Background: Heywood Hospitality is a hotel management company, specializing in t
ID: 432946 • Letter: B
Question
Background:
Heywood Hospitality is a hotel management company, specializing in the management of full service, branded hotels throughout the United States. The company started 20 years ago by the two founders and has grown quickly and steadily since. The company manages the owned hotel portfolios for several large insurance companies. Presently, the company manages 85 hotels throughout the United States. The brands managed include Hilton, Marriott, Wyndham, Westin, Sheraton, Crowne Plaza, and Embassy Suites.
Currently, the company is structured in two ways. The operational structure for the actual day to day oversight of the hotels is based on geographic areas. The Senior Vice President of Operations reports directly to the CEO. There are 5 geographic areas, each area is led by an Area Vice President of Operations
Which is SVP operations: West, East Coast, Mid Atlantic, Southeast, and Central
Each area has a small team which is focused by discipline:
Area Vice President: Area Director HR, Area Director Revenue Management, Area direct sales, Area direct finance
Each of the Area Director positions report to the Area Vice President and provides direction and support to the hotels in their area.
In addition to the Operating structure, the company has small discipline specific teams which serve as resources to the operating teams. Each of these reports directly to the CEO.
CEO: SVP operation, SVP sales and marketing, SVP revenue management, SVP finance, and SVP HR
Each of the corporate teams provide overall policy, procedures, and support for the area teams.
For example, the SVP of HR develops human resources policies and procedures which are to be implemented by each of the area teams. The SVP of finance develop policies and procedures which are to be implemented by each of the area teams. Etc. No one on the area teams reports to their corporate discipline on a direct line basis, but informal relationships exist.
This structure has been in place since the origination of the company. As the company has grown, the company has added Area teams when the number of hotels increased to the point that these teams could be financially viable. For the corporate teams which report directly to the CEO, the number of people on the teams has been increased as well, as necessary. There are about 4 people on each corporate team, including the SVP. Team member positions range from Director to Coordinator (secretarial/administrative).
The CEO believes that while this structure has generally worked well, there are some significant issues arising as the company continues to grow. The CEO has asked you to recommend a new structure to improve the performance of the company.
Here are the challenges the CEO sees with the current organization:
The discipline SVP’s have a difficult time in getting cooperation from the area teams on certain issues. If the SVP of operations or an Area Vice president does not believe a policy to be effective, they simply don’t implement it.
The Area Vice Presidents have a difficult time getting specific assistance from a Corporate Team on issues which may be important to their geographic area. They feel that the corporate resources are too stretched to be anything but policy factories.
Each Area tends to try to keep hotel General managers they like and who perform well in their area – and not allow them to be promoted into another region. In addition, the Area Vice presidents tend to “push off” their poor performing GM’s to another Area VP by not disclosing performance issues. Over time, this has led to a number of promotions of poor general managers into another area.
There are growing inconsistencies between the areas with respect to discipline activity. For example, the Area Director of Finance in the West has an outstanding process of communicating with owners and asset managers. The Area Director of the Southeast does not follow the same process. As a result – owners (who may have hotels in both regions) are beginning to complain about these inconsistencies.
The Area Directors generally do not cooperate with each other. They focus on serving the hotels in their area and making their Area Vice President happy.
There is no promotion route for an Area Director to move up.
The Area teams complain that the staff on the Corporate teams have no hotel experience and “don’t understand” how hotels operate.
There is limited cooperation between the corporate discipline teams, and each fight with each other for resources constantly.
There is no “bench” for promotion to a corporate team from the field. If a corporate SVP were to leave the company – they would need to be replaced with someone from outside the company.
Since the corporate team skill sets are so unique – it is virtually impossible to shift resources between teams when that is necessary for a project. What ends up happening thus is that the company needs to hire temporary consultants rather than simply allocate existing resources.
The CEO wants you to recommend a new structure which addresses and hopefully solves these problems, or at least mitigates them. You must incorporate your knowledge of how individuals behave and how they are motivated as well as how best to accomplish the goals of the organization.
You cannot change the number of areas – unless you figure out a way to dramatically increase the scope of the teams to oversee the number of hotels in their area. Each team is now at its “maximum capacity”.
You can change the levels in the new structure. For example, SVP’s in the current structure could be Director level in the new structure – however you can do this ONLY if their responsibilities are changed (reduced) as well.
Finally, the new structure cannot have more people nor cost more than the current structure. You will need to develop your new structure with the same or less cost and the same or fewer people than the current structure.
Your paper must address each of the 12 items of concern. You may not be able to solve all of them, but you can improve each of them.
You must include revised org charts in your paper. Use the “Smart Art” functionality in Word.
Explanation / Answer
CEO SVP SVP S&M SVP REV SVP OPERATION SVP FIN. SVP - HR AVP AREA DIR. HR A.DIR. FIN A.DIR sales A.DIR rev A.DIR All regional verticals should report to the Regional Heads (AVP’s) along with a direct reporting to the SVP vertical team. For eg. The Area Director HR will report directly to the AVP and would mark the communication for consent / clarifications to the SVP- HR. Any discussion will have to be arrived with the consent of all three after discussions. The responsibility of implementation of any policy would be directly on the area Director of the vertical. For eg :- for any HR related policy, the Area Director HR will be responsible for his area. The AVP will be second person in line responsible. For approvals and specific area related policies, the SVP vertical will be directly responsible. For eg. If there is need for any special / specific HR related issue / policy in any particular geography, SVP – HR will be responsible to get it done with consent of the AVP. All matter till executive / entry level should be taken responsibility by the vertical Area Head with approval from AVP. This may include increments, recruitments, transfers, promotions, cross- functions.. etc. For All matter of Mid- management and above, there should be a information and consent for the respective vertical and AVP both. No transfers, increments, promotions should happen without the consent. This will help the SVP team to guide and manage the inter- zone, regional transfers and cross training as well. The maximum time spend at one post and one location should be determined, say 3 years. After which, the management can take a decision either to transfer to extend it to the next 3 years, OR promote the person. Eg.. SVP –HR can spend three years in one region, after that he will either be relocated to a different region or may be promoted for higher responsibilities. The AVP’s should be given opportunity to serve the organisation with greater responsibilities’ as SVP of some verticals. This may be linked to a criteria of having served in at least 3 regions. The responsibility of all assets and resources must be regional. Any lose or addition would be the responsibility of the regional vertical head and the AVP. There has to be a clear guideline and in NO circumstance should the company loose business due to lack of resources. Reward and Recognition of at least two to three person from each vertical should be identified at regional level and they should be awarded at the HQ in the presence of all regional teams. This would build / develop a healthy competitive environment in the company. The candidates chosen this way may get higher opportunities in the organisation. The SVP should sholder the responsibility for smooth functuning of cross function at the regional and central level. He could organize training, getto gathers, know your colleague... R&R etc.. at regular interval to keep employees motiavated. Monthly news letters, from the central team could be circulated highlighting regional best performances and practices.
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