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Ritz carlton hotel

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Ritz carlton hotel

  1. 1. 1999 Application Summary THE RITZ-CARLTON® HOTEL COMPANY, L.L.C.Copyright © 2000 by THE RITZ-CARLTON® HOTEL COMPANY, L.L.C. – All Rights Reserved
  2. 2. THE RITZ-CARLTON® HOTEL COMPANY, L.L.C. at a Glance Products and Services: The Ritz-Carlton Hotel Company, L.L.C. develops and operates luxury hotels for others. The hotels are de- signed and identified to appeal to and suit the re- quirements of its principal customers who consist of: (1) Meeting Event Planners and (2) Independent Busi- ness and Leisure Travelers. President & COO: Horst Schulze Headquarters: 3414 Peachtree Road, N.E. Suite 300 Atlanta, Georgia 30326 Operations: One Central Reservations Office Seven International Sales Offices (ISO’s) 24 Hotels and Resorts in North America Two Hotels in Europe Eight Hotels and Resorts in Asia Two Hotels in Australia 30 Hotels under Development Customer Base: Over 800,000 Customers World-wide 1999 Revenue: $1.5 Billion. A 40% increase over the previous five years. Employees: 17,000 World-wide, known as The Ladies and Gentlemen of The Ritz-Carlton History: Established in 1983, the former owner, W.B. Johnson Properties, acquired the exclusive North American rights to the Ritz-Carlton trademark, the foremost name in luxury hotels. This status was largely due to the legendary Caesar Ritz who developed and operat- ed two of the world’s best hotels in Paris and London. The hotels achieved such fame in the marketplace that they attained what is often referred to as “The Ritz Mystique”. In 1995, The Ritz-Carlton was jointly ac- quired by Marriott International Inc. to achieve their strategy of entering the luxury hotel segment of the industry; the takeover/merger occurred in 1997. Copyright © 2000 by THE RITZ-CARLTON® HOTEL COMPANY, L.L.C. – All Rights Reserved
  3. 3. The Ritz-Carlton Hotel Company, L.L.C. 1999 Application SummaryOverviewA History of Managing forPerformance Excellence in the Hotel Industry Most hotels remained profitable despite these quali- Previously, in tiny hotels and inns, the innkeeper di- ty deficiencies because competitors had similar problems.rected activities in the organization personally, including“managing for quality”. As hotels grew in size, the volume Ritz-Carlton Returns to the Fundamentals:of activity outgrew the capacity of the innkeeper to manage Upper Management Participationby personal direction – it became necessary to delegate. Then came 1983 and Horst Schulze. The pace Apprentices were trained in the craft and qualified quickened with a lengthy procession of new Ritz-Carlton Ho-by examination to become craftsmen. The innkeeper - the tels under development. Faced with this challenge, Horstmaster - then delegated much of the managing for quality to Schulze and his team decided to personally take charge ofthe craftsmen, subject to inspection and audit by the master. managing for quality because they realized managing forMany of our standards go back 100 years to this era of Cae- quality could not be delegated!sar Ritz and the legendary Chef August Escoffier. The upper management participation of Horst As we entered the 20th century, the size of a hotel Schulze and his team ranged across a broad spectrum, butand its organization sharply increased. The resulting large most significant activities consisted of:hotels required functional departments. The innkeeper - nowa general manager - delegated to each functional department • Defining the traits of all company products which are sethead the responsibility for quality, for performing the func- out in The Credo. For a full explanation of The Credo, seetion correctly. Figure 1 on page 2. With the emergence and growth of technology, hotel • Translating The Credo into basic standards to clarify theproducts and processes became increasingly complex. To quality responsibilities for our Ladies and Gentlemen; thedeal with these new complexities the hotel industry adopted most important of which include: (1) anticipating the wish-the principle of separating planning from doing. Planning of es and needs of the guests (2) resolving their problems andthe various departments was delegated to division and depart- (3) genuinely caring conduct towards guests and each other.ment heads (e.g. Food & Beverage managers, Rooms Execu-tives, Purchasing Directors, etc.). This left the job of execut- • Personally training the Ladies and Gentlemen of a newing the plans to the first-line supervisors and the workforce. Ritz-Carlton on The Credo and Basic Standards, commonlyThe separation of planning from execution had four major referred to as The Gold Standards, which are shown on pageconsequences. 2 as Figure 1.1. A factory concept emerged in which people were assigned • Aggressively instilling a passion for excellence. one task rather than a single craftsman performing the en- tire sequence of tasks. In this factory approach, if task #11 was causing a problem for task #24, it wasn’t identified Another Major Change, A Comprehensive until it reached the customer, and even then the problem Structure likely continued.2. A dramatic rise in productivity. By 1989 Horst Schulze realized that a more com-3. The segregation of divisions and departments. prehensive structure was necessary for the Ritz-Carlton to4. A further distancing of upper managers from the job of optimize its performance. He selected the Malcolm managing for quality. Baldrige National Quality Award Criteria. Through the use of this assessment tool and the resulting feedback reports, The progressive removal of upper management from The Ritz-Carlton developed a “Roadmap” to business excel-managing for quality produced negative effects on quality. lence (see pages 3-4) which has attained significantly higherTypically, performance either fell short of customer need or performance levels. A major ingredient of this approach wasthe cost to meet the need became excessive. In addition, the involving people in the planning of the work that affects accumulated huge chronic costs as a result of poorquality. 1
