Human Resource Development in Restaurants in Western Sweden – A Human Capital Theory Perspective

Abstract

While the Swedish hospitality industry is experiencing substantial growth, this growth comes with a cost, as the industry has neither the knowledge nor the incentive to pay enough attention to human resource development. This continuous growth will therefore impose challenges and erect obstacles once the industry begins expanding again after the pandemic. Insofar as attracting, engaging and retaining talent are the biggest challenges, it might be time to go back to the drawing board and identify a possible shift to an employee-based approach to developing businesses. Based on interviews with managers and owners representing 28 predominantly seasonal restaurants in the Swedish coastal region of Bohuslän, this study identifies current obstacles and challenges facing the Swedish restaurant industry with a clear focus on the concept of human capital. The results of the study clearly indicate that human resource development (HRD) is by far the most critical factor in addressing staffing issues and overcoming the difficulty involved in attracting, engaging, and retaining not only enough staff but more importantly staff with basic knowledge, experience, and interest. The aim here is to initiate a shift to a more direct and sustained focus on human capital in the hospitality industry, from the perspective of human capital theory, by highlighting some of the most highly relevant factors associated with this perspective. According to an employee-driven restaurant analysis (EDRA) approach, a shortage of human capital could pose the biggest obstacle to further development, as restaurants find it increasingly difficult to attract, engage and retain employees for all positions.

Keywords:

• Hospitality industry
• human capital theory
• human resource development
• human resource management
• restaurant management
• social sustainability

Introduction

The hospitality industry provides crucial employment opportunities in areas and regions where few or limited opportunities exist. The industry also contributes substantial tax revenues as well as unprecedented marketing possibilities for cities, towns, destinations, and even countries. At the same time, restaurants create better prospects for the presence in an economy of thriving local communities, lively towns and villages and a countryside with contented inhabitants. However, such growth depends on several factors.

One factor is perhaps more pressing than other challenges: the supply of skilled human resources. In a growing industry, the need for a continuous supply of talent is paramount, and without a sustainable approach an already existing problem could reach unmanageable levels, possibly jeopardizing not only the industry’s development and expansion but also its efforts to improve on other factors such as sustainability—ecological as well as social and economic. The industry will need human resources in abundance to reach the next level.

Failure to address this challenge could affect the industry negatively. Challenges connected to the workforce are by no means unique to the hospitality industry, but the effects could be devastating for a labor-intensive industry plagued by a high rate of staff turnover and heavy reliance on service and a service culture (Carlbäck & Nygren, 2019; Jeou-Shyan, Hsuan, Chih-Hsing, Lin, & Chang-Yen, 2011). This impact could be especially notable in rural areas and regions that depend greatly on seasonal staff. By focusing on human capital and human resource development (HRD) within the framework of human capital theory, it should be possible to analyze firms from an employee perspective as opposed to a traditional owner or customer perspective—where employees are treated and handled as an asset and not a cost.

The purpose of this study was to initiate a shift to a more direct and sustained focus on human capital in the hospitality industry, hence help the restaurants to gain competitive advantage via HRD, leading to better efficiency and improved social sustainability.

The objectives of this study are to:

1. Explore and identify current obstacles and challenges facing the Swedish restaurant industry’s talent management endeavors.

2. Provide managers and business owners with insight and knowledge which could be practically applied in a restaurant HRD-context.

3. Provide foundations for managers and business owners to facilitate the development of hands-on guidelines within this field to improve the HDR activities, by addressing the most pressing matters, in a long-term perspective.

4. Identify specific areas within HDR to focus their attention to ensure an efficient transition to HDR.

Literature review

Background

Hospitality is and will be a people-focused industry—where a large number of people deliver service to an equally large group of people (Wood, 2015). However, human resource management has for a long time posed one of the greatest challenges, a point confirmed by Dolasinski and Reynolds (2018), as over 50% of surveyed business leaders indicated that this is the single most pressing matter. This challenge is also highlighted by Gehrels (2019).

The coronavirus pandemic has changed the entire playing field and could endanger the whole industry, but it also presents opportunities to make changes and improvements in certain problematic areas. This requires a completely new approach to human resource management with a focus on increased efficiency in identifying, measuring, developing and controlling human capital—the foundation for solid and sound human resource management.

As human resource management is considered crucial, remedial actions are needed in the near future. At the same time, more efficient and sustainable HRD could indirectly generate several positive side effects, not least concerning cost reduction (Jang & Kandampully, 2018), as costs relating to poor talent management are affecting the industrýs profitability to a considerable extent (Kusluvan, Kusluvan, Ilhan, & Buyruk, 2010; Wood, 2015). The increased costs involved are associated not only with hiring, training, and replacing staff but also with loss of efficiency.

The Swedish hospitality industry carried over 200 000 employees before the pandemic but has been contending with a staff turnover rate in excess of 25%, which is considerably higher than in other comparable industries (BFUF, 2018). Both operations and strategic planning will, based on high staff turnover, become highly demanding as considerable time and effort is needed to recruit and retain talent. At the same time, companies have been forced to recruit staff who lack the required competence. Some restaurants recruit from abroad to fill vacancies (Christensen Hughes & Rog, 2008). Foreign recruitment is clearly not in the best interest of hospitality firms, at least not from a profitability perspective (Singal & Rhou, 2017). Further, this point is particularly valid for companies located outside main urban areas and in regions where seasonal tourism is most influential.

The restaurant industry’s future success depends largely on its ability to adapt its HRD. Critical factors include understanding the foundations of human resource management with respect to how information can be used to better understand what needs to be done and, not least, what the impact on the workforce will be.

