Case Leadership and Organization Behaviour

Boi Hutagalung (1806249062)

Tasnima Nur Azizah (1806161885)

THE REGENCY GRAND HOTEL

Summary of the Problem
The Regency Grand Hotel was a five-star hotel in Bangkok, Thailand that has been managed and
operated by a local manager for fifteen years. The hotel was very renowned with over 700 employees
who really appreciated for being associated with the hotel. The hotel had provided above industry
standard employee benefits and salaries and it came with a high level of job security. Furthermore, a
large, year-end bonus was rewarded to employees regardless of the employees or the hotels overall
annual performance. In fact, the performance was very good throughout the fifteen years managed by
the local manager. It was also very profitable and successful during the years. Employees had always
worked diligently to achieve the manager’s instructions. However, under the local management,
innovation and creativity were discouraged and employees were punished for their mistakes and
discouraged from trying ideas that had not been approved by management. Employee worked only
according to management’s instructions. They were not allowed to be innovative and creative. All the
decisions were from the management. Because of this, employees were afraid to be innovative and take
risks.

The hotel was then sold to an American hotel chain and the current local general manager decided to
take an early retirement once the hotel changed ownership. Even after the change of ownership, the
hotel chain kept all of the Regency’s employees. John Becker was then selected as the new general
manager due to his previous success integrating newly acquired hotels in the US. In most previous
acquisitions, Becker took over operation with poor profitability and low morale. Becker had 10 years
experiences with the American company. However, most of his management had been in poorly
profiting organizations with low morale. Quickly after becoming general manager of the Regency,
Becker introduced the practice of empowerment with hopes of duplicating the success that he had
previously achieved in the United States. He also substantially reduced the number of bureaucratic rules
and allocated more decision-making control to front-line employees. They started working but then
realized that their supervisors allowed them to make any decision and they became demotivated, which
affected the performance and profitability of the hotel. Even though Becker believed that the
introduction of empowerment would greatly benefit the overall performance of the hotel, the business
and overall performance began to quickly decline. After he implemented changes, the employees’
morale also declined, absenteeism increased, customer complaints increased, and received poor ratings
in the media.

Company’s Major Issues

The hotel has some main symptoms indicating that there are certain very serious issues, such as
personality and organisational fit, stress, job satisfaction, job design and role ambiguity, absenteeism,
decision making process and power hierarchy, and high staff turnover. Wen Backer became the new
manager, some employees of the hotel were moved to other positions. The employees who were moved
might not have the skills and capabilities to achieve the full variety of the new work. Supervisors and
some other employees felt losing power due to the exercise of empowerment (Bakker & Schaufeli,
2008). Then, many of them left the job.

Another problem was that many supervisors still dealt with minor issues by themselves, not allowing
employees to do so properly. This thing wasted their time. Becker was not very good at giving minor
decision directions to subordinates. The differences turned up when the management argued with the
ideas the employees had given. Because of all this, all the employees no longer joined and were not
very helpful towards each other.

The main tendency for these problems is suspected to be because of the culture differences. The United
States based company failed to research or invested in any culture changes that might affect employees
when they acquired the Regency Hotel. Becker failed to arrange plans and implement changes. He did
not involve any staff in the change process nor did he have a change agent to help oversee the change
Case Leadership and Organization Behaviour
Boi Hutagalung (1806249062)
Tasnima Nur Azizah (1806161885)

process within the newly acquired hotel. Another tendency that might cause the problems is
communication. John empowered employees to make minor decisions while only elevating major
decisions to management. John failed to communicate expectations of what were minor decisions and
what were major decisions.

Solutions and Recommendations

Regarding the tendency to the problem of the differences in cultural dimensions between the people of
Thailand and the people of the United States, as demonstrated in the case, the people of Thailand tend
to value a high-power distance society while people of the United States, and organizations alike, tend
to value a low power distance society. High power distance society’s value obedience to authority and
are comfortable receiving commands from superiors. They also prefer authority figures to resolve
conflicts. Low power distance societies expect equal power sharing and view relationships with
superiors as interdependence.

Prior to the acquisition, the Thai employees have always worked strictly according to managements
instructions and their main responsibility was to ensure that management’s instructions were diligently
met. Becker, under the concept of empowerment, emphasized the freedom of decision making and
autonomy for the lower level employees, which was not successful. The Thai employees in the case
also seem to value a high uncertainty avoidance, while John Becker emphasized his value of low
uncertainty avoidance. One who has a high uncertainty avoidance feels threatened by ambiguity and
uncertainty while one with a low uncertainty avoidance tolerates ambiguity and uncertainty. As
described in the case, “employees had much difficulty trying to distinguish between a major and minor
issue/decision”. This perfectly depicts that though Becker expected the employees to be able to
distinguish between major and minor decisions and handle the minor decisions on their own, the high
uncertainty avoidance of the Thai people hindered the operating performance of the hotel. The
ignorance of the differences in cultural dimensions between the Thai individuals and American
individuals could have easily been avoided with just a moderate level of cultural research.

For the tendency to the problem of interactions and communications, it is imperative to provide effective
feedback to employees in order to maintain goals and increase motivation. Effective feedback must be
specific, it must be relevant, it must be timely, it must be credible, and it must be sufficiently frequent.
One of the most significant errors in this case was the lack of interaction and positive reinforcement
between management and lower levels employees to stimulate confidence and allow concept of
empowerment to continue. The case states that, “Employees who displayed initiative and made good
decisions in satisfying the needs of the guests rarely received any positive feedback from their
supervisors”. Furthermore, employees eventually lost confidence in their decision-making abilities and
continued to rely on their supervisors for decision making. By not providing positive reinforcement to
the employees who took initiative and welcomed the concept of empowerment, extinction of the
behavior eventually occurred.

The company can make adjustment/alternative in their ways in communication system as follow:
 Build a manager/employee guide to communicate the standards, rules, expectations, and define
what major/minor decisions are.
 Hire a consultant/facilitator to oversee the process.
 Provide comment boxes for suggestions of improvement, feedback, and open communication.
 Make a Performance appraisals, provide a 360 scoring of managers/employees such as online
surveys.
 Get the whole team involved in the decision-making process through meetings gear to meeting their
needs both for management and the employees.
 Provide employees an avenue to voice concerns (anonymous if needed), and address issues on an
individual bases.
Case Leadership and Organization Behaviour
Boi Hutagalung (1806249062)
Tasnima Nur Azizah (1806161885)

This alternative provides open communication, training to the entire staff, and both
managers/employees handbooks that outlines expectations, rules, and standards. It also provides an
expert to oversee the process. Success and effective change management approaches as given a rough
idea in this case should now be presented to help the employees to put up a new organisational culture
and integrate the empowerment strategy. Empowerment is an outstanding tool to increase the decision-
making power and leadership worth among the employees. The intension of Becker was not bad to put
into practice empowerment but the way he implemented was not right.