Introduction and Bob Kharazmi (Global Officer, Worldwide Operations)

Introduction

Change is the
law of life. And those who look only to the past or present are certain to miss
the future.

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–John F. Kennedy

Many people think the quality improvement techniques used in
manufacturing cannot be applied to the service industry. In both industries
work is accomplished through systems transforming inputs (people, material and
processes) into outputs either product or service. Management
on a manufacturing industry might concentrate their quality improvement efforts
on materials and machines, whereas on a service industry they will spend more
of their quality improvement time on people.2

Objective

            The specific service aspects of the hotel intangibility
and perishability of the product, variability of delivery, simultaneous
production and consumption of the service, and the changing needs and
expectations of customers made it nearly impossible to apply quality
improvement principles from other industries. Until October 14, 1992, when
the Ritz-Carlton Hotel Company was named a winner of Malcolm
Baldrige National Quality Award, as the first hotel company to win this ultimate
prize.1

            Congress
created the award in 1987 to recognize quality achievements of U.S companies
and promote quality awareness. As a recognition of the late Secretary of
Commerce Malcolm Baldrige efforts in promoting Total Quality Management (TQM).2

            In
this case study, I will discuss: How Ritz-Carlton successfully implemented
TQM on the Hotel Industry?

 While winning the award is nice, the process
is the thing

–Shakespeare

The Contemporary Ritz-Carlton and Issues

            In
1898, the dream of Cesar Ritz the founder of The Ritz-Carlton Hotel came true
by opening the grand hotel that carries his name. Today, The Ritz-Carlton Hotel
Company is a management company that develops and operates luxury hotels across
the globe. The company operates 91 hotels and resorts worldwide in 30 countries
with 40,000 employees under the leadership of Herve Humler (President &
Chief Operations Officer) and Bob Kharazmi (Global Officer, Worldwide
Operations) wondering, how we provide memorable
experience for 100 percent of our customers?

How The Ritz-Carlton Hotel implemented TQM?

A number of
fundamental but complex principles and several key quality initiatives, many of
them descend from traditional TQM method, pave the way for The Ritz-Carlton Hotel to achieve its quality goals.

Start
at the Top

            Quality
management start with president and chief operations officer and the other
senior executives who must commit to quality and make quality number-one
priority. The senior executives meet weekly as senior management quality team
to review quality standards and performance, customer satisfaction and other
organizational indicators. They spend nearly one-fourth of their time talking
to as many employees and guests as possible to improve products and on quality
issues. Also, work at the hotel, teaching, coaching and testing the new
employees on The Ritz-Carlton “Gold Standards”, especially during the seven
days countdown prior to any new hotel opening.         

Screening and Selection

The hotel industry average turnover rate is 100%, compared
with The Ritz-Carlton’s annual rate is only 20%. Ritz-Carlton completely integrate human
resources and operations. The human
investment on The
Ritz-Carlton starts from screening and selection
process to ensure successful fit between the potential employee and job/organization
using Talent Plus tool (www.talentplus.com). The General Manager of the hotel
interview every candidate personally before the final decision to hire to send
a message to the candidate that management cares and would listen to all
employees.

  We are Ladies and Gentlemen serving Ladies and
Gentlemen.

–The Ritz-Carlton Motto

Ritz-Carlton Gold Standards

 After the selection, new
employees are veteran on the corporate culture through a two-day orientation, followed by extensive on-the-job training,
then the job certification. At The Ritz-Carlton Leadership Center Senior
leadership teaches the orientation classes, which sends a influential message
to employees. At the start of orientation classes, senior leaders thank the
employees for choosing to work at Ritz-Carlton. The company pays attention to
details, such as learning trainees’ preferred snack on the first day and having
those snacks offered the next day. They cultivate on them Ritz-Carlton Gold Standards, which include a credo,
motto, three steps of service, and 20 “Ritz-Carlton Basics”, which translate
the key product and service requirement of the travel consumer.

