Organizational Analysis for Hilton Worldwide

“Organizational Analysis for Hilton Worldwide” Table of Contents 8.0. Information Technology and Control Systems. 3 8.1. Measures to Control Inventory Levels. 3 8.2. CIO at the Company. 4 8.3. Security Measures. 5 8.4. Use of Enterprise Management Software. 6 9.0. Organizational Size, Lifecycle, and Possible Decline. 7 9.1. Hilton’s Size. 7 9.2. Lifecycle and Possible Decline. 9 9.2.1. Description of Lifecycle. 9 9.2.2. Lifecycle Stages of Hilton Worldwide and Possible Decline. 12 10. Organizational Culture. 14 10.1. Defining Organizational Culture. 14 10.2. Hilton's Organizational Culture. 15 10.2.1. Prevailing Type of Culture. 15 10.2.2. Level of Social Capital 16 10.2.3. Integrating the Employees into Culture. 17 11. Ethical Values. 17 11.1.. Defining Ethical Values. 17 11.2. Culture at Hilton Worldwide. 17 12. Innovation and Change. 22 12.1. Strategic Aspects of Innovation and Change. 22 12.2. Innovation and Change at Hilton with Examples. 22 12.3. Key Obstacles to Innovation and Change Management 27 12.3.1. Size of the Organization. 27 12.3.2. Legacy. 28 12.3.3. Pull Factors. 28 12.3. Issues related to Stakeholder Management 29 13. Decision-Making Process. 30 13.1. Decision Making Authority and Control 30 13.2. Decision Making Strategy. 33 14. Conflict, Power, and Politics. 35 14.1. Conflicts and Conflict Management at Hilton Worldwide. 35 14.2. Power and Politics at Hilton Worldwide. 36 15. Recommendations. 39 15.1. Improving on Mission. 39 15.2. Introducing Robotic Technologies. 39 15.3. Slowing Down on Expansion and Speeding up Innovation. 40 15.4. Creating a Culture of Adaptability. 41 15.5. Improving on CSR Plan. 41 15.6. Introducing Formal Processes for Change Management 42 15.7. Keeping the Information Technology Infrastructure Upgraded. 42 15.8. Stakeholders Partaking in Decision Making. 43 References. 44   8.0. Information Technology and Control Systems   The information system is vital in hotel management, particularly for sizeable hotel chains. Hilton Hotel's operations present the need to manage information from its routine activities and transactions. For example, the hotel must keep and facilitate access (either selective or general) to information about reservations, orders, employees' activities, and several other considerations. Therefore, the hotel is to ensure that it has a robust information system, which ensures complementarity across the departments and consistency between the guests' needs and its provisions. It also plays a vital role in keeping records of its interaction and transactions with external stakeholders, such as suppliers, to optimally schedule its activities.   8.1. Measures to Control Inventory Levels   Hilton Hotel mainly relies on OnQ System to manage its inventory and supply chain. OnQ System is a data-oriented information system used to ensure centralized processing and storage of information. Proactive tracking functionality enables the system to decide which part of the information is to be shared with which particular department or person and which is to be accessible in general. OnQ enables the organization to manage its inventory, which involves keeping records of orders, keeping track of seasonal fluctuations in demand to facilitate decisions about pricing and availability, and keeping records of hotel room occupancy rates in realtime.OnQ serves as a one-stop solution for the company concerning inventory control and management.   While an integrated OnQ system enables the organization to manage multiple considerations simultaneously, it leverages RFID technology to manage its laundry. Hilton Washington has used RFID to track the linen's lifecycle and cleaning needs. It enables the organization to keep the linens clean and optimally rotate them between the washing depart and the hotel rooms.   Hilton's inventory management protocols align with the recognized best practices. For instance, the IT system allows easy access to information and facilitates collaboration at intra- and interdepartmental levels. However, the hotel's reliance on the OnQ system is experimental in nature since top competitors of Hilton, such as Hyatt, Marriot, and others, rely either on Micros Opera or Oracle. These two property management systems (PMS) have a proven track record and higher ubiquity than OnQ.Hilton's adoption of RFID for its Washington DC branch is indicative of its sluggish approach to tech integration, while the same system has long been in use by Marriott and Hyatt. The competitors are using RFID across the board, while Hilton could integrate it only at its single branch. Therefore, the company is lagging its main competitors in the race of tech adoption for inventory management.

 

    8.2. CIO at the company   The hotel has a seasoned and experienced CIO, Tim Harvey, who oversees the matters relevant to technology and information system. Harvey is a visionary CIO with hands-on experience dealing with multiple informational system protocols and PMS. Harvey first encouraged the hotel to take up the OnQ system and believed that an integrated solution would be the best option for the company in the increasingly competitive environment. The interview with Harvey reveals that he keeps an eye on emerging trends and adopts a 'think-ahead-of-time' approach to ensure that Hilton maintains its lead over its competitors. Hence, Tim Harvey’s contributions and his role as CIO are central to the performance of Hilton’s information system.   8.3. Security Measures   Two critical data breaches in 2014 and 2015 stained Hilton's reputation. In both instances, the hotel was found both slow to respond to the threat and late to inform the public. The data of more than 7000 customer cards were affected during these breaches, and the company had to pay a $700,000 fine to settle the matter. In 2017, Hilton announced that its weak security gateway, mainly due to delays in required updates, created an opportunity for hackers to establish their control.   The hacking activity taking place at Hilton raises several questions. Even after the incidents had occurred and the company had paid the price, Hilton has not announced any strategy to strengthen its security. However, Hilton hotel is not alone in facing issues relating to cyber-security. For instance, its nearest competitor Marriottwas also fined by GDPR in 2018 for stealing customers' data and getting their credit cards hacked. The hotel industry is vulnerable to cyber-security threats, which is evident from frequent incidents of data breaches making the headlines. Hence, the competition concerning data security within the hotel industry is not mature, which helps explain Hilton Hotel's meek response to its two consecutive data breaches. However, it is also evident that data security interacts with customer confidence. Therefore, from the marketing perspective, Hilton Hotels must embark on an image restoration campaign and lay out a data security plan to regain customers' trust. Since other reputed organizations are lagging in this context, strengthening data protection will significantly contribute to the competitive edge of Hilton Hotels.   8.4. Use of Enterprise Management Software   As mentioned earlier, the company uses the OnQ database to manage its multiple functions relating to information management. This PMS enables the company to manage the records of its customer interaction. The management in this area guides it to make timely decisions about the guests. Automated check-ins and check-outs enable the staff to focus more on core activities. It is important to note that the OnQ system of the company is integrated into the Global Distribution System (GDS), allowing it to execute bookings through multiple channels online. Integrating into GDS is essential for the company's international player and worldwide visibility. It enables the customers to easily access the hotel, which is an important determinant of their buying behaviour.   The company has its integrated customer management system carried out through OnQ, which involves keeping the records of customer profiles and preferences and making them available throughout the hotel portfolio to enable its franchises to make customized arrangements based on the shared characteristics of guests and their tendencies. Keeping an eye on guests' preferences is an important source of strengthening the bonds between the organization and its customers and ensuring a high guest retention rate. The system also facilitates organization-wide learning, which is highly significant from the marketing point of view. Within the hospitality industry, customizability and adaptability of the service providers to the customer needs is a crucial determinant of the buying intention and retention of the customers. Therefore, data-driven CRM is in line with the emerging trends and enables the organization to respond effectively to the intensity of competition.   9.0. Organizational Size, Lifecycle, and Possible Decline    9.1. Hilton’s Size    Hilton Worldwide is among the top five largest international brands operating within the hospitality industry. The company has a diversified portfolio extending into 18 different brands. The company has operations in 118 countries and has a share in the global market up to 13%, which is the largest after Marriott and Huazhu Group, as the Figure XXvisualized:   Figure XX: Hilton’s Market Share   The company's market cap, determined at $33 billion, is slightly lower than that of Marriott at $42 billion. The company boasts 6115 properties worldwide, of which 5405 are managed properties. These properties feature more than 980,000 rooms. Hence, from the data, it is evident that Hilton Worldwide is a sizable organization and ranks among the largest hospitality brands in the world.   