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THE CENTURY HOTEL

On a warm Monday afternoon in late July of 2000, Amir Hassan, the general
manager for the Century Hotel in Dalian, China sat and read the memorandum he had just
received from the senior vice president at the head office in Beijing. The memorandum
pointed out the human resources issues and challenges that his hotel was facing. The
senior vice president wanted him to come up with an action plan and present it in the
annual meeting due for September 2000.

The Century hotel had been opened for a year and unlike other properties in the chain,
Amir’s hotel was experiencing thin gross margins. After reading the memo for the second
time, Amir had realized that a solution was desired that would effectively control the
manpower expense as well as keep the employees motivated.

Amir had confidence in his team, particularly Joe who was appointed as the director of
human resource at his hotel. Joe had a master’s degree in human resource management
from Hong Kong polytechnic, extensive experience in Chinese hotel industry and came
from ethnic Singaporean Chinese background. Amir felt that an overview of the human
resource strategy at Century Hotel in nearby city of Shenyang was essential to explore the
possibilities and resolve human resource issues in his hotel.

Amir felt that a critical analysis of Century Shenyang’ s localization strategy was

essential to his presentation, he also knew there were possibilities for his own hotel to

learn from other Century hotels in the region. Furthermore, Amir had a lot of confidence

in his team, particularly in Joe, the director of human resources. To discuss the situation

and get some input, Amir asked his secretary to call Joe in his office. While waiting,

Amir picked up the phone and started calling the general manager of the Century Hotel in

Shenyang.

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Amir Hassan
In June 1999, after a 40 minutes flight from Beijing, Amir and his wife arrived at
Dalian city international airport. Amir was sent to Dalian to open the fourth Century hotel
in China. The head office in Beijing had provided him with a complete update on the city.
Part of Amir’s orientation, was an intensive two week workshop on cross-cultural issues
and potential organizational problems arising from interpersonal conflicts. Amir had over
twelve years of international hospitality industry experience that included five years of
managing hotels in China, a diploma in hotel management, the status of a certified hotel
administrator from American Hotel and Lodging Association and management training
from the Cornell Hotel School.

Amir began his career in Switzerland in 1990 as a banquet supervisor at the Palace Hotel
in Luzern. From 1991 to 1993 he worked with a multinational lodging firm as project
coordinator. In 1993, he was hired by a Swiss hotel management group for their projects
in China. In 1995, Century Hotels, an international hotel chain hired him to open six
hotels in Northeast China. He continued with the Century for five years as General
Manager and eventually was promoted as a hybrid general manager and regional vice
president operations based out of The Century Hotel in Beijing.

Amir was confident that his extensive experience and hospitality education would enable
him to meet the issues and challenges at the Century Hotel Dalian.

THE CASE STUDY ORGANIZATION

Background and location

The Century Hotel is a 400 rooms’ hotel with five restaurants and a convention
centre. The property is located in Northeast part of Peoples Republic of China in the
coastal city of Dalian in Liaoning Peninsula; Dalian is one of the most important seaports
as well as industrial, ship building, trading and tourism destination in China. Dalian has
clearly demarcated seasons, warm summers, and harsh winters. Dalian abounds with
natural resources and plays an important role in Chinese economy. Dalian covers an area
of 12,500 square kilometres with 5,370,000 inhabitants. The flourishing coastal city of

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Dalian is the major port for China's north-eastern province and has been a magnet for
foreign investors, domestic and international tourists and leisure travellers.

The Century Hotel was a remodelled 4 star hotel managed by an international hotel
management company on a fifteen years management contract.. In 1999, prior to the
opening of the Century Hotel, there were only three other hotels in the city that was
authorized by the government (see Appendix 2 – Hotel Industry in China) to receive
international guests, this included 800 rooms five star Shangri-La hotel, a five star 800
rooms Hilton hotel and a four star 500 rooms Dalian International hotel.

Pre – Opening at the Century Dalian

The opening team comprised of a number of expatriate (see Appendix 1-

Management and Human Resource Practice in China) and mainland Chinese divisions
heads that had extensive management experience in China. This executive management
team included Joe originally from Singapore and working as the director of human
resources, a director of rooms, a financial controller and a director of food and beverage.
All division heads were hired by the head office or transferred from other Century
properties to facilitate the opening of the Century Dalian

Pre-opening recruitment and training

The division heads led the selection, hiring and skills training tasks for their own
departments. Joe being the director of human resources was responsible for maintaining a
close working relationship with all six of the local hotel schools in addition to arranging
job fairs in local hotel schools and placing advertisements in the print media. These six
hotel schools offering two years diploma program and had over 1200 students enrolled
with 1100 graduating each year.

