The Ritz Carlton Hotel Company is a management company which operates hotels and resorts in twenty three countries worldwide and seventy properties in all the major cities. The brand is a subsidiary of Marriot International with the headquarters located in Chevy Chase, Maryland. Established in the early 1990’s; the company employs more than 32,000 people and privately
owned, the company today runs under the guidance of William Johnson and Horst Schulze. With 100 years of impressive past record, Ritz Carlton has managed to uphold and rather magnify its prestigious its brand image of luxury and comfort (Stark, 1998).
1.1 Company Products The Ritz Carlton excels at providing luxurious hotels and resorts with the added features of spas, bars, suites, guest rooms, gold facilities, conference halls for executive meetings and so on. Any celebrations of birthdays, anniversaries, weddings or showers, the Ritz Carlton takes pride in creating a memorable occasion. 1.2 Main Customers Its target market is the upper and the upper middle class traveling for executive business trips or wedding receptions and other such functions. They emphasize on understanding what the customer needs and pampering the customer to make him feel special. It is known for its exemplary customer services by taking the initiative to inquire about guest needs and preferences and ensuring that the customer does not have to repeat his demands the next time. The staff is especially trained and they undergo retraining orientation to ensure that the employees uphold the prestigious name of the company and work to go beyond customer expectations (Leonard & McAdam, 2002). 1.3 Operational Challenges Sophisticated customers are perhaps the most important challenges to Ritz Carlton’s operations. Posing to be very difficult, this genre of customers are satisfied after lots of pains however, Ritz Carlton cannot ignore them because they often belong to the elite class. Other challenges include maintain a demand forecast and price adjustments according to the forecasts. No manager would like to see empty rooms but disappointed customers are also not really desired. Striking a balance between the demand and supply is a major issue. 1.4 Market Challenges The hotel industry in general today is facing challenges in the form of a sluggish economy which has been aggravated by the financial crunch the world is facing currently. Apart from this, the rising competition by the rapid emergence of luxurious 5-star and above hotels and resorts all over the world and the increasingly demanding and sophisticated customers are posing serious challenges to this industry (Sher-q, 2009).
2. Concepts and Applications of TQM
Total quality management is a criterion for managing people, tasks and processes to ensure the best quality service/product which guarantees complete customer satisfaction. It is an aspect of management which solely focuses on quality as its prime success factor (Babar & Aspelin, 2004). (Juran, 1986) defines: ““Total Quality Management (TQM) is the set of management processes and systems that create delighted customers through empowered employees, leading to higher revenue and lower cost.” The focus of a company on accuracy closer to Six Sigma is essential for the application of TQM. Crosby believes that TQM is achieved through focus on the following principles: Prevention is better than cure: Avoiding mistakes from happening in the first place is essential for TQM application. Quality is product meeting the description: Since the customer is the king, the product description should match the requirements completely. Standards should be maintained: The product should be benchmarked and standards should be maintained throughout. Zero Defects: Crucially important and correlates with the fact that if standards are maintained, there will not be any defects in the product. Continuous Improvement: There cannot be TQM achieved unless there is a constant improvement in the quality of the product or service. Employee Involvement: It would be unwise for any organization to expect TQM without the important input of its employees.
A combination of all the six steps above result in the implementation of true total quality management practices. Without a balance in the above elements, it is not possible for there to be true TQM in any organization, be it a product manufacturing company or a service firm. TQM gurus such as Crosby and Lawler have written again and again on the importance of the last two elements in the chain of development. Most organizations implement all but one of the elements of TQM, and thus fail to adequately provide quality in service. Ritz Carlton hotel has devised programs for each of these elements in order to ensure that the customer gets the right service the first time, the service quality does not go down the next time and that the employees contribute towards greater development in order to improve the overall quality of the service. For effective TQM total commitment and strong
leadership are extremely essential in order to identify and eliminate the wasted efforts and energy spent in an organization on a regular basis. The concept of TQM originated and developed in the manufacturing sector but over the years the concept has been redefined and adapted to be applicable to a service industry. In a service industry since usually there is no tangible product and the customer is directly involved in the service being offered, thereby applying TQM is not only critical but may also pose a problem to place quantifiable terms on the features that contribute to the quality of the service. “The Ritz Carlton hotel company implemented the Malcolm Baldrige quality program for effective quality management. And it became the only recipient in the service industry to receive
4 the Malcolm Baldrige award twice” (Mehrotra, 2003). This criterion has seven categories which include leadership, strategic planning, customer focus, measurement, analysis and knowledge management, workforce focus, process management and results.
