Hilton hotels case study

Table of content

  • Introduction
  • Role of leadership in managing change
    • Managing change in Hilton hotels
    • Nassetta ability to create team work
    • Unifying vision of Nassetta
    • Direct channels of communication in Hilton
  • Relevance of leadership styles to key sector changes
    • Technology innovation, and how Nassetta leadership made Hilton a trend setter
    • How Nassetta leadership enhanced Hilton hotels to overcome Globalization and internationalization
    • Nassetta leadership and Hilton’s development
  • Leadership capabilities
    • Motivation capability
    • Accountability capability
    • Vision capability
  • Strategic organizational change
    • key strategic changes focusing on performance, brand expansion, and international expansion
    • Eradication of hieratical structures
    • Key performance indicators
  • Conclusion
  • References
  • Introduction

In the modern business world, competition in each and every sector is becoming intense, and this is rapidly forcing almost every business firm to start embracing change. Devoid of change, business firms will risk losing their critical competitive advantages as they will be unable to deliver the desired goods and services by the modern generation of consumers (The Boston Consulting Group, 2011).   Just as Buelens & Devos (2012) argued, change is the most critical element of modern businesses, since it enhances a firm’s efficiency, as well as aids the firm to overcome the challenges posed by its rivals.  What change refers to in this paper, is the comprehensive restructuring, creation of new job functions, as well as creation of new departmental organizations  that helps the business to become more flexible, as well as efficient in terms of adopting new technologies, delivering greater value to consumers, along with enhancing its overall imperativeness (The Boston Consulting Group, 2011).

  • Role of leadership in managing change

Though a change in businesses is inevitable, it should be noted that it is not always an easy task. Just as the process model by McNeill & McNamara (2009) states; change is not an incidence, but a rigorous process. In fact, the model starts that change is a process that needs a leader who can be able to focus on the steps of implementation instead of concentrating on the conceptual task required (BCG, 2011).   So, being a process, change does not just happen. It should be suggested by an individual working within an organization (Alexakis, 2011). Given that change involves the adoption of different goals, frameworks, and objectives, ten it is apparent that leaders and the company entire leadership have a crucial role to play.

  • Managing change in Hilton hotels

The organization leaders do not only engage in ensuring better job performance in a firm but also involved in driving positive change. This is exactly what Nassetta did when he took over the leadership of Hilton hotel (BCG, 2011). Taking a company that was almost entirely created via acquisition, Nassetta was able to offer leadership, guidance, and motivation needed to change the operations of the hotel (Alexakis, 2011). At that moment, back in 2007, Hilton hotel needed a robust revival, and to achieve such a huge change was needed. Under Nassetta’s leadership, the hotel was able to transform and became a highly competitive player in the hospitality sector (BCG, 2011).  However, looking at it critically, the change did not come out of anywhere; it was all through the effective leadership offered by Nassetta that it survived.

  • Nassetta ability to create team work

One leadership aspect that Nassetta brought to Hilton hotel was the aspect of teamwork. Through his cognitive ability, Nassetta was able to rally people behind her new, revitalized vision for the hotel, and this to a great extent allowed him to win the employees supports (The Boston Consulting Group, 2011). This is one of the crucial roles of any leader towards managing change.  As Lewin’s 3-Stage Model of Change advocate, Nassetta was able to unfreeze, change and refreeze the Hilton hotel through his exemplary abilities. Nassetta knew that people were the key agents for change, so out of that knowledge, he went ahead and broke down the existing status quo, and brought a new way of operating (Buelens & Devos, 2012).  By removing the layers of management and inefficiencies that had built over the years, Nassetta ensured that each and every individual was always free and allowed to give his or her opinions that are either innovative or critical towards the hotel revitalization (Alexakis, 2011). Such breakdown brought people to a new environment where they were able to air their opinions, and also enquire on issues that they did not comprehend.

  • Unifying vision of Nassetta

The ability of Nassetta to breakdown the  Hilton’s hierarchical structure brought people together and were able to shed off the fear they had, as they began interacting and exchanging ideas without fear (The Boston Consulting Group, 2011).  This is one of the main roles of leadership in the process of change management. Bringing people together for a common vision. Generally, people fear change, and whenever they are not assured of their safety and security, they may end up posing great resistance towards it (BCG, 2011). The critically needed safety and assurance are what Nassetta leadership provided. It sold a new vision to the workers, promising that the company’s new path towards cutting cost; especially, from the cost structure that was heavily bloated will allow them a chance to grow in their careers (Alexakis, 2011).  This motivated employees, and led to a unified team that supported Nassetta’s redesigned Hilton vision.