  4. 4. THREE STEPS THE EMPLOYEE PROMISE OF SERVICE “We Are At The Ritz-Carlton, our THE RITZ-CARLTON® CREDO 1 Ladies and Gentlemen are the A warm and sincere greeting. Use the guest name, if Ladies and most important resource in our service commitment to our guests. The Ritz-Carlton Hotel is a place where the genuine care and comfort of our guests is and when possible. By applying the principles of Gentlemen trust, honesty, respect, integrity our highest mission. We pledge to provide the finest 2 and commitment, we nurture personal service and facilities Anticipation and compliance with guest needs. Serving and maximize talent to the benefit of each individual for our guests who will always enjoy a warm, relaxed yet The Ritz-Carlton Hotel Company, L.L.C. and the company. refined ambience. 3 Ladies and The Ritz-Carlton fosters a work environment where diversity is The Ritz-Carlton experience Fond farewell. Give them enlivens the senses, instills a warm good-bye and use their valued, quality of life is enhanced, Gentlemen” well-being, and fulfills even 1999 Application Summary names, if and when possible. individual aspirations are fulfilled, the unexpressed wishes and The Ritz-Carlton mystique and needs of our guests. is strengthened. © 2000, The Ritz-Carlton Hotel Company, L.L.C. All Rights Reserved2 The Ritz-Carlton® Basics 7. To create pride and joy in the work- 13. Never lose a guest. Instant guest Do not screen calls. Eliminate call place, all employees have the right to pacif ication is the responsibility of transfers whenever possible. Adhere 1. The Credo is the principal belief of our be involved in the planning of the each employee. Whoever receives a to voice mail standards. Company. It must be known, owned work that affects them. complaint will own it, resolve it to 18.Take pride in and care of your per- and energized by all. 8. Each employee will continuously iden- the guest’s satisfaction and record it. s o n a l a p p e a r a n c e . E v e r yo n e i s 2. Our Motto is: “We are Ladies and tify defects (M.R. B.I.V.) throughout 14. “Smile – We are on stage.” Always responsible for conveying a profes- Gentlemen serving Ladies and Gentle- the Hotel. maintain positive eye contact. Use sional image by adhering to Ritz- men.” As service professionals, we 9. It is the responsibility of each employ- the proper vocabulary with our Carlton clothing and grooming treat our guests and each other with re- ee to create a work environment of guests and each other. (Use words standards. spect and dignity. teamwork and lateral service so that like – “Good Morning,” “Certainly,” 19.Think safety first. Each employee is 3. The Three Steps of Service are the the needs of our guests and each other “I’ll be happy to” and “My pleasure.”) responsible for creating a safe, secure foundation of Ritz-Carlton hospitality. are met. 15. Be an ambassador of your Hotel in and accident free environment for These steps must be used in every 10. Each employee is empowered. For a n d o u t s i d e o f t h e wo r k p l a c e . all guests and each other. Be aware of interaction to ensure satisfaction, example, when a guest has a problem Always speak positively. Commu- all fire and safety emergency proce- retention and loyalty. or needs something special, you nicate any concerns to the appropriate dures and report any security risks 4. The Employee Promise is the basis for should break away from your regular person. immediately. our Ritz-Carlton work environment. It duties to address and resolve the issue. 16. Escort guests rather than pointing 20.P r o t e c t i n g t h e a s s e t s o f a R i t z - will be honored by all employees. 11. Uncompromising levels of cleanli- out directions to another area of the Carlton hotel is the responsibility of 5. All employees will successfully com- ness are the responsibility of every Hotel. every employee. Conserve energy, plete annual training certification for employee. 17. Use Ritz-Carlton telephone eti- properly maintain our Hotels and their position. 12. To provide the finest personal service quette. Answer within three rings protect the environment. 6. Company Objectives are communicat- for our guests, each employee is with a “smile.” Use the guest’s name ed to all employees. It is everyone’s responsible for identifying and record- when possible. When necessary, ask responsibility to support them. ing individual guest preferences. the caller “May I place you on hold?” © 2000, The Ritz-Carlton Hotel Company, L.L.C. All Rights Reserved Figure 1
  5. 5. The Ritz-Carlton Hotel Company, L.L.C. 1999 Application Summary The Ritz-Carlton Chronology of Performance Excellence Genesis 1890’s Caesar Ritz defines Standards for a Luxury Hotel Apprentice Programs, Inspection/Audit by the Master 1900 General Manager Concept Delegation of Quality to Functional Managers Managers Plan / Workers Do 1980 1983 Extensive Participation of Horst Schulze in the Management of Quality • The Credo • Basic Standards for The Ladies and Gentlemen • A Passion for Excellence 1988 1989 MBNQA Audits and Feedback Business Excellence Roadmap (Figure 3) Involving People in the Planning of the Work that Affects Them 1999 100% Employee Pride & Joy Zero Customer Difficulties 100% Customer Loyalty 2003Figure 2 3
  6. 6. The Ritz-Carlton Business Excellence Roadmap Approach Deployment Results Improvement MBNQA “Plan” “Do” “Check” “Act” 1. Leadership A Passion for Excellence Senior Leaders “Start-Up” new hotels Performance Evaluations Development / Training Plans The Seven Pyramid Decisions Distribution of “The Pyramid” Leadership Center Basic Empowerment Process Daily Reinforcement of Developmental The Gold Standards Job Assignments The Ritz-Carlton Hotel Company, L.L.C. 2. Strategic Fact-based Strategic Objectives Divide/Subdivide Objectives Actual versus Planned Act on the Planning performance compared Differences Fact-based Key Process Select Process Owners Quarterly by Upper Managers Evaluate / Improve 1999 Application Summary Identification at the corporate and hotel level Planning Process Develop Processes Daily Operations review Provide Necessary Resources by the workforce4 3. Customer and Market Research that concentrates 6P’s Concept Daily Hotel Measurement Evaluate / Improve Market Focus on the quality of the hotel facility • SQI Annually and operations Operation of the “CLASS” Database • RevPAR by Market Segment Standard Performance Measurement Monthly Measurement • Advance Bookings • Customer Satisfaction • RevPAR • P&L 4. Information and Selecting Performance Individual Process Owners select Statistically Trained Continuous Analysis Measurements for: Performance Measurements for: Employees, Improvement • Upper Managers • Upper Managers Consulting Specialists • Daily Operations • Daily Operations Comparative Benchmarking Share/Replicate Best Practice Performance, On-Going Figure 3