The company's exponential growth in its size over its history is mostly attributable to its aggressive market development strategy, which involved acquiring top-rated hotels at frequent intervals.Hilton has been active in assuming the management of high-performing hotels. The company went on a mergerspree stemming from assuming the management of local hotels and then expanding to international destinations.   It is also worth mentioning that Hilton’s size is a vital contributor to the value of its business. For example, the company leverages its size to gain high visibility worldwide. The visibility lies at the bottom of its marketing strength, allowing the company to effectively combine pull marketing tactics with push strategies. Due to its high visibility, it takes advantage of word-of-the-mouth marketing since its campaigns and messages are easily disseminated across the target audience. It also enables the company to stay in the media gaze, which can be seen both as an edge and a disadvantage. On the upside, it contributes to the outreach of the company's core messages. At the same time, any misshape can set it up for substantial disrepute, such as noticed in the case of the data breaches in 2014-2015.   The company effectively leverages its size and diversified portfolio by achieving economies of scale and scope. The economies of scale are achieved through optimal utilization of its assets to meet the growing demand for tourism. The economies of scope allow different components to interact and collaborate. It reduces the operational cost since all brands complement each other and reduce the overall cost of operations compared to if each brand had operated separately. Similarly, operating under the banner of Hilton contributes to each brand's brand equity and credibility. Therefore, Hilton Worldwide is fully using its size and subsequent visibility and outreach to its audience.   However, as also explained by Daft and Armstrong (2005), the big size is not necessarily a certificate of infallibility but has its dilemma. The growth in size comes at the cost of structural and administrative complications and as elaborated in a later part, sets the company up for overhauls at varying intervals. Customers place high expectations on large organizations, and any loopholes are seen as massive failures and can draw substantial criticism tarnishing the corporate image and creating operational challenges. Hilton's experience during 2000 and 2001, as explained later, indicates crises resulting from huge expectations and failure to meet those expectations in a certain area. Similarly, the demand side shocks in the wake of COVID-19 resulted in huge losses since the loss has proportionality with the assets that the pandemic-induced restrictions rendered unutilized or under-utilized. Since Hilton is a sizeable corporation with a huge amount of assets that were left underutilized during COVID-19, its substantial loss during that phase is also attributable to its size. Hence, Hilton's experience over the period puts the myth "too big to fail" to rest.

 

9.2. Lifecycle and Possible Decline    9.2.1. Description of Lifecycle   The organizational lifecycle typically comprises four stages discussed as follows:   Entrepreneurial Stage This is the initial stage denoting a company's infancy. At this stage, the company starts and adopts an informal style of operations. The working hours are typically longer than usual, and the managers and employees unleash creativity to bring growth. As shown in the Figure XX,the growth at this stage plateaus after a creativity-driven growth and crisis sets in.   Figure XX: Organization Development Stages   At this point, the managers either work towards adapting the structure to meet the pressure arising from the growth or appoint managers strong enough to handle the crisis while keeping the operations intact.   Collectivity Stage At this stage, a company goes past its entrepreneurial stage and begins to introduce certain formal processes and hierarchies. The number of employees is increased, and the relationship between the management and employees has become clear. The company also assigns job descriptions, and there is much more clarity about short and long-term milestones. The managers and employees complement each other to meet the daily targets of the company. The growth at this stage also dissolves into a crisis after the managers at the lower levels gain command over their functional areas and press the top management for greater autonomy and empowerment. Hence, the leadership once again must rise to the occasion with the efforts to achieve adaptability.   