Back to top

Managing for the Exceptional: the Ritz-Carlton Story

The problem with the exceptional is it doesn’t happen the same way twice. If, as a manager, you see your organisation like a huge prosthesis, which allows you to directly steer a thousand limbs, you won’t get far with the extraordinary. In the luxury hospitality business, the base-line that every competitor meets is to deliver excellence through expensive and thought-through infrastructure, or procedures and standards devised to provide perfection with a majority of relatively low-skilled staff. The way to outperform, to shine in comparison to your competitors is not with your standard, but with the exception, the extraordinary act in a specific context. Again, if you look at the entirety of these exceptions, you face a complex phenomenon. As we will see, the main trait with which the Ritz-Carlton achieves its results is culture, and the way to build a culture of excellence is to nudge for its emergence. Let us go through the elements one by one. 


Many companies try to influence culture by formulating some kind of document – values, a vision, a motto. The reason why many of these efforts are essentially naïve is not that these documents exist. It is that not much more exists around them. In the Ritz-Carlton, the respective document is called the Gold Standards. It includes several elements, most notably a motto, and service values. In the form of a small leaflet, employees are required to carry it around at all times. The company’s motto, as stated in the document, claims that “We are Ladies and Gentlemen serving Ladies and Gentlemen.” What is the nudging intent of this sentence? Employees are referred to as ladies and gentlemen. They are seen as people who can meet a guest with a certain level of self-esteem which is the condition on which service and respect can be expressed beyond the ordinary. 

Management actions to show the anchor is taken seriously

If you tell employees that there is a sentence that describes how much the company values them, and ask them to carry this sentence with them on a leaflet, you would get cynical reactions in most organisations. Not so at the Ritz-Carlton. It is the sum of elements that create a context in which this potentially empty claim is filled with life. The most obvious is to expect a discipline of wording. On all occasions, managers at all levels speak of their staff as ladies and gentlemen. 

Taken for itself, this approach would still be shallow. It is obvious that managers use the words because there is a rule that tells them to do so – so it is up to each manager to fill this wording with authenticity. In another instance, the Ritz-Carlton have actually learnt the lesson that mandatory wording, if exaggerated, can ruin the experience. For some time, employees were asked to say “It is my pleasure to…” on every possible occasion. The effect was a slight too monotonous, and sometimes out of place, so that guests and travel journalists started making fun of “my pleasure”. Since then, the Ritz turned to working more on its staff’s posture, instead of the wording. But the “ladies and gentlemen” remained.

To reinforce the authenticity of the “ladies and gentlemen”, you can give people a practical experience how seriously the company takes its claim. In a so far unconfirmed story, I’ve heard that new hires are asked to stay several days as guests in the hotel. They work their shift in the kitchen, and then they have dinner in the hotel restaurant, pass some time in the spa, and sleep in a room that usually sells at $ 400.- a night. In another case, when the chain acquired an existing hotel in Shanghai, and renovated the building, the first thing they renovated was the staff entrance. The wording of “ladies and gentlemen” becomes tangible through experiences like these. 

Vectors, and authorisation to act

At this point it is still only a signal – not yet embedded in the daily experience. But it explains something about the functioning of the next building block. The Ritz-Carlton is most famous for their $ 2000.- rule. Every employee – or lady or gentleman – is empowered to spend up to $ 2000.- to solve a customer issue, or create a Wow-moment. Many managers who hear this, are shocked at the thought of it in their own company. And they are incredulous when they hear that yes, no member of staff is ever told off for the way they spend money under this rule. And no, there is no inapropriate, or excessive spending of this allowance. To be clear, the sum needs to be put in perspective to the average $ 250 000.- lifetime customer value of a Ritz-Carlton guest. But again, the relevance and effectiveness of this rule only appears in the context of other nudges. The anchor for this behaviour, in the Service Values of the Gold Standards read: “I build strong relationships and create Ritz-Carlton guests for life.” The long term purpose of the employee’s behaviour. “I am empowered to create unique, memorable and personal experiences for our guests.” The focus of the behaviour is where standards and procedures cannot reach. “I own and immediately resolve guest problems.” This last one is particularly telling. Someone phrased it this way: “Who sees a problem, owns the problem.” No matter what your job responsibility, if you lead a guest to their room, and on the way see that someone has put their breakfast tray out their door, it is your obligation to make sure it disappears. If you finish your job in a minute, you come back and take the tray down to the kitchen. If your job takes longer, you call someone from room service. As one Manager of Guest Services phrased it: “There is nothing of which I can say: this is not my job. Everything is my job.” 

The Service Values act as vectors. As part of the anchor, they are just claims on paper. But tangible actions, and the authorisation to act, make them impactful. What is the outcome? Here are some examples. 

A facility manager was changing a light bulb when a guest asked him how long it took to get to the airport, because they had to go there fast. “No problem, Sir”, he replied, “I’ll take you to the airport.”

A family with two boys stayed in the Ritz Carlton Toronto. The boys played floor hockey in the hallway. Another guest complained. The member of staff went to the room and explained to the parents that their kids could not play floor hockey on the hallway. The parents were very understanding, and asked the boys to stop. And this is how far any hotel would have gone. But the employee said that one of their ballrooms was not in use at the moment. He invited the boys to come play floor hockey in the empty ballroom. He organised some other members to join, and they challenged the family to a match. 

In Berlin, a family was on their trip home, when it turned out the little girl had forgotten her teddy bear in the room. They called the hotel, and of course the hotel had found the teddy and offered to send it home. Again, this is how far any hotel would go. But they took the teddy to the various departments, took pictures of the teddy with members of staff, and wrote a little story about all the adventures the teddy had had during his time at the hotel, and that it hadn’t been lonely at all.  

Regular practice to focus attention towards the desired way to act

How do we learn about such Wow-stories? They are shared. Of course, when they appear on videos made by hospitality trainers, or on the Ritz’s public learning institution’s blog, or are mentioned by the CEO in an interview, they work as multipliers of a marketing effect. But the more important role of sharing is internal. And again, there is a structural element which ensures that. At the Ritz-Carlton, the practice is called the Lineup. It takes place on department-level at the beginning of each shift. For fifteen minutes, the team members discuss one of the Service Value statements from the Gold Standards, share Wow-stories, and use some time for other relevant information, birthdays or anniversaries. The value statement of the day is chosen centrally for the entire Corporation, and the central communication department prepares a worldwide collection of Wow stories for the teams to choose from. Both the statement discussion and the Wow-story part are facilitated by a team member. 

Motto, Service Values, $ 2000.- rule, and Lineup are all rigid, centrally imposed elements. The Motto puts the person in a certain place – I am a lady or gentleman. The Service Values offer orientation – what would be a good thing to do. The $ 2000.- rule opens opportunities – what am I allowed to do. And the Lineup guides attention to how desired behaviour in specific contexts can look like – how could I do it. Together, they create the structural conditions for nudges which happen in situations that nobody has foreseen, and which turn them into a unique, but entirely appropriate and desired experience. 

p.s. And if any of my Agilist friends is wondering what this article is doing in their feed – try finding the values of the Agile Manifesto in the story.

  • What We Do

    Palladio Trusted Advisers are a small group of professionals dedicated to developing organisations and their leaders in complex and dynamic environments.


  • Contact

    Trusted Advisers
    Bachlettenstrasse 66
    4054 Basel

    +41 78 783 72 44

©2020 Bernhard Sterchi, Palladio Trusted Advisers AG.
All right reserved.