The pre-opening recruitment process was divided into two phases. In the first phase,
Amir wanted to hire the best trained and most experienced local managers for key
positions. These positions included a front office manager reporting to director of rooms,

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six managers for the restaurants reporting to the director of food and beverage, sales
managers reporting to director of marketing and sales and the chief accountant reporting
to the financial controller.

In the second phase, out of 1000 applications that were received in response to the hiring
campaign through job fairs and advertising in national news papers, 500 rank and file
staff was selected after going through a screening and selection process conducted by the
division heads. Prior to the opening, the hotel had required number of rank and file staff.

To meet the organizational needs and overcome the shortage of local managers in Dalian
city, through an amendment approved from the head office on the policy for hiring and
staffing, Amir incited hiring of departmental managers from neighbouring Asian region
as well as from other Chinese cities. According to the amendment, division heads were
required to select qualified local candidates as management trainees for their own
departments. Expatriate and local-expatriate managers were then directly responsible to
supervise the management trainees and complete the training process in a three months
period.

In his meeting with the expatriate and local-expatriate department managers, Amir had
made it clear that hiring of the qualified management trainees with minimum two years
work experience and an undergraduate college degree (see Appendix 3- Hospitality
Education in China) was the first step towards their own career growth and without a
successor it was unlikely that the department head would get an advancement
opportunity. Amir felt that he had successfully convinced them to work towards finding
local managers to replace expatriate management staff.

The department managers were given a timeline to train the management trainees with a
three step approach. In the first step, the focus of the training program was on orientation
of overall operations. Once the trainee had a thorough understanding of operational
process, they were then trained on budgeting, hiring of rank and file staff, performance
evaluations and other administrative duties. The last step was their cross-functional

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training and orientation to improve their decision making skills. Amir had come up with
this three step training plan in order to create a local management team that would meet
the management standards and could be used as a task force to open other Century hotels
in China.

Amir had also asked Joe to include training on prudence in performance of job that would
allow the middle management to evaluate solution alternatives and solve operational
problems. In the situations where alternatives did not provide a direct solution, the middle
management was trained on how, when and why to deviate from routine decision making
through a creative solution that would minimize the effect of deviation.

According to the corporate policy of Century Hotels International, the management was
also appraised on the pre-opening performance. The criteria included recruitment
practice; control of human resource expense and an evaluation of motivation to train. The
performance appraisals that were conducted allowed the department heads and the
management trainees to evaluate the performance in the result of the training.

In addition to the amendment on the hiring policy, Amir and Joe had formulated standard
operating procedures that provided clear and precise information on promotions and
performance awards, open door policy, team performance evaluations. The support
resources for the training included access to training videos and guest comments for
reference. Two English teachers were hired to help improve the language skills of the
local management trainees.

Employee feedback

The Century Hotels International had a human resource policy to conduct an employee
feedback survey at the end of each six months period. The general manager of each
Century hotel was required to conduct the survey and submit the results to the head
office. At the Century Dalian, the first mid management and rank and file survey was
conducted prior to the opening of the hotel. The results showed 94 per cent of the
responding mid-management and rank and file staff were satisfied with the working

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environment, 50% were aware of the management training program and 25% found the
training programs conducted by the department heads to be effective for career
development.

The opening phase

The Century Dalian opened its doors in October 1999. The management team
performed well during the first three months of opening and paid full attention to the
operational issues. The daily morning briefings and Friday meetings were conducted to
resolve and follow up on any operational and human resource problems. By mid of July
2000, despite the initial success in recruiting management trainees, the hotel experienced
an increasing number of serious human resource challenges. Joe pointed out that some of
the departments were facing shortage of qualified and trained local managers for the
department head positions and this shortage was adding work load on the division heads.
Amir was expecting to attract qualified local management trainees through the
amendment in the hiring policy that stressed on the formal education more than past
experience of the applicant. Within the first year of opening, it was noted that the
management trainee would leave the company soon after completion of their training
program. Amir also noted that over 80% of the graduated trainees that joined at the pre-
opening stage had left the Century Dalian.