  7. 7. The Ritz-Carlton Business Excellence Roadmap Approach Deployment Results Improvement MBNQA “Plan” “Do” “Check” “Act” 5. Human Jobs are designed so our Employee Education, Training and Q.S.P. Site Visits by Resources people: Development Senior Development and • Know what to do Day 21/365 H.R. Leaders Management • Know how well they are doing Training Certification Review • Can regulate the process Analysis of or their own personal Performance Appraisal Employee Surveys The Ritz-Carlton Hotel Company, L.L.C. conduct Evaluations Analysis of Employee Surveys 1999 Application Summary 6. Process Manage Key Production and Incorporate changing Customer P.Q.I. Major changes that Management Support Processes requirements require project S.Q.I. management5 The GreenBook Process Audits Incremental Process Owners Modify Processes Day-to-Day for each new hotel Improvements 7. Business Strategic Objectives define Lead People Actual versus Planned Continuously and Results long-term targets Performance compared quarterly Forever Improve Manage Processes by Senior Leaders at the corporate Tactical Processes set and hotel level annual targets Standard Performance Measures Daily Operations Review by the workforce Figure 3 (continued)
  8. 8. The Ritz-Carlton Hotel Company, L.L.C. 1999 Application SummaryLeadership Our Senior Leaders continue the strong excellence- as The Gold Standards, Figure 1, page 2. These standardsdriven leadership that began in 1983 and resulted in us be- consist of: (1) The Credo (2) The Basics (3) Three Steps ofcoming a recipient of the 1992 Malcolm Baldrige National Service (4) Motto and most recently, (5) The EmployeeQuality Award. In the years following the award they actual- Promise. These standards have had a long life with only Thely increased their involvement in both the improvement and Basics changing with business conditions.operation of our structured approach to business excellence.A summary of this business excellence roadmap is shown in Collectively, these standards have an incredible em-Figure 3, page 4. powering effect on The Ritz-Carlton Ladies and Gentlemen to think and act independently with innovation for both theApproach “Plan” benefit of the customer and our organization. Our Senior Leaders have a passion for excellence, Since The Credo stresses “providing the f inestlargely because of: (1) the performance expectations of Horst and anticipating the unfulf illed wishes of our guests,”Schulze (2) our Gold Standards and (3) the Pride and Joy of The Ritz-Carlton Ladies and Gentlemen continually learnachieving excellence. and innovate. The Three Steps of Service, combined with our basic empowerment process shown below in Figure 1.2 The seven specific decisions made by our Senior promotes innovative, quick personal service.Leaders, collectively, to set direction for business excellenceare shown below: Deployment “DO”1. 10 Year Vision The specific actions taken by our Senior Leaders to2. 5 Year Mission deploy our leadership approach consist of three major3. 3 Year Objectives processes:4. 1 Year Tactics5. Strategy 1. Since 1984, all members of Senior Leadership have per-6. Methods sonally ensured that each new hotel’s goods and services7. Foundation are characteristic of The Ritz-Carlton on opening day. Since six to seven hotels open each year, our leaders The process for providing our Senior Leaders with spend at least six to seven weeks working with our Ladiesthe necessary data and analysis to make these key decisions and Gentlemen (using a combination of hands-on behav-is explained fully in the Strategic Planning section. ior modeling and reinforcement) during the seven day countdown to opening. This includes the President and It is worth mentioning that our Senior Leaders per- COO who personally demonstrates the guest/employeesonally established our foundation, which is now referred to interface image and facilitates the first vision statement 1 The Basic Empowerment Process Three Steps of Service Warm Welcome Employee Employee Employee Breaks Away Applies Determine Guest 2 Anticipation and Senses Guest from Routine Immediate Reaction Wish or Need Compliance with Duties Positive Action Guest Needs If Satisfied If Dissatisfied 3 Fond Farewell Employee Document the Guest Memory Escalate the Returns to Incident System Complaint Routine Duties Figure 1.2 6
  9. 9. The Ritz-Carlton Hotel Company, L.L.C. 1999 Application Summary session for each newly formed department. During these Results “Check” formative sessions which all employees must attend, the President and COO personally interacts with every new Leadership effectiveness is evaluated (1) On key employee both individually and in a group setting. His questions of our semi-annual employee satisfaction results in-depth knowledge of hotel operations and enthusi- (these questions reveal if the respective leader has gained the asm for The Gold Standards are an inspiration for all full support of the Ladies and Gentlemen regarding our concerned. Gold Standards). (2) Through audits on public responsi- bility (i.e. Life Safety Systems, Security Systems, Food2. The results of the seven specific decisions from Preparation and Alcoholic Beverage Service, Environ- the annual strategic planning process are mental Stewardship). arranged in a “Pyramid Concept” and distrib- uted throughout the organization. The 2000 Improvement “Act” Pyramid is shown in Figure 1.3. Gaps in leadership effectiveness are ad-3. The Gold Standards are reinforced daily dressed with development/training plans. For in a variety of forums which include: (1) widespread deficiencies, the corporate human lectures at new employee orientation (2) resource function develops/improves courses, developmental training (3) daily line-up 10 YEAR VISION processes or facilities. As a result, we have meeting (4) administration of both pos- To be The developed a leadership center at Corporate itive and negative reinforcement (5) Headquarters. In addition, we make ex- mission statements displayed (6) dis- Premier Worldwide tensive use of developmental job assign- tribution of Credo Cards (7) The Provider of Luxury ments. Credo as first topic of internal Travel and Hospitality Prod- meetings and (8) peer pressure. ucts and Services 5 YEAR MISSION Product and Profit Dominance OBJECTIVES T h e V i t a l - Fe w O b j e c t i v e s TACTICS Key Production and Business Processes S T R A T E G Y C u s t o m e r a n d M a r k e t Fo c u s S t r a t e g y w i t h Action Plans M E T H O D TQM - Application of Quality Sciences · M a l c o l m B a l d r i g e N a t i o n a l Q u a l i t y Aw a r d C r i t e r i a · T h e G r e e n B o o k – 2 nd E d i t i o n F O U N D A T I O N Va l u e s a n d P h i l o s o p h y – T h e G o l d S t a n d a r d s Credo · Motto Three Steps of Service · Basics · Employee Promise Copyright © 2000 by THE RITZ-CARLTON HOTEL COMPANY, L.L.C. – All Rights Reserved Figure 1.3 7
