The Ritz-Carlton

Angela CauthornNneka Eni

Heather KromerJessica Lovorn

Ryan Rothermel Peter Singer

Presentation Overview

• Company History• Business Model• Current State • 7 Day Countdown

– Learning Methods

• Summary & Group Recommendation• Ritz-Carlton Now• No Ordinary Boot Camp

– Learning Methods

Ritz-Carlton History

• Cesar Ritz– Shepherd in Switzerland– Moved to Paris and worked in some of the finest

hotels and restaurants– Opened first hotel in Paris, followed by London

(1898)

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Ritz-Carlton History

• 1927: Ritz-Carlton Hotel Company expanded to North America (Boston)

• 1983: Atlanta based Johnson Company bought North American rights to name

• 1997: Marriott International purchased Ritz-Carlton

• 2000: Ritz-Carlton primarily a management company operating 38 hotels and resorts across the globe

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Millennium Partners Overview

• New York based real estate development group

• High end luxury apartments– Height– Light– Views– Service

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What are the basic characteristics of the Ritz-Carlton business model?

Ritz-Carlton Business Model

• Focus on guests– Greet at airport with mimosas and discount

coupons on a silver tray– “Technology Butler”– Airport check-in concierge– Event planners the “vital few”

• 40% of annual sales income

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Ritz-Carlton Business Model

• Management Contracts– Real estate crash of the late 1980’s– Hotel owners gained leverage in management

contract negotiation process– Wanted more voice in how properties were

managed

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What is Ritz-Carlton selling?

Quality at Ritz-Carlton

• 2 Time Winner of Baldrige Award for Quality

• Total Quality Management– Continuous improvement– Programs designed to meet customer needs

• Service Quality Indicators– Guest Recognition

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Human Resources at Ritz-Carlton

“We respect our employees…You have to have a passion for people. If you have an accounting approach to human resources, then you’re bound to fail…A successful business is one that is capable of enlisting an employee not only for his muscles and his labor, but also for his brain, his heart, and his soul.”

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Human Resources at Ritz-Carlton

• 20% annual turnover rate– Industry average: 100%

• “Day 21” Event– Degree to which company lived up to promises

made to employees during orientation

• 25% of management began as hourly employees

• Extensive formal and informal training

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The Washington D.C. Hotel

• The complex was located in the Foggy Bottom Historic district of Washington D.C.

• For the first time the Ritz-Carlton was opening a hotel that was part of a multi-use facility

• The hotel was owned by Millennium Partners who had also signed contracts with The Four Seasons, the Ritz-Carlton's largest competitor

Washington D.C.

The “Hospitality Complex”

• The complex covered 2.5 acres• It included 162 luxury condominiums• A 100,000 square foot sports club• Splash spa• Three restaurants• 40,000 square feet of street level restaurants

and retail shops• And the 300 room hotel

Washington D.C.

Hotel Opening Process

The process was divided into three sections• The Property• Market Customization • Staffing

Washington D.C.

The Property

• Many decisions have to be made regarding the site of a new Ritz-Carlton hotel

• The new D.C. location was desirable because of its proximity to may sites of interest such as the White House, Capitol Hill, Embassy Row and the Foggy Bottom Historic district

• Washington D.C. also attracted foreign diplomats and other potentially strong clientele

Washington D.C.

Market Customization

• The Ritz-Carlton had to customize each hotel to meet the local market demand

• In recognition of the fact that most of the potential customers were internet savvy, the hotel planned to link restaurant services to the internet– Hotel guests and condominium residents could

order food online

Washington D.C.

Market Customization

• They also decided to break away from the company’s historic English tradition– The Ritz-Carlton recognized that old English

tradition did not work well in the new millennium; especially since their main competitor was The Four Seasons

Washington D.C.

Staff Selection

• Millennium Partners had the right to approve the individuals nominated by the Ritz-Carlton for the executive positions– The General Manager, the Director of Marketing

and the Controller– These executive members then selected their

function managers who in turn were responsible for hiring line-staff members

Washington D.C.

Methods of Staff Selection

• Personnel recruitment- James McBride dined at the competitors and distributed cards with job application information to exceptional servers

• Ritz Carlton Job fair- Two-day event for job applicants, where they were treated to the service oriented culture that made the Ritz famous

Washington D.C.

Seven Day Countdown

• This was the new employees first encounter with the hotel, that started exactly seven days before the grand opening of the hotel– The first 2 days were devoted to orienting

employees to the company culture and values– The next five days were devoted to more skills

training and trial runs of service delivery

Washington D.C.

Day One: Staff Orientation

• Big Pep Rally– Enthusiasm around the Ritz-Carlton culture

• Schultz addresses new employees– Audiovisual Training Method– Lecture Training Method

• Service Philosophy– Gold Standards

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Day One: Leadership Orientation

• Leadership Orientation– Different approach from staff orientation

• Focus on the bottom line

– Modified version of team leader training

“The business is created for one reason – to make money. This is your role.”