By consensus, the hospitality industry faces and will face even more severe talent deficiencies, requiring innovative approaches to HRD (Gehrels & Suleri, 2016). That Melissen and Teunissen (2018) describe the industry as unprofessional, under-developed and inferior to many other industries does not work to its advantage. This critique, together with the generally low appeal of restaurant jobs, could further complicate the situation as the common belief that one could work for years in the hospitality industry before university or obtaining a “proper” job most likely affects the industry and its talent supply negatively. The restaurant industry is unfortunately best known for supplying so called McJobs (Wood, 2015)—simple, monotonous jobs requiring neither education nor engagement—but it must gradually become an industry that offers a higher number of jobs that require more rigorous qualifications or expertise (Wood, 2015).

Competitive advantage

To achieve sustainable organizational success, labor-intensive hospitality firms strive for competitive advantage as the market is and will be highly competitive (Arokiasamy, Ismail, & Maritmuthu, 2009). Srivastava, Franklin, and Martinette (2013) maintain the importance of achieving and maintaining competitive advantage as a necessity for success now and in the future. Competitive advantage is best explained as the leverage a business has over its competitors, something which could be achieved by offering clients a better value proposition (Kim, Song, & Triche, 2015).

In a people-oriented business the human factor is highly relevant and will clearly be an important factor in the quest for competitive advantage. It is assumed that there is a verifiable and relevant relationship between human capital, corporate performance and sustainable competitive advantage which can be neither ignored nor taken lightly. On the contrary, the issue must be analyzed, and possible improvements identified.

As the hospitality industry is at the same time changing in various directions, staffing becomes even more relevant and the human capital factor might be even more important. Roper (2017), for example, stresses the importance of understanding human capital as an asset when the industry is undergoing vertical disintegration. Currently this concerns primarily hotels but eventually even restaurants will be affected, as every hospitality firm will have to find growth opportunities in a competitive market. This trend is exemplified by the fact that chains and other large firms in the industry are increasingly going ‘asset light’, i.e. they are selling off their assets to facilitate faster expansion without having so many of their resources tied up in buildings (Roper, 2017). As online travel agents (OTAs) have already taken care of distribution and customer-related assets, the residue left on the balance sheets for the hotels and the restaurants is limited. They still have their employees, possibly their main asset, even though there is no established way to measure this asset or include it on a balance sheet. Consequently, firms struggle to improve human capital in a way that makes it more valuable.

Without buildings, a restaurant’s customer-related assets—its employees—will become even more significant, as employees will constitute a brand when barely anything else is left.

To create better opportunities, one possibility undoubtedly would be not only to identify human capital, acknowledge, and measure it, but also to give firms options for investing in their employees. Gehrels and Suleri (2016) stressed the necessity of introducing assessment criteria and key performance indicators (KPIs) for factors related to human capital that must be incorporated into the creation and development of efficient strategies. A firm’s attention to maintaining and building human capital will be equally important in the quest to attract, engage and retain talent (Gehrels, 2016).

Employee performance

To the discussion above it is necessary to add the issue of employee performance—how well a person performs in their job, fulfills required tasks, and acts at their workplace (Nguyen, Luan, & Khoa, 2021). Waqanimaravu and Arasanmi (2020) further insist that employees can improve a company’s overall performance by providing high-quality work-related attributes. Employee performance is therefore a critical factor in the overall success of an organization and in the creation of a vital competitive advantage.

Prioritizing employee performance benefits more than just an organization as it enables individuals to achieve their maximum potential whilst still boosting overall performance (Soud & Mosoti, 2018) and therefore automatically building human capital (Magnini & Simon, 2016). Effective performance can further boost overall morale and improve the quality of work performed (He, Zhang, & Morrison, 2019).

The quality of work and performance are perhaps seen as crucial indicators of employee performance, although work quality is difficult to define as it is a soft value, a subjective and to a certain extent intangible factor (Dahl, Nesheim, & Olsen, 2009).

Employees seek consistency rather than passivity within an organization. Consistency offers structure to an organization, allowing both management and staff to meet organizational objectives on a regular basis, as it also boosts the organization’s overall performance (Kotrba et al., 2012). Consistency adds to human resource development and human capital, while inconsistency would in a similar manner affect human capital in a negative way.

Even customers are far more generally satisfied with a business that offers consistent, high-quality services, and management must have a plan to improve employee performance to increase consistency (Kamiński & Flieger, 2017). In addition, Bafaneli and Setibi (2015) argue that the importance of training, employee motivation, and team morale should not be neglected while optimizing employees’ performance, factors which could and should be related to building or maintaining human capital.

All of the above issues require the measurement of human capital; otherwise, no one knows where they stand or where they are going. To create a framework for managing human capital it is necessary to formulate a measure as this would be the only way to evaluate how investments are turning out or if any activities conducted are paying off. Just as DiPietro (2008) stresses, it is vital for hospitality firms to measure return on investment (ROI) related to human capital as one would do with all other asset classes. Unfortunately, this cannot be done if the numbers to be put into equations are missing. No one would invest in a building, a company, or a stock without a reliable analysis of the ROI, but for some reason this is not valid for the human capital asset class.

The service–profit chain is a strategic framework model that suggests that investments in employees, such as reward and recognition programs that are directly linked to individual performance results, will lead to quality and productivity improvements that subsequently yield higher levels of service quality at lower costs (Cohen & Olsen, 2013). Such improvements should in turn influence customer satisfaction and loyalty, ultimately driving revenue growth and profitability (Heskett, Jones, Loveman, Sasser, & Schlesinger, 1994).

Before measuring human capital, it is necessary to attract, engage, and retain it and to build a solid foundation from this for human capital development. Then, as the knowledge base regarding the human capital is increasing, what is creating it, how to maintain and build it and how to measure it, new opportunities will arise. Without any capital in the first place there is nothing to build from.

