Introduction to the Company
Meliá Hotels International, S.A. (headquarters in Mallorca, Spain) was founded in 1956 by Gabriel Escarrer Juliá, who is still holding the post of the President. At the time, the company was called “Sol Meliá, S.A.”, but the name was changed in 2011 (Meliá Hotels International [MHI], 2012, pp. 90-91).
The Senior Executive Team of the company consists of the Chief Executive Officer and six Executive Vice Presidents, one of them, Gabriel Cánaves, being concerned with Human Resources (MHI, 2012, p. 14). The main governing body of the company is the twelve-member Board of Directors (MHI, 2012, p. 15). Nowadays, the company owns seven brand names (Gran Meliá, ME, Paradisus, Meliá, Innside, Tryp by Wyndham, and Sol) which means operating “approximately 350 hotels in 35 countries on 4 continents” (Bloomberg Business, 2005 par. 1).
The employee turnover rate of MHI was 3.75% in 2011, but amounted to 6.22% in 2012, which, according to the company, can be attributed to high turnover rates of European and Latin American countries at the time (MHI 2012, p. 55). All the aspects of MHI operations, including its leadership model, are claimed to be affected by the company’s culture and values that are going to be described in the following section.
The Core Values of the Company
The company has adopted the idea of Corporate Social Responsibility (CSR). In effect, CSR presupposes “companies going beyond legal obligations and their own interests to address and manage the impact their activities have on society and the environment” (Vallaster, Lindgreen & Maon, 2012, p. 35).
Such a definition could be regarded as that of responsibility in general and appears to correlate with the ideas of business ethics. In fact, following CSR ideas seems to be counterproductive from the point of view of profit. At the same time, in the long run CSR appears to boost the corporate reputation and improve the brand’s image, increase the trust and satisfaction of all the groups of stakeholders which can be regarded as a most positive outcome (Vallaster et al., 2012, p. 61).
Martínez, Pérez and del Bosque (2013) point out that the concept of CSR has become central in MHI’s identity (p. 58). The company interprets CSR as an idea according to which MHI should take into account the possible impacts it may have on the society, economics and environment of the countries it operates in (MHI, 2012, p. 32).
For example, these ideas have been reflected in the MHI environmental sustainability programs that include particular concern with the minimization of carbon emissions and water and land contamination (MHI, 2012, p. 50). In 2012, 30 of the company’s hotels had environmental certification (MHI, 2012, p. 93).
Similarly, the first MHI Code of Ethics was published in 2012, and it was created with particular attention to the elimination of all forms of forced labor. It was based on a number of international codes and pacts, such as the Eradicating Child Prostitution Abuse and Trafficking Code or the Convention on the Rights of the Child (MHI, 2012, p. 63).
Effectively, the ideas of MHI CSR understanding also encompass the relationships of the company with all the groups of MHI stakeholders, including that of the of employees (MHI, 2012, p. 54; Martínez et al., 2013, p. 58). This understanding shapes the specifics of the company’s leadership model.
The Leadership Model of the Company
The leadership model, as the company defines it in its Sustainability Report, is based on MHI culture and values which have been described above. Apparently, the leaders of the company are expected to promote organization’s principles of operation, primarily through their own example (Clark, Hartline & Jones, 2008, p. 209).
In MHI’s interpretation, when applied to leadership, these principles presuppose promoting teamwork and collaboration, encouraging flexibility of decision-making process, supporting employees, while monitoring and motivating them, and encouraging their development (MHI, 2012, pp. 54, 57-58).
Common Positive Leadership Characteristics
Proper leadership strategy is usually associated with increased employee’s satisfaction and commitment which has a positive impact on the company’s organizational climate and the service quality (Clark et al., 2008, p. 209). At the same time, poor leadership and especially its destructive practices may result in diminishing efficiency of employees caused by deviant work behavior, decreasing motivation and commitment, increasing job tension, and reducing employee wellbeing (Schyns & Schilling, 2013 p. 12).
In order to define and assess the leadership model of the MHI company, we shall define what kinds of leadership practices are usually regarded as positive ones. At the beginning of the theoretical leadership studies, attempts at defining it were often focused on the leaders’ qualities. However, significant as those characteristics are, nowadays the emphasis appears to have shifted to the interpersonal relationships.
It is the type of the relationships that a leader has with his or her employees that define the transactional or transformational leadership (Brownell, 2010, p. 364). Transactional type of leadership is mostly restricted to managing human resources with the help of financial rewards as a reaction to positive results and restrictive actions as a reaction to negative results (Kara, Uysal, Sirgy & Lee, 2013, p. 9).
At the same time, transformational leadership is based on the firm trust- and respect-based relationships that are created with the help of supportive and empowering actions aimed at the encouragement of employee’s development (Brownell, 2010, pp. 365, 369). Specifically, transformational leadership presupposes inspirational motivation and intellectual stimulation (Kara et al., 2013, p. 10). It also appears to be connected with empowerment.
Empowering leadership, as opposed to the directive leadership, presupposes significant amount of employee control and is regarded as a more positive and efficient kind of human resource management. There also exists an intermediate kind of leadership, the participative one, for which the employee control is higher than that of the directive type but lower than that of the empowering model (Clark et al., 2008, p. 211).
