Consultancy Report to the Board of Directors of

Greenway Hotel Group.

Module: International Human Resource Management INDU-1130

Assessment 2: Case Study Report
Module Leader: Dr Scott Tindal
Student ID Number: 001190016

Executive Summary

This report is the analysis and recommendations of the Human Resources (HR) consulting team for
Greenway hotels Group in the United Kingdoms (the UK) in the acquisition and merger of Hôtel de
Charme in France, as well as their expansion in the whole of Europe in the next 10 years. An
overview of the hotel chain Greenway and Hôtel de Charme is summarized in the poster located in
the appendix.

Introduction

As a member of an HR consulting team, our role is to advise Greenway on the best approach to
support success in both short-term and long-term goals through a report that proposes
recommendations with supporting information.

The report is presented in three parts with a tight layout and clear analysis to clarify the
recommendations. The first part of the report presents recommendations for Greenway's short-
term and long-term goals in providing resources for the management team, moving from an
ethnocentric approach to short-term goals to an approach regiocentric for the long-term with
supporting evidence. Secondly, the next section presents information related to the HR function
when Greenway wants to expand to France and throughout Europe, specifically recruitment &
selection. Finally, the third part studies and analyses the socio-political and cultural circumstances
related to this merger and acquisition process of Greenway, specifically the impact of Brexit and the
COVID-19 epidemic.

International staffing – short and long-term strategies.

Greenway's goal of expanding across Europe offers many visions of growth opportunities, but also
challenges in delivering on the company's international human resources strategies. It cannot be
denied that, for multinational companies (MNCs), successful international business operations
depend heavily on the quality of the recruitment of senior managers (Schuler, 2000). Therefore, the
key factor leading to success is determined by international personnel (Colakoglu, et al., 2009) - This
is especially important in a time of internationalization for young firms, it is partly because Small and
Medium-sized Enterprises (SMEs) grow rapidly and resources become scarce (Anderson & Boocock,
2002). According to Perlmutter (1974), the International HR strategies of companies are often
characterized by methods namely ethnocentric, polycentric, regiocentric, and geocentric orientation
- These policies will also change as companies become more international and grow. Also, according
to Perlmutter (1969), companies often adopt an ethnocentric orientation in the early stages of
internationalization, gradually transitioning to a polycentric approach, and finally a geocentric or
regiocentric policy as the company becomes more international (Kelly, 2001). Therefore, it is
undeniable that this is a suitable direction for Greenway to use the ethnocentric approach for short-
term goals and regiocentric policy for long-term goals. For the ethnocentric approach, the decisions
and ways of doing business of the subsidiary are owned by the parent company. At the same time,
key positions are also held by the management staff of the head office – Parent Country Nationals
(PCNs). Besides, for the regiocentric approach, the missions and business activities are organized by
regions such as Europe or Asia-Pacific. Subsidiaries in each region are closely linked with each other
and are managed under the autonomous direction of the regional centre. Regional managers can be
staff from Host Country Nationals (HCNs) or Third-country Nationals (TCNs).

This recommendation is considered the best because it offers many advantages consistent with
Greenway's short-term and long-term. As for the advantages of the ethnocentric approach for the
short-term, it helps to coordinate and communicate more effectively in the early stages of
development to other countries, namely France - This helps Greenway to control overseas business
activities effectively and directly. Besides, it helps the parent company carry out activities to spread
corporate values on a larger scale throughout the organization, broadening horizons and creating
growth opportunities to develop experience for expatriates. In case something bad happens, the
parent company can replace expatriates quickly. This is a suitable method to start internationalising
a business, it also does not require a well-developed host country's labour market (Patel & Budhwar,
2017). On the other hand, as for the advantages of the regiocentric approach for long-term - It
allows for better integration within the region as HCNs and PCNs are able to work and communicate
with each other at the regional headquarters. Besides, MNEs will have a certain sensitivity and
better adapt to local circumstances, regional subsidiaries will be led directly by HCN. Therefore, this
will make a difference in global demand. (Brewster, et al., 2016)

