My husband and I spent our honeymoon in France and we had the privilege to enjoy a wonderful lunch at the Ritz Hotel in Paris. Cesar Ritz was a passionate entrepreneur, with a single-minded vision: to have his hotels be the very definition of elegance and refinement. He wanted his hotel to be a place 'where a Prince would feel at home'.
Ritz built a prestigious global hotel business, which, after more than a century, still embraces the core values established by its founder. The word ‘Ritzy’ immediately brings to mind a certain kind of refined elegance, luxury and sophistication. If we’re ‘putting on the Ritz’, we’re dressing in our finest attire to celebrate in style.
Ritz understood his customers, who included royalty, the very rich and the very famous. By knowing his customers’ needs and desires, even when they weren’t articulated, Ritz kept his business strong. Of course, Ritz himself couldn't be there to see to the needs of every customer and he's no longer around to train them himself. So, how did Ritz ensure that every hotel that bore his name would live up to his rigorous standards? This is a similar question faced by boards in terms of policy, which is the mechanism by which strategy is operationalised within the organisation. From an asset management perspective, this principle is known as alignment and is one of the four fundamentals of asset management. How does the board articulate its vision in a way that ensures it will be embraced and enacted by every employee, from the boardroom to the workshop floor?
There's much debate in the governance world about the comparative merits of a rule-based approach versus a principles-based approach. Ritz shows that this is a false dichotomy. What you need for the most effective outcomes is a blend of the two. Rigorous processes and procedures to ensure that high standards are maintained, coupled with the flexibility of staff who are empowered to enact the vision by adapting their service to suit individual customer needs. Ritz employees are informally given a $2000 allowance to use at their discretion to solve customer complaints or issues.
To effectively implement this blended approach, training and communication are essential. Paul Hemp, who spent a week observing the inside workings of the Ritz, as a room-service waiter, reflected that you must do more than grant employees the freedom to do what is necessary; you must motivate employees to exercise that freedom. To achieve this, Ritz has a set of Gold Standards, which all employees are trained in. These are encapsulated on a small, laminated card that every employee is expected to carry at all times. Among these are 20 principles of customer service. Each day a 'line-up' is held at every Ritz establishment around the world, where managers provide a tutorial focused on one of these principles each day. This means that every 20 days the same principle is re-visited.
This concept is a bit similar to a pre-start meeting, or a tool-box talk. These often focus on safety. How many of them also focus on the company strategy, vision or purpose and how it will be lived on that day? The board is not there every day or involved in the frontline operations of the business. However, the board is responsible to ensure that the business has the systems and processes in place to meet its objectives. As a board member, you want to satisfy yourself that these systems are robust enough to achieve their intended outcomes. How is your board motivating the business to enact your vision?