HUMAN RESOURCE MANAGEMENT ANALYSIS

AT ROYAL RAINBOW TOURS

BY: RINA KURNIAWATI

Abstract

Human Resource management is an important aspect for any

organization in pursuing its goal. Without a careful knowledge and
management efforts, inefficiency will likely to be faced. Theory
presents an ideal approach how Human Resource Planning should be
conducted. However, the writer is intrigued to discover how Human
Resource Management is applied in real situation, since the real world
is dynamic and always change. This paper is a case study on how
Human Resource Planning is applied in Royal Rainbow Tours, one of
travel agency in Jakarta. The result shows that the best practice does
not always in accordance with the theory. Human Resource
Management, in this case of Human Resource planning, is regarded
as flexible approach suited the needs of the organization.

Keywords: Human Resource management, Planning, Royal Rainbow,

Travel Agency

1.0. INTRODUCTION

1.1. Background of the Study

People have very complex needs. One of them is the need for

traveling either for leisure or business purposes. Seeing that a person

has traveling needs whether for leisure or business, it creates

business opportunity in this sector, such as transportation,

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accommodation, travel agents, tour operator, food and beverage

service, etc.

Travel agent as one of the businesses involved has a

considerable role in fulfilling a person needs for travel. Travel agent

provides services in which make it easier for the person fulfill his

travel needs. By using its service, people do not need to waste their

time or energy to make travel arrangement. Just by picking up the

phone then the travel agent will take care the rests.

In Indonesia, travel agent has become partner of the society

where it is there to assist them in making necessary travel

arrangement they need. In Jakarta itself the number has reached

more than five hundreds (according to the list taken from ASITA). With

the numerous presence of travel agent, it makes this business

extremely competitive. Certain strategy is implemented by each

travel agent in order to survive in the wave of competition.

Human resource management is one factor that is significantly

important for a company to achieve its goal. It is the tool which makes

a company be more competitive and will able to produce highly

qualified services and products.

Royal Rainbow Tours is one of the travel agents in Indonesia. It

has been in the business for sixteen years. With long its history,

experience, as well as its ups and downs, there must be something

that can be learned from the company.

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As it is important to study about human resource management

in Travel Company, therefore, this paper is titled “HUMAN

RESOURCE MANAGEMENT ANALYSIS IN ROYAL RAINBOW

TOURS.”

1.2. Purpose of the Study

This paper will discuss the theory of human resource

management process, how the human resources management

process applied by Royal Rainbow tours in order to survive in the

industry.

1.3. Limitation of the Study

The study will be limited on the process of Acquiring Human

Resources which involve Human Resource Planning and Staffing at

Royal Rainbow Tours. This is in accordance with the limitation of time

and knowledge the writer has and focusing on the main issue of the

findings at Royal Rainbow Tours.

1.4. Methodology of the Study

The study is qualitative descriptive analysis using two

instruments: observation and interview.

1.5. Goal of the Study

By analyzing the theory and the application, the gap between

the theory and the application can be identified and reasons can be

discussed. The result of the study can generally be used as an input

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for those who are interested in managing a travel agent and

specifically be an input for Royal Rainbow Tours to optimize their

human resources process.

2.0. THEORITICAL FRAMEWORK

2.1. Definition of Travel Agent

In tourism industry, there are several terminologies commonly

used such as travel bureau, tour operator and travel agent or travel

service. The three terminologies seem to have significant differences.

However, basically they all are the same in practice although from the

activities involved are different.

The terminology for travel bureau which is commonly used in

Indonesia is equal to tour operator which is commonly used

internationally. According to A.J. Burkat (54-56;1971) “tour operator is

a distribution company in tourism industry which activities involves

service provision based on demand, transport arrangement,

accommodation arrangement, and other necessary services needed

by tourists in particular tourist destination, as well as package tour

selling through its agent or through its office to individual or group

with certain prices.

According to the Law of Tourism No.9, 1990, point 11 states

“Usaha Jasa Perjalanan Wisata merupakan usaha penyediaan jasa

perencanaan dan atau jasa pelayanan dan penyelenggaraan wisata.”

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(Travel bureau is bureau which provides travel planning and

organizing services).

From the definition it can inferred that travel bureau or tour

operator is a business which serves tourists or traveler in planning,

arranging, and organizing their trip starting from preparing the

necessary documents, amenities, and facilities needed during the trip,

either partly or entirely.

