Creating employee evangelists
(2001) Robert Habeeb is a hotel executive responsible for 1,500 employees in an industry where employee turnover can average 100 percent. That's the equivalent of having to replace everyone in your entire organization every year.
As president of First Hospitality Group, a privately held Chicago company that owns and manages 23 franchise hotels ranging from AmeriSuites to Hampton Inns, Habeeb does not want to hire the equivalent of a new company every year, so he has a simple theory: If you treat your employees more like hotel guests, you will reduce turnover. Then employees will treat hotel guests better, which spreads good buzz, encourages repeat visits and voila, makes the business more profitable.
"People on both sides of our customer groups are identical," Habeeb says, referring to people who pay for rooms and those who clean them. "Our mission is to market to them and create loyalty."
Habeeb has created some of that employee loyalty by not being a typical, well-dressed executive. For instance, he takes five of his hotel general managers and their spouses on an all-expense-paid trip to an exotic locale every year. He drives a hot Mustang to all of the hotel properties every year, rallying the teams at each property in a quest to win the car. He personally prepares an elaborate meal for the company employee (and a dozen of her guests) voted by peers for having demonstrated outstanding focus on customers.
From all indications, Habeeb's strategy is working. In the nearly five years Habeeb has been president of First Hospitality Group, company turnover for hourly employees is half the industry average. Revenue has grown 300 percent since 1998; in 2000, FHG did $125 million in sales. In their markets, FHG's hotels typically command 125 percent of the total available occupancy. In other words, their hotels are usually booked. FHG has so far eluded the market downturn that has been hammering hotel operators in 2001. This week, industry bellwether Marriott Corp. said its revenue per available room in 2001 will decline 10 percent. Habeeb says their RVPAR is up 2.3 percent this year.
There are three lessons about Habeeb's work with FHG that can apply to anyone who's providing services to consumers or other businesses. As this case study shows, the ecosystem of satisfied employees leading to satisfied customers can make a big fat difference. Here's a look at Habeeb's smart and savvy evangelistic programs.
1. Constantly gather feedback.
"Any fool can run a company that's smart enough to listen," Habeeb says. He learned that lesson well as a former executive of U.K.-based Rank Group, operator of Hard Rock Cafes and various resorts and hospitality properties. FHG constantly encourages feedback from customers and employees. Some of the highlights:
Each FHG property prominently displays a toll-free complaint or praise hotline for customers to call 24 hours a day. The phone rings directly into Habeeb's office.
The company has a separate toll-free number for employees for the exact same reason: Any one of the 1,500 FHG staffers can talk to Habeeb directly about an idea or gripe. Habeeb answers the line himself.
"When we screw up for guests or employees, we hear it," he says. Perhaps because the company is constantly gathering feedback in other venues, the employee hotline rings "surprising infrequently," Habeeb says. "People want to talk to you more when you don't want to listen."
Each hotel room has a "Dear Bob" postcard for customer feedback. Each employee has a "Dear Bob" postcard available as well.
"When we receive guest feedback, we respond to each one," Habeeb says. "It's just common courtesy."
The company comprehensively tests brand satisfaction with customers twice per year. Then it does the same thing with employees. For someone who is the president of a $125 million company, Habeeb doesn't display a typical attitude about the role of executive management and its importance; he calls it "just spending corporate overhead."
"My role is to facilitate people's ideas. All of our best ideas are the result of the front desk people, the housekeepers, the bellmen, everyone. It's those people on the front lines who are making critical decisions everyday while those of us in management are just spending corporate overhead," Habeeb says, smiling at the incongruence of his statement.
2. Incentives work.
In the low-wage world of the hotel industry, absenteeism (in industry parlance, it's known as "call-offs") can be as pervasive as turnover. Last year, Habeeb created a program to give a cherry Ford Mustang convertible and gas for a year to the employee with perfect attendance.
To promote the program, Habeeb drove the car to all 23 FHG hotels around the country. He took some of the employees out for a spin, talking up the company and the importance of good attendance. The result? Call-offs dropped 75 percent that year. A handful of employees ended up having their names thrown into a hat. The winner, a desk clerk in Indiana, hadn't missed a day of work in three years.
In 2001, Habeeb is again offering employees (a term he despises; he consistently refers to them as associates) a free year's lease on a Mustang or to pay the winning associate's rent for an entire year. For those who live in the big cities, the chance at having the boss pay the rent for a year - literally - has been appealing, Habeeb says. The idea came from one of the associates in Chicago who lives in the city and has no need for a car.
To emphasize the importance of focusing on customers, FHG hotels compete in a quarterly "Super Bowl" contest. The hotel that compiles the best customer satisfaction score shares a $10,000 prize among the staff. For a housekeeper at a Hampton Inn making $6 an hour, splitting $10,000 with 35 of her colleagues can equal or exceed a week's pay.
3. Build a community.
In describing the FHG culture, Habeeb pauses for a moment and says, in this order: "Fun. Open. Honest. Ethical. Very shirt-sleeves. A bias toward action.
"I came to this company from a multi-national company where it's impossible to make a difference. Here, people can make a difference. In the media every day, you see stories of companies declaring war on their employees. I just don't understand it."
Habeeb constantly encourages his 1,500 associates to support one another, reinforcing and punctuating points with the words "team" and "spirit" and "service."
FHG recognizes an associate every year with a Spirit of Service award. Employees who go above and beyond the call of duty in helping guests or teammates are nominated; one recipient is chosen and feted by Habeeb and his executive team in the associate's hotel. Donning chef's hat and uniform, Habeeb and the veeps cook and serve a meal for the associate and a dozen of his invited guests.
Instead of inviting buddies and family, last year's winner brought his hotel teammates to the festivities, further cementing the idea of a team community.
Habeeb's hotel general managers are largely in control of the community. When he came aboard, management turnover exceeded 55 percent. Research by People Report, a consulting group in Dallas, estimates that it costs roughly $25,000 for a company to replace a manager in the hospitality industry (and about $2,500 to replace an hourly wage worker). So, Habeeb declared war on GM turnover. Each year, five of the top-performing GMs and their spouses are treated to a week-long vacation at a foreign locale, with Habeeb as tour guide.
"You have to understand that for some of these folks, it's the first time they've ever had a passport, the first time they've ever traveled," Habeeb says.
Since 1999, Bob's War has reduced voluntary GM turnover to zero, he says. If the GMs maintain their loyalty and pass certain performance standards, they may be invited to become part-owners of the company. As FHG continues to grow, this perc can make a significant improvement in a GM's lifestyle.
In building his community, Habeeb has focused equally on customers and employees. With the former, he meets every corporate client every year, soliciting feedback, understanding their needs and building rapport. With the latter, he does the same. He lunches or dines with employees at each hotel several times per year. He easily rattles off the names of clerks and bellmen and housekeepers at different hotels, their personal stories, their families and how their ideas to run the business made things easier, simpler.
"I love what I do. Every day. We... we just have a great team." Habeeb pauses. A rush of emotion. He struggles for a moment to maintain his composure. "This is my life's passion."
