Recently purchased by a large American hotel chain, the Regency Grand hotel, located in Bangkok Thailand, is an example of prestige, with a 5-star rating. For the past 15 years it has almost always performed well.
John Becker has been appointed as head manager of the newly purchased hotel. He is renowned for successfully turning around other newly purchased hotels that were underperforming. However, his strategy of employee empowerment was not properly implemented at the Regency Grand hotel. This has resulted in many organizational issues such as high stress, increased absenteeism, an increased turnover rate, as well as many other problems.
It has been revealed that these problems have largely been attributed to a lack of communication to employees about their roles, a lack of consideration about the local culture, and a failure to fully assess the situation beforehand. At this point, some symptoms of the issues are beginning to show, such as decreased customer satisfaction and negative reviews. Becker has four options to remedy these organizational issues, before he loses control of the situation. His options include implementing; a strict chain of command, with no room for innovation; strict chain of command on decision making, with room for innovation; simply empower his employees empower; or empower his employees with a new supervisor role. The most logical course of action would be to still maintain an employee empowerment strategy, but add a new role of supervisor that would act as a decision consultant for fellow employees, while working alongside them. It maintains the benefits of employee empowerment strategies, while providing additional direction for the expectations of employees. It will be implemented immediately through the use of meetings, and proper training. Problem Statement
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The Regency Grand Hotel, located in Bangkok Thailand, has suffered from a decline in overall performance since the newly appointed manager, John Becker, attempted implementing employee empowerment strategies without success, within the newly acquired hotel. Sandra Chakri, the Senior Vice President of Human Resources for the large American hotel chain’s Asia-Pacific region, has been tasked with assessing the situation and recommending a plan of action to the Hotel chain’s senior management team. Situation Analysis
Introduction
The Regency Grand hotel has enjoyed being considered one of the most highly rated hotels in Bangkok Thailand, since its grand-opening 15 years ago. Under the previous management, employees enjoyed a number of benefits, including a year-end bonus that was worth about 4 month’s salary. The previous management also maintained a strict order of procedures, which limited employee’s ability to make their own decisions about their work.
After the large American hotel chain purchased the hotel, John Becker was posted as the hotel manager at the new location. In his 10 year career, he has become renowned for turning around other newly purchased locations of the American hotel chain which were preforming poorly. The key to his success has always been empowering his employees.
John Becker applied this same strategy at the new hotel and as a result, the employees, who are used to a strict hierarchy of order, have become unorganized and inefficient. This has caused both the levels of employee job satisfaction, and customer satisfaction to fall. Recent- customer reviews have all been negative, and many media outlets are writing negative reviews about the hotel.
Sandra Chakri, the Senior Vice President of Human Resources for the large American hotel chain’s Asia-Pacific region, has been tasked with coming up with a recommendation in order to address the organizational behavior problems that have arisen. She is to submit her plan to the hotel chains senior management team as soon as possible. Organizational Behavior Symptoms & Issues
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* Employee morale and Job satisfaction are suffering
* Absenteeism is on the rise.
* Employee turnover rates are at a record high.
* Increased stress levels.
* Employees are unmotivated.
* Employees lack independent decision making skills; lacking empowerment.
* Employees are requesting advice more frequently on making decisions.
* Employees are unable to distinguish between decisions that they are responsible to make, and decisions that management is responsible to make. * Employees lack confidence in their decision making skills. * Poor communication between management and employees.
* Employees are not entirely aware of what is expected of them. * Employee’s decisions are often overturned by their supervisors. * The new power structure was never clearly outlined. This has led to confusion and uncertainty about the roles and responsibility of employees. * Management failed to seek out employees opinions on how they should be managed. * Management failed to include employees in overall decision making process. * Lack of a reward system.
