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J.W. Marriott, Jr. Outlines the Company’s Five-point Strategy to Attract and Retain Employees
Text of Speech:  Our Competitive Strength: Human Capital

DETROIT, Oct. 2, 2000 -  Marriott International, Inc. (NYSE: MAR - news) today outlined the company’s five-point strategy to attract and retain employees. As one of the largest lodging hospitality companies in the world, Marriott maintains a workforce of approximately 150,000 associates in 59 countries. The company expects to open at least 400 additional hotels over the next two to three years, creating more than 20,000 new jobs.

In a speech delivered to several hundred executives at the Detroit Economic Club, J.W. Marriott, Jr., chairman and chief executive officer of Marriott International, said, “With employment rates holding at record-high levels, recruiting and retaining employees is the greatest challenge facing American business today.”

Mr. Marriott added that while the company has one of the lowest turnover rates in the hospitality industry, the company’s competitive strength depends upon recruiting, developing and retaining high-quality associates. “We invest $100 million per year on training alone. It is a key part of our employment package, which is designed to attract and retain the best people. How we invest in and manage our human capital today will dictate our success tomorrow,” Mr. Marriott said.

“An employee searching for a job has just as many choices as a consumer shopping for a product or service. Just as our customers know that value transcends price, we must offer our employees value beyond just compensation.”

Mr. Marriott said the company’s “human capital strategy” focuses on five principles to generate even greater value for employees and the company. They include:

  1. Get it right the first time. Hire the right person for the right job. “Good managers identify, hire and wisely place top talent,” Mr. Marriott said.
  2. Money isn’t the only thing. “Money is just one component of value, and managers must offer the whole package: competitive compensation and a great workplace. Our research shows that while pay is a top concern in decisions to stay or leave, other factors combine to outweigh money—such as work-life balance, leadership quality, career development opportunities and work environment. The longer an employee is with us, the more important the non-monetary issues become,” Mr. Marriott said.
  3. Create a caring workplace. “Pay may keep people on the job, but it won’t motivate them to produce more value for the company or go the extra mile. In our industry, a genuinely warm, caring, empathetic workplace is a clear driver of the quality of our product.”
  4. Promote from within: “We give every associate the opportunity to advance as far as their abilities will take them. Not only does this help us build long-term leadership, it also enables us to perpetuate our culture, which provides our company with a sustainable competitive advantage.” Mr. Marriott noted that more than 50 percent of the company’s current managers have been promoted from within, adding, “Employees specifically cite the opportunity for advancement as a key factor in their decisions to stay with Marriott.”
  5. Build Your Brand: “Consumer branding enables us to make a sale to customers who have unlimited choices.Employment branding enables us to attract potential employees, who also have a wide range of choices,” said Mr. Marriott. “Today more than ever, employees seek out brands with strong reputations and high standards.”
Our Competitive Strength: Human Capital

Prepared Remarks By J.W. Marriott, Jr.
Chairman and Chief Executive Officer
Marriott International, Inc.
Detroit Economic Club - October 2, 2000

Finding and keeping employees has never been easy. But now, full employment has converged with a service and information economy—making recruitment and retention—the most pressing challenge—facing American business today.

But we can handle the problem if we offer value, which is the same strategy we use to attract and keep customers. A worker shopping for a job has just as many choices—and is just as conscious about value—as a consumer shopping for a product or service. Just as our customers know that value transcends price, now we must offer our employees value beyond just compensation.  Some may view the labor shortage as a passing problem, the consequence of a hot economy. But I am convinced the challenge of recruitment and retention of the best talent—will be with us for at least another 10-15 years.

Boom times come and go. Labor markets expand and contract. But more lasting forces are converging today to permanently elevate the premium on human capital. It is now the central ingredient of economic output. Workers’ minds and attitudes are as important to satisfied customers as materials and machines used to be.

And thus recruitment and retention are now indispensable skills across every industry, from hospitality to high-tech.

Nowhere is that more true—than in the hospitality industry. We don’t manufacture anything—our people and the service they give defines the competitiveness of our product.

For example:

Not long ago, a room service waiter at one of our hotels in the west delivered a dinner to a guest.  When he knocked on the door, he found the woman inside sobbing and distraught. He learned that her sister had just died of cancer.

On his own initiative, this associate went to the hotel gift shop, bought a sympathy card and had every member of the staff sign it.
Then he collected a dollar from every employee, bought her flowers, delivered them and said, “we just wanted you to know you’re not among strangers here.” 

That guest’s room may be our product, but our associate’s caring attitude is our value. We can’t measure it with statistics, and we can’t manufacture it. We can deliver that value only if we can attract, retain and inspire the best people—with what we call “The Spirit To Serve”.  And we must attract and retain them with a total value proposition, one that begins with a competitive wage but extends to the intangible factors—like outstanding leadership, career opportunities, a caring environment—these are among the key drivers of employee behavior.  For us, this is not a new proposition. For more than 70 years, we’ve lived by a simple motto. If we take care of our associates, they’ll take care of the guest. 

