Novotel was founded in 1967 by Paul Dubrule and Gerard Pellison, neither of whom came from a hotel background. Driven by an ambitious enterpreneurial spirit, they expanded they empire by building new hotels and buying existing hotel chains. This case study focuses on Novotel in Europe, where Novotel is the market leader with 214 Novotel in 18 countries. From the beginning when they opened their first hotel, Dubrule and Pellison approached hotel management differently from their competitors. Several distinctive innovation such standarized concept, employees that where trained to do a variety of tasks, and numbers of other inovative practices that have since become standard.
However, as the Novotel Network expanded, control become problematic, and standards were slipping. By the late 1980s Novotel had grown immensely. In order to manage those dispersed hotels, an nine-layered management structure had evolved. 1990s brought a period of changing fortunes for Novotel. In the spring of 1992, there were signs of profit decline. In that year, Phillip Brizon and Gilles Pellison were named as the two new co-presidents of Novotel, and given a clear mandate to introduce major changes. The changes included selecting general managers, developing an assesment center, changing the structure and operations of the
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Analysis These analysis below are based on theories that are mentioned in Organizational Behavior, written by Kreitner and Kinicki. Organizational Culture The effort to discover Novotel’s cultural history insipired the achievement of new ideas and accord. It then helped the core management team to identify and recommend future directions for the organization. The team identified the need to place the hotel guest at the top of the organization. This identification led to some changes in Novotel. The problem was that the culture itself had already been faded during few decades of Novotel’s prosperity.
To make the culture affect the organization effectively, they needed to use some mechanism to embed the culture to fit the current environmental situation. The mechanisms that can be used includes formal statements of organizational philosophy, vision, mission, values and materials used for socialization, the design of physical spaces, deliberating role modelling, and so on. Those mechanism involves teaching process in which the organizational members teach each other about the organization’s preferred values, beliefs, expectations, and behaviors.
Some of these mechanism have already been used by the Novotel’s management, for example by informing their staff about the Retour vers le Futur project and introducing its principles into their Novotel. However, it was not easy to convice most of the staff members that the effort might work, and that the project was intended to help eliminate hierarchies, not to create them. Thus, we can say that there should be better ways that can be done to introduce the change.
Organizational Decline The problem that happened in Novotel during the early 90s was an organizational decline that was shown by the decline of its profit. It was caused partly by the fact that Novotel lost its benefit as the innovator of the hospitality. There were so many other companies that copied Novotel’s strategies, which made Novotel lose its competitive advantage. According to Kreitner & Kinicki, the time to start doing something about organizational decline is when everything is going right.
During the period of success, usually, a company becomes slower in responding the competitive threats. However, there are some early warning signs that should be monitored in order to reorganize in a timely and effective manner. Some of those signs are loss of effective communication, outdated organizational structure, decreased innovation, and cumbersome administrative procedures. These warning signs actually appeared in Novotel, and later were being monitored.
The Changing Shape of Organization The changes in the internal structure of Novotel was the reduced number of supervisory levels. After the changes, there were only three steps between staff and GM, that are staff, heads of departments, and the GM. The new organizational pattern in Novotel can be classed as hourglass organization, where there are relatively small executive group that coordinate efforts of numerous operating personnel who make goods or render services. Lateral transfers are common in this type of organization. Management will compensate for the lack of promotion opportunities with job rotation. The carreer orientation may also be changed from position orientation to competence orientation.