Valuetainment - “Unhappy Customers Become TERRORISTS” - Ritz Carlton Founder EXPOSES The Hidden Cost Of Poor Service

00:00:00.000 how do you teach employees to confront each other what is the format of confronting

00:00:06.480 management to employees employees to employees how do you teach me to do it yeah well first of all

00:00:14.080 turn it around we had in our pockets first class cards and everybody was encouraged to use that

00:00:21.760 card if they see anybody doing something good a fellow worker write down first class and give it

00:00:27.200 to them or when i walked on tell people gave me first class cards so that's the opposite that is

00:00:34.080 right away establishing the environment that you're here to deal with your video with your

00:00:41.120 fellow workers in a positive mode and then what what happens the more first class cards i get

00:00:46.560 no you just collected the first card for you know i have 20 first class cards are you wrecking

00:00:51.280 how do you recognize the person that got the most first class cards in a month

00:00:54.720 monthly every department recommends an employee of the month that employee all employees of the

00:01:03.840 months have a dinner one of them gets employee of the of the month total they're for each department

00:01:12.400 but one gets for the hotel got it they're 12 in a year that's once a month one of those 12 becomes

00:01:20.080 employee of the year he becomes a vacation paid vacation with a with a spouse

00:01:28.000 and cash paid vacation for spouse with spouse you find them a spouse or you don't find them a spouse

00:01:36.560 i don't think you're in that business that's a different business horse you don't want to say

00:01:40.480 that you'll attract a lot of different customers tell me they make a lot of money

00:01:43.760 make a lot of money yeah you can't do like only writs if you did like something called only writs

00:01:49.840 not only fans it would be a different business model you'd be in but okay so let's say in this

00:01:54.080 so you so i get first class cards but still because when you're talking about this the reality of running

00:01:59.920 a company is you're not hiring everybody right you have direct reports who have direct reports and

00:02:06.960 you have a chief hr officer that the interviews come through how are you teaching me to hire

00:02:13.280 writs type of people to the company what am i looking for you're not doing 100 the interviews

00:02:18.880 how do you teach me oh well i well because i when you came in you you were taught and everybody

00:02:25.840 understands the very the very minimum everybody everybody goes through orientation and managers

00:02:32.960 got to a special orientation i gave every manager leadership session the way our teaching worked

00:02:38.720 beautifully because we were mind you we started with no hotel so every hotel we had was was either

00:02:46.480 new or take over i got it so you had an added you had an advantage i had an advantage i opened every

00:02:52.000 hotel i got it i also knew all employees knew me it wasn't them what a point it wasn't them in the

00:03:00.000 corporate office you have to overcome them because if i don't know you up there in my insecurity

00:03:09.200 i will blame you what is wrong up there because i if i don't make it if i can't live up by the rules

00:03:17.200 it's your fault you have your own but but they didn't know me that's why the big thing that happened

00:03:23.200 in reds carlton and in reds carlton is the empowerment piece which wasn't which was a nuclear

00:03:32.640 explosion in all businesses when i said i empower every employee to make a decision up to two thousand

00:03:39.440 dollars if a guest has but i could do that first of all we did that very carefully i didn't just say it

00:03:47.440 we taught i thought about it for a very long time it was an economic decision i didn't want to lose a

00:03:54.480 customer because a customer that leaves unhappy becomes a terrorist against your company you cannot

00:04:00.240 afford that really i knew from the behavioral analysts that 96 of complaints is people that want

00:04:09.600 to get rid of their frustration we learned i thought they complain on the front desk or the concierge

00:04:16.320 no they don't they complain to anybody who listens anybody listens and if you don't accept it so i

00:04:23.440 had to make sure that a boss boy will accept as his tv the tv that didn't work forgive me

00:04:32.320 and so i didn't want customers to run out there and be unhappy my guest is well connected he calls his

00:04:40.080 travel agency and said was no good his travel agency is part of a consortium 500 travel

00:04:46.000 agencies so i want to be sure that everybody leaves us an ambassador

00:04:52.720 so i had to teach our our employees how to handle any complaint and say the same time i trust you

00:05:00.160 in fact you can make a decision up to two thousand dollars to keep that customer how much did that

00:05:06.240 end up happening per month like at its peak how many people use the full two thousand dollars at its

00:05:12.160 peak in the last three years that was there once oh wow the rest was the busboy saying did you have a

00:05:18.640 nice day with us no my tv didn't work please forgive me about my tv i will buy your breakfast and i guess the

00:05:26.480 complainer now is embarrassed that he complained and leaves as an ambassador rather than so but we

