Management of the change process in hotel companies

Hospitality Management 17 (1998) 363 — 374 Management of the change process in hotel companies: An investigation at unit level* Fevzi Okumus1,s, Nigel Hemmington2 1School of Tourism and Hospitality Management, Mugla University, Mugla, Turkey 2School of Hotel and Restaurant Management, Oxford Brookes University, Gipsy Lane Campus, Oxford OX3 OBP, UK Abstract The management of change has become an organisational necessity in the 1990s and will continue to be a major factor in the management of hotel companies in the future. This article investigates and evaluates management of the change process at unit level in hotel firms. The data was gathered through in-depth semi-structured interviews with ten hotel managers in the UK. Lewin’s three-stage model was found to be of limited use in practice. A five-stage model of the change process emerges from the research findings. This model reflects a more practical view of the management of change as an on-going, continuous process. Finally, the limitations of the research are discussed and further research areas identified. ( 1998 Elsevier Science Ltd. All rights reserved. Keywords: Hotel management; Types of change; Management of change 1. Introduction Go and Pine (1995) state that rapid and unpredictable changes in customer attitudes and information technology make the need to manage change inevitable and that the ability to manage change will be the key to the long-term survival of hotel companies. Mullins (1995) also claims that factors such as uncertain economic and political conditions, changes in social attitudes, fierce competition, take-overs, acquisitions, technological developments and governmental interventions create an increasingly volatile environment for hotels and consequently they can only perform effectively through flexibility and responsiveness to change. Most of the literature on * The authors would like to thank Mugla University, Turkey for sponsoring this project. s Corresponding author. Tel.: 0044 01865 483858; Fax: 0044 01865 483878; E-mail: 95115905@ brookes.ac.uk 0278—4319/98/$ — See front matter ( 1998 Elsevier Science Ltd. All rights reserved. PII: S 02 7 8— 4 31 9 ( 98 ) 0 00 2 7— 9 364 F. Okumus, N. Hemmington/Hospitality Management 17 (1998) 363—374 managing change, however, has been related to manufacturing industries and fails to address the specific issues associated with service industries. As Kaiser (1989) and Wood (1994) point out, the hospitality industry has particular characteristics which have implications for the adaptation of generic management principles. Furthermore, there has been very little research into managing change in the hotel industry. This study aims to investigate and evaluate the main stages of the change process in hotel companies with a particular focus on the operational level. Although it is argued by Carnall (1995) and Vandermerwe and Vandermerwe (1991) that there is no universal formula for managing change, authors such as Burnes (1992), Hill and Jones (1992) and Kotter (1995) recommend that change programmes should be planned against a set of objectives and a clear process and that the use of frameworks or models helps managers to address issues in a logical order. In addition, Nadler and Tushman (1990) claim that it is essential to identify and evaluate the type and characteristics of any change situation if the case and its implications are to be understood clearly. The objectives of this paper are therefore as follows: f to identify and evaluate the main types of change, f to explore and analyse the main stages of the change process, and f to propose a model of organisational change at operational/unit level for the hotel industry. The paper starts with an analysis of the literature related to types of change and the main stages of the change process. It then describes the research methodology and presents the research findings. Finally, the findings are evaluated with areas for further research identified. 2. Theoretical background The characteristics of organisational change are mainly categorised along the following two dimensions; radical versus incremental change and reactive versus proactive change. Nadler and Tushman (1990) refer to radical changes that ‘have an impact on the whole system of the organisation and fundamentally redefine what the organisation is or change its basic framework, including strategy, structure, people, processes, and (in some cases) core values’ (p. 79). On the other hand, they interpret incremental changes as follows: ‘they happen all the time in organisations, and they need not to be small. Such things as changes in organisation structure, the introduction of new technology, and significant modifications of personnel practices are all large and significant changes, but ones which usually occur within the existing definition and frame of reference of the organisation’ (p. 79). Quinn (1980) and Johnson (1988) claim that the incremental approach to change is more common and this type of change is commonly used to maximise short term F. Okumus, N. Hemmington/Hospitality Management 17 (1998) 363—374 365 performance. The logic behind the incremental view is that the environment is constantly changing and incremental change by a continuous process is the only way to secure the future of the company. However, in some situations, such as after a period of flux or unexpected rapid change in the environment, a radical approach to change may be necessary to address more fundamental problems (Johnson and Scholes, 1997). In terms of the reactive/proactive nature of change, Nadler and Tushman (1990) characterise reactive change as that implemented in response to some external event and/or serious internal operational and managerial problems. They see proactive