THE REGENCY GRAND HOTEL – CASE STUDY ANALYSIS

Summary of the Problem

The Regency Grand Hotel was a five-star hotel in Bangkok, Thailand that has been managed
and operated by a local manager for fifteen years. The hotel was very renowned with over
700 employees who really appreciated for being associated with the hotel. The hotel had
provided above industry standard employee benefits and salaries and it came with a high
level of job security. Furthermore, a large, year-end bonus was rewarded to employees
regardless of the employees or the hotels overall annual performance. In fact, the
performance was very good throughout the fifteen years managed by the local manager. It
was also very profitable and successful during the years. Employees had always worked
diligently to achieve the manager’s instructions. However, under the local management,
innovation and creativity were discouraged and employees were punished for their mistakes
and discouraged from trying ideas that had not been approved by management. Employee
worked only according to management’s instructions. They were not allowed to be innovative
and creative. All the decisions were from the management. Because of this, employees were
afraid to be innovative and take risks.
The hotel was then sold to an American hotel chain and the current local general manager
decided to take an early retirement once the hotel changed ownership. Even after the change
of ownership, the hotel chain kept all of the Regency’s employees. John Becker was then
selected as the new general manager due to his previous success integrating newly acquired
hotels in the US. In most previous acquisitions, Becker took over operation with poor
profitability and low morale. Becker had 10 years experiences with the American company.
However, most of his management had been in poorly profiting organizations with low
morale. Quickly after becoming general manager of the Regency, Becker introduced the
practice of empowerment with hopes of duplicating the success that he had previously
achieved in the United States. He also substantially reduced the number of bureaucratic rules
and allocated more decision-making control to front-line employees. They started working
but then realized that their supervisors allowed them to make any decision and they became
demotivated, which affected the performance and profitability of the hotel. Even though
Becker believed that the introduction of empowerment would greatly benefit the overall
performance of the hotel, the business and overall performance began to quickly decline.
After he implemented changes, the employees’ morale also declined, absenteeism increased,
customer complaints increased, and received poor ratings in the media.

Company’s Major Issues

The hotel has some main symptoms indicating that there are certain very serious issues, such
as personality and organisational fit, stress, job satisfaction, job design and role ambiguity,
absenteeism, decision making process and power hierarchy, and high staff turnover. Wen
Backer became the new manager, some employees of the hotel were moved to other
positions. The employees who were moved might not have the skills and capabilities to
achieve the full variety of the new work. Supervisors and some other employees felt losing
power due to the exercise of empowerment (Bakker & Schaufeli, 2008). Then, many of them
left the job.
Another problem was that many supervisors still dealt with minor issues by themselves, not
allowing employees to do so properly. This thing wasted their time. Becker was not very good
at giving minor decision directions to subordinates. The differences turned up when the
management argued with the ideas the employees had given. Because of all this, all the
employees no longer joined and were not very helpful towards each other.
The main tendency for these problems is suspected to be because of the culture differences.
The United States based company failed to research or invested in any culture changes that
might affect employees when they acquired the Regency Hotel. Becker failed to arrange plans
and implement changes. He did not involve any staff in the change process nor did he have a
change agent to help oversee the change process within the newly acquired hotel. Another
tendency that might cause the problems is communication. John empowered employees to
make minor decisions while only elevating major decisions to management. John failed to
communicate expectations of what were minor decisions and what were major decisions.

Solutions and Recommendations

Regarding the tendency to the problem of the differences in cultural dimensions between the
people of Thailand and the people of the United States, as demonstrated in the case, the people
of Thailand tend to value a high-power distance society while people of the United States, and
organizations alike, tend to value a low power distance society. High power distance society’s
value obedience to authority and are comfortable receiving commands from superiors. They
also prefer authority figures to resolve conflicts. Low power distance societies expect equal
power sharing and view relationships with superiors as interdependence (McShane 53). Prior
to the acquisition, the Thai employees have always worked strictly according to managements
instructions and their main responsibility was to ensure that management’s instructions were
diligently met. Becker, under the concept of empowerment, emphasized the freedom of
decision making and autonomy for the lower level employees, which was not successful. The
Thai employees in the case also seem to value a high uncertainty avoidance, while John Becker
emphasized his value of low uncertainty avoidance. One who has a high uncertainty avoidance
feels threatened by ambiguity and uncertainty while one with a low uncertainty avoidance
tolerates ambiguity and uncertainty. As described in the case, “employees had much difficulty
trying to distinguish between a major and minor issue/decision” (Ho 465). This perfectly
depicts that though Becker expected the employees to be able to distinguish between major and
minor decisions and handle the minor decisions on their own, the high uncertainty avoidance
of the Thai people hindered the operating performance of the hotel. The ignorance of the
differences in cultural dimensions between the Thai individuals and American individuals
could have easily been avoided with just a moderate level of cultural research.
For the tendency to the problem of interactions and communications, it is imperative to provide
effective feedback to employees in order to maintain goals and increase motivation. Effective
feedback must be specific, it must be relevant, it must be timely, it must be credible, and it
must be sufficiently frequent. One of the most significant errors in this case was the lack of
interaction and positive reinforcement between management and lower levels employees to
stimulate confidence and allow concept of empowerment to continue. The case states that,
“Employees who displayed initiative and made good decisions in satisfying the needs of the
guests rarely received any positive feedback from their supervisors” (Ho 465). Furthermore,
employees eventually lost confidence in their decision-making abilities and continued to rely
on their supervisors for decision making. By not providing positive reinforcement to the
employees who took initiative and welcomed the concept of empowerment, extinction of the
behavior eventually occurred.
Build a manager/employee guide to communicate the standards, rules, expectations, and define what
major/minor decisions are. Hire a SIGMA 6 facilitator to oversee the process. Provide comment boxes
for suggestions of improvement, feedback, and open communication (Shove, 2010). In addition to
employees Performance appraisals, provide a 360 scoring of managers/employees such as online
surveys. In addition to the first choice, open lines of communication within the organization such as the
open-door policy. Get the whole team involved in the decision-making process through meetings gear
to meeting their needs both for management and the employees. Provide employees an avenue to
voice concerns (anonymous if needed), and address issues on an individual bases (Van Knippenberg,
2000). This alternative provides open communication, training to the entire staff, and both
managers/employees handbooks that outlines expectations, rules, and standards. It also provides an
expert to oversee the process. This should be implementing immediately (Furnham, 2012). Success
and effective change management approaches as given a rough idea in this case should now be
presented to help the employees to put up a new organisational culture and integrate the empowerment
strategy. Empowerment is an outstanding tool to increase the decision-making power and leadership
worth among the employees. The intension of Becker was not bad to put into practice empowerment
but the way he implemented was not right.