TQM At the Ritz Carlton Case Study

• Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). • Submissions without this cover page will NOT be accepted. Department of Business Administration Organization Design and Development- MGT 404

Assignment 3 Marks: 5 Course Learning Outcomes: • Analyze the human, structural and strategic dimensions of the organizational development (2.4) Assignment Instructions: • Be sure to cite at least two scholarly, peer-reviewed references in support of two of your answers and also incorporate the key concepts from the course. Assignment Question(s): Please read the case study “TQM at the Ritz-Carlton” in Chapter 13, p.391 available in your textbook “Organization Development & Change” (10th ed.) by Cummings, T and Worley, C and answer the following questions: •

Q.1 Based on your understanding of the case, discuss and evaluate employee involvement as practiced by the Ritz-Carlton in terms of the following key elements: -Power (0.5 mark) -Information (0.5 mark) -Knowledge and skills (0.5 mark) -Rewards (0.5 mark)

• Q.2 Do you think the Ritz-Carlton’s experience with TQM could be provided as a benchmark to other organizations? Explain your answer in light of the stages for TQM application. (1.5 marks)

• Q.3 Discuss which features are evident in the practices of the Ritz-Carlton that would enable the Hotel Company to meet the criteria of high involvement organizations. (1.5 marks) Answers: A.1… 1.1… 1.2… 1.3… 1.4… A.2… A.3… application 13 2 CHAPTER 13 EMPLOYEE INVOLVEMENT 391 TQM AT THE RITZ-CARLTON T he Ritz-Carlton Hotel Company, the premier flagship of Marriott International, operates 81 luxury hotels in 27 countries. Employing about 38,000 staff, the firm has a venerable record of excellent service that is considered the benchmark by many in the hospitality industry. Ritz-Carlton has been involved in TQM for over 30 years and was the first hotel chain to win the coveted Malcolm Baldrige National Quality Award in 1992.

Needless to say, Ritz-Carlton is passionate about quality guest care, from the president and chief operating officer, Herve Humler, to the maintenance, front desk, and housekeeping staff. Ritz-Carlton’s unique approach to TQM is embedded in its strong corporate culture, which is spelled out clearly in its “Gold Standards.” These standards are the backbone of the company and include the values and philosophy that guide how it operates, including processes for solving problems and criteria for grooming, housekeeping, safety, and efficiency. The Gold Standards include Ritz-Carlton’s credo, motto, three steps to service, service values, and other proprietary statements. All employees know the Gold Standards by heart and are well-trained in what they mean for daily work behavior. For example, Ritz-Carlton’s motto, “We are Ladies and Gentlemen serving Ladies and Gentlemen,” is closely tied to how guests are welcomed, with “a warm and sincere greeting,” and depart with a “fond farewell.” Ritz-Carlton’s TQM program begins at the top with senior executives who spend about a quarter of their time on quality issues. Because the company’s service culture is built on trust, these leaders hold themselves accountable for behaving according to the values that they require of the organization.

The senior executives comprise the corporate steering committee for TQM as well as the senior quality-management team. Each week the steering committee reviews various measures of service quality and performance. It engages in detailed planning by setting objectives, devising action plans, and assessing results. This planning process is essential to RitzCarlton’s TQM program. It extends to each level of the firm where teams in the individual work areas set objectives and create action plans that are reviewed by the corporate steering committee. This cross-level planning process helps to assure that quality goals and action plans are consistent across organizational levels and integrated with the firm’s overall plan. In addition, each hotel has a designated quality leader, who serves as a resource and advocate as teams develop and implement their quality plans. Teams play a key role in providing quality service.

Each work area in a hotel includes teams responsible for problem solving, strategic planning, and setting quality-certification standards for each position. Employees meet as teams to spot problem patterns, prioritize problems, and develop measures to prevent their recurrence. These cross-functional teams require sufficient time and resources to learn how to function effectively. Managers are still responsible for objectives and solutions but rely on input and involvement from team members. A unique team tradition at Ritz-Carlton is the “lineup,” drawn from early French restaurants where the chef got his whole team, including the waiters and waitresses, together at the same time each evening to communicate what they are going to be serving. At the Ritz-Carlton, teams on every shift use the lineup for about 15 minutes every day.

This includes sharing up-to-the-minute information as well as talking about great things employees have done to deliver exceptional service. An integral part of Ritz-Carlton’s TQM program is empowering employees to solve guests’ problems as quickly as possible. Employees are responsible for acting at first notice, regardless of the type of problem or guest complaint. They are expected to stop their normal routine and to take immediate positive action to discover what went wrong and resolve it. They are empowered to handle any customer complaint on the spot and can demand the immediate assistance of other employees and spend up to $2,000 if necessary. Employees can apply this rapid response 392 PART 4 TECHNOSTRUCTURAL INTERVENTIONS not just to solve problems but to do something that creates an absolutely wonderful stay for a guest, such as surprising guests with champagne and cake in their room on their birthdays. Ritz-Carlton also works hard to avoid guest problems before they occur. Employees who detect a potential problem in service delivery are immediately expected to bring it to management’s attention and a solution is found.