Human capital

Human capital is the economic value of the aggregated competence—ability and quality—of the complete labor force that influences organizational productivity (Becker, 1993). The OECD (2009) defines human capital as the fifth capital factor needed in a production setting in addition to land, labor, capital, and entrepreneurship. Human capital is therefore considered a key to future growth and prosperity, regardless of industry or market. Consequently, human capital represents the economic value of the knowledge, skills, abilities, competencies and also personal characteristics and talents of individuals (Arokiasamy et al., 2009; Gehrels, 2019; Kusluvan et al., 2010; OECD, 2009). Human capital has also been characterized as the overall quality of the workforce (OECD, 2009) that is needed to create competitive advantage. It is, however, not only what employees know, their skill competencies, as it also depends on their ability to use this in the best interest of a firm, something based to a considerable extent on the engagement factor.

Harbison (1971) believed that the wealth of an organization could be expressed in terms of the level of development and the effective utilization of human energies, skills, and knowledge for useful purposes. Enterprises that focus their energy toward developing the skills of their employees will gain an advantage that may not be readily duplicated by competing firms—in other words, creating a competitive advantage.

The focus here is on human capital, an asset class of the same, if not greater, importance as all other asset classes (Carlbäck, 2022; Gehrels & Suleri, 2016). However, employees are seldom treated as assets in real terms, only as a necessary expense. What might be the most valuable asset in the industry has no place on balance sheets, no actual measurable value, no relevant KPIs and consequently cannot be measured, controlled or compared like other measures. If the restaurant industry is business-oriented, restaurant businesses clearly have to be able to measure the value of their investments to establish the ROI.

The human capital challenge

There are several issues related to measuring human capital, some of which present serious challenges. Staff turnover is one such issue and the literature is quite clear regarding the situation with turnover in the hospitality industry—it is high and not showing any signs of improving. And a high staff turnover rate can have serious effects on the execution of business strategies and may cause problems for organizational efficiency, performance and success as well as being costly in various ways (Sthapit & Shrestha, 2018). Turnover is, therefore, considered a major challenge for the hospitality industry (Pearlman & Schaffer, 2013) This challenge—attracting and retaining staff—does not add value to human capital (Sthapit & Shrestha, 2018); on the contrary, affected hospitality firms are likely to experience a loss of knowledge, skills, abilities, and competencies through turnover, i.e. reducing the value of their human capital. This could mean reduced productivity as well as lost employee–customer relationships when customers cannot depend on consistent contacts with a sales force (Gehrels, 2019; Sthapit & Shrestha, 2018). The costs of hiring and training new employees are high (Gehrels, 2019), whereas invested resources are lost to competitors or are lost by the industry as a whole (Sthapit & Shrestha, 2018), reducing ROI or turning it very negative. And that is not all, as remaining employees are likely to become demoralized, demotivated and/or uninspired (Dwesini, 2019; Sthapit & Shrestha, 2018), which again may lead to a decrease in productivity (Dwesini, 2019) and further depreciation of human capital.

Human capital theory

To facilitate the analysis based on the above discussion, human capital theory will be used as a framework, as the theory and the related concept of HRD have been developed around these issues (Becker, 1993; Nafukho, Hairston, & Brooks, 2004; Swanson, 2001). The theory is not without controversy, but the fact that humans are perceived as capital—alongside physical capital—has sprung from the gap identified by Becker (1993). Nowadays this conceptualization is easier to understand, as human capital is a compilation of knowledge, habits, and social and personality attributes, including creativity, resulting in the ability to perform labor to produce economic value (Khan & Hefny, 2019). HRD is defined as the process of developing and releasing human expertise through organizational development and personnel training and development for the purpose of improving performance (Swanson, 2001).

The main principle underpinning human capital theory is the belief that learning capacities are of comparable value to other resources engaged in the production of goods and services. The notion is that when a resource (regardless of type) is effectively utilized, the results are profitable for an individual, an organization or society (Schultz, 1961). In this paper the focus is specifically on organizations, but improvements for individuals and organizations will affect society positively as well.

Human capital theory is often used as a framework for analysis and research (Swanson, 2001). The theory, which at its roots is an economic theory pertaining to the human contribution to the economic system, includes the following principles (Swanson, 2001):

1. Investments in training result in increased learning

2. Increased learning results in increased productivity

3. Increased productivity is reflected in increased wages and business earnings.

For companies, human capital theory provides a new way of working with employees, which could lead to new strategies, new organizations, and possibly new business models. And, at the same time, human capital theory has the potential to enhance a firm’s capacity to attract, engage, and retain employees as wages, reputations and working conditions improve. Thus, companies that are analyzing themselves based on an employee-driven restaurant approach (EDRA) to assess their human capital and find alternatives for HRD will also find it easier to attract, engage and retain employees (Carlbäck, 2019, 2022; Nemeschansky, 2020).

Here the theoretical concept of human capital is used to advance knowledge and facilitate a shift in a more employee-driven direction, as this would ultimately help companies, society and, foremost, current and future employees by improving conditions at the workplace.

Methodology

Participants

To investigate challenges and obstacles to growth in restaurants associated with human capital, 28 semi-structured interviews were conducted in four municipalities at eleven locations in the rural, seasonal tourist destination area of Bohuslän, a popular tourist destination for both domestic and international tourists. Bohuslän is located on the Swedish west coast and is stretched between Gothenburg and Oslo in Norway. Initially, representatives from 32 restaurants, all part of a local development initiative were contacted, but only 28 were available during the time for the study. The number was deemed sufficient for the study.

The inclusion criteria for participation in the study were:

• Being located in one of the four municipalities.

• Being evaluated as a high-quality restaurant as defined by White Guide, TripAdvisor and/or recommended by the Business Strategist in one of the four municipalities.