  10. 10. The Ritz-Carlton Hotel Company, L.L.C. 1999 Application SummaryStrategic Planning Planning Process At The Ritz-Carlton, Strategic Development is the 1process that enables Senior Leaders to make specific deci- Confirm/Modify Vision,sions that set direction for Business Excellence. Mission, Strategy, Methods, Macro Environment Analysis FoundationApproach “Plan” A description of the three major components of ourplanning process, including the pre-work known as the Macro 2Environment Analysis, is show in Figure 2.1. Select RITZ-CARLTON Strategic MandatesMacro-Environment Analysis This extensive analysis is done to understand thecurrent state (and expected future state) of the Macro En- 3vironment in which we operate our company. The key re- Develop RITZ-CARLTON “Vital-sult of the analysis is a projection of the future state of Few” Objectives and TargetsThe Ritz-Carlton relative to competitors and the expectationsof hotel owners in primary performance areas. Subsequently,gaps are identified. March—June Figure 2.1Step 1 March - June Deployment Process Using the Macro Environment Analy-sis, Senior Leaders confirm the 10 Year Vision, 1 55 Year Mission, Strategy, Methods and Founda-tion or make changes. Reinforce Pyramid Concept/ Develop Production Plans/BudgetStep 2 March - June Processes 6 Using the Macro Environment Analy- Communicate Pyramidsis, strategic mandates are identified along with Concept to thegaps in performance. 2 Ladies and GentlemenStep 3 March - June Deploy Support 7 Processes The strategic mandates and the gaps Execute Plansidentified in the Macro Environment Analysisare used to create the Vital-Few Objectives for 8the next three years. The Objectives are de- 3 Daily Line-Up Reinforcementsigned to address the projected gaps identified Develop Preliminary on-going throughout the yearin the Macro Environment Analysis and to main- Plans / Budgets fortain or enlarge The Ritz-Carlton advantage over L.L.C. and Hotels 9competitors where these advantages exist. Vital-Few Objectives are separated into multiple cate- Evaluate/Improve Planninggories for two purposes: (1) respond to the ProcessStrategic Mandates and (2) represent all who are 4affected by The Ritz-Carlton. Finalize RITZ-CARLTON Pyramid Plan, Budgets Conduct Monthly Reviews of The output of this step becomes our for L.L.C. and Hotels Plan at all levels. Collect in-Pyramid (Figure 1.3, page 7). formation for the next cycle. July—September October—February Figure 2.2 8
  11. 11. The Ritz-Carlton Hotel Company, L.L.C. 1999 Application SummaryDeployment “DO” Activities that have been agreed upon are then tied into our financial planning and budget process. The specific actions by Senior Leaders to deploy theVital-Few Objectives are shown in Figure 2.2. Steps 5 - 7 October - FebruaryStep 1 July - September Step 5 occurs during our semi-annual General Man- agers meeting which sets in motion steps 6 and 7. Key Production processes are identified by three cri-teria: (1) work that ranks very important to customers (2) Step 8 On-Going Throughout the Yearwork that is rising in importance to customers and (3) workthat is poor in comparison to competitors. These processes Every day, in every work area, on every shift, a briefmust then be developed and deployed. This is done by line-up meeting is held. During these formative sessions, theprocess owners at the corporate level. For a discussion of Pyramid Concept is deployed, The Gold Standards are rein-these processes and how they are developed see Section 6, forced and good ideas are shared.Process Management. Step 9 AnnuallyStep 2 July - September Each year the Vice-President of Quality is responsi- Support processes are deployed to the support func- ble for evaluating and improving the Strategic Planningtions of the organization. These processes indirectly affect Process. Benchmarking other Baldrige recipients is used ex-our products and enable us to reach our Vital-Few Objectives. tensively for continuous improvement.These processes are also developed/deployed by corporateprocess owners at the corporate office. Results “Checks”Steps 3 - 4 July - September Monthly performance reviews of the the Strategic Plan are conducted by the upper managers at the corporate To bring out into the open the resources required to and hotel level. The framework of a typical review is shownreach our Vital-Few Objectives, we involve the Ladies and in Figure 2.3, which focuses on the pre-established perform-Gentlemen of The Ritz-Carlton. First, we communicate the ance indicators of the Vital-Few Objectives as well as keymeasures and targets of our Vital-Few Objectives to lower processes. This information allows us to easily make im-levels of the organization. The lower levels then identify the provements and benchmarking comparisons which are dis-deeds, that if done, will collectively meet the objectives. The cussed in Category 4.lower levels also “submit the bill” to perform these deeds. The quarterly performance reviews are Focus Indicators What’s Process translated into opportunities for improve- ment and innovation. These decisions are Reviewed Owner determined by process owners with assis- Employee • Key Survey Questions Actual versus • Human tance from the special organization of Direc- Pride & Joy • Turnover Plan / Trends Resource tors of Quality. Widespread understanding Director and involvement of findings and actions are Customer • Overall Customer Actual versus • Operations deployed to lower levels through: (1) the tra- Loyalty Satisfaction Plan / Foremost Director ditional hierarchy (2) process owners and • Customer Difficulties Competitor, • Quality teams and (3) Commitment to Quality Trends Director newsletters. Revpar / • Advance Bookings Actual versus • Marketing P&L • Market / Business Plan / Industry Director Another form of improvement is the evalu- Performance Trends • Finance ation of the Strategic Planning Process. The Director Vice-President of Quality is responsible for Key • Key Production and Actual versus • Functional developing, benchmarking and improving Processes Support Processes Plan / Trends Leaders this process. Figure 2.3 9
