Moscow Aerostar Hotel is a joint venture between Aeroflot - Russia's countrywide airline and IMP Group Limited, Canada's aerospace multinational company located in Moscow, Russia.
The two companies began their relationship when Ken Rowe- Chairman & CEO of IMP noticed an unfinished building on Leningradski Prospect near the 1980 site of Moscow Olympic Game titles, while on a business trip in 1988. He accepted the challenge of changing this building into a top 4 celebrity hotel.
Little have he know that launching a American style hotel in a past communist country would deliver its show of problems by producing unproductive and de-motivated Russian employees who were not in a position to develop managerial skills. Even though, Moscow Aerostar Hotel acquired developed a solid reputation for its high standard quality and service.
The hotel's proper plan was to lessen the number of expatriates working the hotel within 2 yrs of opening, but after one year the number of expatriates as well as Russian employees acquired increased which led to a major impact on the hotel's budget.
One of the major concerns by Laurie Sagle - Director of Training and Employees was how to keep Russian employees determined to produce productive results and to develop their managerial skills as most of them lacked interest.
SWOT ANALYSIS
Before mentioning the main element problems and issues encountered by Aerostar Hotel, a quick SWOT Evaluation of the hotel examining its internal strengths, weakness and external opportunities and risks will give a much better understanding of the entire situation experienced by them, and down the road justify the suggestion I am proposing.
Strengths:-
Room rates prices were 15 - 20 percent less than that of your competition.
Restaurant prices were comparable to prices at similar hotel restaurants in the Western.
Talented and dedicated band of western experts.
Positive reputation scheduled to high standard of quality and service.
Four-star rating with 417 well-appointed rooms, spacious getting together with rooms, well equipped fitness room and a gym.
Hotel achieved the average occupancy rate of over 80 percent.
Weakness:-
Low efficiency of Russian employees because of the inexperience in the hotel business.
Utilizing doubly many employees to operate compared to the hotels in the Western, draining the allocated budget.
Training technique not completely comprehended by the Russian employees.
Failure to convince Russian employees to be Supervisors.
Inability to understand the social and social reasons for Russian employee's patterns and frame of mind. (drinking, punctuality etc)
Opportunities:- (Politics and Economical)
In 1991, the Soviet Union collapsed therefore changing from a communist dictatorship (socialist current economic climate) to a multi-party democracy (free market current economic climate) wherein privatization of status owned enterprise occurred checking the economy to become one of the most quickly growing marketplaces on earth.
Moscow was located and became a business hub for foreign suppliers as the overall economy expanded and upgraded by the growing diversification of services.
Opening domestic markets to international trade and investment, thus linking the market with the rest of the world, was essential for business men and tourists to visit Moscow and thereby the Hotel.
Threats:- (Politics and Cost-effective)
Russian citizens got a hard time adapting to capitalism and democratic techniques which led to the "Shock Therapy" resulting in high poverty, corruption, high inflation rates, unemployment and decrease in industrial production.
In 1992, the Government lifted the price controls in order to expand the money source and available credit, this led to high inflation and the deterioration in the ruble's exchange.
Household cost savings were reduced to nothing at all as the ruble broke down which lead to a reduction in the number of customers to the Hotel creating further tension to the budget.
New Labour Law Legislation in 1991 protected the employees venturing into private sectors from a range of issues such as working time and conditions, reimbursement and benefits, Labour conflicts, security issues etc.
KEY AND SUB ISSUE ANALYSIS
After evaluating most the issues faced by Moscow Aerostar Hotel, the key concern that is in charge of the company's situation is its lack in Human Reference Management. Particularly the procedure for recruiting, training, assessing and settlement. Below I shall develop on the implications of the aforementioned issue and present a broader perspective of the result it can have if not rectified immediately.
Key Issue Evaluation:
Recruiting
Many of the people who applied were university graduates such as medical doctors, professors, engineers, legal professionals and were over-qualified to work in the majority of the positions. Many of them did not have even hotel experience. A perfect example was hiring a lawyer from the Highest College of the Militia for a Security Supervisor position. Specific Characteristics (capacity, experience etc) did not match with the job requirement, which lead to low employee satisfaction and poor performance.