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Lecture Method

• One way communication from trainer to the trainee through spoken words

• Least expensive training method• Best used for getting large amount of

information in a well thought-out manner

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Audiovisual Instruction

• Overhead, slides, and video in conjunction with lecture

• Multiple advantages for trainers:– Ability to go back or skip forward in lesson– Can be watched as many times as needed– Exposure to real life situations that are difficult to

replicate– Consistent instruction– Allows for review

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Team Leader Training

• Team Leader Training– Strategy within team training– Refers to the training that the team manager or

facilitator receives• Involves preparing the leader to resolve conflict or help

the team coordinate its activities

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Day Two: Departmental Vision

• Department Meetings– Group icebreakers

• Self-directed learning

“There is only one way of teaching – self teaching. Think, when you’ve left, where are you in creating a fine memory …?”

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Self-Directed Learning

• Employee has total responsibility to learn all objectives – Determines when, where, and at what rate

learning will take place– Biggest drawback is employee must be motivated

to learn material on their own

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Days 3 – 7: Skills Training• For next five days the hotel’s leadership team,

trainers, and managers met each morning at 6am to review previous days training activities

• All employees attended a session on the anticipation and handling of guest requests

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Days 3 – 7: Skills Training• Each department continued to formulate and

refine its own philosophy and statement of goals

• Everyone received “life safety” instruction, was treated to wine tasting, and enjoyed product show which allowed each employee to learn more about the materials that would provide comforts to its guests

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Days 3 – 7: Skills Training

• Instant guest pacification was a Ritz-Carlton basic skill

• Day 4 all new employees were instructed in the standardized procedure for “handling guest difficulties”– They were taught to break away from their standard

duties to solve a customers problems

• Each problem was documented on a Guest Incident Action Form

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Last 3 Days

• Departmental technical training occurred– Learn details involved in performing their jobs to

standards

• Everyone was expected to master their department's key production processes

• Every employee practiced their job as if they were serving real customers (role play) examples: check-in, servers, etc.

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Role Play

• For role plays to be effective, trainers need to engage in several activities before, during, and after the role play.

• Before the Role Play: – It is critical to explain the purpose of the activity

to the trainees • Increases the chance that they will find the activity

meaningful and be motivated to learn– A sample role play helps explain to the trainee

how the role play works

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Role Play

• During the Role Play:– The trainer needs to monitor the time, degree of

intensity, and focus of the group’s attention– The more meaningful the exercise is to

participants the less trouble the trainer should have with focus and intensity

• After the Role Play:– Debriefing is critical

• Helps trainees understand the experience and discuss their insights with each other

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Role Play at Ritz-Carlton

• Members of the corporate steering committee observed the trial runs or role playing – They looked for flaws and then passed these

observations on to trainers who then provided additional training

– Schulze would even step in and help a struggling employee. He would show them exactly how it was supposed to be done. (Behavior Modeling).

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Behavior Modeling• Presents trainees with a model who

demonstrates key behaviors to replicate and provides trainees with the opportunity to practice key behaviors– Key Behavior is one of a set of behaviors that are

necessary to complete a task• Is based on the principles of social learning

theory (Ch4) which emphasize that learning occurs by:– Observation of behaviors demonstrated by a

model and– Vicarious reinforcement

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Behavior Modeling• Vicarious Reinforcement occurs when a

trainee sees a model being reinforced for using certain behaviors

• Research suggests that behavior modeling is one of the most effective techniques for teaching interpersonal skills

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First Month of Operations

• Plans were to open hotel with 50% occupancy• Monthly occupancy will increase each month

to 80% in 3 to 4 months• Hired in beginning as they have 80%

occupancy• October 11, 2000 the Ritz-Carlton Hotel

opened for business

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Seven Day Countdown

• Summary– Day One: Staff Orientation– Day Two: Department Vision Sessions– Days Three – Seven: Skills Training

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Seven Day Countdown

• Pros to the Seven Day Countdown

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Seven Day Countdown

• Pros to the Seven Day Countdown– Employee morale

• Protection from feeling overwhelmed

– Flawless Execution• Focus on quality (not quantity) from the very beginning

– Offsets expected (minor) turnover at opening

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Seven Day Countdown

• Cons to the Seven Day Countdown

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Seven Day Countdown

• Cons to the Seven Day Countdown– Loss of profit

• Opening at 50% occupancy

– Employees have over a month between hire and first day

• May lose quality hires that cannot go without pay

– Time sensitive (Adult Learning Theory)

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Should McBride lengthen the Seven Day Countdown?

What impact to the HR Strategy would lengthening the Seven Day Countdown have, if any?

Should Ritz-Carlton allow Millennium to direct its management practices?

Ritz-Carlton Now

The Ritz-Carlton Hotel Company, L.L.C. wins number one ranking in Training Magazine’s “Training Top 125” 2007 Survey.