The activities of travel bureau, according to the Ministry of

Tourism, Post and Telecommunication above involve:

a) Create, sell and organize package tour

b) Provide transportation service to individual or group

c) Reserve accommodation, restaurant, and other facilities

d) Administer travel documents

e) Organize tour program

f) Provide service for convention

According to Ministry of Tourism, Post and Telecommunication

Decree Travel agent is a business which organizes travel and it

functions as the mediator in selling or serving for travel. The

activities involve:

a) Selling ticket of transportation and others

b) Provide Reservation services

c) Administer travel documents according to the implemented

law and procedure

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2.2. Human Resource Management

According to John M. Ivancevich and Lee Soo Hoon (2002)

Human Resource management is the function performed in

organizations that facilitates the most effective use of people (the

employees) to achieve organizational and individual goals. The

functions can be group into the following categories:

2.2.1. HR Planning

Human resource planning involves determining future human

resource needs and job requirement. HR plans are derived from the

organization goals, the organization’s strategy, conditions faced by

the firm in the external environment and the nature of its current

employee’s knowledge, skills, and abilities. With HR planning, the firm

ensures that sufficient numbers of properly trained staff are available

at all times to carry out the firm’s operations efficiently and

sufficiently. However, HR planning must include the following to

ensure well defined strategic of the company can be carried out.

1. Situation analysis and environmental scanning

2. Forecasting demand for human resources

3. Analysis of the supply of human resources

4. Development of plans for action

Situation analysis and environmental scanning involves a

strategic plan to adapt with the environmental circumstances. Yet,

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currently changing environment requires the ability of being global

scanner in order to say competitive.

Forecasting demand for employee requires a strong sense of

the future conditions although quantitative tools are available in the

market to measure the demand. It is quite difficult to do if related to

the question of how many employee the company needs within 2

years for example. However, there are approaches helpful for HR

practitioners to cope with the unstable condition. The approaches are:

expert estimates, trend projections, statistical modeling, and unit

demand forecasting.

Analyzing the current supply of employees does not merely

mean counting the number of the employees available. Yet, it is such

a complex inventory of human resources skills in terms of career

planning, management development

The last stage of HR planning is the action taken to identify any

gap existing among those aspects—situation analysis, forecasting

demand, analyzing supply—and overcome both in shortage and

surplus condition of workforce.

2.2.2. Staffing

Once the critical job competencies are identified from the HR

Planning process, the firm can carry out its staffing process. Staffing is

the process of hiring people to perform work for the organization. It

comprises two major activities: recruitment and selection.

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Recruitment involves obtaining a large number of applicants,

thereby giving human resources professionals and managers more

choices to select from among the competent candidates. Two sources

of recruits could be used to fill needs for additional employees:

present employees (internal) or those not presently affiliated with the

organization (external).

1. Internal sources can be tapped through the use of job posting

and bidding, and seeking recommendations from present

employees regarding friends who might fill vacancies.

2. External sources include media advertisement, the internet,

employment agencies, and special events recruiting such as job

fair, and referrals from schools

Selection process is employed to hire employees who are most

likely to meet the organization’s standards of performance and who

will be satisfied and developed on the job. The typical selection

process can include up to five steps:

1. preliminary screening with an application blank and a brief

interview

2. Employment interviews

3. Employment tests

4. Reference checks and letters of recommendations

5. Physical examination as a part of a conditional job offer.

2.2.3. Orientation, Training and Development

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Orientation gives new employee the opportunity to adapt with

the new surrounding of the organization that he or she enters in. The

focus of orientation is to socialize with to the rules, regulations, and

goals of the organization, department, and work unit.

Training and development activities teach employees new skills

and refine their existing skills. Training is the organization’s efforts to

increase the capabilities of individuals to achieve organizational

objectives. The goal of training and development is to have

competent, adapted employees who possess up-to-date skills,

knowledge, and abilities to perform their current jobs successfully as

well as to prepare them for future job changes.

2.2.4. Compensation

Compensation is the human resource management function

that deals with every type of reward that individuals receive in

exchange for performing organizational tasks – wages, salaries,

bonuses, commissions, benefits, and non financial rewards like praise.

The objective of the compensation function is to create a system of

rewards that is equitable to the employer and employee alike.

2.2.5. Performance Management

Performance management is the process of communicating the

organization’s performance expectations to employees, assessing the

performance of employees’ work quality and outcomes as well as

assessing employees’ future work potential. The organization

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evaluates their employees for several reasons. This includes

determining pay raises, giving feedback, and assessing training

needs. Without evaluations, employees will not know how they are

performing based on company expectations or where they can make

improvement.