Formalization Stage At this stage, the organization has grown large enough to introduce formal rules and regulations for relationship management and communication. The top management is no longer able to interact directly with lower-level staff. The operations are delegated to the middle management while the top management concerns itself with the issues relating to planning and strategy. At a critical point, the bureaucracy plagues the entire organization when the middle management succumbs to the workload, mainly due to the proliferation of programs and systems. The employees are supposed to work under a rigid set of instructions, leaving the organization with minimal room for creativity and innovation. Hence, homogeneity takes over, and the top management precedes the continuity of operations over innovation and novelty.   Elaboration Stage At this stage, the middle managers learn to act efficiently and effectively within the bureaucratic culture. The organization gets broken down into different functional units, departments, and divisions, each assigned a particular set of deliverables. Hence, the organization counters the complexities arising at the third stage and again enters the growth phase, driven by collaboration among teams and complementarity across different functional units, departments, and divisions. However, like all previous stages, the temporary crisis is likely to bar growth at this stage, too. The crisis occurs when the need for revitalization is felt (typically after 10 or 20 years). The organization becomes overly bureaucratized at this stage and seeks a breakthrough that may come through changing top leadership positions or taking chances to put innovative ideas to the test. The maturity-led crisis can perpetuate and question the organization's survivalif not managed well.   9.2.2. Lifecycle Stages of Hilton Worldwide and Possible Decline    Hilton Worldwide entered its first stage after Conrad Hilton bought Mobley Hotel, comprising 40 rooms, while on his way to the bank. The spirit of the entrepreneurial stage is evident in the fact that Hilton was a creative entrepreneur, and he purchased Mobley Hotel with the vision of making it the best hotel in Texas. He started with a few employees, and the operations were informal during the initial phase until the company assumed the management of another hotel and introduced it as the Hilton Hotel in 1925. The 'collective stage' lasted from 1925 to 1949, when Hilton Hotel and Resort Chain witnessed exponential growth by assuming the management of multiple hotels and resorts.   After 1950, the organization grew internationally and experienced rapid growth, bringing administrative and managerial challenges. However, Conrad Hilton's prudence enabled the company to steer clear of bureaucratic tape. The company expedited its shift to the fourth phase by formalizing the relations and promoting cross-functional and cross-divisional collaboration. The credit for the hotel for avoiding major drawbacks mainly goes to the Hilton's insights into business matters.   Hilton isat risk of losing its tempo if the management does not focus on emerging opportunities to save the organization from the trap of stagnation. As mentioned earlier, the crisis at the fourth stage mostly tests the management's ability to revitalize the organization and needs strong leadership to timely handle the challenges and bring the organization back on track for growth. Hilton Worldwide has already navigated the phase of temporary decline after a period of rapid growth in 2000. The decline was more concentrated in Great Britain when Hilton saw its competitors overtaking and thriving on innovation and greater convenience. At that time, David Michaels took over as the company's CEO and pledged to recover the brand from its upheavals by focusing more on innovation and product development . It led to acquisitions and diversification, which enabled Hilton to improve its guests' experience and regain its lost competitive advantage.   The hotel witnessed another decline in 2020 when its revenue was hit hard by the pandemic to plunge by 58% compared to the previous year. It is further illustrated through theFigure XX: Figure XX: Hilton Worldwide Revenue   However, it is important to understand that the crises resulting from COVID-19 are not typically linked to the lifecycle. Instead of being treated from a resource-based perspective, the bigger picture must be kept in view. The pandemic is an uncontrollable factor in the external environment, indiscriminately affecting the organizations in the hospitality sector. Therefore, identical to the fourth phase, the last major crisis hit the company in 2000, and fresh upheaval indicates no managerial or administrative loopholes.   10. Organizational Culture   10.1. Defining Organizational Culture   Organizational culture refers to how people, departments, and stakeholders interact with each other and make sense of their relations and business. Social capital lies at the bottom of a culture. High social capital implies that the organization has knit the employees into close bonds where complementarity is high, stemming from mutual understanding, trust, and goodwill and vice versa. The cultural paradigm within an organization determines its degree of alignment with the external environment and how it connects with its customers and other stakeholders.    