Explain the employee relationship management


The Ritz-Carlton-Specializing in Customers Bill Kapner, CEO of financial software provider Bigdough, checked into the Ritz-Carlton in Palm Beach, Florida. Before introducing himself, he was greeted-by name-at the front desk. Then a reception clerk asked, "Will you be having sushi tonight?" The interesting thing about these conversations is that Kapner never mentioned his fondness for Japanese cuisine. "I was wowed," he said. Ritz-Carlton is the only service company to have won the prestigious Malcolm Baldrige National Quality Award twice-in 1992 and 1999. Companies worldwide strive to be "the Ritz-Carlton" of their industries.

In 2000, the company launched the Ritz-Carlton Leadership Center, where anyone can study the brand's cult of customer service for $2,000. The center has addressed topics such as "talent benchmarking" and "empowerment using customer recognition to boost loyalty" for more than 800 companies, including Starbucks, Microsoft, and CocaCola. The following six steps can be followed and implemented by any company to become the Ritz-Carlton of its industry:

1. Make customer service an elite club. Ritz-Carlton has devised a rigorous interview process to identify the positive team players who, according to in-house statistics, become top performers. Executives believe that the company is effective not only in picking great talent, but also in conveying the message that working at Ritz-Carlton is a privilege.

2. Once you have the right people, indoctrinate them. Ritz-Carlton spends about $5,000 to train each new hire. It begins with a two-day introduction to company values (it is all about the service) along with a 21-day course focused on job responsibilities, such as a bellman's 28 steps to greeting a guest: "A warm and sincere greeting. Use the guest's name, if and when possible." Tracy Butler Hamilton, a retired bond trader who has stayed at a Ritz-Carlton in Atlanta several times, recalls that the hotel's bartenders remembered not only her name, but also the name and favorite drink of her brother, who would sometimes visit. "He wasn't even staying at the hotel," Hamilton said.

3. Treat staffers the way they should treat customers. The Ritz-Carlton motto-"We are ladies and gentlemen serving ladies and gentlemen"-might sound corny, but it is taken seriously. The company celebrates not just employee birthdays, but also employment anniversaries. Regardless of position, every staff member can spend as much as $2,000 without management approval to resolve a guest's problem. Employees say the exemption lets them make a personal impact on a guest's experience, resulting in higher job satisfaction. The median annual nonmanagement turnover rate at luxury hotels is 44 percent; at Ritz-Carlton, it is only 25 percent.

4. Offer "memorable" service. " What others call complaints," said John Timmerman, vice president for quality and productivity, "we call opportunities." A tired euphemism elsewhere, the idea is truly embraced at Ritz-Carlton. In one case, an administrative assistant at Ritz-Carlton Philadelphia overheard a guest lamenting that he had forgotten to pack formal shoes and would have to wear hiking boots to an important meeting; early the next morning, she delivered to the awestruck man a new pair in his size and favorite color. (In a more intimate example, a housekeeper recently traded shoes with a woman who needed a different pair.)

5. Talk about values and stoke enthusiasm. 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.

6. Eschew technology, except where it improves service. Other hotels may be experimenting with automated check-in kiosks, but not Ritz-Carlton. "Not in a million years," said Vivian Deuschl, the company's vice president for public relations. "We will not replace human service with machines." But porters and doormen wear headsets, so when they spot your name on luggage tags, they can radio the information to the front desk. In addition, an inhouse database called the Customer Loyalty Anticipation Satisfaction System stores guest preferences, such as whether an individual likes Seagram's ginger ale or Canada Dry. The software also alerts front-desk clerks when a guest who has stayed at other Ritz-Carltons has a habit of inquiring about the best sushi in town.


1. What are the two different types of CRM and how has the Ritz-Carlton used them to become a world-class customer-service business?

2. Which of the Ritz-Carlton six steps of customer service is the most important for its business?

3. Rank the Ritz-Carlton's six steps of customer service in order of greatest to least importance in a CRM strategy for an online bookselling business such as Amazon.com.

4. Describe three ways the Ritz-Carlton can extend its customer reach by performing CRM functions over the Internet.

5. What benefits could the Ritz-Carlton gain from using analytical CRM?

6. Explain ERM and describe how the Ritz-Carlton could use it to increase efficiency in its business.

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