Entrepreneur Association of Tokyo
"Legendary Service at the Ritz-Carlton Hotel"

Think of two young men sitting down in a quickly filling train: One is sending messages on his cell phone and the other one is attentive to his body position and those around him. At the next stop, an elder enters the train and when he begins to look around for a seat the attentive young man is simultaneously hopping up to offer his seat to the elder because he already surveyed the train and knew there were no seats available.

Now, imagine the same two young men working at different hotels. Do you think your experience is going to be different if you interact with both of them? One being disengaged and probably someone who only sees his job as a "job" while the attentive young man from the train understands that he or she has a responsibility for people.

It does not even matter if the hotel of the young man who is disengaged is more aesthetically pleasing because it’s not the facility that makes a hotel - it’s the people who work there. Such was the message shared by Noboru Takano, who is The Regional Director of Sales of The Ritz-Carlton Hotel Company, Japan, and who on this night sold entrepreneurs on how taking an organizational behavior perspective can solve many challenges, primarily the need to establish a solid core and to stay true to that core while stimulating progress.

A Company’s DNA: Innovation and Purpose
“The past lives on in the present, no matter what we might think, and traditions do inform our own efforts. To understand this better broadens our sense of what is possible today and what sources of inspiration we can draw upon for hope.” Kevin Mattson – historian

External Innovation
Unsurprising, the 100-year legacy of the Ritz-Carlton began with innovative business ideas with the customer in mind, all conceptualized by hotelier César Ritz. These ideas revolutionized the industry by:

Putting a private bath in every guest room so they can relax upon arriving
Introducing a lá carte dining to provide more choices
Enhancing the hotel’s lighting so people felt more secure
Initiating the first Guest Data Base System to BETTER SERVE CUSTOMERS

Internal Innovation: Purpose
When W.B. Johnson bought the rights to The Ritz-Carlton name in 1983, there were 5 top hoteliers who came to join the organization. Johnson, then, had a meeting with top hoteliers to discuss the following important question for any organization to ask, “Is it necessary to exist?” Interestingly enough, this group said “NO” because there was already many luxury hotels operating successfully worldwide. This scary truth gave way to natural follow up, “What value do we need to create to exist and impact society?” Before answering this they had to know what people are closest to them, in other words, who is The Ritz-Carlton’s core society? Three societies emerged, in order from most important to least important they are:
Society 1: Employees and their families
Society 2: Vendors and partners
Society 3: Customers

From this insightful inquiry the Hotel’s core managerial concept was born………

Employee Satisfaction = Customer Satisfaction
Since unhappy employees cannot make customers happy, Ritz's strategy is to ensure that employees are satisfied with their work. As Mr. Takano put it, “on a scale from 0 to 10, 10 being the highest, it is impossible to achieve a customer satisfaction level of 7 if the employees are not at least 7.5.” Mr. Takano also stressed the important of being optimistic in context of reality in that achieving a satisfaction level of 10 is impossible so it is important to manage that expectation and strive for excellence, not perfection. All and all, achieving high customer satisfaction leads to engaging employees who are then transformed into Ambassadors of the hotel who naturally win and keep customers.

A take home message: Going through a process of inquiry similar to the one mentioned above is vital. In order to offer the ultimate customer experience and create a value to society an organization has to know itself.

The Key Difference: Core ⋄ Strategy ⋄ Effective processes
As a company in a competitive service industry, both employee and customer service are rather normal things to talk about as a strategy, right? The interesting point is the Ritz-Carlton has found a winning formula that is as deep as it is simple:

1) Hire the right kind of people
The right kind of person is our young attentive man from the train example above because it is clear that the person sees the value in helping others. Finding this type of person is essential since they are the most important asset to the company. Moreover, based on his 32 years in the industry and feedback from top business consulting firms, Mr. Takano stated that in the workplace you can’t train people and their inspirations - you can only train skills and that is why the ideal situation is to have a mutual selection process, called Quality Selection Process at Ritz-Carlton. However, this is not always possible so Mr. Takano gave us a sample question that the Ritz asks at job interviews, “What have you done to make the most important people in your life happy in the past two-weeks?”

A take home message: Peter Drucker would certainly agree with this approach. He said, ”the task of leadership is to create an alignment of strengths, making weakness irrelevant.” All employees are Ambassadors of the Ritz and having a commonality of an outward focus and passion for people in addition to the feeling of belonging to a global family, all of which fosters organizational continuity and a culture of success.

2) Establish processes that give employees the chance to THINK
Many times, people get to know their job so well that they can do it without thinking creatively. Mr. Takano said this is naturally dangerous and thus the Ritz has processes in place to make employees think, especially regarding the philosophies of the organization that adds value to the core. They stimulate thinking by awarding the best practices of employees every month, implementing maintenance training seminars, and by viewing a concise Ritz-Carlton philosophy card (CREDO card) daily. Even more astounding is the company’s Stories of excellence (Wow stories) database which feeds real life experiences of the hotel’s 34,000 employees.
Every employee reads two stories a week, which amounts to 104 stories a year. Beyond the knowledge gain, the process keeps the employees fresh so that they can quickly respond to anything because the Ritz-Carlton has developed a responsive culture.

This philosophy is reminiscent of the famous Nordstrom urban legend and its handbook that says: "Use your good judgment in all situations. There will be no additional rules."

Final thought and resources:
To say the least, the Ritz-Carlton takes leadership seriously, places enormous value on human development, and is extraordinarily innovative at creating processes to maintain their core while stimulating progress. You can learn more about their business practices directly from Noboru Takano by checking out his best-selling book, 'Ritz-Carlton ga Taisetsu ni Suru Service wo Koeru Shunkan' and by visiting the Ritz Carlton Leadership center at: www.ritzcarlton.com/corporate/leadership

**********************

Text by Vinnie Ventimiglia

December 05, 2006


Noboru Takano (profile)
Regional Director of Sales -The Ritz-Carlton Hotel Company Japan