With assurance to his followers, Nassetta was able to create an environment that allowed the followers to resolve their uncertainty. This allowed the organization as a whole, including the leader and his followers to begin looking for new ways of cutting operation cost and enhancing efficiency (The New York Times, 2012). The Nassetta’s clear vision and assurance had won the people to his side, and this made them start believing and acting in ways that supported his new direction (Buelens & Devos, 2012). This gave him time to scrap the Hilton’s hierarchy that had resulted in the creation of layer upon layer of duplication in all sorts of roles. With the assurance that people with duplicated roles will be transferred to other departments, and will not face retrenchment, Nassetta was able to get full support and collaboration needed to scrap the layers that had led to bloated expenses across all the departments (The Boston Consulting Group, 2011).

  • Direct channels of communication at Hilton hotels

Nassetta leadership went a notch higher by creating direct channels of communication, and this was critical because people began to feel involved in all the activities that were to bring the needed change to the Hilton hotel (The New York Times, 2012). Each and every day, Nassetta used to hold company meetings to brainstorm on the way forward, as well as to inform and explain to his employees on the new innovations that t the company was focusing on at each department so as to create a cost structure that was not bloated as the earlier one (Minett, Yaman & Denizci,2009). This as Lewin’s 3-Stage Model of Change state, was the refreezing stage, given that Nassetta was trying to engage people in the new change. With such direct involvements of employees, the Hilton company changes begun to take shape, and people started embracing the new ways of working (McNeill, & McNamara, 2009).

  • Relevance of leadership styles to key sector changes

As discussed in the previous section, leadership is the most crucial element in change management.  In fact, leadership acts as a key change agent. However, in the modern world, there are different disruptions caused by emerging trends such as globalization, technology advancement, along with other key trends such as internationalization (Ernst & Yip, 2008). For an organization to successfully integrate these interruptions into its operations without having dire negative effects, the leader should be an individual who is highly flexible in terms of his or her leadership styles. Leaders who are rigid and traditional cannot cope with the immense change brought about by these immense trends in the modern businesses (Ernst & Yip, 2008). So, as McNeill & McNamara, (2009) states, an effective leader in the modern business world, should be an individual with diverse leadership styles, since it’s through such that he or she will be able to have diverse leadership skills such as marketing and sales ability, communication skills, along with leadership development skills; all which are necessary for an effective change.

  • Technology innovation, and how Nassetta leadership made Hilton a trend setter

One of the key disruptors of Hilton hotel global operations, since Nassetta took over the leadership mantle back in 2007, is technological innovation.  When Nassetta took over, the hospitality industry was facing immense disruption, as technological innovations were largely changing the dynamics of the sector (Erhard & Jensen, 2012). This had caused a lot of challenges to Hilton hotels. With such disruptions and challenges, Hilton needed a comprehensive transformation. For such transformation to occur, the firm greatly needed a leader with transformational leadership style.

According to LMX theory, transformational leadership is the kind of leadership where the leader will be able to ask, and also help his follower to do more than require so as realizing unexpected goals (Erhard & Jensen, 2012). It involves the ability of a leader to create a cordial relationship with the subordinates so as to create the desired change.  Involves the leader supporting his followers so to ensure they solve the problems as a team. This is exactly what Nassetta did at Hilton immediately he took over (Ernst & Yip, 2008). He created time to interact with his followers, and during such meetings, he would motivate them with his unique, strong visions that would motivate his followers to put all the necessary effort to create a unique platform for the hotel.

Through such transformative techniques, Hilton hotel was able to become innovative and trendsetter.  For instance, regardless of the disruptive nature of technology, Nassetta has able to inspire his followers to create a cultural sensitive database, that all his team members can access to online (Chen, Wang, & Chu, 2011).  Through this innovative database, all his subordinates are able to learn and develop deep insights of different cultural norms and behaviors from different nations across the globe.  This has guided his team to develop unique and creative ways of serving the firm’s customers across the globe (Erhard & Jensen, 2012).  So, Hilton employees are using innovative technology to improve service delivery to their clients, all thanks to the transformative style of Nassetta leadership.

  • How Nassetta leadership enhanced Hilton hotels to overcome Globalization and internationalization

With globalization and internationalization, the hospitality industry has become highly vulnerable as hotels are forced to hire employees from different states and regions. With over 300,000 employees, Hilton faced the issues of diversity that comes along with globalization and internationalization (Buelens & Devos, 2012). Different cultures call for different remunerations and reward systems. However, regardless of all the challenge involved in such a situation, Nassetta was able to manifest his transactional leadership style, whereby, he effectively went ahead and managed to achieve the needed compliance from his followers through rewards (Chen, Wang & Chu, 2011). One thing that Nassetta did was to tie compensation to diversity metrics. This emerged as the best remuneration metric for Hilton, which cultural diversity brought up by globalization and internationalization was extremely high. Since he took over, there have been minimal labor complaints and also minimal general complaints within the company. This shows how effective Nassetta leadership has been in relating to subordinates (Buelens & Devos, 2012). His ability to organize, supervise and monitor all these diverse workers shows his exemplary ability in transactional leadership style.