change as that where the company is not currently experiencing any serious problems but managers anticipate the need for change to put the company in a better position or avert potential future problems. Although this anticipatory approach to change is generally preferable, in practice most companies tend to take a reactive approach, usually as a consequence of the commonly held view that there is no need for change if current performance is satisfactory (Taucher, 1993). Additionally, the hotel industry has been heavily criticised for being reactive largely as a result of its strong operational orientation and a tendency to focus on short-term results (Umbreit, 1986; Wood, 1994). One of the early models of planned change was developed by Kurt Lewin (1951). This model involves three steps; ‘unfreezing’ the present pattern, ‘changing’ or developing a new pattern, and then ‘refreezing’ at the new desired level (Cummings and Huse, 1989; Weilhrich and Koontz, 1993). As a starting point, Lewin’s model has an attractive simplicity because it identifies the general stages to be considered and therefore the process to be followed. More recent views, however (such as Moorhead and Griffin, 1995), consider managing change as a continuous process and argue that Lewin’s three-stage model has little practical relevance. Apart from Lewin’s three-stage model, other linear models are also proposed by a number of different authors (Bowman and Ash, 1987; Burnes, 1992; Hill and Jones, 1992; Thompson, 1993; Grundy, 1993, Vandermerwe and Vandermerwe, 1991, Kotter, 1995). In reviewing these models it is possible to identify a number of common themes which fall into five basic process categories as follows: 1. 2. 3. 4. 5. Identification and diagnosis. Consultation, exploration and negotiation. Planning. Implementation. Monitoring Although common themes can be identified, it is important to note that the five categories should not be seen as clearly distinct, discrete steps. In practice, and in most situations, there is a fair degree of integration and therefore blurring between the stages (Burnes, 1992; Clarke, 1994; Vandermerwe and Vandermerwe, 1991). The first step involves determining the need for change, analysing the organisation’s current position and defining the ideal future state that the organisation would like to reach (Hill and Jones, 1992). The need for change can be diagnosed at any level within the organisation from operational to senior level (Thompson, 1993). The second stage 366 F. Okumus, N. Hemmington/Hospitality Management 17 (1998) 363—374 involves wider exploration of the problem environment including consultation and negotiation with stakeholders. The third stage, planning, requires consideration of the resources available, culture, amount of commitment required and the capabilities of the management team within the context of the issues identified in stage 2. Objectives, timetables and implementation methods are then defined as part of the planning process. The advantages of using analytical tools prior to the implementation stage have been identified by various authors; these include the systems approach (Carter et al., 1984), stakeholder analysis (Grundy, 1993) and force field analysis (Lewin, 1951; Thomas, 1985). It is claimed that these tools facilitate a wider consideration of the change environment, including analysis of possible resistance, identification of those likely to be affected by change and the advantages and disadvantages of various change strategies. Stage four involves the implementation of change. It is widely accepted that this is the most difficult step because it involves moving from the known to the unknown and is therefore risky, stressful and complex (Clarke, 1994). Jick (1995) highlights the contingent nature of change in terms of the importance of choosing the right time and pace at which to implement the change process; Kanter (1983), in looking at aspects of organisational culture and structure that are related to successful change, identifies the ‘change masters’ as ‘literally — the right people in the right place at the right time’. Finally, the results of the process are monitored and evaluated against the original objectives; the extent to which they have been achieved and whether further adjustments or changes are needed. It is tempting to see evaluation as the last stage in the process but it is important to view change as an on-going process where through evaluation further opportunities for improvement are identified (Clarke, 1994). It could therefore be seen as the starting point of a cyclical approach to change. 3. Research methodology Because this study seeks to explore and analyse complex organisational processes it was decided that a qualitative approach with a relatively small sample would provide the most useful, in-depth data. A case study approach (Yin, 1994) using critical incident analysis (Gill and Johnson, 1991) was chosen as an appropriate method for the collection of primary data. In-depth semi-structured interviews and documentary analysis were considered as appropriate data collection methods. A semi-structured interview schedule was developed and was then piloted with one academic at Oxford Brookes University and one restaurant manager in Oxford city centre. A sample of 25 hotels from the London, Oxford, Reading and Swindon areas was selected on the basis of location, size and hotel brand. General managers were contacted by letter to explain the purpose of the research and to request an appointment for an interview. Ten managers from nine hotels agreed to be interviewed. The majority of them had more than six years managerial and operational experience in the industry. Amongst the nine hotels selected for the study, there were four 3-star, F. Okumus, N. Hemmington/Hospitality Management 