Book review for “The New Gold Standard – the Ritz Carlton Hotel Company” By Joseph A. Michelli By Jie Zhang Cal Poly Pomona Winter 2013, GBA 671 Professor Ed von Leffern Book review for “The New Gold Standard – the Ritz Carlton Hotel Company” Introduction Ernest Hemingway once wrote “When I dream of afterlife in heaven, the action always takes place in the Paris Ritz. ” The Ritz-Carlton becomes synonymous with perfection and luxury worldwide through its painstakingly attention to detail, practical innovation and creation of an unrivaled customer experience.
Today the Ritz-Carlton has become the benchmark standard of customer service that other world-class companies such as Apple and FedEx strive to emulate. Regardless of what industry they are in, the techniques employed at Ritz-Carlton have helped many companies increase their customer loyalty to levels previous unseen. “The New Gold Standard” shares the wisdom of Ritz Carlton’s five principles to maximize one’s ability to deliver quality and world-class service throughout business and personal life. Firm and steadily practices its five principles, one will have the opportunity to form and strengthen industry new gold standard.
This book also helped me understand how Ritz-Carlton differentiates itself in employee loyalty, first-class customer service and great branding and principles. My book review will be combining Ritz-Carlton’s five principles with my own experience working at the Century City InterContinental hotel in China and The Sheraton in Downtown LA with those described in the book. Specifically the five gold standards are: 1. Define and Refine 2. Empower through Trust 3. It’s Not about You 4. Deliver Wow! 5. Leave a Lasting Footprint The gold standards:
The customer is always right! Since founder Caesar Ritz first managed the Paris and London Ritz-Carlton, the brand has focused on providing guests with excellence experience without compromise. Its focus on creating a legendary customer experience has been recognized by the United States Department of Commerce by wining the coveted Malcolm Baldrige National Quality Award two times. The gold standards create the foundation for the hotel’s unique guest experience. The Ritz Carlton is unique in creating a company culture that brings out the best in its employees. The Credo
Ritz-Carlton has condensed the essence of their mission statement into three sentences which reflects its commitment to its guests. Each employee is referred to a lady and gentleman, and carries a credo card with them at all times. The credo reads as below: “The Ritz-Carlton is a place where the genuine care and comfort of our guests is our highest mission. We pledge to provide the finest personal service and facilities for our guests who will always enjoy a warm, relaxed, yet refined ambience. The Ritz-Carlton experience enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests. ” The Motto Ladies and gentlemen serving ladies and gentlemen. ” Ritz- Carlton is known for treating employees with the same care as its customers. Employees in the service industry appreciate the level of respect and admiration that may be seldom experienced in their home country where they may face social or economic challenges. Its groundbreaking emphasis on service and support at all levels of its organization has been an industry model for years. The three steps of service Anytime a customer comes into contact with any aspect of a business, it is an opportunity to form an impression, also called “moments of truth” in service industry.
Employees at Ritz-Carlton not only fulfill guest needs but take the extra effort to impress them. Is has become the industry standard to give the guest a warm and sincere greeting, anticipating and complying with guest needs, saying a fond farewell and using the guest’s name when possible. The consistent execution of simple aspects of service is vital to separate Ritz-Carlton from its competitors. The brand weaves these three steps into the core of the company culture: “1. A warm and sincere greeting. Use the guest name. 2. Anticipation and fulfillment of each guest’s needs. 3. Fond farewell, give a warm good-bye and use the guest’s name. Empower Through Trust The second chapter of the book emphasis on how Ritz-Carlton does not hire employees, as other organizations do, it selects team members. Ritz-Carlton employees are sourced from the same labor pool as others, but the difference is in hiring and training practices. To motivate staff to not only satisfy but delight guests, leaders must understand the importance of not only identifying talent but also maintaining top candidates. A colleague recalls her interview experience at the Ritz-Carlton Sanya, China. I was surprised how comprehensive the interview process she had to go through for a sales coordinator position.
As the first step of the interview process candidates will be asked to take a one-hour online assessment with all behavior-based questions suggested that the prospective candidate test judgment in hypothetical work situations. She was the only one invited to an in person interview at the hotel, while there are four people that she knew who also took the assessment for the same position. She first had an hour-and-half interview with the department manager and director with more behavior-based questions, and was told that the GM would like to meet her as the last interview process.
