Organisational Case Study Kempinski Hotel San Lawrenz

Organisations operate in complex and dynamic environments influenced by their organisational cultures. These can assist or hinder employees’ efforts to achieve business set goals. Kempinski Hotel San Lawrenz (KHSL) is a five-star resort based in Gozo, a small island part of the Maltese archipelago, which sets the background for this study investigation. This paper aims to analyse the respective organisational culture at KHSL and critically evaluates it in respect of concepts, theories and models as presented by various authors and academics on the subject matter. Furthermore, the paper assesses to what extent the current organisational culture at KHSL supports the business objectives. It further attempts to recommend how organisational culture changes can lead to realignment towards the company’s business objectives. It is worth mentioning that the author is as an ex-Manager of KHSL. The author and the General Manager’s contributions are the prime source of the descriptive information on the company itself.

The first section of this paper presents the background scenario of the local tourism sector and the competitive environment in which KHSL has been operating in the last decade, specifically within the tourism upmarket segment. The company’s profile follows, which includes its relevance to the German corporate business culture. The second part focuses on the theoretical aspect of organisational culture including a description of various concepts, models and theories and their relevance to KHSL. Specifically, the paper assesses Schein’s theoretical approach to organisational culture applied to KHSL. Furthermore, the Cultural Web model by Johnson et al. is applied to the situation at KHSL. The appropriateness of the application of these two models is justified throughout the discussion. The third part of this investigation highlights the relevance of a mission statement towards a company’s objectives. The paper further demonstrates how the inexistence of such a mission statement at KHSL and its stated objectives can create confusion in employees’ perceptions on the company’s organisational culture. Finally, an assessment is made as to what extent the present organisational culture is supportive to KHSL’s stated business objectives. Recommendations on how changes in organisational culture can lead to the realignment of the company’s objectives conclude this study investigation.

Background Scenario

Throughout the past decades, Maltese entrepreneurs have had the ability to develop and move forward the tourism industry (Goutier 2008). The Maltese Government played an important role in this sector by investing in infrastructural improvements and offering specific assistance schemes for the Gozo industry (Debono 2009). One can mention the improvement in accessibility between Malta and Gozo by the introduction of three new state of the art ferries, cruise-liner disembarking facilities, improvements in cultural site presentations and buildings. Furthermore, the Gozo Tourism Association representing the local tourist service providers assisted businesses based on the island such as KHSL.

The upmarket tourist sector in Gozo is facing challenging times. Access to the island is still limited to ferry and sea-plane services. This makes the 5 star hotel market segment hard to penetrate. In fact, out of three 5 star hotels which have been built in the past two decades, only two remained operational, one of which is KHSL.

Company Profile

KHSL forms part of the Kempinski Hotels, one of Europe’s upmarket hospitality provider established in Germany in 1897 (Wittwer n.d). High quality service is a key feature of their corporate culture. This is backed by the rapid unpredicted expansion of the chain of hotels across all continents except Australia.

KHSL is located in the tiny village of San Lawrenz, which is found on the far west flank of Gozo (67sq.km island) and covers an area of 70,000 sq.mtrs. Its landscape is surrounded by 122 suites, the majority of which offer Mediterranean sea views. The main guests are up-market tourists, business people and incentive groups. KHSL employs 350 people of which 20% work on a part-time basis to support the seasonality peak demand (Attard 2009). It is claimed that KHSL embraces diversity whole-heartedly and this is considered as a central hallmark of its organisational identity (Wittwer n.d.). The company’s cultural diversity can be seen through the employment of non-EU nationals which are mostly employed in lower grades. From a different perspective, this can be seen as capitalising on cheap foreign labour. KHSL’s organisational structure (refer to appendix 1) is flat and decisions are mostly taken by the top management executives.

Defining Organisational Culture

Diverse researchers came along with distinct perspectives concerning company culture. In this respect, Deal and Kennedy and Peter and Waterman (cited in UoL 2008:58), advocate that “Culture is the way we do things around here or the rules of the game for getting along in the organisation”. This theory is very consistent with the KHSL’s culture, in which organisational members perform tasks, approach customers and solve conflicts. New employees have to adapt to the organisational culture to get along and be accepted in the organisation.

Moreover, Hillis (2004:28) perceives that “A constructive culture is defined simplistically as one oriented towards achievement, self-actualisation, creativity, participation, valuing people, and one that places a high priority on healthy relationships between people”. This perception of organisational culture partly resembles that of KHSL, where management indoctrinate employee’s ‘to value people’. This is supported by the employees’ beliefs that the company truly values its members by setting up a human resources department with a competent staff compliment. Employees perceive this as practical evidence that the company wants to build strong relationships with its employees having different social, educational, national and cultural backgrounds. Such a belief takes into consideration the complexity in work-patterns, including shifts, flexi-time and part-time workers.

