Part 3. Management and labour

In 1990, Marriott laid off more than 1,000 people, most of them in two divisions at our corporate head-quarters. If you followed the business pages in the early 1990s, you might recall that Marriott went through some tough times from 1990 to 1993. The company had been on a roll throughout the 1980s—building hundreds of hotels, selling them to investors, and negotiating long-term management contracts. We had hit upon a formula for expansion that was tailor-made for the go - go times. By the decade's midpoint,we were one of the largest real estate developers in the country. In an average year, we handled about $1 billion in new construction. In 1989, we opened at least one new hotel every week.

Then the bottom dropped out of the U.S. real estate market in the fall of 1990. That crash-together with a general economic recession, the outbreak of the Persian Gulf War early in 1991, and other factors— effectively smacked us upside the head and left us reeling. We had plenty of good company; lots of businesses found themselves in trouble when the economy stumbled. But we got caught in the middle of our most ambitious expansion program to date.

To pull ourselves back from the brink, we had to take a number of austere measures. One of the most painful was letting most of our hotel development and architecture and construction departments go. With real estate dead in the water and a backlog of hotels to sell, we didn't need—and couldn't afford—to keep idle staff on the payroll.

Compared to other American companies that have "downsized," "right-sized," and otherwise reinvented themselves in the past ten years, Marriott's phased lay-off of 1,000 employees out of more than 200,000 might not seem like a big deal. But for us, it was one of the roughest episodes we've been through. The cornerstone of our corporate culture has always been: "Take care of your employees, and they'll take care of your customers." Laying off a substantial number of people who had worked hard to contribute to our success felt like a betrayal of that philosophy.

On the surface, the layoff did look pretty bad. To outside observers, it probably appeared to be yet another nail in the coffin of already uneasy employee relations in 1990s American business. And, of course, for those who were being let go, the layoff didn't simply look bad, it was bad.

To the people inside Marriott who worked hard to make the experience as graceful and painless as possible, however, the downsizing was also a poignant opportunity to reaffirm our long-standing policy to "take care of" our employees.

Before I explain how we tried to do that, let me tell you about where the "employees-first" philosophy came from and why it's such a fundamental part of our corporate culture.

***

My father, J. Willard Marriott, was an extrovert. The second oldest in a family of eight children, he thrived on people. He was never happier than when engaged in lively conversation or a friendly debate.

Dad particularly enjoyed talking to his employees. Marriott's corporate legend is full of stories of my father perched comfortably on a hotel lobby sofa, listening to the family problems of one of our associates while senior managers cooled their heels waiting for him to return to the office.

I can confirm that the stories are true. Dad felt very strongly that the concerns and problems of the people who worked for him were always worth listening to. In his eyes, a successful company puts its employees first.

I couldn't agree more. When employees know that their problems will be taken seriously, that their ideas and insights matter, they're more comfortable and confident. In turn, they're better equipped to deliver their best on the job and to the customer. Everyone wins: the company, the employee, the customer.

The philosophy of putting employees first is particularly important in our industry, because Marriott is in the people business, not just the service business.

What do I mean by that? When your job is to supply customers with answers to two of life's basic needs— food and lodging—you're touching on pretty special human territory. Even if our customers aren't conscious of it, they have very definite expectations about not only the tangible parts of eating and sleeping— good food, a comfortable bed—but also the intangibles of those experiences: how they're greeted, how their questions are answered, how their special problems are handled. That's where the right human touch can make all the difference between a mediocre or poor experience and a positive, even unforgettable one.

Naturally, if the people who are responsible for supplying that human touch are unhappy, tired, stressed out, poorly trained, dissatisfied, or otherwise distracted, they're probably not going to do a good job. Their problems at home or behind the scenes will show in their work . . . and have a direct impact on guests' experiences.

On the flip side, if employees are content, confident, and generally happy with themselves and the job, their positive attitude will be felt in everything they do.