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McBride Now

• Since January 2006-- Regional Vice President for Rosewood Hotels and Resorts • Since December 2003--Managing Director of The Carlyle• Joined The Carlyle from The Grosvenor House

in London where, as General Manager, he was recruited to reposition this landmark hotel after an extensive renovation

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Collins Now

• Brian Collins Named President at Intrawest, Reporting to Recently Named CEO Bill Jensen – VANCOUVER, June 3, 2008

• Between Millennium Partners and Intrawest he was the Principal and Founder of Colgate Development LLC

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Ritz-Carlton Now

• The Ritz-Carlton, Washington, D.C. Wows Guests with Multi-Million Dollar Renovation

“Washington is experiencing a renaissance of sorts right now, with a revived cultural and dining scene. It’s not just the city of monuments anymore, and guests want to experience this dynamic city in style.” said Nicholson. “Re-imagingthe Ritz-Carlton, Washington D.C. to fit this exciting time was a wonderful experience for me.”

• The $12 million dollar enhancements include:– Anew signature restaurant, – Westend Bistro by Eric Ripert; – An enhanced Lobby Café & Bar and Club Lounge; – Improvements to all meeting rooms and 300 guestrooms and suites.

• The project which began in November 2007 was completed ahead of schedule in September 2008

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Bringing it Together

• Training methods used in the Ritz-Carlton case– Lecture– Audiovisual techniques– Hands on Methods

• Self-Directed Learning

– Role Play– Behavior Modeling

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Bringing it Together

• Training methods not seen in the case– Business Games– Case Study– Simulation– Hands on Training

• On the Job Training

• What about group training methods?

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Corporate Boot Camps

• Corporate boot camps designed to push new hires to their limits, with two goals:– Preparedness– Bonding

Trilogy

• Trilogy founded in 1989 (Austin, TX)– Configuration software

• Allows salesperson to transfer a customer’s needs into computer specifications, producing an accurate price quote.

• Company clients include large names such as HP

−Rapid growth called for additional talent, and a way to orient the hires to Trilogy

“You’re going to be the future of Trilogy – the company is relying on you – and everybody’s waiting on you.”

– Joe Liemandt, CEO

Trilogy University

• Three month program:– Month One:

• Assigned to section and track, functional learning and assignments

– Month Two:• Project Month. Develop an idea, and the business

model for it. Build the product and develop the marketing plan

– Month Three: • Graduation projects, assignments within business units

Training Methods - Groups

• Group Building Methods– Designed to improve team or group effectiveness

• Experiential Learning• Action Learning

Trilogy University

• Month One– “Section” is a new hire’s social group for duration– Assignments mimic customer engagements

• Experiential Learning

Experiential Learning

• Four stages– Gain Conceptual Knowledge and Theory

• Functional learning– Take part in a behavioral simulation

• Assignments– Analyze the activity

• Employees discuss with section and section leader– Connect the theory and activity with on the job or

real-life situations• Often part of month one assignments

Trilogy University

• Month Two– Project month

• Small teams develop a product, its business model, a prototype and a marketing strategy

– Action learning: actual problem solved and action plan developed

– 15% of projects survive past “project month”

Action Learning

• Used to solve important problems, develop leaders, quickly build high performance teams, and transform organizational culture.

Action Learning

• Steps in Action Learning– Identify sponsors (CEO)– Identify problem or issue (New product needed)– Identify group to address problem (TU employees)– Identify coaches (Section Leaders)– Present problem to the group (Month two)– Group discussion – Data gathering– Group Presentation– Self-reflection and de-briefing

Trilogy University

• Month Three:−Graduation projects or continuation of TU

projects−Graduation process

• Meeting with TU’er, new manager, section leader• Begin full assimilation into the organization

Other Group Training Methods

• Group training methods– Adventure Learning– Team learning

• Coordination Training• Cross-training• Team leader training

Adventure Learning

• Focuses on the development of teamwork and leadership skills through structured activities– Best suited for development of self-awareness,

risk taking, problem solving and conflict management

– Examples:• Trust falls• Low ropes course

- Must consider company risk and effectiveness of training

Team Training

• Utilized to train and prepare those working in a team (NASCAR, military)

• Four elements– Tools– Methods– Strategies

• Coordination Training – practice other skills• Cross-training – how to share information• Team leader training – how to lead / facilitate

- Objectives

TU Outcomes

• Product Pipeline− The idea to sell cars on the internet was developed at

Trilogy University in 1997; now Trilogy has a global alliance with Ford

• Leader Development− Trilogy’s section leaders are actually top performers at

Trilogy − The university is grounds to develop these performers

in to top-notch leaders

• Strategy − Leader’s have a “teachable point of view” (TPOV),

which is constantly tested

TU Outcomes

• Organizational Transformation− Trilogy sees its new hires as the best chance to

change the company− Trilogy University was developed as a way to keep the

company moving forward

• Virtuous Training Cycle− New hires are learning from the leaders in the

organization and the leaders are learning from the new hires

Summary

• Ritz-Carlton in Washington D.C.− Training Overview− Ritz-Carlton utilizes several training methods to train

their ladies and gentleman

• No Ordinary Boot Camp− New brand of “orientation”− Group training and action learning a key focus