* Employees do not receive feedback, even after making good decisions. * The only reward system in place, the year-end bonus, is given on such a regular basis it is now, more or less, an expectation. * Failure of management to take cultural differences into consideration. * John Becker, who has only so far worked at American locations, was posted to a foreign country. He may not be fully knowledgeable about the local culture. * No studies were conducted to see if differences in culture could have any effect on implementing an empowerment strategy. Consequences not looked into. * The new strategy does not take into consideration differences between American and Thai employees in their power distance, individualism, collectivism, and uncertainty avoidance. * The relationships amongst employees, and with their supervisors were never taken into account. STEP Analysis
Social-Relationships between employees were not taken into account.-Cultural differences were not addressed.| Technological| Economic-Customer dissatisfaction causes decreased profits.| Political (Environmental) -Media is writing negative reviews about the hotel.| SWOT Analysis
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Strengths * Considered to be one of the most prestigious hotels in Bangkok. * Maintains a five-star rating. * Employs 700 people who have all worked for the hotel under its previous management. * Employees are knowledgeable of how the hotel should operate. * The new manager, John Becker, does have 10 years of experience as a manager. * John Becker does have experience in managing newly acquire hotels. * John Becker has managed to turn hotels around before. * John Becker is knowledgeable of what Employee Empowerment is.| Weaknesses * Employees are still too used to the way the previous management conducted its business. * Employee motivation is on the decline; absenteeism and stress are on the rise. * Job satisfaction is suffering the turnover rate at a record high. * Communication about expectations between supervisors and employees is severely lacking. * New power hierarchy was never properly developed and outlined to employees. * Management has not taken into account the needs and wants of both the employees and supervising staff. * There is a lack of feedback between management and employees, when employees do make good decisions.
* Management has not taken cultural difference into account.| Opportunities * The management team at the hotel still has the opportunity to turn the performance of both the employees and supervisors around. * A fresh and more efficient work environment can be made. * An Employee empowerment strategy can still be successfully implemented. * If management manages to turns things around at the hotel, it will be able to regain its status as one of the most prestigious hotels in Bangkok, Thailand.| Threats * As a result of the current events, the Regency Grand hotel’s public image has been hurt. * As a result of the poor service provided, some media are now dubbing the Regency Grand hotel as “one of Asia’s nightmare hotels” * If management fails to address the problems and weaknesses arising from recent events, customer perception will continue on a downward negative trend.|
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Organizational Problem Analysis
The change between the previous Thai management, to the current American management at the Regency Grand hotel, has caused a number of organizational issues. These issues have accumulated, and are now leaving the new owners in charge of a faltering employee base, and a previously prestigious hotel that is now considered to be a nightmare by media outlets.
Under the previous Thai management, the Regency Grand hotel had almost always been successful, enjoying a 5-star rating. The power hierarchy under the previous management was clearly outlined, and stressed following management’s instructions. It involved a chain of command starting off with employees, who would then make inquiries with their managers, who would then have to document the decision to the general manager. Employees made very few of their own decisions, and would be punished for any mistakes they would make. Innovation and creativity were also frowned down upon.
However, employees did enjoy a number of benefits such as a sizeable year-end bonus that was worth about four months’ pay. Also, the employee’s salary at the hotel was paid out at a value above the market rate, and employees also felt that their job was secure.
Becker’s criterion for employee empowerment has always involved letting employees have greater decision making authority. His style of management pushed employees to become more innovative and “think outside of the box”, in order solve every customer’s problem on an individual basis. This style of management is radically different from the previous management’s strict chain of command for decision making authority.
Becker has taken some steps to implementing his new employee empowerment strategy. He first explained to the management team that he would be allowing greater employee decision- making authority, as well as greater employee innovation and creativity. He did maintain that larger decision making would be left up to management, and that repeated mistakes would be punished. Becker has also attempted to convey these changes and new expectations to his employees through one-on-one interactions with them.
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While this was a first great step to implementing the new employee empowerment strategy, it failed to fully outline the expectations to everyone on the management team, and all of the employees. The response many of the members of the management team gave, strongly hints that they either did not understand the new changes, or simply are unenthusiastic about them. The way in which employees showed great difficulty in making decisions, also hints at a failure by Becker to communicate what kind of decisions employees are expected to make, and what is to be left to managers.
The combination of confusion in decision making authority, and penalization for repeating mistakes, has led to an increased frequency in employees seeking advice from Becker. This has perpetuated the problem of employee’s poor decision making skills, as it does not address the big issue. It simply solves the current problem.
Another large problem that has resulted from this failed implementation of employee empowerment has been a decline in employee motivation, as made evident by the increase in employee turnover rates, and increased absenteeism. This can be attributed to Becker’s failing to take cultural differences, and the relationship dynamics of the employees into account.