We have countless associates who have demonstrated remarkable personal generosity and kindness toward guests over the years. Stuff that no SOP can cover. If those associates didn't feel terrific about themselves, I don't think they would be able to do some of the things they've done. Some have loaned money out of their own pockets to guests who forgot their wallets. Others have played emergency babysitter, ordered (and picked up) replacement contact lenses, and put their weekend mechanic skills to work on conked-out cars. I've heard of associates lending shoes, jewelry, coats, blouses, and other items to guests who didn't pack them. One of the best stories I've come across involves an associate who loaned a nervous guest an entire suit of clothing for a critical job interview.

When you have employees who are willing, literally, to give a guest the clothes off their backs, doesn't taking good care of those employees make sense? Yet like developing and perfecting systems and SOPs, the concept of making employees feel really good about themselves seems to be missing from many companies' philosophies. Think of the number of heavily unionized industries that would be more productive and less tension-ridden if member companies had worked harder to take care of their employees from the beginning. Or how much more competitive American companies could be if relations between management and labor didn't require a continuous courting ritual to sort out respective interests?

Don't get me wrong. I'm not about to claim that every Marriott associate has at all times been treated with unfailing fairness and unflagging support. Of I course not. No human institution handles human problems perfectly every time. But I do think that we are well above average, thanks to the emphasis we've always placed on the idea that we're all part of a team and that team members take care of one other.

A favorite story of mine—one that exemplifies this attitude—involves two Marriott associates who took it upon themselves to look after a third who was dying of cancer. For more than two years, the pair dropped by the woman's apartment or hospital bed on a daily basis. On one of my visits to the area, I stopped by to say hello to the ill woman. Both of her ministering angels were by her bedside. When she died about a year later, I had the honor of presenting the company's President's Award for extraordinary service to the two women who had shown such compassion for and devotion to their colleague.

But illness isn't the only time Marriott associates help each other out. Sometimes the assistance is as simple as covering for each other on the job to make sure everyone gets time off to attend special events and enjoy the holidays. Sometimes it's more dramatic. I know of truckloads of food, clothing, and necessities being collected, boxed up, and driven thousands of miles to people in need in the aftermath of hurricanes, floods, fires, earthquakes, and other natural disasters. Such generosity isn't unique to Marriott, of course, but it's a terrific sign of how far our concept of teamwork goes.

Saying "employees first" is one thing, but making it a permanent feature of your corporate culture requires action, not just words. I'd like to think that we put our money where our mouth is.

Training, for example, has been a core activity at Marriott since the early Hot Shoppes. Every day, hundreds of our associates new and old file into classrooms and kitchens around the globe to upgrade their skills. In our early days, all of our managers and executives were trained to flip hamburgers, assemble salads, and make sundaes by longtime associates who were experts at the job. And if the manager didn't pass the associate's exacting standards, he did not "graduate" until he improved. No excuses. For many years we sent our chief financial officer and other nonoperations executives through the company's "food school" to gain a bit of hands-on experience with the products and services that form the basis of Marriott's world.

Our emphasis on training of all kinds and at all levels is partly a reflection of the aspects of our corporate culture.

But it's also a recognition that we can hardly expect our associates to do their jobs well if we haven't shown them how. They deserve to know that the organization is willing to invest in building their skills and knowledge to give them more confidence on the job, as well as a chance to keep moving up the ladder. It's central to our employees-first philosophy to give them both the opportunities and the tools to succeed.

One of our most recent employee initiatives is Pathways to Independence, a welfare-to-work program developed by our human resources department to train low- or no-skilled workers for jobs with the company. During a six-week, no-pay internship, former welfare recipients are taught basic work skills that qualify them to hold hourly positions. For many, this is the first opportunity they've had to master skills that most of us take for granted. Not everyone who applies makes it into the Pathways program; only 25 percent of those interviewed for the program are accepted. And not everyone sticks with it, in spite of yeoman labor on the part of our trainers to help trainees overcome self-esteem problems, family troubles, and other challenges. Pathways hasn't been without its frustrations and issues, but we hope it becomes a model for other businesses.

Given our penchant for systems, you probably won't be surprised to learn that we're big on providing safety nets for our associates. By safety nets, I mean the kinds of support systems that let employees know that they're not out there on the job alone, with no one to turn to for help if they need it. Some call it "overmanaging by design." We just think it's a natural outgrowth of our hands-on management philosophy and our drive to get the details right.