3. TQM and Ritz Carlton
5 Ritz Carlton has an especially trained team of quality management executives who spend about one fourth of their time on discussing and resolving quality related matters. Weekly meetings are held to discuss product and service quality, guest satisfaction, profits and competitive status in the industry, competition and market growth and development. Ritz Carlton believes that the secret to effective quality management is to hire efficient staff that understands the guests’ needs and caters to them immediately (Page & Curry, 2000). Quality Planning In the hospitality industry, quality is of extreme importance but unfortunately so far the focus has only been on training front line staff to ensure guest satisfaction. The importance of measurement and process improvement has been totally ignored. Forms and questionnaires asking for “Rate Us” filled out by guests and indirect measures of determining customer satisfaction have been used as a means of process improvements for years. But this methodology has proved to be ineffective since steps can be taken for improvement after a disgruntled customer points out what the hotel lacks. Thereby, the
suggestions and recommendations are received too late to prevent a customer from being affected by it (Jandel-Leavitt, 1995). When a customer stays at a hotel, his perception of quality is defined by reliability, assurance and empathy. Ritz Carlton has set this perceived quality as its target and to achieve it emphasizes on predictability, integrity and timeliness. All three factors combined lead to customer satisfaction (Hashmi, 2007). Quality Control Once these service standards have been determined the next step is to decide on the measurement techniques to monitor how well these standards are being achieved.
The major difficulties faced by the hospitality industry in implementing TQM are determining measurements and process improvement methods that provide quantifiable data. But the service industry is realizing this dilemma and in the next few years will be coming up with effective means of measuring quality performance. In fact some measurement techniques have already been adopted by hotels including Ritz Carlton. Advance technology is being utilized to the maximum benefits by employing automated building and safety systems to computerized reservation system; Ritz Carlton is coming up with more user friendly mechanisms to enhance customer satisfaction. The employees are trained to note down the likes, dislikes and preferences of guests and this data is entered in a database which ensures a quality service to repeated guests as per their preference (Cassidy, 2006). Quality Improvement The hotel industry can achieve quality improvement without the using the sophisticated statistical techniques normally used by the manufacturing industry. For the hotel industry the Baldridge awards simply requires the company to collect and analyze information regarding customer satisfaction, product and service quality, cycle time (time take to recognize and satisfy a customer need), financial data and employee records and compare this information with industry benchmarks and corresponding data of competitors (Nixon, 2009). Comparing their quality standards to competitors and other hotels in the industry is a major obstacle since it is hard to find quality related information on the industry. Other than the
6 financial data neither the individual competitors nor the industry as a whole has any recorded or documented quality standards and other relevant information. After winning the Baldridge award, the company decided to
reduce the cycle time (the time delay between recognizing a customer need and satisfying it) and set a target of 100% customer retention. 3.1 Benefits of TQM at Ritz Carlton The Ritz Carlton Baldridge quality standards set the foundation stone for the hotel industry and demonstrate how the entire industry can set the quality criteria to develop a successful and effective quality assurance plan. But for that a quality culture needs to be developed and the top leaders can take the initiative to build that (Ishikawa, 1985). Working to improve the quality of service in the hospitality industry not only has a positive impact on the hotel sector and the customers but the employees as well. Their working value increases leading to job commitment and satisfaction, employee empowerment and involvement improves communication and encourages teamwork (Ho, 1995). Management leadership, reduced costs and customer loyalty add to the competitive advantage of an organization which is working to continuously improve its service and products to better serve its customers. Continuous improvement needs to be the focus because we are currently living in a culture where customer needs are changing rapidly. To keep up with the ever changing surroundings the hotel industry needs to be alert and flexible enough to accommodate the demanding customers of today.
Approaches to TQM may vary from organization to organization but the Malcolm Baldridge Awards serve as a guiding light for setting up a quality improvement program (Cassidy, 2006). The aim of the entire quality management program at Ritz Carlton is not only to attain customer satisfaction and to meet their expectations but also to provide them with a memorable stay that goes far beyond their expectations (Leonard & McAdam, 2002). Ritz Carlton does operate Total Quality Management and it is only because of this consistent TQM that the company has retained its customers over the years and continues to satisfy them and provide them with a luxurious stay. “Since the inception of the first Ritz Carlton hotel in 1927, it has managed to sustain its brand image and the added feature of winning the Malcolm Baldrige award has strengthened its position in the hotel industry” (Smith, 1993). Assessing the organizational culture and adapting it to suit the diversified cultures of the guests staying in is another important factor that needs to be worked on. A group of top managers and executive staff from different areas and departments of the company need to sit together and critically analyze and examine the organization to
assess the fit between the TQM principles, organizational culture and customer requirements . To implement continuous improvement and to align operational activities Ritz Carlton developed a pyramid concept where the company’s mission is at the top, succeeding levels are followed by the 10-year mission, 5-year mission, key process improvement techniques and strategies to sharpen customer and market focus. The pyramid base is set by the company’s philosophy and values to ensure that all efforts for improvement are aligned with the company principles and standards (Jandel-Leavitt, 1995). 3.2 Five Areas for development
7 Strategies and policies implemented and information communicated is one aspect of TQM which Ritz Carlton needs to work on specifically regarding issues of how quality control policies are established and how are they linked to the long and short term plans of the organization. The authenticity of external and internal information collected and the effectiveness of its communication to concerned parties is one factor which has been totally neglected by Ritz Carlton and needs to be considered in order to successfully achieve TQM in its products and services offering. The five areas for development at Ritz Carlton are as follows: 1. Benchmarking: Ritz Carlton operates in an industry where benchmarking is a subjective exercise. Being a luxury hotel, it cannot actually select any other hotel for its benchmark. However, it should define one and strive hard to meet its standards.
