Page 155 - The New Gold Standard

Build a Business Focused on Others
The ongoing nature of the customer engagement assessment
allows Ritz-Carlton leadership to monitor and intervene when
necessary with specific hotels. John Timmerman explains how
variable performance in guest engagement relates to the way ho-
tels are classified: “In our organization, we have hotels that have a
lot of fully engaged customers, and we have hotels that have less
fully engaged customers. In the past, we would set performance
targets by asking individual hotels to set a goal. If the hotel was,
let’s say, at 50 percent full customer engagement, we would have
probably challenged them to show a minimal 10 percent im-
provement. But what happens if a hotel is at 60 percent full cus-
tomer engagement? Should we ask them to stay the same or
demonstrate a 1 percent or 10 percent improvement in order to
be rewarded? The problem with that process was that percentage
numbers are relevant only if you can establish at what threshold
the numbers reflect that customers are getting the world-class
service they deserve from Ritz-Carlton.”
Ritz-Carlton proceeded to task Gallup to create a threshold
number that reflected the point where each hotel was certain it
was delivering on the company’s brand promise. To do this, they
used Ritz-Carlton’s internal performance data, supplemented
with external benchmarks taken from companies like Lexus and
Tiffany. Ken Rehmann, executive vice president of operations,
comments, “When a hotel meets our brand performance marker,
it is performing around the 97th percentile in Gallup’s global
competitive database of hundreds of thousands of business units.
That hotel is truly world class, and that puts the hotel in our yel-
low-zone category. The green-zone hotels are performing around
the 98th to the 99th percentile in Gallup’s global database. The
red zone represents our hotels that are not performing at the
level of brand promise. I don’t want to scare you and have you
think that we’ve got these hotels that are burning to the ground
or that you’re going to get a horrible experience. A red-zone ho-
tel is performing around the 94th to the 95th percentile. Some
could argue that the 94th percentile is pretty darn good, but

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