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624
– 624 –
TEACHING NOTE
CASE 27
Employee Training & Development at
Ritz-Carlton
Overview
The Ritz-Carlton hotels began in 1898 with a Ritz hotel. Cesar Ritz, a Swiss hotelier, known as the ‘king of
hoteliers and hotelier to kings’, opened his first location, the Ritz hotel, in Paris. Before opening that first
hotel, Cesar Ritz had worked in several well-known hotels and had definite ideas about what constituted
a good hotel. He designed the Ritz Paris consistent with those ideas. The hotel became one of the most elegant
hotels of its time and a favorite with the wealthy and aristocratic members of society because of its elegance
and meticulous service. Cesar Ritz expanded the Ritz hotels across Europe in the early 1900’s and during that
period, opened the Carlton hotel in London. Mr. Ritz set up the Ritz-Carlton Management Corporation (RCMC),
to franchise the Ritz-Carlton name and logo, and to set the service and culinary standards that were required of
the franchisees.
After Cesar Ritz’s death in 1918, his wife continued to manage RCMC. In 1927, the first Ritz-Carlton in the US
was established in Boston, with several others following in the US and across Europe. Between the late 1920s
and the 1940s, the business suffered a downturn due to the Great Depression and World War II. All the hotels,
except the Boston Ritz-Carlton, went bankrupt. After World War II, Charles Ritz, Cesar Ritz’s son, took over
the management of RCMC, and franchised the name to several new investors in Europe, where the luxury hotel
business had quickly recovered. In 1983, Johnson Properties, owned by William B. Johnson from Atlanta, GA
purchased the Boston Ritz-Carlton and the US trademark for the Ritz-Carlton name, and then incorporated its
hotel business as the Ritz-Carlton Hotel, headquartered in Atlanta. In
1988, Johnson bought the global rights to the Ritz-Carlton name (except for the Hotel-Ritz, Paris, and the Ritz-
Carlton in Montreal). He invested significant amounts in the company to turn around the Boston Ritz-Carlton
and revive the hotel’s reputation for service, He also built several new wholly-owned hotels under the Ritz-
Carlton name across the globe.
In the late 1980’s, Horst Schulze, a highly experienced hospitality industry executive, became the vice president
of operations at Ritz-Carlton. Under his leadership, an effort was made to ensure that the hotels had an image
of elegance, with particular emphasis on extraordinary level of service, and in 1992, Ritz-Carlton received the
Malcolm Baldrige National Quality Award. By the mid-1990s, Ritz-Carlton was floundering in debt, which some
analysts believed was the result of rapid expansion and the costs associated with the emphasis on high quality
service. In 1995, Marriott bought a 49% stake in Ritz-Carlton, and in 1998, the stake was raised to 99%. Marriott
maintained an independent brand identity for the Ritz-Carlton chain, and in 1999, Ritz-Carlton, now with 35
hotels around the world, received the Malcolm Baldrige Award for the second time.
The Ritz-Carlton began to diversify in the late 2000’s, setting up luxury residential condominiums called the
‘Residences at the Ritz-Carlton’, increased its focus on the Ritz-Carlton Club timeshare set up in 1999, and
opened spas and golf courses at some of its resort hotels. Schulze retired in 2001 and was succeeded by Simon
: Fostering an Exceptional
Customer Service Culture*
*This teaching note reflects the thinking and analysis of Professor David L. Turnipseed, University of South Alabama. We are most
grateful for his insight, analysis and contributions to how the case can be taught successfully.
Case 27 Teaching Note Employee Training & Development at Ritz-Carlton
625
Cooper as the president and COO of the company, and in 2003, Ritz-Carlton moved its headquarters from
Atlanta to Chevy Chase, MD, to improve operational efficiencies. The company expanded its properties around
the globe and by 2013, Ritz-Carlton operated 81 hotels in 26 nations with 38,000 employees. Ritz-Carlton had
managed to maintain its reputation as an exceptional service organization over the years, and was branded as a
“lifestyle company” that also managed golf resorts and spas and even sold bedding. According to the company,
an average guest spent US$100,000 at the Ritz-Carlton over a lifetime.
The Ritz-Carlton case traces the development and perpetuation of an organizational culture of elegance and
high-quality service from the opening of the first hotel in 1898 to the present. The development of the iconic
brand, including its never-varying focus on elegance and high-quality service, its diversification strategy in the
early 2000’s, to the current globalization strategy are succinctly described in the very interesting case.
Suggestions for Using the Case
The Employee Training & Development at Ritz-Carlton case is best assigned later in the course during your
module on strategy execution. The case provides illustrations of concepts presented in Chapters 7–12, but
focuses primarily on concepts from Chapters 10–12. It is an excellent case for drilling students on the intricacies
To facilitate your use of assignment questions and making them available to students, we have posted a file of
the Assignment Questions contained in this teaching note on the instructor resources section of the Connect
Library. In all instances, these assignment questions correspond to the assignment questions in the teaching
note for the case.