However, these recommendations also come with disadvantages and challenges for Greenway.
Considering the limitations of the short-term ethnocentric approach - In the implementation
process, personnel plans are complex, the selection process is prone to errors, and the potential
failure rate is high in other methods. In addition, the private life of expatriates is seriously affected,
PCNs easily find it difficult to adapt in the host country, which can lead to making mistakes or making
incorrect decisions in the future operating process, which includes difficulties in cultural adaptation,
local customs, and language. Besides, recruiting PCNs to work in foreign positions is often very
expensive, including moving costs, training and compensation packages. Not only about the problem
of burden for the company, but also leading to discontent among HCNs working. That is without
considering into account the restrictions imposed by the government, and the limited employment
as well as promotion opportunities for HCN employees, which leads to a decline in productivity. On
the other hand, considering the disadvantages of the regiocentric approach to the long-term - The
formation of federalisms at the regional level can constrain MNEs in moving towards a global
position at the national level. In addition, this approach shifts employees' career goals from the
national level to the regional level, even though employee mobility to headquarters is still limited.
(Patel & Budhwar, 2017)

Challenges of managerial staffing

There are many risks and challenges that Greenway must address when using expatriates, among
them, culture shock is the first important factor that Greenway faces. Culture shock is a term had
first defined by Oberg in 1960. Experiencing a new culture can be a surprise or an unpleasant culture
shock when people's expectations do not match up with reality (Black & Gregerson, 1991) - Working
in a new culture can produce a variety of stress responses such as anxiety, confusion, isolation,
disappointment, or depression cold. According to Furnham and Bochner (1986), stress is a major
part of tasks as employees initially learn to adapt to a new culture. It is a fact that the usual
situational handling of expatriates should not be used in the host country, because this can cause a
lot of disappointment in the outcome and even create a vicious circle of negative influence for
expatriates when they try to do their job well. According to Oberg (1960), there are four stages of
emotional response involved in culture shock. In which, the first stage is associated with excitement,
enthusiasm, and passion; stage two presents with anxiety, frustration, even mental crises
characterized by feelings of dissatisfaction; stage three is emotional recovery through learning a new
culture and dealing with mental crises; and finally, stage four is a realignment of lifestyle, interests,
and abilities are revealed.

Greenway should consider training programs and expatriates support programs to minimize
difficulties during operation and development. Firstly, training is the process of improving and
changing employees' attitudes and behaviours to increase the probability of achieving business goals
(Hodgetts, 1993) - Pre-departure training is a necessary step and important to work efficiently and to
ensure the success of new overseas businesses (Weech, 2001), even Greenway should include
families in training programs to maximize its effectiveness. According to Latta (1999), prior training
facilitates in minimizing the cognitive adjustment needs of expatriates. According to Windham
International and the National Foreign Trade Council (1999), there is a survey that has shown that
the main cause of poor performance or delay in international missions is due to spouse problems in
the family. In addition, there is a study that says that if family members of expatriates have difficulty
adjusting to foreign countries, expatriates will also have similar difficulties leading to low job
performance, possibly even returning home early due to lack of qualifications to complete the
mission. Therefore, providing a rigorous and comprehensive cultural and linguistic training course
will greatly assist expatriates and their families, reducing much of the uncertainty associated with
new work roles. Secondly, organizational support for expatriates is very important in the
implementation of the mission in the host country, it directly affects the culture shock (Eisenberger,
et al., 1990). More specifically, the level of organizational support for expatriates is directly
proportional to the extent of expatriates' commitment to assigned performance. When motivation is
high, the ability to adapt as well as modify behaviour will take place more smoothly and quickly.
According to Punnett (1997), when culture shock started, domestic social support became essential.
Besides, when overcoming culture shock, it becomes very important to support housing,
transportation, and schools. According to Black (1991), social support from colleagues in the host
country will help reduce culture shock and the uncertainty of expatriates.

