The Customer Confidential Podcast
Horst Schulze is famous as the visionary cofounder of Ritz-Carlton and founder of the Capella Hotel Group. They are two brands that set the bar for luxury service—a vision that Horst had from the start.
When Horst joined me on the podcast, I read him the vision statement of Capella, which says, “We are the global leader in the service business. Our accomplishments and meaningful contributions have a positive impact on society.” Horst wrote that statement before he had a single hotel. “Because that was the dream,” he says. “That was the purpose of our doing anything: to become the global leader.”
And, he says, “when we hire people, that’s what we tell them: Here’s where we want to be. Join us in that dream.”
Ask Horst why that matters and he’ll tell you that people need purpose—an idea, he notes, at least as old as Aristotle. “To be fulfilled in life, people need purpose and belonging. And that’s what I offered them when I offered them a job.”
Some might argue that many hotel workers come to work only for a paycheck and don’t have the luxury of worrying about purpose, but Horst won’t hear of it: “My goodness, we are talking about human beings here, we are not talking about machines.” In our conversation, he repeatedly emphasized that a sense of purpose, of the long-term vision for the organization, is critical to making sure employees deliver on the daily mission.
That’s why Horst went personally to the opening of every new hotel, to help orient employees and ask them to share in his purpose. He didn’t just picture a great customer experience; he articulated it from day one to ensure that, every day, every employee strived to make that statement a reality. The result was not only hotels that were legendary for their luxury, but employees who were legendary for their service. Horst tells the story of one employee at a Ritz-Carlton in Naples, Florida, who scrambled down from the top of a tall ladder to open the door for a guest returning from the beach with her arms full.
Horst’s approach is the subject of his new book, Excellence Wins, Every Time: A No-Nonsense Guide to Rejecting the Status Quo, and Reaching True Success.
In this excerpt, Horst explains how his hotels were able to keep employees much longer than most competitors, in large part by establishing daily huddles—and without breaking the bank.
Rob Markey: Getting people together for 10 minutes in the morning really means 15 minutes out of their workday. That's a quarter of an hour.
Horst Schulze: Multiply that by a thousand in a hotel.
Rob Markey: By thousands of people, their hourly wage, their work . . .
Horst Schulze: Don’t think I didn't hear that from the analysts, from the owners! Don't think I didn't hear that many times!
Rob Markey: So, some people are going to ask, “What's the return on investment of that time? Show me the dollars that I get out of that.” How do you answer that?
Horst Schulze: Well, I actually said, “This is teaching. So the decision is, either we teach our employees to be better, or we keep them stupid. What do you want?”
Rob Markey: So, you basically said, “Look, I'm not going to quantify this.”
Horst Schulze: I mean, it is pathetically ridiculous to question this. But mind you, I was asked that every day by the analysts. And I was shown how much it cost, etcetera, etcetera.
And I could have quantified it. Because our overall system—this is only one process—but the overall system lowered our employee turnover from an industry average of over 100% to 20%.
Rob Markey: Whoa.
Horst Schulze: Our employees didn't leave. Even though we didn't pay more! Because they felt like part of the organization.
Rob Markey: Wait, wait, wait. Say that again. Your employees basically achieved an average tenure of about five years, while most employees of hotels are there for about one on average . . . and you did not pay more?
Horst Schulze: We didn't pay more. No. But we created a sense of belonging. We created a sense of being part [of something], and connected them. We gave them purpose. There was an environment, there was a culture that they felt belonged to them, where they were respected.
Also, it was not just that one piece.
It was many pieces of creating a culture where people felt they had a little elbow room, where they could make some decisions. Where they actually belonged. They were aligned. I'm using that word on purpose because it is used so pathetically in many companies, “alignment.” But when you ask what is it that they are aligned to, nobody understands it.