Baliuag University

School of Graduate Studies

Master of Business Administration

BA 517: Human Resource Management

Case Study

The Portman Hotel Company

Group III Professor

Divine Grace Bacas Atty. Manuel Del Rosario

Mark Anthony Casem

Katherine Joy Estrella

Wendilyn Llanes

Gianina Pascual

John Vincent Valmadrid

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Abstract

Maintaining and providing customer satisfaction is becoming one of the biggest contemporary
challenges of management in the service industry where service quality is a key factor in the battle
for competitive differentiation and customer retention. To be successful in the market, attracting
new customers is not enough. Managers must concentrate on keeping existing customers and
implementing effective policies on customer satisfaction and loyalty. With the hope of achieving
a new level of service among American luxury hotels, the Portman hotel introduced an innovative
concept: superior service that revolves around a business plan based on Asian standards of
hospitality, which the Hotel’s executives were committed to, keeping both their guests and
employees happy. After presenting the different solutions, we will discuss manners of
improvement, dealing with risks and alternatives in customer satisfaction and hotel management.

Introduction

During the past few decades, customer satisfaction and service quality have become an area that
has a strong impact on business performance and customer behavior. Service quality leads to
higher profitability and customer satisfaction. Furthermore, empirical studies indicate a positive
relationship between customer satisfaction and customer loyalty, as well as between customer
satisfaction and positive word-of-mouth.

In this paper we analyze the Portman Hotel: a five stars brand new company that aspires to import
the Asian-style of service to America using a butler-like employee group called the personal valets
(PVs). To achieve an elevated level of service, the hotel has paid great attention to its human
resource policies, believing that the quality of the service provided depends on the motivation of
its people. Despite an initial excitement of the employees, their morale and the quality of their
work started to diminish, causing problems in the management. We will evaluate the hotel's
human resource management in both theory and practice.

Background

The Portman Hotel is a company that was seeking to be innovative in the American Hotel Industry
during the late 1980s, when overseas tourism was just starting its rapid development. The
Portman Hotel, being a luxury hotel in the city center of San Francisco, had the right basics to
succeed. The industry was evolving rapidly, thus they wanted to give a twist to the classic idea of
luxury, seize “the change, respond to it, and exploit it as an opportunity.” Their plan was to reach
the high-end service standards through the valets and “overwhelm guest by the professional,
cheerful and immediate response to every request,” imitating the Asian model. On the other hand,

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the Portman Hotel faced certain drawbacks. The company was trying to imitate the Asian model,
but this idea of luxury came with a price: to keep its prices competitive, it had to run with only one
third of its workforce due to the higher wages in the US. This subsequently led to the incapability
of dealing with the different occupancy levels, resulting in an increasing need of flexibility among
the whole company. Moreover, there has been a lack of coordination among staff and
management and the turnover rate among the PVs in the first year has been higher than the hotel
could afford. Reaching this flexibility is one of the main goals of the hotel due to the issues the
PVs and the 5-Star Team Plan are bringing up. The 5-Start plan, the plan the company produced
to solve these problems, was not as effective as expected: every solution the team proposed
caused recent problems. Major flaws such as floaters occurred, while inflexibility and
inappropriate job structure stayed the same. The hotel, thus, is now in need of a new effective
strategic plan that solves existing problems.

Human Resource Principles

Principle of Scientific Selection

For the proper coordination between work and workers it is necessary to have a right person for
the job so that the question of inability of the person will not arise and workers will be able to get
and do work according to their interest. Portman Hotel hired Selection Research, Inc. (SRI) which
supplies consulting for recruitment and development. SRI's approach to selection was to
systematically study successful performers in a wide range of jobs and industries, looking for key
success characteristics. The hotel interviewed more than 9,000 applicants for its original 350
positions. Mene wanted the most talented people he could find, and he wanted them to know that
they had been part of an extremely selective process.

Principle of Effective Communication

There must be an effective medium of communication between the management and the workers.
Communication means that orders of higher authorities are conveyed in a proper way. If this
arrangement is not effective then there arise complex problems like mistrust, hatred and ill-will
and this in turn affects the production of the organization. Particularly, Portman Hotel looked to
maximize service while minimizing management overhead. Mene tried to cut out areas not
essential to top service, particularly in middle management. Kay, the company president, saw this
as “extending the bottom portion of the organization triangle;” it meant putting more employees in
front of the guests, rather than in management. While, the director of room services, Spencer
Scott, had had over sixty personal valets reporting to him directly when the hotel first opened.

