Quality Control in a Service Business

As earlier HBR articles have emphasized, quality control is a crucial function in an organization that markets services. But is quality control the same thing in a service company as in a manufacturing concern? And what does management have to do to establish it in operations? Little has been written on these questions, though valuable insights and principles have been acquired by leading companies in the service sector. In this article a top executive of one such company shares his organization’s knowledge with other business leaders.

Since this article is about people, I shall begin with a story about a person I know. The purpose of this story is to provide a reference point for the discussion and analysis that follow, for in every case the programs to be described must be evaluated in terms of how well they meet the needs of particular individuals who, like the subject of my story, possess conflicting motives and desires.

Ten years ago an employee whom I’ll call Tom Simpson went to his boss, one of our vice presidents, and announced that, although not disappointed with the progress he was making, he would soon be leaving Marriott to join a competitor.

Simpson was then assistant manager of a large restaurant in one of our major hotel properties. He was in his late twenties and had made steady progress with us. His file was clean of those pesky, lukewarm evaluations that can cool the enthusiasm of superiors as they leaf through personnel records seeking indications of exceptional management talent. There were no “Good, but needs improvement in handling people” comments or “Promising, but not achieving full potential.” Simpson had consistently been rated “Excellent,” “Superior,” or “Promotable.”

No company likes to lose good, young talent, certainly not service companies, which typically are labor intensive. For a service organization, quality control of employee attitude and performance is pretty much the equivalent of product quality control for a manufacturer. Computer manufacturers, for example, point to a roomful of hardware that has been quality controlled down to the last core and spool. The service company has nothing so tangible. It counts instead on favorable impressions made on customers as a result of services properly rendered. Everything depends on “quality control” of personnel. As J. Willard Marriott, the founder of our company, has said many times, in the service business you can’t make happy guests with unhappy employees.

After good people have been recruited and trained, it is essential to keep them. Accordingly, Simpson was interviewed several times by senior executives when he announced his resignation. He was asked to reconsider, told that he was thought to have exceptional talent and promise, and assured that he could look forward to a well-paid career with increasing responsibilities. However, he held to his decision and joined a new company that was just entering the restaurant business.

Six months later we wrote Simpson asking that he send us a constructive critique of our company. We asked him to tell us about complaints that he, or others he knew, had about us, and also to tell us what he felt to be good about Marriott. He sent us a fine letter of criticism, and we acted on some of his suggestions.

Within two years, Simpson had cooled on the new employer. He contacted us to see if we might be interested in his return, and although many companies seem opposed to rehiring anyone, we snapped up Simpson without hestitation. Now that he’s back, we think he may be a better man for his experience with another company. Today he is general manager of a Marriott division.

Simpson’s case is not an isolated one; as many as 10% of the managers who leave us voluntarily return as he did. We try not to feel insulted when they leave, and we always feel complimented when they return.

One reason for the departure of our managers is the unusual amount of entrepreneurial ambition among people in the food and lodging business. Sometimes it seems as if, deep down, everyone in the industry wants to open his own restaurant. This speaks well of the level of individual ambition, but it’s a troublesome thing for the company, and it’s a problem not fully shared by any other industry I can think of.

Another reason for good people leaving us—and thereby hurting our quality control program—is dislike for the physical requirements of our business—the long hours of physically demanding work, the weekend and holiday duty, and so on. After all, how many management careers can you think of where the heaviest work load comes on family holidays like Thanksgiving and Easter? Still another reason for losing good people like Simpson is the seeming attractiveness of a higher position with a competitor. This is a reflection of the intense competition for good personnel in our industry; the problem is most acute for industry leaders.

Because of pressures like these we pursue an elaborate “rescue” operation for our good management people. But, needless to say, maintenance of a high level of performance cannot be accomplished just by retrieving good people who have left. When able employees are hired, the objective must be to retain them by keeping them challenged and satisfied and growing in their jobs.

Overview of Eight Programs

It would be convenient if this objective could be achieved by one extremely effective program. To the best of my knowledge, however, no such program exists. It takes a number of personnel programs to keep good people, partly because employee needs vary so widely and partly because a variety of subjects, settings, and instructors often serves to “reinforce” a person’s knowledge and understanding.

Let us turn now to eight of the most effective programs that Marriott has developed over the years.

