Business and Management Review Vol. 2(12) pp February, 2013 ISSN: Available online at

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1 ISO MANAGING SYSTEM STANDARDS IMPLEMENTATION AND PRACTICE-CROATIAN HOTELS MANAGERS POINT OF VIEW MARIJA DRAGICEVIC, Ph. D. University of Dubrovnik The Department of Economics and Business Economy Lapadska Obala Dubrovnik Croatia marija.dragicevic@unidu.hr ABSTRACT The researches throughout the world have confirmed the increase of the ISO Managing System Standards implementation within the hotel industry. The aim of the research was to find out the level of ISO standards implementation in Croatian hotel industry.the empirical research has been done using the polling method in the hotels in the Republic of Croatia on a sample of 350 randomly chosen hotels. Based on the research results it is visible that the implementation of ISO managing system standards in the Croatian hotel is less than 20%. The aim of the paper also was to examine the attitudes of hospitality managers towards implementation of ISO Managing System Standards. The results of the research show that there is a necessity for improving the hotel managers awareness towards ISO Managing System Standards implementation. There is a positive influence of ISO Managing System Standards implementation of croatian hotel business performances and strategic orientation towards increasing ISO certificates in the future. Keywords: hotels, Croatia, ISO standards, state, attitudes, managers 1.INTRODUCTION In regard to the globalization trends in tourism, tourist companies and hotels are becoming more and more international destinations what results in growth of the international competition. Therefore, hotel companies must focus on the improvement of performance through a better service quality and differentiation (Claver, E., Tari, J.J. & Pereira, J., 2006). Quality in the hotel business implies concentrating on tourists and guests demands and fulfilling all their wishes and expectations. The implementation of Quality Management System according to International Standard ISO 9001, Environmental Management System according to International Standard ISO standards and Food Safety Management System according to International Standard ISO has huge importance in the hotel business practice. Some other systems, Such as Occupational Health and Safety Management System according to OHSAS and Information Security Management System according to ISO lately have also been implemented. It can be stated that the number of cerificats is an indicator for quality or trends in quality in a certain state or region (Dumičić, K., Knego, N., & Melvan P., 2007, 32) Considering many advantages that surpass ISO standard faults, the researches throughout the world show the increase of the ISO standard currently being issued certificates (Franceschini, F., Galetto, & M. Gianni, G.A, 2004.), but request to introduce managerial management system according to ISO standards, comes from the head of hotel management and is frequently conneted with educational level and informing the hotel manager about the specifics, advantages and disadvantages of ISO standards implementation. It demands and implies changes in the pattern of behavior of the hotel staff. Implementation of the standard requires the organizational culture and philosophy of supporting the introduction of quality standards. Panisello and Quantick (2001) as a condition for successful implementation of risk prevention management system (HACCP), cite knowledge and management training. It is important to note that the middle management is often limited infrastructure set by senior management. They are in charge of the facilities, equipment and processes set by senior management and must operate within the limits set by senior management. That is why there can not be a successful quality program, if there is not a full support of senior management. In thisway hotel becomes one single entity, which 1

2 managers should make perceived as a "family home" in which managers play important role in directing the work of subordinates. The aim of the paper was to explore the level of implementation and attitudes of Croatian hotel managers towards implementation of ISO Management System Standards. For this purpose, has been carried out the empirical research including the sample of 350 hotels randomly selected from the basic set of 650 hotels. Information feedback from the managers was about 20%. Two basis hypotheses that have been stated are: H1. The implementation of ISO Managing System Standards is not satisfying and there is a need for increasing the number of ISO certificate in Croatian hotels H2. The managers experience with ISO Managing System Standards implementation is positive. For analysing data have used the methods of descriptive and inferential statistics. 