The Ritz Carlton Organizational Behavior - Term Paper Example

 The Ritz Carlton Organizational Behavior Table of Contents 1. Introduction :page 3 2. Leadership Style, Structure, Strategy, Environment of the Ritz Carlton :page 3 3. Leadership and management style adopted by the Ritz Carlton during a period of change :page 6 4. Management changes needed within the organisation to achieve success :page 7 5. Behavioural and cultural obstacles faced by Ritz Carlton :page 8 6. Positive and negative aspects of leadership approaches on the corporate culture, organizational structure and organizational behaviour of Ritz Carlton :page 9 7. Conclusions :page 10 8. References :page 12 Introduction The Ritz Carlton Press: Fact sheet (2010), shows that the world’s favorite hotel group Ritz Carlton having headquarters at Willard Avenue, Suite 800 Chevy Chase, Md. 20815, United States, was established in 1983. Under the current Chief Operating Officer and President: Simon F. Cooper, Ritz Carlton is growing steadily and as per the statistics available in 2010, it has 72 hotels worldwide in 24 countries. Ritz Carlton enjoys the services of 38000 employees’ world wide as per the statistics available in 2010. Ritz Carlton is currently planning to further expansion in Europe, Africa, Asia, the Middle East and the Americas. The Ritz-Carlton Hotel Company is an independently operated division of Marriott International, Bethesda, Md (The Ritz Carlton Press: Fact sheet, 2010) Ritz Carlton leadership and management styles are big talking points in the corporate world because of the rapid growth it has achieved even amidst difficult situations in which other similar industries struggled to grow or prosper. The organizational behaviour and the working environment inside the company are different from other hotel groups. Ritz Carlton uses predictors such as ethics, self-esteem, teamwork and empathy to help its employees labelled as "ladies and gentlemen” (The Six Characteristics of Highly Effective Internal Marketing Programs, n. d).This paper briefly explains the Leadership Style, Structure, Strategy, Environment of the Ritz Carlton. Leadership Style, Structure, Strategy, Environment of the Ritz Carlton Jan (1993) has mentioned that at each level of the company, teams are charged with setting objectives and devising action plans that are reviewed by the corporate steering committee Troy (Jan 1993). Teamwork is encouraged in all the departments of Ritz Carlton Company. They have realized that business is a team game and it is difficult to succeed in business because of individual brilliance alone. A less productive employee may perform far better in a team because of the assistance he receives from the team members. Team members complement each other in completing a task which reduces the stress levels of each employee. Problem solving, strategic planning etc related to each team will be managed independently by the team members. Once the tasks were allocated, top management may not interfere in the team functioning. Moreover, the employees of Ritz Carlton have been given immense respect by the company management. The employees are referred as ladies and gentlemen in order to mark company’s respect towards the employees. The Ritz-Carlton believes in the linkage between employee engagement and customer satisfaction for making the organization more profitable (The Six Characteristics of Highly Effective Internal Marketing Programs, n. d). Only the satisfied employees will satisfy the customers. The above principle was recognized and accepted by the management even from the beginning of the company itself. The management is very particular to make the employees satisfied in all the aspects of their professional life as they realized that the satisfaction of the employees will reflect in their dealings with the customers. Hospitality industry, especially the hotel industry is very much dependent on the customer satisfaction. The internal marketing at Ritz-Carlton is controlled by a steering committee of department representatives from human resources, operations, product/brand management, and sales and marketing (The Six Characteristics of Highly Effective Internal Marketing Programs, n. d). The combined effort of various departments in dealing with the internal marketing is a big plus point for the company as internal marketing is one of the core operations of a hotel business. Service is considered as an honour not as a burden by the Ritz-Carlton employees. The attitudes of the Ritz-Carlton employees towards their customers are always service oriented because of the freedom and benefit they enjoyed in their works. It should be remembered that Ritz-Carlton allows its employees to spend up to $2,000 to correct a customer's problem or handle a complaint (The Six Characteristics of Highly Effective Internal Marketing Programs, n. d). Moreover, training and empowerment programs are conducted in Ritz Carlton on an annual basis which may last minimum 21 days. The article Organizational behaviour (2007) mentioned that Ritz Carlton provides specific training for specific jobs and it is designed and delivered by the five best employees called 5 star awardees (Organizational behaviour, 2007, p.161). The selection of trainers from the organization is because of the fact that only the internal trainers would be more aware of the problematic areas needed to be improved more than the external trainers. Moreover, it is recognition for the employees as their talents, capabilities and opinions honoured by the management through such spirited actions. “In 1989, Ritz Carlton has adopted the Malcolm Baldrige National Quality award criteria for implementing a comprehensive structure. The core of this approach was to involve people in the planning of the work that affects them” (The Ritz Carlton Hotel Company at a glance, 1999, p.1) Even though management theories have progressed a lot, still it is not possible to