RITZ-CARLTON HOTEL

The Ritz-Carlton Hotel

The Ritz-Carlton Hotel

Brief overview of the Chairman's and CEO's reports

Previously, in tiny hotels and inns, the innkeeper directed activities in the organization personally, including "managing for quality". As hotels grew in size, the volume of activity outgrew the capacity of the innkeeper to manage by personal direction - it became necessary to delegate. Apprentices were trained in the craft and qualified by examination to become craftsmen. The innkeeper - the master - then delegated much of the managing for quality to the craftsmen, subject to inspection and audit by the master.

Many of our standards go back 100 years to this era of Caesar Ritz and the legendary Chef August Escoffier. As we entered the 20th century, the size of a hotel and its organization sharply increased. The resulting large hotels required functional departments. The innkeeper - now a general manager - delegated to each functional department head the responsibility for quality, for performing the function correctly.

With the emergence and growth of technology, hotel products and processes became increasingly complex. To deal with these new complexities the hotel industry adopted the principle of separating planning from doing. Planning of the various departments was delegated to division and department heads (e.g. Food & Beverage managers, Rooms Executives, Purchasing Directors, etc.). This left the job of executing the plans to the first-line supervisors and the workforce.

The separation of planning from execution had four major consequences.

A factory concept emerged in which people assigned one task rather than a single craftsman were performing the entire sequence of tasks. In this factory approach, if task #11 was causing a problem for task #24, it wasn't identified until it reached the customer, and even then the problem likely continued.

A dramatic rise in productivity.

The segregation of divisions and departments.

A further distancing of upper managers from the job of managing for quality.

The progressive removal of upper management from managing for quality produced negative effects on quality. Typically, performance either fell short of customer need or the cost to meet the need became excessive. In addition, the hotels accumulated huge chronic costs as a result of poor quality. Most hotels remained profitable despite these quality deficiencies because competitors had similar problems. By 1989 Horst Schulze realized that a more comprehensive structure was necessary for the Ritz-Carlton to optimize its performance. He selected the Malcolm Baldrige National Quality Award Criteria. Through the use of this assessment tool and ...