SAIRA TAJ (15121005)

Avari group : Organizational values and crisis leadership (A)

Executive Summary:
The Avari group started its journey almost immediately after Pakistan came into being in
1947. Starting initially from a small hotel in Karachi, the group currently owns and operates one
3-star and two 5-star hotels in Pakistan. It also manages two 4-star hotels in Dubai. The group
has also gained a lot of exposure to the air travel business. Avari Travel Agencies (ATA) is the
general sales agents for American Airlines and Canadian airlines. The Avari Group has also
experimented in the fields of Power Generation and Communications. Avari Group was
established by Byram Avaris late father, Dinshaw Byramji Avari, who founded the organization
on the core values of respect, honesty, life-long employment (no retirement) and equal
opportunities for people from all religions and backgrounds to grow. In business as well as in all
other aspects of life, Byram was deeply impressed by his father. However unlike Dinshaw, he
was not a risk taker. The president of Hilton International once compared the father and son as:
Dinshaw is an old man with a young thought; while his son is a young man with conservative
thought.
Problem of statement:
1. The challenge Avari group was facing regarding the lifelong employment policy.
Causes of problem:
In recent years, due to low business opportunities and low growth, most of the 5-star hotels in
Pakistan were reducing headcounts in their organizations. But the Avari family was rethinking
their lifelong employment policy on the one hand and on the other hand they were thinking about
different growth alternatives to handle this business crisis. The hotel industry in Pakistan caters
well for the basic needs of any client. Due to uncertain political conditions and unrest, tourists do
not often prefer Pakistan when choosing a place for vacation. Due to lack of security for tourists
and travelers, the hotel industry has suffered in the past. On average, the share of foreign guests
in hotels has increased to roughly 35%
Byram had a very flexible approach towards his employees, because his father used to say to
him; We look after the poor because we were once poor too. One of his employees recalled an
incident: Once an employee filed an application for 40 days paid leave as his mother had died.
The GM refused because the rules allowed for only 30 days of such leave. Byram Avari, he
directed the GM to approve the application, and added that the rules could always be changed by
the top management because their purpose is to help employees in every way. His father had
built an environment in Avari where someone could join the group as a peon, but, based on the
abilities, could rise to the managerial and even directorial ranks. It was believed that such a

system would result in producing an extremely loyal and ever motivated human resource. They
developed an environment where there was no concept of retirement. If employees wished to
work after the age of 60 they could do so on a contractual arrangement. When they were too old
to be able to work, they received their last drawn monthly salary and medical benefits for the rest
of their lives. The policies developed by Byram and his father paid off in the form of extremely
low attrition rates. In 2007, 2008 and 2009 the hotel industry was facing a major challenge in
Pakistan. Due to the poor law and order situation, economic problems and the ongoing war on
terror on Pakistans soil, most of these hotels were experiencing low occupancy and decline in
the business activities in the hotel industry in all the major cities Karachi, Islamabad, and Lahore.
Several top hotels in Karachi and Islamabad were reducing the headcounts. According to Byram;
We are a values-driven organization, we exist and survived because of our core values but now
it is becoming very difficult to keep our head above the water. All of the top leaders including
Byram were worried as they were facing the real test of their core value.
Alternative / decision criteria:
1. Avari not change their core values of the organization.
Pros and cons:
If the Avari does not change the lifelong employment policy for this purpose employees
are more loyal to the organization and feel motivation and efficiently perform their tasks.
With the passage of time hotel industry is growing so require the more trained employee
for this purpose we can sustain the employee in this way we can build the image that
Avari not change their values even in the crisis stage. Most of the five-star hotels in
Pakistan were reducing their headcounts in the organization. On the other aspect if the
Avari sustain the policy of employment so face the cost of employee and also bear the
long life medical facilities provided to employees.
2. Avari reduce the employees and implement the retirement plan by providing the special
bonus.
Pros and cons:
Employees are not happy for this kind of action and destroy your image as well. By
taking this action Avari provide the compensation to the employee and change their core
values bearing cost of benefits as well and brand image is also affected.
3. In the crisis situation Avari try to not reduce the employee they announced a salary cut
across the managerial levels.
Pros and cons:
If the situation improved in a manner of three months and the group rewarded its
management staff by giving special bonuses on top of the compensation for salary cuts.
Decision:
I select the option 1st the reason behind is that for this purpose employees are more loyal to the
organization and feel motivation and efficiently perform their tasks.

Recommendation:
AVARI should send its managers/employees to abroad for training purpose for it will
ultimately improve the organizations overall performance.
More flexible benefits plans should be introduced for employee so they can choose which
suit them the best.
If Avari follows its expansion and growth it will be able to gain higher revenues. Its
departments are contributing to its profitability. If Avari ads more facilities and services it
can catch more market share.
AVARI doesnt have any special program to bring the outside talent in, so they need to
take this area under consideration.
Sources:
http://documents.mx/documents/hr-project-on-avari-hotel.html
http://documents.mx/download/link/avari-group-2011-a
http://documents.mx/documents/avari-a-mba.html