1. Individual Development

This program (which we refer to as “ID”) is designed to teach new management employees necessary skills and technical knowledge during their two- or three-month formal training period so they can assume responsible management roles quickly. (See Exhibit I for a list of programs offered by Marriott.) ID leans heavily on programmed instruction manuals written specifically for the assistant manager positions that the trainees are preparing for. It involves numerous, highly detailed task sheets that break required job knowledge down into dozens of major and minor components, and it establishes performance times for the degree of mastery required in each instance. Also, this program allows the individual to set his or her own pace in acquiring the skills, mixing a series of structured on-the-job experiences with classroom seminars where the learning process is shared with other trainees.

Exhibit I Programs for Employees at Marriott

A program like ID helps a geographically dispersed company ensure that requisite job skills are being taught to new managers in a consistent manner and at the accelerated pace desired by most trainees.

2. Management Training

Our company policy calls for every member of management up through the middle levels to attend one management development session each year.

Sessions are conducted by the corporate training department and include a variety of two- and three-day seminars, for groups of 10 to 20, on a wide variety of professional management topics. Courses are aimed at the first three levels of management, and an individual usually attends with members of his peer group from various operating divisions. This program is first cousin to ID.

As a company with a progressive profit sharing plan that allows managers to retire at any age after 20 years of service, Marriott’s management organization tends to be youthful, starting with president Bill Marriott, Jr., who is 43. Restaurant managers average between 24 and 29 years of age, and district managers are in the 28- to 35-year range, very close in age and outlook to the managers they supervise. As a result of this youthfulness, there is little in the way of a generation gap between top management and the “firing line.” Yet the company still emphasizes communication skills, offering such seminars as “Managing the ‘Now’ Generation” in which 30-and 35-year-old middle managers learn to deal with their even more youthful subordinates.

3. Manpower Planning

How many and what kinds of people will be needed in three or four years to fill key company positions? Properly managed, the manpower planning process can create an inventory of good prospects who are trained and ready to be shifted upward to fill newly created managerial opportunities.

The employee who knows how he or she is performing on the job, and what his or her chances are for more pay and responsibility, is more likely to be a happy employee. Thus a key element of good manpower planning is the periodic performance review of all management personnel. Our people know that these reviews of their work, attitudes, and potential are prerequisites to promotion, and it follows naturally that our better people look forward to them.

Our policy is to schedule these reviews annually (or more frequently), for if spaced too far apart they lose effectiveness. They should be formalized. We try to use them to focus on strengths rather than weaknesses. While they are time-consuming and, for some managers, difficult, they are the only consistently effective way we know of to identify good back-up personnel long before the actual need for them arises.

Manpower planning is carried out by successive layers of management, with the process starting from the bottom and moving upward. Each manager personally reviews two layers of employees below his own rank. This allows an overlap in the evaluation procedure, because everyone is evaluated by his immediate superior as well as by the person two ranks ahead.

Each line division or staff department plots three-to five-year expansion curves and the management talent needed to accomplish the growth. For example, if in two years we will be needing five additional district managers in a given division, we should be able to identify five to ten people now who can reasonably be expected to grow to fill those positions. If such individuals need further training and experience, top management should know who they are and should insure that they get the needed attention.

Keeping it personal

Managers tend to be unwilling to admit that some subordinates are truly non-promotable; rather they will say that a particular individual “isn’t ready yet” or “just needs more experience.” In manpower planning, therefore, we try to focus most of our attention on those individuals who are identified as promotable “immediately” or, at most, “within one year.”

We have found it extremely important to keep the process personal, and not let it become statistical. Therefore, an executive doesn’t try to evaluate employees who are more than two levels below him. Beyond that point he (or she) cannot be directly knowledgeable about the performance of the people involved.

When I participate in manpower planning, I ask such questions as these of my team:

• How many new units are you going to open in each of the next two years?

• What will your organization structure look like two years from now?

• How long will it take you to develop the talent you will need for each position?

• Do you have enough identified reserve talent now to meet your needs two years out and, if not, can you recruit the talent you need from other divisions within the company?

• As a last resort, when must you recruit the necessary “fast track” candidates from outside to fill the vacancies that remain?

