Cross-Cultural Crash and Labor Conflict (A): Sài nóng Restaurants

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Cross-Cultural Crash and Labor Conflict (A): Sài nóng Restaurants IES2 March 2010 With only three restaurants in Madrid, Sài nóng Restaurants was a relatively small family business.

1 Cross-Cultural Crash and Labor Conflict (A): Sài nóng Restaurants IES2 March 2010 With only three restaurants in Madrid, Sài nóng Restaurants was a relatively small family business. Meticulously decorated, the restaurants were very particular, serving Asian food, made by native Chinese cooks with ingredients imported from China and presented in beautiful oriental dishes. The cooks, who were all Chinese, had created their own recipes. There were no written documents that painstakingly described how the dishes were made, instead, this know-how was transmitted orally from one cook to another. It was highly unlikely that someone of non-chinese origin would join the kitchen staff, not only because mostly Chinese was spoken, along with some broken Spanish, but mainly because the Chinese were very protective of their recipes and did not like showing them to outsiders. Nobody was allowed in their kitchen. The business was doing well, as costumers were very satisfied with the food, the impeccable service and the atmosphere. They were likely to return and to recommend the Sài nóng to their friends. While the restaurants popularity in Madrid grew, their Asian culture-loving Madrilean owners were dreaming of expanding all over Spain. Juan Antonio García Juan Antonio was a responsible, hardworking man who had worked as a waiter ever since arriving from Peru two years earlier. He had started off working nights at an Irish Pub, and six months ago he had joined the Sài nóng staff during the day. This case was prepared by Berónica Galàn, Associated Director Barceló Hotels, and Lourdes Susaeta, Associate Professor of the Universidad Complutense, under the supervision of Professor José R. Pin, as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. March This case was written with the support of the CELA (Center for Enterprise in Latin America), IESE. Copyright 2010, IESE. To order copies or request permission to reproduce materials, contact IESE PUBLISHING via the website, Alternatively, call , send a fax to , or write to IESEP, Av. Pearson, Barcelona, Spain, or iesep@iesep.com. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means electronic, mechanical, photocopying, recording, or otherwise without the permission of IESE. Last edited: 6/15/

2 DPO-203-E Cross-Cultural Crash and Labor Conflict (A): Sài nóng Restaurants Juan Antonio worked from 1:30 p.m. to 5:30 p.m. as a waiter in the restaurant. His job was to take care of the costumers from the minute they set foot in the restaurant until the moment they left. In the Sài nóng, he worked with people, his workmates liked him and the costumers asked for him when he was not there. Waiters in the Sài nóng served customers in one of three sections. Juan Antonio usually took care of section number one, which was the largest, because he was the only waiter capable of handling it alone. All the other waiters who had worked that section had needed an assistant. Juan Antonio was well liked among his peers because he was very obliging and always willing to help: When he had completed his tasks he would be the first to help those who had not. How the Restaurants Operated Sài nóng restaurants were run by a manager who was in charge, but was equaled in rank by the chef (see Exhibit 1). The kitchen staff had its own independent pyramidal structure. Any petition would be addressed to the head of the kitchen (the chef) and, if he was absent, to the next in command (the sous-chef). Neither the cooks nor the chef spoke any Spanish, so the manager communicated with them either through the assistant waiters, who were required to speak both languages, or through the cook supervisor, who was always a Chinese national who spoke good Spanish. The assistant waiters were Chinese and, in general, spoke Spanish well. Their job was to place the orders the waiters had taken and serve the prepared dishes to the customers in the dining room. They also doubled as unofficial translators between the kitchen and the dining room. Carlos Muñoz, the manager in charge of the Sài nóng restaurant in Salamanca, little by little taught Juan Antonio other functions. He learned how to place orders, how the SAP worked, how to make annulments, and so forth. Carlos liked the way Juan Antonio worked and always set him up as an example to his co-workers. April 4, 2006 It was 11:00 a.m. on a Monday morning when Juan Antonio came in through the restaurant door. Although it was not his usual working hour, he had come early because Carlos had asked him to meet up with him: he had something to tell him. Juan Antonio was a bit nervous, not knowing what the mysterious conversation would be about. They started with a cup of coffee and a relaxed chat about the Champions league match the night before. At a certain moment, Carlos changed the subject: Carlos: Look, Juan Antonio, I have something important to tell you. They are going to open a new restaurant in Génova Street and I m going to be the manager. I want you to come with me as my floor manager but under one condition: you have to quit the Irish Pub and come to work with us full time. What do you think? 2 IESE Business School-University of Navarra

