Organizational culture: A Ritz-Carlton Experience

1.0 INTRODUCTION

1.1 CULTURE

Culture has become one of the main areas of discussion in an organisation but there is no agreement on appropriate definition of culture. Culture may be understood as ‘The way we do things around here’ or ‘the way we think about things around here’ (Williams et al., 1994). Culture comprise of at least four sub concepts: values, beliefs, norms and symbols (Jepperson and Swidler, 1994). Culture is a multi faceted concept and it is difficult to tell which components are most important for understanding organisation performance (Detert et al., 2003).

1.2 ORGANISATION CULTURE

‘The collection of traditions, values, policies, beliefs, and attitudes that constitute a pervasive context for everything we do and think in an organisation’ (Mclean and Marshall, 1993 cited in Mullins, 2002).

Organisations can have a culture if it has been a stable group for some period of time (Schein, 1988). Schein (1988) suggested three level of organisation culture: Artifacts, visible organisational structures and processes, Values, strategies, goals and philosophies and Underlying Assumptions, unconscious, taken for granted beliefs, habit of perception, thought and feeling. Reeves and Bednar (1994) said that the organisation culture can change people actions in the perception of all aspects of their work. It greatly influences their action and behaviours.

1.3 RITZ-CARLTON HOTEL

"We are Ladies and Gentlemen serving Ladies and Gentlemen."

Ritz-Carlton Hotel Company operates 5 star resorts and luxury hotels worldwide. The motto, credo, three steps of service, service values, the 6^th diamond and the employee promise (Gold Standards) are the foundations of Ritz-Carlton Hotel (Ritz-Carlton, n.d. a). What sets Ritz-Carlton apart is its service. They fully understand and are committed to the culture of service. Even in times of financial crisis, its service quality didn’t fall; it was recognized for its continuous excellence. In past several years, sales revenues have increased from $1.2 billion in 1998 to $3 billion in 2007 (Michelli, 2008).

2.0 HANDY AND HARRISON MODEL OF ORGANISATION CULTURE

Developing the ideas of Harrison, Handy illustrated power culture, role culture, task culture and person/support culture to be the four main types of organisation culture (Mullins, 2002).

Figure 2.1 The four Gods of Management (Handy, 1995)

2.1 THE CLUB OR POWER CULTURE

The symbol for Zeus is a spider web. The organisation following this culture has division of work based on function or products. In the figure 2.1, we can observe 2 lines, one radiating out from the centre and the other encircling the centre. The encircling lines are the lines of power and influence and they are weakened as they go farther from the centre (Handy, 1995). To meet the organisation goals and objective, power is used in form of rewards and punishments depending on whether one achieves those goals and objective or one doesn’t achieve them. The decision making is up to few key people who have got the power and the power culture has more faith in individuals (Handy, 1993).

Ritz-Carlton Hotel has hired leaders with determination and supportive line managers. Daily for every department, there is a line-up to talk about one of the twelve service value (Anon, n.d.). Weekly, President and Senior Executives meet to review measures of product and service quality. Ritz-Carlton approach to quality management is characterized by detailed planning (Jones et al., 2008). Once a month, the General Manager has informal meeting with some employees from different department to know what can be improved. The Ladies and Gentleman are recognized and rewarded for their outstanding customer service both financially and non-financially. A 5 star Award is awarded every quarter (Anon, n.d.). Hard working and committed ladies and gentleman receive day one benefits such as complimentary meals, post-eligibility benefits such as life insurance and addition benefits such as dental insurance (Ritz-Carlton, n.d. b).

2.2 THE ROLE CULTURE

Symbol used for Apollo is a Greek Temple. The pillars represent the function and division in a role organisation and these are joined managerially at the top to form the board or the management committee. The role, set of duties is fixed and here you do your job, neither more, nor less (Handy, 1995). Efficiency is meeting the target and the jobs are done effectively without deviating from the procedures. People working in the role culture are aware of their job description and management expectations (Harrison, 1987).

Ritz-Carlton Hotel has its standards and job descriptions. It begins training at the values and goal levels in order to instill the philosophy of service and dealing with customers (Donaldson and O'Toole, 2007). The behaviour towards the guest had been detailed and scripted. But now it has changed and one of their services basic is ‘When a guest has a problem . . . break away from your regular duties to address and resolve the issue’ (Grönfeldt and Strother, 2006).

2.3 THE TASK CULTURE

Symbol used for this type of culture is a net where the power lies in the interaction of the net. The problem is defined and the appropriate resources are allocated for the solution. Task culture is based on the continuous and successful solution of problem (Handy, 1995). This kind of culture utilizes the unifying power of the group, bringing together the right resources and people for a problem (Mullins, 2002). It is build around co-operative group of people without much hierarchy. In this kind of culture, instead of managers, they have the team leaders or coordinators (Handy, 1993).

Ritz-Carlton carefully selects only those candidates with appropriate caring attitude, one who has right attributes to do the job. There is a 2 day orientation to learn about the Ritz-Carlton culture which is followed by extensive on the job training (Jones et al., 2008).