The fact that the transformational leadership style is more effective than the transactional one particularly as it has a greater potential to “enhance positive relationships with employees, improve the organizational climate, and increase service performance” (Kara et al., 2013, p. 9). Upon studying the MHI’s explanations of its leadership model, the following aspects have been singled out to prove that this company encourages the transformational type development.
Financial Motivation
The remuneration policy of the company includes the fixed and variable kind (the latter acts as a financial incentive for excellent work) along with fringe benefits. An example of the latter is “mas Estrellas” program that offers significant and accumulative discounts for the accommodation in the MHI hotels for employees and their friends or family along with similar discounts provided by partner companies (MHI 2012, p. 55-56).
Pension schemes and minimal wages of MHI are typically higher than the minimal legislative rates of the countries the company operates in (MHI 2012, p. 56). Financial motivation is obviously an essential part of the leader-employee relationship. At the same time (as it has been shown above) this is not enough for transformational leadership.
Ethical Aspects
MHI’s emphasis on ethics should become a major advantage for the company. Ethical leadership has been shown to be more people-oriented and charismatic. The actions of ethical leaders tend to be perceived in a positive way, their relationships with employees tend to be based on trust and respect, and themselves tend to be regarded as models to follow (Eisenbeiß & Brodbeck, 2013, pp. 345-350).
Apart from that, the employees’ satisfaction, commitment, and pride felt for the company tends to rise in case they appreciate its position, values, and actions even in case these actions are not aimed at themselves directly (Vallaster et al., 2012, p. 61). Finally, MHI board of directors believes that its ethical guidelines of the company act as anti-corruption measures (MHI, 2012, p. 39).
Therefore, ethics appears to be most important for employee-leader and employee-company relationships while having a positive effect on them. In this respect, the MHI’s Ethical Code can attract employees and raise their satisfaction, which is especially true for the leadership-related issues, such as diversity management that is discussed in the following sections.
The Leadership Model across the Hierarchy
A series of regulations are expected to be followed by the staff members regardless of their position (MHI, 2012, p. 38). The managerial staff is also expected to adhere to Managerial Behaviour policies (MHI, 2012, p. 39). The questionable issues like conflicts of interest or complaints are resolved with the help of this guidance.
The managerial staff of MHI is continually being assessed from the point of view of corresponding to the company’s values. For example, the Board of Directors is expected to carry out an annual assessment of the performance of the Executive Committees. Apart from that, they are supposed to assess their own performance and that of the Chief Executive Officer (MHI, 2012, p. 38).
The importance of implementing the company’s values by the managers has been especially highlighted by the Director (MHI, 2012, p. 23, 29, 54-56). It appears that the leadership model requirements and especially their ethical component are expected to be executed on every level of the company’s hierarchy.
Talent and Development
MHI emphasizes the importance of learning and developing. Talented employees are provided with career growth opportunities both in their region and in the company as a whole (MHI 2012, p. 57). Training is provided for employees at all levels, including managerial ones, and encompasses job-related topics including the safety and security ones along with those concerning ethics and the company’s own guidelines (MHI 2012, 2012, pp. 8, 36, 47, 62).
Leadership and Interpersonal Communication
The communication between the leader and the followers is another important aspect of leadership. It is the means of knowledge and information exchange, a leadership tool that may be used to increase the employees’ trust, respect, and commitment, and a way of assessing the employee’s mood and satisfaction (De Vries, Bakker-Pieper & Oostenveld, 2009, p. 371; Riggio & Reichard, 2008, p. 174; Brownell, 2010, p. 365).
Given the CSR ideas of MHI, the company is especially concerned with receiving feedback from its employees. For example, the Commitment and Culture Survey called “Tienes la Palabra” in Spanish and “Over to You” in English is used to assess the employee’s job satisfaction and their understanding of the company’s values. Apart from that, it is regarded as a way of receiving the employees’ feedback and suggestions (MHI 2012, p. 55).
According to the 2012 Sustainability Report, the employees’ commitment appears to be quite high, with 90% of the respondents evaluating their own commitment to be from 7 points to the maximum 10 points. Similar results have been noted for the level of satisfaction, motivation, and “pride in belonging”: 83%, 83%, and 91% respectively (MHI, 2012, p. 65).
Furthermore, the negative feedback from the employees (and from other stakeholders as well) is especially valued and taken into account by the MHI leaders (Martínez et al., 2013, p. 53). This example shows that the company’s leaders attempt to be sensitive and receptive to their employees’ ideas and mood. At the same time, no sufficient evidence has been found to define the rate of employees’ engagement in leadership practices.
Leadership Issues
It can be pointed out that the leadership model of MHI appears to be both sound and effective which has been shown with the help of the “Tienes la Palabra” survey. The company appears to manage its human resources well, emphasizing the necessity of corporate image maintaining and paying particular attention to ethical business conduct.
