The Portman Ritz-Carlton, Shanghai

How does a five-star hotel differ from its lower tier competitors? How does the best five-star hotel stand
out among its five-star peers? The answer is “People,” according to Mark DeCocinis, general manager of
the five-star Portman Ritz-Carlton Hotel in Shanghai, China, which has been named the “Best Employer
in Asia” by Hewitt Associates three times. “Our priority is taking care of our people,” said DeCocinis in
an interview. “We’re in the service business, and service comes only from people. It’s about keeping our
promise to our employees and making that an everyday priority. Our promise is to take care of them, trust
them, develop them, and provide a happy place for them to work. The key is everyday execution.” One of
the “secrets” behind the Portman Ritz-Carlton’s success is that the general manager interviews every
prospective employee. This process of course is time-consuming on the part of the busy general manager.
Yet, by doing that, the general manager is able to get a “feel” of the intangible nature of employee
attitudes. In terms of the questions that the general manager asks, DeCocinis shared: “I usually ask them
about themselves and try to make a connection. But the important question is: Why do you want to join?
Whatever they say, the most important notion needs to be ‘I enjoy working with people,’ not just using
the phrase ‘I like people’ . . . I really want to find out what motivates them. If the person smiles naturally,
that’s very important to us, because this is something you can’t force.” In a culture featuring more
reserved expressions, service personnel who smile naturally will indeed become valuable and rare
resources appreciated by hotel guests. The Portman Ritz-Carlton’s employee satisfaction rate is 98%, and
its guest satisfaction is between 92% and 95%. To translate excellent HR management to better firm
performance, the hotel’s performance goals are aligned with Ritz-Carlton’s corporate goal—from the
company to the hotel, and from the hotel to each division. This means that everyone is part of the whole.
Every employee comes up with a plan to reach the goal for the next year, measured by guest satisfaction,
financial performance, and employee satisfaction. The bonus at the end of the year is based on
improvements. In China, many multinationals face a constant shortage of talent and high employee
turnover. Yet, the Portman Ritz-Carlton has not only been able to attract, but also to retain high-quality
talent to deliver excellent customer service and ensure profitable growth. What are its “secrets” behind its
ability to retain such individuals? Among many secrets, DeCocinis pointed to one incident:

During the 2003 SARS crisis, business started to deteriorate. By April, our occupancy rate, which should
have been at 95%, dropped to 35% . . . The first step was for me and the executive team to take a 30%
pay cut . . . Then it got worse. In May, the occupancy rate was 17% –18%. We reduced the workweek to
four days, and people were asked to take their outstanding paid leave days. And then, when these
reserves were getting used up, that’s when everyone really pulled together. Employees who were single
gave their shifts to colleagues who had families to support. Some employees were worried that their
contracts would not be renewed given the low occupancy rates, we renewed them without a second
thought . . . Our employee satisfaction rate that year was 99.9% . . . This was one of those negative things
that turned out to be extremely positive.

Such a willingness to go the extra mile to ensure employee satisfaction is reciprocated by a loyal,
dedicated, and hard-working work force that radiates the precious and rare smile in China. Within the
RitzCarlton family of 59 hotels worldwide, the Portman Ritz-Carlton has been rated the highest in
employee satisfaction for five consecutive years. It has also won the prestigious Platinum Five-Star
Award by the China National Tourism Administration. It is one of three hotels in China, and the only
Shanghai hotel, to receive this inaugural award, which is the highest hospitality award in China.
Case Discussion Questions

1. What is the main source behind the Portman Ritz-Carlton’s performance?

2. How valuable, rare, and hard-to-imitate are its human resources?
3. How organizationally embedded are its capabilities?
4. If you were the general manager of a rival hotel, how would you respond?