The first and the most important duty of the employee are to address and resolve the customer problem. Employee can spend as much as $2000 without management approval to resolve the guest problem. This has helped employee feel valuable and lead to higher job satisfaction (McDonald, 2004; Grönfeldt and Strother, 2006). The executive team effectively communicates with the employees when any issue arises, whether small or big and they work together to solve them (Anon, n.d.).

2.4 THE EXISTENTIAL OR PERSON OR SUPPORT CULTURE

This type of culture suggests that if anyone is responsible for us and our world, it is ourselves. In the other three culture discussed above, the individuals are there to help organisation achieve its goals and are given something in return for that but in this culture type, the organisation exists to help individual achieve his purpose (Handy, 1995). The individuals are the central focus and the values and beliefs are about the people within the organisation.

The motto of the organisation is self explanatory about people being their greatest assets. From The credo, it can be derived that the organisation empower their employees, giving them respect, trusting them and wanting them to create pride and joy where they are working (Anon, 2004). When Simon C. Cooper took the job of president of Ritz-Carlton Hotel, his first priority was to reach out and personally thank with the ladies and gentleman who was washing the laundry, who delivered the room service and cleaned the guest room (Michelli, 2008). Now the employees are not told how to make the guest happy, but still they have been figuring out and have been able to deliver the highest customer service. Mark DeCocinis, Regional Vice President says that the priority is to take care of the employees, to trust and develop them and to provide a working environment in which they are happy (Anon, n.d.).

3.0 ADVANTAGES AND DISADVANTAGES

In situation where the service fails, organisation culture is the key to determine how their employees react (Grönfeldt and Strother, 2006). Setting and communicating clear goals that employees identify with, to foster organisation’s commitment, empowering the front line to solve immediate problems and rewarding employees for service excellence are the three main actions that enhance service recovery performance (Boshoff and Allen, 2000) and the Ritz-Carlton Hotel culture provides them. If the service recovery performance is high, there is feeling of being valuable and part of organisation, higher level of job satisfaction is created and the employees are less likely to leave the organisation (Grönfeldt and Strother, 2006). In luxury hotels the median non management turnover rate is 44%, but at Ritz-Carlton, it is 25% (McDonald, 2004).

Ritz-Carlton wanted to increase the customer satisfaction rate from 97% to 100%. This is a costly process and can reduce the profits. Some critics believe that Ritz-Carlton is not sensitive to its bottom line (Jones et al., 2008). This kind of organisation culture depends on the calibre of the leader, so the selection and succession is regarded as a critical variable and much time and effort should be spend on them. Employees working in this kind of organisation culture are reluctant to change and they respond to the changing environment by first ignoring the change. Also this kind or organisation culture is very expensive.

4.0 ORGANISATIONAL CHANGE

Organisation performance is affected by the culture, so it may be sometimes necessary to change the culture (Huczynski and Buchanan, 2001) but this should be managed and controlled (Hayes, 2007). But before doing so, the management should identify, analyze and develop the organisation’s capacity for change (Judge and Douglas, 2009). It is very difficult to change the culture of the company, for it may take years. There may be many challenges that Ritz-Carlton faced while doing so. It might have been hard for them to establish the need for urgency for the culture change. Lot of research needs to be done to find out why exactly is it necessary. The company might faced problem while forming change group to guide this change. With the existing motto, it might have been hard for them to create and communicate a clear vision for why the change was needed. Also when the company is large, it is very difficult to involve most of their staff that would be affected by the change. The staffs fear that they might have to do things that they have never done before or even lose jobs because of the culture change which is the most powerful restraining force. One of the main challenges that the company faced may be while removing policies and process that restrained the change (Kotter, 1995).

To maintain the new culture, Ritz-Carlton has empowered their employees. Now their behaviour towards the guests are not detailed and scripted. They have been setting and communicating the goal clearly and efficiently; there has been no communication gap. Ritz-Carlton has been able to trust their employees, develop them and provide them with better workplace so that they come to work with a smile and build the attitude for providing excellent customer service. They have been giving rewards and have provided training to new employees to foster an understanding of company culture. They have also given their other employees minimum of 130 hours of training every year (Anon, n.d.).

5.0 CONCLUSION

One of the variables that contributed to success of Ritz-Carlton Hotel is its culture. They have built the business focused on others. They have not been hiring people; they have been selecting ladies and gentleman with appropriate caring attitude. The employees have been enjoying the workplace created by this kind of culture where they are treated like the customers. The empowerment of the staff has not only made them do their job efficiently but also created a sense of belonging to the company. This is one of the other reasons why the median job turnover rate is 25% in Ritz-Carlton Hotel compared to other luxury hotel which has 44%. The leaders have been proven very effective communicating the core identity and culture. The management has not only given importance to the front line staffs, but they have also reached out and personally thanked the other employee behind the scene. The culture of the company has had a great impact on their business.

6.0 REFERENCES

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