4) Empowering the front-line saves money. While many business leaders talk about their empowered workforce, few put money behind the hype. At Ritz-Carlton, staff members (referred to as the Ladies and Gentlemen of The Ritz-Carlton) are given the authority to spend up to $2,000 per day per guest, without seeking the approval of their supervisors. This authority allows front-line workers to immediately resolve service breakdowns for guests or simply engage guests by doing something unexpected that will make the hotel stay memorable. The cost-saving nature of this seemingly risky level of financial empowerment is derived from the morale and loyalty of employees, the clear cost savings of resolving problems immediately, and the impact that this type of empowered workforce has on customers. Essentially, empowered employees consistently transform otherwise satisfied customers into fully-engaged brand loyalists that spend more and refer family and friends to the business.

In my book The New Gold Standard, I identify 5 key business principles that have allowed The Ritz-Carlton to continue to be a recognized leader in product quality and service excellence (two time winner of the Malcolm Baldridge award for service excellence). Rather than contracting or adopting a defensive posture during economic uncertainty, The Ritz-Carlton leadership stays the course with these five principles:

Define and Refine

Empower through Trust

It’s Not About You

Deliver Wow!

Leave a Lasting Footprint

While concepts like empower through trust have been alluded to earlier, concepts such as "define and refine" and "it’s not about you" warrant further exploration. By clearly "defining" the core components of the company's values, quality standards, and service tradition, Ritz-Carlton constantly communicates the path by which a guest's experience can be elevated, how the staff member can purposefully add value and the means by which the company will thrive. By having every staff member take time every day at every hotel worldwide to participate in a process called line-up, Ritz-Carlton leadership re-engages staff in a discussion of the overarching mission they all share. Further, by being attentive to the need to "refine" the brand so that it remains relevant in changing economic times, for evolving customer segments and in diverse international markets, leadership builds on their well-defined culture.

The "It’s not about you" principle reflects the disciplined practice of listening to staff, customers, vendors and all stakeholders to constantly assure that business does not principally serve the needs and preferences of leadership. By adopting a penchant for listening to stated and unstated needs while maintaining a passion for service, great leaders produce businesses that endure. From the customer's perspective, these businesses are extensions of themselves and not commodities.

While none of us can control the winds of economic change, taking a few lessons from The Ritz-Carlton Hotel Company can help us adjust our sails to arrive at our desired destination. I welcome your thoughts about the journey…

©2008 Joseph A. Michelli

Author Bio Joseph A. Michelli, Ph.D., is an internationally sought-after speaker and business consultant whose clients include Bridgestone Firestone, Nokia, The Hartford Insurance Group, and UCLA Health System. The author of the bestselling The Starbucks Experience, he has appeared on The Glenn Beck Show and CNBC's On the Money.

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