Measuring Human Resource Value: An Analysis Based on the Hotel Industry

Abstract

The importance and value of employees in service industries has been recognised by senior executives for many decades and they are aware that the service provided by human resources is the key to competitive advantage in the market place. This is particularly true of the hotel industry where employees form an integral part of the “hospitality product”. In labour intensive industries human resources are also costly to develop and maintain and increasing global competition in the 1980s followed by a world‐wide recession in the early 1990s has focused attention more acutely on the effectiveness of investments made in human resources. This had led to the rediscovery of human resource costing and accounting as a means by which organisations can monitor the impact of their employment practices on business performance. This article discusses the findings from research on the human resource accounting practices of hotel companies operating in the UK. The research indicates that very few hotel companies studied undertook any systematic analysis of their human resource investments and the economic contribution of employees remains unknown. This raises questions regarding the extent to which human resources are truly “valued” by hotel organisations and how much time and effort is devoted to ensuring that human resource investments and employment practices add value to the business.