Roaring Dragon Hotel
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Employee recruitment was based on Guanxi or connections, favouring nepotism Guanxi or connections of employees led to a large number of income-generating contacts The number of employees were 675 and the Board of Management had 4 members The employees of RDH were proud to be a part of the organization The hotel ensured job security and a relaxed organizational culture for its employees Managers even left the premises during work hours to conduct their private businesses The existing staff members of the hotel, with around 30 years of experience, came from simple backgrounds with no education However, the RDH team as a whole lacked professionalism and efficiency Need for Change
The provincial government felt that RDH needed modernization, because of the following reasons: Management was reluctant to adapt to changing trends in the industry, resulting in a decline in RDH’s popularity and income Management was not keen on generating profit or improving the service standards Adapting to new practices would imply a change in their current working atmosphere HI’s Intervention
With HI coming on board in April 2002, significant changes were made in all sectors of RDH. Also, it was decided that until the quality of service of RDH was brought up to the level of HI’s international standards, RDH would not be branded as Hotel International Roaring Dragon Hotel. The major alterations that happened can be classified under the following heads:
Prior to HI’s intervention, the culture at RDH was traditionally Chinese with nepotism at its core. The organisational culture was relaxed with several employees indulging in private business. Almost all the recruitment was based on connections with as many as 32 families with more than 2 family members working with RDH. Once HI took over the management, they entrenched this non-productive work behaviour. All managers and supervisors worked 8 hours a day and were busy all the time. HI was looking at transforming this relaxed family based employees working under ad hoc management into a professional group of dynamic employees operating within a structured international organisational culture. Infrastructural Changes
HI decided to replace the old section of the hotel by a five star wing. By November 2002, the old section was to be closed and stripped for demolition. This change meant the loss of local Chinese business clientele who did not prefer the lack of privacy in the restaurants of modern section. Employee Management
The decision to close down one of the hotel wings also lead to the problem of overstaffing and redundancy. As a result of which voluntary redundancy package was drawn towards younger staff who were actually excited by the prospect of working in an international set up as opposed to the older lot. Also hiring was on complete freeze. Employees were given two months of training, followed by a month of probation post with the redundancy schedule started. Also the manner in which the layoffs were carried out was essentially non-traditional, no prior notice or reasons were given for firing people. This left a sense of insecurity and depression in the employees throughout the organisation, which in turn led to a lot of employees looking for opportunities elsewhere, resulting in loss of some of the critical industry contacts and Guanxi connections that RDH had built over the years. Management Changes
The hotel’s board of management expanded from 4 to 20 members, with 11 new representatives from Erhi T, the co-owners of RDH. On one hand existing employees were being shown the door and on the other Fortune brought on eight expatriate professionals on board, paving the path for the transformation of an ad hoc management system into a professional international standards management. Business Decisions
Nu Fu Travel, which in the past had had intense business relations with RDH by providing them with customers, was no longer a part of eco system of RDH. All business associations with Nu FU were cancelled and this resulted in loss of business. Also closing of restaurant in old section led to loss of important business clients. Due to all this occupancy of RDH had reached an all-time low of 6%. Severe cost cutting measures were being taken and the funds had majorly dried up.
With reference to the ‘Eight Step Framework for organizational transformation’ mentioned by John P. Kotter in the HBR article titled ‘Leading Change : Why Transformation Efforts Fail’, we can analyze the problem faced in the transformation of Roaring Dragon Hotel into eight parts as follows:
The ideal eight steps required for implementing the change were not followed and there were flaws in almost each of the eight steps. HI should have diligently followed the framework to bring about change in the organization.
1. Firstly, the goals and expectations of both the parties i.e. the Board and HI should have been discussed in depth. HI should have tried to understand that the Board needed short term returns from the RDH and their primary focus should be on the lines of that objective rather than setting up long term goals and targets.
2. A team comprising of members from both China and England should have been formed and they should have been directly responsible for implementing the change in the organization.
3. People from Chinese background should also have been part of the top management.
4. Training about objective behind the change should have been clearly communicated to every employee of RDH, so that the employees at each level are well informed about the need for the change.
5. Proper communication platform should have been developed to regularly inform employees about the change.
6. Proper feedback collection from employees could have been conducted. One-on-one interaction session between the management and employees should also have been arranged to address their concerns because Chinese people would not speak openly about their problems.
7. Responsibilities and expectations of each side should have been clearly mentioned in the contact.
8. Changes should have been implemented in a phase wise and planned manner. They should not have tried to incorporate numerous changes in a short span of time. Further research and time should have been invested to find out exact reasons for the decline of RDH business.
9. A clear metric system should have been developed to track the effectiveness of change at RDH.
10. The younger employees who were more favourable for change should have been retained while the older employees who lacked productivity should have been removed.
11. Senior staff having significant guanxi or connections with agents and government officials who contributed financially to Hotel performance should have been leveraged for the benefit of RDH. The attitude of HI towards the well-connected employees and revenue-generating agents should have been much better keeping in mind the business sense involved.
12. More research and time should have been invested to better understand the needs of agents like Nu Fu and other revenue generating agents which would have helped RDH in long run.