Our overall systems and our training programs, of course, provide part of the safety net, but there are other aspects as well. A good example is the process we use when we open a new hotel. Weeks ahead of time, a special team composed of veterans from other Marriott hotels takes up residence at the property to help the new staff debug systems, put on the finishing touches, and roll out the red carpet on opening day. A skeleton crew sticks around afterward to help out until they're not needed anymore. All that fuss might seem like overkill, but I've yet to hear of a GM of a new property who wasn't grateful for the support.

Another area in which we've invested considerable energy and attention in providing support systems is our work-life programs. Marriott is hardly the only major company in America to recognize the increasing complexity of employees' lives, but I'd like to think we're at the forefront of doing good things to help our associates cope. This is an area where we clearly have an opportunity to demonstrate the employees-first philosophy.

One of the biggest employer challenges for Marriott has always been in helping our associates juggle family responsibilities with duties on the job. The task has become even more daunting as the nation's hourly workforce has become more multicultural in makeup. Once upon a time we had perhaps at most a dozen foreign languages spoken among our employees; we now have more than eighty. Many of our hourly associates must cope with complicated immigration procedures, interpersonal cultural clashes, and social discrimination, in addition to the pressures of child care, elder care, substance or domestic abuse, or housing problems.

What toll do these problems take on our associates and, by extension, on the company as a whole? Well, as I said earlier, if you have employees who aren't feeling terribly good about themselves, they're not likely to give their best on the job. An associate who must scramble to replace a baby-sitter who canceled or who's worried sick about a recent call she received from an immigration lawyer isn't going to be in the best shape to deliver that all-important "human touch." What that troubled associate needs is a bit of the human touch herself, in the form of understanding and assistance.

In many cases, our associates help each other out. But for those times when colleagues and bosses aren't the answer, there are alternative sources of support. One option is a toll-free consultation service for our lodging associates staffed by social workers who field questions and find solutions to just about any problem. And they can do it in more than 100 languages.

We rolled out the 800 Associate Resource Line (ARL) on a national basis in 1996, after a two-year regional trial run. Although the program is based on intensive studies of our associates' needs, the thinking behind it is actually pretty simple. At heart, it's really just a slightly higher-tech version of my father's "let's-sit-on-the-sofa-and-talk-this-out" approach to taking care of employees. An associate with any kind of question, problem, or crisis can dial up the ARL and immediately connect with a trained professional who listens, counsels, and follows through until a solution is found.

In addition to providing concrete help, the program gives our associates a sign of our commitment to them. The vast majority who have tapped into the ARL felt even more positive about working at Marriott after getting help with their problems. That's particularly important to me. I want our associates to think of the company more than as a clock-in-clock-out job.

Marriott, naturally, benefits when the ARL is able to lend a hand to an associate. We wouldn't be able to justify the program if it didn't. But more important, we've seen dramatic drops in turnover, absenteeism, tardiness, and short workdays among those using the service, all of which are very good signs that those associates feel more in control of their lives. That's what it's all about.

Helping associates feel in control of their fates is also one of the engines behind the company's profit sharing program, which has been in place since 1959. I'm sure I don't have to explain the philosophy of profit sharing, and I certainly won't bore you with the mechanics. Suffice it to say that we think profit sharing is a fitting reflection of our corporate culture's emphasis on teamwork. We've had scores of longtime associates retire with hefty nest eggs because they stuck with us twenty, thirty, forty years or more. Those associates took care of Marriott for many years, and we, in turn, paid them back.

