Group Project Assignment Cover Sheet

School of Management 21844 Managing Work & People Autumn 2011

Attach a completed copy of this Cover Sheet to the Group Assignment

Our Class Lecturer Our Class Time Due Date: Team Membership (Names of Group) 1

Jana Stone 18:00 October 19th, 2011 Name Signature (all members to sign)

Basil Yakoubi 11118991 Marcella Merck 10944510 Nicole Challita 10924963 Robert Nadj (Turnitin) 11094998 Silvia Acosta Flores 10801429

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Executive Summary
This analytical report of the Regency Grand Hotel case describes the problems and issues that arose as a result of the change in management and the introduction of empowerment for employee motivation. It addresses five key areas of organisational behaviour and explains how it affected the Regencys staff and ultimately the hotels performance with the support of relevant leadership and management theories, concepts and models. Results of this analysis show a decrease in employees job satisfaction and motivation. Further, different cultural attitudes towards management styles are identified, role ambiguity and the deficiency of adequate training to appropriately support staff in the use of the empowerment method were all factors contributing to the low performance of employees and consequently the deterioration of the hotel. The analysis of the Regency case finds that the hotels issues were instigated by a lack of effective leadership and management qualities from their new general manager. The inadequate introduction of the empowerment method without prior detailed investigation of the implications and consequences resulted in poor staff morale and behaviour. This report, through its analysis, endorses the implementation of the empowerment method. This increases leadership abilities and the decision making power amongst employees when applied appropriately and should be performed in a three step process. The analysis is limited to the problems and issues identified in this report and the reasons that led to the deterioration of the Regencys performance. There may be other issues apparent, however, they are outside of the scope of this report and need to be analysed separately.

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Table of Contents
Executive Summary..............................................................................................3 Introduction...........................................................................................................5 Problems and Issues..............................................................................................5 Analysis................................................................................................................6
Cultural Considerations .....................................................................................................6 Performance and Job Satisfaction......................................................................................8 Motivational Factors..........................................................................................................9 Social/Organisational Learning Factors...........................................................................11 Leadership Factors...........................................................................................................13

Recommendations...............................................................................................14 Conclusion..........................................................................................................16

Table of Figures
Figure 1 - EVLN Model........................................................................................8 Figure 2 - Porter-Lawler Theoretical Model.......................................................10

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Introduction
This report presents an outline and analysis of the issues that took place in the Regency Grand Hotel, a five-star hotel in Bangkok. It explains the reasons for the rapid collapse of the hotel after the acquisition by an American hotel chain and what actions can be achieved to revert back to its original high performance culture. This paper pays specific attention to the central issues once the new general manager took over the Regency and the negative impact they had on their employees. It provides information obtained through problem and issue identification and through analysis by applying them to relevant organisational behaviour theories. The information is presented by identifying the main problems and issues, their causes and how they affected the situation. The five key issues analysed are; cultural differences, performance/job satisfaction, motivation, social/organisational learning and leadership. Each topic highlights the major weaknesses that occurred and provides an explanation for the causes by using appropriate models or theories. This paper provides comments and makes recommendations as to how to improve the Regency Grand Hotels current performance, based on the findings of this analysis and solutions offered in organisational behaviour theories and models.

Problems and Issues

Prior to its acquisition, the Regency was a highly successful operation, providing Bangkok with a world-class facility and the opportunity for 700 locals to work in a prestigious and rewarding environment. When the new general manager, John Becker, began to implement changes, the hotels performance quickly deteriorated.

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The most basic problem was that he applied the concept of empowerment without understanding the local culture or the employees temperament, and without careful planning of the implementation process. The range of problems that followed were a symptom of his boorish approach. Whether it was the escalating level of mistakes, absenteeism and turnover of employees, the lack of support and communication between staff, the increasing frustration felt by Becker himself, or the complaints by guests and negative media advertising, it can all be attributed to Beckers ill-informed plan to empower employees who were accustomed to following rules. Becker failed to consider cultural differences between Thailand and the United States, where he had achieved success with a similar approach. He failed to recognise what provided job satisfaction and the motivational factors that would enable employees to do their job well. He gave no thought to social and organisational learning issues. Becker did not even grasp his own shortcomings as a leader or manager. The following section provides a more detailed examination of the key issues identified and uses organisational behaviour theories to analyse the topics.

