreign customers by associating goods and services with local culture. According to DePalma, Sargent, and Beninatto (2006), 72.4 percent of individuals are more likely to purchase goods and services with information in their native language. If consumers cannot understand product information, they are unlikely to purchase. McDonald's has launched region-specific products: the Chicken Maharaja Mac in India, the Kiasu Burger in Singapore, the Chicken Tatsuya Burger in Japan, and many others tailored to regional tastes (The Travel Almanac, 2013).

Conclusion

Globalization promotes economic growth. Countries that have embraced globalization have experienced higher growth rates and far-reaching economic impacts. However, many people underestimate the scope of this impact. While globalization accelerates, proper monitoring is essential to ensure that the quality of goods and services exceeds or maintains guest expectations. Globalization has driven organizations to produce higher-quality goods and services through increased competition. However, some organizations deviate from their original aims, providing products and services customers do not want. Maintaining quality requires customer orientation as a crucial factor. Organizations must also sustain continuous quality improvement processes.

Given current trends, globalization will likely continue to increase global economic growth. Regarding health issues, technological improvements should eventually bring developing countries' sanitary standards in line with those of developed countries. Although globalization has some drawbacks due to inherent limitations, these disadvantages will likely diminish in the future.