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REGENCY GRAND HOTEL CASE STUDY Assignment 1 MGMT20124—People, Work & Organisations Term 2, 2011 Prepared and Submitted by Gratiela, PALADE s0187412 Tutor: Melissa Stevenson Due Date: 30 August 2011 Executive summary This report analyses and evaluates the introduction of employee empowerment strategy to Regency Grand Hotel, a successful business of 700 employees established by local investors and acquired by an American Hotel Chain, considering the impact employee empowerment had on employee performance and the reputation of Regency Grand Hotel.
It will examine employee empowerment strategy and explore the issues associatedwith the introduction of such strategy, using academic literature and evaluating online sources and other publications. Researched points to introduction of employee empowerment as a valuable strategy if a business is to succeed and survive in this age of globalisation, recommending proper introduction of the strategy, and taking into consideration issues such as cultural differences, job design and emotional intelligence.
Culture is very important and different from one country to another, so understanding it will give an organisation the ability to use it to its advantage. A good job description and understanding of the decision making process will make employees more effective and efficient, while understanding an individual’s own emotions and the knowing how to manage it would give the individual a competitive advantage. Material examined suggests few alternatives. One is to introduce the new strategy and gain a competitive advantage, keeping in mind the factors which could influence the process and manage them before they become a problem.
Second alternative may be to go back to the old strategy and hope everything will work out or continue with the current process and hope for the best. The recommendations made to Regency Grand Hotel were to keep introducing the new employee empowerment strategy as it will give results and help it in this new age of globalisation, but look at how cultural differences, job design and emotional intelligence have negatively impacted the strategy and try to correct the errors. Study Thai culture and use it to benefit the organisation.
Look more closely at job descriptions and decision making process to make it easier to follow and understand. Finally study emotional intelligence to understand employee’s emotions and how to manage them. Table of contents 1. 0 INTRODUCTION…………………………………………………………………………………………………………… 5 1. 1 Background …………………………………………………………………………………………………………… 5 1. Aim ………………………………………………………………………………………………………………………. 5 1. 3 Scope ………………………………………………………………………………………………………………….. 5 2. 0 LITERATURE REVIEW …………………………………………………………………………………………………… 5 2. 1 Henry Ongori 2009 ……………………………………………………………………………………… 2. 2 Raub S and Robert C 2007……….. …………………………………………………………………………………….. 5 2. 3 HsiungHH and Tsai WC 2009 …………………………………………………………………………………… 5 3. 0 DISCUSSION ………………………………………………………………………………………………………………. 6 3. 1 Employee Empowerment ……………………………………………………………………………………….. 6 3. Cultural Differences……………………………………………………………………………………………….. 7 3. 3 Job Design …………………………………………………………………………………………………………….. 7 3. 4 Emotional Intelligence…………………………………………………………………………………………….. 8 4. 0 OPTIONS ……………………………………………………………………………………………………………………. 4. 1 Employee Empowerment………………………………………………………………………………………… 9 4. 2 Cultural Differences ……………………………………………………………………………………………… 10 4. 3 Job Design……………………………………………………………………………………………………………. 10 4. 4 Emotional Intelligence…………………………………………………………………………………………… 10 5. CONCLUSION ……………………………………………………………………………………………………………. 10 6. 0 RECOMMENDATIONS ………………………………………………………………………………………………… 11 REFERENCE……………………………………………………………………………………………………………………. 12 List ofTable and Figures Figure 1: Elements of Empowerment (adapted from Ongori 2009) …………………………………. Table 1: Hofstede Index (Hofstede 1980) ………………………………………………………………….. .. 7 Figure 2: ELVN Model (adapted from McShane 2010) ……………………………………………………. 8 Figure 3: Emotional Intelligence Model (adapted from McShane 2010) ………………………….. 9 1. 0 INTRODUCTION 1. 1 Background Regency Grand Hotel is a successful five star hotel in Bangkok, established by local investors, who sold it to an American Hotel Chain.