Proper standards for hiring applicants were not placed. Really the only two criteria found from the choice process is the ability to speak English and standard grooming. In fact, the ideology of "hire-a-friend" marketing campaign is ridiculous as this shows that Management is unable of placing down the ground guidelines/basis of selecting and employing a candidate. This may also be perceived as an indicator of incompetence on the management's aspect.
Interview questions weren't correctly perceived by the Russian applicants. Questions such as "Why should we retain the services of you?" and "What did you in your previous job" weren't common in Russia.
Management didn't involve Russian Professionals to be part of interviewing and selecting prospects to give insight on Russian culture.
Reference or Background Checks did not end up being effective as only positive response were received. The Management also pointed out that there were conditions of individuals being terminated for theft in prior hotels that they worked well for.
Training
Imposing a traditional western design of training by recommending role playing proved difficult to the Russians as these were more familiar in memorizing facts. It had been difficult for these to examine certain situations that these were not familiar with.
Russian employees never asked questions and didn't show much contribution in the training exercises. It looked like difficult to evaluate if they known what was being taught.
It was difficult to clarify to the employees the concept of "service" as it had not been clear what services were required from them towards the guests.
The orientation program did not instill the hotel's main values in to the employees at an early stage, so the employees did not consider themselves as part of the establishment.
Cultural habits were affecting the task ethics; such as punctuality, absenteeism and drinking. They were not addressed in any ethics training that could solve this issue at a youthful stage.
The Supervisors were preferred for the Supervisor Training Program based on their work performance, rather than on their aptitude to develop managerial skills and be good leaders.
Difficultly in evaluating their peers due to their collectivism nature. Providing positive and sincere feedback seemed to be the norm.
Compensation and Benefits
It was illegal to pay in hard money, therefore the employees received a performance-based bonus in the form of gift certificates. They could not use these certificates to choose the items they required as it was quite expensive in the hard currency shops. The wide open market of the economy played its share in increasing the price price of goods in Russia in those days.
Employees earned almost twice their state average salary (allocated for teachers, doctors etc). However, they believed that they were not given a good/equal remuneration compared to the westerners in the Hotel. Proof this is seen in one of the employee's response "In general, I am happy with what I am getting, but with respect to the West, it's nothing at all".
Management was frustrated as their work to compensate and compensate the employees, through performance based merit, was not treasured. Employees were constantly complaining and disgruntled despite management increasing the hard currency bonuses double for the supervisors plus a few other benefits. In short, the bonus system didn't become a motivational tool.
Sub Issue Analysis:
Cultural Differences
Using Hofstede's framework of assessing ethnicities, an examination of the distinctions in Canadians and Russians cultural ideals is shown in the desk below. Naumov and Puffer carried out comprehensive research on Hofstede's social value sizing and developed the below table.
Individualism versus Collectivism
Canadians have an index score of 80 (Hofstede) in terms of these individualism. They think that people are accountable for themselves and also have a sense of achievements when an success is done individually. They aren't emotionally dependent on organizations and groupings. This is the frame of mind shown by the Canadian management.
Russians, on the other hands, have a more communal heart and a sense of togetherness shows in their collectivism mother nature. They basic one's identification on a group membership. Teams normally protect individuals from harm. This explains some of the patterns of Russian employees in not attempting to intensify for a supervisory position. In the above stand their individualism is very low, Naumer and Puffer (41) and Bollinger (26).
Uncertainty Avoidance Index
This handles a society's tolerance for uncertainty and ambiguity. It indicates to what magnitude the members of your culture feel uneasy or comfortable in unstructured situations.
Russians have a higher uncertainty avoidance and try to minimize the problem of a discord arising. Because of this, people follow well defined and established laws, regulations and settings. That is also one of why Russian employees do not understand role playing. Naumer and Puffer (69) and Bollinger (92).
Motivation
The Management failed to determine what exactly encouraged their employees. These were unable to obtain the employees' direction and persistence of effort towards the organization's goal. The performance based mostly bonus system didn't offer drive.
Employees did not volunteer for supervisory position; these were merely tasked upon the hardest working employee. Employees may understand this as a form of punishment.
Due to their collectivism nature, they often times questioned why everyone cannot go to the special functions meant for the supervisors and have the rewards.
Most of the employees perceived their job as short-term since they were more willing towards intellectual work or manual work in factories where in fact the work is more organized/routine (predictable).