In our experience, it is quite difficult to have an insightful and constructive class discussion of an assigned case
unless students have conscientiously have made use of pertinent core concepts and analytical tools in preparing
substantive answers to a set of well-conceived study questions before they come to class. In our classes, we
expect students to bring their notes to the study questions to use/refer to in responding to the questions that
Utilizing the Guide to Case Analysis. If this is your first assigned case, you may find it beneficial to have class
members read the Guide to Case Analysis that immediately follows Case 31 in the text. The content of this Guide
Suggested Assignment Questions for an Oral Team Presentation or Written Case Analysis We suggest that the
Ritz-Carlton case be used for written assignments and for team presentations. Three good assignment questions
are:
1. You have been retained as a consultant for the Ritz-Carlton hotels and requested to assess the company’s
strategy to perpetuate its culture of elegance and service through selection, training and development of its
employees. Please prepare a report to the Board of Directors of Ritz-Carlton that includes,
Case 27 Teaching Note Employee Training & Development at Ritz-Carlton
626
Your report should be 5–6 pages.
2. (Short written case assignment/class presentation) What are the pros and cons of the Ritz-Carlton’s strategy?
3. (Short written case assignment/class presentation) Trace the development of the Ritz-Carlton’s corporate
Assignment Questions
1. Describe the culture of the Ritz-Carlton hotel organization. What are the key features of the culture?
2. Explain the Ritz-Carlton philosophy of selecting employees to build their capabilities for proficient strategy
execution. How did the Ritz-Carlton get the “right kind” of employees? What attributes were required to
work at the hotels?
3. Describe the first year experience for new employees at the Ritz-Carlton.
4. Evaluate the outcomes of the Ritz-Carlton’s Employee Training and Development initiatives.
5. Describe the Ritz-Carlton’s diversification strategy. Consider the lessons of Chapter 8. What type of
diversification strategy did the company use? Why was this strategy particularly appealing?
6. As the Ritz-Carlton focused on global expansion, what did the company believe was its competitive
advantage that would ensure success? How did the company approach globalization?
7. What recommendations can you make to the management of the Rita-Carlton as the company pursues its
global expansion?
Teaching Outline and Analysis
1. Describe the culture of the Ritz-Carlton hotel organization. What are the key features of
the culture?
The corner-stone of the Ritz-Carlton culture was laid at its beginning, and has not changed. The Ritz-Carlton
foundation for elegance and excellent service quality began in 1898 when Cesar Ritz, a Swiss hotelier,
known as the ‘king of hoteliers and hotelier to kings’, opened the first Ritz hotel in Paris. Before opening his
The culture of excellent customer continued over the years and in the late 1980’s under the leadership of
Horst Schulz, Vice President of operations, a conscious effort was made to ensure that the hotels projected an
image of refined elegance and particular emphasis was given to providing an extraordinary level of customer
Case 27 Teaching Note Employee Training & Development at Ritz-Carlton
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Rapid expansion and the costs of high quality service resulted in debt problems for the Ritz-Carlton, and in
1995, the company sold 49% interest to Marriot, and two years later sold an additional 50%, giving Marriot
99% ownership. Marriot maintained an independent brand identity for Ritz-Carlton, and its culture remained
intact: in 1999, the hotel received the Malcolm Baldrige Award for the second time. The Ritz-Carlton has
continued to expand and diversify, and by 2013, the company operated 81 hotels in 26 countries, with 38,000
Key features of the culture are:
n The values business practices, and standards that management preaches and practices: elegance,
n The company’s approach to people management and policies, procedures and practices that provide
n The atmosphere and spirit that pervades the workplace: professionalism, empowerment, trust,
Employees were referred to as ‘The Ladies and Gentlemen of Ritz Carlton.’ The Ritz-Carlton fostered a
n Actions and behaviors that were explicitly encouraged and rewarded: quality was explicitly managed.
n Revered traditions and stories of “heroic acts” and how we do things around here ‘Monday Wow’—
2. Explain the Ritz-Carlton philosophy of selecting employees to build their capabilities for proficient
strategy execution. How did the Ritz-Carlton get the “right kind” of employees? What attributes
were required to work at the hotels?
n The Ritz-Carlton philosophy of selecting employees:
The Ritz-Carlton believed that as a service business, the quality of its end-product was only as good as the
people providing it. Consequently, the company was very careful to recruit the right kind of employee and
n The Selection Process—Getting the Right Kind of Employee:
Employee selection was a rigorous process and based on benchmarking and selecting the ideal employee.
