hm 582 case study

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THE PROSPECTOR HOTEL

This month, July 2001, John reflected, was the 14-month anniversary of his becoming the general manager of the Prospector Hotel. While business was improving, John Austin was not yet satisfied with the way the hotel was operating, especially the front desk. In fact, two of the front desk clerks, Reese and Estelle, had recently come to him and requested that he hold a meeting with the front desk personnel. John knew that some of his recent decisions as well as those of his direct reports had met with staff resistance. A meeting, the first of its kind, had been scheduled with the front desk staff for five days hence. John had to prepare himself for this meeting very, very carefully. THE FRANKLIN YEARS For over 25 years, Charles “Chuck” Franklin had managed the Prospector as general manager. He had also served as the president of the hotel for the last 15 years. Chuck had been very successful as a general manager. He learned his trade through apprenticeships and on the job experiences, as opposed to formal schooling. He was very autonomous, rarely solicited input from department managers, and he alone made almost all decisions, ranging from selection of vendors of toilet paper to staff hiring on his own. Between 1995 and 1997 he successfully executed a 110-room expansion of the hotel, bringing the total number of rooms from 106 to 216, more than doubling its room supply. Franklin turned 60 years old in 2000. The rumor was that his family had demanded that he slow down. After considerable thought, Chuck finally decided to leave the general manager’s post but to remain as the Prospector’s president. Franklin chose John Austin, the sales and marketing manager, as his successor. John had started his career with the Prospector hotel in 1988 as a front desk clerk. He was then about to complete his B.A. degree in English from the local university. John was very shy and didn’t seem to fit into the culture as did the other young people who worked with him at the front desk. A story circulated that long-standing family trouble had put its mark on the young man. John was serious minded and very different from his more outgoing coworkers. Chuck, however, seemed to like John and, in 1990, John was promoted to front-office manager. The Prospector’s two main divisions were food and beverage, and rooms. As front-office manager, John was effectively in charge of the Prospector’s rooms division. The food and beverage manager, however, had more experience than John and was also the Prospector’s assistant general manager. In 1992, Chuck Franklin saw an opportunity for expansion of the hotel. To concentrate his efforts on this expansion, Chuck leased out the hotel food and beverage operation to a partnership formed by the managers in the existing department. This lease secured a fixed income for the hotel from its food and beverage operations, a department that had historically drained cash flows. Now, the only real operating unit of the hotel was the rooms division. John’s title changed from front-office manager to assistant general manager, although his duties didn’t initially change at all. Eventually, John took on sales and marketing assignments from Chuck, but John realized as the years went by that he wouldn’t get promoted further at the Prospector as long as Franklin remained as the general manager and president. John’s frustration with the job only increased when Franklin never solicited John’s input on the design of the new addition of the hotel. In spite of the exciting times that seemed to be ahead at the Prospector, with the opening of the new wing in the summer of 1996, John didn’t feel he had reached his full potential. That fall, John was approached by a local developer, who had a 100-room Holiday Inn hotel under construction. John accepted an offer to become the Holiday Inn’s general manager and left the Prospector in January 1997. The hotel gave a minor farewell party for John but only the front desk staff showed up to wish John well in his future endeavor. The Holiday Inn opened in July 1997, two months after its scheduled opening. John felt both relieved and relaxed at the Holiday Inn. He seemed to thoroughly enjoy his job. The Holiday Inn had a hard time establishing itself in the market, however, in part because it opened two months later than originally scheduled because of construction delays. This was troublesome to the owner as the hotel was heavily leveraged, but didn’t seem to affect John at all. John had attracted some staff with him from the Prospector, possibly due to the excitement that comes with opening a new hotel. John also managed to attract many of the Prospector’s regular customers to the Holiday Inn. His enthusiasm for his position at the Holiday Inn was evident. He even worked with the construction crew and several hotel workers during the last weeks before the opening, carrying mattresses into the rooms, fitting light fixtures, and moving furniture around. Despite John’s efforts in marketing the hotel, the Holiday Inn never quite generated enough revenues to cover its debt service. Six months after the hotel opened, the owner had to file for bankruptcy and the mortgage bank took over the property. Due to John’s lack of financial background, he was reassigned as the Holiday Inn’s operations manager while a young and locally prominent businessman was brought in as general manager. In the meantime, Franklin had trouble finding a replacement for John at the Prospector. He hired Bob Stockmen, who had a background in public relations and in the travel business, as assistant general manager to focus on sales and marketing. Franklin had not considered an in-house candidate for the position. Bob began hiring his friends into sales to handle room reservations, although these positions historically had been filled with people from the front desk. The front desk staff developed an adversarial relationship with Bob. Bob had never worked in a hotel before, and his staff in the sales office produced erroneous reservation forecasts that seriously affected the front office. Harriet, the front desk clerk with the longest tenure, and others actually began talking about the good old days when John was in charge, because “then you could at least rely on the room reservation count.” Whether it was due to serious