17 (1998) 363—374 367 three 4-star and two 5-star hotels. Five of the hotels were members of hotel chains and the other four were independent hotels. The interviews took place over one month in the summer of 1995. All hotels were visited personally and the interviews took approximately 1 h. In order to ensure complete and accurate records the interviews were tape recorded. Each manager was asked for the details of the most recent change project undertaken in the hotel and then the interview focused on this specific change case. Several main issues were identified and the interviewees were asked for more details whenever necessary. At the end of each interview, a general question was asked about their experiences, approaches, strategies and ideas about change to find out whether they use similar or different approaches in other situations. After completing the interview schedule, all the notes and tapes were transcribed. The transcriptions were then analysed, which included the identification of patterns which were then coded (Miles and Huberman, 1994). Each interviewee was asked whether there was any documentation related to the case. Two managers provided documents but they proved to be of little relevance to the analysis. In some cases, managers were reluctant to provide documents or reports because of concerns about confidentiality. It is interesting to note, however, that in most of the cases there was no documentation generated. For these reasons, documentary analysis proved to be an unsuccessful approach for collecting data in this instance. 4. Findings Table 1 shows the 10 change cases that were investigated. The majority of the cases were implemented shortly before the interview schedule and three cases; ‘introducing multi-skill training programmes’, ‘opening a new reservation department’ and ‘creating a new management position’, were about to be completed. Prior to the fieldwork, the main concern was to find appropriate change cases to investigate. When the interview schedule started, it was clear that there were plenty of cases in each hotel it Table 1 Sample change cases Re-positioning the hotel Re-branding the hotel Computer instalments Updating the computer system Opening a new reservation department Restructuring the organisational chart Opening an engineering department Creating a new management position of a full time duty manager Introduction of multi skill training programmes Changing the menu and the service style in the F&B department 368 F. Okumus, N. Hemmington/Hospitality Management 17 (1998) 363—374 then became important to choose the most appropriate cases for the purposes of the research. Each case had particular characteristics in terms of its scale and content. For example, two cases (‘re-positioning’ and re-branding’) were relatively larger projects when compared to the rest. It was evident that during and after the implementation of these changes, both hotels went through a wide range of fundamental changes in structure, culture, service style and customer type. The scale of the remaining eight cases was relatively small as each case was generally focused on one part of the hotel or tended to have less significant implications across the business. It was evident that the hotel companies were implementing the changes in response to the external forces and to internal problems. For instance, prior to implementation of four of the cases (‘re-positioning’, ‘re-branding’, ‘introduction of multi-skill training programmes’ and ‘changing the menu and the service style in the F&B department’) each hotel had been facing serious problems and difficulties. On the other hand, it was interesting to note that in the cases of ‘opening a new reservation department’ and ‘creating a new management position’ the hotels had not faced any major problems or difficulties, but had decided on change to improve their standards and service quality. However, in the case of ‘opening a new reservation department’, the manager noted that whilst the change was being implemented, the hotel had started to face problems in handling reservations. The findings indicate that change programmes were initiated from both corporate and operational levels. Three of the 10 cases (‘re-positioning’ and ‘re-branding’ and ‘updating computer system’) originated from head office level, the other seven cases were initiated at operational level. When corporate offices diagnosed the need for change at operational level, there was little consultation with unit managers and they usually issued instructions to execute the changes. In cases where the need for change was identified at the unit level, usually by the hotel general manager, corporate offices were required to approve the change. This was usually achieved through a process of meetings and discussions between the relevant people from head office and the manager from the unit. It was observed that in some cases the managers needed to convince key people at head office that the change was necessary and beneficial for the company. The findings indicate that planning activities usually took place after diagnosing the need for change and the consulting and decision stages. Planning activities were generally carried out by the unit managers and their team, although in some cases (‘re-branding’ and ‘upgrading the computer system’) people from head office were also involved. Defining objectives, determining the pace and type of change, developing a timetable for the actual implementation process, resource allocation, recruiting, training, communication, coordination, delegating roles and responsibilities and estimating the costs of change appeared to be the main planning activities. It was also noted that some of the issues considered at previous stages were re-evaluated and through this iterative process plans