Analysis
Cultural Considerations Typical of the Thai style of management (Yukongdi 2010), under the previous administration hotel employees were expected to comply with strict instructions. However, Becker was led by his past successes to implement a policy of empowerment in which employees were authorised to make minor decisions. The resulting problems that arose from this policy manifested themselves in a number of ways. Firstly, as a consequence of the reduction of bureaucratic rules, the role of some of the managers or supervisors who previously enjoyed the associated decision-making power was reduced. Some of these staff members left the hotel, presumably due to the perceived loss of status.

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Secondly, employees found it difficult to take on the additional responsibility, especially with regard to deciding whether an issue was minor and, therefore, within their jurisdiction. This was exacerbated when supervisors began to contradict employees decisions. The problems faced by Becker were in part due to his misconception of the Thai culture. What worked in hotels in the United States is not necessarily transferrable to a hotel operating in Thailand. Hofstede (2001) provides an insight for Beckers failure. His four dimensions of culture, namely, Individualism versus Collectivism, Power Distance, Uncertainty Avoidance and Masculinity versus Femininity, reveal why Beckers approach was ineffectual in the Thai context. Consider two of the more important of these dimensions. Thailand ranks high in terms of Power Distance (Hofstede 2001). This indicates the societys acceptance of an inequality of authority and power; an acceptance which cuts across all levels of society. The Regency employees were, therefore, very comfortable in their acquiescence to management staff and managers were accustomed to directing their subordinates. This dimension is demonstrated by the response of both employees and managers. As stated above employees, who were accustomed to following strict rules, found it difficult to take on the role of decision-making. Managers also struggled with the idea that their authority would be diluted. This is evidenced by the apparent unease that some of the managers and department heads exhibited when Becker presented his notion to them. It was certainly evidenced when management staff began to resign from their jobs. According to Hofstede (2001), Thailand is also ranked high in the dimension of Uncertainty Avoidance. A major probable reason why the hotel had been so successful in the past was that senior management had implemented administrative control, with its strict rules and bureaucratic procedures. With the dilution of the rules and procedures, Thai employees may have become uncomfortable. When their attempts to assume additional responsibility seemed to fail, either because their decisions were reversed or good outcomes were unacknowledged, they retreated back to their comfort zone.

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As a society characterized by high Power Distance and Uncertainty Avoidance, and also as a Collectivist and Feminine society, Thailand is culturally different from western countries (Yukongdi 2010, p.162).

Performance and Job Satisfaction Argyle (1987) discerns that job satisfaction manifests itself as employee happiness in the role or within the organisation. He asserts that content employees are more efficient and have a higher job performance influenced by personal values, job acceptance and organisational culture. These essential factors for staff satisfaction diminished at the Regency through the introduction of the empowerment strategy. To understand the reason for their unhappiness the EVLN model from Hirschman (1970) (shown below) is utilised. It outlines four behaviours of employees responses to job dissatisfaction.

E N Mod VL el
E xit Voice

Org anisation

L lty oya

Neg ct le

Figure 1 - EVLN Model (Source: Hirschman, A. O. 1970, Exit, voice, and loyalty: Responses to decline in firms, organizations, and states, Harvard University Press, Cambridge, Mass., p. 83)

Exit employees search for another role within the organisation or an exit to another organisation. Voice employees attempt to solve the problem with management. Loyalty

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employees wait patiently until the problem is resolved. Neglect employees reduce the work effort and pay less attention to details and increase absenteeism and lateness. The first manifestation is exit. The Asian culture fosters the hiding of emotions compared to western countries where people are free to show their emotions (Markus & Kitayama 1991). Asian employees are not likely to complain, but look for another role or exit the organisation. The second element in the model is voice. Thai employees avoid confrontational situations and respect their jobs and the hierarchy level (Bond & Hwang 1986). Becker stressed very clearly that mistakes were allowed but not the same mistake more than twice. Employees were fearful of raising or voicing complaints to facilitate their jobs or change management perceptions. Loyalty is a behavioural attitude. In Asian cultures staff would rather work with some level of dissatisfaction and wait patiently for the problem to get resolved by others (Hofstede 2001). Employees in the hotel always worked under management instructions, therefore they were afraid to take any responsibility and rather wait for problems to go away. The last manifestation is Neglect. The situation for staff at the Regency became stressful and the number of mistakes made by employees increased. Subsequently absenteeism due to illness, staff turnover and blame games accelerated. These are symptoms of the neglect element. Following the analysis, the hotel employees developed a number of symptoms of job dissatisfaction linked to the empowerment approach. However, the change in management style was not necessarily the driving force of job dissatisfaction.