Fast food restaurants and pizzerias were excluded.

Restaurant owners and managers were then sent an e-mail with information about the study and a request to participate in an interview. They were informed that they would be treated anonymously, and that the information would be treated with confidentiality. The respondents, 21 men and 7 women, were either owners, managing directors or F&B managers for the establishments (Table 1).

Table 1. Towns or villages and the number of interviews for each municipality.

Municipality	# of interviews	Towns/villages
Lysekil	7	Grundsund, Lysekil
Sotenäs	8	Bovallstrand, Hunnebostrand, Smögen
Strömstad	7	Daftö, Strömstad, Sydkoster
Tanum	6	Fjällbacka, Grebbestad, Tanumshede

Interviews

All interviews were conducted in person and each interview was recorded and later transcribed (see Table 2).

Table 2. The interview process.

Interview	Respondent interviewed at location	Type of interview	Time
1	Owner	In person	28 min
2	Owner	In person	36 min
3	F&B manager	In person	42 min
4	Restaurant Manager (RM)	In person	36 min
5	Owner	In person	40 min
6	Manager	In person	51 min
7	F&B manager	In person	38 min
8	Manager	In person	42 min
9	Owner	In person	39 min
10	RM	In person	27 min
11	Owner	In person	29 min
12	Owner	In person	27 min
13	RM	In person	50 min
14	F&B manager	In person	41 min
15	Owner	In person	36 min
16	Director	In person	39 min
17	Owner	In person	27 min
18	RM	In person	40 min
19	RM	In person	32 min
20	Owner	In person	35 min
21	RM	In person	53 min
22	Owner	In person	30 min
23	Director	In person	39 min
24	Ass. RM	In person	41 min
25	Owner	In person	34 min
26	F&B manager	In person	32 min
27	Owner	In person	49 min
28	Owner	In person	44 min

Each interview consisted of 18 questions, where the majority were open-ended to invite the respondents to elaborate on relevant issues. Themes identified within the literature and primarily connected to restaurants within a seasonal setting, like attract talent (Christensen Hughes & Rog, 2008; Dolasinski & Reynolds, 2018; Gehrels, 2019), engage talent (Dolasinski & Reynolds, 2018; Gehrels, 2016; Melissen & Teunissen, 2018; Sthapit & Shrestha, 2018) and retain talent (BFUF, 2018; Dolasinski & Reynolds, 2018; Kusluvan et al., 2010; Wood, 2015) were used as overarching structure, and formed the basis for the questions asked to ensure depth in the responses. All questions, apart from the demographical questions, were then structured and inspired by the issues identified during the literature review and directly connected with human capital, human resources, recruitment, and training as this format was also used to analyze the data in the consequent step.

Data analysis

As the interviews consisted of both closed- and open-ended questions and were partially based on themes already identified—attract talent, engage talent, and retain talent—an inductive approach (Wildermuth, 2016) was used. Wildermuth (2016) and Hsieh and Shannon (2005) propose that coding and categorizing of collected data can be done in several ways, where one is based on previous research and where theories are to be investigated. Hsieh and Shannon (2005) indicate that this analytical method can be used in studies based on previous research in need of further description, hence creating better understanding. Hsieh and Shannon (2005) describe focused content analysis as a structured process where the emphasis is put on identifying key concepts, or key factors, which then will be used as categories in the coding process. Further, Patel and Davidson (2019) suggest that the names of the categories could be used as topics for the presentation of the results to facilitate a smoother read.

The results of a focused content analysis consist of supporting or non-supporting evidence relating to previous research, and as Hsieh and Shannon (2005) suggest, the results and discussions comprising this study are based on previous research. The purpose of using this analytical method is in part to be able to reduce large amounts of text to a limited number of categories to create structure, order, and an easy overview of the collected material.

Results

The restaurants included in this study experienced various obstacles and challenges, predominantly depending on the municipalities in which they were located. More than 85% of the respondents identified HRD in general and recruitment more specifically as the most important obstacle and challenge to their ability to build human capital and operate successful businesses.

The availability and recruitment of human resources is singled out as the most difficult obstacle to success for restaurants in northern Bohuslän. The most pressing matter is the lack of chefs, principally those with experience, knowledge and competence and in some cases proper education or training. However, the situation is almost equally challenging for all types of staff needed in the restaurants.

The presentation of the results will follow a description of the above-developed framework that is divided into the three main HRD-categories: attract talent, engage talent, and retain talent.

Attract talent

Homogeneously all restaurants emphasize that the greatest challenge for restaurateurs is recruiting staff with competence. The main obstacle to growth is lack of chefs, especially those with experience, knowledge, and the right skills. Occasionally restaurateurs address the problem that they lack chefs with formal education.

“To find competent staff is a nightmare. To find competent staff for a limited period is absolutely impossible.” (Respondent 22)

“The biggest challenge is to find chefs—trained chefs who do not have problems making them unable to work in a kitchen […]. Good people who are willing to live here during the summer.” (Respondent 6)

The restaurateurs point out that there are too few applicants of high quality, as in fact there are too few applicants generally and, overall, they are of low quality compared with what the restaurants under study have encountered in previous years. A common denominator is also the universal lack of experience among the applicants even though the age at which they begin working seems to rise every year. Older individuals with less experience are applying for seasonal work on the Swedish west coast, which is causing problems for the restaurant owners:

“I have searched at the employment agency; I have searched at Facebook. At Facebook I find people, but they are more criminal than law-obeying. Most of the chefs do have a proper job, and the well-behaved have a good job. If you find young people who would like to do seasonal work it could work, but if you find someone in my age, there is probably something wrong and that is alcohol”. (Respondent 14)

“For the bar and the dining room it is usually easy to get employees […] to get experienced employees is rather more difficult […] (Respondent 12)

“To attract experienced employees is rather more difficult as the experienced ones have given up on seasonal work to have a safe and secure job in a city or in a hotel where they can have every other weekend off. People see the industry as a transit-route to a proper job”. (Respondent 11)

“My youngest this year is 18. Last year the youngest was 16. She did not come back, as she probably did not know what she had ventured into”. (Respondent 4)

Further, the restaurateurs point out that the competence needed for working in a dining room consists primarily of the ability to be positive and outgoing. In contrast, they also point out the problem that customers today often are older than the service staff, and these customers have great interest in and knowledge of food and beverages and consequently demand and are willing pay for high standards of service.