  12. 12. The Ritz-Carlton Hotel Company, L.L.C. 1999 Application Summary Customer and Market Focus A particularly noteworthy tool that we use is CLASS (an automated “memory system” that links returning guests At The Ritz-Carlton, customer and market focus to their preferences). The practice of remembering regular concentrates on the information needed for hotel develop- guests creates lasting relationships, which is a major compet- ment and operation explained in Section 6, Process Manage- itive advantage for us. The types of information stored in the ment. CLASS database are given in Figure 3.2 . Approach “Plan” In addition, we utilize other information technolo- gy: (1) DFS (2) Product Quality Indicators (PQI) and (3) Ser- The many needs and sources of this information (i.e. vice Quality Indicators (SQI), explained in the next Section, market research) are summarized in Figure 3.1. Information and Analysis. Needs and Sources of Market Research at The Ritz-Carlton Needs for Market / Brought Readily Available Must be created byCustomer Information to our Attention but Requires Analysis a Special StudyDetermination of Market • Alliances with TravelSegments Partners (Airlines, Credit Card Companies, Convention Bureaus, etc.)Identifying Potential • Sales and Marketing function • Same as aboveCustomers ranks potential and current customers by volume, geography and profitRelative Priorities of • “Automated Memory • Analysis of “CLASS” • Focus GroupsCustomers System” that links returning database • Customer Satisfaction guests to their preferences resultsDemand Forecast • Use of Information Technology • DFSIndividual Dissatisfaction of • Complaints, Claims, ClientCustomers Alerts, Feedback from the Salesforce, Summarized in the SQI/PQIWidespread Customer • Pareto analysis of the SQI and • Interviews withDissatisfaction PQI customersCompetitive Quality Status • Criteria, Rating and Awards • Ratings from Customers, Star • World-Class customer from Travel Industry Report, Salesforce reports and employee publications • Summary of above analysis satisfaction dataOpportunities for Improving • Pareto analysis to identify • Summary of above • Special psychologicalRevPAR through Quality major causes of customer studies to understand: dissatisfaction 1.What Customers mean, not what they say 2.How to appeal to the customer in the language they most understand Figure 3.1 10
  13. 13. The Ritz-Carlton Hotel Company, L.L.C. 1999 Application SummaryDeployment “DO” to remember returning guests and generate essential prefer- ence and schedule information to all concerned. In this way, The specific actions taken by our Sales and Market- the Ladies and Gentlemen of The Ritz-Carlton and our sup-ing Leaders to deploy our Market Research conclusions con- pliers understand what is “new or different” about each indi-sist of four major processes: (1) The 6 P’s Concept (2) Oper- vidual customer or event.ation of the CLASS database (3) Complaint ResolutionProcess and (4) Standard Performance Measurements. Standard MeasurementsThe Six P’s Concept The major components of our Sales and Marketing Performance Management System are shown in Figure 3.3. After we gain a full understanding of our market Since these measures both precede and lag the operation theysegments, customers and their relative priorities, we develop are both forward-looking and reaction based.and distribute, internally, a 6P’s Concept. The concept con-sists of: (1) Problem or need of the Customer (2) Product Subject Precede / Lag(what is it) (3) Promises (what it can do for the customer) (4) OperationsPersonal Advantage (what can the customer do because of it) Advance Bookings Precedes up to(5) Positioning (the benefit of it versus the competition) and several years(6) Price/Value (what customers must give up in time or Service Quality Indicators (SQI) Lags by One Daymoney to get it). These concepts lay the groundwork for measure The Gold Standardsprocess design. Revenue Per Available Room Lags by One Day (RevPAR) The 6P’s concept typically creates a vision of well- Customer Satisfaction Lags by 45 Daysbeing, which results from the purchase of Ritz-Carlton prod- Determinationucts – genuine care, comfort and prestige. By disseminating The P&L Statement Lags by 40 Daysthis information into the marketplace, we reinforce an aura ofcompetence. Figure 3.3Operation of the CLASS Database Results “Check” A major challenge faced by The Ritz-Carlton is to re- The effectiveness of our Customer and Marketmember each of its 800,000 plus customers. In response, a Focus is evaluated through reviews of our standard perform-special organization exists in each of our hotels called Guest ance measures daily, monthly and annually.Recognition. This special function uses the CLASS database Daily reviews at hotels consist of SQI and RevPAR by market segment and performance. • Likes/Dislikes • Previous Difficulties Monthly reviews at all levels consist of Advance • Family Interests Books, Customer Satisfaction, RevPAR by Market Segment • Personal Interests and the P&L Statement. • Preferred Credit Cards Knowledge of Individual Annual reviews at the corporate level are contained Customers, in our Strategic Planning Pre-Work, Macro Environment Stored in Analysis. CLASS Recency/ Lifetime Database Frequency of • Usage Improvement “Act” Use • Amount of The daily and monthly reviews identify performance • By Hotel Purchase gaps to be corrected. The extensive analysis of the Macro • All Hotels Environment Analysis drives confirmation or changes in mar- keting strategy, objectives and plans. Figure 3.2 11
  14. 14. The Ritz-Carlton Hotel Company, L.L.C. 1999 Application SummaryInformation and Analysis The PQI are our Product Quality Indicators, which consist of the 10 most serious defects that can occur in theApproach “Plan” development phase of a new Ritz-Carlton Hotel, listed in Fig- ure 4.4. Two basic types of measurements are used at TheRitz-Carlton: (1) organizational measurements for upper PQI Defectsmanagers at both the corporate and hotel levels and (2) oper- 1. Sub-Standard Management Contractational (i.e. process) measurements for planning, assessing 2. Missing / Wrong Conceptsand improving daily operations. A further distinction in our 3. Late Feasibility Studymeasurement is whether it provides information before, dur- 4. Wrong / Late Schematic Designing or after operations (Figure 4.1–4.3). 