frictions with the front desk or due to his inability as a manager, Franklin eventually terminated Bob in late 1998. The economy was hit by a recession in late 1998. To replace Bob, Franklin wanted an assistant general manager with a finance background. He hired Steve Stoller, an MBA from the University of Rochester, who, while locally well known, did not have any hotel experience. The economic recession affected local restaurants and food service establishments very hard, and the partnership that had leased the Prospector’s food and beverage operation had to file for bankruptcy in early 1999. Franklin terminated the lease immediately and the hotel took back the food and beverage operation. Although most employees in the food and beverage department retained their jobs, Chuck Franklin had to fill its managerial positions since the partners who previously managed had left. JOHN RETURNS With Steve Stoller installed as financial manager, Chuck Franklin needed someone to manage sales and marketing at the Prospector. He contacted John Austin at the Holiday Inn and quickly made him an offer that was accepted. There were mixed feelings at the front desk about John’s return. Some people welcomed him back, as they were tired of the confusion that had existed ever since his departure. As sales and marketing manager, however, John didn’t get involved in front desk operations. He did supervise the reservations department, which was in very close contact with the front desk. John got his old office back next to Chuck’s office, while Steve moved to another office down the hallway. John was soon quite successful in managing the marketing and sales function of the hotel. Since its expansion in 1996, the hotel hadn’t been able to secure its fair market share, but 1999 seemed to be the first year the hotel would regain it. The front desk staff seemed somewhat more satisfied with the way things were going—at least reservations were more accurate now than they had been in the recent past. In March 2000, a year after John’s return, Chuck Franklin prepared to retire as the general manager of the hotel. He approached Steve to offer him the position. Steve declined the offer and resigned from the Prospector a month later. Franklin then hired Brian Brown who had been a financial manager at a small computer firm but had no hotel experience. Franklin was interested in having the hotel’s internal control system revised and considered Brian a good choice as financial manager. Brian in turn, with Franklin’s permission, hired Tom Piper to be in charge of the hotel’s internal control function (accounting). Tom was a graduate of Florida International University’s hotel program and had actually worked at the front desk under John’s supervision 10 years earlier. One Saturday morning in early July, Emily, the telephone operator on duty, was reading the newspaper. To her surprise, there was news in it about a new general manager at the Prospector Hotel. The article said that John Austin was to replace Charles Franklin as the hotel’s general manager with Franklin remaining president. The news spread swiftly around the hotel, that John would replace Franklin as general manager as of next Friday. At noon, when John arrived at the hotel, people congratulated him on the news. Reese, president of the staff club, congratulated John on the news, but also expressed concern that the staff wasn’t notified before the press on the change. John felt a little embarrassed. Despite the shift in top management, nothing in the hotel seemed to change. Franklin was still the president of the hotel and continued to occupy his office. There was no party or any formal ceremony for the new general manager. No one replaced John as the sales and marketing manager of the hotel. Within two weeks, John decided to move his office to the space occupied by the reservation department next to the front desk. The reservation department in turn moved into a section of the sales office. John’s stated rationale for the change was that he wanted to maintain closer contact with the guests. The gossip among the front desk staff was that John switched offices so that he could observe them more carefully. Not only could John now observe everything that went on the front desk through the glass doors to his office, but he could also overhear the back room of the front desk where front desk clerks typically took breaks to chat over a cup of coffee. THE FRONT DESK Because John’s hotel background was in front-office operations he believed that the front desk was the nerve center of the hotel, and he was very concerned with having it run smoothly. Karen Thompson, Franklin’s daughter-in-law, had been the rooms division manager for four years. Two shift managers reported to Karen and supervised the front desk clerks. Karen’s regular day-to-day duty was to perform the morning audit and balance the accounts receivable from the previous night as well as to hire and schedule the front desk employees. While the front desk clerks liked Karen, they never approached her when there were problems but instead went to the shift managers with their concerns. The front desk was predominantly staffed with women. Their average age was below 30. Although the turnover was quite high compared to their competitors, most employees had worked there sometime before. The clerks seemed to like their jobs as they frequently returned after being away a year either at school or at some other job. The front desk job was busy and thus interesting. All clerks had to work both day and night shifts. The younger clerks liked the night shift because then there were no hotel managers around. During the winter-time, especially during midweek when business was slow, the clerks frequently had time to watch TV, read books, or just chat and get to know each other. Consequently, the clerks got to know each other extremely well and many of them developed strong friendships. The few older front desk clerks were typically women in their midthirties. There were so few because most of them did not like the assigned night shifts for all clerks. When John became general manager, there were just two older clerks, Grace and Harriet. Grace had worked at the front desk for two years, whereas Harriet had worked there for almost six years. Harriet was single and didn’t mind working night shifts; she was also the most familiar with the computer