00:05:34.480 certified every employee how to do it so were you employee number one were you employee number one in

00:05:42.400 ritz yeah sure so you're the founder president and coo of the company right the co-founding member of the

00:05:48.000 ritz so from one employee to 47 000 employees you've been part of that entire process i mean i left

00:05:54.720 25 000 25 000 when you left i think today they're at i don't know what the number is that's higher number

00:05:59.280 but from one to 25 that's a hundred percent you question for you did you guys buy other hotels or no

00:06:06.000 yeah we talk about yeah but wait a minute we didn't own hotels we managed hotels right so so for

00:06:11.200 instance we talk on our own existence for example we talk about hotel in new york consequently i inherited

00:06:17.760 a union got it none of our none of my hotels i opened san francisco new union was picking us for

00:06:26.880 three years but it never became union so when you took when you're so you're taking opera like for

00:06:32.640 example two properties are opening up here in pompano one is ritz private residence one is waldorf

00:06:37.440 astoria i want to look at a couple of them and they'll say waldorf's going to be managing

00:06:40.720 this property for 30 years yeah so you you were managing those hotels servicing those hotels okay

00:06:46.880 but but we insisted we wouldn't have written a contract anymore unless you signed 50 years

00:06:53.920 50 years to you guys yeah and what is the business model how do you get paid i get i get a percentage

00:07:00.480 of sales whatever sale they make you make is it i make profit or is it rev i make off sales if if you

00:07:08.240 you own the hotel and they say the sales 100 million i get 3 million got it and you may be losing money

00:07:15.360 to operation so no matter what you're making your 3 million so it's more like a consulting firm yes in

00:07:20.240 a way yes but i also have an incentive after after you make that service i am sharing 10 of whatever in

00:07:31.040 the profit after got it so i have an incentive to make a profit so if i'm doing 100 million no matter what i do

00:07:37.200 i got to pay 3 million on my revenue that goes to you what is my uh what is your incentive to make

00:07:43.120 my 100 million 200 million well i get i get an incentive on anything over a certain profit is it

00:07:49.520 an accelerator like does it get really bigger or no no it stays fairly at the three percent number yeah

00:07:55.520 but but at the same time i i drive sales up which in which i get my three percent on on the sales i drive

00:08:03.280 the rate up i drive the income up and of course i drive the profit up and the profit now now there

00:08:09.520 is an exit clause for you the owner that means we established in the beginning who would buy competition

00:08:16.080 who are the three best hotels in town if i don't if i'm not between five percent at least what they do

00:08:23.680 you can exit me you can throw me out that's in the contract oh yeah oh yeah but they also want

00:08:30.400 the name ritz carlton on the on the property right they don't they don't want to give us

00:08:33.680 because it's not only it's not only hotel that's probably most like course yeah restaurant all the

00:08:37.200 other stuff that's benefiting as well at the peak what was the revenue of all the hotels you guys were

00:08:42.000 managing at the peak under your watch well a world world worldwide we were close to two billion

00:08:52.240 including clubs and stuff that we had everything included yeah got it so two billion 60 million goes to

00:08:58.320 you guys yeah got it that's a pretty nice revenue going to you yeah so you made some real good money

00:09:03.280 yeah yeah yeah that's great so but going back to it so you would come in and your job was to inject the

00:09:11.360 spirit and your philosophy to the way we managed our hotels sure that's what you did sure okay so and

00:09:17.440 the processes make sure the process for sure and i love that and by the way the lady said the following

00:09:21.840 she says you guys have this thing and by the way correct me if i'm wrong i'm just giving you what

00:09:25.600 she said she said that they didn't you guys did an engagement study to identify which employees

00:09:30.960 fell where you guys found that that you call them superstars or invincibles were 32 percent of employees

00:09:37.440 who were energized and committed to do their work then 51 percent were neutral you guys called them

00:09:43.440 just there they're just there and you can correct me here they showed up and do what is expected but

00:09:48.720 a little more and the last one was cave which was around 17 percent this is a constantly against

00:09:55.680 virtually everything this is what the lady i never heard about that so this is not you that wasn't me

00:10:00.960 what do you think about this analysis it's ridiculous tell me why it's ridiculous

00:10:06.080 yeah i this is why i came to the source i want to know what you think yeah yeah okay

00:10:10.320 rob are you tracking rob were you in that meeting am i giving numbers that were numbers that were

00:10:17.600 given to us so please continue it it's it's nearly pathetic i'm please forgive me