Another long-term tradition at Marriott that falls under the employees-first umbrella is promotion from within. To use just one year as an example, in 1983 about one-third of all new Marriott managers were promoted from hourly ranks. One former Marriott executive told me recently that he thinks the "genius" of our company lies in treating all of our associates as if they were managers. I'm not sure I'd go quite that far—every organization needs leaders and followers— but I think he's on the right track. We've always been more impressed by hard work and dedication than paper credentials. And we always will be. Another long-standing practice that I have no intention of giving up is my own habit of answering nearly all of the letters that come into my office from Marriott associates. If an employee takes the time to write me, he or she is owed a response. Usually, associates contact my office because they've got a problem or complaint that they want to bring to my attention. Small or large, the matter is investigated and we get back to them. Some of what's driving me is—you guessed it—my hands-on habit, but it's also because I want to be sure that every Marriott employee feels that he or she can get a fair hearing. Even if the problem isn't resolved in the associate's favor, I'd at least like him to know that he received respectful attention. " All of the above are important—training, work-life programs, safety nets, profit sharing, promotion, a willingness to investigate concerns—but none is as important as having hands-on managers in place who possess the people skills to support, encourage, lead, inspire, and listen to associates. A manager without those skills is going against the grain of the organization. He or she might be able to make good financial results for a short time, but in the end, the lack of people skills will always catch up.

Let me give you an example. A couple of years ago, on a property tour, I noticed that the new general manager of one of our hotels was making impressive numbers in his first nine months on the job, but the associates at the property seemed to me to be unusually subdued. Even the folks at the front desk—roles almost always filled by extroverts—looked uneasy.

Curious to get a glimpse of the associates at work when the boss wasn't around, I made a point of getting away from the GM for a short stroll of my own. I soon saw and heard enough to convince me that the whole staff was walking on eggshells. Closer investigation revealed that the associates were scared of the GM: he was bullying, punitive, and unsympathetic to their concerns.

In spite of his good numbers, the manager was not good for the health of the associates. He didn't embrace our employees-first philosophy. The solution was clear: we had to let him go.

***

Speaking of letting people go, let me get back to the story about Marriott's layoff.

When trouble hit us in the fall of 1990, we had to retrench pretty quickly. One of the most wrenching decisions we made was to effectively eliminate our huge hotel development and architecture and construction (A&C) departments. We had been developing about 100 new hotels a year in the latter half of the 1980s. A&C had grown into a gigantic assembly-line operation. There truly was nothing comparable in the American hotel industry ... or most other industries, for that matter.

Almost overnight, we had to close down the assembly line. Marriott had never in its sixty-three-year history faced the prospect of letting go two entire departments. Growth had always been our motto; we were accustomed to hiring, not firing. But we had no choice. We couldn't pretend that there was going to be new building when most of the hotels in Marriott's pipeline had been halted or scrapped.

The only thing we could do was handle the layoff in a way that would take as much of the sting out of it as possible, for all parties—both those who were to depart and those who would stay behind.

I intentionally emphasize the fact that we had two "audiences" to take care of during the phasing-down process. It was important to us to do our best to help all of our associates cope with anxiety about the future. The people who were leaving deserved our support in finding other work, if possible, and the folks who stayed on needed to be reassured that their hard work was appreciated and they needn't waste energy agonizing over whether they, too, would soon lose their jobs.

Novices to downsizing, we had the remarkable luck to stumble upon a terrific consultant who helped us with every aspect of setting up an off-site outplacement center near our corporate headquarters. The team responsible for handling the outplacement effort spent hours working out every possible option to help people prepare resumes, conduct job searches, and deal with the stress of facing an extraordinarily tight employment market. At our center, departing associates had access to professional counseling, interview coaching, and a bank of cubicles equipped with telephones where they could come each day to pursue job leads.

When the layoffs were announced, we braced ourselves. Not surprisingly, the anger of being laid off often translates into litigation, and we had been warned that despite our efforts to provide for our employees, we weren't going to be immune.

The concern turned out to be groundless. Out of more than 1,000 people, only 2 took legal action against us, and those claims were minor and amicably resolved. In fact, I was touched when a number of departing employees took the trouble to thank us for our outplacement help. I was likewise pleased that we ultimately were able to place more than 90 percent of those looking for jobs.

There's no way to prove it, but I believe the fact that the employees who had to leave us had enjoyed a good tenure, at Marriott—had been, in effect, well taken care of—is what made the difference. Had those associates felt they had been treated carelessly during their years with us, I doubt we would have seen such understanding on their part. When put to the toughest test possible, Marriott's employees-first philosophy more than lived up to the ideal my father intended when he put it into place seventy years ago.

Linguistic Survey of Part 3: