The chapter “Defining productivity” reviews past attempts to define productivity and outlines their shortcomings. Many traditional measures of productivity have not been inflation-proof. For example, defining productivity as employee costs divided by sales means it could be increased as costs rise simply by raising menu prices or room rates. But this would not indicate whether employees were working harder or smarter.
We must be concerned about productivity because of the evidence suggesting it is on the decline. This is increasingly important to the hospitality industry, which can no longer count on a growing market. Because it is a labor-intensive industry, relatively little substitution of technology for people can occur without losing the whole meaning of the terms hospitality and service.
When we add to these concerns the fact that human resources traditionally have been undervalued in the hospitality industry, the scope of the problem becomes clear. The focus of this section is on the need to increase profitability by hiring, developing, and motivating productive employees.
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