Introduction
Hilton Hotels Corporation (currently known as Hilton Worldwide) is an American company which owns a string of full service hotels and resorts around the globe. The corporation was established in 1919 under the guiding leadership of Conrad Hilton in Cisco, Texas. It is currently under the Blackstone Group, a classified equity company.
The corporation owns, controls, and/or contracts a portfolio of brands. Hilton Worldwide franchise includes: Hilton Garden inn, Conrad Hotels, Hilton Grand vacations, Hilton Hotels and Resorts, and Double tree among others.
The corporation boosts of nearly 4000 hotels with over 640000 rooms in more than 90 countries. Recently, Hilton Worldwide was ranked the second largest hotel chain in the global hospitality industry. The company only comes second to Marriot International. (Applegate, Piccoli & Dev, 2008, p. 1).
The corporation rolled out its global operations in 1964 through an independent company known as Hilton International Company. In 1967, the company was acquired by Trans World Airline’s holding company –Trans World Corporation. The company was later acquired in 1986 by the United Airline Corporation, the holding group for United Airline.
This was aimed at revitalizing the company into a full service travel company. In 1987, the United Airline Corporation sold the company to a British leisure and betting company, which renamed the company to Hilton Group PLC (Applegate, Piccoli & Dev, 2008, p. 2).
The renaming of Hilton International Company by the British company led to the emergence of two separate and completely autonomous companies operating under the umbrella of Hilton Worldwide. The hotels operating outside the U.S. were not allowed to use the brand name Hilton. This was only reversed in the recent past.
Hotels operating in the U.S. soil were named Visa International Hotels, whereas those operating outside the U.S. were called Conrad Hotels (Applegate, Piccoli & Dev, 2008, p. 2).
The standardization of the brand was done to curtail long-term confusion among the consumers. The U.S. and UK Hilton companies signed a common marketing agreement under which they shared similar emblem, promoted their products and maintained a common system of reservation.
The signing of the accord saw the phasing out of Visa International Hotels, while Conrad Hotels were remodeled into sumptuous brands and operated within and without U.S.
In addition, the company’s expansion program led to the acquisition of several companies, for instance, International Leisure Company (1971), Promus Hotel Corporation (1999), Park Place Entertainment and many more (Applegate, Piccoli & Dev, 2008, p. 3).
In late 2005, Hilton Hotels Corporation reached an agreement with the British leisure and betting company to re-acquire the Hilton International Chain sold by the United Airline Corporation for a sum of 5.7 billion dollars.
The deal was concluded on February 2006 and brought the two Hilton companies back together as one. Immediately after the merger, the Hilton hotels Corporation was ranked fifth globally in terms of room numbers. In addition, the company’s holding company (Hilton Group PLC) was renamed Ladbrokes PLC (Hiltonworldwide.com, 2013).
In 2007, Hilton Hotels Corporation decided to sell all of its shares and debts to Blackstone Group LP at a cost of 26 billion dollars. The deal saw Blackstone Group LP become the largest hotel owner in the world. In the same year, Christopher J. Nassetta became the group’s President and CEO. The company’s headquarter was also moved from Beverly Hills, California to Fairfax, Virginia (Applegate, Piccoli & Dev, 2008, p. 3).
On September 2013, the company advertised a 1.3 billion dollar IPO to finance its global expansion plans (Hiltonworldwide.com, 2013). The essay aims to explore the company’s organizational structure, power and politics and organizational culture. This will be achieved through the analysis of different theories and concepts and key arguments between different authors and their theoretical positions.
Organizational structure: Hilton Worldwide
Hilton Worldwide is based is currently headquartered in Fairfax, Virginia, U.S.A. Hilton Worldwide owns, manages and develops hotels, resorts and timeshare facilities , and contracting of accommodation facilities.
Therefore, the corporation’s main areas of business are hotel ownership, managing and contracting, and timeshare. Nonetheless, most of the company’s properties are franchised to autonomous firms and operators. Franchising has proven to be successful in expanding the company’s operations within and without U.S (Hiltonworldwide.com, 2013).
