Submission date: 9 Feb 2011

Human Resource Management Case 2: Ritz-Carlton

Mariana Dimcheva Jorinde Timmerman Immanuel Klein Willem Kistemaker Bernhard Keller Aurelien Lina

326845 320520 322251 319856 319678 321018

This paper provides answers to the questions linked to the Ritz-Carlton case. Due to the page limit, we will not explicitly emphasize each single question but rather provide one coherent text. In short, the case is about the challenges which the successful general manager James McBride faces while opening a hotel owned by Millennium Partners in Washington D.C. as part of an enormous multi-use facility. Ritz-Carltons service is twofold. On one hand, it manages hotels for companies such as Millennium Partners. On the other hand, it provides a very unique service to its customers1: serving the high-end market, Ritz-Carlton offers its customers a perfect stay in each and every one of its hotels. Outstanding personalized service to every single guest is of key importance. Ritz-Carltons service to the customer develops with time, e.g. in Kuala Lumpur a Technology Butler was introduced helping customers 24 hours a day in case they experienced technical difficulties. Ritz-Carlton has a distinct HRM policy. Its motto is that employees are service professionals, Ladies and Gentleman serving Ladies and Gentleman. Respect and dignity are key values. In order to optimally prepare for the job, every new employee follows the Seven Day Countdown. The first two days are used to get the new employee acquainted with the organizational culture and values. Staff orientation and getting to know the department are emphasized. The remaining five days, the new employee enjoys skills-specific training which is very much focused on the future set of tasks which the person will be performing. Although a standardized process over the last decades, the success of the Seven Day Countdown is questioned by Brian Collins. As a Millenium Partner and owner of the property, its concerns on lengthening the current seven days of training should be taken seriously. The partner should however be notified with the following history. The Seven-day countdown has proven to be efficient in the last decades. The program has extensively been developed and standardized to a success method. Substantiation for the winning-formula can be found in the eighteen awards won by the Ritz-Carlton (RC) over the past. In addition, the service level of the hotel group has been rated as one of the best; only open to competition with one other group namely the Four Seasons. It is however a validated perspective to argue that as the Seven approach has been adapted to this standardized formula, it could be kept on being evaluated to a new modernized concept in
Note: Ritz-Carltons predominant target customer groups are 1) independent travelers and 2) meeting event planners
1

order to keep up with the competition, as seen with the recent re-organization in art undertaken by the RC group. No matter what modifications undertaken however, the focus must lay on the satisfaction of the customers. With a 5% dissatisfied clientele the group misses currently out on $300 million additional fees. With an extended week, the focus will lay more on the creation of good values within the firm, creating an even better serviceoriented team of staff members. The center of attention should also lie on implementing the Service Quality Indicators further in to the team members. However, the negative aspects of a prolonged week should be evaluated upon regarding the difference between 50% of rented rooms or 75%. The evaluation should concern increased organizational values in contrast to learning skills in practice. When considering any financial implications for the extension of job training, there are two types of implications one should take into account. Firstly there are the costs associated with extending the job training. The second type of implication one should look at involves any potential gains to be earned by the company if the employee training program were to be extended. Judging by exhibit 13, the costs of job training are fairly insignificant compared to the total costs. Job training activities are said to cost $75.000, whereas the total costs of the project amount to $3.500.000. Because there are a lot of costs which have been covered in days 1 through 7 which will not come up again, such as the costs of the pep rally, extending the final part of the training (the skills training) by a few more days should not cost a lot. These costs may even be potentially offset by the gains which can be obtained from a longer training program, such as reaching the 80% occupation mark faster (which can be significant on the bottom line as Ritz-Carlton operates in a premium industry) and retaining customers by having them exposed to better trained employees.