system, which frequently broke down, especially during the night. She was frequently consulted when the system crashed. The hotel provided the front desk clerks with uniforms. They were supposed to wear a white blouse that was provided by the hotel with the uniform as well as a bow tie. The clerks, however, frequently wore their own blouses. Karen, Franklin, and John never reprimanded the clerks for doing this. Karen wore her black uniform any way she wanted. The front desk clerks, as well as Karen, also had the habit of arriving 10 minutes late at work almost everyday. The front desk staff, however, consistently received outstanding ratings from the guests of the hotel, better than any other department. As the front desk was located adjacent to the hotel entrance, it could become quite cold in the wintertime, especially during the night. For quite a while, the front desk clerks had asked to have the skirts replaced with pants since the skirts were too cold to wear in the wintertime. Franklin, and John, had always been against it, as they thought it was more appropriate for female employees to wear skirts rather than pants. Christine, the personnel manager and an avowed feminist, had recently persuaded Franklin to change the uniform. Although Franklin was no longer the general manager, he still seemed to be in charge of most things at the hotel. While he didn’t often interfere with things in the rooms division, Franklin was quite involved with the food and beverage department. For example, he decided to run an upcoming state banquet in honor of Tony Blair, Prime Minister of England—something the Prospector had never done before. Yet John felt Franklin’s presence. One day John asked one of his staff to buy new telephones as a safety stock for the hotel rooms in case of breakage. Franklin however, liked neither the color or the design of the phones chosen. “This is what happens when people start to think,” he said to an acquaintance. John soon started his old habit of going behind the front desk to observe the clerks working. One thing got especially on their nerves. John frequently positioned himself behind a desk clerk when that clerk was registering a guest. This would make the clerk nervous as well as the guest uncomfortable. If the clerk made an error, John would intervene and start ordering the clerks around or even reprimand them in front of the guest. One day he caught a front desk clerk directing customers to the banquet room in a manner he didn’t agree with. John shouted at her in front of the guest, and just before slamming the door to his office was overheard to say, “I am glad she is leaving, that stupid girl.” In the fall of 2000, several front desk clerks quit. The younger clerks were frequently recent high school graduates who had dropped out of college and believed their job was a temporary one. Frequently, they returned to college after a year or two at the Prospector. The turnover of the front desk clerks was always higher in the fall. This fall, however, both shift managers quit to resume their studies at the local university. Luckily, at the same time, Jackie Ross, who had worked with John at the front desk seven years earlier, approached him for a job. John, who always had liked Jackie, hired her immediately as a shift manager. Harriet had informed Karen, who was one of Harriet’s best friends, that she could barely stand the night shifts anymore. The night shifts were tiring and Harriet, who was overweight, found them difficult. Harriet’s extensive work experience at the front desk, in Karen’s mind, made her an ideal candidate for the other position. Reluctantly, John agreed to Karen’s proposal to promote Harriet, although he had some doubt about this decision. In early 2001, Amy Eastman, a recent graduate of California State Polytechnic University’s hotel program, also approached John for a job. Amy had worked as a front desk clerk and supervisor at the Los Angeles Sheraton. John thought Amy would be an excellent candidate for a shift manager, but there weren’t any openings. While John never expressed any concerns regarding Harriet’s performance as a shift manager, he now had Amy as a candidate so he hired her as a shift manager at the front desk without conferring with Karen (see the Appendix for the hotel’s organizational chart). Harriet resumed her duties as a front desk clerk. Amy’s supervisory style was different from what the front desk clerks were used to. She became unpopular with the other clerks as well as with Karen. Instead of arriving 10 minutes late to work, she arrived 10 minutes early. She frequently reprimanded the clerks for spending too much time in the back room as opposed to staying at the desk itself. She also asked clerks frequently to type letters and reports for her as if they were her secretaries. Her behavior toward guests was very different from theirs. In the past, shift managers had always been hired from the ranks of front desk clerks, with only one exception when five years earlier John had hired an outside person as front-office manager. That woman was made uncomfortable by Harriet and Karen, who then were shift managers. Amy never approached Karen with any problems. She went to John. A NEW SYSTEM One of John’s first major decisions as general manager was to select a new property management system for the Prospector. The current system frequently broke down and maintenance costs were alarmingly high. John wanted to install the new system by March. John showed Karen demonstration packages of three systems. Karen in turn consulted Harriet on which system to select. John ended up choosing the system that Karen and Harriet liked the least. The system John chose had never been installed in a hotel as large as the Prospector. John especially liked a feature that allowed the sales department to book function rooms directly on the computer. The rumor was that Franklin liked this system as well, because it had “nice color screens.” Neither Karen nor anyone at the front desk knew of John’s decision until he approached them on a Tuesday and told them that the new system would be installed during the upcoming weekend. He installed a personal computer in Karen’s office and asked her to translate the menus in the system because it came from a foreign vendor. Karen managed to translate the menus with minor difficulty. The system was installed over the weekend.

