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.
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
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
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
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
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.