3 Cross-Cultural Crash and Labor Conflict (A): Sài nóng Restaurants DPO-203-E Juan Antonio, who could not hide his satisfaction at this news, answered without a second thought. Juan Antonio: Look, Don Carlos, I would go with you to the end of the world, this is a very tempting offer but I need the Irish salary. You know I have a family in Peru and I support them with what I earn here. Besides, I am thinking about bringing my wife and children here. Carlos: That will not be a problem, I ll match what you make at the pub, plus what you were making here, so you will still earn the same amount but have a higher rank and better promotion prospects within the company. Juan Antonio: Perfect, Don Carlos, I accept. Carlos: Then get everything ready to start on the 10th. I need you right away. April 10, Sài nóng Génova Street When Juan Antonio first started his new job, he was a bit uptight. He was second in command now, and if anything went wrong it would be his responsibility, unlike before, when they would just call his supervisor. Working with Don Carlos helped set him at ease, as he could always ask him anything he didn t know. He started setting up schedules, recording earnings, placing orders, making inventories, and so forth. After a week he was on top of the business operations. Carlos was pleased with him and the waiters felt at ease at work. However, Juan Antonio did not get along well with the kitchen staff. He said the Chinese were odd, and when a costumer wanted to change an order, it was a real ordeal. The head of the kitchen refused to redo it, and would not allow orders to be cancelled. Sometimes Juan Antonio had to stay after hours, waiting for the cooks to leave in order to cancel a dish. According to the assistant waiters, the head of the kitchen believed that when someone cancelled an order, it was because they wanted to steal the money that the dish had cost. One of the owners, who had placed all his trust in the kitchen staff, had told the head of the kitchen to beware of order cancellations and to not serve any dish that was requested orally and did not appear on the order. When they were hired, they had been told that it was customary for managers to cheat the company by charging the customer in full, then cancelling the order and pocketing the difference. Some Months Later One very hot summer morning, on one of those odious Madrid days, right in the middle of serving the meals, Carlos asked Juan Antonio to leave Pablo, the floor submanager, in charge of the dining room and come to his office because he had something to tell him. Carlos told Juan Antonio that the company was being sold to a large American restaurant chain that owned many types of restaurants throughout Spain. Some served Spanish food, IESE Business School-University of Navarra 3

4 DPO-203-E Cross-Cultural Crash and Labor Conflict (A): Sài nóng Restaurants some were Italian or American, and it also owned coffee shops and stores. The group was interested in the Sài nóng because they lacked an Asian restaurant that was not just any Chinese. He said he would not be working with the new owners. With his savings and his experience, he was going to open a little vegetarian restaurant with his wife. He had suggested Juan Antonio to the new owners as manager of the Génova Street restaurant. A New Horizon When the Sài nóng became part of the new group, Juan Antonio was happy because he thought things would change. The new American holding had a business vision that was just what the Sài nóng needed. He thought it would cease being a typical family business, where things were getting out of hand due to the owner s fanatical partiality for Asian culture. Juan Antonio became manager of Restaurant no. 2227, according to the new company s numbering system. As always, the first thing he did when arriving in the morning was to check schedules, organize the staff, record the earnings and check the orders. As soon as the Sài nóng became part of the new chain, there were changes. Management spoke a lot about integration, which Juan Antonio did not quite understand, because to him it was clear that it was the Chinese who were not integrating, not the dining room staff. He did not know how to handle this. The American chain also changed the decoration and the chinaware. Communication systems with the head office improved and they finally had Internet installed. Above all, however, what changed was the amount of work. Juan Antonio didn t have time to do everything the head office asked of him, there was too much paperwork to fill in and his new supervisor, Alfonso Huertas, who had worked for the holding for five years, didn t give him a chance to breath. Waiters began to complain. Section one used to be handled by two waiters, now it was handled by one alone. The new policy was efficiency above all, but Juan Antonio didn t like it because he thought that the American understanding of efficiency was to let one person handle the workload formerly performed by three. In addition, there was the issue of salary. Even though he had been promoted to manager, he was earning only 50 euros more than he had before. People were not happy because everyone s salary that of the cooks, waiters, assistants, etc., had been reduced to match the salaries of the employees of the other restaurants owned by the chain. The idea was to instill a principle of internal equity, along the lines of, We are part of a group and equal jobs deserve equal salaries, with no room for favoritism. Time of Expansion The group soon applied their way of doing business to the Sài nóng. In less than two years, the four restaurants became 27 in Madrid alone, with plans to open more all over Spain. 4 IESE Business School-University of Navarra

