CASE TEMPLATE TO WRITE YOUR CASE ANALYSISCase 3.6 – Club Med and the InternaTonal Consumer Name: Maryam Ahmadi 1. Company Facts – Club Mediterranee SA (Club Med)Club Mediterranee SA, commonly known as Club Med, is a French public limited company specializing in the sale of all in holidays at a number of vacation villages which it owns and operated in anumber of locations around the world. The Club was started in 1950 by a former Belgian water polo champion Gerard Blitz. The first official Club Med was built in 1960 in Palinuro, SalernoItaly. In 1961, the company was purchased by a 35-year-old Baron Edmond de Rothschild, after he had a visited a resort and enjoyed his stay there. The Club became a destination for families, with thefirst Mini Club opening in 1967.The Club has also ceased to be a club in the legal sense, changing from a not – for – profit public limited company in 1995. In the 1990s, the Club’s fortunes declined because competitors copied its concepts and holidaymakers demanded more sophisticated offerings. The Club fell into a deep loss following the 9/11 attacks in the USA. The Club regained its profitability in 2005. In 2006 and 2007, Club Med and its partners dedicated a total of $530 million to renovate several resorts. 1
1) Are there problems in the recruitment process? Why? What are your recommendations? Club Med, by understanding the case, is considered an high potentially turnover company, since it’s natural characteristics on type of business, and also, type of framework, mainly focused on person specifications, extremely dated on time. Having considered these aspects, it seems obvious to the reader that Club Med is wrongly approaching the recruitment process, as a whole, consequentially affecting the company’s business on GO’s work condition.
In order to clearly structure the recruitment problem, we’ve decided to split the global problem in several urgent issues to solve, being them, the selecting process, the explaining work conditions process, non-existence of training module, the overlapping of GO’s recruits, and the specific framework used on recruiting. Selecting Process As understood, Jacky, in Club Med is receiving around 10. 000 CV’s or resumes in response to the ads posted.
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Very briefly, we have to consider that, due to some conflicts, represented by the quitters or fired GO’s comments, Med Club isn’t always, recruiting the best oriented to that type of work-style people. They advertise it as being an adventure, and not only a work. Indeed, as we will understand by the following aspects, the selection problem is directly related with the approach of the market, and by having the wrong type of exigency when choosing the right GO’s. Explaining Work Conditions It is not a work, it is an adventure”. This is the main idea passed to the global interested people in GO’s position at Club Med. In fact, considering some of the comments made by chiefs and quitting GO’s, we can assume that something is wrong explained, because many GO’s aren’t perceiving their work, properly as an adventure, but more as a really tough work, which compensations, for instance, the usage of sports equipment on free time, don’t help at all, since GO’s consider their work as “work-sleep-work-sleep”.
Once again, this topic will be related with the framework topic, because what is missing is a detailed explanation about how the work really is, allowing recruits to expect the 100% idea of work, making them ready to the work circumstances. By recruiting with a defined talent, we will be approach the competency framework model. Training Module The training Module is clearly a main issue, and by recruiting GO’s without any previous training, many conflicts during the work suddenly happen because GO’s have no idea at all of their limitations, attitudes needed, work routines, in resume, information.
Information and training are crucial to keep GO’s aware of what’s asked from them, and also to have more productivity on GO’s recruited, because obviously a training module will incurre in some additional costs, however, overlapped costs by saving time, irritation and capital, on avoiding recruiting more and more GO’s. Also, due to the lack of training, chiefs usually fire GO’s immediately when they see some unusual behaviour, and the main problem driving those fires is the lack of training.
Overlapping of Recruits. Recruiting 450 to 500 GO’s to cover 300 available spots is a risky situation, anyhow, without major concerns to company. However, by reducing this number a little bit near 300, would allow company to keep up a safety measure, but reducing the waste, on time and on GO’s potentials career, because as understood by one irritated comment from a GO not allocated, after some time, the GO’s are extremely angry and don’t want to be located anymore. Would be helpful, to reduce those concerns. Competency Model Framework We arrive at the top problem in recruiting.
The current model used by Club Med is driven by the specific job they are looking for, or a person specification framework. However, that type of approach is leading Club Med to huge turnovers, once they are recruiting based on time and specifications of work. Assuming GO’s won’t do the same type of work forever, when they change, it will be needed an adaptation time, which will create some inefficiency. And besides, being North American business so important to international step of Club Med, and considering the discrimination laws on North America, a model based on competency would fit much better the needs of Club Med.
