Company Analysis: The Regency Grand Hotel - Essay Example

? Company Analysis: The Regency Grand Hotel Company Analysis: The Regency Grand Hotel Introduction To oversee the changes in an organisation is full of challenges. There are umpteen numbers of relations and processes in an organisation that are difficult to fully understand. The Bangkok based Regency Grand Hotel was owned by local investors for fifteen long years. Thereafter, the five-star hotel was transferred to an American hotel chain. However, the merger was not so smooth without any issues. This work looks into the management style of the new manager John Becker and the issues that arose as a result of the transition and the new management style. Soon after the introduction of the new employee empowerment strategy, Becker found that there was a rise in stress levels, employee absenteeism, and employee turnover. In addition, there was a fall in the relation between the management and the staff. Also, the relationships among the employees were significantly strained. Analysis Acquisition The new American hotel chain did not conduct extensive industry audits and study of the corporate culture of the acquired firm, probably due to lack of experience. Evidently, it failed to identify and tackle the key areas that are necessary for a transition. In fact, in such mergers, there are a large number of issues involved. The first issues is that as Malekzadeh and Nahavandi (1988) identified, when there is a merger or acquisition, the acquirer is more likely to believe itself to be more knowledgeable about the industry and the products. Similarly, Stanwick (2000) points out that for the acquired, there is total uncertainty as they find it a chaotic situation where it is uncertain as to whether the acquirer will support their long cherished values and beliefs. Admittedly, the previous manager of Regency grand hotel was a Thai national who exhibited a bureaucratic management style where employees were totally reliant on the management for decisions. However, the new manager John Becker wanted to introduce an American management style which promotes employee empowerment. However, as Feldman and Murata (1991) point out, effective communication, management approach and practice are very vital when there is a merger and all these things were seriously deficient in the case of Regency grand hotel. As the employees of the acquired hotel already had certain degree of skepticism about the new management, it was very necessary to mitigate such feelings and to ensure job security before resorting to considerable changes in management practices. Evidently, the policies did not take into account the existing culture of the organisation. If cultural and communication issues were addressed with adequate importance, this situation would not arise. Communication An important issue that affected the Regency Grand Hotel merger was lack of communication. Dooley and Zimmerman point out that merger is to be treated like long term relationships where communication is very important. There is a number of communication issues involved in this particular case. First of all, the management failed to communicate with the acquired employees to ensure them that their fears of job insecurity and cultural undermining are ill-founded. In addition, it was for the management when it wanted to introduce the management changes in a hurry to ensure that the new strategies and culture are well introduced to the existing employees, and also to address the areas where there is a possibility of friction. As a result, the stress and anxiety that were created in the employees as a result of the acquisition were elevated through the immediate change in the management style where the employees were made to take independent decisions. Without clearly understanding the values and principles of the new management, the employees were in danger of getting fired in case of a wrong decision. This only exaggerated the already existing fear of job uncertainty and the hostility the acquired normally feel towards the acquirer. This uncertainty and fear resulted in more employee errors and more customer complaints. In the case of Regency Grand Hotel, the problem was that the management failed to communicate with its acquired employees about the new strategies and plans. Also, it did not try to mitigate the tensions and fears in the acquired employees before introducing its new strategies. Worsening the problem, the employees did not receive any training to get used to the totally new strategy where they are supposed to take decisions independently. Stress Undoubtedly, the new management style of ensuring employee empowerment promotes creativity and innovation. However, it was the way the strategy was implemented that created the problem. As Gertsen, Soderberg, & Torp (1998, p.85) points out, it is important to measure, evaluate and then manage the cultural differences before and during the integration of a merger. This is especially important when there are cross-border mergers. Gertsen et al defines stress as the disruptive tension that arises when members of one culture are required to interact with a second culture and adopt its ways. According to both the anthropological theory of social movements and the psychological theory of procedural justice, acculturative stress arises due to the unfulfilment of an expected state of affairs. In the case of Becker, it seems that he forced the acquired organisation to simply adopt and follow the organisational culture, structure, and practices he brought from America. However, he evidently forgot the tension. This approach can create and also the need to have extensive cultural training when such cross cultural mergers occur. As Buono and Bowditch (2003, p. 128) point out, merger and acquisition have profound impact on the employees as such a change can considerably alter the organisations structures, systems, processes, and culture of the firm. So, it is pointed out that a merger is followed by a drastic decline in the perception of job security. Inability to introduce new culture and values In the case of the Regency Grand hotel, the introduction of new policies did not take place in the proper manner. Firstly, it did not take into account the cultural differences, and secondly, it did not identify if the company has the capabilities and resources to manage around the cultural differences. Instead of assessing and acknowledging the existing company culture, Becker immediately changed to the new empowerment mode, but it was not preceded by proper training, nor did he wait for a step by step transition over time as communication and interaction improve. The mere fact is that Becker was almost totally unaware about the cultural issues and forces related to such a merger. A study by Haruyama, Muto, Ichimura, Yan and Fukuda (2008, p. 183-187), shows that even the announcement of a merger results in considerable amount of stress and anxiety in the acquired employees. Lack of proper coordination when the new strategy was implemented Admittedly, Becker failed to ensure coordination of the activities when he introduced his new strategy. In addition, as the executives of the acquired and acquirer companies were not given proper role definitions, they were in total confusion regarding their roles. This made the functioning of the acquired staff that already feared a possible bias at the hands of the foreign management all the more difficult. This only increased the existing stress and hostile attitude the acquired employees are likely to develop towards their new management. Thus, Becker evidently failed in ensuring that there is proper coordination and understanding among staffs and executives about the existing system, required changes, and the expected role of each member. To illustrate, the empowerment itself was not well-prepared. For example, the ones who tried to utilize the empowerment found themselves oppressing their supervisors or other colleagues. For example, a front counter boy who decided to give a guest a room-upgrade without the permission of a supervisor found himself rebuked as the supervisor thought the action was detrimental to the profitability of the organisation. This kind of confusion and role ambiguity were to be removed before implementing the new strategy. Recommendations Based on the above analysis, the following recommendations are made to solve the issues in the Regency Grand hotel. The solutions are aimed at improving employee performance, reducing stress and effectively shifting to the new strategy. The first solution is to remove role ambiguity by clearly defining the role of each and every employee and the areas where they are supposed to take independent decisions. In order to promote the staff confidence, it is necessary to give proper training on how to use this empowerment. To take effective decisions, it is necessary for the staff to have a deep understanding of the values of the company. The second point is to ensure proper communication with the staff. This can be done through cultural events, various meetings, and other programs that give the employees a chance to interact with the other cultures, and thus, to remove cultural bias and fears. The next thing is motivation. The employees who properly adapt to the new management style should be motivated through proper staff appraisal. This may involve recognition through words, money or promotion. This is because evidently, motivation will help alter the attitudes of the existing employees. Lastly, Becker should change his management strategy altogether. Evidently, he has failed to effect a good merger as he miserably failed to adopt any of the standard procedures as suggested by scholars and to understand the cultural and communication issues associated with mergers. To sum up, it is evident that the issue in Regency Grand Hotel was the result of poor assessment of cultural issues associated with merger, poor implementation of new corporate strategy, poor communication, and poor coordination. By improving these fields, the problems can be solved considerably. References Buono, A. F & Bowditch, J. L. (2003). The Human Side of Mergers and Acquisitions: Managing Collisions Between People, Cultures, and Organizations. USA: Beard Books. Dooley, K. J & Zimmerman, B. J. (n.d). Mergers as marriages; communication issues in post-merger integration. Health Care Management Review, 1-34. Retrieved from http://www.public.asu.edu/~kdooley/papers/mergermarriage.PDF Feldman, M. L & Murata, D. K. (1991). Why mergers often go ‘pfft. ABA Banking Journal. Questia, 83. Retrieved from http://www.questia.com/googleScholar.qst?docId=5000131528 Gertsen, M. C., Soderberg, A & Torp, J. E. (1998). Cultural Dimensions of International Mergers and Acquisitions. New York: Walter De Gruyter. Haruyama, Y., Muto, T., Ichimura, K., Yan, Y & Fukuda, H. (2008). Changes of subjective stress and stress-related symptoms after a merger announcement; a longitudinal study in a merger-planning company in Japan. Industrial Health. Mendeley, 46(2): 183-187. http://www.mendeley.com/research/changes-subjective-stress-stressrelated-symptoms-after-merger-announcement-longitudinal-study-mergerplanning-company-japan/ Nahavandi, A & Malekzadeh, A. R. (1988). Acculturation in Mergers and Acquisition. Academy of Management Review. Jstor, 13(1):79-90. Stanwick, P. A. (2000). How to successfully merge two corporate cultures. The Journal of Corporate Accounting and Finance, 11(2):7-11. Read More