Book Chapter by Wittenborg Researcher Highlights Value of Human Capital in Hospitality

11.03.2025

Mats Carlbäck Underlines Importance of Valuing and Retaining Employees

In recent years, the hospitality industry has faced challenges in attracting, engaging and retaining employees. For Wittenborg associate professor Mats Carlbäck, valuing and investing in employees’ well-being is crucial to addressing these issues, as well as providing opportunities for growth and fostering a supportive work environment.

Carlbäck makes this argument in the book chapter he co-authored with Wittenborg graduate Willemijn Marcussen, titled ‘Human Resources in Hospitality: An Asset, Not a Cost?’ and recently published in Örebro University’s anthology ‘Revealing Meals’.

The authors underline that the hospitality industry, still dealing with the consequences from the COVID-19 pandemic, faces a challenging future marked by ongoing manpower shortages and rising costs. The traditional economic model, where firms tightly controlled all processes and resources, is no longer viable. Therefore, the industry’s focus is now shifting toward human capital as a critical asset, requiring innovative strategies.

Carlbäck highlights that this is vital for the hospitality sector, where employees hold significant influence over a business’ success. “Given that services are produced and consumed simultaneously, employees play a crucial role in shaping customer perceptions and experiences. Failing to meet service quality expectations can drastically impact a firm’s current and future financial position.”

The researcher adds that high staff turnover can severely disrupt the execution of business strategies, leading to organisational inefficiencies, decreased performance and overall hindered success. “The costs of hiring and training new employees further aggravate the situation, and the morale, motivation and inspiration of remaining employees are likely to decline, potentially reducing productivity.”

The chapter explains that, to avoid such risks, companies need to invest in robust human resource development, which involves maximising human expertise through organisational development and personnel training to enhance overall performance. This aligns with the theory of human capital, which views people’s knowledge, skills, abilities, competencies, personal characteristics and talents as drivers of the overall quality and potential of a workforce.

“By recognising employees as valuable assets rather than mere expenses, the industry can build a more motivated and committed workforce. This shift not only enhances employee retention but also improves the overall quality of service, leading to better customer experiences and long-term business success,” Carlbäck says.

The associate professor points out that employees are often the first target for cost-cutting measures during challenging times, undermining the notion that the industry is ‘all about employees’. Additionally, the sector’s tendency to overlook human capital prevents it from being measured, managed and compared with other metrics.

“In a business-oriented industry, quantifying human capital is essential for determining potential returns on investment. To address this imbalance, it is crucial to assign measurable value to human capital based on education, knowledge, competence, practical skills, experience and other industry-relevant factors. For employees, this change can lead to greater recognition and development opportunities, while for companies, it opens the door to innovative strategies, organisational structures and business models.”

According to Carlbäck, both the industry and academia need to develop measuring criteria and a conceptual framework to assess human capital, a crucial concept often vaguely defined due to its intangible nature and the lack of standardised criteria for assessment. “Metrics such as job yield, skills inventory, promotion rates and external market share can serve as starting points for creating a comprehensive human capital measurement model,” he explains.

The researcher concludes by encouraging educators to understand human capital, identify its key factors and tailor education and training to address these needs. “Developing a universally applicable model and tools for measuring human capital would benefit all stakeholders and foster better cohesion and understanding across different sectors.”