At the same time, it is important to mention that certain issues which the company has to face may be regarded as an obstacle to the leadership processes. The main of them is the diversity issue, which is obviously not a flaw. Instead, it is a fact that, nonetheless, may become a problem and cause difficulties.
Diversity Issues
Since MHI is an international company, its workers are the representatives of more than 130 nationalities, and this number has been growing for the past several years (MHI, 2012, p. 65). This poses particular diversity issues that the company’s leaders claim to address. Diversity is a natural feature of modern international business that results from the differences that can be connected to the concepts of gender, race, religion, or disabilities.
Managing diversity is another aspect of ethical conducting business, which can be used to boost the company’s image and stakeholder satisfaction, not to mention the fact that it presupposes respecting human rights and fighting discrimination (Coleman, 2012, p. 597). Apart from that, it should be pointed out that talent knows no race, and effective human resource management would be restricted by discrimination stereotypes.
MHI emphasizes that it has paid attention to the issues that arise due to the international character of its business. For example, MHI has signed the ‘INSERTA’ Agreement with ONCE Foundation that is aimed at facilitating the process of job integration for the disabled (MHI, 2012, p. 55).
Another part of the company diversity management is achieved through its Equality Plan that regulates the problems of gender discrimination and those related to it. The Board of Directors believes that this plan is beneficial from the point of view of talent management and working relationships optimization. Apart from that, they suggest that this strategy has a positive effect on employee attraction and motivation (MHI, 2012, p. 57).
At the same time, the company attempts to create a recognizable international culture and, especially, internationalize its methods and tools to optimize the working process (MHI, 2012, pp. 54-55). In part, this aim is achieved with the help of its training programs where the company’s standards are being explained and promoted.
Still, this corporate culture appears to be compatible with the diverse cultures of the company as, for example, in the year 2012 no cases of discrimination have been reported by the employees (MHI, 2012, p. 64). All of these measures appear to correlate with MHI’s concern and respect towards human rights.
It was harder to find information concerning the decisions of the company connected to other kinds of discrimination; however, the overall dynamics of diversity management and the values promoted by MHI allow one to suppose that other related issues are being treated with similar open-mindedness and thoughtfulness.
Conclusion
The main limitation of this case study is the fact that most of the information regarding its values and leadership style have been provided by the company itself. Still, one may point out that both the leadership model and the regulatory means that are expected to monitor its implementation appear to be sound and consistent.
What is more important, they can definitely be characterized as the features of transformational leadership, including the promotion of employee development, the development of ethical relationship between the followers and the leaders, the encouragement of communication between different hierarchical levels, and the respect towards the diverse cultures incorporated by the multinational company.
The “Tienes la Palabra” survey and the study by Martínez et al. (2013) appear to indicate that the implementation of the leadership model is satisfying at the very least. As a result, the company may enjoy all the benefits promised by a sound leadership model, including, as suggested by the survey, the employee’s satisfaction and commitment. Finally, through its leadership model, MHI appears to implement its CSR ideas. As a result, the company manages to stay consistent in its actions and claims.
References
Bloomberg Business. (2005). Melia Hotels International. Web.
Brownell, J. (2010). Leadership in the Service of Hospitality. Cornell Hospitality Quarterly, 51(3), 363-378. Web.
Clark, R., Hartline, M., & Jones, K. (2008). The Effects of Leadership Style on Hotel Employees’ Commitment to Service Quality. Cornell Hospitality Quarterly, 50(2), 209-231. Web.
Coleman, M. (2012). Leadership and Diversity. Educational Management Administration & Leadership, 40(5), 592-609. Web.
De Vries, R., Bakker-Pieper, A., & Oostenveld, W. (2009). Leadership = Communication? The Relations of Leaders’ Communication Styles with Leadership Styles, Knowledge Sharing and Leadership Outcomes. The Journal of Business And Psychology, 25(3), 367-380. Web.
Eisenbeiß, S., & Brodbeck, F. (2013). Ethical and Unethical Leadership: A Cross-Cultural and Cross-Sectoral Analysis. The Journal of Business Ethics, 122(2), 343-359. Web.
Kara, D., Uysal, M., Sirgy, M., & Lee, G. (2013). The Effects of Leadership Style on Employee Well-Being in Hospitality. International Journal Of Hospitality Management, 34, 9-18. Web.
Martínez, P., Pérez, A., & del Bosque, I. R. (2013). Exploring the Role of CSR in the Organizational Identity of Hospitality Companies: A Case from the Spanish Tourism Industry. The Journal of Business Ethics, 124(1), 47-66. Web.
Meliá Hotels International. (2012). Sustainability report 2012. Web.
Riggio, R., & Reichard, R. (2008). The Emotional and Social Intelligences of Effective Leadership. Journal of Managerial Psychology, 23(2), 169-185. Web.
Schyns, B., & Schilling, J. (2013). How Bad are the Effects of Bad Leaders? A Meta-Analysis of Destructive Leadership and its Outcomes. The Leadership Quarterly, 24(1), 138-158. Web.
Vallaster, C., Lindgreen, A., & Maon, F. (2012). Strategically Leveraging Corporate Social Responsibility. California Management Review, 54(3), 34-60. Web.