“So, there is no one in the service who is educated […] happy girls that we have taught a little crash course in the spring and so they do a tremendously fine work.” (Respondent 19)

[…] having quite a wide range of competence […] among the guests. As well-read and educated as guests are now, they have not been for many years […] Now people have traveled a lot and are knowledgeable and willing to pay for quality. (Respondent 4)

“[…] the quality of applicants has also decreased.” (Respondent 3)

“How can one look for a job with me when I need service staff or a chef and tell me that I should train them? I am to employ the person, pay a decent salary and teach them a job which has taken me 6–7 years to learn; are they supposed to be trained in two weeks with full salary? No, thank you—not interested.” (Respondent 11).

Foreign chefs are perceived to have a more positive attitude toward work; however, they do not always understand local food culture. Foreign chefs could make up for some of the experience shortage on the kitchen staff as they generally appear to be more interested in working. But the drawback is the lack of knowledge and feeling for the local cuisine and food culture. Further, the recruitment of foreign chefs is also hampered by the insecurity involved in the need for work permits.

“[…] You can get chefs from Spain and Portugal, but they are not familiar with the food we have.” (Respondent 2)

“[…] foreign chef risk being sent home but there is space for them to work here.” (Respondent 10)

Engage talent

The interviewees indicate that young people who apply for jobs at restaurants are generally perceived to be inexperienced and unwilling to work. They lack interest and commitment, do not want to take responsibility or initiative, and need to be monitored at work. Restaurateurs perceive millennials to be aware of their rights as employees and therefore make strong demands. However, restaurateurs note that young people do not always understand that the right you have as an employee is based on what you are giving in return. The experience is that young people happily apply for positions for which they are not qualified.

“Above all, I see a difference between young people 10 years ago and today. 10 years ago, they wanted to work. Today they do not want to work. They have great demands on the work tasks, wages. They do not want to do anything, and they should not earn as little as anything … and that has become a challenge as they come in and have no experience or knowledge, but they do not want to do so much. They have a lot of rights and demands but very little obligations.” (Respondent 6)

“Out here it is sufficient with smiling faces and some good spirit and the will to make it work—then it works. So, no one in service is educated or trained […] smiling girls we have trained in a crash course during the spring and then they do an incredible job. However, in the kitchen one must have the know-how, it is not just to cook some food. It is rather complex and the whole food-chain …” (Respondent 24)

The lack of experience could be offset by an ambition to learn and a willingness to adapt to prevailing circumstances, but the results from the study clearly indicate that the contrary is the rule. Applicants do not really see their lack of experience as a problem—rather, they expect the employer to provide proper training to substitute for any discrepancies in experience.

“Before one used to be thirteen years old when one started to work, and now the majority are 18–19 when they have their first job, and the difference is very notable […]” (Respondent 17)

“It is possible to adapt them to our business. Chefs are very difficult to make to adapt […] But the younger ones are more flexible […]” (Respondent 4)

“There has been a lot of nagging, but I usually tell them the meat cleaver is more powerful than the iPhone”. (Respondent 8)

Several of the issues raised above could be related to the overall perception of work in general for younger individuals, but also more specifically work within the hospitality industry. The results of the study indicate that the image of the hospitality sector is not very attractive to young individuals looking for entry to the labor market. This will obviously influence a company’s ability to attract employees now and in the future:

“[…] The service trade is not very attractive any longer […] It is necessary to improve the image of the profession”. (Respondent 16).

Retain talent

The wages, terms, and conditions associated with seasonal work in the hospitality industry in combination with abolished compensation for working late nights and weekends and lower tips are making it even more difficult to retain staff, according to the interviewees.

Issues related to seasonality make it more difficult to employ local staff on a permanent basis:

“It feels like one is training them and then they leave to get better paid somewhere else. I am not the person paying them a lot more than the national agreement. I offer slightly more just to attract them, but you must train them”. Respondent (8)

“We have a very weak labor union; the salaries are not the best […] We must improve the status of the trade.” (Respondent 21)

The lack of suitable infrastructure such as housing for staff is a common problem for the restaurateurs who participated in the study. The housing shortage makes an already challenging recruitment situation even more problematic. Frequently, it puts a heavy burden on a company’s resources. Entrepreneurs are forced into property ownership to secure their opportunity to hire staff for the season every year. In some cases, the availability of staff housing can also affect the capacity of the business to serve customers. In the absence of public transport and parking, staff housing is needed close to workplaces.

Very hard, it is panic every year. Now I have found some places that I rent some weeks every year. I find the places for them, but they must pay for themselves. It is a little overpriced of course but there is nothing else I can do […] Those who you really want to have here, you must help a little, maybe pay half the rent. (Respondent 18)

The results imply a situation where applicants seem to be inexperienced and are unwilling to work. They show a lack of interest and engagement and are not willing to take responsibility or initiative and need considerable supervision. This affects their commitment and ability to engage in work-related activities, regardless of a restaurateur’s efforts.