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According to this principle, it is very necessary to prove an effective machinery of communication
to manage the affairs of the concern effectively.

Principle of Maximum Individual Development

With this principle, workers can fulfil the goals of an organization with the minimum cost, hence
giving them occasion to develop themselves to the maximum extent of their capabilities. Their
ability, productivity and efficiency could be used for the concerned goals. Portman Hotels knows
that if they want customers treated better, we should treat each other better. We want to make
the Portman the most fulfilling, fun work experience that anyone on the staff has ever had. We
want to be the best employer in San Francisco, to show our trust and pride in each person on our
staff, and to work in ways that help each person to grow, both personally and professionally.

Principle of High Morale

It is essential to have a high morale for the workers organization and work. With this purpose,
ideal wage policy should be offered in the organization. The high morale would be in position to
create a cheerful outlook and sense of motivation. Portman’s Hotel 5-Star team plan had
reorganized one group of employees, the personal valets (PVs). The PVs both cleaned the rooms
and were like butlers for the guests. Under the plan, the PVs had been organized into teams of
five, with one team per floor. Mene had agreed to the plan because the PVs had complained
about how disorganized they were when the hotel opened in October 1987. Now the PVs' morale
was down. Many of them were not performing or had poor attendance. According to this principle,
the morale of workers should keep high. High morale is indispensable for the effectiveness and
efficiency of the organization. High morale creates a cooperative attitude among the workers and
makes them committed to the organization. For this purpose, workers should be motivated by
monetary and non-monetary incentives such as ideal wage system, bonus, gratuity, better
working conditions, facilities for training, labor welfare, social security schemes etc.

Principle of Team Spirit

Team spirit must be developed in the workers. It is only team spirit that keeps the members united
to shoulder the challenging tasks and fulfil them in time properly. They should work collectively,
and they should feel collective responsibility for the execution of the goals of the organization,
with this intention, they must have the sense of cooperation, unity, and mutual trust. During the
First month of Portman’s Hotel operation, there were frequent tensions with other groups of
workers in the hotel. PVs complained that porters often were slow to respond to their requests to
carry guest bags to and from the room; guests ended up having to wait. The PVs originally thought

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that they would do tasks like ordering theater tickets for the guests, but the concierges had
“usurped” this. The hotel is disorganized. There is no central character. Entry court, room service,
the receptionist—it is all departmentalized. Working with other groups is a problem. In general,
PV’s felt that other groups treated them like maids rather than as a group crucial to the business
strategy.

Principle of Dignity of Labor

According to this principle, labor should be given due regard in the organization. Portman Hotel
believed that the key to the business strategy was providing unparalleled service. How could this
be achieved? The employee handbook had the company's answer. On the other hand, Michael
Kay, president of The Portman Hotels put the philosophy very strongly: “We'd better have the
same level of seriousness and commitment to meeting employee needs as we do to meeting
guest needs. People are really our product—people who love you by nature.” Personnel
management should work specially on this principle so that the laborers feel proud of their work.
Sentiments like ‘work is worship’ should be developed in them and for this they should be
appraised with their work. With this purpose, the principles of the division of work and
specialization will prove helpful.

Principle of Joint Management

This principle emphasizes the idea of labor partnership in the business. In the age of industrial
democracy, it is better to give to the labor his share in management. This creates responsibility in
labor with increasing mutual faith and friendship. This will help to foster labor relations. Since all
the large San Francisco hotels had unions standing for their employees. Typically, 8 or 9 unions
stood for the different employee groups in a hotel. Issues arose when Mene and Kay argued that
having separate unions rigidly delimiting jobs would undermine their strategy of broadly defining
jobs and promoting inclusiveness. They believed that moving people around to avoid hiring extras
was crucial to the business.

Principle of Fair Reward

According to this principle, the workers should get fair rewards for their work. At Portman Hotel,
aside from these butler-like tasks of PV’s, they also had to clean the rooms, perform minor
maintenance, restock the rooms' minibars, paint, clean the hallway, and move out the room
service tray. The typical American luxury hotel was organized very differently. The maids cleaned
the rooms, someone else stocked the bar, a “houseman” vacuumed and dusted the hallways,
someone else put the shampoo in the bathroom—in short, it was organized by specialty. At the

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Portman, the PV did all these. The base pay of the valets was about the same as a maid in
comparable hotels: about $7.50 an hour. In addressing this principle, Equal Pay for Equal Work
– All employees should be paid based on equal pay for equal work.