After 21 days when employees return for their third day of
orientation, they are asked about their experience with their learning coach.
Employees help to fine-tune processes by providing feedback on their
enculturation into the company. Also after 1 year from the hire, they come
again to hear an update on the company, receive their 1-year anniversary pin
and reenergize the Ritz-Carlton culture and philosophy, so they are
“psychologically rehired”. The daily line-up call is attended by top leadership
where Wow stories are shared to motivate staff; aspects of culture, mission and
credo are reviewed regularly, not just when something goes wrong.

Training

            All Ritz-Carlton
employees receive at least 126 hours of training on quality topics to be
“quality engineers” who can spot defects, correct them immediately, report them
to management and prevent them in the future. Any employee who receive a
customer complaint owns the compliant. When the guest asks for direction, the
employee, whether it’s the CEO or a staff member, escorts the guest to the
destination rather than pointing out directions to another area of the hotel.

Appraisal and Promotion

            The Ritz-Carlton
annual performance-appraisal and promotion systems in all levels is based on
the things that employees learned during their orientation and quality
trainings. Meaning, their annual raises are linked to evaluations of the employees’
quality of performance and contribution to continuous improvement, so the
performance appraisals became a recertification of quality. Companywide, 25% of
The Ritz-Carlton managerial staff began their careers as hourly employees, such
as dishwasher, housekeeper and restaurant server.

Teamwork

               The Ritz-Carlton used screening and predictive methods to make sure
the hired personal is suited to teamwork. Employees meet as teams to spot problem
patterns, prioritize problems, and develop measures to prevent their
recurrence. The hotel is also focusing on building the relationship among the
teams to achieve better results. To recognize and rewards teamwork, the company
allocated bonus pools to be shared with members of work teams when solutions
they recommended to quality-related problems are successfully implemented.

Empower

               The Ritz-Carlton empowers its employees by giving them the
responsibility for satisfy guests’ needs. If a service problem arises or if a
customer has a complaint need or, employees must stop what they are doing and
do whatever it takes to provide immediate positive action rather than having
the director of marketing fix it later, each individual employee can spend
$2,000 to satisfy a guest. The Ritz-Carlton believe in the 1-10-100 rule: What
cost you $1 to fix today will cost $10 to fix tomorrow and $100 to fix
downstream.

Suppliers

            The Ritz-Carlton only want to deal with suppliers
that are capable of continuous improvement. The company developed supplier
certification program, through which they ask potential suppliers to conduct
self-assessments of their quality efforts, to see which vendors are best able
to meet their quality needs and can be a fully integrated partner. They choose
suppliers based on their quality standards not just on their price tag.

 

 

Quality
Data

            The Ritz-Carlton precisely analyses the daily quality reports on
every aspect of the guest’s stay to determine if the hotels are meeting customers’
expectations. Among the data gathers ranges from percentage of check-ins with
no queuing to time to service an occupied guest room. The reports work as key
performance indicators (KPI) for detecting problems that can hinder progress
toward meeting quality and customer-satisfaction goals. The hotel depends on
technology to keep comprehensive guest history profiles on the likes and
dislikes gathered by the employees to personalize the service during their next
visits. Also, its researchers survey more than 25,000 guests each year to find
ways to improve delivery of its service.

Recommendations
and Conclusion

               Despite
of the specific
service specification of hotel industry which made it nearly impossible to
apply quality improvement principles from other industries. The Ritz-Carlton
Hotel achieved its quality goals using a number of fundamental but complex
principles and several key quality initiatives, many of them descend from
traditional TQM method. While, others concentrate their
quality improvement efforts on materials and machines, The Ritz-Carlton spent
more of their quality improvement time on people to provide memorable
experience for 100 percent of their customers.

   The education establishment needs to recognize that quality
is a whole new branch of knowledge, and it has to be taught to the students as
an entirely separate concept

–Patrick
Mene

 The Ritz-Carlton Director of Quality

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