Organizational Behavior Sith Eltion we Aol cose, University of Western Australia ‘The Regency Grand Hotel is a five-star hotel in Bangkok, ‘Thailand, The hotel was established 15 yeas ago by alocal consortium of investors and has been operated by a Thai general manager throughout this tine, The hotel Is one of Bangkok’s most prestigious hotels, and its 700 employees enjoy the prestige being associated with it.The hotel pro Vides good welfare benefits, above-market-rate salaries, and job security In addition, employees received a year- end bonus amounting to four months salery, regardless of the hotels overall performance during the yar. Recently, the Regency was told to a large US. hotel chain that was very keen to expand its operations into ‘Thalland, When the acquisition was announced, the gen- eral manager decided to take early retirement when the hhotel changed ownership. The ULS. hotel chain kept al the Regency employees though afew were transferred to other positions John Becker, an American with 10 years of man- agement experience with the hotel chain, was appointed as the new general manager of Regency Palace Hotel, de to ‘is previous successes integrating newly acquired hotels in the United States. In most ofthe previous acquisitions, Becker took over operations with poor profitablty and low morale Becker i a strong believer in empowerment. He expects ‘employees to go beyond the guidelines and standards to consider guest needs on a case-to-case basis. He believes employees must be guestoriented at all mes to provide excellent customer service. From his US. experience, Becker has found thet empowerment increases employee ‘motivation, performance, and Job satisfaction, all of which contribute to the hotels profitability and customer service ratings. Soon after becoming general manager in Regency Palace, Becker introduced the practice of empowerment to replicate the successes tet be had achieved back home. ‘The Regency Grand Hotel has been very profitable ‘throughout its 15-year history. Employees have always worked according to management’ instructions. Tas sponsibility was to ensure that the instructions fcom their managers were caried out diligently and conscientiously. Tnnovetion and creativity were discouraged under the pr vious management, Indeed, employees were pualshed for their mistakes and discouraged from trying out ideas that hhad not been approved by management. As a result, em- ployees were afrald tobe innovative or take risks. Becker met with the Regent’s managers and depart ‘ment heads to explain that empowerment would be intro: duced in the hotel. He cold chem that employees must be ‘empowered with decision-making authority so that they CASE 7: THE REGENCY GRAND HOTEL By Elizabeth Ho, Gucci Group, under the supervision of Steven L. McShane, could use thei ive, creativity, and judgment to satisfy guest needs or handle problems effectively and ef. ficiently. However, he stressed that the more complex is ‘sues and decislons were to be refered to superiors, who were to coach and assist rather than provide direct orders, Furthermore, Becker stressed that mistakes were allowed. but he could not tolerate thatthe same mistakes be made more than twice. He advised managers and department heads not to discuss minor isues, problems, or decisions with him; however, they were to bring important and me- jor issues and decisions to him, He concluded the meeting by asking for feedback. Seversl managers and department Iheads tld him that they iked the idea and would support, it, while others simply nodded their heads. Becker was pleased with the response and eager to have his plan implemented. In the past, the Regency hed emphasized administrative control, resulting In many bureaucratic procedures ‘throughout the orgenization. For example, the front coun- ter employees needed to seek approval from their manager before they could upgrade guests to another category of room, The front counter manager would then write and submit a report to the general manager justifying the up grade. Soon after his meeting with managers, Becker ¢e- duced the number of bureaucratic rules at the Regency and allocated more decision-making authority to frontine em- ployees. This action upset those who previously had deci- sion-making power over these issues, Asa result several of these managers left he hotel Becker also began spending most of his time cbserving ‘and interacting withthe employees atthe front desk lobby, restaurants, and various departments. This dicectinterac- tion with Becker helped many employees understand what he wanted and expected of them. However, the employees iffculty trying to distinguish between major and ‘minor Issue of decision, More often than not{Zupervisors ‘would reverse employee decisions by stating that they were sajor issues requiring management approval. Employees ‘who displayed initiative and made good decisions in sati- fying the needs of the guests rarely received any positive feedback fom their supervisors. Eventually, mast ofthese employeelost confidence in making decisions and re verted back to relying on thelr superiors for decision making, Not ong ater the implementation ofthe practice of e- powermenf)Becker realized that his subordinates were consulting him more frequently than Before. Most of thera came to him with minor issues and consulted with him on.Organizational Behavior Emerging Knowledge, Global Realty, Sith Edition ost minor decison. Heidt spend most ofhis tine at teadngt hi subordnates Son he ep of gly fas ‘trated and exhausted, and often he would tell his secretary that Miles heh so ae don anyone dit me” Bester thought that the pracice of empowerment would benefit the overall performance ofthe hotel How: er contary to hs expectation, th busing overall pesfomanee ofthe hotel began to deteriora There had een at increasing numberof guest complaint In the past the hotel ad mlnial guest compat Now there were Epalfeant aumber of formal writen complaints every month Many otber guest oped thee dasaisaton ver Sally to hoe! employees, Tauber of mistakes rude by tmployees hed been on an incest, Becker was Very Up sera he vealed that two leal newspapers and an Srereas newspaper had publlded negative feedback a about the hott in tems of serie tundards, He was mos. Alnvewed when en international vel magsine ad voted ftone gaa ightmare ho “Thc eas ees ofthe employees were continuously inounting sine the introduction of enpovrermenig A Tener de ples as icening aan sling Sie Insdattor@npope turnover ates ad eaced an “tn hgheth good working lationship tht were SEanluhedunder old monoernent had been severly Stsined Th employes were no longer ated sn sup- port of one another nse, hey were quceto pot Rrget and bets when mistake were made or ro lee ote. ‘he This case based on te vet bathe nds and as have beer dsnged