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A Suite Life
By Sean Roth | Real Estate Editor
The white-gloved customer service synonymous with the Ritz-Carlton hotel brand can largely be attributed to one man: Horst Schulze. He launched the hotel brand in 1983 and grew it into one of the top national hotel chains in the world in service and quality.
Schulze's name, too, is now linked with modern theories of great customer service.
In 1992, the chain was awarded the Malcolm Baldrige National Quality Award, the first service-industry company and the only hotel chain to ever win the award; it won it again in 1999.
Schulze spoke March 7 at the inaugural lecture of the Linda Novey-White Memorial Lecture Series, sponsored by the University of South Florida School of Hotel & Restaurant Management from the Ritz-Carlton, Sarasota.
Prior to his speech, Schulze talked with the Review's Sean Roth about building value through exceptional customer service. Here are excerpts from the interview:
You talk in many of your speeches about how everything including customer service is related to the profit motive. Why?
I want to incorporate benevolent reasons, but I'm not in business for benevolent reasons.
In my opinion, if I am creating excellence in service utilizing empowered and participatory employees then I am serving the company, I'm doing the right thing for the employee, I'm doing the right thing for the customer and in fact, I'm doing the moral thing at the same time.
Any fool knows how to save cost, but it takes a professional to create value.
How important a component is salary in getting better customer service from employees?
Fair pay has to of course be there, but in fact every study ever taken has shown that it is not the driving force. The way that anyone leaves me - whether it's a dishwasher or a maid, they're not leaving me because they get money somewhere else that dramatically changes their lifestyle. But they leave me, or conversely they join me, because they don't have the right work environment. They're not respected. They're not part of the organization. They have no purpose. That is why people leave a job.
How do you empower a lower level employee in your organization, such as a maid or a bus boy?
When I was at Ritz-Carlton, I oriented all employees at all new hotels or take-over hotels. When we took over China, I went there to orient the employees as to who we are. I gave them our objectives and our motives. You cannot become part of a company unless you know what the company is.
You have to show them their successes. It is no use if you do it and nobody ever knows that you are doing it as the employee. What is the point of playing a great football game if there are no spectators?
Has our culture changed to point where customers expect the high level of service you are describing only in the upper end?
No. At the upper end, there may be a higher or more defined expectation of customer service, but the expectation is everywhere on the higher or lesser level.
If I go to a roadside inn, I don't expect the finishes and the room and everything to be like I would expect in a five-star hotel. I also don't expect quite the service, but I still expect the guy who checks me in to be nice to me. If he is especially nice, I am even more appreciative and will stop at the same roadside inn next time. Not because of the room, which could be next door, next door, next door. But I'm stopping there because of the service that I got because someone was nice to me.
Why don't more companies adopt this?
Well, they all adopt it in the advertising. But when you ask them 'What is your process to accomplish service?' There's nothing. Go to the businesses where the employees are called partners and associate and so on and then ask that so called partner, 'What's the objective of this company? What's the strategy of the company?' There's nothing.
In other words, we are creating some lies - titles to make people feel good. If they are associates or partners they should know their objective; they should know the belief system. They should know the strategy of the organization. There's no process of aligning the employees and consequently there is really no process to give service.
How has this translated into your employee turnover rate?
We have a 24% turnover rate. I guarantee I will bring it down to under 20%. Some hotels have more and some hotels will have less. But considerable less than the national average. Considerable savings. Considerable high customer satisfaction, because of that.
You have talked about how from 1992 to 2000, every year the Ritz improved, not only in customer and employee satisfaction, but also in profit. How did you accomplish that?
The moment when I lowered my turnover, the teaching that I am giving my employees sticks and the employee gives better service. That creates efficiency. When I have employees that understand, it eliminates defects. When I eliminate a defect, in that moment I am improving my product and lowering my cost.
Let's say I am making toast, and I've burned the toast. Now I am serving you toast that is slightly too dark. You are going to complain about it; I'm going to throw it away and make new toast. Now, how about making sure my toast is never burned. A) I save money; I don't throw it away. B) I increase my service to you. That's the way a business should be approached. With the quality approach, with processes that continually improve themselves.
Who were some of your mentors?
There were a lot of them, going all the way back to when I was a bus boy, my maitre d'. I went to hotel school once a week when I was 15. We were supposed to write an essay about our business. So I wrote down "We are ladies and gentlemen serving ladies and gentlemen" about him. That if we are excellent at what we are doing that we are respected by the customers just as much as we respect the customers. That we are not servants. I made that the motto for Ritz-Carlton.
I knew a dishwasher I consider a mentor. When he was off, it took two people to replace the guy. I said, "you work so hard. You work so clean." He never broke dishes. He said "Mr. Schulze, I am a professional. I'm a professional at what I am doing, and I'm not going to let anyone do it better than me." He impacted my life.
AT A GLANCE
Horst Schulze
Age: 67
Hotel history: Schulze has worked for a trio of major hotel chains: Hilton Hotels, Hyatt Hotels Corp. and the Ritz-Carlton Hotel Co. He has served in roles from hotel general manager to regional vice president to vice chairman of Ritz Carlton.
Awards: Schulze was named Corporate Hotelier Of The World by HOTELS Magazine in 1991; he received the Ishikawa Medal for "personal contributions" to the hotel industry in 1995; and he was given an honorary doctorate of business administration in hospitality management from Johnson & Wales University in 1999.
Current job: President and CEO of The West Paces Hotel Group.
Motto: "We are ladies and gentlemen serving ladies and gentlemen."
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