2. THE ADVANTAGES FROM ISO MANAGING SYSTEM STANDARDS IMPLEMENTATION IN THE HOTELS BUSINESS PRACTICE The ISO 9001 certificate proves that the company possessing it respects all the international and national quality standards. Correctly completed and Implemented Quality Managing System brings certain internal and external advantages to the company. However, we need to emphasize that the benefit amount is directly proportional to the success of implementation and commitment of all employees. The researches carried out all over the world show positive influence of ISO 9001 on business performances. Rayner & Porter (1991) state that improved marketing performance is one of the advantages. Atwater & Discenza (1993) state that the main advantages of ISO 9000 implementation are improved business efficacy, higher consumer satisfaction and increased competitiveness. Adanur & Allen (1995) identify five main advantages: reduced number of complaints, increased demand, higher employee commitment, reduced production costs, reduced sale of low quality and inferior product. Calisir et. al. (2005) report that the main advantages relate to increased product quality, reduced mistakes in production and increased market share. The hotels that have implemented ISO 9000 have reduced labor turnover and losses and improved publicity (Callan, 1992). Salameh & Walker (1996) report on the positive changes following the implementation of ISO 9001, reflected on some aspects and operations in staff turnover, enthusiasm, cooperation, communication and employee satisfaction. Nield & Kozak (1999) come to the conclusion that the implementation of ISO 9001 brings numerous advantages in terms of operations, ie improved systems operations and reduced costs, marketing, and increased consumer satisfaction, increased competitiveness, higher nation-wide recognition, human resource management, and e decreased staff turnover and Increased employee satisfaction. Ingram and Daskalakis (1999), and Costa (2004) state that quality has become a key factor in the hotel business practice due to increased competitiveness. Urbonavicius (2005) points out the advantages of ISO standard implementation practice in the business of small and medium enterprises in the EU which are reflected on some marketing and management benefits. Besides the need to emphasize the advantages and benefits arising from the implementation of Quality Management System ISO 9001, we need to be aware of its downsides too, which are the same in the hotel industry as in other industries. The use of the system increases paperwork, it is time demanding, causes additional costs and reduces flexibility. ISO which was officially released in October is a new series of global standards assigned to the environmental management. The experience and business practice show that the hotel enterprises apply quality systems very successfully. Certification according to the International Standard ISO brings manifold benefits to the hotel enterprises which refer to reducing the energy, reducing of water consumpion, benchmarking, tehnical support, reducing costs and noise, improving air quality ( com, ). As the environmental concern has grew in the travel industry and environmentallyconcerned consumers would only choose hotels which show concern for the environment, hotel business was required to adapt to the new environmental realities and to implement new environmental policies and strategies. For example, Shangri La, a five star hotel with 565 rooms in Hong Kong in September 1996 started with the ISO implementation and has become very soon the first hotel with ISO certification. That increases the hotel s competitive edge and made a better image of the hotel (Chan & Ho, 2006). The 2

3 research made by Kirk (1995) shows that the most important benefits from ISO implementation are better hotel image and better relationship with the local community. The reseach made by Lee Peng Tan (2005) in Malaysia shows that all hotels that had been included in the research had benefits refering to the better business control, reducing cost, reducing ecological incidents, improving working culture and improving hotel image. The purpose of Food safety System ISO is to provide a practical approach to ensure the reduction and elimination of food safety risks as a means to protect customer. This is especially important due to the clients seeking that the hotels meet not only the basic quality standards but also the added quality standards such as food safety (Coleman, P., Griffit, C., 1997). ISO specifies the requirements for an organization to have a food safety management system in the food chain. The system needs to demonstrate an ability to control food safety hazards in order to ensure that food is safe at the time of consumption. The implementation of Food Safety System ISO in the world hotel business practice has influence on reducing possibilities of food poisoning and improves the consumers protection ( Annon, 1997 ). This is especially important due to the clients seeking that the hotels meet not only the basic quality standards but also the added quality standards such as food safety (Coleman, P., Griffit, C., 1997). The consumers who are not satisfied with the level of safety because of the bad health conditons in the touristic destination, in the next purchase will probably select the other hotel as the new destination (Mori, 2002). The fact is that risk of the food poisoning in the food preparation units exists and is not to be disregarded (Sheppard, J., Kipps, M., Thomson, J., 1990). Taking into the account that hotels are resonsible for the 44% of the food poisoning, the implementation of the Food Safety Systems is very important for the hotels enterprises in their attempt to reduce the number of poisoning (Annon, 1997). Tour Operators as a business partner of the hotel enterprises is also reponsible for filling all the points of agreement, no matter who gives a service, a hotel or Tour Operator, so they demanded from the hotels to take care when they provide the services to the costumers and choose the hotels (Čavlek, N., 1995). Respecting the fact that the hotels in Croatia sell above 70% of their product using services of Tour Operator (Horwath Consulting Zagreb, 2010) the implementation of Food Safety Systems is very important. 