Case Study Quality — Ritz Carlton

Customer service is at the heart of quality, of late, the perception as to what constitutes Quality has undergone a metamorphosis. Quality is regarding the performance of the product as per the commitment (written or unwritten) made by the producer to the consumer. It does indeed concern itself regarding the control of defectives in a manufacturing environment and or complaints in a service environment. However, the scope of quality as a concept has expanded beyond its conventional definition. Defining quality as only lack of non-conforming product /service would be taking a very limited view. The prevailing new paradigm for world class quality is Total Customer Satisfaction. The customers’ expectations are therefore, paramount. Customer service is at the heart of quality for physical products as well as services .

The Atlanta Ritz Carlton Hotel Corporation operates 23 luxury hotels in the United States and two in Australia. The hotel chain which employs 11,500 people, claims distinctive facilities and an unusual environment, highly personalized services, and exceptional food and beverages. With average room rates higher than $150 per night, Ritz Carlton realized it must do more than just please its customers in order to succeed. The Hotel known simply as The Ritz did what many experts thought no hotel chain could accomplish in 1992, the Ritz became the first hotel to win the coveted Malcolm Baldrige National Quality Award.

When the name ‘Ritz’ has been synonymous with quality for years the luxury hotel chain did not actively begin its quest for total quality management until 1989. It was then that Horst Schulze, Ritz president and CEO told senior managers that he was not satisfied with hotel quality. He believed that the only reason the chain was considered the leading luxury hotel in the industry was that everyone else was even more unsatisfactory. Schulze therefore introduced a total quality initiative rounded in participatory executive leadership, thorough information gathering and coordinated planning and execution. A trained empowered and committed workforce was another essential element. All employees learn the company’s Gold Standards – the Ritz’s minimum set of standards for premium service.
Schulze and a team of the chains’ 14 top executives form the senior management quality team, which meets weekly to review performance and set standards. They spend a lot of time working on ways to improve our product by talking to as many guests and employees as possible.

Ritz Carlton carefully selects and trains its employees to be quality engineers capable of spotting defects and immediately correcting them. Employees receive 126 hours of annual training on quality issues. Ritz management believes that high quality personnel reduce costs because they do the job right the first time. The company reinforces its employee improvements program by recognizing superior individual performance. Annual raises are tied to the individual’s level of performance and work teams share in bonus pools when solutions they recommend for quality issues are successfully implemented.

Management empowers employees to ‘move heaven and earth’ to satisfy customers. Whenever a customer complains or a service problem arises, employees are expected to take immediate corrective action. Employees have total authority to do what it takes to satisfy customer needs without waiting for management direction. The Ritz gathers quality data on all aspects of a guest stay to determine if he customer’s expectations are being met. The chain surveys more than 25,000 guests each year to determine where improvements are necessary. Ritz computers maintain data on the likes and dislikes of more than 240,000 repeat customers.

Ritz Carlton won 121 quality-related awards in 1991and earned the industry best ranking by all three major hotel rating organizations Surveys indicate that 95 percent of the Ritz’s customers rate their stay as a ‘memorable visit’ exceeding their expectations. The 1992 Baldrige Award old Ritz customers and employees what thy already knew – the Ritz means quality.