A viewpoint expressed by Handy states:

“Anyone who has spent any time in another country will appreciate how values, beliefs and cherished philosophies affect the way society is organised. They will appreciate too how these values and beliefs are shaped by history and tradition, by the climate, the kinds of work people do, the size of the country and its prosperity”.

(Handy 1993:169)

This theoretical concept is one of the most relevant concepts to KHSL since, although the corporate organisational culture is influenced by German corporate strategy, it is blended with the Mediterranean culture. It is fair to comment that high quality customer standards, consistency in service provision and supreme hotel facilities were adopted at KHSL as part of its corporate German organisational culture. On the other hand, the Maltese culture influences KHSL’s organisational culture particularly when one considers the high flexibility, loyalty and commitment to high productivity levels of its employees. Quoting the General Manager of KHSL, “The employees show full loyalty to the organisation as the Maltese were under British rule with high productivity levels and are flexible and capable of adjusting to different economic conditions” (Attard 2009).

Supporting this theory, one can comment that the culture of the Gozitan people, forming part of the Maltese archipelago is one of continuous survival going back to ancient times when the island was conquered and invaded by foreigners who were taken away as prisoners. The Mediterranean climate and the tininess of the Maltese archipelago reflect KHSL’s organisational culture. This is evident in the warmness and smiling faces of its employees reflecting the frequent warm and clear skies of the Maltese climate.

It is noteworthy to refer to Johnson et al. (cited in Mullins 2007), when discussing organisational culture. These theorists developed the cultural web concept which can be applied precisely to KHSL. Figure 1 depicts KHSL’s core web elements that form part of the company’s organisational culture as perceived by the author and General Manager of KHSL.

Schein’s Theory and Layers Of Organisational Culture

Schein’s Layers of organisational culture is pivotal in assessing the culture at KHSL. The justification for applying this theory is because the model is simple and practical to apply and assess KHSL’s organisational culture. Where appropriate other authors and academics are quoted to support or criticise Schein’s theory in the respective arguments raised. Quoting Schein’s theory, Organisational Culture is defined as:

“A pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaption and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems”

(Schein 2004:17)

Furthermore, Schein (cited in Hollway 1991:139) states that “It is at the group level that culture forms”. He proposes “…that culture derives from the depths of unconsciousness” (Schein cited in UoL 2008:71). It is pertinent to approach Schein’s theory by referring to the three levels of culture.

First level – Artefacts

On the superficial level, one finds artefacts which include the observable appearance of the organisation, structures and processes (Schein 2004). Within this level, different cultural indicators might exist and this reflects the true corporate culture. According to Schein (2004:26) Artefacts are “…easy to observe and very difficult to decipher”.

On entering the hotel, guests can notice the elegantly rustic and aesthetic Maltese architectural design surrounded with palm trees and colourful flowers. One’s first impression is the openness and warm welcoming received by members of staff. One can notice the open-plan layout with few doors throughout the building. On the upper floor, modern and spacious administrative offices are located. All these physical characteristics form part of KHSL’s true organisational culture. The absence of doors allows guests and employees alike to communicate freely. Walking further inside the hotel premises, one notices that all levels of employees have a formal dress code and talk politely to guests which reflects the corporate German culture of discipline and formality. This is in contrast to the fact that work procedures, policies and practices are not documented. In fact, the organisation’s mission statement is nowhere to be found let alone displayed in a prominent place as it should be.

On the lower level, a staff canteen is found where employees from different departments take their break at the same time. This serves the purpose of cultural transmission where Anakwe and Greenhaus (1999) state that organisational culture is transmitted on to employees, via the process of socialisation.

Further inside the lobby, one finds conference and meeting rooms. These rooms not only serve the public but also function as a meeting place for management run meetings on a weekly basis. Decisions are made by the top management down to subordinates. This is part of KHSL’s culture where managers who have a high level of authority are constantly pressured to keep up with targeted budgets and transmit this pressure to subordinates. This culturalisation is in line with the definition given by Linstead and Grafton-Small (1992:333) who proposed that “Culture devised by management and transmitted, marketed, sold or imposed on the rest of the organisation…which are offered to organisational members as part of the seductive process of achieving membership and gaining commitment.”

Second Level – Espoused beliefs and values

Schein’s second level describes the organisation’s espoused beliefs and values, which are embedded within corporate strategies, goals and philosophies (Schein 2004). This describes the manner in which individual organisational members justify their action and behaviour (ibid). In substance, espoused values represent the preferred values and norms by an organisation.

