Taj Hotel Group Case Study

Case Study 1

Taj Hotel Group is one of the largest luxury hotel companies in India, founded by Jamsetji Tata, who is the founder of the Tata Group. R.K. Krishna Kumar was the head of Taj hotel Group at that time. In order to level up the service quality to meet the international hotel service standard in Taj Hotel, Krishna Kumar had brought a new employee management system to the company. And the company was going to select a senior manager for Taj Kumarakom, one of the Taj hotels. The selection process was majority taken by the career development committee. While Subir Bhowmick, one of the executives that worked in Taj Hotel Group for years, wanted to let Krishna Kumar overturn this decision. So that, Krishna Kumar needed to consider carefully and make a decision between the committee and Subir Bhowmick.

Tata group first started its business in textile industry, then it expanded into different new market areas, such as steel, cement, chemical and others. By overlooking the potential growth of Indian hotel industry, it has started the hotel business and named Taj Hotel Group. This large hotel group owned more than 80 chain hotels. Before Krishna Kumar had taken over the Taj, Ajit Kerkar was the key figure who leaded the hotel company. Under Kerkar’s management, Taj gained great amount of revenues every year, while some ethical issues occurred at the same time. For example, the employee salary was much lower than market rates. So, Kerkar was replaced by Krishna Kumar. A new ear has started when Krishna Kumar became the leader, some executives left and he had also replaced a lot of employees in different positions. He has also introduced the voluntary early-retirement system to solve the overstaffed situation, raising salaries to comfort employees. The biggest change he has made was the development of new performance-appraisal system, which was used to measure Taj’s employees’ abilities and performances and develop managers. But this new system has also brought a lot of controversy. Subir Bhowmich, who was one of the most respectable senior executives of Taj, in particular, had a different view of this new performance system. Bhowmich claimed that a successful manager could not be evaluated by the performance systems only by his personal experience during these years. Although he admitted the advantage of the 360-degree feedback system. He said, “People don’t become great managers because they always follow procedure.” While Bhowmich has acknowledged that Taj did not have a structured system before. Prabhat Varma, another senior executive of Taj, hold same opinion with Bhowmich’s. Varma’s unique career path let him believe that, “Developing managers cannot be systematized.” The company should not use procedures or systems to measure a person’s ability. However, managers could also benefit from the external resources by using the employee-satisfaction tracking system and 360-degree feedback system. Sometimes, systematic management does not always mean a bad thing. Taj also had external threats at that time: competition circling. As the leading hotel company in India, Taj was focus on expanding its properties at the first. Therefore, the service quality of Taj Hotels was neglected. One of the main competitor, Oberior, was seizing the opportunity and focusing on the service quality of its hotels. As well as other International hotel chains have entered the India market, like Ritz Carlton and the Four Seasons, Taj Hotel Company had a feeling a crisis. This situation let Krishna Kumar realized the importance of developing performance systems to standardize the management and service quality in the hotel.