HR functions – differences across Europe

Greenway should consider the difference in recruitment as well as selection between countries as an
important function of HR - Recruitment is the first process to create an advantage in HR strategy for
enterprises, this is a process of analysing job needs to attract and recruit suitable candidates for
each specific position (Khan & Abdullah, 2019) - This role belongs to the HR department to find the
best-qualified candidates (Othman, et al., 2019), determine whether an individual currently working
within the organization is qualified to fill this new position or an individual outside the organization
(Anwar, 2017). On the other hand, the selection is the process of interviewing, evaluating, and
reviewing candidates for a suitable position (Abdullah & Rahman, 2015) , this is the role of the HR
department to search and select the most suitable person for the vacancy (Anwar & Shukur, 2015).
The recommendation for Greenway is to employ both British and French staff simultaneously. First,
this helps balance to fit the culture of the organization, and avoid causing conflicts about differences
in working methods. Secondly, at the beginning of the expansion to France, there were many
challenges in terms of administrative apparatus and management process. Therefore, British staff
will have more solid expertise for these key positions. In addition, the cultural and language barriers
in France are the reason for Greenway to recruit French employees for labour positions with the
basic process, and then support more training and development programs for new employees.

The proposed recommendation is based on "best fit" because recruitment and selection methods in
the UK and France have some differences, and there are even many recruitment methods in France
that Greenway needs to consider in order to make decisions more effectively. According to Cranet
survey (2017), managers in France are often recruited from within the company. Meanwhile, the UK
is one of the countries that favours recruiting HR professionals from the external market (58.4
percent).

Figure 1: Recruitment of HR Directors (European Union - EU)

Source: Cranet survey on comparative human resource management: International Executive report (2017), p.18
Having a similarity, commercial job sites and corporate websites are the most commonly used
recruitment methods in both the UK and France. As for recruiting professionals, the common
method is to recruit through newspapers, word of mouth applications or through internal sources as
well as popular websites. In addition, for clerical or manual jobs, recruitment through internal
sources or word of mouth is more common in all countries, candidates can apply through social
networks. In summary, in the UK and France, there are similar recruitment methods and also many
different recruitment methods used in an effort to expand and diversify the pool of candidates to
increase the probability of selecting the most suitable candidate for the vacant job position. On the
one hand, for the French assessment process, references and interviews through a panel or one-to-
one are often used, regardless of position in the company such as specialist, manager, clerical or
manual labour. On the other hand, the UK personnel assessment process is more diverse, in addition
to one-on-one interviews and references, candidates also have to pass job application forms or
technical tests. (Cranet, 2017)

There are differences in the cultural characteristics of France compared to the UK, and this is also a
factor affecting the recruitment process of Greenway. Through Hofstede's cultural dimensions
theory, the two cultural characteristics about power distance and uncertainty avoidance are the
most disparate and different in the two countries, the UK and France.

Figure 2: The value for Hofstede's six cultural dimensions of France and the UK.

Source : https://www.hofstede-insights.com/

Hofstede defines power distance as the degree to which society accepts the problem of imbalances
in the distribution of power between institutions and organizations (Hofstede, 1980, p.45). It can be
said that power distance represents the degree of equality in society. Britain is a country with low
power distance, every individual has their own desires for autonomy and equality, they see others as
their equal partners (Adler, 1997). In this case, individuals tend to make decisions for the
organization without consulting their superiors. Therefore, in the context of recruitment, individuals
want to be proactive with information from employers so that they can identify valuable information
for themselves. In contrast, France is a country with a high power distance, individuals think that
each person has a different level of power and they are willing to respect this. They expect
leadership from higher social levels to make decisions in almost any situation (Adler, 1997). In the
context of recruitment, candidates view employers as representatives of organizations and they
have more power over the interviewing and selection process. Therefore, the recruitment method
through direct communication forms and with a clear power structure will bring more positive
effects to the perception of candidates. Secondly, the influence of a culture of uncertainty avoidance
on the hiring process (Ma & Allen, 2009). France is a country with high uncertainty avoidance – 86
points, where individuals feel uncomfortable with situations that do not provide them with
certainty. They like standardization and things work in a structured way (Hofstede, 1980). Therefore,
a standardized structured recruitment system would be preferred. Besides, according to Rynes
(1991), highly qualified candidates will often rate the effectiveness of an organization through the
speed of their hiring process, delays risk reducing the attractiveness of the organization in cultures
like France. In contrast, the UK is a country with a much lower uncertainty avoidance index than
France. (Ma & Allen, 2009)