All cultures are different, and some will exhibit different cultural values than others. Exhibit 1 displays the cultural values the Thai employees exhibit, in comparison to the results of cultural values displayed by Canadians as reported by; (D. Oyserman, 2002).
The culture of the- Thai employees at the hotel is clearly reliant on authority, with a high power distance. The employees are also still clearly not used to the idea of individualism, leaving many employees dependent on authority to make decisions for them. Becker failed to look into these cultural differences when he implemented his employee empowerment strategy. As a result, a strategy that has been successful for their American counterparts, simply does not work for the Thai employees at the hotel, as it was not implemented accordingly. Becker gave the employees more decision making power than they were ever used to, and failed to properly train and introduce them to a strategy that incorporates their cultural values.
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Another large issue that Becker failed to fully look into is what exactly motivates the employees, and then utilizing this to his advantage when implementing his employee empowerment strategy. The year-end bonus the previous management awarded employees is an expectation more or less as it would always be awarded regardless of the businesses’ financial outcome for the fiscal year. Becker missed his chance to implement a simple reward system by not having his managers give positive feedback when employees go above and beyond what is required of them. This is not only an important factor of employee empowerment, but also plays a big part in an employee’s drive to acquire. Positive feedback is a great tool to motivate employees.
Becker’s failure to actually study the relationship dynamics amongst the employees also allowed a negative influence on their motivation to occur. Becker did not take their social norms, personal values, and very little of the employees past experiences into account, before implementing his empowerment strategy. These three factors all have a direct influence on the four motivational drives, and will directly affect an employee’s mental set in making goal-directed choices and thus their ability to make decisions. Had Becker looked into how these- factors would affect employees when they were introduced to the new strategy, he may have been able to take these factors into account, and apply his strategy accordingly. Exhibit 3 shows how these factors influence employee motivation, and decision making skills.
Finally, the lack of employee motivation, in combination with the confusion from the decision making process has resulted in a great deal of stress. This is evident by the record high employee turnover rate, and the increased frequency of employee absenteeism. The final result of the high stress, low motivation, and lack of job satisfaction, is that it decreases service quality, which in turn has a negative effect on customer satisfaction, which can harm the overall profitability for the company. This effect can be seen from start to finish in exhibit 2. This flow chart makes it obvious that poor organizational practices affect every aspect of the service experience within an organization. It shows how Becker’s poor implementation of his empowerment strategy will have a negative influence on employees, as well as customers, and as a result the hotel’s profitability.
It is also worth noting that not all of the organizational issues are being caused by the employees and Becker. Many of the managers at the hotel are exhibiting organizational issues as well. When Becker told them about his plan to implement empowerment, many only nodded their heads. This shows that they are not entirely open to the proposed changes, and are not fully disclosing their opinion with Becker, thus increasing their hidden area. Their blind area is also fairly wide as they do not provide the positive feedback the employees need. Exhibit 4. As a manager too, Becker’s open area is also in a similar position. External Analysis
As a direct result of the organizational issues, customer satisfaction has fallen. This is made evident by the increasing amount of complaints from customers to employees, and to the management team. It has gone as far as some media outlets now dubbing the Grand Regency hotel as “one of Asia’s nightmare hotels”. Assumptions
One important bit of information that the case fails to explain is if the employee bonus at the end the year remains in effect. It would be safe to assume that the new management would not want to anger its employees by taking this bonus away, but it is worth noting that this isn’t a guarantee. Implications
Some of the consequences from the improper implementation of the employee empowerment strategy are already evident. Because employees are confused with the decision making process, they are seeking out advice on making decisions more often. This inevitably leads to increased wait times for customers, and as a result, decreases customer satisfaction. A very serious consequence arising from poor customer satisfaction is negative reviews, both from customers and other media outlets. This will further taint the Regency Grand hotels image of being a prestige hotel, and will cause the hotel to lose new customers, and even loyal customers. As exhibit 2 clearly shows, customer satisfaction, and customer loyalty all have a direct influence on profitability. If customer satisfaction decline, it can be expected that profitability declines as well. Alternatives
1. Strict chain of command, no room for innovation.
2. Strict chain of command on decision making, but room for innovation.
3. Empower employees.
4. Empower employees under a new supervisor role.
1. The most straight forward option would be to revert back to original chain of command, in which employees would have to consult their managers on every decision they make, and then have those managers document it to the general manager. Under this scheme, employee innovation and creation would be discouraged, unless permission is given to them by their managers.