5. Detailed Design Changes 6. High-Risk Facility Suppliers Before Operations Measures 7. Late Construction Days 8. Missing / Inadequate Key Production and Subject Unit of Measure Use Support ProcessesMacro- Summaries of Annual Input for 9. Inadequate Pre-Sales ResultsEnvironment Performance, Senior Leaders to 10.Inadequate Caring Mindset of EmployeesAnalysis Money, Ratios, reset organizational Indexes and operational Figure 4.4 measures Since our customer requirements extend beyond theNew Hotel Defect Points Measures for functional to the sensory (which are difficult to measure), weDevelopment (i.e. PQI) Senior Leaders to rely on The Gold Standards to measure quality during opera- plan, assess and tions. Most of these measures are used by line level employ- improve each new ees. We can do this effectively since the workforce is select- hotel development ed, trained, certified, reinforced and rewarded through ourDaily Variable Production/Hours Plan daily Gold Standards, This qualifies them to design the appropri-Demand worked ratio operations and ate sensory measurements that allow them to assess their pricing work and take appropriate actions. Figure 4.1 The SQI are our Service Quality Indicators, which During Operations Measures consist of the 10 most serious defects that can occur during the regular operation of a Ritz-Carlton hotel. The serious- Subject Unit of Measure Use ness of each defect is weighted by a point value listed in Fig-The Gold Taste, Sight, Operational ure 4.5.Standards Smell, Sound, measures for the Touch individual SQI Defects Points Employee to Plan, 1. Missing Guest Preferences 10 Assess and 2. Unresolved Difficulties 50 Improve their Work 3. Inadequate Guestroom Housekeeping 1 Figure 4.2 4. Abandoned Reservation Calls 5 5. Guestroom Changes 5 After Operations Measures 6. Inoperable Guestroom Equipment 5 Subject Unit of Measure Use 7. Unready Guestroom 10Vital-Few Organizational Improve 8. Inappropriate Hotel Appearance 5Objectives Performance Organizational 9. Meeting Event Difficulties 5 Indicators, Money, Performance 10. Inadequate Food/Beverage 1 1–5 Scale, 11. Missing/Damaged Guest Property / 50 Percentages AccidentsKey Production Weighted Defect Improve Daily 12. Invoice Adjustment 3and Support Points (SQI) Operations Figure 4.5Processes Production/Hours The total number of occurrences is multiplied by the worked ratio weight, totaled and divided by the number of working days Revenue per Improve Pricing applicable to obtain an average daily point value. The aver- Available Room Policies age daily point value is disseminated to the workforce daily. Figure 4.3 12
  15. 15. The Ritz-Carlton Hotel Company, L.L.C. 1999 Application SummaryComparative Benchmarking process owners to each metric associated with key produc- tion and support processes. There are three types of comparative data at TheRitz-Carlton: (1) comparisons to industry and our foremost Since these process owners are heavily involved incompetitor (2) benchmarks outside our industry and (3) designing the architecture of the data and information thatbenchmarks inside our company. Since we began formal they review, rarely do they see a fact or figure presented in abenchmarking in the 1980’s, we have found this highly useful way they don’t it has pushed us over the years to even higher target levelsof performance and roadmaps to get there. Figure 4.6 details Results “Check”the sources of this data and the types of information that areanalyzed. Since we place such a strong emphasis on fact-based decision making, reliability of the data is critical. We rely onDeployment “DO” our highly trained Ladies and Gentlemen (including statisti- cally trained at all levels) to insure data and information reli- The specific actions taken by Senior Leaders to de- ability. At the corporate level, we assign individual processploy the information and analysis approach is based on the owners to assure data can withstand scrutiny and provideconcept of individual process owners. background information. We also retain third-party special- ists to provide independent reviews of information analysisIndividual Process Owners and processes. Our Senior Leaders and Hotel Guidance Teams have Improvement “Act”the high level organizational performance data they need be-cause we assign individual owners to each metric associated Whenever our process owners and consulting spe-with the Vital-Few Objectives. In addition, our Vice-Presi- cialists indicate a change of plan is needed, the plans aredent of Quality keeps our performance measurements current rewritten, rebudgeted and reapproved. Our Ladies and Gen-with business needs. tlemen, on a daily basis, identify and implement improve- ments in performance measurement as expected in our cul- Our Ladies and Gentlemen have the operational per- ture and facilitated through the training and performanceformance data they need daily because we assign individual management programs outlined in Category 5. Sources of Comparative Data Internal External Source Information Source Information RCHC Each Hotel’s measurements in the areas RCHC Ritz-Carlton Marketing and Finance Information, of employee satisfaction, customer Information, functions compare us against our Analysis System satisfaction, RevPAR and operational Analysis System competitors in the area of market and performance are compared business performance Process Operations, Human Resources, Baldrige Award Annually, the VP of Quality studies Champions Marketing and Finance leaders drive Winners comparative data and best practices best practices and processes both up and down the organization Regional VP These periodic meetings focus on review Kaznova World-class benchmarks Meeting of performance to plan Consultants New Hotel When Ritz-Carlton managers are Travel Industry Travel Publications, AAA, Mobil Criteria Start-Up assigned as trainers in a new hotel, they Criteria and to identify industry trends and learn and share best practices Publications performance Best Practice Any “new idea” implemented is shared Mayflower The VP of Human Resources compares us Sharing company-wide via E-mail. Results and Group to America’s most-admired companies Improvements are communicated in the (i.e. Fortune 500 and Baldrige winners) in daily Commitment to Quality newsletter the area of Employee Satisfaction Figure 4.6 13