Manpower planning often makes it necessary for a manager to “bite the bullet” in order to cope with a shortcoming. For example:

Some time ago we had a man in a middle management position who was considered a prime future candidate for two or three different higher-level jobs. But most of them would require considerable travel—and he was deathly afraid of flying. We told him where he stood and asked him to grapple with the problem, with our help if he wished, before it could affect his career. As a result of this candid approach, he decided to seek medical assistance. He brought his fear under control and was subsequently promoted into a position that he could not have filled successfully before.

Such high store is set by manpower planning appraisals that our corporate president examines reports on management down through several ranks and often compares them with reports from previous years. He also reports personally to our board of directors on manpower planning and appraisal for the two layers of management below him.

4. Standards of Performance

We find it helpful to have written, highly detailed statements of expected productivity for each member of management. They are negotiated personally between subordinate and superior every year. They enable a person to answer the all-important question, “Exactly what is expected of me in my job in order for me to be rated at least a satisfactory performer?” They allow managers the much needed freedom to determine for themselves how a task is to be performed, while being held strictly accountable for the end result.

Standards of performance are also applied to improving the performance of lower-ranked employees. They help the holders of even unskilled jobs understand the importance of their function to the organization and the company’s expectations of them. For example:

• A series of booklets tells employees in our hotels what their attitudes toward guests should be, how they should conduct themselves when dealing with customers, what courtesies to show, and, in many cases, how to speak.

• “The Marriott Bellman” booklet is designed to convince our uniformed doormen that they represent an all-important first and last impression for many of our guests, that they must stand with dignity and good posture, and that they must not lean against the wall or put their feet up when sitting. Important standards of personal hygiene are outlined in the booklet as well.

Bellmen are often looked at subconsciously by guests as being “Mr. Marriott himself,” because many times a guest will speak to and deal with the bellmen more often during a visit than with any other employees of the hotel. The bellman is the person the guest talks with on the way up to his room. It is the bellman who points out the air conditioning dial and where the extra towels are. And while making the guest comfortable, the bellman is expected to explain about the restaurants on the property, what great food they serve, and which ones the guest might enjoy most during his stay.

Our bellmen, bell-ladies (we call them “doorbelles”), and the young people who drive our airport limousines are some of our best sales persons. They are coached to smile often and do all they can to make the guest feel welcome and special. It’s a regular practice for a bellman to check the guest’s luggage tag and find out where he comes from. This is a fine basis for conversation as the guest is escorted to his room; there is power in suggesting to, let us say, an Atlanta-based guest that “you really should visit our great hotel in Atlanta—it’s got some terrific restaurants and meeting facilities!”

I have even known bellmen to strike up a conversation about Marriott stock on the way to the room, one reason for this being that a large number of our employees own company stock. Ask a Marriott bellman what the current price of his stock is, and you’re very likely to get a right answer! We encourage employee interest in our stock through our profit sharing plan, stock purchase plan, and various management equity programs. We believe that stock ownership helps build pride, identification, and a sense of profit responsibility at all levels.

Another booklet, “The Switchboard Operator,” tells in detail how to speak with the guest, and it offers guidelines in handling a variety of specific situations that might face a hotel switchboard operator. Still another booklet, “The Housekeeper,” tells precisely how a room is to be tidied and is accompanied by a 12-minute audiovisual film to help insure that the job is done right. Standards are established for every part of the job—even such details as requiring wrapped bars of soap to be placed on the same side of each wash basin, with labels upright so they can be read by the guest.

The ‘flying squad’

By themselves, standards are not enough. To see that they are followed, a “flying squad” of inspectors goes periodically from one hotel property to another to observe operations. Typically, the squad consists of a representative of each of the key job skills in a hotel—experts on food and beverage, sales and marketing, accounting and finance, personnel, front desk operation, banquets, restaurants, housekeeping, and so on.

Soon after its arrival, the squad assembles all the employees, gives a pep talk on the purpose of its visit, and often counsels individual employees on their work, attitudes, and opinions about how the property is being operated. Each employee is rated as to technical proficiency, attitude, cleanliness, and how well he or she communicates with guests and other employees. A lengthy evaluation is prepared on each facet of the hotel’s operation, comparisons are made with prior reports, and objectives are negotiated for improved future performance. Arrangements are made with the resident managers to follow up on the appraisal after the squad departs.

Flying squad reports are often used by those who assign employees to the next new hotel “opening team.” These teams consist of one or more outstanding performers in every area of operation—dishwashing, cooking, housekeeping, waitressing, and so on. The employees are selected from Marriott hotels all over the country. Recently, for example, our new 1,000-room Marriott in Los Angeles opened with very few hitches, thanks to the opening team that moved into the hotel a few weeks before operations began and spent from one to three months training the new Los Angeles employees.