10.2. Hilton's Organizational Culture   10.2.1. Prevailing Type of Culture   The organizational culture at Hilton shows the mixed elements of 'mission culture' and 'bureaucratic culture.' The company is guided by a clearly defined mission that has remained consistent over time. For example, the company's mission is "To fill the earth with the light and warmth of hospitality by delivering exceptional experiences – every hotel, every guest, every time." In response to a question, Hilton's CEO remarked that the secret to success is to start with a good culture. He added that while a mission statement for different companies is rhetoric, Hilton takes it seriously and ensures that its employees and managers live up to its core mission . Hilton has always strived to ensure the highest levels of quality and has relied on incremental innovation to keep pace with emerging trends or set new trends. However, it has not deviated considerably from its legacy and treats its cultural heritage as an asset, indicative of short-term orientation and a mission-based culture.   At the same time, the company characterizes bureaucracy as evident from the formal relations structures and formally described roles. The managers and employees are supposed to carry out their routine tasks within their job descriptions. However, Hilton mixes its instruction-led environment with a sense of ownership by creating programs for its employees and managers. The delegation and empowerment are selective and concentrated on prominently skilled managers. Therefore, Hilton is not a purely bureaucratic organization, though rules and regulations define employees' behavior, interaction with each other, andapproach to their daily tasks.   10.2.2. Level of Social Capital   While seen from Daft & Armstrong's standpoint, the social capital at Hilton Worldwide is high. The main source of social capital is the organization's trust, thanks to its market experience. With several decades of successful experience in the marketplace, Hilton remains a trustworthy name, which makes brand equity one of the primary sources of its ability to connect with and retain its customers. Social capital also reflects in people management at the company. The company features an environment that fosters teamwork, though within well-defined and structured relationships. The teams operate with each other, and thanks to extensive training, each individual and functional department understand how to complement one another in time. Hence, the company has a culture of collaboration at the internal and external levels. For example, the functional departments operate in seamless harmony with each other. The company has strong and long-established relations with its guests and suppliers built on trust and goodwill. Therefore, the social capital is determined as high in the company.   10.2.3. Integrating the Employees into Culture   Another remarkable aspect of Hilton's culture is its way of integrating the new hires into its cultural stream. To achieve a cultural fit, the company mainly focuses on 'personality' as the key determinant of a candidate's behavior. Key aspects of personality include dynamism, passion, and confidence. Strong evidence of how the company maintains consistency between its overarching culture and employees is that millennials make up most of its workforce. Millennials usually have dynamic personalities, openness to new ideas, and high tech-literacy. Hence, the company's focus on an age group that matches its cultural criteria reflects its cultural integration efforts. However, there is no evidence showing any activities, such as employee orientation, to show how the company familiarizes its new employees with its norms upfront.   11. Ethical Values   11.1 Defining Ethical Values   Ethical values are a company's commitments to society and the environment, along with the guiding principles of how it treats its stakeholders. Large corporations usually encapsulate their ethical stance on business into a corporate social responsibility (CSR) plan. The sources of ethics determine the ethical paradigm to which a leadership subscribes and how it incorporates the same into the organization's strategic plan.   11.2. Culture at Hilton Worldwide   Hilton has a well-structured corporate social responsibility plan, shared over its web platform's page dedicated to this purpose, and key disclosures in this regard are published in its annual reports. As for the ethical values, the company has a six-pronged approach abbreviated as its brand name Hilton. These values include:   Hospitality The company expresses its passion for deliveringan exceptional experience to its guests. The earlier history reveals that Hilton has lived up to this core value throughout its journey. For instance, Hilton was the first restaurant to integrate television in its guest rooms. Similarly, it pioneered the trend of making ea...