Besides, there are important legal aspects of recruitment in France that Greenway needs to
consider. Specifically, in most cases of layoffs, employees are entitled to one to three months' notice
to prepare. In addition, in France, employees are entitled to 30 days of paid leave per year, the
working time is limited to 35 hours per week and 10 hours per day, in case of overtime the employee
will be paid at the rate of higher. The third one that needs to consider is the minimum wage for each
employee is 10.03 euros per hour (approximately US. $11.39). Furthermore, the works council is an
important committee within the company and it consults with the company leadership on important
activities related to the organization, management, or employees, etc. (Dieterling, 2019)

The socio-political and cultural environment

In the process of business internationalization, Greenway should also pay attention to current hot
issues such as Brexit and COVID-19, which have had extreme effects on Greenway's mergers and
acquisitions process in France particularly and on the development of the hospitality industry in
general throughout the UK. First, Brexit is the withdrawal of the UK from the European Union (EU)
with 52 percent of voters supporting it. Before Brexit, the UK was open to migrant workers from EU
member states and conversely, the UK industry was responsible for employing 400,000 migrant
workers (James, 2021). Since Brexit, many major changes have affected workers, businesses, and
visitors - Regulations on free movement between the UK and EU member states no longer apply to
workers. For workers, moving to the UK to work is not as appealing as it used to be, and for
employers, finding workers from abroad has become more difficult. Therefore, Brexit reduces trade
efficiency and increases costs when Greenway wants to expand from the UK to France. It is more
difficult to move staff from headquarters in Greenway to France, as well as employing most of the
local staff is more efficient and cost-effective in the long run. Brexit also entails some instability
issues about taxes and other charges that make attracting investment difficult (Ramiah, et al., 2017).
Second, the COVID-19 pandemic has created a general crisis for the tourism and hotel industries
around the world. The restriction on commercial activities has had a significant impact on revenue.
Besides, fixed costs continue to increase along with debts, making financial problems a big challenge
for Greenway in particular and the hotel industry in general. On the other hand, in many countries,
workers face serious reductions in working hours and wages as well as risk losing their jobs. Moving
between countries during the epidemic season is inherently difficult, especially when moving from
the UK to France after Brexit. Moreover, countries are having very strict regulations for tourists,
which will limit the number of visitors that the hotel receives (Gursoy & Chi, 2020). Therefore, the
COVID-19 pandemic poses a challenge to the Greenway Hotel on the way to opening its new chapter
in France.
However, the current government has introduced policies to help businesses survive the COVID
period. In France, the Ministry of Labour is issuing a series of measures to support businesses,
especially small and medium enterprises affected by the COVID-19 crisis, including those operating
in the hospitality industry hotels, catering services, and tourism (ILO, 2020). On the other hand, the
development of vaccines is also making a huge contribution to the reopening of European countries.
From here, Greenway can seize opportunities and make appropriate policies to maintain and
develop their business.

Conclusions

In conclusion, it is recommended for Greenway to use ethnocentric approach for short-term and
regiocentric for long-term to take full advantage and bring more efficiency. In addition, during the
operation, pre-departure training and support for expatriates are extremely important to increase
the efficiency of completing assigned tasks in the host country. Moreover, for Greenway, the
simultaneous use of staff in the UK and France will provide a better fit for HR. Besides, it cannot be
denied that Brexit and COVID-19 have caused crises to the hotel industry and obstacles for
Greenway during the merger and acquisition process with Hôtel de Charme.

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Appendix

Poster 1: Hôtel de Charme

Poster 2: The Greenway Hotel Group