Question

Red Carpet LLC is a national hospitality and entertainment company with headquarters in Philadelphia, PA with national operations in the US. Historically, the company has had 3 divisions: hotels, food service, and cruise lines. However, it recently completed the acquisition of Sparkstar theaters, a movie theater company, that it is slated to become its 4th division. Red Carpet now owns 200 hotels in 48 states, 4 brands of restaurants with 1776 locations, 4 Buoy Bay branded cruise ships, and 300 Sparkstar theaters.

Its matrix organizational structure consists of a central HR, accounting, business development, sales, marketing, and research and development departments located at the headquarters in Philadelphia that serve each division. Each division is located in a different part of the US and lead by a VP that reports to the President and CEO. The company is privately owned by a consortium of investors and investor groups.

Red Carpet has 16,000 employees, 1000 of which work at its corporate headquarters. The organizational culture of the headquarters is informal and organic and there are few policies and processes that guide employee behavior. The company, as a whole, does not value HR so employees struggle with many employee relations and employment law concerns. The company outsources all of its training to one of the investor group companies, however this training is commonly not customized to the needs of Red Carpet.

As a whole, Red Carpet struggles with its business to business partners and suppliers because of its reputation for being nonnegotiable. Red Carpet would rather disrupt the quality and availability of its only products and services rather than partner for the supply chain resources that it needs. Likewise, Red Carpet does not hold many of the General Managers in its hotels, restaurants, and its cruise ships accountable for performance, opting instead for a weaker political strategy of blaming and gotcha games.

Being aware of these challenges, Red Carpet acquired Sparkstar for their strong industry reputation and financial performance in the hopes that merging the structure and culture of Sparkstar into Red Carpet would change the organization for the better. Historically, Red Carpet has been a highly successful company, however in recent years, its mismanagement has created noticeable effectives in product and service quality and its bottom line.

Divisions

Hotels: Red Carpet branded hotels are mid-price semi-luxury hotels known for high quality. Each customer is given a red velvet cupcake upon checking in. Red Carpet relies on its General Managers to micromanage the hotel. Despite its corporate parent owning a restaurant division, no Red Carpet hotels have restaurants. The Red Carpet division headquarters are in Sedona AZ. Many of the hotels are in need of refurbishment.

Food Service: Chicken Heaven is a fast-food chain with a long tradition of quality, large customer base, and 1000 locations. It is a solid overall performer for Red Carpet with high employee satisfaction. Burger Blast is another fast-food chain recently launched to cater to upscale customers who seek customized, gourmet-style burgers. It has 200 locations, however General Managers are struggling with budget and supplies causing a poor customer experience and high employee turnover. Food Park is a buffet-style restaurant with 500 locations that has been recently struggling because of high competition and poor marketing. Delicacy is a high-end restaurant with an urban theme. It has 76 locations, is the oldest of Red Carpet's food service operations, and provides a unique dining experience for customers. However, General Managers have a high turnover at Delicacy because of the grueling schedule. The food service division is located in Burke, ID.

Cruise Ships: Buoy Bay cruise ships offer low-cost, short-term cruises from Port Canaveral, FL only to the US Virgin Islands. Buoy Bay offers customers average quality staterooms and food from Chicken Heaven, Burger Blast, and Food Park. However, it does not offer a non-buffet formal dining option such as Delicacy. Although they are known for their over-the-top entertainment, employee turnover is very high relying primary on seasonal employees who are poorly trained. Buoy Bay has had much controversy. Just 5 years ago, the Buoy Bay cruise ship, Garland of the Sails, hit a reef, partially sank, and had to be salvaged in a 1.5 billion dollar operation. This resulted in a Federal investigation that is still pending. The Buoy Bay division is located in Lapsowanne, OR.

Movie Theaters: Sparkstar theaters were recently purchased from the Vegamega group for 2.3 billion dollars. Sparkstar is the highest rated movie theater chain the US. It has high customer and employee satisfaction, an efficient organizational structure, and solid financial results. Sparkstar's culture is one of high HR involvement including a strong training and development department, Sparkstar Institute. Sparkstar has a customer rewards program that provides a free movie rental of the film that the customer saw in the theater which has been very popular and has increased its strong customer base. Sparkstar has its divisional headquarters in Pasadena, CA.

The Issues

With the purchase of Sparkstar theaters, Red Carpet is hoping to redefine its operations in the next 5 years. It sees opportunities to integrate its divisions, products, and services to better serve its customers and employees. Here is a summary of some of the issues that Red Carpet must address in its strategic plan:

Internal politics and communication
Improved HR and training
Employee relations issues
Federal investigations
Product and service quality
Marketing support
Performance issues
Redefining the organizational structure
Improving its organizational culture
Integrating products and services
Resource and supply chain issues

Your Role

Leroy Banks, the Director of Change management at Red Carpet is seeking an Organization Development Consultant to address Red Carpet's need for change. You've just received a consulting contract from him to help prepare a plan to assist Red Carpet. You're excited about the opportunity and are motivated to work on this project. You know that your insight will assist Red Carpet with managing organizational change.