This alternative would be very easy to implement because it is what the employees are already used to, and only minimal additional training would be required. Only John Becker would have to become acquainted with this style of management. This course of action has already worked for the hotel in the past. However, it does not allow any room for employee innovation, which could prevent new ideas and employee opinions from reaching management. This would keep the open area in exhibit 4 to a minimum, and maximize the hidden and blind areas, as a result of lack of feedback from employees to their management and vice-versa. In the long run, management will lose out on ways it could perform better, since employees are not disclosing feedback. Also, employee motivation may fall, as a result of having no empowerment. Pros| Cons|
-Employees and the management team have experience with this alternative.-This alternative has proven successful under the previous management team.-Easy to implement; minimal additional training.| -Does not empower employees.-Not allowing employees to innovate and be creative will prevent management from learning better business practices that suit employee and customer needs.-Employee motivation may suffer in the long run.
2.Taking a twist on the previous management’s strict chain of command, another course of action would be still utilize a strict chain of command for any decision making, but allow room for employee innovation. Employees would still have to clear decisions with management, but they would be encouraged to think up new ideas on how they could make their work more efficient. For example; if an employee in the housekeeping staff realizes that costs can be minimized by using one particular multi-cleaner, they would be welcomed to continue to do these practices. However, employees would still require permission from management on decisions such as moving a customer to another room.
A major drawback to this course of action is that employees could very well likely be confused between what innovation is, and what a decision is. Innovation requires an employee make a decision on whether a task can done more efficiently if it is done differently, and this is where the confusion would occur. Although some obvious decisions are outlined as being strictly up to management, using this strategy would still confuse employees not knowing what is being innovative and what is making a decision. While it does open some of the open area in exhibit 4 into the blind area, it still maximizes the hidden area as employees will still be unsure of what is expected of them. Pros| Cons
-Employees would be allowed to innovate.-Employees would slightly be empowered.-Could bring new ideas to the table in how the hotel could improve its business practices. -The line between innovation and decision making is too blurred.-Would cause confusion.-Does not solve organizational issues fully.
3.Becker’s original strategy of empowerment could be re-implemented, in a more organized and successful fashion. It would require Becker to train and bring everyone on the management team, and all of the employees to an understanding of what employee empowerment is, as well as what kind of decisions employees are allowed to make. Roles would have to be clearly outlined. Management would be in charge of large accounts, as well as administrative and financial decisions. Employees would handle more day to day decisions, such as moving a customer to another room.
While this strategy failed to be implemented the first time, there is still time to successfully implement it. If it is done correctly and clearly, confusion about roles could be kept to a minimum and the transition could go over smoothly. To successfully implement this strategy, management must keep in mind that it must maximize the open area, in exhibit 4, by providing feedback to employees, and disclosing what their roles are. Clearly outlining these two criteria will prevent confusion, and as a result increase job satisfaction, which as exhibit 3 shows, will increase customer satisfaction, and thus profitability. However, if this plan is not implemented correctly the situation could fall back to the way it is now.
-Empowers employees.-Allows innovation, which will in turn improve business practices.-Increases employee satisfaction as well as customer satisfaction, and thus increases profits.| -This strategy has already failed to be implemented correctly once.-Very similar to what is in place now. Although it would include additional training, the lines between employee’s decisions and managerial decisions could still be blurred.
4.Another way of empowering employees, while minimizing confusion, would be to still empower employees in the same fashion but incorporate supervisors into the strategy. These supervisors would simply be employees who have proven themselves capable of making decisions, and will consult other employees in their area needing help on distinguishing what kind of decision they can make, and other inquiries about decisions. Generally, there should be at least one supervisor per area (i.e.; housekeeping, front desk) at all times. These supervisors do not have the same level of authority management has. Their only extra authority is being designated to help other employees. An additional pay rate may be considered, if it is financially possible.