Final Suggestions * Select and explain conditions to recruits following a competency model framework on the recruitment process, in order to reduce unhappiness and conflicts by recruiting the wrong candidates and providing GO’s a possible Career inside Club Med. * Provide a Training Module after recruited, informing and training the GO’. * Be more efficient on recruiting GO’s, reducing the waste of time and capital on “stocking” GO’s not allocated, yet. 2) Is Go turnover really a problem at Club Med?
What are the pros and cons of high turnover? First of all, it is important to notice that Club Med has a high turnover in the American Zone (nearly 50% of turnover rate) and a minor rate in European Zone (25% of turnover rate). Jack Amazallag, director of Human Resources for Club Med’s American Zone, describes the high turnover rate as a problem that has to be straightened out immediately in order to provide a better service to the clients and to the chiefs of the village.
The turnover occurred in four ways: 1) a GO quit before the end of the season (around 37% of the turnover cases); 2) a GO was fired before the end of the season (32% of the turnover); 3) a GO quit at the end of the season (27% of the turnover); 4) a GO was given a poor evaluation by the village chief and was not asked back for the next season (4% of the turnover). Therefore, we may say that the turnover is a very serious problem on the first two ways (which are those that have more weight too), since it is very difficult to find good GOs during a season.
In the 3rd and in the 4th ways, the turnover is no longer such a big problem since at the end of the season, there will be a new recruitment process, with more than 10. 000 candidates, and Club Med will already be prepared for the newcomers and for the quitters. One of the big reasons for this high turnover rate in the American Zone is related to the fact that the majority of the Chiefs of the Village are French / European, so they often don’t understand how American GOs have to be managed, creating serious problems.
Additionally, these chiefs often have difficulties with the English language, and therefore, they do not provide as much training and feedback as they should. Jack Amazallag, thinks that if these chiefs were more involved in the recruitment process, maybe they would understand how difficult it is to find good GOs and so they would try to make an effort to work with the GOs instead of firing them right away (this will be referred later as a cons of high turnover).
Most of the companies struggle to maintain low turnover of employees. Sometimes, there are advantages associated to high turnover, depending on the industry and other factors. To analyse this, we will now refer the pros of a high turnover. The first “pro” is the “new blood” factor, since the new comers are looking to prove themselves and the older employees want to show that they know best. New people can also encourage new ways of thinking, instead of resorting to the same old strategies.
The second one, concerns to low wages (400 dollars per month by a GO in Club Med). If the employees move quickly, the chances of staying long enough to expect an increment in their wages will decrease. The third one is about the low employee expectations. If there is a high turnover of employees, there will not be great expectations. This means that employees can put the minimum amount of effort into ensuring that employees will do a good job. The last “pro” concerns to the minimum impact of “difficult employees”.
Most companies have a few employees who are difficult to deal with for several reasons (it can be because they are moody or they like to stir up trouble amongst other employees, or because they are not good enough to do their job); with a high turnover, this kind of employees are likely to move on quickly, minimizing their impact on the company. Hereupon, we will now refer the cons of a high turnover. The first one, and probably the most important one concerns with the high cost of training.
In order to reduce the turnover, Jack Amazallag has the idea, that in the future, will be possible to recruit and train qualified GOs in a specialized school for a week or two, before their first assignment, in order to reduce the turnover and solve the turnover problem. However, if the turnover does not decrease, that will become a problem since each replacement will need to be re-trained, and therefore, the costs of training will increase again. The second cons, is about the “brain drain”. Following training, employees gain a greater knowledge that they can take to another company if they leave the company who trained them.
However, in the case of Club Med this is not a problem yet, since they don’t have already training sessions to the GOs before their first assignment. However, if Jack’s idea of making a training school is implemented, this will be a serious cons for a high turnover. Other cons of a high turnover is the lack of loyalty by the employees. Just as employers have little loyalty to their employees, like it has been seen before in the relationships between the French/ European village chiefs and the American GOs, employees will have little incentive to return any loyalty. The fourth cons, concerns to the low staffing levels.
If staff turnover is high, then there are bound to be times when staffing levels are low, especially if new employees are not available to start straight away (this cons is well demonstrated on page 8, since Debbie, the potential new replacer for tennis instructor, want two weeks before start working in Martinique). Other cons that we can refer, is about the poor team spirit. Most people like to know the people they work with so they can feel very uncomfortable if those people keep changing. This, in turn, can affect the morale and the ability of the team working together.
The sixth cons, is about the customer dissatisfaction, since employees build a relationship with the customers. With a high turnover, customers are less likely to be loyal. However, this is certainly the less important factor to Club Med case, since it’s almost impossible to build a long relationship between the customer and the GOs, due to the high rotativity of the GOs and the low probability of the customers repeating the location. Another cons, refers to the negative message that a high turnover conveys to the public about the state of the company.