3.THE RESULTS OF THE EMPIRICAL RESEARCH ABOUT IMPLEMENTATION LEVEL OF ISO MANAGING SYSTEM STANDARDS IN CROATIAN HOTELS 3.1. Methodology of the research For the purpose of this research sampling unit, as an elementary unit for the sample, hotel company is defined. Final set of units is consisted of the target population, or in other words the basic set which will be examined is a set of small, medium-sized and large hotel companies registered in the Republic of Croatia. For the selection procedure Internet data has been gathered. For the purpose of the research, sampling method has been used what can be considered as the limitation of the research. Random number generator has been used for choosing sampling units. Reporting units were hotel managers. The research included 650 hotels throughout the Republic of Croatia. Research sample consisted of 350 companies. In mail back survey total of 65 companies have been willing to give informations, what is accepted as satisfying for the purpose of this paper Results of the research and discussion The majority or 43.3% of the hotels that have implemented ISO managing systems is in the Dubrovnik-Neretva County, while 25% of the hotels with the ISO managing systems is located in Istria County and Coast-Gorski Kotar County. Further 6% of the hotels with ISO managing systems is in Bjelovar-Senj County, as well as in Zadar County. The Research Conducted in 2003 (Dumičić, K., 2004., 56) shows that only two out of 36 hotels had an ISO cerificate, and 5 of them were in the process of consulting in order to receive ISO systems. With regard to this it can be said that there is a growing trend of implementing ISO managing systems in the hotels in the Republic of Croatia. Using the interval expression of the universe ratio evaluation (D., M., Dumičić, K., & Dušak V., 2006., P 173) Pr( p -z y/2 δ p p p +z y/2 δ p ) = (1-y) by evaluating universe evaluation ratio p with α = 0.05 based on the results = =

4 It can be stated with 95% of certainty that the ratio hotel in the Republic of Croatia that have implemented the ISO managing systems is higher than and lower than Based on the research results it can be assumed that the ratio of the hotels with the Implemented ISO managing systems in the Republic of Croatia is less than 20%, Thus an operating hypothesis is set as: H0... p> 20% H1... p 20% Based on the calculated standard error δ = and a conducted upper confidence limit of the test (calculated value of the upper limit of the confidence interval being.15328) on the level of 5% of the significance, and null hypothesis is dismissed and an alternative hypothesis is accepted. Data on the educational qualifications of the managers in the hotels with Implemented ISO managing systems show that 50% of them have a university degree, 20% of them have M.S.. or a Ph.D. diploma, while 30% of the managers have secondary school qualifications. Interviewees in the hotels that have not implemented ISO managing systems do not have M.S. or Ph.D. degrees. The greatest share or 44% of them have a two-year postsecondary school diploma, 6% of the interviewees have a university degree and 20% have a secondary school diploma. Taking into account that an empirical value χ2 = , and the table value is χ2 = , conducted chi-square test shows that there is a relation between the educational status of the managers and the implementation of ISO managing systems. In the Republic of Croatia 60% of the hotels with ISO certificates are privately owned. On the other hand there are many privately owned hotels, or 79.5% of them, that have stated they have not implemented systems. Taking into account that an empirical value and χ2 = , and the table value is χ2 = , with α = 0.05, Conducted chi-square test of statistical independence shows that there is no relation between the type of ownership and implementation of ISO managing systems in the Republic of Croatia. Majority of the accomodation capacities in Croatia that have implemented ISO managing systems, or 40% of them, are four star hotels, while three and five star hotels are equally represented with approximately 20%. Among the hotels that have Implemented ISO managing systems in Croatia there are 10% of the two star hotels. There are approximately 60% of the high category hotels in Croatia that have implemented the standards. The greatest number of the hotels without ISO managing systems are three star hotels, what is not surprising when we relate this to the category of the hotel structure objects in the Republic of Croatia. Also, about 25% of the high category hotels have not yet implemented ISO managing systems. Hotels that have implemented ISO standards, or 60% of them, mostly have 51 to 200 rooms, 30% of them have 201 or more rooms while 10% of them are small hotels with 5 to 50 rooms. The greatest number of the hotels that have not implemented ISO managing systems are hotels with 5 to 50 rooms, or 50% of them, while other 50% consists of middle-size and big hotels. Taking into account an empirical value and χ2 = , and the table value is χ2 = , with 95% of the certainty, conducted chi-square test shows that there is no relation between the size of the hotel company in the Republic of Croatia and the implementation of ISO managing systems. According to the research results of the hotel companies in Croatia conducted in 2003 (Dumičić, K., 2004., 58) there is a relation between the implementation of the ISO systems and managing the hotel company size. Based on this it can be concluded that the