Junction Hotel - Advantages of Rationalization to an Organization - Case Study Example

Rationalization 03 May Rationalization Rationalization can simply be described as the process of restructuring of an organization with an expected goal of increasing its efficiency, subsequently reducing the operational costs and improving the general delivery of service. It can also be simply described as the act of organizing a business using principles of management with a view of forming efficiency, fragmentation of levels of production except one - the CEO, increasing control, and bureaucracy among others. In the Daniel King, Scott Lawley book, ‘Organizational Behavior’, we refer to the Junction Hotel. It’s a highly placed city centre hotel, which has a good history of strong customer service with an added traditional outlook (King & Lawley, 2012). A newly appointed CEO of the Junction Hotel, One Mr. Simon, is hoping to revamp and restore the hotel’s lost glory that it was once credited for. Simon Chance previously had doubled up as a venture capitalist and the president of the Second–Chance consortium and is determined to rise up to the challenge of restructuring the hotel’s operations, appearance and how it runs. The Junction Hotel has slipped to its lowest due to poor management, poor organization, and old operational equipments, with a poorly and deteriorating interior. All these are way far worse description of a hotel that once catered for the high-class clientele and celebrity customers. The poor conditions, coupled with expensive room charges and increased regional competition in the hotel sector have placed Junction Hotel in a very precarious financial position. Chance has come to a decision based on a new business strategy, which he claims is what Junction Hotel needs. This paper is aimed at discussing the advantages and disadvantages that rationalization will have if applied to cut cost and generally improve the current conditions at Hotel Junction, compared to other themes such as social organization, managing the individual, managing the organization, contemporary trends and organizations and society amongst others (King & Lawley, 2012). Efficiency is one of the advantages that rationalization brings to an organization. Efficiency is a method an organization decides to apply for it to attain a specific goal in the shortest time possible, with less effort and costs in relation to the type of industry concerned. It is majorly aimed at fulfilling the interest of customers although it makes the customer get involved in certain activities that would have instead been done for them by service provider; it circumvents the idea as a privilege offered to the customer though they still pay for it. For instance, the aspect of self service in supermarkets, grocery store, withdrawing money from an ATM service and so on, are some of the privileges pursued. Efficiency as an aspect of rationalization can arguably be introduced at the Junction Hotel as the new manger Mr. Simon Chance had requested his colleague Mr. Weaver to come and make survey secretly of the hotel as a customer. After the survey, Mr. Weaver suggested that the hotel was in dire need for a new system and procedures (King & Lawley, 2012). The hotel’s booking-in procedure is too slow and tiresome; checking-in alone consumes a lot of time, as it took a whole 20 minutes as the registration details had been misplaced and the machine was not working. In spite of excellent food, the service was also slow and poor. Chance suggests a comprehensive plan as an option to improve the hotel’s operations and reduce the five year running on losses (King & Lawley, 2012). Chance even suggests of hiring outside catering to improve on the speed of service of food. To achieve efficiency as an aspect of rationalization, Chance can decide to cut on the number of employees, by introducing new systems such as outside catering and well trained machine operators to avoid slow registrations; this will actually result to job cuts and subsequent retrenchment of some unproductive employees. Comparing the aspect of efficiency with other themes such as social organization, we find out that people are social beings who become influenced by the social norms, cultures, peer group, trends and society at large. The individuals have their own personality traits; for instance, some are naturally slow while others just cannot keep time - an example of Linda Wilkinson who arrives at work late, past 8:30 am and furthermore she is not keen on being neat (King & Lawley, 2012). Making managerial decisions basing on the difference in individuals is very important, as it helps to identify factors that motivate each one of them to work harder, including how one can make improvement other than a generalized efficiency rational aspect. Predictability is another aspect of rationalization that an organization can effect in its structures to reduce cost in the long run. Predictability is an aspect, which requires standardization of day-to-day operations of a business or simply a uniform delivery of services in an organization (Ritzer, 1994). Customers normally like to be assured that the kind of services they received last week is the same kind of services they expect to get when they return two weeks later. It’s similar to a culture that they get accustomed to which subsequently affects and determines their interaction with the organization (Hofstede, 1991). The satisfaction, the taste, added benefits, and the organization environment should always remain the same or be improved to add value to customers. Structural changes like modification of interiors through color or shapes might negatively affect customers’ interest of wishing to come back; quality of food and the mode of service delivery should always be maintained at their best. This will maintain the cash flow as customers will keep coming back, hence maintaining the business. The predictability aspect of rationalization has been negatively associated with the employees of Junction Hotel, while Simon Chance and his business guru counterpart Mr. Weaver have a dream of restoring the hotel to its glorious past through several comprehensive measures. The employees themselves predict this as just a mere usual crap, which comes with every new acquisition. Both Linda