John Becker, a man with a good history in organisational management became the General Manager and introduced a new empowerment strategy as an aspect which would increase the success of the hotel. However his policy did not improve the performance of the organisation, customer complaints increased and mistakes employees made increased as well. The overall performance of the hotel therefore deteriorated. This report is based on the above case study found in McShane, S, Olekalns, M and Travaglione, T 2010, Organisational Behaviour on the Pacific Rim, 3rd ed. , McGraw Hill, North Ryde, NSW. 1. Aim The object of this report is to evaluate employee empowerment and how its introduction will increase the success of an organisation. It will focus on factors which need to be considered when a new strategy is implemented stipulating whether the new strategy would work and recommending ways to introduce a new strategy. 1. 3 Scope The report will examine material relating to employee empowerment and how it is linked to organisational success, concentrating on employee empowerment in connection with cultural differences, job design and characteristics as well as emotional intelligence.
It will analyse different theories associated with these factors and will consider the options management has. 2. 0 LITERATURE REVIEW 2. 1 Ongori, H 2009, ‘Managing Behind the Scenes: A View Point on Employee Empowerment’, African Journal of Business Management, Vol. 3, p 9-15, viewed 8 August 2011. Employee empowerment is a strategy widely used in management to enhance employee performance and reduce turnover, enabling organisations to succeed in this era of globalisation.
Research done by Henry Ongori ascertains that employee empowerment works, if it is managed and nurtured properly it will reduce employee’s turnover and increase organisations success. In his paper ‘Managing behind the scenes: A view point on employee empowerment’ Ongori, illustrates how empowerment benefits employees and organisations and suggests strategies for success in employee empowerment (Ongori, 2009). 2. 2 Raub, S, Robert, C 2007, ‘Empowerment and Organizational Citizenship: Moderation by Culture in a Multi-National Sample’, Academy of Management Annual Meeting Proceedings, p 1-6.
Studies done by Raub and Robert have linked employee empowerment to cultural difference and in particular power distance. According to Raub and Robert cultural differences and in particular power distance play a major role in the empowering process. They paper ‘Empowerment and organisational citizenship: Moderation by culture in a multi-national sample’ explains how cultural differences affect empowerment, encouraging organisations to understand cultural differences and use them in the empowering process (Raub and Robert, 2007). . 3 Hsiung, HH, Tsai, WC 2009, ‘Job definition discrepancy between supervisors and subordinates: The antecedent role of LMX and outcomes’, Journal of Occupational ; Organizational Psychology, vol 82, issue 1, p 89-112. An investigation was also done by Hsiung and Tsai into job description and design to better understand the relationship between leaders and subordinates, and their view of job description and design.
Hsiung and Tsaipaper, ‘Job definition discrepancy between supervisors and subordinates; The antecedent rot of LMX and outcomes’ determined, leaders and subordinates view job description and design different, which let the authors to suggest jobs specification be clearly defined and explained by leaders to subordinates, avoiding discrepancies and misunderstandings (Hsiung and Tsai, 2009). 3. 0 DISCUSSION 3. 1 EMPLOYEE EMPOWERMENT Employee empowerment is a significant concept used by every employer to some extent (Fox, 1998).
The concept has benefited many organizations through managing and enhancing employee commitment and reducing employee turnover (Ongori, 2009). According to Ongori 2009, employee empowerment is a state of mind comprised of elements shown in Figure 1 below. RESPONSABILITY ACCOUNTABILITY POWE R CONTROL EMPOWERMENT DECISON-MAKING Figure 1: Elements of Empowerment (adapted from Ongori, 2009) When executives are empowering employees ‘they are changing the work environment to support the feeling of empowerment’ giving employees decision making power, control, responsibility and accountability.
This change cannot take place unless employees have the necessary skills to take control and ‘handle the additional decision-making requirements’ (Mcshane 2010, Olekalns ; Travaglione, p222, Monen 2001) In the case of the Regency Grand Hotel, new management introduced empowerment practice expecting employees to go beyond guidelines and standards to consider guest needs on a case to case basis. However it did not equip employees with necessary skills to make decision, take control and be responsible, as a result empowerment did not have the desired effect.