The hotel developed an ideal profile, a job description, and required qualifications based on top performers
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no telephone interviews for skills-based jobs, rather the applicants were scheduled for a demonstration. After
the initial screenings, the candidates were given a standard behavioral interview questionnaire, ostensibly
to determine whether the individual shared the Ritz-Carlton’s values and his/her comfort level working
n Required Attributes:
To be selected as a Ritz-Carlton employee, according to the Ritz-Carlton area marketing director, a “candidate
must look you in the eye, and be warm and friendly during the interview. If they can’t do that in the first
Other requirements were situation-specific, as special traits were required for different jobs: a candidate for
a housekeeping job would need to be meticulous about his/her work. A front desk employee would need to
be a people-oriented person. However, there was one commonality, which was a passion for service. The
3. Describe the first year experience for new employees at the Ritz-Carlton.
Subsequent to selection of highly committed service individuals with varying levels of technical skills and
backgrounds, the Ritz-Carlton assigned learning coaches to the recruits. The coaches trained and certified
the new employees on the core requirements of their respective jobs. Ritz-Carlton invested significant time
New employees were given a two-day orientation program before being assigned to their job at Ritz-
Carlton. Ritz-Carlton ensured that no new recruit joined work without the two-day orientation. The company
considered this an important activity, and the hotel’s General Manager and the HR department conducted
the initial orientation, in which new employees were familiarized with the company’s history, culture,
After the orientation, each new employee was assigned an experienced employee (learning
coach) from the department in which he or she would work for three weeks of on-the job training. During this
period, new employees got to meet the guests and their trainers focused on developing their customer service
skills, teaching things skills such as addressing the guests properly, anticipating their needs, soothing them
in case of complaints, and solving customer problems. During the third week of training, new recruits were
Training did not stop after the initial certification and job assignment: formal on-the-job training continued
till day 365, upon which the new employees were given a written test, interview, and role-play session. Upon
satisfactory completion of these evaluations, they were recertified, recognized for their service, and given
Case 27 Teaching Note Employee Training & Development at Ritz-Carlton
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TABLE 1. Ritz-Carlton First Year Training and Development
Orientation Welcomes new recruits to The Ritz-Carlton, and shares its culture and philosophy.
Operational Certification Partners new recruits with a Learning Coach in their department who coaches
and trains them on the job-related skills and standards.
All Aboard—From
Satisfaction to
Engagement
Workshop designed to actively involve the employee in identifying and
developing the knowledge, skills and abilities necessary to own and
immediately resolve problems and opportunities.
4. Evaluate the outcomes of the Ritz-Carlton’s Employee Training and Development
initiatives.
The Ritz-Carlton training and development programs were widely recognized for excellence. It invested
10 percent of its payroll expenses in employee training. According to Mandy Holloway, Senior Director of
Global Learning, “We take training and learning seriously. We focus on the design of learning, measuring
competency, and whether the skills learned are truly being delivered to the customer.” The company was
ranked #1 Global Learning Company in the world by Training Magazine in 2007. In 2008, the Ritz-Carlton
The Ritz-Carlton Leadership Center was highly respected and attracted a large number of clients from
diverse industries such as Finance, Healthcare, Transportation, Legal, Energy, Technology, Retail, Fitness,
Insurance, Human Resources, and Hospitality. Apple modeled its service after Ritz-Carlton. In October
According to analysts, Ritz-Carlton’s training and development programs helped it maintain its mystic,
retain customers, and increase sales. The hotel’s fully-engaged guests spent more nights in a Ritz-Carlton
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There were some detractors to the Riz-Carlton training. Some analysts believed that the detailed scripted
format of service and its daily recitation by the employees was not a good way to motivate. They agreed
that the selection and training at Ritz-Carlton was critical to its service excellence, but they believed that
the employees blindly followed the rules because the rituals had become repetitive and monotonous, and
such an organization culture would make those employees reluctant to change. The analysts thought the
5. Describe the Ritz-Carlton’s diversification strategy. Consider the lessons of Chapter
8: What type of diversification strategy did the company use? Why was this strategy
particularly appealing?
The Ritz-Carlton began implementing its diversification in the early 2000’s. The company used related
diversification which was particularly appealing because of the competitively valuable cross-business value
chain and resource matchups. The company initially set up the Ritz-Carlton Club timeshares, spas, and
The ability to exploit the highly-respected brand name, share resources among the several businesses,
engage in cross-business collaboration, and transfer specialized expertise among the businesses, helped
6. As the Ritz-Carlton focused on global expansion, what did the company believe was its
competitive advantage that would ensure success? Which approach to international
competition best describes Ritz-Carlton’s strategy and why? What was the company’s
process for going global?
n Competitive Advantage: As the Ritz-Carlton began to focus on international expansion, the company
n Approach to Internationalization: The Ritz-Carlton’s approach to internationalization is best described
as Global Strategy: think global—act global. The approach in the company’s international strategy was
standardized: customer service. The company provided the same service under the same brand name
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n The Globalization Process: In emerging markets such as China, where there was a shortage of qualified
hospitality employees, the Ritz-Carlton was able to attract, train, and retain top-quality staff. The
company’s management realized that training new employees for new hotels was much more difficult
than training for existing hotels. The company’s senior management reacted by working together to
source the coaching needs of new hotels and utilizing some of the best coaches and trainers from
7. What recommendations can you make to the management of the Ritz-Carlton as the
company pursues its globalization strategy?
n Rotate new employees to well-established hotels in different countries to help socialize them into the
Ritz-Carlton culture and to use the established hotels as training sites.
Epilogue
There was no recent news to report concerning the Ritz-Carlton’s employee training and development or its
approach to strategy execution when this note was prepared.