Motivational Factors The motivation of employees is vital for organisational success and therefore it is crucial for management to understand how to improve the quality, effectiveness, intensity and consistency of personnel performance (Kressler 2003).

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Motivational staff behaviour can be explained by applying Lawler and Porters (1968) theoretical model, which is based on Vrooms (1964) expectancy theory that workers should elect the degree of effort that has the maximum motivational power. Whilst Vroom (1964) in his theory discusses only the motivational force, the model from Lawler and Porter (1968) (shown below) considers the entire employees performance (Miner 2006).

Figure 2 - Porter-Lawler Theoretical Model (Source: Lawler, E. E. & Porter, L. 1968, Managerial Attitudes and Performance, R. D. Irwin, Homewood, Illinois, p. 17)

The model asserts that successful performance [6] (where [x] refers to the block number in the model) by an employee depends on effort [3], abilities [4], and role perception [5]. The effort itself is contingent on the importance of the reward [1] and a persons perception of a reward probability for the effort invested [2]. Successful performance [6] can create intrinsic rewards [7] such as a feeling of accomplishment or self-actualisation as well as extrinsic rewards [8] individuals think should receive for their work, such as praise, promotions or recognition (Lawler 1969). The employee feels satisfied [9] when either an intrinsic and/or extrinsic apparent reward is existent. Applying this model to the case of the Regency clearly shows a functioning interaction of all components of the model before the new management took over. There was the effort

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component by the employee due to the existence of rewards being valued like job security and an above market salary as well as the employees confidence that effort will result in the desired reward. The performance component of the model was fulfilled by the employees effort, a clear job and line of authority definition and the ability to perform the task. Supervisors or workers felt satisfied with their status and rewards, they enjoyed being associated with the hotel. This is in complete contrast to the situation after Becker used empowerment for employee motivation. Due to non-performance there was no satisfaction, either amongst supervisors or workers, as the expected extrinsic rewards like praise for good decisions were rarely given and intrinsic rewards didnt result in employees feeling the task had been successfully completed. Most of the workers reverted back to letting superiors make decisions and supervisors, who had decision making power previously, left upset. According to the model this affected the effort component due to the rewards not being valued as well as the employees conviction that their effort did not result in the desired rewards. No training was provided to increase the staff ability and the role and authority hierarchy were not clearly outlined to them. These deficiencies became apparent as there was an evident increase of mistakes made by employees and, combined with the lack of the effort element, consequently influenced the accomplishment component of the model and resulting in the nonperformance. The model of Lawler and Porter (1968) outlines the low morale and motivation employees demonstrated after the introduction of empowerment by the new management.

Social/Organisational Learning Factors Robbins et al. (2001, p. 124) defines learning as any relatively permanent change in behaviour that occurs as a result of experience and identifies three theories: Classical Conditioning, Operant Conditioning and Social Learning The focus of this report is on Social Learning and Operant Conditioning and the role they played in the hotel. Classical Conditioning is not considered.

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Robbins et al. (2001, pp.126-127) describes Operant Conditioning as a type of conditioning in which desired, voluntary behaviour leads to a reward or prevents a punishment. He asserts that Social Learning is a model where individuals acquire their knowledge through observation and direct experience. Learning from peers at work is identified by Boud and Middleton (2003) as a very important tool in the work place. However, there was no one in the hotel that had experience with the empowerment management style; consequently there was no opportunity for social learning to take place. Only a few of the front line staff members were shown what was expected. No one, neither in the management hierarchy nor on staff level, was able to observe and learn from each other how to implement and apply the new strategy. There are three key parts to Social Learning identified by McShane, Olekalns and Travaglione (2010) that are involved in Organisational Learning and should be implemented by managers to help enable the future sustained success of a business. These are the acquisition, sharing and usage of knowledge. There was no opportunity to obtain new knowledge as Becker did not provide a source. There was no sharing because there was no team unity in the hotel after the changes were implemented; the disunity was caused by confusion and frustration throughout the reporting lines of management. The staff, as a result of the confusion and ineffective use of the new information, made mistakes which led to punishment, low morale and poor performance. These negative side effects eventually led to staff abandoning the new initiative strategy. This rejection of the new strategy can be put down to Operant Conditioning (Robbins et al. 2001). Employees were experiencing more negative feedback for their efforts than praise or other extrinsic rewards as outlined in the motivational factor section of this report. They would rather go back to the way they had known than deal with the stress of the new system. Schultz (2011) identifies a number of key aspects to sustained improvements; the first of which is to identify what needs improving and why. A concept known as the Systematic Research Anchor (McShane, Olekalns & Travaglione 2010) is a means of evidence based management. It involves researching and drawing information from available resources. Becker, however, did not gain information through his supervisors or other means. He acted on the symptoms, but failed to research the nature of the problem.

