The Georges Hotel is a small upscale hotel located in Chicago that has succeeded considerably in recent years. As a result, its owners began considering an expansion, purchasing and renovating another facility in the same city and eventually expanding nationwide. However, currently, the hotel is managed by members of the Mitchell family, who have hired many of their relatives for different positions.
While this approach helps create a close family atmosphere and potentially improves cohesion, it has also led to some issues. Moreover, the top management won’t always be present at the new facility the same way they can be for the original hotel, which can exacerbate the issues. To retain the family-like atmosphere while minimizing the problems it creates, the HR director has proposed the formulation of a new organizational structure. This paper will provide recommendations to that end using the Strategic HR Pyramid.
Strategic HR Pyramid
Level 4: HR Investments
- HR Department Design: Previously, the HR department at the Georges Hotel has primarily been administrative in nature, performing duties such as compensation and vacation planning. Management became involved in any issues that emerged directly, without using a formalized approach. With this possibility unavailable for the new facility, the department will need to prepare to assume these duties. To that end, it will need to become more structured and emphasize formal policy and accountability.
- HR Practices: The purpose of the HR department is to produce optimal performance out of employees through a number of aligned practices. To that end, it will need to become more involved in employee work, collecting information about their performance and mediating disputes. The department will also need to become more involved in hiring and training to avoid the nepotism problems that are currently present in the Georges Hotel.
- HR Professionals and Competencies: To perform the duties expected of the new HR department, a variety of new skills will be expected from its workers. To that end, extensive hiring of professionals familiar with the aspects of HR needed for the department’s new duties will need to take place. With that said, where possible, training current employees to fulfill these tasks is also advisable due to their familiarity with the hotel’s circumstances.
- HR Analytics: Currently, HR collects little to no data about many items such as employee performance. Moreover, in the current atmosphere doing so would be difficult due to related employees covering for each other. The department will need to increase the transparency of the company’s operations and disincentivize nepotistic practices. Following that, it will need to define characteristics that are critical to performance and begin collecting and processing them.
- Level 3: HR Targets and Outcomes
- Individual: Current employees are already committed to the company, as they expect it to be loyal to them. The same degree of loyalty should be maintained in the new hotel through a family-like atmosphere. With that said, competence and contribution are problematic, as employees purposely do as little as possible, knowing that their job was secure. Supervisors need to be trained, and high performance needs to be recognized and promoted.
- Organizational Capabilities: The Georges Hotel needs to become less reliant on its top management for resolving day-to-day matters and give them an opportunity to oversee the company as a whole. To that end, processes need to be formalized, and responsibilities have to be delegated to specific workers at the company. As a result, the hotel’s ability to provide service should remain excellent but also become scalable to new facilities.
- Leadership: Currently, leadership holds limited authority at the Georges Hotel, as workers expect they will be protected from any repercussions by their relations. Sustainability, as defined by “Dr. Dave Ulrich – The Future of HR,” is also an issue, as there is more than one candidate to take the CEO position next. In the future, the authority of leadership will need to be reinforced through differentiation and branding, particularly with regard to Chad, and the succession situation needs to be addressed.
- Level 2: Relationship to the Business
- Business Context: The new hotel will be located in Chicago, and any others are also expected to be in the United States. As such, STEPED factors as described by Ulrich (4) are unlikely to be substantially different across the different hotels. With that said, the model of referral hiring used at the original hotel is unlikely to be sustainable in other facilities, and a more formal process should be considered.
- Business Stakeholders: As the Georges Hotel is not a publicly-traded company, it does not have to consider shareholders. However, customers and workers need to be considered, and the HR department should understand how it delivers value to them. To that end, maximizing employee performance while satisfying their needs and maintaining a family-like environment is essential.
- Level 1: Mega Message
- Value Creation: In addition to its current practice of performing administrative duties, the HR department will create value for employees and customers by taking a more active role. The former will benefit from the increased performance its new policies generate while the latter are provided with growth opportunities. Moreover, new employees will be treated more fairly within the company through the minimization of nepotism.
Ultimately, the Georges Hotel’s HR department will need to become more active and take a more prominent role in the company. It will need to formalize hiring and performance management procedures to ensure that employees are compensated fairly for their efforts and that weak performers are not protected by nepotistic supervisors. Moreover, it will need to introduce measures such as complaint processing to reduce the burden on the company’s top management. With that said, these moves are unlikely to be received well by many of the Georges Hotel’s current employees, who benefit from this system.
There will likely be frictions in the short term, but over time, they should smooth out and enable overall better performance. However, whether the family-like structure and the management values will be preserved is in question, and the department will need to make changes carefully to maintain it.
The top management situation is a more prominent concern, as it can create substantial tensions that affect the company as a whole. First, Chad is a weak leader whose duties have to be supplemented by Cindy. During a formalization of top management roles, this issue will need to be addressed, potentially through his firing, which can aggravate Cindy. Moreover, there are two candidates for succeeding the CEO position, one backed by Jeff Mitchell and the other by Chad and Cindy.
The dispute over who should be chosen presents a substantial danger for the company with the potential to destroy it. As such, in the future, the department should consider discussing future strategy and planning in advance to determine how top management should be organized and planned for the best results.
“Dr. Dave Ulrich – The Future of HR”. YouTube. 2016. Web.
Ulrich, Dave. Are We There Yet? What’s Next for HR. 2010. Web.