Clearly KHSL’s espoused values includes its philosophy to commit itself to luxury hospitality guided by the corporate’s strategy to offer high quality service to its clients. (Wittwer 2006). The underlying assumption as perceived by the management and the workforce is that this can be done through its loyal employees working in collaboration with each other. This perception is further supported by KHSL’s culture to frequently hold social activities for its employees including parties, barbeques and dinners.

Another underlying belief in KHSL is that work is valued to the extent that it must be given first priority in life. Employees are familiar with this belief but have not yet come to terms with it as they see this conflicting with their family values and beliefs. Family priority over work is one of the values of Maltese society (Abela 1999). This is a common topic and source of tension between employees.

Third Level- Basic Assumptions

Basic Assumptions represent the third level of Schein’s theory. These are “unconscious, taken for granted beliefs, perceptions, thoughts and feelings” (Schein 2004:26). Information is compiled at this level by carefully observing behaviour, so as to construct the underlying assumptions. The latter, are sometimes taken for granted and not recognised. According to Schein (2004), the crux of organisational culture is within this level.

Although basic assumptions tend to be unobserved, however they represent the core of the organisation’s culture. Subsequently, organisational values that have been taken for granted emerge as significant assumptions that guide the organisation’s behaviour (ibid).

Within the KHSL culture, basic assumptions include, that employees are responsible, trustworthy, professional and capable of governing themselves, and that the relationship between them is based on collaboration. Employees assume that management is taking the right strategic and operational decisions which are rarely questioned. Top management seem to be ‘untouchable’ people. Employees take management decisions for granted leading to the assumption that KHSL is a preferred resort. Furthermore, such an assumption allows employees to believe that management is complacent and rarely creates innovative ideas.

Organisational Goals – Mission statement and stated objectives

Mullins (2007) clearly defined how a mission statement’s value is largely dependent upon the extent to which the entire organisation accepts its worth. Arguably, he refers to the process of disseminating it into meaningful terms such that all employees can understand and accept it. Johnson and Scholes (2002:239) describes how it can be thought of as, “a statement of the overriding direction and purpose of an organisation”

de Waal (2007:182) agrees that “High performance organisation creates clarity and a common understanding of the organisation direction and strategy, which results in a commonly held strategic mind-set among organisational members.”

It is clear that the mission statement is where corporate direction is defined and disseminated via an evocative statement. There is considerable agreement amongst key writers that the mission statement has to be clear and unambiguous yet (Perren and Tavakoli (1997) concede that if the overriding objective of a well crafted mission statement is actually to create a sense of mission amongst the members of an organisation then some naive executives have a lot to learn. They argue that a mission statement has to be believed, understood and acted upon by the majority of an organisation’s members to achieve a state of togetherness (or as the author would prefer to describe it: a common purpose). Mullins (2007) embellishes this point as he describes the need for organisations to practice what they preach if the mission statement is to be of any value. The KHSL mission statement is highlighted hereunder as stated by the General Manager,

“To be renowned as the most unique hotel in Malta offering guests the ‘perfect retreat’ to relax in the tranquil ambience of Gozo, showcasing Kempinski as a luxury brand and ensuring at all times guest satisfaction, while improving the financial return to the owner and Kempinski”.

(Attard 2009)

It is unfortunate that the above mission statement is not known to employees. It is very rarely, if ever, mentioned in meetings, social activities and the author never came across any document stating this statement. Despite this, employees commit themselves to improve the financial position using continuous loyalty, dedication, and hard work. One can argue that as a general rule, employees feel the common purpose of working with KHSL. Linking employees with stated business objectives should further improve the performance of the organisation by entrenching a documented well understood mission statement.

Mr. Attard (2009) further claimed that KHSL’s goals and objectives are to achieve and run a professional, profitable and ethical company. He further argued that this is done through the building of long term marketing relationships via its esteemed stakeholders and guest. He also highlighted that the aim of the company, is to deliver a high quality service to its respective guests, thus enabling the company to attain its long term sustainability.

Analysis of the Supportive and Unsupportive Elements of Organisational Goals

Johnson’s et al. Model

It transpires from observations, that there are certain ingredients within the corporate culture of KHSL, which are supportive and unsupportive as regards its organisational goals.

Analysing KHSL’s culture web using Johnson’s et al. model one can notice that a number of web elements support the organisational goals whilst others divert and could be conflicting. The symbols content reflects the organisational culture with regards to the excellent facilities and high quality service as seen in the eyes of the customer. This contributes towards the company’s goals of being profitable by continuously attracting upmarket guests through the portrayal of upmarket corporate image. The control systems and the organisational structure web elements also seem to support the company’s goals as they are customer focused and the management is cost conscious thus demonstrating an alignment with the company’s profitability. Another supportive element is the company’s stated goals which include the role of the Human Resources department giving a clear indication that the company invests in its people.