2.2.6. Employee Relations

A labor relation is the formal structure that governs the

interaction between an organization’s management and its unionized

employees, for some managers it means reducing hostilities or

employee dissatisfaction. For others they seek to ensure fair and

equitable treatment for all employees.

3.0 RESULT OF THE STUDY

3.1. An overview of the Company

Royal Rainbow Tours was established in 1989. It was first

located on JL. Cikini Raya No.88 Central Jakarta and named as PT.

Griya Dharma Wisata. Since the name of PT. Griya Dharma Wisata is

not very easy to remember, the company uses Royal Rainbow Tours

as its company name. In the beginning, the company only had four

staffs.

In 1990, it received Operational Approval Letter from

Directorate General of Tourism no. 079/IU.BPW/KW.BSP/1990. On the

first year of its establishment, the company was focusing on its in-

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bound tour program in which it covers Java-Bali Tour program. And the

target market of the company was international tourist and domestic

tourist.

In 1992, the company invested on Travel Bus. In the same year

the company had 22 employees. The company continuously focusing

on its in-bound tour program and airlines ticket sales was just a

supplement.

In 1998, the national economics and political situation was

unstable and it had a great impact on the company. The company had

to make necessary adjustment with the not very conducive external

situation. The company has managed to survive, and now it is still

exist with 7 employees.

Royal Rainbow Tours has got two outlets. One is the head office

and the other one is the branch office.

Head office:

Jl. Dr. Muwardi III No.40 Jakarta 11450

Telp.021-530311, Fax.021-56964833

Branch office:

Jl. Kompleks Pertokoan Cempaka Mas

Telp.021-42880509, Fax.021-42880508

The company has a motto “We are tour-packaged specialist.” It

implies that the company is specializing in tour with the fact that the

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economics return from tour program sales is higher than air transport

ticket sales. However, the company start focusing on its air transport

sales as well as the airlines industry is booming in 2002.

Royal Rainbow Tours Organizational Structure from 1992-1999

Shareholder

Director

Manager of Tour Manager of Manager of Finance

Department Transport and
Department Accounting
1 Ticketing staff Department
10 Drivers
1
Cashier
2 Tour staff
5 Co-
Driver

Royal Rainbow Tours Organizational Structure After 1999

Sharehold
er

Director

Tour Department Tour Department

(Branch)
(Head Office)

3 Drivers 1 Ticketing/ Cashier

1 Ticketing/Cashier Staff
Staff

1 Tour/ Transport
1 Tour/ Transport Staff
Staff
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1) Director

To oversee, direct all aspects of Royal Rainbow Tours operation

and receive reports from department manager on the on-going

activities of the company.

2) Manager of Finance and Accounting

To make strategic financial plan and budgeting, record out flow

and in flow cash, control all form of collection in terms of

finance and banking, and write financial report to the director.

3) Cashier

To receive payment from sales and make invoices, distribute

salaries to all staffs, and report to Manager of Finance and

Accounting

4) Manager of Tour Department

To plan, create and organize tour package, supervise ticketing

staffs work, assist ticketing staffs when needed, and write

reports to the director.

5) Ticketing Staff

To make reservation whether by phone or face to face, make

bookings of airlines seats, provide sufficient information on

flight and airlines seats prices.

6) Tour Staff

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To assist Manager of Tour Department in planning, creating and

organizing tour package, and sell and promote tour program

made by Tour Department.

7) Manager of Transportation

To ensure that all vehicles owned by the company are under

good condition, to coordinate, direct, and supervise drivers and

co-drivers based on the program scheduled by tour department

or based on request.

8) Driver

To operate the vehicles owned by the company safely, fetch and

drop off vehicles right on schedule, and wisely use the fuel in

line with tour program.

9) Co-driver

To assist driver in fulfilling his duties

3.2. HR Planning

1) From 1992 to 1999

Whenever there was a very high demand for tour in 1992, the

company had to ensure that it had sufficient number of staffs to carry

out the organizational projects which were quite high in demand.

Therefore, it hired up to 22 employees divided into three

departments. There was a career planning stated implicitly that an

employee had the opportunity to move up into a higher position

particularly in the tour department where the staffs, through

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experience and practices during the work, was expected to able to

handle projects initially given to his/her manager. Therefore, it

stimulated the employees to improve their performance. Yet, the

director, as he explained, faced a dilemma where his best personnel

then was hijacked by other companies, contrasted to the

development process that had been given to the employees since

they were new comers in the industry.