That isn’t just a sentiment. It’s a strategy—one all business must adopt to remain competitive in an environment where our most valuable resource—human capital—is scarce. We know, empirically as well as anecdotally, that retaining and strategically managing our human capital drives economic value for our company. 

Marriott has enjoyed some success in recruiting and retaining associates our turnover rate is one of the lowest in the hospitality industry. 
And, we’ve done it by offering our employees a total value proposition. Today, I thought I’d share 5 guiding principles, which have helped us. 
One - get it right the first time. 

The first step in retaining a good employee is hiring the right person. Just ask Annie Krusheski.  Annie cleans the ladies room in one of our larger properties. We’ve received quite a few letters praising both the cleanliness of the ladies’ room and her happy disposition. Annie even brings in flowers she grows in her garden to brighten the countertops. Why does she go the extra mile?  Because we hired the right person. Here’s what Annie told us: “Being able to help people is what I like most about my job. I also like to clean, so this is the perfect job for me.” As her story proves, if minds and attitudes are the materials and machines of today’s economy, then hiring the right person is just as important as designing the right products.  That may sound obvious, but in today’s labor market, it also requires discipline. For a manager desperate to fill a shift, hiring the first person in the door is very tempting.  But good managers identify, recruit, and place talent wisely - they decide what they need, and find it. 

We’d rather hire a person with “The Spirit To Serve” and train them to work in a hotel than take on someone who knows the hospitality business and try teaching them to enjoy serving our guests.  It’s very hard to teach people to smile. That’s why we hire friendly and train technical.  The idea is for every associate to be in a job they truly enjoy and to be able to relate to our customers. We can teach associates to use a computer. We can’t teach them to be caring and friendly. 

We hire kitchen personnel who love to cook, for example, and housekeepers—like Annie—who love to clean. We know that works both for delivering our service product—and for retaining our associates. 
Being selective costs money—but there’s also more to it. Which brings me to: 

Two - money is a big thing. But it’s not the only thing. 

In the 1980s, a new automobile reached North America from behind the Iron Curtain. It was called the Yugo, and its main attraction was price. About $3,000 each.  But the only way they caught on was as the butt of jokes. Remember the guy who told his mechanic, “I want a gas cap for my Yugo”? “Ok,” the mechanic replied, “that sounds like a fair trade.” 
Yugo was offering a lousy value proposition. The cars literally fell apart before your eyes. And the lesson was simple: price is just one component of value. No matter how good the price, the most cost-sensitive consumer won’t buy a bad product. 

What’s true for keeping customers is just as true for keeping employees. Money is just one component of value. And companies have to start offering the whole package: a good price and a good product—in other words, competitive compensation and a great workplace.  At Marriott, we recently completed groundbreaking employee research that will enable us to refine our value proposition for the new economy. In the course of developing it, we surveyed associates as precisely and exhaustively as we do our customers. 

Their top concern was indeed total compensation. But, intangible factors taken together like work-life balance, leadership quality, opportunity for advancement, work environment and training far outweighed money in their decisions to stay or leave. And, we found that the longer an associate is with us, pay matters less and these factors matter more.  From flexible schedules to tailored benefit packages and development opportunities we’ve built systems to address these non-monetary factors. 

A value proposition is about more than retaining associates. It’s about the value they, in turn, create for the customer. Which brings me to: 
Three - a caring workplace is a bottom-line issue. 

Let me tell you about Adam Cembroski. Adam is a dining room attendant at this hotel. A native of Poland, he’s been with us for ten years. 

All that time, though, his family has been in Poland, ineligible to emigrate because Adam wasn’t yet a U.S. citizen. Just last month, he became one. And Adam hopes his real family will be able to join him soon. Because, for ten years, Marriott has been Adam’s family. He states that a day at work is a day with my family, not away from it. 

If that seems like a small part of the value proposition to our associates, consider our value proposition to customers. When a guest arrives at one of our hotels, the odds are pretty good he’s been beat up by the airlines, is tired and lonely and wants to get some rest. Any hotel can offer him a bed. Marriott’s value proposition is genuine care, dependability and a sense of community.  That’s our value proposition to associates too. When they come to work, there’s no telling what problems they face at home. They can come here and feel safe, secure and welcome.  And that isn’t just about retention. It’s a bottom-line issue. 

Our research has found that committed associates are less likely to leave and that retaining hourly associates in particular has substantial impact on our bottom line. We also know that associate work commitment is one of the key drivers of guest satisfaction.  Top pay may keep people on the job, but that won’t necessarily motivate them to produce more value for the company, or go the extra mile. In our industry—a genuinely warm, caring, empathic workplace is a clear driver of the quality of our product. 

For us, that kind of work place is as old as the days when my father used to sit on the couch in the lobby of our first hotel and help associates with personal challenges by talking things through one problem at a time. 
My parents were caring people. But they were also business people. And they knew that if they took care of the associates, the associates would take care of the guest.  Today, Marriott, like most large companies, is too far-flung to solve everyone’s problems on the lobby couch. That’s why companies that depend on human capital must design a caring workplace.  And we do it by making our managers accountable for associate satisfaction ratings and for turnover rates. One of their basic strategies is to celebrate employees, keep them informed, and provide them with world class managers and great training. 