and objectives were clarified. The majority of managers claimed to have timetables for the implementation of change but they appeared to be open ended and flexible and interestingly none of them would provide a copy for the study. Another issue that emerged was that the F. Okumus, N. Hemmington/Hospitality Management 17 (1998) 363—374 369 managers appeared to analyse change situations in an informal way by drawing upon their knowledge and experience and through a process of trial and error. It was also noted that none of these managers had any formal training in managing change. After the planning activities, implementation took place. In the majority of cases, the implementation stage took more time than the planning stages and the managers generally found implementation the most difficult stage. The importance of time and the pace of change varied with each situation. During the implementation stage communication and training activities also continued. In three cases (‘re-positioning’, ‘re-branding’, and ‘changing the menu and service style in the F&B department’) marketing the new changes to potential customers was also an important aspect of implementation. After the execution stage, the results and progress of each change case was monitored and evaluated in order to ensure that the change was progressing in the right direction. An interesting point was that majority of the managers appeared to monitor and evaluate the results for some time after the implementation. It was noticed that for the first few weeks, more time and attention were devoted to the monitoring activities but gradually the devoted time and attention lessened. In relation to this issue, it was evident that as a result of the monitoring activities, some fine tuning of the implemented change took place and almost every hotel was planning further changes. It was found that in the cases of ‘updating the computer system’, ‘re-branding’ and ‘re-positioning’, the head office of each unit made available the necessary resources and provided guidelines and support in the planning and implementation stages of the change. It was evident that this support and supervision helped the managers in overcoming and solving problems in a more efficient way. Finally, it was noticed that majority of the respondents considered managing change as a learning process. They claimed to have gained experience and knowledge which would help them in the future to cope with the continuously changing nature of hotels. 5. Discussion Consistent with the literature (Carnall, 1995; Mullins, 1995; Sadler, 1995), the research indicated that changes and developments particularly in technology and customer attitudes in the external environment and problems concerning cost and operational inconsistencies in the internal environment forced the participant companies to consider change on an on-going basis. It was difficult, however, to attribute change specifically to either external or internal environmental forces alone. For example, in the cases of ‘changing the menu’, ‘re-positioning’, ‘re-branding’, ‘restructuring the organisational chart’, ‘installing computers’ and ‘opening a new reservation department’ it was certain that both the external and internal environments came together to force hotel firms to consider the need for change. Of the 10 cases, eight of them were incremental changes and the remaining two (‘re-branding’ and ‘re-positioning’) were identified as radical change. All the 370 F. Okumus, N. Hemmington/Hospitality Management 17 (1998) 363—374 respondents stated that incremental changes are more common than radical changes, that they are easier to implement and that they are preferable in terms of overcoming resistance. This is consistent with the literature (Quinn, 1980). Based upon the definitions given by Nadler and Tushman (1990), only one case in the sample could be clearly defined as proactive, that is ‘creating a new managerial position of duty manager’. In this case, the hotel implemented this change despite the fact that there were no immediate problems in this area. It was also observed that in the case of opening a new reservation department, although the change was initially planned in anticipation of future needs, the rate of change was such that by the time the change was being implemented it had actually become a necessity. This illustrates the point that the rapid rate of environmental and organisational change can often lead to what had originally been proactive proposals being over-taken or even superseded by events during planning and implementation. From analysis of the findings, it emerged that hotels generally follow five steps in developing and implementing changes at operational/unit level. These steps can be categorised as (1) analysing the situation and diagnosing the need for change, (2) consultation and decision making, (3) planning, (4) implementation and (5) monitoring (Fig. 1). This corresponds with the proposed five-stage model that emerged from the literature review. It should be noted, however, that not every hotel followed these five steps precisely. It appeared to depend upon the context of the change. In two cases (‘introducing multi-skill training programmes’ and ‘creating a new managerial position’) the managers combined the analysis and consultation stages while in the case of updating the computer system the implementation and monitoring stages were also combined. As illustrated in Fig. 1, there are some overlapping areas between the stages and in practice it is often very difficult to distinguish between stages. Therefore, the proposed five-stage model should be seen as indicative of practice rather than as a prescriptive linear change management process. There was no indication in any of the 10 cases investigated that Lewin’s three stage change model