Primary Task Response: Within the Discussion Board area, write 300-400 words that respond to the following questions with your thoughts, ideas, and comments. This will be the foundation for future discussions by your classmates. Be substantive and clear, and use examples to reinforce your ideas.

Additional Information:

The VP of HR reviewed the executive summary and decided that your recommendation was a strong course of action for the change process. In her discussions with Leroy, she mentioned that it would be good to have you participate in a focus group to discuss your experiences with the change process. She was interested in discovering some best practices for change and felt that your experiences would be very valuable to Red Carpet’s approach to change. To guide the discussion, she recommended addressing a few points that should be covered in the focus group. Leroy will gather the results of the focus group and share it with the VP of HR.

Review the Red Carpet scenario for this course and with your classmates; discuss the following questions that will provide insight into your own change experiences:

Describe a successful change initiative from your own experiences and why it worked well.
Describe an unsuccessful change initiative from your own experiences and why it did not achieve its intended objectives.
From your own experiences, summarize the key success factors for change at Red Carpet that you would recommend to Leroy.

Answer 1

The key areas that Red carpet needs to address for change management in strategic planning with a systematic, comprehensive framework and executives have to manage personal change and also engage the organisation in managing the change as follows:

Key principles for change management	Impact	Specific to Red Carpet
The change in managers behaviour-human factors	The management has to change the culture and build culture they want across the company	Internal politics and communication, Employee relations issues
Changes in the top management	The behaviour and attitude of top m management will indicate the culture and can manged and start the change without involvement of top management change is not possible	Redefining the organizational structure
Change across the organisation	Change cannot be departmentalised it has to be across the organisation and in each team member	Improving its organizational culture, Product and service quality
Clear communication for need for change and alignment of team and leadership	The need to build a transparent and clear communication wil solve many issues and build a good organisation	Internal politics and communication
Create ownership	Each team has to take ownership of their team and activities, each department has to be cohesive and synchronised, the individual behaviour should be to meet team goals	Integrating products and services, Marketing support
Clear communication	The need for cross functional, vertical and horizontal communication is critical	Clear communication, transparency in conveying visions and strategies and need for change management will ensure building a cohesive informed team and remove interdepartmental and inter organisational hostilities.
Cultural approach	The organisation should build a culture of team building, innovation, and inculcate the business requirements of the organisation	The culture has to be developed and has to top down and dictated and successfully incorporated cross the organistaion
Manage cultural diversity
Problem solving	Each person has to take responsibility for their job and have to solve the problems after discussing with the seniors.	Resource and supply chain issue, Federal investigations
Managing individual communication	Build team and one to one relationship where HR makes plans to motivate and promote people by encouraging them and creating incentive schemes. The individual performance should be encouraged and	This will increase communication and motivate individual to perform individually and as team.

Describe a successful change initiative from your own experiences and why it worked well.

The organisation had a limited regional recruitment policy and was not open to geocentric approach to business, they had employees and skill set from a specific nationality only who had almost no exposure to the world business scenario. The change in business scenario required global expansion which was not possible without diverse manpower and good understanding of the dynamics of global business.

The management hired a consultant to help set up offices in key target markets of Brazil. China, India. The Political, economic, social and legal background of these countries required localising of business and adapting product and services according to the country. The consultant arranged a two pronged approach of first changing the culture and bias of the organisation and second create environment for international requirement and setting up international offices who could arrange local efficiencies for the business, third approach was integrating the local and international teams by many trainings and workshops to build and create mutual trust and healthy business integration. The first year resulted in a lot of conflict management, few employee attrition, hostility in communication, also an increase in revenue which almost increased by 25%. The global team started seeing the advantages of the global approach, diverse views and new ideas which emerged. The business obviously benefitted and things started moving in a positive cohesive manner.

Describe an unsuccessful change initiative from your own experiences and why it did not achieve its intended objectives.

An unsuccessful change management scenario is when an organisation with a localised and single owner’s driven organisation was not ready to change its approach to the global scenario and the owner/founder of the organisation was not ready to change the autocratic, bureaucratic way of functioning to a transformational and democratic style. Thus even though the organisation had a good team and good innovative a range of products. The organisation was restricted to a small size with a limited growth and were unable to globalise as owner centric approach of management and organisational culture did not adapt to changing business needs.

From your own experiences, summarize the key success factors for change at Red Carpet that you would recommend to Leroy.

Leroy should initiate the following changes for the success of Red carpet:

1. Change in management thinking and assigning more responsibility to the key general managers.
2. The need to have mutual trust building workshops and clearly creating channels of communication
3. Integrating the different business skills and strengths to ensure Red Carpet 4 divisions work as one organisation.
4. The need to have clear assessment and evaluation methods where incompetent and irrelevant manpower is warned and told to pull up their socks and clearly manage their roles or leave the organisation.
5. The transparency in the organisation with the strategic plan and goals clearly defined and communicated to all team members enforcing change.
6. The organisational culture has to move towards team work, problem solving, taking responsibility and ownership for their profiles.