Wilkinson and the chief Chef Mr. Graham Effingham take it as the same old ways that they have to be accustomed to. They are not keen on the prospective restructuring of the hotel’s operations, as their intention is to see status quo remain (King & Lawley, 2012). Compared to social organization, predictability reduces employees to just mere puppets; (Peters and Waterman, 2012) the creativity required on daily basis to come up with a new invention is thwarted, as one is supposed to follow the instruction or guidelines laid down. Although it gives the manger or people in authority an easy way to either reward an employee for good performance or use the guidelines in punishing an employee who has done a mistake. Skills and capabilities are underutilized, as employees cannot introduce new trends in their line of duty. The guidelines stressed upon can be either the companies visions or missions that any other factor can’t be calmed as a reason to stray away from them as (Collins and Porras, 1994) writes that Visionary companies outperform non-visionary ones by 1500%. Calculability is another aspect of rationalization that the Junction Hotel can apply to cut its cost. It implies that one can measure the type of goals he/she seek to achieve at a specified time. The quantity of the output of a product delivered to the customer is equal to the quality of the product. It implies that every customer at whatever time he/she visits the hotel will get the same product prepared or services offered as before. It is a highly rational system that stresses the specificity of a product or services, and any alterations should not be attempted by any chance. This in effect makes it easier to budget for the business and assist the manger to find ways of reducing costs further as they put more resources to areas that have more demand and less to areas that are weak; furthermore it can be one way that business can use to set targets (King & Lawley, 2012). This also helps mangers to reduce on wastage as they study the amount of resources needed for a particular product or service. At the Junction Hotel, Mr. Weaver and Simon Chance introduce a departmental target, as each head is given an A3 paper with a target that they have to fulfill within three weeks. This to an extent will make the employees to work with a specific goal, which they themselves have set or it has been set for them by their departmental heads, and rather increase on the general level of output. Another factor that is related to calculability that was introduced at Junction Hotel is the standard record keeping, which had not been in existence previously. Streamlining payroll, records of employee’s absence, working history, and daily company worksheets will probably improve the accountability in running of the Junction Hotel, and it will make the manager to assess performance of the hotel and Target efforts to the areas of highest returns (Tawney, 1952). Compared to other themes, for instance, social organization, calculability majorly implies the uniformity of certain behavioral aspects of an employee; however, sociology explores how a society can actually shape people. It does assist human kind to understand that no action can take place without being affected by the environment. Individual experiences as part and parcel of the society as well as who and how we interact should not be ignored or/and unsubordinated to rules and set standards (Pfeffer, 2013). Hierarchical or Bureaucracy or Taylorism rational organizational designs are normally developed depending on the size of the business in which they are used. It usually has one member of staff, the manager, in control of majority of other employees; the hierarchy design resembles a pyramid and shows one main managerial position with a large number of managerial staff who controls specific working departments and developing the chain of command (Steven Lukes, 2005) and (Weber 1978). Bureaucracy normally applies more rules and regulations due to an increased number of employees who have powers over other employees. This is essential to assert discipline and sense of direction, as all the employees have a duty to know who is in charge of their welfare and what they shouldn’t go against (Milgram, 2014). It is also an important aspect, as it clearly demarcates the achievement an employee is supposed to achieve at a given department. This so far makes the employees more efficient as their duties are clearly stated. If bureaucracy is properly structured, hierarchy can release energy and creativity, rationalize productivity and consequently cut costs (Fayol, 1949). In the case of Junction Hotel, Simon Chance and Mr. Weaver decide to implement hierarchical form of organization structure to streamline the operations, which he found in a mess; nobody seemed to know what they were doing but, it was just a conglomerate of disorganized employees. This is highlighted when Simon Chance inquired for an organizational chart from Meg Mortimer, the general manager of Junction Hotel, who seemed clueless and asserted that she knew everybody personally and worked as a friendly group (King & Lawley, 2012). After working at the hotel for the last 25 years, Mortimer still managed employees with a personal touch, although she delegates most of the work to her deputy manager, Mrs. Linda Wilkinson, who seems overburdened. Head Chef Graham Effingham also confirms the disorganizations that go around the hotel, as he has no control over waiters and the kitchen staff, despite of him being the head of the department. Chance makes a decision to bring coherent management and organization to the hotel by developing an organizational structure, defining the line of reporting for each employee and the amount of authority each position holds. This method seems to have solved the problem that had handicapped the Junction Hotel, as the streamlining of the employees structure significantly boosts productivity in the Hotel (Mehrabian, 1977). In comparison to other themes, bureaucracy or hierarchically rational organization assists in the control over a larger number of employees, as mangers reduce the face-to-face control over other employees; they delegate these duties to other departmental heads in the hierarchy. This organizational structure reduces the managerial duties such