Principle of Effective Utilization of Human Resources

The development of personnel management is for the effective use of the human resources. It is
an art to get the work done by the people, to get the desired result. He should be asked to do the
work that he can do and for his development proper training be provided. Portman Hotel looked
to achieve high quality and cost-effective service and demanded a certain philosophy of job
design. Whereas jobs in most other hotels were “narrow,” Portman jobs would have to be “broad.”
Associates would have more responsibilities, would have to be able to cover for one another, and
would have to be willing to perform tasks outside their official responsibilities, particularly if those
tasks had to do with a guest's request. With Portman Hotel’s approach, use of human resources
was extended to cover most of the task. The personnel management has been evolved to use
the available human resources in the best manner possible to achieve the organization objectives
effectively.

Principle of Contribution to National Prosperity

Personnel management should develop the sense of patriotism in labor by which organization will
be successful in achieving its goals and success of individual organization is the success of the
nation. Although this economic principle was not broadly discussed in the case study it gave us a
glimpse of Portman Hotel’s physical attributes and pride. At a time when industry analysts were
predicting a glut of luxury hotel rooms in San Francisco, Portman went ahead undaunted.

How can these HR principles be a source of competitive advantage for the organization
involved?

Human resource management is the procedure of linking the function of human resource with the
goals of the firm to drive and improve productivity.

First, as the Portman hotel focused on the caliber of the people, they looked for talent and not for
experience. Talented people as they are defined can do something perfectly with positivity, focus,
values, and attention to details. With this kind of recruitment, it can be an advantage since it will
surely select the right people for the job that fit to the goal of the hotel which is to achieve a new
level of service among American luxury hotels.

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Second, HR handles keeping people feel motivated for their work. First comes the task of defining
an individual’s role. Thereby an effective feedback mechanism from time to time helps the
employees to improve their skills. This helps in alignment of the organizational goals with their
own personal goals. Specifically, Mene’s belief was unique because he wants his managers to
be successful. This philosophy may attract caliber people because they can sense a healthy work
environment inside the hotel.

Lastly, there can be occasions where there is a disagreement between the employee and the
employer. You cannot avoid conflicts from happening. But you can surely try and manage them.
Here comes the role of the human resource department in acting as a counsellor and a mediator
to sort the issues in an effective manner. The HR takes prompt action so that thing does not go
out of hands. In this specific scenario, Mr. Mene made a final decision wherein the 5-star system
will create a new of position of team captain. With this, it will be an advantage since the spirit of
teamwork among the PVs will regain and it will give positive impact for the hotel.

Are these HR principles applicable in the Philippine work environment?

It sets no boundaries! HRM involves getting the organization right, providing effective motivation
and leadership, obtaining, and developing the right people, paying, and treating them fairly, and
getting them involved in working productively. In the broadest sense, it denotes satisfaction,
development, fulfillment, and happiness of all the people who work in an organization.

All the principles of Human Resource Management reiterate the importance of this department in
any organization, culture, or country. They are the key to holding the workforce together and
helping them grow together as an organization. It is also their responsibility to ensure that every
employee at all levels of management feels a sense of security and satisfaction. The human
resource environment within an organization must increasingly viewed as an integral whole. The
primary objectives of the people who work in the organization are satisfaction of their own
physical, social, and psychological needs, the organizational objectives being only of secondary
importance to them, though degree of achievement of which is necessary for the achievement of
their own personal or group objectives.

Firstly, human resources are the most important assets an organization and their effective
management is the key to its success.

Secondly, this success is most likely to achieve if the personnel policies and procedures of the
enterprise are linked with, and make a major contribution to, the achievement of corporate
objectives and strategic plans.

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Thirdly, the corporate culture and the values, organizational climate and managerial behavior that
emanate from that culture will exert a major influence on the achievement of excellence. This
culture must be managed which means that organizational values may need to be changed or
reinforced and continuous efforts from the top to the bottom of the organizational hierarchy will
have to get them accepted and acted upon.

Finally, HRM is concerned with integration, getting all the organizational members involved to
make them work together with a sense of common purpose.

What can Filipino companies learn from the lessons in this case?

A recent study showed that most business leaders in the Philippines consider innovation a ‘must’
amid market uncertainties brought by the COVID-19 pandemic. According to the study, 88% of
Filipino decision-makers treat innovation as a tool with the capacity to accelerate progress, and
not just a ‘good-to-have’ element of the business. This number, while less than the response
recorded in a broader study among Asia Pacific innovation leaders (98%), is still more than the
average 74% positive response recorded for all business organizations in the region.