If this subject continues, the hotel may be faced with a group of de-motivated employees happening strike as the level of frustrations boosts with management being unsure of the way to get their message (core ideals) across to them.
STRATEGIC ALTERNATIVES
Strategic Choice 1 - Recruitment Policies
Target selecting young individuals with a college degree whose mind set matches the organization's core values. A highly effective selection is to discover the individual characteristics like a person's capacity and experience and match people that have the job requirements. Hiring over-qualified individuals for positions that are not highly relevant to their field is only going to add frustrations and de-motivate them over time.
For a 4 celebrity hotel seeking to contend with its opponents in the hospitality industry, management should consider many criteria's in selecting prospects such as overall flexibility, honesty, capabilities, experience in the hotel industry, etc.
Involving Russian Professionals after the original selection to help prepare a more substantive selection process such as preparing capability, personality and integrity exams in order to hire candidates with a confident and "can do" frame of mind, eager to learn and who are dependable. By by using a standardized group of questions and providing interviewers with a standard method of recording information as well as standardizing the rating of the applicant's qualification will help increase the interview selection process. It can help consider the ethnical aspects and can be utilized for future recruitment process.
To conduct criminal background checks on candidates who have referrals from a earlier organization.
Pros:
You shall have a powerful team force in a year's time.
When employees are satisfied with their job, they'll not be de-motivated.
Cons:
It will be difficult to re-interview the hired employees to make sure they are skilled enough.
Difficulty in finding a Russian Manager who'll have the ability to perceive or understand the ethnic variations both in Canada and Russia.
Do you flames the incompetent employees or retrain them?
2) Strategic Substitute 2 - Training, Development and Compensation
A transnational orientation program can help transmit the company's core values with their employees. If the incorrect principles are communicated at this time, the damage done is nearly irreversible. The core value should be valuable, inspirational and present the workforce a sense of direction. Subsequently, the corporation must have the knowledge to disseminate it across diverse ethnicities. Once this is achieved, a powerful unifying force retains the company mutually.
Training on proper work ethics will overcome some of the issues of punctuality and absenteeism shown by the majority of the employees. It is to be realized by them that this tendencies leaves no room for negotiation and these actions will never be tolerated.
Customer Service Training to give attention to more true to life situations, video centered education, instilling responsibility, catering to customer needs, effective communication skills etc, while keeping in mind the doubt avoidance factor. Employees also needs to go through a behavior modification to improve their attitude and cause them to become ask questions during the training classes.
Engaging employees in decision making, or playing a significant role in changes will morally stimulate them to take up supervisory tasks. The Control program will further instill core values, which the employees hold dear, to control the rest of the employees. They must have a mentality that failure to execute well shouldn't be considered a weakness but a chance for the worker to improve his/her skills. This can eradicate the collectivism aspect in performance analysis.
Compensating employees by giving free health care on their behalf, as well as discounts for members of the family, discounts on university fees, airfare seat tickets, discounts on foods at retailers that the hotel are in partnership with. This is applied on a grade size system wherein supervisors, professionals have more savings. In this truth, you are putting the family aspect in motivating these to work harder and also have more commitment towards the business.
Pros:
Will help the business gain loyal, satisfied and effective employees as the main element issues were dealt with by training and developing their frame of mind.
Better leaders who is able to manage their workers and delegate duties.
Cons:
Will give more of a bargaining chip for the Russians, as they consider bargain a sign of weakness.
Will involve a substantial upsurge in overall costs.
RECOMMENDATION
Although Moscow Aerostar takes a strategic plan to select and seek the services of their workers and create a stringent recruitment policy that handles matching a person's strengths with the work description (Strategic Choice 1), I am positive any particular one of the main element great things about job satisfaction is organizational determination. This commitment may be accomplished once the staff is faithful and confident to get the job done. I strongly assume that training, developing and compensating employees will foster better results in the long run; therefore choosing Strategic Solution 2.
Different types of training (customer support, ethics, and control) along with orientation will deal in changing their mindset. This helps the company gain faithful, satisfied and productive employees who consider themselves within the establishment.
It will also help them appreciate the chance to become supervisors after they understand the idea of proper control skills.
PLAN OF ACTION
Immediate Plan of Action
These steps should be used to get an immediate positive result prior to the situation gets beyond control. The below plan of actions are the first steps in building and really should not be looked at short term but continual.