“They are worse. They think a lot higher of themselves, they do not know a lot of the world around them. They see their little bubble […] they do not accept that someone else knows more.” (Respondent 22)

The results of this study clearly indicate an absence of understanding of the level of knowledge and competence needed to work in the restaurant industry, among both applicants and recruiting companies. This problem relates foremost to floor positions. From the companies’ perspective it is most important for an employee who works on the floor—directly with customers—to have a positive attitude and an extroverted personality, but customers are becoming more discerning. Nowadays they have high expectations of service but also an increasing willingness to pay if a company can meet these expectations.

The industry’s lackluster image and reputation is also a general concern among the respondents. This situation has declined even further lately, and fewer and fewer individuals see the hospitality sector as an interesting alternative:

“[…] we have a management among the restaurant owners which is far from good. We need to be better restaurateurs and managers and look after the staff. If we do not do that no one will work here either […] (Respondent 12)

In Table 3, a summary of the predominant themes identified from the interviews are presented as a foundation for discussion and also as a base for developing a direct roadmap for practical applications.

Table 3. The following themes were identified as predominant from the results of the interviews.

Themes identified
Rate of applicants Competence level Age Experience level Education level Nationalities Work ethics Willingness to work	Training needs Industry image Distractions Self-motivation/self-drive Infrastructure Financial factors (renumeration) Terms and conditions Issues with seasonality Status of labor union

Discussion

The restaurant companies in this study, based in the tourism-dependent area of Northern Bohuslän, all identified HRD as their biggest challenge for the future. This result is in line with previous findings and predictions, both nationally and internationally (BFUF, 2014; Carlbäck, 2022; Dolasinski & Reynolds, 2018; Gehrels & Suleri, 2016). In Sweden alone there is predicted demand for between 40 000 and 50 000 staff to be recruited before 2024. This large number of new staff members is needed because of previously specified issues such as rapid industry growth with fewer employees and high staff turnover—up to and sometimes exceeding 40%–45% (BFUF, 2014).

Based on the theoretical and conceptual framework that was applied in the analysis, the factors identified in the study are presented in Table 4 as a foundation for further development of HRD leading to advances in human capital with a firm eye on EDRA.

Table 4. Identified factors affecting restaurants’ ability to attract, engage and retain employees relating to HRD to enhance human capital.

Attract	Engage	Retain
Too few applicants	Tension between guests and staff (competence)	Attitude and competence
Too few with competence	Willingness to adapt	Suitable infrastructure – housing of staff
Youth/age	Age issue	Financial factors – wage level and seasonality
Lack of experience	Limited willingness to work	Terms and conditions
Lack of education	Inexperience	Wages
	Lackluster industry image	Weak labor union
Foreign chefs	Distractions, i.e. smart phones	Challenges with seasonal work
	Need to be monitored	Unwillingness to take responsibility
	Employers need to provide training	Unwillingness to commitment
		Poor industry reputation and image

In this study, the respondents are mangers/owners of seasonal restaurants in Northern Bohuslän, where high staff turnover appears normal and there is, among the respondents, an ongoing discussion about how to find a permanent and sustainable solution to this problem. As Jang and Kandampully (2018) have observed, a widespread industry problem with high—often exceptionally high—staff turnover is prevailing, which is also linked to below-average levels of engagement. This tradeoff could be connected to Gehrels and Suleri (2016) discussion about recognizing labor as human capital and not just a cost. Restaurants are naturally seeking ways to lower costs or to develop more flexible cost structures—hence the use of seasonal staff (Gehrels & Suleri, 2016). The results also indicate a current challenge that involves finding the balance between seasonal staff and permanent staff, often related to money issues, as few restaurants have the financial resources they would need to keep all their employees once the lucrative season comes to an end. The reasons behind this could, according to the results, be several, where the low volume of applicants is singled out as the most clearly expressed. Further, applicants who do apply often lack knowledge, education, competence, skills, and experience, both industry-related but also general, in accordance with Singal and Rhou (2017) earlier findings—indicating a low level of human capital, both currently in place and being recruited.

Moreover, the reputation and image of the industry as well as its provision of simple, monotonous, low-skill jobs (again, McJobs, as Wood (2015) brands them), seem to have significant effects on younger individuals’ willingness to work, requiring remedial efforts in the future. The results of the study indicate that few individuals are attracted to an industry that Melissen and Teunissen (2018) describe as unprofessional, under-developed and inferior to many other industries. This could then have a direct link to HRD, investment and appreciation of human capital.

The results of this study also reveal some new perspectives on the hurdles facing aspiring restaurant owners outside the major cities in Sweden. Although the recruitment problem is valid for all parts of the restaurant business, the results show that it is most severe with kitchen staff, mainly chefs. This issue has previously been noted by Tillväxtverket (2018). The unavailability of trained and experienced chefs forces restaurants to offer less sophisticated menus and other offerings than they aspire to offer, reflecting low levels of human capital and few or no alternatives for HRD.

Christensen Hughes and Rog (2008) suggest alternative methods for finding solutions to the staffing issue and the respondents have at least tried to do this, as they increasingly find themselves having to attract foreign staff, mainly chefs. The red tape connected with this alternative unfortunately hinders further attempts to up-scale this method, as the insecurity relating to work permits is too great a challenge. Also, lack of culture-specific knowledge and competence affects this solution, which also requires investments in human capital as well as investments in infrastructure such as housing and other facilities for foreign workers. These investments are not normally associated with HRD in restaurants. However, in these circumstances they need to be included in the formula as they are investments in human capital and should be treated as such. This approach will be especially valid in rural areas and seasonal destinations where housing and infrastructure might be lacking.