  • Nassetta leadership and Hilton’s development

Organizational development in the modern business environment is critical, given that without such growth and development the organization may be gotten out of the market by rival competitors. According to path-goal theory, the organization leadership should always be leading the way, thus creating a path for the juniors to follow. For any leader to be able to do this, then he should be well conversant with strategic leadership style (The Boston Consulting Group, 2011). Strategic leadership style is the best style of leadership to propel the company to the desired development. In Hilton hotels, Nassetta was able to heavily manifest his ability to embrace strategic leadership immediately he took over (Buelens & Devos, 2012). Nassetta all through has been strategic in policy making, a factor that has enhanced Hilton’s ability to survive within the modern, highly competitive hospitality industry. Nassetta has in a great way manifested his ability to take the lead in shaping the organization (Buelens, & Devos, 2012). He is a risk taker, an encourager and also a support to his team.

Under his leadership, Hilton has launched several risky initiatives such as the “Travel with Purpose initiative” which is a Hilton’s commitment to diversity, inclusion, community building and sustainable living (Alexakis, 2011). Though such an initiative needs a lot of resources, Nassetta, through his strategic leadership qualities took the risk, and convinced his team to support it. In the long-run the company has been able to become globally accepted and its image value enhanced. Overall, all his strategic leadership abilities have enhanced Hilton’s global development.

  • Leadership capabilities
    • Motivation capabilities

Leadership capabilities involve the ability of a certain leader to identify a problem and create a conducive environment that enhances the ability of the organization to overcome such problem (McNeill & McNamara, 2009). In the Hospitality industry, Hilton hotels have been for over a decade struggling with various issues, ranging from employee dissatisfaction to over floated structures. However, immediately Nassetta took over the company, a lot of his leadership capabilities and strategies began to get manifested (Ernst & Yip, 2008). For instance, in the sector of recruitment and compensation of employees, Nassetta was able to embrace a change in the company’s reward system. Through his new motivation strategies, Nassetta was able to effectively ties compensation to diversity metrics (Alexakis, 2011). This immediately solved the organization’s long battle of employee morale. By ensuring that people were compensated and rewarded in accordance with their culture and traditions, Nassetta was able to bring forth the needed motivation in the company (McNeill & McNamara, 2009). His leadership capability to motivate all his workers, regardless of their culture and religion was exemplary.

  • Accountability capability

Additionally, another key leadership capability he manifested was the accountability capability. Accountability is a major element for the success of any organization (The New York Times, 2012). The ability of a leader to utilize the company’s resources well determines the involved organization level of success (Alexakis, 2011). When Nassetta came to Hilton Hotel as the CEO, he immediately embarked on a process of doing away with the bureaucracy that was imminent in the organization. He began by doing away with the company’s bloated structures, and hierarchies. This created a flat organization that was more open and effective (Ernst, & Yip, 2008). As a result, the operation expenses of Hilton came down, thus saving the company a huge sum of money from the operation expenses.

  • Vision capability

Lastly, as a leader, Nassetta was able to show the visioning capability. This was manifested by his strategy of brand expansion and international growth (The New York Times, 2012). The first three months of his leadership, Nassetta spent most of his time traveling and visiting Hilton’s outlets all over the world. This made him come with a transformative strategy, whose vision was to enhance the company’s expansion and internationalization (Alexakis, 2011). By embedding on his vision, Nassetta was able to create a culture that promoted efficiency, and hard work, and in the long-term, Hilton hotels were able to realize a rapid rate of expansion across the world.

  • Strategic organizational change
    • key strategic changes focusing on performance, brand expansion, and international expansion

Strategic change within an organization aims at redesigning, and modifying the traditional ways of doing things, so as to enhance the company’s effectiveness, efficiency, and overall growth. However, as path-goal theory states, strategic change, is not a change that is brought overnight (BCG, 2011).  It is a change that is started by fearless leadership within an organization; a leadership that is able to offer needed guidance, and make tough decisions regarding some organizational structures, all with a sole aim of enhancing the organization’s growth and development.  Under the leadership of Nassetta, Hilton hotels have experienced a huge number of strategic organizational change incidences (Ernst & Yip, 2008). For instance, when Nassetta took over the mantle of leadership at Hilton hotels, the company was mostly constituted of mergers. Hilton, a company that had existed for over 100 years, was composed of seven different companies that were reasonably siloed. Though ta the time they were doing well, they were highly fragmented, and this made them to operate without any alignment, as well as, without any clear vision, mission or even set of values (Erhard & Jensen, 2012). With such fragmentation, the company also lacked key strategic priorities, and this made it difficult for Hilton to expand across rapidly as needed.