00:10:26.320 i mean please forgive me why though tell me why because because that means everything is wrong with

00:10:34.160 the selection process already if you if you had if you hired those poor those poor percentages then

00:10:39.920 then you better start selecting stop get somebody to help you selecting employees but you said your

00:10:46.960 retention hit 19 percent our between 18 and 20 percent was that means you fired or lost 18 or 19 percent

00:10:53.760 of us yeah yeah that's you want to have 10 because you're wondering a new a little bit so why did you lose

00:11:00.800 18 or 19 percent about partially because people moved and or partially because or or we did make

00:11:06.480 mistakes but when i make a mistake i have this now i have to ah this employee really didn't work out

00:11:14.320 so let's look where we made our mistake and tweak our process did we hire them wrong did we orient i agree

00:11:23.280 with something going wrong i have to go back and tweak my processes not the employees and if i have those

00:11:28.960 numbers that means my processes that that says your processes are really screwed up start over

00:11:36.800 that's what that says to me okay how many times in your career did you fire people

00:11:43.600 how many people have you personally fired well i look at general managers i roughly five or six

00:11:51.920 five or six five or six you fired in 30 years at ritz from no no 20 years 20 years at ritz that's

00:11:59.760 between hold it that's between ritz and capella so in 30 years yeah okay so in 30 years you fired five

00:12:06.320 man five gm channel managers general managers who how often did you fire people at hyatt how many people

00:12:12.080 did you fire at hyatt oh that was earlier and i worked was working different oh i want i didn't fire

00:12:19.760 general management but managers a lot yeah a lot what's a lot 50 100 200 yeah something okay so tell

00:12:25.200 me what god what did a person do to get you to a point of wanting to fire them okay for example i

00:12:33.280 as a leader we talk about delegating and so on we kind of kind of what tested what what you delegate

00:12:39.120 you delegate except you don't delegate your vision and your purpose you did doesn't you don't delegate the

00:12:44.400 standards you don't delegate the values you don't delegate those things you delegate how these things

00:12:53.200 so but you let people do things and then you measure and make sure they happen you cannot hope then

00:12:58.240 hope is not a strategy whatsoever so so you measure and you you establish the you you established the

00:13:06.400 expectation you expected to exercise so so my expectation for example was and that was a key element

00:13:13.840 here employee satisfaction x customer satisfaction 92 percent top box intend to return intend to

00:13:24.080 recommend 92 minimum and that was made very clear if i hire you as jenny mentioned now i said patrick now

00:13:30.800 understand that is understand i have no right to compromise i am here for all concerned sure my my right

00:13:39.520 of compromising is over so my expectation is x do you think you can handle it by the by the way and

00:13:46.240 by the way my role is to help you okay i'm here available call me anytime i'm here to help you i will

00:13:51.840 come to your hotel and spend time with you but i'm here to help you but here's the expectation here are

00:13:56.880 the expectation customer satisfaction employee satisfaction and so on and i delegate you and here's how our

00:14:02.640 rules and you go to rotation how is how we do it they learn that the employee is a part of the company

00:14:09.440 not just working for the company they learned that any manager that every employee works in an environment

00:14:15.360 of belonging and purpose do you understand this patrick i would say belonging and purpose so we go through

00:14:23.920 all that and then you have the precise numbers and every year the precise budget's numbers everything's

00:14:29.920 clear but now i see the customer satisfaction which was my key on the end of the month i see you are 86

00:14:41.440 but 92 is the minimum standard so i call your party guy you know he said horse no problem working on it

00:14:48.560 i got it you will have careful customer service you can dig into it i don't have it i don't look i have

00:14:53.760 no time for that was it from this was it food was it what was it correct it next two

00:15:00.560 next month is 94 now patrick now listen buddy you understand i'm cannot compromise that you understand

00:15:10.560 i'm getting upset next month 85 patrick find a chair put it in the corner of your office because your

00:15:23.440 your desk will be mine i'm moving i will move to the hotel

00:15:27.120 you're gonna tell me this yes and then how much longer after that are you firing me

00:15:33.680 oh you i would i would keep you if you stand if you stay at 80

00:15:37.280 if you stay in the hotel and work with me and correct it till this 92 and keep it keep it there

00:15:45.520 i'm fine but if it starts it slips again i said patrick do me a favor leave you know when when you

00:15:53.200 start your number was 92 yeah yeah month month by month by month so at the beginning oh yeah you can

00:16:01.120 have a month slip that's no problem totally get that but what i'm asking is so so every month when

00:16:07.120 you would look at reports and data beginning of the month when all the numbers are done it's you know