Employees who understood and used empowerment were not encouraged while employees who did not understand how to use empowerment were not encouraged to learn and develop the skills necessary for empowerment. 3. 2 CULTURAL DIFFERENCES While empowerment is commonly used in organisations to motivate employees, its success or failure is directly linked to cultural values which need to be understood, as they are very powerful forces operating outside our awareness but impacting our organisation’s life (Raub& Robert, 2007 and Schein, 2010).
Research confirms, countries like United States and Australia have different cultural values from most Asian countries including Thailand (McShane, Olekalns&Travaglione, 2010 and Hofstede, 1980). Table 1 of Hofstede’s index, point out power distance and uncertainty avoidance is very high in Thailand and very low in United States while individualism and masculinity are very low in Thailand and very high in United States. Country| Power Distance| Individualism| Masculinity| Uncertainty Avoidance| Thailand| 64| 20| 34| 64| U. S. A| 40| 91| 62| 46|
Table 1: Hofstede Index (Hofstede, 1980) Analysing the table above it is easy to understand why Mr Becker’s empowerment approach was very successful in United States while it failed for Regency Grand Hotel in Thailand. His approach in the case of Regency Grand Hotel failed to take into considerations Thailand’s cultural values and as a result it failed. Raub and Robert (2007) studies ‘suggest that attempts to empower workers in countries with high average levels of power distance might be less successful than they would be in countries that have lower levels’ (Raub and Robert, 2007, p6). . 3 JOB DESIGN Employees are motivated and satisfied more when jobs are well defined and characteristics are high. Further studies suggest ’employee’s job definition differ from their supervisors’ resulting in discrepancies with negative consequences (Hsiung and Tsai, 2009, p 89, Bratton et al 2010). Job design is the formal specification of job responsibilities, duties and ‘the interdependency of those tasks with other jobs’ (Bratton et al 2010, p 213 and Hsiung& Tsai, 2009).
It is important to define jobs correctly and complement them with employee’s skills and ability. An organisation’s goal should be to create jobs which motivate, engage and have employees with high job satisfaction, while at the same time allow work to be effectively performed (McShane 2010). After the acquisition of Regency Grand Hotel some employees were transferred to different positions however, new management did not take into consideration the skills and abilities of employees.
The process of restructuring and transferring employees, failed to take into consideration the need for new job designs. Regency Grand Hotel employees and management perceived the new jobs differently, and as Hsiung and Tsai (2009) studies suggested discrepancies occurred (Hsiung and Tsai, 2009). Top management became frustrated and employees showed the ELVN model dissatisfaction responses in Figure 2 below (McShane 2010). EXIT – General manager took early retirement VOICE – some employees displayed initiative but no feedback DISSATISFACTION RESPONSES
NEGLECT – reduce work quality and as a result – more complains & guests dissatisfaction LOYALTY – employees stayed and reverted to old practices Figure 2 ELVN Model (adapted from McShane 2010) 3. 4 EMOTIOANL INTELLIGENCE When organisations go through tough times, emotional intelligence works to improve strategic advantage and proves ‘to be twice as important as any other competency in a job'(In the Australian Business Training 2011, p 1-4, Vise 2011). If cultivated it would give an organisation the support it needs to keep on track and achieve its goals in adverse circumstances (Vise 2011).
