Company background
The Palm Riviera Resort (The Resort) is a hospitality organization, a subsidiary of a global
resorts group headquartered in Europe. The group serves a diverse array of patrons with
highly skilled chefs and other staff. The group’s strategy is the high focus on exceptional
customer care, and smooth customer experience. The Resort is one of the flagship
brands and sites of the group.
The resort has been established 12 years ago in the suburbs of Shanghai to serve the
Group’s clients in the quickly growing Chinese market. Thanks to global key accounts
and cheaper airfares, the business grew fast, and the Resort quickly became profitable
and was more profitable than the group’s similar sized resort in Cappadocia, Turkey.
Things were going well, until the competitive pressure started to erode profits. The
management and stakeholders looked towards the General Manager (GM) who was now
looking more anxious than ever. The was consistently failing to meet the profitability
expectations of the owners. The ownership eventually lost confidence in the
management at the time and decided to make a change. The GM was replaced with a
younger GM. Clients wanted a wider range of services but at competitive costs. Costs of
doing business were increasing; staff cost was increasing; while holiday and normal sales
were shrinking, causing the resort incur losses. Two previous GM’s have already failed to
make the turnaround and got fired. Now it is the third General Manager, who is hired with
the mission of making the turnaround. Failing to make profits in the last three years
made the owners cautious about further investment, so the turnaround should be
achieved with a low budget.
Why is the Resort in crisis?
Based on the industry and economic factors, the Resort should still be profitable. Why is
it in the red then? According to the HRD who has been hired one year ago, it was caused
by bad leadership, by top management complacency, neglecting continuous
improvement and development for many years. Realizing the ineffectiveness of top
management, the owners made a major personnel change one year ago, replacing not
only the General Manager, but also most of the Directors. The new Management Team –
the GM and the Directors – agree that change is needed, and it is needed now.
Plans for the turnaround
The Management Team discussed about and decided the following changes:
• The workforce will be reduced to 600 (250 people will be laid off);
• Staff will be trained to handle more positions, so that they could be deployed
more efficiently
• Business processes will be streamlined; there will be more detailed new KPIs
introduced; P/L will be calculated for each service offered, and managers will be
hold accountable for them
• Currently, overtime fee is a “standard employee benefit”, regardless of the actual
need for overtime. This practice will be changed: overtime pay will be reduced to
the necessary minimal.
The other changes must be implemented within the next 12 months, but there is no
detailed schedule yet.
Current situation and challenges
According to the HRD, there are major roadblocks standing in the way of successful
transition:
• The Management Team has consensus about the direction, but the new business
processes and the future organizational structure have not been clarified and
worked out in details, and it is not sure whether they will be able to come up with
a convincing solution.
• The Middle Managers are not supporting the change. It seems they don’t want to
understand the new direction. They are passive in the meetings, and skeptic or
opposing one-on-one. They started as porters in the company for 10-12 years ago
and have been gradually promoted to become managers. According to the
observations of the HRD, many of them show very low managerial and leadership
competencies. Many of them show little capability for independent thinking and
decision making in general, and don’t have much influencing power with their
staff members. Some of them may lack the potential to adapt to their expanded
future managerial roles.
• The General Manager and the Directors are all task focused people with low
“people” awareness and communication skills. They underestimate the resistance
of the people. They don’t recognize the competency gap of the Middle Managers.
They don’t think much about the communication strategy and the human aspects
of change management.
• The morale is already very low in the entire resort. The planned changes would
put higher demands on staff, while their income would decrease, or in best case
equal their current income. This will very likely further undermine their motivation
and productivity.
TASK
To ensure that the top management achieves success, you are expected to produce a
3000-word report. In this report you will be required to evidence the following with
reference to the issues highlighted in the case study above:
Task 1: Evaluate and recommend a model of change that might be utilised in
order to develop an environment that would allow the organisation to be
competitive. (60%)
Task 2: Analyse what might be the major resistance from employees on the
recommendations made above and, using appropriate change models and
interventions, how might the CEO mitigate this employee resistance? (40%)
Learning outcomes assessed
2. Explore and critically appraise strategies and methods used for the planning and
management of change
4. Develop a plan to effectively manage a specified change.
ASSESSMENT CRITERIA
Ensure you use the correct report format:
• Cover page with index
• Executive summary (a ‘summary’ of the key recommendations for the CEO. Not in the word count)
• Introduction
• Tasks – main body including analysis and evaluation
• Conclusion
• Recommendations
• References
• Appendices
Please note:
• The word count should be 3000 words (+/- 10%)
• You may include appropriate graphics to support your points if you consider they
will add value to your answer
• This is not to be written as an ‘essay’
• Cover page, Exec Summary, References and Appendices are NOT included in the
word count)
• You must use academic theory and other robust sources to support your text,
and any theory used should be applied to the context of the scenario
• You must use in-text citations to evidence your work, in addition to producing a
full list of references in the bibliography. All of these should conform to Harvard
Referencing format.
• The bulk of this text should be your own original work and should not be
excessively paraphrased.