However, on taking over, Nassetta offered the much-needed leadership. Through his transformative leadership, Nassetta went ahead and created a company unified by a common culture. He personally initiated key changes that focused on performance, brand expansion, and international expansion (Chen, Wang & Chu, 2011). To realize this, Nassetta as a leader was ready to lead Hilton towards a path of embracing certain risk.  Within is first 4 months in leadership, he went ahead and removed the layers and duplication of roles that had engulfed Hilton for decades.  These strategic changes did not only lead to cost savings in the company but also enhanced its alignment, accountability, and responsiveness.

  • Eradication of hieratical structures

Secondly, like a strategic leader, Nassetta was not yet done in streamlining Hilton. He went ahead and carried out a comprehensive change to the company’s senior leadership team (Buelens & Devos, 2012). This was followed by the eradication of hierarchical structures, a factor that created a direct communication of workers across all levels.  With such changes, Hilton hotel was able to start becomes effective and efficient in service delivery (Chen, Wang & Chu, 2011). Worker’s morale began getting boosted and almost everyone in the organization started supporting Nassetta strategic reforms.

  • Key performance indicators

With such key strategic organizational changes initiated by Nassetta leadership, Hilton hotels were able to increasingly become more sustainable. For instance, using the occupancy rate as one of the key performance indicators, it is evident that within the third year of robust strategic change carried out by Nassetta, Hilton hotels occupancy rates, and rooms rating began to increase (Alexakis, 2011). In 2007, when he took over the leadership of Hilton, the firm’s global occupancy rate was at 65%; however by 2010, through his strategic reforms, the Hilton’s hotels occupancy rate had increased up to 85% (BCG, 2011). The company’s room’s rating escalated from 70% to 95% within those first three years. In terms of expansion, over 75% of the Hilton’s hotel rooms under construction were located in oversea markets such as Asia, and Europe. This was a whopping 11% increase from the 2007 expansion rate. Overall, it is evident that the Hilton’s hotels success rate enhanced as a result of Nassetta’s leadership (BCG, 2011). Through his abilities to initiate strategic organizational changes, Nassetta had begun a long-term journey of transforming the Hilton hotels.

  • Conclusion

Hilton hotel case study is an exemplary case of how organization change can be realized. From the literature, it is apparent that organization change does not automatically occur, and takes a courageous and flexible leader to attain. Were it not for the ability of Nassetta to be highly flexible, Hilton hotels could not have realized the level of success it has in the modern day. It means that it takes proper leadership for any organization to embrace change, given the fact that change calls for redesigning, reformation and restructuring of its core businesses and operations. So, under all situations, leadership is a very vital element for the success of a company in the modern day world, particularly with increased disruptions from technology, globalization, internationalization and competition.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • References

Alexakis, G. (2011). Transcendental leadership: The progressive hospitality leader’s silver bullet. International Journal of Hospitality Management, 30(3), 708-713. doi:10.1016/j.ijhm.2010.12.005

Bcg. (2011, October 3). bcg.perspectives – Christopher J. Nassetta on the Four Ps of Transformation. Retrieved from https://www.bcgperspectives.com/content/videos/leadership_transformation_christopher_nassetta_four_ps_of_transformation/

The Boston Consulting Group. (2011). Leading Transformation. Conversations with Leaders on Driving Change, 2-48. Retrieved from http://www.bcg.com/documents/file87317.pdf

Buelens, M., & Devos, G. (2012). Art and Wisdom in Choosing Change Strategies. Dynamics of Organizational Change and Learning, 3(35), 85-96. doi:10.1002/9780470753408.ch5

Chen, Y., Wang, W., & Chu, Y. (2011). A Case Study on the Business Performance Management of Hilton Hotels Corporation. International Business Research, 4(2). doi:10.5539/ibr.v4n2p213

Erhard, W., & Jensen, M. C. (2012). The Four Foundations of a Great Personal Life, Great Leadership and a Great Organization. SSRN Electronic Journal. doi:10.2139/ssrn.2050202

Ernst, C., & Yip, J. (2008). Bridging boundaries: Meeting the challenge of workplace diversity. Leadership in Action, 28(1), 3-6. doi:10.1002/lia.1232

McNeill, D., & McNamara, K. (2009). Hotels as Civic Landmarks, Hotels as Assets: the case of Sydney’s Hilton. Australian Geographer, 40(3), 369-386. doi:10.1080/00049180903127796

Minett, D., Yaman, H. R., & Denizci, B. (2009). Leadership styles and ethical decision-making in hospitality management. International Journal of Hospitality Management, 28(4), 486-493. doi:10.1016/j.ijhm.2009.01.003

The New York Times. (2012, October 13). Christopher Nassetta of Hilton, on Focusing Its Values – The New York Times. Retrieved from http://www.nytimes.com/2012/10/14/business/christopher-nassetta-of-hilton-on-focusing-its-values.html

 

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