  16. 16. The Ritz-Carlton Hotel Company, L.L.C. 1999 Application SummaryHuman Resource Focus Human Resource Approach Skilled and Empowered Work Force Our human resource approach is summarized in Fig- Operating with Pride and Joyure 5.1, which is the well-established model that underpins ➡ ➡and aligns our various human resource philosophies and pro-grams. Ritz-Carlton Work EnvironmentApproach “Plan” Ritz-Carlton Human Resources Fundamentals Our Senior Leaders decided to increase both themeaning and satisfaction our people derive from their work. • Quality Selection ProcessThis approach consists of three basic components: (1) our • OrientationLadies and Gentlemen know what they are supposed to do • Training Certification(2) they know how well they are doing and (3) they have the • Line-up and daily trainingauthority to make changes in the process under their authori- • Communicationty or their own personal conduct. • Personal and professional development • Work/life issue managementKnow What They are Supposed To Do • Job Enlargement • Career progression At Ritz-Carlton our Ladies and Gentlemen know • Performance measurementwhat they are supposed to: (1) learn and use The Gold Stan- • Legal compliancedards (2) master the procedures of their job (i.e. Training Cer- • Employee Rightstification) and (3) generate ideas to improve products, servic- • Issue Resolution Processes and processes. • Reward and RecognitionKnow How Well They Are Doing Figure 5.1 We keep our Ladies and Gentlemen informed on Our education and training is designed to keep indi-how well they are doing in many forms. They receive coach- viduals up to date with business needs. The Corporate Di-ing from managers and peers on individual tasks throughout rector of Training and Development and the Hotel Directorsthe day. of Training and Development have the responsibility to make sure that training stays current with business needs. To do Daily, they receive information from the SQI report. this, they work with Human Resource and Quality Execu-Finally, they receive semi-annual performance appraisals on tives who input organization and job performance training re-their general performance. quirements or revise existing ones. The flow of this process is shown in Figure 5.2. Key developmental training needsThe Authority to Make Changes are addressed through a core of courses that all employees re- ceive. The ability of our Ladies and Gentlemen to regulatehow work gets done is assured through Basic Standards set All employees (regardless of their level in the com-out in The Credo Card, “People have the right to be involved pany) receive the same mandatory two day orientationin the planning of the work that affects them”. process, which includes classroom type training on The Gold Standards and The GreenBook (page 16).Deployment “DO” As shown in Figure 5.2, we use input from employ- The specific actions taken to deploy our approach ees and their supervisors in determining educational needsrange across a broad spectrum, but most significant activities primarily via a review and analysis of our performance ap-consist of: (1) The Quality Selection process and (2) Employ- praisal documents. The Hotel Director of Training and De-ee Education, Training and Development. velopment and the Quality Trainers also receive and consider direct feedback from Ritz-Carlton personnel. Our President and COO started as a waiter’s appren- When training is designed, it is piloted and approved in atice in Europe, and many of our executives started as front fashion similar to the new product and service developmentline personnel in Ritz-Carlton Hotels and were promoted as process described in Category 3. Participants in the pilot pro-they rotated jobs. Therefore, training receives the highest at- vide direct, candid feedback to the designers and instructors.tention in our company. 14
  17. 17. The Ritz-Carlton Hotel Company, L.L.C. 1999 Application Summary The Ritz-Carlton Design of Courses Evaluate Student Confirm/Modify existing Corp Director of Training and Development Departmental Trainer Reaction/Needs processes/Facilities Evaluate Performance Develop/ImproveManagers/Training Director appraisals/training results Courses/Processes/Facilities Determine Organizational Vice-President, Quality Performance Excellence Co- Requirements developed Project with supplier Determine Organizational Outsource Vice President, Team of new Developmental Training equipment/ Human Resources Requirements Technology Figure 5.2 Although job induction training is classroom deliv- “themes” of each job. The graph also contains comparativeered by the Director of Training and Development and the data which consists of industry and Ritz-Carlton norms.General Manager, most training delivery is on-the-job. Thisconsists of: (1) daily line-up (2) self-study documents (3) de- Day 21velopmental assignments and (4) training certification. Mosttraining is evaluated through examinations, while other meth- 21 days after orientation, each orientation class re-ods include audits, performance reviews and appraisals. unites for a day of evaluation and debriefing. A similar ses- sion occurs on or near day 365. Approximately 80% of the training received byThe Ritz-Carlton Ladies and Gentlemen is from in-house Training Certificationsources which allows us to have direct control over themethod of training delivery and evaluation. Much like the Craft Concept, employees are subject to examination/audit at the end of their initial training period. To gain real-life developmental experiences, we Likewise, they must demonstrate mastery of the proceduresmake extensive use of developmental assignments in which of their job.people choose to expand their knowledge and experiencethrough requesting new assignments within and across hotels Evaluation of Performance Appraisalsand functions. Since most of our executives came up theranks this way, this is a widely accepted and expected process Annual Performance Appraisal information is eval-for people who would like to be promoted. uated to identify weaknesses in our approach to training and development.Results “Check” Analysis of Employee Surveys Results of the selection, training and developmentof our Ladies and Gentlemen are checked at key stages of We determine employee well-being, satisfaction andprogression: (1) Quality Selection Process Measurement (2) motivation from formal surveys designed, analyzed and com-Day 21/365 (3) Training Certification Review (4) Perfor- pared to world-class companies, via a consulting specialist.mance Appraisal Review Evaluation and (5) analysis of em- Our results are compared to outside world-class service com-ployee surveys. panies and The Mayflower Group. Impartiality of survey analysis and recommendations is assured by independent andQuality Selection Process - QSP objective design analysis and presentations. We measure the desirable, spontaneous behavior Improve “Act”(i.e. Talent+) of potential employees at all levels and cate-gories through our QSP. Certified interviewers measure the Improvement activities in Human Resources rely ex-responses to a structured interview. These measurements are tensively on internal audits, site visits by Senior Human Re-then arranged in a performance graph of the necessary sources Leaders and analysis of employee survey data. 15
  18. 18. The Ritz-Carlton Hotel Company, L.L.C. 1999 Application SummaryProcess Management We are a process-focused organization with many Ladies and Gentlemen. The Nine-Step Quality Improvementstandard procedures. Our Senior Leaders realize that Process is featured in this handbook to guide the design, con-processes must be thoroughly planned so we can give our trol and improvement of all processes. This process is em-Ladies and Gentlemen the means to meet standards, create a phasized during new employee education, training and devel-market and thereby generate our company’s income efficient- opment and is ingrained in our process-oriented Develop/Deploy Processes for New HotelsApproach “Plan” The design of key production and support processes Through our market research which concentrates on is modified for each new hotel based on: (1) market researchthe quality of hotel development and operations, we have (2) facility design and (3) operating conditions. Theseidentified key production processes. In addition, we have process changes address quality, learnings from past hotels,conducted formal discussions between: (1) support and oper- cost control and general effectiveness and efficiency. Theseations employees and (2) internal and external customers to processes are transferred to our Ladies and Gentlemen dur-identify administrative and support processes which impact ing our pre-opening countdown process.our hotel products and our company’s mission. Results “Check”Deployment “DO” Although we must control many sensory character- The specific actions taken to deploy our annual istics of the products we produce, we try to “put it in num-process management approach flow from our strategic plan- bers” in our system of process measurements.ning process to every job level and category in our company. Improvement “Act”Incorporate Changing Customer/Market Requirements Standing cross-functional teams at all levels use “After Operations Measures” and customer survey inputs to During the annual strategic planning process, we in- improve key processes. These improvements can come incorporate changing customer/market requirements into pro- two ways: (1) major changes that require funding, resourcesduction and support processes. This assists in prioritizing and project management and/or (2) incremental day-to-dayour processes. improvements. While both types follow the Nine-Step Q.I.P., meeting event by meeting event improvement involves jobAssigning Process Owners shape theories found in the GreenBook. Each production and support process is assigned an Improvements are institutionalized in two main“executive owner” at the corporate office and a “working ways: (1) the traditional hierarchy and (2) executive processowner” at the hotel level. These owners are responsible for owners.the development/improvement of these processes. They haveauthority in defining the measurements and determining the In either case, we use our process to overcome cul-resources needed to manage these processes. They involve tural resistance to change. This process consists of four fac-all concerned in determining what must be done differently tors: (1) stressing the importance of the change (2) express-to reach our objectives. ing confidence the change can be made (3) providing a rea- son why people should make the change as a group and (4)The GreenBook allowing time for people to find an accommodation to the change. We use the logic, processes and tools of managingfor quality, set out in our GreenBook, a handbook for our 16
  19. 19. The Ritz-Carlton Hotel Company, L.L.C. 1999 Application SummaryBusiness Results 7.1 Customer Focused Results Individual Customer Satisfaction The following results, items reviewed in Category 1,emanate from our strategy and customer focus Categories 2 Meeting Planner Satisfactionand 3. They are included in our measurement and analysis % Extremely Satisfied 90%Category 4, and executed through our human resource and 80%process management Categories 5 and 6. All of our Customerand Employee Satisfaction data comparisons are: (1) statisti- 70%cally significantly different from the competition at the 95% 60%confidence level (2) administered and produced by well- 50%known objective and independent outside third-party researchsources and (3) analyzed against world-class/world-best and 40%Baldrige-winning companies by our performance excellence 30%supplier/partner and benchmark source. 1997 1997 1998 1998 Ritz-Carlton Foremost Ritz-Carlton Foremost Our Meeting Planner satisfaction is measured both Competitor Competitorinternally and externally. Externally, we use J. D. Power andAssociates to measure our customer satisfaction versus our Event Post-Event Overall Experienceforemost competitor. Figure 7.1a shows our level and trendsuperiority. These percentages represent extreme satisfac- Source: J.D. Power and Associates Figure 7.1ation. This Meeting Planner Study was not conducted in 1999;hence, there is no new data available. Our Individual Guest sat- Frequent Leisure Traveler 1999 Key Comparisons isfaction is also measured both Top 2 Boxes Top 2 Boxes Top Box Top Box internally and externally. Ex- RCHC Foremost RCHC Foremost ternally, we use Nationwide Competitor Competitor Surveys to measure our cus- tomer satisfaction versus ourOverall Satisfaction 91% 80% 70% 52% foremost competitor for fre-Cleanliness of Room & Facilities 90% 77% 64% 48% quent business and frequentAdequate Security 83% 64% 57% 38% leisure travelers. Figure 7.1bValue for the Money 42% 32% 19% 10% shows our level superiority inStaff Knowledgeable & Helpful 67% 54% 41% 28% 1999. Frequent Business Traveler 1999 Key Comparisons In the most comprehen- Top 2 Boxes Top 2 Boxes Top Box Top Box sive, objective and valid study RCHC Foremost RCHC Foremost to date, the Cornell School of Competitor Competitor Hotel Administration and McGill University undertook aOverall Satisfaction 91% 84% 68% 57% survey of 13,400 managers inQuality of Facilities from Location 85% 68% 62% 39% the lodging industry to identi-to Location fy “Best Practices” in the lodg-Quality of Services 88% 67% 61% 37% ing industry. The study namedHas Alert & Helpful The Ritz-Carlton as the overall 83% 62% 52% 34%Staff/Responsive to my Needs Best Practice Champion.Provides Excellent Business Class 70% 49% 43% 23%FloorsHas Very Clean & Well Maintained 96% 93% 74% 60%FacilitiesProvides Full Range of Busines 77% 58% 48% 26%ServicesSource: Nationwide Surveys Figure 7.1b 17