Regarding the engagement situation, the results of the study indicate several obvious areas of concern. As young and often inexperienced employees are unwilling to adapt to the needs of the restaurants that hire them, possibly because they have no intention of returning or pursuing a career in the hospitality industry, most attempts to create engagement fall flat. In response, employers must monitor their workers almost constantly, something which neither helps the employers nor stimulates the employees. Thus, employers need to spend time and resources to train and educate individuals, reducing the time and resources available to develop their businesses. Rather than building human capital, this process might even drain it, and very basic skills and competencies that are instilled through training could disappear when employees move on to other industries. The results of this study shed light on restaurant owners’ quest to become a better and more attractive employer, at least with respect to seasonal staff. Terms, conditions, and wages are shown to be important, and specifically so for seasonal work. Financial factors are and will be challenging to manage in seasonal work, as the season is limited and consequently so is the opportunity to make money. Further, the study also highlights the role of infrastructure that facilitates seasonal work, especially the need to provide housing for the workforce. Poor housing or other basic infrastructural functions that are lacking could and do deter employees from staying or coming back for another season. All these factors represent the relevant parameters in the quest to facilitate the creation of human capital. Without adequate infrastructure, it is difficult to increase the value of employees as an asset class.

The restaurant industry’s dubious reputation will, according to the results of this study, also have a detrimental effect on the industry’s success in attracting job applicants. Alternatively, employees could then seek employment elsewhere, where the future looks less bleak, also contributing to the human capital drain (Christensen Hughes & Rog, 2008, Roper, 2017).

The lack of professionalism, willingness to adapt, and competence that was observed in the data could create a potentially dangerous situation for restaurant companies depending on how much business they generate during limited periods of operation. The overall product they offer could be perceived as unprofessional and not worth the cost, undermining their competitive advantage. Further, this could lead to a paradoxical collision between inexperienced and disengaged staff and guests who are experienced, astute, and willing to pay for above-average experiences, as indicated by Melissen and Teunissen (2018), who find that well-traveled guests seek genuine, high-quality experiences. Restaurants need to keep up appearances, exhibiting cleanliness and offering comfort (Christensen Hughes & Rog, 2008), but with staff shortages, incompetence, or indifference, this is all but impossible. Gehrels and Suleri (2016) stress that the guest experience, which is central to the hospitality industry, depends on outstanding service, hospitality, and craftsmanship. This is evidently not the case among the respondents, who find it difficult to attract and engage staff, and it will not be the case in the future—hence the industry could face even larger issues ahead. The suggestion is that restaurants learn how to become better and more attractive employers (Gehrels & Suleri, 2016) by focusing on HRD and building human capital in the workforce.

In this study, problems with the restaurant industry’s reputation and image were identified as discouraging factors for remaining in business. There were multiple aspects behind this issue, not the least of which are low pay, generally poor or inferior management, and on top of that a weak labor union. This finding supports Melissen and Teunissen (2018) conclusion that the industry is less well developed than many other industries. The results also indicated that limited efforts have been made to solve these issues. The conclusion which could be drawn from this is that a clear lack of investments can and will lead to poor management, which will then filter down through organizations and create something of a vicious circle. Investments in human capital could enhance the industry’s image and improve general conditions. In an industry that is perceived as unattractive by prospective employees, offering monotonous jobs with low wages and less than generous terms and conditions, it is not difficult to understand employees’ unwillingness to commit or to accept any form of responsibility.

Finally, presented below are some of the most crucial factors to be used by companies in the industry as hands-on guidelines required to develop a sustainable HRD in a practical manner, based on the identified factors in Table 4 above. Based on every company’s situation, resources, and intentions they could also be beneficial in deciding which ones to focus on, to improve the HDR-approach as much as possible.

Attract talent

• Work with national industry body to enhance industry image

• Work with national industry body to reduce red tape for foreign recruitment

• Get a better understanding of younger generation’s ways of job searching

• Review terms and conditions offered to better reflect applicants’ needs

• Reduce the level of work experience required and ensure correct on-boarding and initial training

Engage talent

• Ensure correct balance between permanent and temporary employees

• Develop existing management/leadership

• Ensure an inclusive and inspiring work culture

• Start measuring every activity with employees as an investment rather than a cost, hence be able to measure the ROI on each activity

• Facilitate ongoing training and development as part of investments in human capital

• Set clear and concise guidelines for employees when it comes to breaks, use of digital devices during working hours

• Provide initial and ongoing hospitality and service training to ensure employees could handle increased expectations from customers

Retain talent

• Ensure well developed leadership

• Work with local community to ensure suitable infrastructure, like adequate housing, communication and other facilities necessary to create an attractive work destination

• Review terms, conditions and compensation to ensure attractiveness and measure the ROI on these investments

• Work with the labor union to strengthen their position, hence creating a better industry image and reputation

• Review the balance between seasonal and permanent employees by collaborating with other seasonal regions, possibly with an alternating season (winter)

The suggestions above, which should not be considered as exhaustive, could partly lead to the development of new business models (EDRA-based) where the human capital is treated as an asset rather than a cost, as they all contribute to an increased human capital. The implication of this could be a revised way of planning, controlling, and managing the business, as several of the calculations will be based on human capital and related ROI.

Conclusion

The hospitality industry in general, and the Swedish restaurant business more specifically, are facing ongoing problems with recruiting, engaging, and retaining staff. At the same time, customer expectations are growing, which is causing a paradoxical situation for an industry that is predicted to continue growing. The results of this study clearly indicate HRD as the most critical factor in addressing staffing issues and overcoming the difficulty involved in attracting, engaging, and retaining staff. The results from the study produce valid theoretical contribution within the field of human capital and HRD, as the findings both illustrate a clear lack of understanding for the concept and also identifies the relevant factors for sustainable HRD in the future, i.e. where the problems are and consequently the areas for improvement. By adding the knowledge presented here, the understanding will be enhanced and nuanced with current issues and affecting factors.