5 Cross-Cultural Crash and Labor Conflict (A): Sài nóng Restaurants DPO-203-E The Sài nóng division was run by Oscar Ramírez, who was the right hand of Frederick Maddisson, the group s managing director for Spain. This division had three supervisors for the Madrid area: Alfonso Huertas (a 45-year-old Spanish economist), Antonio de la Fuente (a 34-year-old Spanish agricultural food engineer), Guillermo Perrocci (a 38-year-old Italian art school graduate), as well as a supervisor for the Chinese cooks, Euillin Liam Chu (Shanghai-born and American-educated, of uncertain age). Each supervisor was assigned a certain number of units (restaurants), except for Euillin, who oversaw all the Sài nóng kitchens. According to the company s organization chart, the supervisors were superior to managers and heads of kitchens; in reality, however, Alfonso, Antonio and Guillermo only supervised and gave orders to the managers and the dining room staff, while the kitchen only listened to Euillin. When something was amiss in the restaurants regarding the kitchen, nothing could be resolved until Euillin or Oscar arrived, because the Chinese staff only accepted orders from these two men. During the expansion process, Juan Antonio managed different restaurants. Since he was one of the oldest managers in the company, every time they opened a new restaurant, they would put Juan Antonio in charge of getting it started. This was becoming more and more frequent. He had been in his last post for less than three months. They had sent him to a restaurant on Alcala Street, to one in the Plaza Norte Shopping Mall, to Alonso Martínez Street and a long list of others. He was now assigned to the Sài nóng Plenilunio. The rotation index was very high. People were constantly being moved from one place to another and could not complain. A clause in the new contracts stated that the company was entitled to make any changes it considered necessary as long as they were within the province of Madrid. That was without taking into account the people who left the company, i.e., the external rotation index. This was 60% among waiters and 30% among management, maybe because these were the ones who rotated more internally. The cooks, meanwhile, showed less internal rotation and, curiously, less external rotation too, less than 18%. Juan Antonio remembered coming back to one of the units he had worked at, the Sài nóng Las Rozas, after a 15-day vacation in Lima to find that he no longer knew anybody there, only the cooks had remained the same and he had no relationship with them. What Juan Antonio found more difficult to comprehend was the head office s method for selecting new employees. They seemed incapable of noticing that a person would not be fit for the job, and would only last 15 days. Juan Antonio was getting sick and tired of constantly training new people who would then leave without notice or, worse, be transferred by his supervisor Alfonso to another restaurant without even consulting him. IESE Business School-University of Navarra 5

6 DPO-203-E Cross-Cultural Crash and Labor Conflict (A): Sài nóng Restaurants The American Chain s Employee Selection Process Dining Room Staff Dining room staff was selected at headquarters by the human resources department. The preselected candidates were given first a group interview, followed by a personal one. Selected candidates were hired and given a two-day (16-hour) training course at the head office by the human resources department, during which they were succinctly told how to do their job. Both the selection process and the training sessions were the same for all the restaurants of the group, and no differences were made for the Sài nóng. Kitchen Staff The kitchen staff was usually imported from China. Most were from the region of Guangzhou. Chinese staff working for the group would refer up to 20 people each; the human resources department would then travel to China to interview them and bring the successful candidates back to Spain. The cooks were not given any training prior to arrival at their assigned working unit, but would be taught there. Problems Start Out of the Blue It was 12:30 p.m. on a cold winter s day and, like every day, Juan Antonio was making sure that everything was ready to open the restaurant at 1:00 p.m. Suddenly Lieu, the sous-chef, came to inform him that Jan, the chef, had called to tell him that he would not be coming to work because his mother was very sick and he was leaving immediately for China. Juan Antonio was surprised that Jan should take his vacation now, when he was scheduled to take it in two months time. Juan Antonio started telling Lieu that Jan could not just leave, but Lieu just said, Jan gone, I want other cook, today too few in kitchen, meaning that he needed more people in the kitchen, as there were now not enough cooks. The first thing Juan Antonio did was to call Jan on the phone. When Jan failed to pick up, he called Alfonso, his supervisor, and Euillin, to see what could be done. Both told him to call human resources to find him a new cook and to prepare all the paperwork to fire Jan. Human resources suggested not firing Jan, but instead transferring him to a new Sài nóng restaurant that had just opened in Villalba, 39 km away from the city of Madrid. After 37 days had passed, and Lieu had been promoted to head of the kitchen of the Sài nóng Plenilunio, Jan suddenly appeared in the doorway. Juan Antonio was astonished, but, trying hard to make himself understood, greeted Jan and asked what he could do for him. Jan said he was there for work. Juan Antonio, still surprised, told him he was no longer chef at Sài nóng Plenilunio, and that Oscar, the head of operations, wanted to talk to him immediately. The following day, Oscar told Jan in the doorway of the Plenilunio restaurant that he had been transferred to the new restaurant in Villalba. Jan, in a very Asiatic way, said, Me not understand and went straight to the kitchen, disregarding Oscar and Juan Antonio s efforts 6 IESE Business School-University of Navarra