Eliminating internal employee complaints can avoid external complaints that might come from guests. A key to Ritz-Carlton’s TQM success is the continuous collection and analysis of data on service quality and its comparison to predetermined customer expectations. Assisted by the latest information technology, the company gathers information on such quality measures as percentage of check-ins with no queuing, time spent to achieve industry-best cleanroom appearance, time to service an occupied guest room, and guest room preventive-maintenance cycles. Data submitted from each of a hotel’s 720 work areas provide daily quality production reports, which enable rapid identification of problems in achieving quality and customer-satisfaction goals. Ritz-Carlton’s human resource practices are tied closely to TQM.

Selection, training, and performance appraisal are geared to talent acquisition, development, and retention. Only about 2% of the people who apply for jobs are hired. A key criterion is how well the applicant is likely to fit the company’s culture including being a team member. Once on board, new employees are versed on the corporate culture through a two-day orientation, followed by extensive on-the-job training, then job certification. To obtain certification, employees are assessed on their mastery of skills associated with their particular job. They also are tested on how well they know the company’s TQM philosophy and credo, which can qualify them as “quality engineers.” Ritz-Carlton expects 100% compliance with skills testing, so that everyone is certified to do a particular job and is a quality engineer as well. The company’s performance appraisal system is based on the Gold Standards and employees are held responsible only for those things under their control.

Ritz-Carlton also has extended TQM to its suppliers. To assure that suppliers can meet the firm’s quantity and quality needs, it has developed a supplier certification process, which measures how often suppliers meet specifications on time and how well they improve their cycle time from order to delivery. The certification process also includes an internal audit of suppliers’ capabilities and a quality survey of those who use their products and services, including purchasing agents, accounting personnel, sales persons, and hotel guests. Ritz-Carlton ranks suppliers based these data with the objective of getting them certified to become a fully integrated partner. The fundamental aim of Ritz-Carlton’s TQM process is not simply to meet the expectations of guests but to provide them with a visit that is unique, memorable, and personal. According to independent surveys, 92% to 97% of the guests leave with that impression.

Ritz-Carlton’s experience and success with TQM has spread worldwide to organizations in a variety of industries and regions. Started in 2000, its Leadership Center provides knowledge, information and benchmarking to organizations interested in learning many of the business practices that led to Ritz-Carlton becoming a two-time recipient of the Malcolm Baldrige National Quality Award. 13-2c High-Involvement Organizations Over the past two decades, an increasing number of employee involvement projects have been aimed at using high-involvement work practices to create high-involvement organizations (HIOs). These interventions create organizational conditions that support high levels of employee participation. What makes HIOs unique is the comprehensive nature of their design process. Unlike parallel structures that do not alter the formal organization or TQM interventions that tend to focus on particular processes, HIOs address © Pixmann/Imagezoo/ Getty Images 13 Employee Involvement learning objectives F Define the principles of employee involvement and describe its relationship to performance.

Compare three employee involvement interventions: parallel structures, total quality management, and high-involvement organizations. aced with competitive demands for lower costs, higher performance, and greater flexibility, organizations are increasingly turning to employee involvement (EI) to enhance the participation, commitment, and productivity of their members. This chapter presents organization development (OD) interventions aimed at moving decision making downward in the organization, closer to where the actual work takes place. This increased employee involvement can lead to quicker, more responsive decisions, continuous performance improvements, and greater employee flexibility, commitment, and satisfaction. Employee involvement is a broad term that has been variously referred to as “empowerment,” “participative management,” “engagement,” “work design,” “high involvement,” “industrial democracy,” and “quality of work life.” It covers diverse approaches to gaining greater participation in relevant workplace decisions.

Organizations such as General Mills, The Hartford, and Intel have enhanced worker involvement through enriched forms of work; others, such as Verizon, Deutsche Telekom, Wells Fargo, and Boeing, have increased participation by forming EI teams that develop suggestions for improving productivity and quality; Southwest Airlines, Shell Oil, and Nucor Steel have sought greater participation through union–management cooperation on performance and quality-of-work-life issues; and still others, such as Texas Instruments, Kimberly-Clark, 3M, the IRS, and Motorola, have improved employee involvement by emphasizing participation in quality-improvement approaches. As described in Chapter 1, current EI approaches evolved from earlier quality-of-worklife efforts in Europe, Scandinavia, and the United States. The terms “employee involvement” and “empowerment” gradually have replaced the designation “quality of work life,” particularly in the United States. A current definition of EI includes four elements that can promote meaningful involvement in workplace decisions: power, information, knowledge and skills, and rewards.

