Is Rationalization a Good Strategy for Junction Hotel - Case Study Example

Rational Organizations (Student Name) (Institutional Affiliation) Management (Instructor) April 25, 2013 Is Rationalization a good strategy for Junction Hotel? In this era, due to growing level of globalization within hospitality sector, hotel organizations would require to learn various management processes to thrive and growth in environmental situations that has greater uncertainty levels and also understand effects of foreseen impacts either negative or positive, of their fragile industry. As business and international trade expand, there is no doubt that global linkage would be more significant for hotel industry. The proprietor of the Junction Hotel, Mr. Simon Chance upon purchasing the hotel realized that the business was not operating efficiently and smoothly. The hotel has no defined responsibilities, roles and structures within the organization. Besides, the absence of IT system, procedures and rules render the situation more badly. The problems have compounded from poor organization and management to deteriorating interior and outdated equipment. The business appears to be sitting on time-bomb. With the current economic situation, analysts have projected that the hotel industry would experience declining growths, and this adds more problem to the already ailing Junction Hotel. The global leisure industry is yet to cover the business travel reduction which is critical for the recovery of the industry. Thus, reduced rates of rooms which could be attractive to more of last minute customers could be the strategy in beating other industry rivals. The reduced rates of room imply more efficient operations and cost cutting that it is currently. However, under the current economic situation this can hardly come true. Therefore, rationalization of this Hotel appears to be an enviable strategy. This paper starts by introducing the major facets of rational organization, comprising some operating principles and theories and offers some examples in its application within the modern organizations. The paper then, explores the aspects of a rational organization, the merits and demerits. Finally, a brief conclusion follows. The owner has thought of a new organizational strategy so that the Hotel could recuperated and become what it used to be and he sees rationalization as to only viable strategy. Rationalization is the process of organizing an organization through management principles so as to acquire efficiency and is normally achieved through downsizing, for instance closing or selling plants or minimizing the workforce. Through enhancing efficiency it could reduce the operational costs of the hotel and this saved money could be deployed in renovating the deteriorating hotel. The problems within Junction Hotel cannot attract the high-end clientele that the organization purports to serve. The deteriorated condition of the Junction Hotel alongside the exorbitant room rates is one thing that customers cannot oblige to consider paying for particularly within the present economy where the expenses of people are increasing due to taxation and a dwindling economic climate rendering people with fewer disposable incomes. In addition, with the global hotel industry seems as if it would be highly profitable there would be heightened competition for Junction Hotel and several options of hotels for clients. According to Scott (2008) organization structures is based of authority, order and logic with clear emphasis on hierarchal control, promotion through merit and division of labor with the idea that it offers perfection within corporations. Companies adopt this structure with the confidence of enhanced efficiency, but have ignored social organization and as well as their impacts. Scientific organizational management developed by Fredrick Taylor, strives to simplify business operations through abiding by outlined standards. These standards routinize work, arranging it within duties so as to attain optimal efficiency, providing managers a span of control and responsibility. The principle of Taylorism argues that rational organizational framework is established depending on the business size (Morgan, 2006). A simple design should be deployed in companies that have relatively few employees, for instance a retail store. This type of design normally has one employee, in most cases the manager who supervise the majority of workforce. It a hierarchal structure that is similar to a pyramid, depicting the manager having the huge control span. The control span transfers all responsibility for work organization from the employee to the manager, meaning workers only need to execute the tasks which the manager has allocated them. As the organization expands and growths, a more sophisticated rational design should be implemented to make sure that efficiency remain at optimum. Bureaucracy is known to be such a more complex design. The design of bureaucracy applies similar concepts of a simple design, while has more number of managers and particular operational sections or departments, creating the command chain (Morgan, 2006). The design of bureaucracy applied more regulations and rules compared to a simple design because of the higher number of workforce who have supervisory power over the others. This is done to ensure that there is a definite discipline direction, making the employees to be aware of the person in charge. Such a direction would be the scalar chain, indicating the authority line because of the unity of command. Again, it renders it apparent what each employee need to attain, because it is being developed by meticulous departments. This would also imply that training for particular job could be accomplished by employees, thus rendering them more efficient (Coghlan, 1994). This is of significance to rational corporations, for example the theory of McDonaldization developed by Ritzer (2008) which argues that efficient employees could carry out their duties more easily and rapidly. This also is attained in bureaucracies through operating more less like clockwork with the employees having to carry out predetermined set of duties, take a rest at given period, and get back to their duties until the job is over. Typically, this is an illustration of how bureaucracies are established to operate. Morgan (2006) refers to the organizations which posses these design features as business which are operated and designed as if they are robots. It has been suggested that rational business designs assist enhance management of business and reduce costs, overall optimizing the business efficiency and creates a positive effect on the business. A classical example of an organization today that has applied a rational business model to accomplish this is the McDonalds. Through producing restricted the menu options, the organization