At the moment, Hilton Worldwide has nearly 3000 properties with approximately 600000 rooms in 91 countries and jurisdictions. Out of these properties, only 600 hotels belong to the company. Hilton Worldwide like other corporations within the hospitality industry has a very distinctive operational structure.
Operational structure defines the functions that are carried out by the company and the functions that it delegates to others (Gujar, 2004, p. 14). According to Gujar (2004, p. 15), the majority of people are always unable to distinguish the groups and in most cases think that they are all in similar business with similar objectives. However, this is far from the truth.
As already been mentioned, Hilton Hotels Corporation has four distinct business segments: hotel ownership, leased hotels, hotel management and franchise or brand ownership. Hotel ownership has less risk since it guarantees constant income.
Examples of hotels owned by the company include: Conrad hotels and Hilton Garden among others. Inn Proceeds from the leased hotels come from room services, food and beverage sales and other services. The leasing company bears all the risk but has total control of the business operations. Some of the leased hotels include Hilton Grand vacations and Home 2 Suites by Hilton (Gujar, 2004, p. 15; Hiltonworldwide.com, 2013).
The company also manages a number of company a number of hotels on behalf of individual hotel owners or companies at a cost. It provides staff, operating systems and modus operandi. The cost is based on a base management fee or incentives. The latter involves split of property or proceeds in the long run. Last but not least, the company sold their brands to other hotel owners.
The franchised companies are permitted to access the company’s distribution. These companies pay a franchise fee or royalty based on the agreed percentage. Hilton Worldwide franchises include Hilton Hotels and Resorts, Hampton Inn and Waldorf Astoria among others (Gujar, 2004, p. 15; Hiltonworldwide.com, 2013).
The company’s management structure is more or less similar to most multinational corporations. The top hierarchy comprises of the Board of Directors whose sole responsibility is to safeguard the interest of the company and the shareholders. The board is nominated by the stakeholders to make sure that their long-term interests are served (Hiltonworldwide.com, 2013).
In general, the company is being run by the President who is also the Chief executive officer. The current President and CEO is Christopher J. Nassetta. In addition, the company’s different business segments and portfolios are also headed by presidents and their assistants.
For example, Hilton Worldwide presidents include: finance president, human resources president, architectural, construction and engineering president, Hilton grand vacation president, brand and commercial services president, and communications president.
The presidents are responsible for overseeing the operations of the company’s subsidiaries. However, these subsidiaries are independent and are only answerable to headquarter when necessary (Hiltonworldwide.com, 2013).
Power and Politics
Robbins and Judge (2011, p. 170) defines power as the capacity to influence the behavior of another person. They argue that people always have power but do not know how to use it or willfully opt not to use it. They add that the most significant element of power is dependency. In other words, power is a function of dependency.
Therefore, an individual can only be said to have power if he/she can influence or direct another individual. Robbins and Judge (2011, p. 171) stress that power does not necessarily require congruence in goals but simply dependence. On the other hand, leadership necessitates compatibility in goals between those in top hierarchy and their followers/subordinates.
Despite of the fact that most of the Hilton’s subsidiaries enjoy autonomy, crucial decisions are made from the administrative center. Decisions affecting the shareholders’ interest are handled by the board, whereas those that affect the operations of the company are handled by the CEO and respective presidents.
Another disparity between power and leadership is linked to the direction of influence. Leadership emphasizes on top-down influence and provides little room for upward influence.
However, power is not concerned about the direction but strategies for compliance. For this reason, employees of Hilton hotel are so disciplined and do not pay a lot of attention from where orders comes from. Their main concern is company’s performance and compliance with the direction given.
Power can either be coercive or rewarding. Coercive power is power base is linked to fear of failure or negative results. Coercive power is known to have a negative impact on employees’ commitment and loyalty.