was used or applicable. According to this model, managers should first unfreeze or demolish the existing status quo or practices. It was observed that in some cases such as ‘re-branding’, ‘re-positioning’, ‘changing the menu and service style’, ‘opening a new engineering department’ and ‘installing computers’ the hotels did indeed abolish the existing status quo. However, in some cases such as ‘installing new computer software’, ‘creating a new management position’ and ‘introducing multitraining programmes’ they did not abolish the status quo but they built the changes onto existing practice. Lewin’s model also indicates that after the execution of change, the new situation should be refrozen. It was noted in this study that hotel managers rarely seek to refreeze the new position; it was evident that after every change some fine tuning took place and almost every hotel had plans to implement further change. In short, consistent with Moorhead and Griffin’s (1995) arguments, Lewin’s unfreezing and refreezing stages do not appear relevant to current organisational practice. In fact, it appears that the monitoring stage (Step 5, in Fig. 1) is often linked back to the analysis and diagnose stage (Step 1) making change a continuous process in hotel firms. F. Okumus, N. Hemmington/Hospitality Management 17 (1998) 363—374 Fig. 1. The main stages of a change process at operational level in hotel firms. 371 372 F. Okumus, N. Hemmington/Hospitality Management 17 (1998) 363—374 It emerged from the findings that both head office and the unit general manager played an important role in implementing change. Head offices were found to be important in terms of support and approval while unit general managers appeared to be the key players in as much as they were the ones responsible for the planning, implementation and monitoring of the change process. Head offices seem to hold the ultimate power in developing and implementing change as unit general managers invariably have to consult head office if they want to implement changes. In relation to this issue, it was noted that in several cases the head office and hotel worked together at every stage of the change process and that this cooperation made a big difference in achieving the aims of the project. In other words, the level of active cooperation and communication between head office and unit general management appeared to be an important factor in developing and implementing successful changes at operational level. None of the respondents mentioned using any analytical tools such as the systems approach, force-field analysis or stakeholder analysis. It was also noted that none of the managers had any training on managing change and that the majority of the managers found the implementation stage the most difficult, risky and time-consuming part of a change process. Perhaps, this was because the majority of them appeared to have spent less time in the analysis and planning stages than in the implementation stage. Finally, the findings of this research indicate that managing change is a learning process both for the organisation and for the individual. Almost every manager stated that they had gained experience and knowledge of the change process which has helped them to cope with the continuously changing nature of hotels. This confirms the arguments of Carnall (1995) and Grundy (1993). It was not clear, however, how this knowledge and experience could be kept within the organisation shared and used for further changes. 6. Conclusions and implications This research has focused on the management of the change process at operational level in hotel firms. The research findings indicate that reactive and incremental changes are more common in hotel firms. A five-stage model of the change process is proposed arising from both the literature review and the primary research. This model focuses on the on-going, continuous nature of change where both centralised (head office) and local (unit) decision-making have an important role. Active coordination, cooperation and communication between these two levels is a key factor in developing and implementing successful change at operational level in hotel firms. On the basis of this research, it is recommended that hotel companies develop a dynamic and responsive organisational culture where change is seen as the norm and is accepted as part of the normal process of organisational evolution. To achieve this hotel firms should train their operations management staff in the planning and management of change situations. They should also encourage managers to be more proactive in their management such that the need for change can be anticipated. F. Okumus, N. Hemmington/Hospitality Management 17 (1998) 363—374 373 This research has several limitations. It is probably the first empirical research carried out into this area in hotel firms. Therefore, there was no possibility of comparing and contrasting the research findings with the previous research results. In addition, this research is perhaps unable to provide a whole picture of how hotel companies engage in change starting from the head office level and coming down to the regional and operational levels. This is because due to time and resource constraints, a limited sample was selected and the data was collected only from operational/unit level. Finally, it is important to remember that these findings are based on reported data and as such are subject to the honesty and personal perspectives of the respondents and may not, therefore, truly record actual events. The limitations of this approach are perhaps best illustrated by the fact that the respondents claimed to have timetables for change but when asked none of them was willing to provide a copy for the study. 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