can easily allocated duties to specified sections or departments that have to be accomplished within a given period of time, hence routinizing the job. This improved control since managers (or higher authority employees) could keep an eye that the sections are accomplishing their outlined tasks to make sure that food is efficiently and quickly made to allow customers get their fast food. Again, through offering a restricted menu, the business minimizes costs and as pointed out by Ritzer (2008), the restricted number of items on the menu also permits a more efficient ordering of supplies and food. McDonalds does not spend money purchasing items that could be wasted as a result of decline in customer demand and there in no additional room in the streamlined process implying further recruitment of staff or buying of supplies or equipment. The other contemporary example within this industry is the Travelodge Hotel which has implemented rationalization, in respect to value engineering. According to Davis (2009) organizations such as Travelodge engage in an activity known as value management to enhance quality, trim costs and optimize its processes. Value engineering comes as consequence of this operation, where organization minimizes costs by eliminating frills that all not every customer needs. Davis (2009) for instance emphasizes the fact that there are no shampoos within the Travelodge’s bathrooms. Through implementing this rationalization constituent, the business reduces costs, yet does not necessarily lower the customer value, because they have already factored the benefits verses costs. The above illustration indicates how rational business design is done is present businesses. Nonetheless, it was originally developed by the Great Frederick in 1700s. Morgan (2006) discuss on how the Great Frederick established rational organization to enhance control within his military. He lowered “soldiers to automatons” through the introduction of uniforms and ranks, improved task specializing, regulations, systematic training and command language. On introducing these frameworks to his army, the soldiers were taught and drilled to fear their bosses, thus improving the control which the higher level ranks within the hierarchy had on the lower level ranks. This transformed the disorderly mob to machines and accomplished commands which Frederick developed. This is an illustration of how rationalization process has enhanced control, even in the case of the somehow primitive organizations. In spite of rational business models evidently indicating positives for organizations, likewise the design also has negative effects on both workers and the business. When an organizations adopts a rational business model there would be certain limitations. Morgan (2006) identifies some of these limitations such as the major challenge in adapting to circumstances which are constantly changing. According to Ritzer (2008) argues that whereas efficiency is an admirable thing in general terms, it does result to the worker’s dehumanization as business focus on improved efficiency. On this note, BBC article Anonymous (2010) points out that bureaucracy obstruct social employees, with about one fifth of 4200 social workforce indicating that they had “enough time to effectively work with the younger individuals within their case load” and about 40% of the workers who differed indicated that their “workload was basically too huge”. This scenario is associated with bureaucracy that the business has. Workers find it difficult to spend time with their families and children face-to-face because of the organizational structure, thus making employees feel dehumanized since they have massive paperwork, and have less time to focus on cases which they are meant to be tackling. Morgan (2006) also supports this argument by stating that mechanistic systems could have dehumanizing impacts on workers, particularly on those employees are lowly ranked within the business hierarchy and also due to the fact the assembly-line job is basically alienating. Mechanistic approaches that originates from rational design also makes workers adopt unquestioning, mindless attitudes that accordingly results in some employees declining a new responsibility or job change since already they have a clue of what they should do because of the delegation and management rationalization. Viewing this effect on a long run perspective, it appears that a business would find it hard to change the bureaucracy that it has created already. The other challenge of rational models which was suggested by Morgan (2006) is that people working in companies take precedence over the organizational goals that the business aims to attain. Rational organization could also result to massive bureaucracy as it were with the case of UK workers that hindered the ability of workers to effectively operate (Anon 2010). Business models such as Taylorism could cause segmentation with within the work environment and such could create hurdles which are unfavorable for organizational success. In respect to the scientific management theories epoch derived from the industrial stage, a rational element ought to have a well-established bureaucracy, this implies a precise definition of responsibilities and roles, stringent implementation of all forms of procedures and rules. The premises argued that employees, who simply follow fair wage, would be rational. Since the responsibilities and roles are undefined and blurred across the departments within the Hotel. Meg often interferes with Linda’s job who believes she knows everything in the job on one side and her subordinate are supervised by the Head Chef, who tries to assist on the other side. When responsibilities and roles are restricted and made clear, unnecessary disturbance and overlapping on roles would be avoided to allow each and every person to focus on their jobs and in the processes become better professionals (Friedman and Hechter, 2004). Once they become professionals in their respective fields, they would spend less time doing their chores. Hence the beneficial cycle starts and business operations will move on the right direction. The other element of rational organization is the rational operation structure or design and analysis. Taylor for instance, stressed on the standardization and study of working environment, working instruments and methods and suitable work quality. He conducted a study on working-hour that segments a job into various simple operations and eradicates worthless actions. While Fayol discussed the six management functions, including the command unity and concentration, his arguments were leaned on making coordination more efficient and smooth within an organization (Donkin, 2001). David (2007) argues that benefits verses costs need to cut across each and every organizational decision. Value