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Weekly UpdatesAs shown in Exhibit 3, responses came from thirty-three states. Approximately 75 percent of the respondents were males, mostly older than thirty-five. A high percentage (70 percent) of the industry professionals had baccalaureate or higher level degrees. Of those with degrees, more than 65 percent majored in hospitality, with business as the second most common major. Many respondents (62 percent) were experienced hospitality managers possessing more than ten years of service, and 27 percent reported more than twenty years of experience in management. The majority of managers (77 percent) were employed at medium-size properties. The study group was fairly evenly split between upper level managers (43 percent) and middle managers (54 percent). Over half held ownership or administrative-type positions, such as general manager or vice president.
Assessment of Management KSAs
The upper-level executives reported human resources as the KSA in which they were most competent (mean = 4.23), followed closely by financial management (mean = 4.15; see Exhibit 4). Meanwhile, they gave lower grades to their KSAs in marketing (mean = 3.72) and information technology (mean = 3.49). At the same time, these respondents' self-appraisals were in accordance with their importance rankings of those four management KSAs. (10)
Middle-level managers also reported being most competent in human resources management (mean = 4.19). However, they appraised their level of competency in financial management significantly lower than did the upper level managers (see Exhibit 5), but middle managers rated their competence in information technology higher than did the upper level executives." Moreover, unlike their vice-president-type superiors, middle managers' competency levels did not correspond with the importance they placed on each KSA domain. They ranked the importance of financial management second and that of information technology third, even though they claimed the reverse regarding their levels of competence in those KSAs (referring again to Exhibit 4). These findings suggest that perhaps middle-level managers are still developing their proficiencies in financial management but already have strong skills in information technology. In addition, knowledge of financial management and marketing may play a lesser role overall in this subordinate group's success, as reflected by the significantly lower importance ratings the middle managers accorded those two areas (see Exhibit 5). (12)
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These findings demonstrate that both manager groups placed the highest importance on and were most competent in human resources management. Likewise, the two manager types also ranked financial management second in importance for success. However, upper level executives reported being more competent in financial management than their subordinate counterparts, suggesting that hospitality executives' KSAs vary by management level.
To better understand the importance of knowledge in human resources, financial management, and the other KSAs possessed by lodging managers, we examined the correlation between managers' KSAs and monetary success (see Exhibit 6). Financial management was the only KSA that had a significantly positive relationship with increased compensation (r = .27). (13) This result coincides in part with Chung's findings on hotel competencies, which also posited a link between hotel career success and knowledge in finance and accounting. (14) Both studies suggest perhaps a greater potential for career advancement and higher compensation levels for managers that have exceptional understanding of financial techniques and analyses.
New Insight on Management KSAs
Unique to this study is a comparison between the general beliefs regarding KSAs required for lodging professionals and actual knowledge associated with lodging management success. Our study indicates that although upper level executives placed highest importance on and ranked themselves superior in human resources management KSAs, financial management knowledge was found to have a stronger relationship with their monetary success than did human resources. Indeed, the correlation between financial management knowledge and increased compensation was the only significant relationship among the four KSAs that we modeled. Thus, these findings suggest that human resources management knowledge alone may not necessarily lead to success for senior-level management, as previously thought. However, these results do not mitigate the consideration that knowledge in human resources management, for example, is important and is continually employed by lodging managers. What we propose is that these other human resources-related skills perhaps represent basic requisites and are required of all managers at all levels. Moreover, competence in human resources management and especially information technology may be more beneficial for and more frequently used by entry-level and middle managers, while executives with strong competence in financial management KSAs may be in demand for senior-level positions.
Our research reveals other considerations. Increased knowledge in financial management, for instance, had no influence on either of the individual management (middle and upper) groups' monetary success but only among all managers overall. Moreover, significantly higher (t = 9.55; p < .05) compensations for upper level executives were found, as would be expected. (15) These additional findings suggest that perhaps the relationship between increased compensation and knowledge in financial management is a function of upper level managers' appointments and job responsibilities. That is, are managers who are appraised as having high levels of financial management knowledge promoted into upper level positions at attractive compensation levels, or do managers develop to a higher level these financial skills after promotion?
Seeking to answer this question, we first note that compensation levels for middle- and upper level managers typically fall within set ranges. (16) In addition, research has suggested that financial management knowledge in budget planning, operational analysis, and forecasting techniques, for example, generally is acquired within the first few years of hospitality experience, well within the tenure of middle managers. (17) These facts lead us to believe that regardless of their financial management expertise, managers' compensation depends more on their position than on their specific expertise. Our findings also suggest, however, that upper level executives use and develop their financial management skills to a greater degree than do lower level managers. Therefore, we believe that middle-level managers with proven abilities and knowledge in financial management may be viewed by their superiors as qualified candidates for higher level executive positions. As a result, perhaps they have better chances of being promoted than their peers who are less conversant in financial management. This last conjecture extends beyond our study examination and thus represents a recommended research topic for further investigation and future testing.
In summary, our study results reveal that upper level managers have significantly higher knowledge in financial management and have compensation ranges twice that of their subordinate counterparts. Consequently, middle managers aspiring to the upper ranks of management may best pursue the goal by honing their analytical skills and knowledge of financial management. Financial data analyses frequently monitored by general managers are net profit, gross operating profit, and cash flow, representing recommended areas of study for these would-be executives. (18) Hotel owners want general managers who speak the financial language and think in terms of creating value for their firms. Lodging professionals aspiring to successful careers must recognize the significance of earnings and cash flows. After all, it is the ability of a company to generate earnings and cash flows that will enable the entity to expand, pay dividends, and repay obligations.
A well-grounded understanding of margins and return on investment is also needed. (19) Financial measures such as profit margin, operating efficiency ratio, return on assets, and return on equity tell the story of business performance, and lodging professionals must manage their companies using these measures. It is the evaluation of these measures of performance that will enable managers to get a better handle of a firm's changing performance over time, to compare a company with its competitors, and to make required operational improvements. A good grasp of return on equity and the challenge of financial leverage in striking a proper balance between the benefits and the costs of debt financing will serve to evaluate how efficiently the owner's stake in the business has been used. Using this knowledge effectively can make a difference in lodging professionals' ability to advance to higher levels within their organizations.
Implications of Study
This study has implications for many stakeholders including lodging professionals, recruiters, trainers, and educators. These findings can serve to better prepare middle-level professionals for the responsibilities lacing them in their future positions. Being properly equipped can increase executive recruits' potential for success, especially during the introductory period in their upper management positions. Likewise, lodging professionals should recruit entry-level managers who have graduated from hospitality programs with a strong financial management curriculum to ensure their managerial advancement and the firms' long-term profitability and growth.
Current executives also could benefit from the research findings by improving, for example, their knowledge of financial, operational, or capital investment analyses, yielding higher performance for their firms and thus generating more lucrative personal bonuses. Cash flow, earnings, and a firm's value are pivotal in achieving goals for hospitality firms.
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