00:16:12.640 many things are data but what i'm saying is like at the end of the month month is over it's a new week

00:16:18.000 what reports did you want to see at all the hotels what numbers did you want to see customer satisfaction

00:16:22.640 that's it employee satisfaction economics comparison and the future indicator of business that had to be

00:16:30.320 above every very year ago with the indicator a year ago was we have we have already hypothetically now

00:16:36.640 a year ago today we have we had for the year thousand reservation today i want to have more than

00:16:46.080 thousand for the next year you understand i get beat your prior best i fully get it yeah so so that

00:16:52.720 that was one of them then measurement of course i looked what i looked at what was done what the

00:16:57.440 business from last month did we live up to the budget how are we doing with according to the budget

00:17:02.000 certainly i looked at the economics of course i looked at the cause employee satisfaction we did only

00:17:07.920 one survey but it changed slightly by telephone calls from employees coming in and they they serve the

00:17:15.440 satisfaction survey in for employees changed i looked for one on one question in the employee

00:17:21.840 survey that i insisted to be there that said would you hire your mother would you hire would you

00:17:28.800 recommend your mother to work for our company would you if your mother look for a job would you recommend

00:17:35.360 that she works for us are you asking me that's what i did that's what we have it was i don't know

00:17:41.200 if i'm recommending my mother to work at the company and so what would you do in my company

00:17:46.320 are you asking a question to say do you love the company so much that you would recommend somebody

00:17:50.160 else that's right my dad's 83 i don't know if i'm recommending him although he would be great

00:17:54.240 customer service would if it was possible would you recommend it everybody understood that if

00:17:58.240 did if they say no a question that's your most important question yeah most important question

00:18:04.400 it could be worded for would you recommend that 36 questions 36 when i looked at that one right

00:18:09.920 right but but then i looked at the overall satisfaction give me some more questions on the

00:18:14.320 service employee survey what else did you have do you feel part of the do you feel part of the

00:18:19.280 company okay are you do you know a career your career path and so on do you know your career path what

00:18:25.680 else yeah well it most of it centered around how many questions is it how many total 36 36 questions

00:18:33.760 yeah every month yeah no no no that survey was only done once a year thoroughly and what what month

00:18:41.920 did you typically do it uh well it depends on what hotel it depends when they open we usually did it

00:18:49.200 three months after they opened done that same month every year oh i got so interesting system it's based

00:18:54.480 on when they open up it's not calendar no no so it's not like december or january no no no so three months

00:18:59.840 after they open up so it would make sense to a different kind of a business so different kind of a

00:19:04.000 business you do it annually and it's anonymous you don't know who's answering it it's just giving you

00:19:08.480 data so nobody feels uncomfortable not putting it that's right and then how are you doing customer

00:19:12.240 satisfaction scores an outside company call in we get a number the outside company calls the customer

00:19:19.680 yeah yeah and they give you the analysis once a month i get the analysis for each hotel in tender return

00:19:26.240 and so so so now i'm moving to the hotel and and the channel manager is with me now most most of them

00:19:34.320 done quit i consider them to be fired they quit they have to sit in the office with me and i'm making

00:19:43.040 all decisions and so they're embarrassed and and they quit but what did i do i looked at the survey it's

00:19:49.600 it's so simple everything it's so simple everything i looked at the customer service we have ready

00:19:54.640 where may be impacted negatively by the doorman they were not friendly so what i do i go sit down with

00:20:02.320 all the doorman said now guys please help me it seems that we didn't help you or didn't train you

00:20:08.720 right and i'm here to help you to become respected because you're not but i'm here to help you and i'm

00:20:16.080 accepting that we made a mistake here somewhere so help me guess what four weeks later that was corrected

00:20:23.440 it was it was so simple every time it it is it is not rocket science you go and talk to the people

00:20:31.520 connected to the process but the other idea if you're not you're living in taylorism

00:20:39.120 taylorism said here's how taylorism said in the industrial revolution said 0.64

00:20:46.000 hire people who fulfill a function we think and they do but this is ridiculous

00:20:52.880 after they do it they know better how to do it than i

00:20:55.680 do my thing in my office instead of going to them and say what can we do

00:20:59.040 success is built on how you think influence is built on how you show up

00:21:08.240 every detail matters because presence speaks before you do this is more than style

00:21:16.400 the future looks bright

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Valuetainment - February 26, 2026

“Unhappy Customers Become TERRORISTS” - Ritz Carlton Founder EXPOSES The Hidden Cost Of Poor Service

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