Some cultural elements mentioned in the Stories section sustain the company’s objectives including the care of its employees, co-operation and keeping good relations with stakeholders. Stories about the management like for example the ‘heroes’ approach do not seem aligned with the stated objective of the company on professionalism. The company’s stated goals are further sustained as illustrated in the Rituals and Routines cultural elements, where KHSL members believe that collaboration and co-operation with key stakeholders is in place. However, some of the rituals and routines give an indication of unprofessionalism which contradicts the hotel’s objectives. This includes the fact that the mission statement, objectives, company policies and work procedures are not officially stated. Furthermore, the fact that management does not consult its workforce in decision making and attempts to impose its culture on the employees as stated in the Power structures web element diverts from the company’s objectives to attain its long term sustainability.

Other Supportive Models

Going through the various theories, models and concepts of organisational culture and comparing them to the business goals as stated by the General Manager, the paper will now critically assess whether the organisation supports these objectives. Such a task is normally carried out using a mission statement, however, this is nonexistent at KHSL and so this can be considered a limitation of this paper.

As Hillis (2004) remarked that organisational culture is oriented towards valuing people and healthy relationships, this is the same perception of KHSL employees because the company invests heavily in Human Resources, which is clear evidence that organisational goals with regards to long term business sustainability is supportive.

Furthermore, Handy’s (1993) viewpoint is that organisational culture is greatly influenced by history, tradition and climates of organisation’s location. This was earlier proven to be the case with KHSL’s culture. This translates to a competitive edge offered by Maltese employees which includes commitment, flexibility and loyalty that was shaped throughout the history of the Maltese and this contributes to KHSL’s profitability, which in the end is the prime reason of the organisation’s existence.

Going through Schein’s three levels of culture one can remark that the physical characteristics of KHSL as perceived by guests and employees form part of the company’s values and compliments its organisational goals which aim to offer high quality services. These physical elements identified through the first layer defined by Schein, also supplement the professionalism approach and long term sustainability stated in the company’s goals. Moreover, the German corporate culture of discipline and formality is imposed on the Maltese employees. This further contributes to professionalism.

The culture of socialisation mentioned by Anakwe and Greenhaus (1999) and Schein’s (2004) second level is evident at KHSL where employees and management behaviour compliments the long term business relationship goal. Within KHSL’s culture, employees’ personal attributes form part of Schein’s third level, and these are supportive of the company’s goals.

Unsupportive

Conversely, one can argue that there are elements within the organisational culture that do not compliment and support the company’s goals. One of these, is that work practices, policies and procedures are informal and not documented. This culture is embedded in members of the top management team and unconsciously transmitted to subordinates. This cultural approach is not aligned with the company’s professionalism and high quality service goals. Moreover, the unbalanced and conflicting cultures of work vis a vis family between management and employees hinders the attainment of certain company goals.

Other unsupportive elements include the cultural behaviour of top management who are considered as ‘untouchable’ leading to employees’ general belief that management is complacent without the competence of innovative ideas, and this should be regarded as a threat to the long term sustainability of the business.

Conclusion

It can be fairly concluded that organisational culture, although defined by various authors and scholars in different ways and approaches, tend to agree that the core composing elements are values and beliefs. These are initially shaped and embraced by the organisation’s management behaviour and later cascaded down to all members of the organisation, who in turn behave and assume that this culture is correct. KHSL, a modern resort on the island of Gozo, strives to survive in a local upmarket sector and is not a stranger to this scenario.

It is perceived by the author that KHSL’s organisational culture resembles mostly Handy’s theory which attributes such culture to history, tradition, climate and the size of the country in which it operates. The study also reveals that through the application of Schein’s theory and Johnsons et al cultural web model, KHSL’s organisational culture is mostly supportive to its business goals which are surprisingly not derived from a mission statement. Conversely, other important organisational cultural elements were found to hinder and sometimes even conflict these same goals.

Since organisational culture is a dynamic and evolving reality, it needs to be assessed in-depth at a particular point in time in terms of long-term organisational goals. It seems that KHSL’s managers acting as leaders seek to impose some of their own values and assumptions on employees. This could be counterproductive since KHSL’s employees need to be granted a participatory role in the development of culture within their own respective organisation.

It is therefore recommended that to further support KHSL’s long-term business objectives, the management needs to undergo a cultural analysis with a positive approach to formally state and explain the company’s mission statement to all members of the organisation. Furthermore, a cultural change programme should be initiated to enable the company to build-up a well structured management system based on documented policies, procedures and work-practices. Hopefully, by time, these changes will form part of the beliefs, values and underlying assumptions of the organisational culture. This will enable the members of the organisation to better understand their role and responsibilities, thus contributing more effectively towards the business objectives.