7 Cross-Cultural Crash and Labor Conflict (A): Sài nóng Restaurants DPO-203-E to stop him. He remained in the restaurant the whole day, and even though Juan Antonio tried reasoning with him many times, he continued showing up at the restaurant all week. Seeing this, Juan Antonio talked to Euillin and Alfonso. Eventually, human resources sent Jan a written communication informing him he had been transferred on Friday morning, adding that in if he didn t comply, firing procedures would be started. This scene was repeated on Monday morning and Juan Antonio, now at his wits end, called Alfonso and Euillin and asked them to come in. Euillin arrived first and went straight to the kitchen to talk with the cooks. None of the others understood a word of what was being said. Alfonso arrived shortly after. Suddenly, while Euillin was talking with the cooks in Chinese, loud screams were heard. Alfonso and Juan Antonio ran into the kitchen to see what was going on, only to find Jan threatening Lieu with a kitchen knife, while Euillin was between them, trying to mediate in the conflict. Seeing this, Juan Antonio called the police right away. It took only minutes for the police to arrive and take Jan away. Everything seemed to be under control by opening time at 1:30 p.m. The rest of the day was apparently normal except for a slight delay with some dishes and desserts, but that was nothing new. The restaurant closed that afternoon at 6:00 p.m., half an hour later than usual. All the employees went home to rest a little before the night shift started at 8:30 p.m. Juan Antonio went home, pleased that it was his night off and he was going to get together with some fellow countrymen to watch the Peruvian team playing and drink some beers. The Outcome It was exactly 8:34 p.m. when his cell phone rang. It was Pablo, the second floor manager, who was in charge that night. Juan Antonio thought he was calling to ask him about the system s access code because, for unknown reasons, Pablo s code rarely worked. However, what Pablo said was that he could not open up the restaurant because the cooks were outside the Sài nóng refusing to work. They said they were on strike, demanding the reinstatement of Jan, a general wage raise, Oscar s resignation and his immediate replacement by Euillin. Juan Antonio was petrified. He had no idea what to tell Pablo. He was just getting dressed to go out when his cell phone rang again. It was Alfonso this time, and he sounded nervous. He wanted to know if the cooks were working in his restaurant. Apparently in more than half the Sài nóng restaurants in Madrid, the cooks were on strike. Of the 27 restaurants in Madrid, in 14 the kitchen staff had joined the strike. More than 100 cooks, led by 14 chefs, were not working in protest about the situation of a co-worker who the company was transferring to another restaurant (see Exhibit 2). IESE Business School-University of Navarra 7

of Striking Kitchen Staff 8 IESE Business School-University of Navarra Manager

8 DPO-203-E Cross-Cultural Crash and Labor Conflict (A): Sài nóng Restaurants Exhibit 1 Organization Chart (1st) Floor Manager Cleaning Staff Exhibit 2 Pictures of Striking Kitchen Staff 8 IESE Business School-University of Navarra Manager Waiters Assistant Waiters (2nd) Floor Manager Head Chef (2nd) Chef (3rd) Chef Kitchen Helpers

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