engineering entails offering the most efficient service or product possible that is relative to rational business model that usually aims to develop the most possible efficient business. Rational business is vital since efficient employees are able to operate more easily and rapidly, implying that more jobs is performed within the same measure of time, resulting to enhanced efficiency for the organization as a whole. Again, outlined work responsibilities inform individual workers of the things which they are expected of, and motivate them to accomplish their duties. Workers could also specialize, a core element of Taylorims which is among the most dominant approaches of rational organization. Nonetheless, this method best works if the products are similar, roles are straightforward, and human components are complaint, that might result it to problem if it were adopted at the Junction Hotel. This can be attributed to the fact that a hotel could not be a production line; as it specifically deals with customers while Taylorism and in particular Fordism which more extreme are well-matched for manufacturing. Ford developed assembly line that ensured regular individuals were able to afford cars. Currently, McDonald appears to be the leader in this sector. While people are puzzled and shocked with its high efficiency, the company has been seeking for best operational processes of attaining its goals and simplifying all the processes to the possible minimum. A huge amount of reduction in source materials, services and steps save significant cost the company. Ritzer (2008) too argued that Information Technology could enhance efficiency. With increasing technological advancement, more and more IT and electronic are applied in our day to day office operations, leave alone the automation processes within the factories. Manual work done by hands has being replaced by computers and robots that can perform sophisticated calculations and work within seconds. According to BBC (2010) as an effort of seeking greater efficiency, businesses established that neither better welfare nor better salaries could enhance efficiency. Further studies suggested that social needs are more significant compared to economic elements, teams and groups play critical impact on workers. The improvement of organizational culture has an impact in managing organizational change. Strong organizational culture is the bond which could sustain employees close and together if conflicts occur across organizational departments during change. According to Coghlan (1994) the culture of discipline within an organization made Wells Fargo come up again as a strong organization at the backdrop of chaotic management of banks. Rational organization enhances control and efficiency as well as brings costs down since the responsibilities are reduced to the core that they would need nearly no training for the employees to perform them. The other approach is that they standardize systems for instance making of burgers and chips in the case of McDonald’s, they are grouped together and a given time is allocated for preparation before kept in a warmer and finally served to the customers as opposed to be prepared individually and supervised by a waiter (Marwell, Oliver, and Prahl, 1999). This kind of design makes the business better since it enhances pace of service, production efficiency as well as other cleaning services. For instance Travelodge has opted for most core services of decent shower and bed and eliminated extra thrills such as slip mats, hairdryers, and shampoo because they have implemented the design or value engineering. Conclusion Due to the current economic situation (being the longest and deepest recession of our time) there is huge decrease in demand for services and goods within the economy. By looking at these factors, the economic potential of Junction Hotel does not seem to be admirable. The present economic situation facing the Hotel has made Chance to be unsettled. He is of the opinion that the General Manager‘s social approach in handling the needs to be tackled is unorganized and inefficient. Thus the only alternative method of management would be rational organization. This design would be desirable for the Junction Hotel since it would improve and change aspects of the business where they are not performing well. Rational organization identifies labor such as wages to be the biggest cost to organization. Thus, it focuses on reducing costs, and it performs this by production fragmentation. It also emphasizes on enhancing efficiency, control and entails a formal process. Bureaucracy also performs a huge function in this kind of organization. Collectively, these could enhance the efficiency of the management processes of Junction Hotel since there would be an identifiable level of accountability and hierarchy. The disadvantage of rational models which was suggested by Morgan (2006) is that people working in companies take precedence over the organizational goals that the business aims to attain. Rational organization could also result to massive bureaucracy as it were with the case of UK workers that hindered the ability of workers to effectively operate. Business models such as Taylorism could cause segmentation with within the work environment and such could create hurdles which are unfavorable for organizational success. Therefore, in response to what Mr. Chance the Hotel owner identified as core issues affecting the business (not operating efficiently and smoothly) rationalization would be the viable strategy for the company. References Coghlan, D (1994) Managing organizational change through groups and teams,’ Leadership and Organization Development Journal 15(2): 18-23 Donkin, R (2001) Blood, Sweat and Tears: The Evolution of Work. London: Sage Morgan, G (2006) Images of Organization London: Sage Publication Ritzer, G (2008) The McDonaldisation of Society (5th edition) London: Sage Davis, E (2009), Value Engineering, BBC, retrieved from http://www.bbc.co.uk/blogs/thereporters/evandavis/2007/05/value_engineering.html BBC News Online ‘Bureaucracy hampers social workers’ 28 July 2010 retrieved from http://www.bbc.co.uk/news/education-10788737 Marwell, G., P. E. Oliver, and R. Prahl. (1999). 'Social Networks and Collective Action: A Theory of the Critical Mass, III'. American Journal of Sociology, 94: 502-535. Routledge and Kegan Paul, Oliver, P. E., and G. Marwell. (2008). 'The Paradox of Group Size in Collective Actors: A Theory of the Critical Mass, II'. American Sociological Review, 53: 1-8. Friedman, D., and Hechter, M (2004). 'The Comparative Advantages of Rational Choice Theory'. In Frontiers of Social Theory. Edited by G. Ritzer. New York: Columbia University Press, 1990. Scott, J. (2008). Networks of Corporate Power: A Comparative Assessment'. Annual Review of Sociology, 17: 181-203. Read More