These components of EI combine to exert powerful effects on productivity and employee well-being. Major EI applications discussed in this chapter are parallel structures, including cooperative union– management projects and quality circles; total quality management; and high-involvement organizations. Two additional approaches that include elements of EI, work design and reward-system interventions, are discussed in Chapters 14 and 15, respectively. 375 376 PART 4 TECHNOSTRUCTURAL INTERVENTIONS 13-1 Employee Involvement: What Is It? Employee involvement is the current label used to describe a set of practices and philosophies that started with the quality-of-work-life movement in the late 1950s. The phrase “quality of work life” (QWL) was used to stress the prevailing poor quality of life at the workplace.1 As described in Chapter 1, both the term “QWL” and the meaning attributed to it have undergone considerable change and development.

More recently, the term “engagement” has been popular, and a great deal of effort has been invested in differentiating the term. “Engagement” refers to organization members’ work experience. Engaged employees are motivated, committed, and interested in their work.2 Engagement, then, is the outcome of EI interventions. In this section, we provide a working definition of EI, document the growth of EI practices in the United States and abroad, and clarify the important and often misunderstood relationship between EI and productivity. 13-1a A Working Definition of Employee Involvement Employee involvement seeks to increase members’ input into decisions that affect organization performance and employee well-being.3 It can be described in terms of four key elements that promote worker involvement:4 1. Power.

This element of EI includes providing people with enough authority to make work-related decisions covering various issues such as work methods, task assignments, performance outcomes, customer service, and employee selection. The amount of power afforded employees can vary enormously, from simply asking them for input into decisions that managers subsequently make, to managers and workers jointly making decisions, to employees making decisions themselves. 2. Information. Timely access to relevant information is vital to making effective decisions. Organizations can promote EI by ensuring that the necessary information flows freely to those with decision authority. This can include data about operating results, business plans, competitive conditions, new technologies and work methods, and ideas for organizational improvement. 3. Knowledge and skills. Employee involvement contributes to organizational effectiveness only to the extent that employees have the requisite skills and knowledge to make good decisions. Organizations can facilitate EI by providing training and development programs for improving members’ knowledge and skills.

Such learning can cover an array of expertise having to do with performing tasks, making decisions, solving problems, and understanding how the business operates. 4. Rewards. Because people generally do those things for which they are recognized, rewards can have a powerful effect on getting people involved in the organization. Meaningful opportunities for involvement can provide employees with internal rewards, such as feelings of self-worth and accomplishment. External rewards, such as pay and promotions, can reinforce EI when they are linked directly to performance outcomes that result from participation in decision making. (Reward systems are discussed more fully in Chapter 15.) Those four elements—power, information, knowledge and skills, and rewards— contribute to EI success by determining how much employee participation in decision making is possible in organizations. To the extent that all four elements are made available throughout, and especially in the lower levels of, the organization, the greater the employee involvement.

Furthermore, because the four elements of EI are interdependent, they must be changed together to obtain positive results. For example, if organization CHAPTER 13 EMPLOYEE INVOLVEMENT 377 members are given more power and authority to make decisions but do not have the information or knowledge and skill to make good decisions, then the value of involvement is likely to be negligible. Similarly, increasing employees’ power, information, and knowledge and skills but not linking rewards to the performance consequences of these changes gives members little incentive to improve organizational performance. The EI methods that will be described in this chapter vary in how much involvement is afforded employees. Parallel structures, such as union–management cooperative efforts and quality circles, are limited in the degree that the four elements of EI are moved downward in the organization.

Total quality management and high-involvement organizations provide far greater opportunities for involvement. 13-1b The Diffusion of Employee Involvement Practices Employee involvement interventions are being used in organizations throughout the world. In addition to firms in the United States, organizations are applying EI in West European countries, including France, Germany, Denmark, Ireland, Sweden, Norway, Holland, Italy, and Great Britain.5 EI efforts are among the tremendous changes currently taking place in countries such as Russia, Bulgaria, the Philippines, and the People’s Republic of China.6 Organizations in Canada, Mexico, India, Australia, New Zealand, Hong Kong, and Japan also are using EI. Internationally, EI may be considered a set of processes directed at changing the structure of the work situation within a particular economic and cultural environment and under the influence of particular values and philosophies.

As a result, in some cases, EI has been promoted by unions; in others, by management; and in still others, by government. In some cases, it has been part of a pragmatic approach to increasing productivity; in other cases, it has been driven by socialist values.7 In a recent long-term study of EI applications, Lawler and his colleagues at the Center for Effective Organizations at the University of Southern California surveyed the Fortune 1000 and discovered positive trends in EI use among these firms, including both a growing number of firms applying EI and a greater percentage of the workforce included in such programs.8 Despite these positive trends, however, this researc…

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