Since the department director is normally the decision maker for coordinator positions at most hotels, it is obvious that Ritz-Carlton is carefully selecting the best person for every position instead of simply hiring just anyone to fill a job. She took great pride in knowing she was selected after going through such an extensive interview process. She truly feels that the hiring process not only serves as an opportunity to hire her to perform necessary functions for a business but ultimately also sets the tone for the pride she takes in her work.
She feels acknowledged that leadership has invested their time in getting to know her. Ultimately, she feels a strong responsibility to live up to the trust placed in her, by taking extra effort at work to prove that they made the right choice. New hires are warmly welcomed by orientations held in hotel meeting rooms and lunches provided in the hotel restaurant as if they were hotel guests. Sheraton did the same when I joined the company. We had two days of orientation prior to covering any job-specific information discussing the core brand values, “warm, connected and community” which I still remember today.
It is human nature that we want to connect with other people, and when we do, we are more productive and happier. It is important for staff members to fully understand the values of a company and the philosophies behind the brand name before they begin employment. A company loses more money from high employee turnover than it does to properly train and maintain its current ones. As one of the most favorite companies to work for, Ritz-Carlton invests a lot of time in its staff. After the two day orientation for new starts, there is a 21 day on-the-job-training and 250 hours of live training time in the first year.
While formal training programs are in place, the company also develops informal opportunities on Day 21 and Day 365. On Day 21 employees are given a meeting with managers to freely discuss their experiences for their first three weeks. Like how many hotels strive to remember the birthdays of their employees, at Ritz-Carlton, Day 365 serves as the anniversary celebration of a staff member. Since hospitality is a people business, monthly birthday parties are held with birthday cakes and birthday card signed by the management and restaurant vouchers given as gifts.
At the annual New Year dinner, employees who had been there 1 and 5 years are given a certificate celebrating their services. It is important to be acknowledged and to hear stories of others who are celebrating a proud tenure. Personally, I kept all the cards and certificates from all my previous work; it certainly brings back warm memories every time I look at them. There is a positive correlation between employee empowerment and productivity. While most hotels require manager’s approval for expenses more than a certain amount, Ritz-Carlton has taken a huge step when it comes to creating customer wow moments.
Ritz-Carlton employees are empowered to spend up to $2,000 per guest to ensure that guests receive the best lodging experience. This level of trust that Ritz-Carlton displays in its staff’s is not seen anywhere else in the industry. Other hotels require a general manager’s approval before even complimenting airport shuttle fares. Some might think this type of empowerment is financially irresponsible, ladies and gentlemen at Ritz Carlton take pride in their responsibility and are careful with company funds.
As a result, employees at Ritz-Carlton are empowered to create unique, memorable and personal experiences for their guests. It’s not about you Ritz-Carlton first submitted its application for the Malcolm Baldrige Award in 1991. Executives brought in external, third-party evaluators to measure the company against the Baldrige criteria. They looked outside their business by seeking input from other companies such as IBM and Motorola to identify gaps in its business model. Closing those gaps would help to ensure its performance excellence and sustainability.
Winning the award in 1992 and again in 1999, Ritz-Carlton management continues to look toward the Baldrige process as its benchmark for quality excellence. Ritz-Carlton continues to refine its product and services for the future by conducting research on hotel guests who stay in their hotel as well as their competitors. Steve Job once said, “Good artist copy; great artists steal,” Apple retail stores have emulated this technique from Ritz-Carlton and it has served them well.
Just as employees at Ritz-Carlton are trained to anticipate the unexpressed wishes of their guests, Apple encourages its sales staff to listen to unresolved issues or concerns from its customers. After reading this book I realized how Apple has transferred the Ritz-Carlton’s listening technique to its own store policies. As a PC owner thinking of switching to Mac, a salesperson spent more than 15 minutes explaining the simplicity of learning a new operating system and provided me a description of the program which includes one year of personalized instruction as well as a data transfer service between a PC and Mac.
Apple won my business and I have been a loyal fan not only buying products from Apple but also recommending it to my friends. Deliver WOW Ritz-Carlton invented the concept to WOW its guests by creating different approaches to go above and beyond the average and differentiate itself from the rest of the industry. Now competitors are emulating this concept and we see other brands pursuing WOW through in various ways like presenting guests with hand written welcome letters, embroidered pillow cases with guest’s initials, and free upgrades.
As one of the prestigious five-star hotel brands, guests are expecting an extraordinary experience when they hear the Ritz-Carlton name, it is the ladies and gentlemen have went out of their way to create a WOW experience as a result of this concept. The author used the following story as an example how Ritz-Carlton wowed its guests by its ingenuity and thoughtfulness. When a five-year-old child lost her stuffed animal toy at the hotel, the hotel not only came to the rescue by finding the toy but also sending back the toy with a photo album of it lounging poolside, getting a massage at the spa, chronicling its adventures around the hotel.
