Engaging employees makes sense for customers and the bottom line!

I just read an interesting blog entry by Forrester's Bruce Temkin. It’s a story about how Joie de Vivre hospitality improved the performance of its hotels by focusing on employees.

After Joie de Vivre Hospitality Inc. took over operations in 2003, the new manager of the Hotel Carlton in San Francisco reduced employee turnover to 25% to 30% annually, about half of the industry average.

Here are some mind blowing statistics. Market Metrix estimates that each departure costs a midrange hotel about $5,000 in lost productivity, and recruiting and training a replacement Joie de Vivre has 2,500 employees. About 90% are hourly workers who take reservations, clean toilets and perform other low-status jobs.

So lets do some math with those numbers. Reducing the turnover from 50% to 25% for its 2,250 hourly workers means that the hotel chain has 562 fewer employees leaving each year. That saves the company more than $2.8 million each year. And that doesn’t even include any revenue from the likely uptick in loyalty and positive word-of-mouth.

Wow! How did they do it?
Former management at the Hotel Carlton in San Francisco didn’t like to replace aging vacuums, despite staff complaints. The new management bought a vacuum for each of the 15 housekeepers — and replaces them every year. This was just one example of how Hervé Blondel, the Hotel Carlton general manager, said he tried to treat workers as partners rather than employees. In addition, he did things like sitting in for front-desk workers on their lunch breaks and heeding staff suggestions to eliminate minibars, which generated little revenue at the midprice hotel.

The founder and CEO of the firm, Chip Conley, definitely seems to understand the strong link between employee satisfaction and good customer experience. The article talks about a number of things that he does to engage employees like sponsoring parties and awards, arranging paid annual retreats for employees, hosting regular dinners with those who want to chat, and offering free classes on subjects from Microsoft Excel to English as a second language.

It looks like Joie de Vivre Hospitality is a great example of a key principle of Experience-Based Differentiation: “Treat customer experience as a competence, not a function.”

What say you? Any thoughts, comments?

Eric Fraterman