They will wonder what is wrong with the company to cause employees to move on so quickly. However, this is not also an important cons for Club Med, since the customers don’t meet GOs probably more than one time, because of the factors referred previously, in the previous cons. The last cons, but not the least, is actually one of the most important cons for Club Med to a high turnover rate, and especially when a GO quits during a season (which represents 37% of the turnover) or when is fired during a season (36% of the turnover).
If one of these situations happens, it becomes very difficult to replace him and to find a new one rapidly and with good capabilities, in order to fulfil the vacancy, like was referred previously, in the first part of the question (this is demonstrated on page 1 of the case study, when Jack is on the telephone very concerned with the fact of a windsurf instructor has quitted the Club). 3) Is Go turnover really a problem at Club Med?
What are the pros and cons of high turnover? According to what is mention in the case study, Club Med rotates all their employees every six months since that one of their human resources policies consists in rotating all their GOs to different villages after they complete six months working in a company’s village. Club Med assumes this policy as a human resources strategy that has major benefits for the company but also for their employees.
First because they assume that after six months it is time to break the routines and habits. Second because they also assume this strategy as motivational factor for the GOs once it will give them the possibility to travel, meet new countries, sites, cultures. Third and last because they also assume that travelling and the acquisition of new cultures knowledge is fundamental to GOs since it will enable them to adapt to new types of people.
Having a rotation program within the company’s policies, is in our view a positive strategy. This program grants the company that employees are travelling and breaking routines, acquiring cultural know-how, improving and developing new skills and gaining new and productive experiences when moving to new villages. GOs will need to adapt themselves to the new customs, beliefs and religions and therefore improving their own cultural background. This program will also have another positive advantage.
While transferring GOs to new locations, the company is also ensuring that they will work with new Village Chiefs and teams which means they will need to adapt themselves also to new working and team methods meaning that besides the cultural improvement rotation also guarantees the improvement of their operational skills. So and in our opinion the policy of rotating all the employees makes sense, especially for a hotel chain that has as core concept, the objective of offering dynamic stays, full of experiences and activities.
Henri Giscard d’Estaing, CEO and Chairman of Club Med stated the following sentence in the company’s human resources folder in their website about the values that Club Med’s employees must have: “Multicultural spirit, pioneer spirit, kindness, freedom and responsibility”. This statement demonstrates the company’s spirit and aim in having dynamic employees with multicultural backgrounds and willing to work on a company that offers them life experiences but also serve as plea for their rotation policy.
Basically we consider that this policy aims to construct a company culture within the employees which in our view is always beneficial for any type of company in any kind of industry but especially for a hotel chain since that hospitality is a service done by people for people since. This because in this kind of industries intangible aspects like the company’s culture may not only serve as human resources motivational strategy but mainly as a culture of success for company giving in our view assertiveness to this policy.
In what concerns our recommendations we fundamentally think that even being a good policy there are some functional and organizational problems. In the first hand, because Club Med was at the time too big to have a so complex and difficult to manage policy. Second because rotation has the benefit of breaking with employees routines and making them acquire new competences and cultural knowledge but at the same time if this rotation is to frequently it will also destroy the organizational teams formed during the six months in each village and even worst it will destroy all the organizational memory constructed during that time.
Third we also think that the employees could have more power over their placement. The recommendation that we suggest to solve the first problem mentioned is to have change the deadlines. So instead of having a of six months rotation program to have a twelve months rotation program in which half of the GOs in half of the villages would change at the final of the summer and the other half in the final of the winter. This would allow the human resources management to have more time to prepare the rotation and less logistic work to manage every six months. The recommendation for the second problem is to start rotating full teams.
If the team works well we think that it would be beneficial for the employees and for the company if they continue working together. In final analysis Club Med could create a policy in which they would start to rotate entire teams but with a maximal term of three years in order to continue breaking with the routines. In our view this is fundamental to guarantee that the organizational memory creating during the six months of work is not lost. This organizational memory is in nowadays fundamental to ensure innovation that today is also seen as core management tool.
The last recommendation aims to ensure to the employees more control in their placement. We think that employees as human beings like to have control about their lives and for that reason it would be good and also a motivational tool if they could have some kind of power over their future placements. This could be implemented through individual surveys where they would say if they have or not any placement preference. Example of this is what the Accor Group, that currently owns Club Med and that is also a hotel chain since they allow their employees to suggest hotels or locations where they would like to work.