The front desk clerks didn’t receive any training on it, because they could “pick it up on their own” as John put it. There were major problems with the new system—more serious than the problems experienced by the front desk with the old system—the first three months after it was installed. Karen, Harriet, and other front desk clerks were quite upset, in part because they hadn’t been consulted on the selection of the new system. Furthermore, they learned from the sales department that they weren’t using the function room feature of the system enough that John liked so much. However, Jackie and Amy, the new shift managers, seemed to accept the new system. Amy quickly developed more competency in the system than everyone else. The summer of 2001 looked quite prosperous in terms of room reservations. Several veteran desk clerks returned to work during the summer, which was historically an extremely busy season. Reese and Estelle, who had been attending college during the winter, returned. Since they had worked the prior summer, they were already familiar with the hotel but not familiar with the new computer system. Sally, who was about to finish her law degree, and had worked at the Prospector two years earlier, also was hired on to work at the front desk over the summer. Sally had worked with the old computer system and had been quite familiar with it. She had worked on the same shift as Harriet and they had gotten to know each other pretty well. Sally and Harriet were almost best friends. She was also a good friend of Karen. Sally quickly developed a dislike of the new computer system, condemned it frequently, sometimes with reference to John’s incompetence as a manager. Karen, the rooms division manager, went on an extended vacation in June. In the past, the shift managers had filled in for her. Karen’s absence never seemed to slow things down at the front desk in the past. This time, however, John replaced her with Clarice Grubman. Clarice had worked at the front desk three years ago. The past two summers, however, Clarice had worked in the accounting office. Last summer, she had actually become close to Brian, the financial manager. Brian, who was divorced, and Clarice had started dating that fall. While Clarice was well liked by the front desk clerks, the rumor spread that Clarice got her summer job because “she slept with that guy in the accounting office.” Clarice was a very quiet and reserved person. Her experience at the accounting office made the morning audit easy. The rest of her days she spent doing some minor accounting work, while she replaced the clerks and the shift managers on break. Clarice, however, seemed unaware of the tensions that existed within the front desk staff and between the front desk staff and John. At this time, Brian became increasingly aware of a problem related to the front desk’s cash drawer; no two counts of the cash balances in the drawer ever seemed completely balanced. Rather, they fluctuated in an overall downward trend. As financial manager, Brian believed he had to do something about it. He also believed Karen was an incompetent manager and resistant to change. Brian decided to make changes while Karen was away. The problems with the cash drawer at the front desk had existed at the hotel for over five years. Neither Karen nor John had ever taken the time to try to solve the problem. One Monday morning Brian took the book where clerks registered their counts. He saw that the cash balances over the weekend had fluctuated dramatically between counts. Both Harriet and Sally had been on duty over the weekend. In red ink, Brian wrote comments all over Sally’s counts. Later that afternoon, he designed a new form to be used to log counts, and posted the following memo in the room behind the front desk:

TO ALL FRONT DESK CLERKS

This form should be filled out each time you count the drawer and should be included with your audit to the cashier. Brian The clerks were furious over Brian’s initiative. He hadn’t ever consulted anyone at the front desk before making the changes. Sally condemned Brian’s approach in doing this, as well as Clarice’s lack of supporting the clerks, only referring to her as “the chick that sleeps with him.” Jackie and Amy, however, seemed to support Brian’s decision and they were pleased that someone finally had taken the initiative of getting a problem solved. John was not aware of what had happened. The tensions started affecting the already strained relationship between the clerks and Amy. Reese, who had worked under different shift managers last summer, complained to Jackie about Amy. After their shift one day, Reese and Estelle approached John asking him to initiate a meeting with the entire front desk staff. Reese was well liked by the front desk clerks and by John. John said he was happy to have the opportunity to meet with the front desk clerks and told Reese and Estelle he would schedule a meeting for next week. The meeting would just be general in nature. It became widely known among the front-office personnel that Reese and Estelle wanted to discuss Amy’s supervisory style, Sally wanted to discuss Brian’s behavior, and everyone wanted to discuss the computer system. John scheduled a separate meeting with Jackie to prepare for the general meeting. Jackie told John about the friction between Amy and the clerks. John was surprised that this problem had existed so long, for nearly seven months. It seemed strange to him that a hotel that did such a great business would have problems of this nature. APPENDIX: PROSPECTOR HOTEL ORGANIZATIONAL CHART—2001

Read the following: The Prospector Hotel. (pgs. 239-246)

2. Read the case carefully. Assume you have been hired as a Consultant to analyze business operation. In an essay, answer the following: Based on the information presented in the case:

3. What are the organizational strengths presented in this case?

4. What are the organizational weaknesses?

5. Suggest initiatives to help increase productivity. Would you recommend changes to the departmental staffing structure? Why or why not?

6. Submissions will be graded against the “Writing Expectations” rubric posted in our online classroom as well as the strength of strategic recommendations.

7. Apply APA formatting (title page, introduction, in-text citations, concluding paragraph, headings, and reference page).

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