by RASMUS HOUGAARD
Founder and Managing Director, Potential Project
Companies are increasingly realizing the power of creating people-centric organizations that value the happiness of employees as much as the bottom line. In my interviews with leaders of hundreds of organizations, one company stands out as the epitome of a people-centric corporation: Marriott International.
Marriott has its origins as a nine-stool root beer stand in Washington, D.C. to the global, Fortune 200 business that it is today, its leaders have striven to stay true to its mission: “If we take care of our people, they will take care of our customers, and the customers will come back.”
Consider the company’s history: Just a few years after co-founders J.W. and Alice Marriott started their enterprise, the Great Depression hit. In response, J.W. and Alice hired a staff doctor to make sure their people had health care. The reason for this was two-fold. They cared for their employees and they also wanted a reliable, healthy workforce. They believed that if their employees had access to good medical care, they would be able to provide the level of service they wanted for their customers.
Marriott’s people-centric approach has continued despite facing some strong social headwinds that could have otherwise stalled its progress. After the publication of “Theory of the Firm” in the Journal of Financial Economics, which argued that companies were owned by – and responsible to – shareholders before anyone else, shareholder wealth has steadily become more important than employee health. This change has had a significant impact on both companies and societies, but there are two primary problems with “shareholders first” thinking. The first is a widespread focus on short-term results at the cost of long-term benefits. The second is a lack of incentive for corporate social responsibility. Both problems tend to come at a cost for the general employee. This is in direct opposition to the idea of fostering people-centered corporate cultures.
But Marriott has resisted this trend and instead continued to value the well-being of people over quick and easy profits. With over six thousand locations and nearly $23 billion in yearly revenue, Marriott’s success with its people-centric approach is best seen in the daily commitment of its leaders in ensuring that the organization lives up to its original values.
Marriott has turned people focus into long-term business success and while this is certainly no simple process, here are some of the areas you need to focus on to develop a more people-centric organization.
On any given day, around lunchtime, 86-year-old Executive Chairman Bill Marriott finds his way to the cafeteria on the ground floor of the Bethesda, MD headquarters. He picks up a tray, chooses some food, stands in line, and pays for his meal just like any other employee. He then finds a table and has his lunch with anyone who wishes to join him. Despite being the executive chairman and one of the richest people in the country, Bill eschews special treatment. He shows up for lunch, as he does for board meetings, as an ordinary person. When engaging with employees and clients, he brings interest, presence, and care rather than status, hierarchy, and power.
Not surprisingly, Bill Marriott’s leadership example cascades throughout the company. Corporate culture, after all, starts at the top. Marriott CEO Arne Sorenson, following Bill’s lead, spends about two hundred days a year visiting associates at hotels around the world. And he does not just appear at a brief, scripted town hall. Rather, he walks through each hotel, greeting associates at the front desk, in the kitchen, or on the guest room floors. He listens to their thoughts, considers their concerns, and works to truly understand their work. In doing so, he spreads core Marriott principles to team leaders and associates at every property in the world.
This type of humble leadership drives loyalty, which increases effort and retention. These increases lead to better service and an inspired customer experience, which drives revenue. In fact, Marriott’s internal data shows that hotels that score higher in associate engagement drive better financial results.
When the financial crisis hit in 2008, the Marriott executive team gathered to discuss the deteriorating business environment. Like many other companies, Marriott had to consider different ways to cut payroll, including reducing worker hours. During the talks, David Rodriguez, Marriott’s CHRO pointed out that cutting employees’ hours would cause many to lose eligibility for healthcare benefits. As they ran through these implications, CEO Bill Marriott intervened. “Then we’ll have to suspend the eligibility rule,” he said. “We can’t have our associates and their families lose their medical benefits.”
At Marriott, balancing the needs of all stakeholders – shareholders, hotel owners, customers, and employees – has always been an integral part of an overarching strategy. Employees invest their life and time in the company. By doing so, they are equally valid stakeholders deserving of consideration in every major decision. There will always be situations in which one group of stakeholders is unhappy with a decision. However, if fairness and honesty is consistently demonstrated, over the long-term, stakeholders will trust that their continued participation is to their benefit.
A people-centric organization explicitly values the happiness and well-being of its people. It does this not just through slogans or catchphrases, but through developing programs that support employee success.
At Marriott, it is a significant source of pride to see people begin in entry-level positions, gain new skills and expertise, and grow their careers. Many top executives and property managers at Marriott started in the organization as waiters or front desk trainees.
But success in a people-centric organization is not just about attaining a new title or making more money. To further show its commitment to the well-being of its associates, Marriott CHRO David Rodriguez and his team created the industry’s first “holistic employee well-being program.” In 2018, the program was recognized with the American Psychological Association’s Psychologically Healthy Workplace and Organizational Excellence Award. Not surprisingly, Marriott was alone among its main competitors in sharing the benefits of the 2018 tax cuts with its associates in the form of supplemental cash in retirement accounts, and significant investments in new career development and work-life support programs. Recently, the company also announced a new industry-leading parental leave program covering births and adoptions.
The leaders of people-centric companies understand that it is people who make their company successful. These companies realize that when people feel valued and cared for, they do their work with stronger intrinsic motivation, a deeper sense of meaning, and a greater level of engagement. They go the extra mile simply because they want to contribute to an organization that cares about them.
It would be wonderful, of course, if establishing this type of culture was as easy as creating a few great slogans or aspirational values. If it was, every company would make those “great places to work” lists. But it is not that easy. It is not about turning value statements into attractive posters or inspirational websites. Instead, it is about taking action.
It is about creating leadership expectations for humility and compassion (link to MSC). It is about developing employee programs that support growth and well-being – both in the workplace and at home. This is a challenge, yes. But it is not as complex as it seems.
Just put your people first.