First, in the world of business, change is unavoidable. Openly embracing innovation and inventive
design can also help break down organizational barriers and bring people together across the
various disciplines of an organization. If companies want to stay on track, they must adapt to
constant change before failure begins knocking on their door. Some changes are simple and
small enough to not really become noticeable, while some are big and complex to process.

Second, all businesses focus on obtaining a competitive advantage. Specifically in the recruitment
process, Filipino companies should learn how to revise the traditional recruitment and selection
process that we are using now. Just like what the Portman hotel did, companies here in our
company should also consider the talent and not just focus on the experience of a person. The
challenging thing in applying for a job in the Philippines is it always requires experience.
Companies here in the Philippines should learn how to embrace the fact that they also have the
responsibility to protect the interest of its employees. Yes, business tends to gain profit, but it
does not mean that its people should left behind and taken for granted.

Lastly, empowering labor unions in the Philippines. The existing Labor Code provides the Filipino
workers with the right to self-organization, where they can form, join, or aid unions, organizations,
or associations for purposes of collective bargaining and negotiation and for mutual aid and
protection. It also refers to the right to engage in peaceful concerted activities or to take part in
policy and decision-making processes affecting their rights and benefits. The Philippines Labor

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Secretary Silvestre Bello III highlighted the vital role of the labor unions and employees’
associations as partners of the government in promoting the rights and welfare of the Filipino
workers. Through unity, the labor department and the unions can work together to ensure that
companies throughout the country will follow the existing general labor standards and uphold the
rights of their employees. But we think that through this Union we can promote just, fair, or higher
wages and better benefits for all kinds of workers.

Conclusion

Conflict and lack of harmony among workers, a lack of employee effort and morale, and a lack of
a method to reprimand weak performers are all examples of these issues and challenges. The
hotel's production, efficiency and effectiveness, and service will all increase because of these
concerns. Fortunately, these problems are connected and can be resolved by employing a few
solutions.

The Personal Valets (PVs) are the hotel's most significant determiner, yet their jobs were
designed in such a way that they are disrupted. The elimination of floaters, the introduction of
maids, and the Team Captains, among other challenges and issues, will enable the Personal
Valets (PVs) to operate in a more structured atmosphere and establish a greater focus on serving
guests. Resulting in increased job satisfaction and a lower turnover rate. In any organization or
company, there must be a good organizational structure that can apply and limit the scope of work
of all employees, in this, they can understand their work and will be able to focus on their tasks.

The Portman Hotel Company's primary focus should be on enhancing and prolonged
organizational structure and, as a response, improving the working environment or atmosphere
of both employees and management. The hotel will be able to provide superior quality service to
its guests and function more efficiently and effectively in a systematic manner if the stated
difficulties or issues are resolved. All of these will contribute to the Portman Hotel's goal and
objectives which are offering outstanding service to its guests and ensuring its success.

Recommendation

We recommend conducting drastic changes, such as altering the PV-system to increase

profitability and the chances of success.

Firstly, a team captain should be appointed in each team to watch over the team tasks, individuals’
work and be accountable for quality on that floor. Second, we do not believe Scott can do the job
he is assigned to, because his job description is too broad for one person to manage. We propose

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to alter it in the just mentioned way: introducing team-captains who will report to Scott on a weekly
basis so that he will still have a broad overview on the events but will not have to do everything
on his own. Third, we would start an advertising campaign to awaken the consumers' interest in
the PV services of the hotel, since it is the biggest difference and resource of our hotel compared
to the other luxury ones.

On top of that, we thought of suggestions to solve HR problems. First, about the problems related
to the “floaters,” we recommend cutting their position. During low occupancy, normal PVs are
enough to cover the work. When the demand is high and PVs are busy due to heavy workload,
the hotel can hire temporary maids who will assist PVs in carrying out cleaning tasks so that they
can stay focused on providing services to customers. Second, since the floaters were the main
source of shirking and that position will be removed, the company should experience less
slouching behavior. In the current system, the supervisors write reviews quarterly for the
employees. Because of the implementation of the team captains, who can keep an eye on their
respective teams, their overview of the teams should be utilized to get more detailed evaluations
on employees and respond to problems that arise in a prompt matter.

In terms of the hotel’s concern about high turnover rate, a short-term strategy would be a fair
treatment and a reasonable work schedule for the employees. However, these strategies only
have limited efficiency, tend to be short-lived and they also do not directly address the real
problems behind. A long-term solution that considers the origin of employees’ dissatisfaction and
tries to deal with these issues would be the best choice.

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