In general emotional intelligence improves an individual social ability and is described as a combination of personal and social competence (Vise 2011). It is the ability to manage personal emotions and help people control emotions, deal with frustration and get along with others (In the Australian Business Training 2011). Figure 3 below identifies the four dimensions of emotional intelligence which recognise emotions in individuals. RELATIONSHIP MANAGEMENT MANAGEMENT AWARENESS SOCIAL AWARENESS SELF SELF EMOTIONAL INTELLIGENCE Figure 3 Emotional Intelligence Model (adapted from McShane 2010)
These four dimensions of emotional intelligence give an individual the ability to know their own emotions and manage them as well as perceiving and managing the emotions of other people. The fact Mr Becker became frustrated and exhausted to the point of not communicating with his subordinates, suggests he was not aware of his own emotion and did not know how to manage them. Moreover he was not aware of his subordinates’ emotions and did not know how to manage them either, not understanding the difference between east and west culturally appropriate communication.
This lack of emotional intelligence knowledge was also visible in the subordinates as they were unable to stop employees from leaving. 4. 0 OPTIONS 4. 1 Employee Empowerment The eastern way of managing expects individuals’ roles to subordinate to the demand of the group, the power of relationship and obligation and the structure and hierarchy. A successful eastern organisation has individuals who passively accept their role and try to perfect it, at the same time respecting the organisation hierarchy.
Managers should try to break the cultural difference and power distance barriers before trying to implement a different strategy (Dean Foster Associates, 2011). Ongori’s (2009) research suggests the introduction of empowerment, which is a western way of managing to be very critical if an organisation wants to succeed and survive in this globalisation environment. He additionally implies the introduction of empowerment will provide benefits to both individual and organisation, but it also has the potential of failing because of well established patterns and attitude of employees (Ongori, 2009).
Empowered employees feel valuable, committed and part of the decision making process, while organisations become more effective and top management work load will become more manageable (Ongori, 2009). 4. 2 Cultural Differences All countries have an unequal power distribution, but some have a higher level than others and according to Hofstede, eastern countries, like Thailand have a very high level of power distance.
This means employees in Thai organisations accept the unequal distribution of power and managers endorse it as well (ITIM International, 2011). While western countries have a low level of power distance and employees are more likely to question manager’s decisions and demand a justification of the unequal distribution of power (Hofstede, 1984). Future studies done by Raub and Robert, recognise power distance as one of the problems facing global organisations.
Even though the study identifies this western approach, as a problem when empowerment is introduced in high power distance countries like Thailand, it is not something which should discourage organisations ‘because there is variability among individuals within all countries’ (Raub and Robert, 2007 p 9). 4. 3 Job Design Job design should be clarified and a consensus of job content should exists between employees and management to avoid frustration and dissatisfaction alternatively employees of Regency Grand Hotel will continue to leave or rustrate management. A study conducted by Hsiung and Tsai in 2009 advised managers to pay more attention to job design and characteristics because employees and managers perceive job description and characteristics differently. A clear job design will motivate employees perform better, reduce dissatisfaction and the work of management, on the other hand an unclear job design will lead to job dissatisfaction and no motivation to perform resulting in inefficiency and employees leaving (Hsiung& Tsai, 2009). 4. 4 Emotional Intelligence
Recent studies suggest a link between emotional intelligence and cultural differences identifying the close relationship which exists, between understanding emotional intelligence and knowing how to apply its elements in the context of culture. An experienced manager should familiarise with the country’s culture in order to ‘incorporate one or more of the components of emotional intelligence to effectively match the needs of a particular culture, thus leading the organization towards desired results’ (Reilly and Karounos, 2009, p 4).
Being an experienced manager, Mr Becker should have the ability to understand cultural difference and intermix it with one or two emotional intelligence elements, using culturally appropriate communication. Future studies done in the area of emotional intelligence suggest the manager’s ability to manage their own emotions and manage the emotions of others will help them be successful. ‘Emotional intelligence has as much to do with knowing when and how to express emotion as it does with, controlling it’ and it should be considered in the context of culture(Cherniss, 2000 p 7). . 0 CONCLUSION Some of the problems experienced by Regency Grand Hotel after acquisition could have been avoided or reduced dramatically if cultural differences, in particular power distance, were considered before the introduction of employee empowerment. Employee empowerment produced a lot of confusion leaving employees feel unclear about job requirements and expectation, while producing extra work for management, making it unable to understand and