Most employees in the hospitality industry base their loyalty in what the company provides for them, rather than a sense of loyalty or attachment to the company. Hilton Hotels Corporation is known all over the world to be among the few companies that offers the best remuneration packages and excellent welfare services (Hiltonworldwide.com, 2013).
According to Careerbliss.com, Hilton Hotels Corporation was ranked number one as the happiest organization in the U.S, with a 96 percent score. The score was based on a number of factors including: the relationship between the employees and the management, organizational culture and reputation and employee turnover rate among other factors.
On the other hand, rewarding power simply refers to compliance due to anticipated benefits. A senior employee who distributes rewards for good performance has power over the juniors.
Hilton hotel has their own reward system and this is based on performance and loyalty. As a result, senior managers are considerably powerful in view of the fact that they control the reward system (Hiltonworldwide.com, 2013; Robbins & Judge, 2013, p. 187).
Most economic studies have emphasized on the effectiveness of managerial control when studying internationalization of international corporations. Drawing from the concept of transaction cost economics, Hilton hotel corporations apply both markets-geared and administrative form of control to manage its global subsidiaries and franchise.
Therefore, politics and power are fundamental elements of decision making in the hospitality industry. In addition, the company company always tries to balance global efficiency and domestic adjustment to enhance harmonization and power (Geppert, 2013, p. 6).
Political contestation among multinational corporations can be studied in numerous micro-political competitions. Most literatures have focused on the power struggle between the administrative center and the subsidiaries, including the franchise and leased businesses.
The struggle has always been on budgetary allocation, change of mandate and transfer decision (Geppert, 2013, p. 6). As already been mentioned, the highest number of luxurious Hilton hotels is in the United States despite of the fact that part of the company was once owned by a British company. This is attributed to unfair allocation of resources and power struggle between British subsidiaries and the Headquarter.
Culture and Change
Internal business environment refers to internal conditions that have considerable impact on the decision-making process and general well-being of the business. Internal environment includes organization culture, staff commitment and competence, and internal control and evaluation mechanism.
Organizational culture could positively or negatively impact the formulation and implementation of the business strategy. This depends on the compatibility of the organizational culture with the environment. An innovative culture in the organization facilitates the formulation of credible strategies and smooth implementation of marketing strategies (Brown, 2011, p. 32).
According to Robbins and Judge (2013, p. 205), organizational culture can be defined narrowly or generally. Culture can be defined narrowly as the broad system of values guiding all members of the organization. Therefore, culture defines an organization and differentiates it from other organizations.
On the other hand, culture can generally be defined as the common values, business principles and objectives, the necessary code of conduct, systems and procedures and the external representation of the company with respect to performance.
The organizational culture is normally influenced by the company’s founders and the development processes. The culture could be maintained in the organization through: conduct of the managers, response system, training, appraisal and incentive organism, staffing procedures, customs and formal procedures, and organizational anecdote (Robbins & Judge, 2013, p. 205).
Organizational change, on the other hand, refers to the transformational process an organization experiences in reaction to an internal and external amendments or reforms. The repositioning of resources and redistribution of capital may cause numerous challenges during the period of change.
Organizational changes can either be transformational, incremental/frame-bending, unplanned or planned. In addition, organizational changes can be brought about by: the relationship between the company and the external environment; company’s life cycle; company politics; and technological advancements (Robbins & Judge, 2013, p. 206).
The company’s founder envisioned a world where people interact freely regardless of gender, race, tribe or social status. His dream is entrenched in the company’s vision of filling the world with the brightness and warmth of hospitality.
As a result, Hilton Hotels Corporation appreciates cultural diversity and ensures that both clients and employees are valued and respected irrespective of their social status or affiliation. Conrad’s vision of diversity and inclusiveness is also embedded in its mission of becoming the most excellent hospitality company in the globe (Hiltonworldwide.com, 2013).