1) Cultural Training for Management
Any change that should commence should start from the management's area. Laurie Sagle as well as the other westerners should undertake a ethnic training to establish a new system of main values that will help bridge the space (misunderstanding/misconception) they have of the other culture.
Outsource a Russian Administrator who has preceding experience in handling Russian labor force in the "service" industry and who was simply in a position to produce effective results. He/She can help identify the fundamental motivators, set up a center value system through out the human resource management process.
Payment for his/her services will be made once the desired impact (increased motivation and production) sometimes appears from the employees.
2) Gain Employee's trust by Integrating Sociable Life, Family Orientation and Russian Culture
Giving in to their needs and compensating them in the beginning will not have an effect, but insurance agencies a restructured approach to build personal relationships with the Russians can help gain the employees' trust by causing them believe that are the blocks of the organization's objectives.
Organize monthly public events (sports, cultural programs, dinners) for the employees' and their families (both Russians and Westerners) this gives them a chance to know the other person well outside the working perimeters. Russians will appreciate this because they are more family oriented.
Strategic Plan of Action
Development programs which include required training courses will be designed keeping the primary value system in mind to build up employee's knowledge, skills and abilities to boost their performance in their current jobs. Identify the training needs by evaluating the weakness area in the worker, something we have to educate supervisors in the management training.
3) Orientation Program
Russians experience great discomfort in uncertain situations and value balance so they tend to create regulations and procedures in every aspect in the organization. Management should therefore introduce change by keeping employees informed. The Orientation Program should cover the next aspects:
The central value system, by now, should be very well grasped by the management and steps to incorporate them should be in place. They have to make employees recognize that the organization is one team (family) and management prices employee's opinion, thus setting up a positive work place.
Participating in regular management meetings giving employees a chance to raise their suggestions on matters they may be uneasy with. Then ask them to come up with a solution or how they would like it done, which management may/will consider in the execution phase.
Each employee to adopt turn in doing different careers for a day and then selecting the one they are preferred with. This gives them a feeling of responsibility.
4) CUSTOMER SUPPORT Training
Once the employee's believe that they are area of the firm, management can instill in them the meaning and importance of customer service. They have to understand that their action and frame of mind will affect the client service and the trustworthiness of the business (their home). Laurie was not able to get that message across, but with the help new core value system, they can devise training & development in the next manner:
Group employees into teams considering their collectivism characteristics and cause them to become solve customer problems in a team. The team with the optimum solution gets rewards. Reshuffle associates to have them accustomed to a little of change.
This method will help the trainer know which staff shows the ability to think beyond your container and can be contacted down the road for the supervisory position.
Training solutions to include video based mostly lectures and how to communicate effectively and focus on customer needs. Ideas including the "Customer is actually right" should be created. Laurie can hold the Russian Manager overlook the whole process to recognize areas she is not best to explain.
Training will be in-house for many employees including westerners.
5) Command Training
A better methodology in teaching leadership should be implemented. A Transformational Command Workshop which identifies all the several aspects of authority should be set up for the traditional western managers as well as the Russian Supervisors. The reason for selecting this type of training is because leaders can guide and encourage their employees in the direction of established goal (i. e. success of the hotel).
Employees showing capacity to have leadership features are detected (through surveys) or even at working out period. Every group has a few market leaders/motivators that all of those other employees look up to. So, question employees to nominate those they feel have characteristics of being a great supervisor looking for traits such as (credibility, trust, integrity, and fairness).
Management range from employees they recognized earlier and a general vote can take place. The thought of this is to get the employees participation and the elected Supervisor will be happy and will not let his team down.
Supervisors will learn how to provide information, responses and way about the company needs and objectives. The benefit the supervisors will have is that they would learn how to motivate the rest of the of the Russian employees as they know the culture very well.
A Transformational innovator provides visions and a feeling of quest, instills delight and gains value and trust. He/She will be able to inspire inspiration, stimulate intellectuality and give individualized attention to employees to be able to teach them in their portion of weakness. This is what Aerostar Hotel actually needs.
An Staff Handbook of the proper way to behave while at work should get to them. Encourage them by recommending a group trip to another city with their families by the end of the entire year if they seriously time, have less absenteeism and avoid alcohol.
