THE IMPACT OF RISK MANAGEMENT ON STAFF PERFORMANCE IN HOSPITALITY INDUSTRY

Abstract

Risk Management helps ensure effective reporting and compliance with laws and regulations, and helps avoid damage to the entity‟s reputation and associated consequences. Effective risk management plays an important role in daily operations of business entities to avoid financial insolvency and bankruptcy. Hospitality industry in Nigeria has had difficult times over the years, particularly prolonged period of lackluster performance in the 1990s. The purpose of the study was to examine the impact of risk management on staff performance in hospitality. Descriptive survey design was adopted. The target population was selected hotels in Lagos. Supervisors, lower and middle managers were the respondents in the study. Simple random sampling was used to arrive at a sample population of the study. Data was collected using self-administered questionnaires. Descriptive statistics were used to organize the findings while Chi-square, percentage and graphs was adopted as the method of analysis was used to determine the magnitude and direction of the relationship between risk management practices and performance of hotels.

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

A Hotel means establishment providing accommodation, meals, and other services for travelers and tourists (oxford dictionary). The hotel industry has been identified as one of the most important sectors that have a positive correlation to the country‟s economic development. The hospitality industry has been identified as one of the most important sectors that have a positive correlation to the country’s economic development. One of the major benefits of the hospitality industry in any economy is the provision of employment and a top foreign exchange earner (Kusluvan, 2003). The industry consists of a number of diverse sectors including hotel and restaurant, travel agencies, tour operators, transportation, restaurant, food and beverage, and attractions which require a variety of occupational skills. Enhancing customer perceptions of service quality is an important goal. In order to achieve this employee‟s knowledge, skills and investing in human recourses is required. Front line Employees (FLEs) with High Performance Work Practices (HPWPs) can generate new ideas for service improvement and deal with customer requests and complaints successfully by offering novel solutions. With this stated, creativity or creative Continental Plan (CP) and Standard Rate Plan (SRP) appear to be important aspects of frontline service jobs (Karatepe & Karadas, 2012; Karatepe, Kilic, & Isiksel, 2008). Holidays are for having fun and any unplanned deviation from that is unwelcomed (Kusluvan, 2003). However, hazards of all kinds exists, accidents do happen even on holidays and there exists a strong ethical imperative on the part of tourism service providers to ensure that plans are in place to cope with at least the most common uncertainties. Risk is the uncertainty associated with a future outcome or event (Banks, 2004). Risk is a concept that denotes a potential negative impact to an asset or some characteristics of value that may arise from some present process or future event (Douglas & Wildavsky, 1982). Rejda (2008) defines risk management as the process through which an organization identifies loss exposures facing it and selects the most appropriate techniques for treating such exposures. Some of the risks a firm faces include; market risks, credit risks, liquidity risks and operational risks (Nocco & Stulz, 2006). Market risk refer to the impacts of on and off-balance sheet positions of a financial institution. The movements in market rates or prices such as interest rates, foreign exchange rates, equity prices, credit spreads and commodity prices result in a loss to earnings and capital ratio (Nocco & Stulz,2006). Interest rate risk is the potential negative e impact on the Net Interest Income and it refers to the vulnerability of an institutions financial condition to the movement in interest rate. There appears to be a mixed consensus on where the economy is headed. The hospitality industry has had to read to reductions in corporate travel, canceled conventions, employee layoffs, declining consumer confidence, corporate reorganizations, and insurance coverage volatility. Hospitality companies are challenged with optimizing business risks and strategically managing costs in order to stay competitive in the industry. Meetiig these challenges results in increased pressure on business decision makers. In addition, many new types of risks are facing hospitality companies and other related businesses. During the winter and spring months of 2000 and 2001, both commercial and residential energy consumers throughout the nation were exposed to soaring energy costs. For businesses and communities in Lagos and Abuja, this cost increase was further complicated by mandatory power blackouts ordered by government officials. For hotel companies, these energy issues affected every point of guest service from check in at the front desk to ascent in an elevator, and room the utilization of meeting space to food and beverage operations and safety. Hotel owners and managers had to continuously reevaluate their energy risk management strategies, including alternative sources, disaster recovery plans, financing, and hedging strategies.

1.2 STATEMENT OF THE PROBLEM

There are critical issues and challenges affecting Nigeria‟s hospitality industry competitiveness and sustainability as tourist destination. Hospitality industry in Nigeria has had difficult times over the years, particularly prolonged period of lackluster performance in the 1990s (Akama, 1990; Ikiara, 2001). Ikiara, for example, describes performance in the 1990s as erratic. The global economic crisis in 2008 only made inbound international tourism business more challenging. Then in the recent past is the threat of terrorism in which Nigeria has lost both its citizens and the tourists to the Boko-Haram pandemic. This has resulted to frequent travel advisories from the source countries like Britain, USA, Australia and Europe in general (Mayaka & Prasad, 2012). This has brought down the tourism sector in Nigeria as divers Militia group have sprang-up in the south-west and other part of the country to its lowest point ever. The prolonged poor operations have characterized the last two decades, raising the concern of key stakeholders. It is important to investigate and find out the risk management practices that are being employed and how this has impacted on the performance of the sector.

1.3 OBJECTIVE OF THE STUDY

The study has one main objective which is sub-divided into general and specific objective, the general objective is to examine the impact of risk management on staff performance in hospitality industry. The specific objectives are;

1. To examine the impact of risk management on staff performance in hospitality industry.
2. To ascertain if there is any relationship between risk management and staff performance in hospitality sector

• To explore the role of government in ameliorating organizational risk in the hospitality sector

1. To proffer suggested solution to the identified problem

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