Further, the objective was to highlight some of the most relevant factors associated with this perspective to be able to rectify this in the future. In other words, to actively work with the most pressing issues identified here—the issues that discourage individuals from perceiving the restaurant industry as a viable alternative. The identified factors from this study could, with the assistance of an employee-driven restaurant analysis (EDRA) approach, provide new possibilities for the future, not least when it comes to create and maintain competitive advantage. The results could be used as practical guidelines for the astute business owner or manager interested in coming to terms with the issues facing the sector.

Also, by identifying the specific areas where the problems are most pressing, this study contributes with specific information that could be translated into a road map for HRD development for the industry as a whole or for each specific company. The results of this study clearly identify several areas where steps could be taken to improve the current situation.

But to be able to sustain this growth and keep up the level of expectations imposed by discerning customers, immediate, strong, and efficient measures need to be taken. This will require a completely new approach to HRD, with a focus on increased efficiency in identifying, measuring, developing, and controlling human capital—the foundation of solid and sound HRD. The findings presented here could be used to parameters for measuring and building stones for new and relevant metrics.

As attraction to the hospitality industry is low among prospective employees given its inferior image and reputation, it will be necessary to draw up a completely new scenario where the employees are in focus—an EDRA approach (Gehrels & Suleri, 2016; Nemeschansky, 2020). If not, the number of applicants will remain low, with those applying bringing little or no experience or interest to the job and hence little willingness to adapt or, for that matter, remain.

Practical implications

Business owners or managers could, with the assistance of the findings, assess their own situation and get a better understanding of the current situation. They can identify areas where they are weak, for example in providing initial and ongoing training, consistency, compensation and balance, hence building not only the human capital but also the image (for improved attraction). According to the findings presented here, there are several implications directly related to business operations, but some of them are more general and these will be presented here from a practical perspective.

Firstly, the practical implication which could be drawn from an increased level of onboarding, training, and development, applied by an improved leadership, would be an increased level of knowledge and competence. Due to the fact that customers are more knowledgeable and critical this would be a necessity in a not too far a distance. But increased training and development activities would also lead to an improved company culture, which would increase productivity, but also the wellbeing of the employees. With an increased feeling of belonging and happiness at work, the employees should become more engaged, leading to a higher likelihood of them staying within the company, or for that matter, coming back the following season. The retainment of staff will lead to a preserved knowledge and competence base within the company. But this will also serve as a solid foundation for internal promotion, as employees with experience, knowledge, competence and insight in the company culture could serve as leader in a near future.

Secondly, the above activities should facilitate a transition to a more human capital-focused approach, where the collective knowledge, competences, personalities, and leadership capabilities would constitute a true value, or asset, for the company. By building the human capital the company will enhance not only its own competitive advantage but also assist in building a reputation, which could be considered somewhat damaged, for the whole industry. A stronger reputation, or image, would attract not only more people to the industry, but possibly also people with more talent, more dedication, and more interest in pursuing a long-term career with the company, or at least within the industry. Based on this, the company can then start building and calculating the value of this critical asset class—human capital—as the employees and their knowledge, competence and personal skills could be the most valuable asset the company holds.

By this, the companies could move to a situation where investments in the employees would be part of their strategies. This will not only create human capital in the company, but also lay the foundations for improved performance, as improved human capital will lead to better performance and ultimately increased profitability (Swanson, 2001). If the employees know what to do and how to do it with engagement, the resources will be used in the most efficient way, as employee performance is a critical factor for organizational performance.

Finally, and from a more societal perspective, it would be advisable to dig more deeply into human capital and find ways to employ a critical mass of permanent staff that will make it possible to maintain high standards throughout the year. There is perhaps a role for municipalities or regional bodies to play in this matter, as in providing better opportunities and training and educational facilities. The results presented here could be used to initiate such a dialogue. With respect to training and education, the gaze should also be raised to the national level as the responsibility for training and education might be better addressed by a central government body. This could be achieved by collaboration with the national industry bodies to facilitate relevant training and educational activities initiated by them.

Attention is also needed concerning other infrastructural issues that could improve the situation, such as housing for temporary staff, as this could be difficult for individual companies to resolve, and this needs to be addressed together with the municipality. The local government will need to understand their role in this critical process.

Limitations and directions for further research

As for most research this study comes with limitations. While the Swedish hospitality sector might be representative for an extensive selection of developed markets, it will still be specific with regards to certain issues and the results could therefore not be treated as valid for all markets. With a focus on firms in a more rural setting and with seasonality as a common factor, the issues facing restaurants in more urban locations might be of a slightly different character.

Therefore, further research will be needed to ensure that all parameters are included in the framework to cover all aspects of the problem. The parameters could also vary by location, such as region or country, countryside or urban.

Better understanding of human capital in the restaurant industry also calls for theory development and new ideas about how to enhance employer, sector, or even industry branding. The illusions of an industry that offers only McJobs must be erased and replaced by a new and attractive image based on empirical facts.

Finally, understanding the connection between human capital and financial performance would provide vital knowledge on this topic. To be able to measure the financial costs and benefits of human capital is a must in any endeavor designed to persuade the industry to accept the importance of this form of capital. An industry with tight margins requires clear indications of financial impacts that any new methods or models would have. To facilitate this understanding, customers will need to be included as, ultimately, their willingness to pay would be the best possible indicator of the critical role of human capital. If strong human capital, with well-trained, service-minded, educated, and happy employees increases customers’ willingness to pay, few would argue against it.

Acknowledgment

This study is part of a larger project financed by the European Union, Västra Götalandsregionen, and Tillväxt Bohuslän. The authors are grateful for financial support from the Jonas Nordéns minnesfond and the Grythytte Stipendiefond.

Disclosure statement

No potential conflict of interest was reported by the author(s).