ODC Assignment

Roaring Dragon Hotel

Kabir Jain
 CASE BRIEF
 Roaring Dragon Hotel (RDH): State Owned Enterprise (SOE) in South-West China
 Provincial Govt. concerned about hotel’s decline in popularity & income
 2001 Decision: Hotel International (HI) chosen to manage the hotel and modernise it
 Prevalence of “guanxi” for instance: use of connection to gain employment at RDH

Key Stakeholders
1.Tian Wen (former Chinese general manager of RDH)
2.Paul Fortune (GM appointed by HI; From England, UK)
3.Erhi T and 11 other co-owners (Board Members)
4. Employees: 675 employees who faced the risk of layoff
5. Provincial Government

Timelines [as planned by Fortune]

2 years to transform the RDH

Cultural Context of China

Collectivist, hierarchical culture; Guanxi based reciprocity (eg. Nu Fu travel bookings)
Traditional Chinese way: Employees thanked & given chance to save face in case of layoff

Source: https://www.hofstede-insights.com/product/compare-countries/
AFTERMATH OF HI’S INTERVENTION
Parameter Before HI After HI
Environment a)Camaraderie between a) insecurity, glum atmosphere
employees b) balanced distribution
b)unbalanced dept. c) unproductive work behaviours
workloads sustained though hidden from
c)unproductive work HI
behaviours
Revenues Declining Further losses on account of no
(Booking & bookings, lesser occupancy rate
Occupancy Rates) and high compensation at
international rates
Modernisation - Stalled due to lack of funds and
high operating costs

End Result: In 2003, Termination of Management Agreement

invoked and all efforts stalled
CONNECTING THE DOTS
Psychological contract: Based on case facts following seems to be applicable:
Subordination of decision-making power of employees to the owners, hence disempowered
employees who lack the motivation to challenge status quo
Employees deployed “guanxi” to also promote the interests of RDH by bringing business
Family-like, community based setup along with greater distribution of work to the young
accepted due to cultural context

Levin’s Force Field Model

Forces for change:
- external environment: increasing rivalry, declining popularity & income
- provincial government’s decision to modernise RDH
Forces against change:
- complacent employees
- deeply entrenched nepotism (guanxi)
- sheer disregard for existing culture by HI
 LEADING THE CHANGE:

Error (Deficiencies in) Instances

Sense of Urgency Employees did not feel severe impact of business
losses due to secure compensation

Powerful Guiding Coalition -Employees were not brought on board, layoff’s

carried out in secrecy without proper
notification,

Creating a vision Forced vision rather than shared vision

Communicating the vision Confusion, distrust on new policies by staff

Empowering others to act Mere confirmation to instructions than a chance

to modify behaviour
Planning for & Creating Did not account for impact of expenses of
short-term wins international team without concurrent cash-
inflows & revenues
 LEADING THE CHANGE:

Error (Deficiencies in) Instances

Sense of Urgency Employees did not feel severe impact of business
losses due to secure compensation

Powerful Guiding Coalition -Employees were not brought on board, layoff’s

carried out in secrecy without proper
notification,

Creating a vision Forced vision rather than shared vision

Communicating the vision Confusion, distrust on new policies by staff

Empowering others to act Mere confirmation to instructions than a chance

to modify behaviour
Planning for & Creating Did not account for impact of expenses of
short-term wins international team without concurrent cash-
inflows & revenues
A DIFFERENT APPROACH TO CHANGE
Recommendations:
• Senior staff should been leveraged as change champions
•Young staff could have been motivated by future vision of RDH
•Transparency about layoffs & cultural awareness by HI
•Empowering young employees to voice expression
•Better tying up of rewards with effort

“While provincial government chose the conventional method of external

change agents manner of executing change was ignored”
THANK YOU