as disciplinary, supervisory, payroll tasks to other lower hierarchical managers. Commands and rules are only given to other junior managers who afterwards pass them over to other employees in their departments; this creates a sense of differentiation among employees and increases morale and individual creativity; in my bureaucracy is ‘ubiquitous and inevitable’ (Watson, 2006). Rationalization has several disadvantages in its application to cut cost in an organization, and this may have negative impacts on position of organizations that decides to use it. Efficiency basic principle is to quickly attain an organization’s target without spending extra amount in cost, way and above the budget (Evered, 1980). This forces organizations to end up applying methods that are sometimes detrimental to employees and the business as a whole. The issue of self-service, which is one aspect of efficiency, may cause retrenchment of employees who would have been rendered redundant. Efficiency is normally coupled with new technology that is simply regarded better and faster than the ancient ones, which makes it a need for the employees to be forced to learn how to use those technologies. This consumes time and indirectly adds cost to the business, something that is the opposite of what it was initially intended to be for. In Junction Hotel, the threat by the new CEO Mr. Simon Chance implementing outside catering to counteract the slow service being offered by the hotel to its customers attracts mixed reactions (King & Lawley, 2012). This would have subsequently forced a large part of employees to be sacked, though it would still have added cost, as they would have to pay catering service providers way and above what they pay their employees, hence remaining with the problem of high cost of operation. Predictability kills human creativity and it makes their skills dormant, as they keep on doing the same thing over and over again. The idea of maintain the set standard of products of a particular organization makes it so hard for a human being who is naturally a social creature to adapt to what environment offers. This predictability makes employees fear of making mistakes by either accidentally or due to human error or to alter how a product is supposed to be as the standard permeates (Cummings and Worley, 2009). Predictability often tends to introduce automated technology, which maintains a little bit of higher accuracy than human skills in the delivery of products. This implementation of technology further leads to job losses and in effect increases the operational costs to the owner of the organization through operational costs such as skills training, cost of acquisition, repairs, utility costs, and fiscal costs such as taxations (Senior and Swailes, 2012). In the case of the Junction Hotel, the predictability theme of rationalization will adversely affect the company, as the personal touch of employees like Linda Wilkinson had placed on the delivery of her services to the hotel will be threatened; her presence would actually be redundant and subsequently she would be forced out. The rationalization aspect of calculability is disadvantageous to an extend that an organization tends to be at the mercy of the customer. The theory of the customer being the king and also the customer being always right makes the organization to incur extra cost in advertisement and other methods of informing the public of major changes (Meindl & Ehrlich, 1987). In the modern world, advertising has become so an expensive idea for businesses that need to reach a large audience. The idea of maintaining a specific standard of service provision makes it more costly idea; for each change the organization makes on its product, it has to inform its prospective customers either through the print media or visual advertising. This further makes the competitors become aware of the organization’s restructuring and latest changes or acquisition, thereby counteracting this with the same kind of service. For the sake of Junction Hotel, there is stiff competition from competitors such as Travel Lodge; thus, it would be a walk in the park for them to have knowledge on what Junction Hotel is planning to offer to its customers (King & Lawley, 2012). The conditions of the Travel Lodge being at least better compared to Junction Hotel would further help them to improve their services, making them even much better competitively and subsequently attract more customers. Ritzer reiterates that although “efficiency brought by bureaucracy is generally a good thing; it does cause dehumanization of workers, as organizations strive for increase efficiency in their operations” (Ritzer, 1994). Some managers are normally overwhelmed with the type of paperwork they have to go through every day such that they rarely have time to spend with their families. Some positions created through hierarchical system cause a conflict of interest as some positions contradict in relation to the task given to them and the package awarded thereof. Some managerial positions normally don’t match if compared with the package given and the amount of task accomplished; it results to occasional backstabbing and boycotting of duties, which end up causing inefficiency at the organization or even resulting to breakdown to operations (Ritzer 1994). In the Junction Hotel, we see David Hunter, who is the chief accountant, being overwhelmed with paper works, which include daily records, pay sheets, receipts, and payrolls. Graham Effingham, the Restaurant Head Chef, is seen mistreating his juniors - waiters and kitchen staffs - instead of directing his grievances to mangers who are above him and in charge of the whole kitchen. He is even seen denying employees who are sick a sick day off, totally disregarding the chain of command sort of excising his own discretion (Lipsky, 2010). Linda Wilkinson is a soft-touch manager whose juniors misbehave without her taking any action. These actions show how bureaucracy can still make organizations to be inefficient in spite of the organization proclaiming their efficiency (Merton, 1957; Blau, 1964). In conclusion, rationalization helps to cutting costs and increasing the control of the business through hierarchical and bureaucratic means. 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