5. Career Progression

This is a job advancement program designed to provide hourly employees with a ladder of advancement up through positions of increasing skill, responsibility, and pay—even up into management—if they have the ability and the industry to go with their ambition. It was designed originally for the underprivileged, minority-group employee. In many hundreds of instances it has enabled employees to pull themselves and their families out of the poverty cycle.

Employees must request consideration for career progression, and only those with positive attitudes, aptitudes, and a Marriott work history are accepted. (See Exhibit II.) The employee must say, in effect, “I want to grow with the company. I want to get ahead. I’m ready and willing to work harder, do more, study, and prepare myself for promotion.” Adult education courses at local schools are sometimes used to improve reading skills, sharpen writing abilities, and learn mathematics. Individual step-by-step programs are devised by our personnel people for employees in the program. Times are allotted for the completion of each progression step; and if an employee lags too far behind for lack of effort, he is dropped from the program.

Exhibit II Marriott Career Progression (Sample Company Brochure)

An average of 800 employees are usually enrolled in career progression at any one time. It has enabled many people to get two or three extra promotions beyond what they might otherwise have earned. As an example:

I recall one restaurant employee who was ambitious and appeared to have real growth potential. She talked with her boss, the manager in one of our good service operations, and, after being accepted in the program, started learning various new job skills. She spent 40 hours in training for promotion at the rate of one hour per day beyond her regular employment time. When a vacancy in a higher-paid job turned up, she was promoted for a trial period to prove her proficiency. She obtained progressively higher-rated jobs this way and today is manager of one of our food service operations in a retirement home near Washington. Without the career progression program, it is hard to imagine that she would have been able to advance as she did from kitchen worker to unit manager.

Employees understandably feel good about the career progression program. Whether or not an employee has the desire to seek enrollment, the knowledge that the opportunity exists is a strong ingredient in maintaining a positive attitude toward the company.

6. Opinion Surveys

We conduct annual surveys of rank-and-file opinion. These surveys are our first line of defense against the buildup of unfavorable attitudes—our “early warning system.” Also, like the fair treatment policy to be discussed, they are one of our most important quality control devices.

Specially trained personnel representatives go to each one of our units and conduct a meeting of all employees. They explain about the opinion survey and urge frank, open participation by everyone. (See Exhibit III for a sample of Marriott’s employee survey questionnaire.)

Exhibit III Employee Questionnaire

Employees do not have to sign the questionnaires; in addition, they may add anonymous comments about each statement in subsequent interviews with the personnel representatives. The survey responses are analyzed by computer, and two weeks later an employee meeting is held to discuss the results of the survey and to solicit additional comments. Four weeks after that, another meeting is held to announce the action that will be taken in response to the survey. Results of surveys made in previous years are often brought out for comparison with new surveys.

Many times the surveys bring to light small but potentially serious situations that can get out of hand if ignored. One recent survey, for example, revealed that employees resented not being provided with a safe place to store their valuables while they worked; they were troubled by occasional petty theft from their lockers. When this sentiment was brought to light, a safe storage place was made available for employee use, and a cause of ill will was eliminated.

7. Fair Treatment

Our fair treatment program predates and goes beyond the Federal Government’s Equal Opportunity legislation of the 1960s. We give new employees a handbook that outlines the kind of conduct the company expects and what, in turn, the company considers its obligations to the employee. The handbook outlines, among other things, job security, promotion possibilities, disciplinary measures, safety, and a step-by-step procedure for bringing any personal grievance to a just conclusion.

The grievance procedure, part of our fair treatment policy, is a bulwark of our quality control program. It tries to guarantee that no one supervisor has the last word about an employee’s job in the event of a dispute. If an employee doesn’t think he or she has been treated fairly, he or she can appeal without fear of retribution by the supervisor. An ombudsman is provided for many of our employees. He is John Randolph, a 61-year old man who has been with the company since its early days. He is the honored friend of all, from dishwashers to senior executives, and he holds the absolute right to take any disagreement, any charge of unfair treatment, all the way up the chain of command—to the president’s office if necessary. A recent example of his work is illustrated by the following story:

A restaurant employee who was transferred from one unit to another resented the move. Although she complained, her supervisor decided that the transfer stood as ordered; his superior, when brought into the case at her request, also agreed with the decision. She then called John Randolph. He listened to her story and then traveled the 100 miles from Washington to her unit, interviewed her supervisor, and finally agreed with her that she had been unfairly treated in being forced to transfer to another department.