Everyday, the associates in each of our full service hotels participate in a 15-minute meeting.

These meetings occur in each department of every hotel. 

A key part of that daily meeting is reviewing one of our 20 basics of the day. Today’s basic is about respect. And at some point today more than 100,000 associates in more than 400 Marriott, Renaissance and Ritz Carlton hotels around the world will get out a little card which reads - Basic #1: “We practice teamwork and treat each other with the same respect we afford our family and our best guests”. Thousands of other associates of our other nine brands will do something similar.  Tomorrow, they will read and discuss the importance of genuine care and comfort of our guests.  The shift manager, who leads these meetings will also cover technical issues, discuss major customers, special events and VIPs at the property that day, and other issues. But we also give each associate an opportunity to raise their personal concerns. Most importantly, we take the time to celebrate everyone’s birthday and anniversaries. We call this the loyalty program, because it builds loyalty among our associates, and repeat business from our customers.  The end result is everyone feels they have a stake in making the hotel a success, and that explains an anecdote I recently read in Workforce Magazine. 

The author’s company held a leadership seminar at a Marriott hotel. About 90 minutes before it started, they realized they hadn’t arranged for the audiovisual equipment they needed. They were desperate to find a technical expert, but the only associate there was a lady from our wait staff.  “No problem,” she said. “It will be taken care of before you get back.” And sure enough, it was. 

This event wasn’t her specific responsibility or her area of expertise. But Marriott was her family.  And that explains her reply when the guests asked how a banquet server got involved with AV equipment. 

“These meeting rooms are my responsibility,” she replied, “and I make sure my customers have what they need.” 

Her attitude is a direct result of our team spirit. And that makes a caring, family atmosphere a real bottom-line issue. That’s why, during the 150,000 air miles I travel each year visiting our properties, one of the first things I look for is whether a manager knows associates by name, and vice versa. 

And speaking of managers… 

Four - promote from within. 

More than 50 percent of our current managers have been promoted from within. And we give every associate the opportunity to advance just as high and wide as their abilities will carry them.  Elevating veterans to positions of leadership helps us pass on the soul of our business—our corporate culture—from one generation to the next. 

But we’ve also found that promoting from within is a powerful tool for recruitment and retention.  Our associates cite their faith in opportunity for advancement as a key factor in their decisions to stay with us. 
And that means training and development is an important part of our value proposition to associates. 

We invest $100 million a year in training. It permeates every aspect of our business.  Training is not only a productivity tool, but it’s also a retention tool that adds value for our associates because they see it as a pathway to new career opportunities and advancement.  You may have noticed that so far, much of this strategy has dealt with retaining and motivating employees. Of course, much like keeping customers, that doesn’t do much good if you can’t get them in the door first. 

How can today’s companies do it? How else? The same way they attract customers. And that brings me to my final guiding principle. 

Five - build your brand. 

It’s no secret that in today’s world of high competition and instant communication, branding has taken on added importance. 

For companies, branding is the antidote to commoditization—the tidal wave that would otherwise level the value proposition and leave us competing on the basis of price alone. For our customers, branding is what allows a traveler to book a hotel he’s never seen in a province of China he’s never heard of. 

If branding enables a company to make the sale to a consumer who has unlimited choices, then why don’t companies use it to make the sale to potential employees also with unlimited choices. So we need to brand employment as well as products. 

In the service sector, we know that consumers today are buying not only products, they’re buying experiences. And that’s what workers are buying when they shop for a job.  Communicating the promise of a great work experience is what branding employment is about. 

It’s basically a value proposition—and that’s where I’d like to close today.  Since I last addressed this club, American industry has learned to make a great value proposition to consumers. Now we must learn to make it to current and potential employees too.  Our associates dreams must be fulfilled in the workplace, just as our customers dreams can be achieved in the marketplace. 

Full employment will force us toward this change, and it will endure across labor market swings.

That’s true whether your business is high-tech or hospitality.  A fundamental economic transformation is under way—one that values human capital not simply as a producer of economic output, but as an ingredient in it. At stake is our ability to convert the economy from materials and machines to minds and attitudes. And that makes our ability to attract and keep the right employees - today’s pressing economic challenge.  Thank you.

Marriott International, Inc. (NYSE: MAR - news) is a leading worldwide hospitality company with over 2,000 operating units in the United States and 58 other countries and territories. This press release contains “forward-looking statements” within the meaning of federal securities law, including statements concerning business strategies and their intended results and similar statements concerning anticipated future events and expectations that are not historical facts. 

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Contact:
Marriott International, Inc.
http://www.marriott.com

Also See Retaining Employees in Turbulent Times/ Dr. Marc Clark / Sept 1998 
EI-AH&MA / KPMG Study Finds Hotel Industry Turnover Rates Continue to Climb / May 1998 


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