generalize a proper structure or management theory suitable for all the organizations in the world. The management or leadership styles and procedures needed to be fine tuned or customized for each organization based on the business and the environment in which the organization is functioning. Even the organizations offering the same service or product need to adopt different strategies based on the environment in which they are operating. Product or service may be the same, but the market may be different and hence different strategies needed for each market. Ritz Carlton knows the above principle very well and they allow their employees to participate in the planning process which affect them directly or indirectly. For example Ritz Carlton is operating in different regions like Asia, Europe, America etc. The management or leadership styles adopted in America may not be suitable for Asia because of the cultural, political, social and economical differences between these regions. By allowing the participation of employees in the planning process, Ritz Carlton was able to utilize the local expertise for the growth of the company. Leadership and management style adopted by the Ritz Carlton during a period of change Barry L Shuler, CIO of the Ritz Carlton has proposed the following strategies for managing the business during the current period of changes happened due to globalization and that in order to change organizational behavior (and therefore performance), one must change the structural relationships within the processes of the organization (Barry L Shuler, CIO of the Ritz Carlton on Organizational Structures for this economic climate, 2009). Relationship building is accepted as the core of every business functions as per the modern management theories. Both internal and external relationships of the company are equally important for the future growth prospects. The employee behavior needs to be changed in order to change the organizational behavior. It is not possible for an organization to change its behavior if the employees stick with the traditional attitudes and behavior towards their profession and their organization. In order to change the behavior of the employees their compensation plan needs to be revised as per the demands of the changing world and the changing life styles and expenses. Increased customer loyalty and brand awareness is another requirement for tackling the challenges raised by the current changes. Customer loyalty can be improved only through improving the customer service. Brand awareness can be improved through advertisements, sales promotions etc. Management changes needed within the organisation to achieve success Architecture of the organization is a decisive factor in achieving success. It includes resources, management controls, environmental factors, products and services, and external agents (Barry L Shuler, CIO of the Ritz Carlton on Organizational Structures for this economic climate, 2009). Environmental factors are the most critical one for the future growth of Ritz Carlton as in all the other departments; it has a fair amount of success. So, in this paper environmental factor alone is discussed as the most critical areas Ritz Carlton needs to concentrate. Environmental factors include the present economic climate change and the global call for organic foods. Global financial crisis has affected most of the businesses and hospitality industry is one of the worst affected industries. People started to reduce their expenditure on nonessential commodities like enjoying holidays or spending lavishly on food items. Moreover, the addictives included in artificial food items is another major worrying factor for the future growth prospects of Ritz Carlton like hotel industries. Organic foods are generally believed as the safest available food and many people started to use organic foods. Whole Foods Market like big companies is actively engaged in spreading the importance of using organic foods. Ritz Carlton needs to include organic foods also in its menus in order to cater the organic food lovers. Ritz Carlton should be always looking for design changes to the business (including information technology) that have a direct and lasting effect on the firm’s performance in delivering products and services to customers (Barry L Shuler, CIO of the Ritz Carlton on Organizational Structures for this economic climate, 2009). Information technology is progressing rapidly and it is unimaginable for people to think in terms of a world without internet and computers now. Internet has intruded even into the kitchens now. Ritz Carlton needs to improve its customer services by incorporating internet like modern information technology tools in their customer servicing areas. Behavioural and cultural obstacles faced by Ritz Carlton The needs of the current customers have changed a lot over the last two decades because of the entry of globalization and the subsequent increased cross cultural transit of tourists. Globalization has opened opportunities immensely on overseas countries and people are often travelling across the world as part of their assignments. Thus the diversity of visitors to Ritz Carlton like hotels has increased a lot over the last two decades. The needs of an American might not be the needs of an African or Asian. So Ritz Carlton should concentrate more on delivering customers services based on cultures and behaviours. For example, Indians are normally starting a day with a bed coffee whereas same thing might not be true for an African or European. They may need something else at the beginning of their day. Ritz Carlton should realize these cultural differences in food and drinking habits while formulating strategies for the customers they are handling. The business strategies adopted by Ritz Carlton in America need not be suitable for China because of the cultural differences between America and China. America is under democratic