Failing in his attempts to have the decision reversed at the unit level, Randolph took the case through channels to the division vice president and conducted a meeting attended by the employee, the district manager, and the unit manager in question. After reviewing the facts, the vice president upheld lower management. But Randolph still disagreed.

He took the case to the next higher level, a group vice president, where a complete review of the case brought out additional information that favored the employee’s point of view. The group vice president reviewed the case in its new light with the managers involved and then, with their concurrence, put the woman back to work at her old job, with no loss in pay.

This case, like many others pursued by John Randolph, consumed several weeks and many hours of executive time—all in the interest of justice for a single employee. We think our known willingness to go “all the way” in this manner, when necessary, is an important ingredient in our employee quality control program.

In all parts of our operation we maintain personnel representatives who can function as ombudsmen when the need arises. Sometimes, in divisions where large numbers of high school or college youths are employed, the role is assumed by a “house mother” who is expected to guide the youngsters and alert management to troublesome situations that may develop.

8. Profit Sharing

This program originated in the belief of Mr. and Mrs. J. Willard Marriott, who started our company with a root beer stand in Washington nearly 50 years ago, that their employees were responsible for much of their company’s success and deserved more than a paycheck and a few fringe benefits in return for their efforts. Their son, Bill Marriott, Jr., agreed wholeheartedly with this approach, and our profit sharing plan has been improved upon several times since he became president.

All employees and managers are eligible to join our plan after three years of service, and 80% of those who are eligible do join. They contribute at least 5% of their earnings to the plan, and the company makes a distribution from profits that has, in the past, more than equaled the amount of employee contributions. These proceeds are invested by a board of trustees that includes both company management and outside advisers. Since the plan is only 15 years old, none of our retirees has yet actually received the maximum benefit from it, but a projection of the return for one of our recent new hires will serve to indicate the magnitude of the program:

Last year Bill Jones brought his wife and child to the Philadelphia area to start a management career in our Roy Rogers Family Restaurant division. Bill, who was 25 years old, had completed two years of junior college and his military service and had had a year of unpromising job experience behind him. We started him at a trainee salary of $9,000 per year.

If Bill stays with us until age 55 and makes reasonable progress in his 30 years of service, advancing three or four positions to the level of district manager, his profit-sharing fund expectations are impressive. Even at age 45, his retirement fund will be worth almost $150,000; after 30 years, his fund should exceed $600,000. (These projections assume average annual salary increases of 8% and fund performance equivalent to that achieved during the past 15 years.) His total salary deduction in the 30 years, on the other hand, will be less than $50,000.

Continuing Evolution

The programs and efforts described here are far from being the last word in quality control. They have taken much time and brought many good results, but they must be regarded only as steps along the way. The programs that kept our employees happy yesterday are not necessarily the ones that will work tomorrow. Consider just two examples of the need for continued change:

1. Our profit sharing and career progression plans were developed to meet the needs of an era when most of our employees were adult, career-service, full-time, mostly black, relatively uneducated, and only marginally skilled workers. But today much of our work force is made up of part-time workers, youthful employees who are completing their education, and educated workers for whom there are an ample number of alternative jobs. Also, the federal government now takes considerably more interest in the subject than it did when our plans were started. In short, we cannot take for granted that the programs are up to date.

2. Our approach to management training and development evolved before the post-World War II baby crop, the “Now Generation,” began to enter the management work force. It was a time when “traditional” values were accepted without question. It was generally believed that the advancement of a man’s career was his most important life goal, that the gratification of wants should be deferred until earned, and that a woman’s primary interest should be her family and her husband’s career. Of course, we now have a generation of management trainees who are often indifferent to these values. Therefore our approach to career development programs must keep evolving, and we must look at these programs with open minds.

In one important respect, however, we feel that our quality control approach is as sound as it ever was. Half a century ago, J. Willard Marriott reasoned that it takes happy employees to make happy customers. We find that this simple conviction continues to make good sense.

A version of this article appeared in the July 1975 issue of Harvard Business Review.