According to the human resource policy, the second survey was conducted six months
after the opening. The results stated 55 percent employees to be satisfied with the
working environment, 85 per cent were aware of the management training program and
only 15 percent thought that the training programs conducted by the department heads
were of any value to their career development. In addition to that, only 5 per cent knew
about the career development software that had been installed in the computers at the
staff lounge. This software was capable of providing information to the employee on the
amount of experience and the skills needed for promotion including a brief introduction
to the job descriptions of the managerial positions.

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The employee mix

At the opening of the Century hotel, the management was headed by an expatriate
general manager with a team of division heads including, a local deputy general manager
responsible for engineering and hotel security, a director of rooms from United States
overseeing front office and house keeping departments, a director of food and beverage
from Germany responsible for restaurants and banqueting, a local chief engineer
responsible for preventive maintenance and facilities, a financial controller from
Singapore and a local director of marketing and sales to manage the sales team of seven
locally hired sales managers, public relations manager and local marketing functions. An
organizational budget was in place allowing total of 650 permanent staff including rank
and file employees, mid level expatriate and local-expatriate managers. ( see Appendix 1
– Management and Human Resource Practice in China)

The Century Dalian practiced an equal opportunity employment policy, 85% of the
organizational positions were locally filled with a mix of male and female employees.
The front of the house positions such as the front desk agents, food and beverage service
staff and house keeping were mostly occupied by female staff. In the back of the house
areas including engineering, accounts receivables, purchasing and food cost control, male
staff were more prominent.
According to the standard operating procedures, the department managers were
empowered to manage their own departments with minimal supervision from the division
heads and were allowed to delegate tasks according to an authority manual. However, the
department heads continued to micro-manage their operations without proper delegation
to the management trainees using task breakdown. This method was popular among the
department heads due to simplicity of tasks that required minimal training.

Micro-management and lack of empowerment created a vacuum between department

heads and the management trainees. The common hypothesis among expatriate managers
was not to empower their subordinates but to avoid any service and operational problems.

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As a result the management training program was not meeting its objective of producing
local talent for management position.

The Guest Profile

At the Century Hotel Dalian, guests included foreigners, government officials, domestic
leisure travellers, and oversees Chinese business travellers (see Appendix 2- Hotel
Industry in China). Foreign guests were accustomed to well-managed, clean, and well-
maintained hotels. Augmented by language communication problems, these guests could
create stressful situations for semi-skilled hotel staff and the management. The hotel had
been newly opened and the rank and file staff was still under training. The foreigners
staying in his hotel were mostly Europeans and Americans. With their own different
dialects and pronunciations of English language, the staff was having problems with
following simple instructions like room service orders or requests being placed by the
guests for refurbishment of room amenities. Other than language problems, the front
desk operations was also having problems specifically in check out procedures and
occasionally failed to understand the guest’s billing instruction

Amir decided not to advertise and market the hotel unless the organization was ready to
service the individual guest’s needs. He wanted to ensure that the rank and file staff in
guest accessible departments had overcome language barriers through English training
programs and workshops. Amir knew that the guest profile at his hotel required the staff
to be able to communicate confidently and correctly in English language. During the pre-
opening, Amir anticipated the guest mix and had asked Joe to create a language club
where bilingual staff members could enroll. This service was gaining popularity among
guests and had proven to be very successful in offering assistance in French, German,
English, Japanese and Korean languages.

Amir knew that each expatriate manager was costing more than double when compared
to the local managers. In addition to the expatriate division heads and Amir himself, 16
expatriate middle managers were costing the hotel almost 15% towards the overall
profitability. The gross operating profit of the hotel dropped to 30% within first six

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months of opening. This was more than 15% less than the profitability target given by the
head office.

In his monthly report to Amir, Joe had pointed out several problems between department
heads and the management trainees; one problem of much significance - restaurants and
banquet operations were showing the highest employee turnover. In several exit
interviews Joe found that the inflexible and demanding management style of the local
expatriate restaurant managers along with lack of their interest in training were among
the key reasons for the supervisory staff and management trainees to resign.

In December 1999, another international chain advertised for the employment

opportunities in their Dalian property. Within a month from advertisement, Century
Dalian experienced over 60% supervisors resigned. This was a big setback for the
Century hotel because in average of US$3000 per supervisory position had been spent
towards direct training costs. By February 2000, the Century hotel had lost 18 middle
managers to the competition and suffered a loss of over US$55,000 in its investment for
human resource development.

After Joe walked out of Amir’s office and the conference call with the Century Shenyang
GM ended, Amir felt confident on addressing the human resource issues and challenges
and began to prepare his presentation for the annual meeting due for September 2000 at
the head office.