According to Applegate, Piccoli and Dev (2008, p. 8), Hilton Hotels Corporation always strives to leverage the exceptional cultures of the global communities and develop talent and strategies that promotes inclusiveness. The employees and the management are bound by the code that guarantees high integrity, excellent work ethics and service quality.
In addition, The Company only attracts the best and brightest talent through rigorous but professional recruitment process. The process also includes partnership and voluntary programs that are aimed at enhancing the presence of the local communities in the company. The diversity programs also include development of property ownership for women and other minority groups in the society.
Hilton Worldwide has also invested in programs that promote diversity, for instance, inclusion training and celebration of global cultures and traditions. Training is particularly important since many studies have underscored the apparent correlation between a soundly designed and strategic training and the overall success of the organization.
In addition, human resource experts assert that companies which invests heavily training and development benefits from an enriched working environment with low level of staff exodus as well as enhanced productivity and organizational performance (Brown, 2011, p. 116). This is reflected in the outstanding level of employees’ loyalty and low turnover rate.
An example of how the company’s commitment to promote cultural diversity is through the development of the ICT system that encourages wider information sharing and training programs. The training initiatives also include professional training. Professional training helps the company in clarifying, planning, and implementing change through various elements.
To start with, professional training ensures wider consultation and consensus building when it comes to adopting and implementing change. Professional training helps managers to make clear decisions. Most managers are great visionaries except that they do not translate their visions into observable variables.
Professional training thus plays an important role in articulating goals and objectives of an organization. Professional training also acts as a vehicle for communication and leading change (Hiltonworldwide.com, 2013; Robbins & Judge, 2013, p. 208).
Technological advancements have forced the company to amend a number of their policies and procedures, for example, booking and recruitment process. Currently, online booking via the company’s website is allowed. In addition, payments can be made through electronic means such as mobile phones.
Worker assessment is partially done through customized computer software. Last but not least, the company’s marketing and promotional practice which involved designing and printing of colorful brochures elaborating on the types of services offered by the company is currently used on a limited scale. Most of the marketing and promotional activities are at this point in time done online (Hiltonworldwide.com, 2013).
Conclusion
Hilton Worldwide (formerly known as the Hilton Hotels Corporation) is one of the leading hotel chains in the global hospitality industry. The company boasts of nearly 4000 hotels with over 640000 rooms in more than 90 countries. The company’s success in the global hospitality industry is partly attributed to its organizational structure, culture and how its handling of power and politics.
Like many other companies in the hospitality industry, Hilton Hotels Corporation has four distinct business segments: hotel ownership, leased hotels, hotel management and franchise. It also applies to both markets-geared and administrative form of control to manage its global subsidiaries and franchise.
The company’s culture is based on appreciation of cultural diversity and excellent customer service. The culture is based on the vision of the founder Conrad J. Hilton.
Conrad envisioned a world where people interact freely without any form of discrimination. His dream is also entrenched in the current vision of the company. Last but not least, Hilton Worldwide has streamlined its operations based on current changes in a business environment.
References
Applegate, L.M., Piccoli, G., & Dev, C. (2008). Hilton Hotels: Brand Differentiation through Customer Relationship Management. Harvard Business School: Boston, Massachusetts.
Brown, D.R. (2011). An Experiential Approach to Organization Development. Saddle River, NJ: Prentice Hall.
Geppert, M. (2013). Politics and power within multinational corporations: Mainstream studies, emerging critical approaches and suggestions for future research. University of Surrey: Guildford, United Kingdom.
Gujar, P. (2004). Organizational Structure in the Hospitality Industry: A Comparative Analysis of Hotel Real Estate Investment Trust and Hotel Corporations. University of Pune: Pune, India.
Hiltonworldwide.com. (2013). Hilton World Wide: History. Retrieved from www.hiltonworldwide.com.
Robbins, S.P., & Judge, T.A. (2011). Essentials of Business Behavior. Saddle River, NJ: Prentice Hall.
Robbins, S.P., & Judge, T.A. (2013). Essentials of Organization Behavior. Saddle River, NJ: Prentice Hall.