state of the implementation of ISO managing systems has been considerably improved and that the systems have also started to be implemented in small, middle-sized and big hotels The attitudes of croatian hotel managers towards ISO managing system standards implementation Overall assessment of the meaning of quality shows that all respondents believe that quality is important in a business hotel company. Despite the fact that hotel managers response was not as expected, one can say that among the managers who responded to the survey there is a high level of awareness towards importance of arising the level of hotel service quality. Analyses the importance of introducing the ISO management system indicates that most of the respondents, 49% believe that the introduction of the quality system in the hotel business is very important, while 16% of respondents believe that it is important. None of the respondents 4

5 thought that the implementation of quality systems is moderately important, and that it has little meaning. Also there were no respondents who believe that the introduction of ISO management system is meaningless. Relating to the results of research which has been carried out in (Borovina), it can be said that awareness about the importance of ISO management system in the hotel business is increased, but still it is not satisfyingthis supports the fact that a significant number of hotels (18%) strategy of quality does not exists while in 44% of hotel quality strategy does not exist in a formal form. The greatest number of them 55% believe that they are well-informed, while 32% of hotel managers believe that they are moderately informed. One part of managers in hotels in Croatia, 13% thinks they are bad-informed. On the basis of the data it leads to the conclusion that the level of awareness of ISO management systems hotel managers in Croatia is not at a satisfactory level. Besides the lack of self-initiative to search for informations, continued education of hotel managers is lacking, what is the consequence of hotel s management passivity and habits inherited from the period of non market economy. The largest number of managers answers related to better management and quality control, which indicates that the implementation of the ISO management system is directly linked to the improvement of product quality. The implementation of ISO standards also leads to greater customer satisfaction and there are fewer failures caused by inadequate levels of quality. Respondents believe that implementing ISO management system contributes to the better control of the process since the implementation of the system can be applied to different processes in hotel company. ISO control systems are mainly used at the reception desk in the hotel's household and restoration of the hotel. The implementation of ISO management system influences on better procedures prescribing and on the process standardization. No matter that the implementation of ISO management system represents a significant expense for a hotel company, hotel managers cite it is an advantage in long-term reduction of operating costs. Implementation of ISO managing system standards contribute to the improvement of operational business performances and human resource performances, such as marketing performances. Managers point out several different shortcomings in the implementation of the ISO management system. The largest number of responses, 25% of them, refer to a large bureaucracy and paperwork, 12% of the responses is related to the employee resistance and the reduction of creativity and self-initiative because of the strictness of procedures. The managers also point out that it brings high costs of implementation and problems are usually connected with the staff structure and labor turnover because of seasonality. 5. CONCLUSION Considering the fact that the ISO managing system standards implementation is under 20%, it is necessary to improve the level of education of the hotel managers in order to raise consciousness of the importance of the ISO managing system standards. It is also necessary to stimulate the implementation of ISO managing systems standards in the two and three star hotels, because the results of the research show that ISO standards are mostly implemented in high star Croatian hotel. ISO standards have been more implemented in the hotels whit better educated managers, which leads to the conclusion that it is necessary to work on raising the educational level of managers in hotels in Croatia. At the same time when introducing managerial control system according to ISO standards management must be aware that the introduction of such management systems is a process that requires continuous effort and improvement. The hotel managers in Croatia believe that implementing ISO management system improves operational, marketing, financial and human resource performances. Although the number of certificates could not be accepted as satisfying there is a strategic orientation towards increasing the number of certificates in the future. REFERENCES Adams, A., & Morell, S. (1999). Food safety enforcement and the hospitality industry. Nutrion & Food Science, 1, Adanur, S., & Allen, B. (1995). First results on the effects of ISO 9000 in the US textile industry. Benchmarking for Quality Management & Technology, 2, 3, Atwater, J.B., & Discenza, R. (1993). ISO 9000: Implications for US business, Proceedings of the 1993 Decision Sciences National Meeting & Technology, 3,

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