Plan for Benchmarking: Asking the customers for their desired service benchmarks. Adopting international hotel standards as defined by hospitality management institutions. Implementation of the benchmarking plan will enable Ritz Carlton to become the benchmark of other hotels in the region and distinguish itself from its competitors. 2. Teamwork: There are a multitude of services provided in a hotel to a single customer by multiple segments of the hotel. Teamwork and collaboration amongst them is a key issue that needs to be implemented. Plan for Teamwork Training drills according to the most linked services. Installation of communication plan enabling all sections of the hotel to be updated regarding customers’ needs and demands. Implementing a teamwork plan will improve the customer service experience and generate positive reviews about Ritz Carlton in the industry. 3. Zero Error Rate: Mistakes are sins in the hotel industry. The managerial
focus should be to ensure that there are zero errors so that no negative customer views are generated. Plan for Zero Defects Implmenting customer “information” plan where customers communicate their requirements clearly and are maintained on the record. Employees should be instructed to deal with each customer uniquely. Asking the customer for clarification if needed is better than making a mistake. The focus on meeting the customers’ requirements and shifting from standards if it is asked for by the customer should be part of the script at Ritz Carlton.
4. Demand Estimation leading to minimized wastage: In this era of recycling and focus on minimized wastage, Ritz Carlton should adopt a strategy that would minimize its resources
8 wastage and work for a global no-wastage cause. Plan for Demand Estimation leading to minimized wastage The hotel’s approach towards usage of resources should be reflected to its customers. Hotels like Ramadah Plaza have adopted such strategies and have done quite well. Ritz Carlton can use the same strategies, if it feels it does not need to modify them. The hotel can expect its corporate image to rise and shine and thus rely on the “green” customers to come back again because of their focus on minimized wastage. 5. Quality Training: Training and constant re-invocation of tricks and tips is necessary if Ritz Carlton is to establish total quality management practices efficiently. The hotel can look forward to establishing an ongoing training program where existing and new employees can be trained specifically according to Ritz Carlton standards in order to “do it right, the first time” because in the luxury hotel industry, that is what matters (Hansen, 2005).
9 Ritz Carlton needs to realize that aggressive targets and slogans tend to frustrate employees rather than motivate them thereby affecting their performance. Thereby, intimidating targets and goals need to be eliminated because an important concept of attaining TQM is empowering the workforce to take decisions and to place trust in them that they would give their best to
the organization. It is extremely crucial for effective TQM to be practiced that Ritz Carlton removes the currently existing barriers between departments. Research, design, marketing and the human resource department all have a common goal that is of providing quality service and attaining customer satisfaction and for this they need to work together rather than focus on individual goals. The TQM model implemented at Ritz Carlton emphasizes on employee education and training, employee participation and customer focus and the organization has so far been successful in implementing these strategies in its daily operation to attain TQM. But it fails to realize the importance of inculcating leadership in employees, since supervision of management is crucial to ensure that the service quality is not faltering at any point in time (Hahmi, 2007).
10 The new emerging hotels tend to survive for short periods but in the long run are unable to meet the quality standards Ritz Carlton has engraved for itself. And this continues to be a potential benefit for the company in the coming years as well where competition is expected but is likely to be unable to withstand the strong menacing challenge posed by Ritz Carlton (Jabnoun, 2002). But there is no such thing as sufficient improvement; if an organization does not improve continuously it is bound to die. Similar is the case with Ritz Carlton, continuous improvement is necessary to keep up or rather beat competition. In a hotel industry the most important aspect is customer satisfaction and the answer to what makes a customer satisfied is the basic driver to process improvement (Jandel-Leavitt, 1995). The next thing a guest would need is timeliness. Be it luggage delivery, room service, reservation procedure or check-out, timeliness is a factor which is bound to leave a good satisfactory impression on the customer (Tari, 2005). Personalizing through identifying how a guest likes to be treated and calling them by name makes a guest move more rapidly towards sustained loyalty. A warm and sincere greeting and a fond farewell are a norm at Ritz Carlton. And this is what Ritz Carlton believes in and needs to work on continuously to sustain its brand image (Nixon, 2009). TQM practices do not say that brand image positioning is out of its scope.
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