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Leadership Factors Cultural differences, job dissatisfaction, motivation and social/organisational learning have been identified and discussed as some of the key behavioural issues employees at the Regency displayed. These problems ultimately started to surface after empowerment strategy was implemented by the new management; hence it is essential to focus on and examine Beckers leadership. This analysis is limited to his leadership only and ignores other levels of management within the Regency. The emotional intelligence theory of leadership is used in support of this analysis and to clarify the source for the behaviour staff exhibited. Armstrong (2008) explains this theory as the aptitude of leaders to assess themselves and the skill to be conscious and to regulate their own emotions. He describes the fact, that intelligent individuals know their own strengths and flaws and the unproductiveness of being led by emotions. Further, he identifies five elements of emotional intelligence: the motivation, empathy and self-awareness components of this model are considered in this report. Self-regulation and social skills are ignored. According to the theory, motivation requires the leader to display continuous optimism even in the face of failure (Armstrong 2008, p. 27) and a predisposition to actively pursue objectives (Goleman 2004). Although Becker realised that staff consulted him more often, he instructed his secretary not to disrupt him except when the hotel was on fire, exposing his lack of motivation. Empathy involves the competency of understanding the emotional state of other people and to respond accordingly. It comprises sensitivity for other cultures and the ability to train and retain talent (Armstrong 2008). Becker only managed hotels in the United States before being assigned to the Regency and, as explained earlier, cultural differences and social/organisational learning issues became apparent. Hence it was imprudent of Becker to apply the methods he had employed in American hotels and, in addition, not only did he fail to provide adequate means for his staff to learn new skills, he also did not undertake any effort to gain new knowledge or additional information for himself.

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Jansen (2006) describes self-awareness as the most complex, but also as the most critical component of the emotional intelligence theory. This component influences all other elements and involves the competency of leaders to recognise and understand their own attitudes, emotions, needs and how these affect others. Further, it requires the leaders selfconfidence and realistic self-assessment. Becker should have realised that the Regency was different to his previous assignments. It was a fully functioning organisation that was highly profitable as opposed to his prior engagements where operations were making losses and he had to manage unmotivated staff. He also never questioned the source of his own exhaustion, frustration or why, contrary to his expectations, the performance of the hotel degenerated. These symptoms of Beckers behaviour indicate his lack of self-awareness and may also explain why he did not recognise the absence of employees motivation and job satisfaction analysed in this report.

Recommendations
Although his implementation approach was highly questionable, Beckers objective in introducing empowerment is to be highly commended. Therefore, it is recommended to retain Becker as general manger of the Regency and assign him an expert in teaching managers to increase their emotional intelligence. This can be learned (Goleman 2000) and would assist Becker in his self-assessment. Further, Becker requires cross-cultural training and study of the various ways individuals from other cultures think, believe, perceive and behave (Falcitelli & Dean Leung 2004). Chemers (1969) concluded that cross-cultural training increases the group-situational control for the leader in a different culture from ones own. Further, in the short term, it is recommended that Becker reverse the changes he implemented until the hotel begins to function successfully. In relation to the Thai culture, Yukongdi (2010, p.177) found stronger positive effects on employees perceived level of inuence in decision-making, satisfaction with participation and job satisfaction with a non-autocratic style of leadership. Based on this finding, in the longer term, it is recommended to continue the approach of empowering staff to perform their work more effectively. The

