Decision Problem: The Liang Brothers, Xin and Jiang, must decide how to privatize their family guest house heritage from a mainland China SOE. Four urgently emerging human resource issues arose from this case:
First of all, the old SOE employees were poorly motivated and there were no incentives in place at all. There was no pay mix internally aligned with any pay structure. The goals of employees were not aligned with the company’s vision and long-term management strategies if there were any. Low employee morale and productivity combined with corrupted business model severely affected the occupancy rate and profitability of the guest house.
Secondly, the internal and external competitiveness are both off the balance and unfair.
They could also be a great resource for the brothers to understand the local culture and find ways to ease in the Guanxi network. Once the brothers have got a strong Guanxi with the senior managers’ Guanxi, these experienced SOE managers will have no privilege and pose little or no threat to the brothers as everyone knows everyone. We are all on the same network. “Saving face” will be hard to break among Guanxi friends.
2. Set up company vision, corporate strategy, culture and HR strategy: in this task, the brothers must sketch an initial strategies planning for the overall company as well as choose a vision and select a clan culture for the guest house as it was a family heritage from generations. Once the culture and company strategies set, the brother then must select a suitable HR strategy that is consistent with the culture and strategy. This step will also decide the type of organizational structure, design, compensation structure and incentives that will run later in the company.
3. Redefine the organization structure and adopt a flat structure: this task will reconstruct the current organization and jobs design. Different role with different skill sets should be clearly laid out as well as recruitment regulations. It is important for the brothers to bring new hires into the newborn structure. The qualified candidates should have years of experience in the hospitality industry preferably in 4 stars above