This employee empowerment strategy has all the benefits of both empowering employees, and having a chain of command. Designating employees who have proven themselves as good decision makers rewards them, and provides clear feedback on their skills. It also motivates other employees to strive to become supervisors themselves, as it would be a title of respect. This strategy clearly outlines the roles of employees, and what is to be expected of them. All in all it is the strategy that maximizes the open area the most, as it provides clear feedback and concise disclosure.
-Empowers employees.-Allows innovation, which will in turn improve business practices.-Increases employee satisfaction as well as customer satisfaction, and thus increases profits.-Sets out clear roles for employees.-Provides a new form of reward that will motivate employees.| -Some employees may feel jealous that they are not considered capable enough for the new role, and thus lose satisfaction and motivation.-The employee who is acting as supervisor may have a difficult time due to the extra workload.|
Recommendation
Empowering employees is a great way to increase job satisfaction, and employee motivation amongst employees. This in turn increases customer satisfaction. All this inevitably leads to increased profits, as exhibit 3 clearly illustrates. Empowerment requires an employer to grant employees additional autonomy in making decisions. Also, if employees are to be able to successfully utilize an empowerment strategy, they will require feedback on their work. Rewarding employees, even through non-monetary means, motivates them and discloses on how they could improve. However, one of the most important aspects with empowering employees is clearly outlining the roles and expectations of employees.
One solution to clearly outline the roles of employees, while still empowering them, would be to create an additional rank of supervisor. These supervisors would not be managers, but would have additional authority than normal employees. They would be responsible with consulting employees needing help with making a decision, and any other day to day inquiries, before having to go to management. This solution provides a clear outline of roles and expectations, that simply empowering employees does not provide.
The biggest issue with strict chains of command is that they do not allow room for innovation. Allowing employees to innovate helps a business evolve in such a way that it allows employees to carry out their jobs more efficiently. Another big issue with strict chains of command is that they do not motivate employees to the same degree empowering them dose. When employees have autonomy, they feel far more compelled to carry out their responsibilities in the most efficient ways possible.
Empowering employees and having a team of supervisors is also more in line with the culture values that the employees at the hotel have. The culture values at the hotel, having a high power distance, places an importance on respecting authority. Adding this additional authority role will give employees direction of what their responsibilities are. Supervisors will lead by example, making it easy for employees to be aware as to what is expected of them. This new role will also provide employees with incentive to strive to achieve the title of supervisor, as it will be a form of feedback on their excellent work. While some employees may feel jealous that other employees at the same level as themselves are granted additional authority, the respect of authority in the culture should outweigh the feelings of jealousy. This same feeling of respect will also motivate employees in this role to continue to work harder. Action and Implementation
The implementation of the alternative will begin immediately. The first and foremost action will be to host a meeting with the management team, and then host another meeting with the general employees. These meetings will disclose what responsibilities the new role of supervisor will include, as well as go over what is to be expected of employees. To ensure that the management team and employees have an understanding of what their roles are, and what the new role is, they will be given a written test at the end of the meeting.
In the honor of democracy, employees will vote on who they believe should be promoted to supervisors for their respective area. This is the fairest way of choosing these new figures, and will decrease the likelihood of retaliation by unsatisfied employees. The management team will then be tasked with teaching these new supervisors what is exactly to be expected of them. The new supervisors will then start to work, with management keeping an out on their progress. If the manager feels that this employee is not suited for the role of supervisor, then they are encouraged to appoint someone else in their area to the role of supervisor. After several months, if this plan works out, an additional pay rate for the supervisors may be appropriate. Contingency plan
Should the new supervisors fail to prevent the current confusion from perpetuating, or if employees retaliate too much against the new system, it would then be appropriate to go back to the strict chain of command. This sets out a clear hierarchy in which there is minimal confusion, and the employees already have experience with such a system. There is simply too much confusion in the other chain of command, and simply empowering employees would risk reverting back to the current problems. A clear hierarchy keeps employees working efficiently, and thus keeps customers satisfied with the service provided.
Sources
D. Oyserman, H. M. (2002).
Rethinking Individualism and collectivism: Evaluation of Theoretival Assumptions and Meta-Analyses. In Psychological Bulletin 128 (pp. 3-72).
Thousand Oaks CA: Sage.