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implementation of this method should be realized through the three stages of empowerment theory (Dell & Michael 1993) judge, act and command. The first phase, judge, is to build good judgment and share information. Becker did explain to managers and department heads that empowerment would be introduced and what he expected from employees. However, this is far short of the kind of information that is required to build good judgment. Becker must establish an open communication channel to ensure management and employees understand the goals and mission of the hotel, of their own particular department and their own roles within the organisation. Armed with this information, employees will feel they are part of the hotel and capable to judge how they can contribute to its success (Dell & Michael 1993). Once employees are in a position to make good judgment, they ought to be given the opportunity to act. This means that they are to be given some latitude to try out ideas and make mistakes. Beckers approach to allow mistakes to be made twice does provide that latitude, but he must be careful not to apply the rule too rigidly as it may discourage employees from persisting in their tasks when mistakes are made. Equally damaging is the practice of reversing decisions made by employees (Dell & Michael 1993). If the decision does not have dire consequences, it would be better to retain it so that the employee learns from experience. The manager must stand back and allow the employee the room to make decisions, act on those decisions and then self-correct if the result is undesirable. Finally, employees are to learn to command, that is, to be able to make decisions in new and challenging situations. They need to be empowered to decide on any changes that need to be made or call on any resources that are required to complete their task. Armed with good information and the confidence to act, the employee will have little trouble advancing to this step (Dell & Michael 1993). As Dell and Michael (1993) also suggest, managers must model this process so that the employee learns how to ask, explain, correct and praise. Beckers first task is, therefore, to implement and model the new concept to his managers and department heads. Once they absorb the process, they can pass it on to their direct reports until all employees are trained and a new culture develops within the hotel.

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Conclusion
This report analyses some apparent problems in staff behaviour and explains the reasons for the poor performance of the Regency Grand Hotel after the establishment of new management. The focus has been on identifying employee behavioural issues and other relevant requirements for organisational effectiveness by applying appropriate academic theories to analyse these problems. As a result of the analysis, it is concluded that the issues and problems experienced by the Regency are a direct result of the methods applied to implement empowerment by its new general manager, Becker. Becker failed to consider different cultural attitudes towards management; he failed to consider how the changes would affect staffs job satisfaction. Further, he did not consider what motivated employees and ineffectively managed them through the changes he introduced. He also failed to consider their abilities and experience and did not implement any adequate training or learning mechanisms. The key issues are analysed using relevant organisational behaviour theories and models, however, the utilisation of other concepts and theories, like team dynamics, decision making or communication theories, in combination with this analysis may provide a deeper insight into this case. The recommendations are based on what is believed to be the pathway towards returning the Regency Grand Hotel to a profitable business with employees who appreciate being associated with it.

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References
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Jansen, J. 2006, You want me to work with who? : Eleven keys to a stress-free, satisfying, and successful work life no matter who you work with, Penguin Putnam, East Rutherford, NJ, USA Kressler, H. W. 2003, Motivate and Reward, Palgrave Macmillan, Houndmills, Basingstoke, Hampshire and New York Lawler, E. E. & Porter, L. 1968, Managerial Attitudes and Performance, R. D. Irwin, Homewood, Illinois Lawler, E. E. 1969, Job design and employee motivation, Personnel Psychology, Vol. 22, no. 4, pp. 426-435 Markus, H. R. & Kitayama, S. 1991, Culture and the self: implications for cognition, emotion, and motivation, Psychological Review, vol. 98, pp. 224253 McShane, S., Olekalns, M. & Travaglione, T. 2010, Organisational Behaviour on the Pacific Rim, 3rd edn, McGraw-Hill Australia Pty Ltd, North Ryde, NSW Miner, J. B. 2006, Organizational Behaviour 1 : Essential Theories of Motivation and Leadership, M.E. Sharpe Inc., Armonk, NY, USA Robbins, S.P., Millett, B., Cacioppe, R. & Waters-Marsh, T. 2001, Organisational Behaviour: Leading and Managing in Australia and New Zealand, 3rd edn, Pearson Education Australia, Frenchs Forrest, NSW AU Schultz R. 2011, Making it all work: a pocket guide to sustain improvement and anchor change, Routledge, New York Vroom, V. H. 1964, Work and Motivation, Wiley, New York Yukongdi, V. 2010, A study of Thai employees preferred leadership style, Asia Pacific Business Review, vol. 16, no. 1-2, pp. 161-181

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