2) From 1999 to present

Major changes occurred in 1999 following the post culmination of

monetary crisis. Demand fell down to its lowest point that reached 0

(zero demand) and called for dramatic efficiency for the sake of the

company’s survival. As a result, 80% of its total workforce needed to

cut off. Once again, the company suffered from poor cash flow and

forced to sell its assets consisting of 3 (three) buses and 2 (two) micro

buses. The money gained was used to pay the fee for the employees.

Those who worked less than 3 years received (one) month salary and

who worked for more than 3 years or less than 10 years received 3

(three) months salary. The fee, however, was paid in 3-month

installment to avoid the company from running out of cash.

The remaining 5 employees are now working on 2 departments both

in the head office and the branch office with direct supervision from

the Director.

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Yet, since 2004 there has been a positive trend in tour packages

demand, so the company is able to keep in business while restoring

its financial condition. According to the director, the average value of

the projects received is IDR 400,000,000 per year since 2004 up to

present and it is enough to sustain the operation cost of the company.

Since then, the company is applying 100% outsourcing employees

for carrying up all of the projects. Due to the strong relationships and

connections among the tour and travel industry, the company is able

to provide tour packages demanded with satisfying service.

Permanent employees work only on administrative tasks at the offices

while field projects are handled by the outsourcing with direct

supervision form the director. There is no specific system of merit at

the company because of its short and thin company structure.

However, to ensure the employees work comfortably, the director has

the initiative to involve the employees in the projects in order to

develop the quality of the employees, in terms of the knowledge in

the tour and travel industry.

3.3. Staffing

In 1996, the director of the company had once advertised job

vacancy on local newspaper. He also said that this method was

impractical, as too many applicants applied for the job. He found a lot

of qualified and unqualified candidates applied for the post. It took

him some time to screen the candidates, so it would be impractical to

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use this method for recruitment. For recruitment process, he would

prefer referral from school or friend. As the director himself was a

teacher in Travel Department of a Vocational School in Jakarta, he

would recruit his student who had just graduated (fresh-graduate) to

work for his travel. Otherwise, he would ask his friend a favor to find

him the suitable candidates to work for his company.

For the selection process, once the director has got several

candidates to fill in certain post, he would do selection process by

interviewing them. The interview process is conducted twice, one is

with the department manager or the senior staff and the other is with

the director himself. There are two basic qualifications in order to pass

the selection process. The first one is intelligence and the second one

is attitude. For staff level, at least the person has to be tourism

vocational school graduates and for managerial level; the person

must minimally have diploma certificates. For tour department, the

person must be able to make tour program and can speak English,

while for ticketing department, the person must be computer literate

and able to use Abacus Reservation System.

3.4. Orientation, Training and Development

Once the employee is hired, he would undergo a three-month-

probation period, including one month training period. Training is

given by the senior employee; the schedule is from 9 to 12 a.m. every

day during the training period. And after the probation period is over,

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the employee will be evaluated whether he will be hired or not. On

special event basis, the company would send its employee to join a

training program, for example: when the company received an order

to cater French tourists, the company enrolled his staff to a French

course, and when there is an invitation for seminar, the company will

send its staff to participate in it.

3.5. Compensation

In the probation period, a staff would receive Rp.15, 000/day for

eight working hour, six days work and one day off, for three months.

After that, once the staff could pass the probation period, then he

would receive a salary which is in accordance with the minimum

payment set by the government. The salary already includes meals

and transport. When the company serves a large group, then the staff

would get an incentive for every field work he does. The incentive

excludes accommodation and meals. Besides that, The Company

gives THR (the 13th salary) for every staff employed.

The company gives its staff health allowance of Rp.10, 000/

month or Rp.120, 000/year. This allowance is given to the staff

whether they are sick or not. However, when the staff has got an

accident or severe sickness which requires more money than the

given health allowance, the company would give more. In addition, all

staffs receive uniform annually, 3 shirt and 2 trousers per year. T-

shirts made for group are given to the employees.

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3.6. Performance Management

There is not strict performance evaluation on the work done by

the staffs in the company. The company evaluates probation staffs

when they have completed the probation period and after that

decides whether to hire or not. This evaluation is based on the

employee’s attendance and comments from the co-worker and the

department manager.

While for the old staffs, the evaluation is based on the judgment

of the director himself. The judgment is based on attendance,

punctuality, honesty, and work done.

3.7. Employee Relation

To promote good relationship with the employees, the company

organized annual outing program for the employees. However since

1999 the outing program is never held, because the staffs refuse it

and prefer to have incentive bonus instead.