regime and people enjoy immense freedom. Same thing cannot be said about China as the people have less freedom and different eating habits. The American dishes need not be succeeded in China. In short, the major challenges faced by Ritz Carlton in different countries are in customization of business based on the cultural and behavioural differences of people. Positive and negative aspects of leadership approaches on the corporate culture, organizational structure and organizational behaviour of Ritz Carlton “Every day at the chain's 57 hotels, all 25,000 Ritz-Carlton employees participate in a 15-minute "lineup" to talk about one of the basics. The ritual makes Ritz-Carlton one of the few large companies that set aside time for a daily discussion of core values” (McDonald, 2004).The above strategy helped Ritz Carlton to solve many of the problems and to convey the management’s vision and mission to the employees in time. Instead of focusing on process, Ritz Carlton is focussing on outcomes (How The Ritz-Carlton Is Reinventing Itself, 2006). Ritz Carlton never believed in theories. They always value a theory based on the outcome of the implementation of that theory into practice. Academic knowledge alone might not help an organization in sustaining the business in a healthy manner. Apart from academic knowledge, practical knowledge is also taken as the major criteria for devising proper leadership or management approaches in Ritz Carlton. As mentioned earlier, most of the business functions are performed by independent teams in Ritz Carlton. Moreover, employees have given increased participation in policy making and training which an advantage is definitely for Ritz Carlton. The loyalty and sincerity of the employees of Ritz Carlton towards their organization is more compared to any other hotel chains because of the higher consideration given to the employees. At Ritz Carlton employees are considered as “ladies and gentlemen”. In other words, employees of Ritz Carlton enjoy immense freedom compare to other similar industries. Ladies and gentlemen serving ladies and gentlemen." Ritz Carlton chose the motto because they don't want their ladies and gentlemen to think of themselves as servile. Their ladies and gentlemen might not have the wealth, knowledge, or education of our guests, but they do have the same values (How The Ritz-Carlton Is Reinventing Itself, 2006). The above management approach helped Ritz Carlton employees in conserving their dignity and avoid any misbelieve of themselves as servants. Ritz Carlton believes that their employees should be treated same way like they ask their employees to treat their customers. In other words Ritz Carlton treats their employees respectfully and the employees transfer the service they enjoyed from their management to the customers. But, at times this freedom would be misused by the employees. The privileges and luxuries provided by the management may be taken for granted at times by some of the employees and the business might be affected. As the misbehaviour of even a single employee can spoil the reputation of hotel industry, the liberal leadership style adopted by Ritz Carlton sometimes negatively affects the organization. Conclusions Ritz Carlton is one of the leading hotel business groups in the world. The innovative leadership or management styles adopted by Ritz Carlton helped them in maintaining the top spot for the last few years. Ritz Carlton respects their employees very much and employee participation in the policy making and planning process is encouraged in Ritz Carlton. Teamwork is also encouraged in Ritz Carlton which helped them to improve their performance and productivity. Ritz Carlton provides training to their employees with the help of their own expert staffs which helped them in addressing the problems more meaningfully. The major challenges faced by Ritz Carlton are in facing the globalization challenges. Globalization has increased the diversity of customers and satisfying diverse customers is a complex task because of the individual and cultural differences of the customers. The immense freedom provided to the employees is often misused by some of the employees, which is another problem. The requirements of the customers are changing as per the changes in their life styles because of the advancements in science and technology and changing food habits. References 1. Barry L Shuler, CIO of the Ritz Carlton on Organizational Structures for this economic climate (2009), Retrieved on 04 February 2010 from http://noelevatortothetop.com/2009/01/12/barry-l-shuler-cio-of-the-ritz-carlton-on-organizational-structures-for-this-economic-climate/ 2. How The Ritz-Carlton Is Reinventing Itself, (2006), Retrieved on 04 February 2010 from http://gmj.gallup.com/content/24871/how-the-ritz-carlton-is-reinventing-itself.aspx#2 3. McDonald Duff, (2004), Roll Out the Blue Carpet How Ritz-Carlton can teach you to serve your customers better, Retrieved on 04 February 2010 from http://money.cnn.com/magazines/business2/business2_archive/2004/05/01/368262/index.htm 4. Organizational behaviour, (2007), Retrieved on 04 February 2010 from http://books.google.com/books?id=VAfMJO11rWIC&printsec=frontcover#v=onepage&q=&f=false 5. The Six Characteristics of Highly Effective Internal Marketing Programs, (n.d), Retrieved on 04 February 2010 from http://www.performanceforum.org/The_Six_Characteristics_of_Highly_Effective_Internal_Marketing_Programs.62.0.html 6. The Ritz Carlton Hotel Compnay at a glance, (1999), Retrieved on 04 February 2010 from http://corporate.ritzcarlton.com/NR/rdonlyres/22E2CEC9-62A4-4EA2-9C3C-51628265E10E/0/rcappsum.pdf 7. The Ritz Carlton Press: Fact sheet, (2010), Retrieved on 04 February 2010 from http://corporate.ritzcarlton.com/en/Press/FactSheet.htm 8. Troy Jan (1993), The Ritz-Carlton Hotel Co.Quality, Retrieved on 04 February 2010 from http://www.humanitas.nu/upload/docs/Artikel%20-The%20Ritz.doc Read More