They even issued the toy with a Ritz-Carlton ID badge, making him an honorary staff member of Ritz-Carlton. While everyone wishes there hadn’t been a problem in the first place, Ritz-Carlton believes that the hotel might get a more loyal guest than if there were no problem at all. Data collected about problems and resolution processes is done by keep tracking these “opportunities” in the system. Training can be delivered to other employees by collecting quality data and analyze the data for trends. The goal is to create all great moments of magic even if sometimes they start out as complaints.
Leadership at Ritz-Carlton understands the power of defining excellence through examples. Employees begin every day with a process called the lineup. The first 10-15 minutes of the day is spent to discuss and learn the Credo, The Motto, the Three Steps of Service, and The Employee Promise. I believe it is not only useful but powerful to share stories that reflect all levels of employee behavior that is acknowledged by leadership. Similar to Ritz-Carlton’s lineup process, my previous employer, InterContinental Century City Chengdu has adapted this to its own company culture.
Each department shares WOW moments and thank you letters and comments from guests during its morning briefing. Every hotel produces a daily activity report that recaps all the activity within the day. The report not only includes occupancy rate, average daily rate and revenue from each revenue center, it also records complaints that have occurred on that day and actions taken to resolve them. Sharing complaints and comments from hotel guests with every employee is a great way for them to learn from experiences and know how to properly handle the similar situations if they occur in the future.
Leave a lasting footprint Visionary and former president at the Ritz-Carlton, Horst Schulze once said: “A business is only great as its focus. If you focus narrowly on the bottom line, you leave a legacy only for the investors. Great business grows their people, communities, customer base and profitability. From the day we opened our doors at Ritz-Carlton, all we wanted to be was a truly great company. ” As one the charity committee members at my previous work, I was greatly involved with IHG’s charity events.
Each IHG hotel has its own charity committee with members from each department dedicated to activities planning and implementation. Like Ritz-Carlton’s footprints program, we have a similar one called “responsible business day” at IHG. Responsible business activities range from cleaning the historical and tourism sites to wildlife conservation projects. The ultimate goal is to demonstrate IHG’s commitment to betterment of society and the environment. Last year, all the charity board members and hotel executives from our hotel gathered together at a senior home to cook and clean for the elders.
Meanwhile, InterContinental Sanya spent the day at Sanya harbor picking up trash and Holiday Inn Beijing invited children from unfortunate families to lunch at the hotel and raised $12,000 for their school and living funds. While socially responsible projects may initially reduce profits, many corporations are finding that they may also create new profit opportunities. “Show we care” is one of IHG’s core values, and the company has continuously contributed to society’s development, particularly in children’s education and development.
In 2008, the China Wenchuan 7. 8 earthquake broke everyone’s heart. Since our hotel was located in the same province, we shipped medicine, clothing and dry foods. Also, as the largest international hotel company by number of rooms in China, IHGs in Greater China area has donated 500,000RMB to rebuild a primary school in the epicenter of the earthquake with sustained serious damage. InterContinental Century City Chengdu has long history cooperation with local tourism training school.
Since the hotel open in 2006, the hotel received over 1,000 interns and graduates from local tourism management schools. Many of them excelled to become hotel managers. In 2012, IHG has signed an agreement with Sichuan Tourism College to set up a new Hotel institutes by providing funds for class equipment and direct internship opportunities at IHG hotels to continue strengthen its talent reserve in western region of China. The cooperation between the college and the brand has both benefited by connecting the professional trained talents with hotels.
During my time at IHG, I truly felt that the company puts its core value of “show we care” and “do the right thing” into daily practice. As an employee, I am proud to say that my company has used its size and scale to provide consistent efforts support communities and provide consistent disaster relief in times of crises. Conclusion The Ritz-Carlton is one of the organizations whose methodology has truly transformed our understanding of quality customer service and consistency. Overall feedbacks from readers were that this book helped them to apply the concepts around exceptional customer service.
Delivering ‘wow’ means extending their thought process beyond delivering just the basics and look to over-deliver to their clients every day. This book was recommended by many professors from hotel management schools as one of the must-read for anyone involved in the delivery of service. I personally think it applies itself very well to anyone that deals with customers. It helps organizations focus on instilling and maintaining a service culture within the company, and it has also inspired me to take customer service to the next level in the hotel business.