4.0 DISCUSSION

As noted earlier in the first chapter, the writer has limited the

area of discussion in acquiring human resource process which

involves human resources planning and staffing of Royal Rainbow

Tours. It is quite interesting for the writer to focus on this area

because of the extreme shift how the company managed its

employees to remain in the business through the hard times during

the economic crisis. The findings have also visualized that the

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modified human resources planning in the company helped its

operational activities in the early years of the crisis and redefined the

way how the company retained profit.

The following are the findings that are of our interests.

1. Shift from manager-centered to director-centered project work.

The writer has found that since 1999 until present, the director

has been the ultimate planner and executioner of the projects

received. His task involves from designing the tour packages until

supervising the ongoing tour packages to ensure that everything is

on the right track. The implication of this activity is that the

director must have a strong sense when he has to hire a new

employee or he will handle the project himself. This is difficult to

measure the degree of the accuracy of the new recruitment based

merely on his feelings, however, experience and wide relationships

have proven that the company rarely suffers from shortage.

2. Modified company’s staffing strategy for cost effectiveness

It is interesting to find that economics is the key factor that

determines the decision made by the director in planning and

managing his staff. The decision made by the director to cut off

80% of his workforce, either for the mid-management level or craft

level as well as the decision to recruit fresh graduates of tourism

vocational schools and reward them with the minimum salary set

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by the government is the strategy implemented by the director to

reduce cost, so that the business can run well.

Thus, it needs kind consideration and tolerance from the staffs

to see that the small-organization where they work in is unstable,

dependent to economic change, full of uncertainty, and do not

offer a very great salary. And also due the nature of the salary they

receives which is project-based, the level of uncertainty is quite

high.

5.0. CONCLUSION AND SUGGESTION

5.1. Conclusion

It seems that there are two opposing arguments on the best ideal

model and best practice of human resource management practice. On

one side, there is an argument that best ideal model of human

resource management should go in line with the theory, and another

argument that the reality says the best practice of human resource

management does not have to go in line with the theory, that the

implementation of human resource management is flexible and based

on circumstances and conditions.

Royal Rainbow Tours principally has followed the theory of

Human Resource Management system, starting from HR planning,

Recruitment and Selection, Training & Development, Compensation,

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etc. However, technically it does not apply one hundred percent what

is mentioned in the theory. It happens because of several factors.

The company applies the human resources management

system simply based on the needs of the company and from the

judgment that the applied system has already fulfilled the company

needs to achieve its goal. External factor, such as national economics

and political situation which influence tourism sector also has affected

the internal economics of the company. It gives an impact on how the

company manages its human resources.

5.2. Suggestion

1. It is suggested for the sake of human resources effectiveness, job

distribution and description among employees are well defined.

Particularly, in the department of tour with above average

workload compared to its counterpart ticketing department. There

should be a redefinition of the director’s task because it is quite

risky to be dependent fully to the director’s decision. This dynamic

industry requires a fast decision maker in order to stay competitive

which can be achieved in the company by optimizing the potential

of the employees. New hires should also be considered for

succession planning.

2. Seeing that the organization is engaged in the industry which is

very competitive, unstable and full of uncertainty, the organization

will need to set strong driving force within the employees while

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fulfilling and maintaining their satisfaction in order to enhance the

quality of the services and productivity of the organization. The

issue does not focus merely on financial matters but also

promoting the employees’ motivation. This can be achieved by

giving more chances to the employees to directly handle the

projects received, with the supervision of the director, to show the

company’s commitment to human resources development.

REFERENCES

Burkat. A.J. and Medlik S. Tourism. Past. Present, and Future.

Heinemann. London, 1981

Chalik, E.A. Dasar-Dasar Pengetahuan Pariwisata. Yayasan Bhakti

Membangun. Jakarta. 1992

Ivancevich, J.M. and Lee Soo Hoon. Human Resource

Management in Asia. Mc Graw Hill Education. 2002

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LAMPIRAN

DAFTAR PENGHASILAN PERUSAHAAN

ROYAL RAINBOW TOURS (PER-TAHUN)

TAHUN JUMLAH (Rp.)

1992 – 1999 1,200,000,000

1999 - Now 400,000,000

DAFTAR PENGHASILAN KARYAWAN

PT. ROYAL RAINBOW TOURS (PER-BULAN)

1999-NOW

POSISI JUMLAH (Rp) BONUS/INSENTIF (Rp)

Ticketing and Tour Staff UMR 500,000-

Driver UMR 2,000,000/proyek

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