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In our course work we are learning some of the best practices in human resources management that are validated by research and practical outcomes.

In order to understand the practical aspects of these practices and how they have been applied by successful organizations in healthcare and other service industries, we will review a number of key practices and that have been identified in

Fortune’s

Best Companies to work for over time.

  1. Read the attached article “What Makes It So Great?  An Analysis of Human Resources Practices among

    Fortune’s

    Best Companies to Work for.”
  2. Identify at least two of the practices presented that you, as a present or future healthcare leader believe are of most value.
  3. Choose one of the healthcare organizations presented in the article and provide an overview of how they have put one or more of the practices that you have chosen into place.
  4. Be sure to take into consideration the challenges facing healthcare leaders presented by the pandemic and why the practices that you chose are important to you; and, how they may affect you as a future leader.

Cornell University School of Hotel Administration
The Scholarly Commons
Articles and Chapters
School of Hotel Administration Collection
5-2010
What Makes It So Great? An Analysis of Human
Resources Practices among Fortune’s Best
Companies to Work for
Timothy R. Hinkin
Cornell University, trh2@cornell.edu
J. Bruce Tracey
Cornell University, jbt6@cornell.edu
Follow this and additional works at: https://scholarship.sha.cornell.edu/articles
Part of the Hospitality Administration and Management Commons, and the Human Resources
Management Commons
Recommended Citation
Hinkin, T. R., & Tracey, J. B. (2010). What makes it so great? An analysis of human resources practices among Fortune’s best companies
to work for [Electronic version]. Cornell Hospitality Quarterly, 51(2), 158-170. Retrieved [insert date], from Cornell University, School
of Hospitality Administration site: http://scholarship.sha.cornell.edu/articles/215/
This Article or Chapter is brought to you for free and open access by the School of Hotel Administration Collection at The Scholarly Commons. It has
been accepted for inclusion in Articles and Chapters by an authorized administrator of The Scholarly Commons. For more information, please contact
hotellibrary@cornell.edu.
What Makes It So Great? An Analysis of Human Resources Practices
among Fortune’s Best Companies to Work for
Abstract
Although few hospitality organizations are listed in the annual survey of Fortune magazine’s one hundred best
companies to work for, an analysis of companies with similar operating challenges provides clear direction for
hospitality and service companies’ human resource practices. This study examined twenty-one companies,
including one food-service firm (Starbucks) and three hotel chains (Four Seasons, Kimpton, and Marriott).
The remainder of the companies analyzed were grocery and health care organizations, both of which share
human resources issues with the hospitality industry, such as long operating hours, relatively high turnover,
and relatively low pay. The innovative human resources practices isolated in this analysis were a culture that
emphasizes the value of people, scheduling flexibility, creative staffing practices, people-oriented training
programs, transparent and well-aligned performance management policies, and compensation policies that
reflect the organization’s values and link pay to performance.
Keywords
human resources, service industry best practices, Starbucks, Four Season Hotel, Kimpton Hotels, Marriott
International
Disciplines
Hospitality Administration and Management | Human Resources Management
Comments
Required Publisher Statement
© Cornell University. Reprinted with permission. All rights reserved.
Finalist for Best Paper Award.
This article or chapter is available at The Scholarly Commons: https://scholarship.sha.cornell.edu/articles/215
 2010 CORNELL UNIVERSITY
DOI: 10.1177/1938965510362487
Volume 51, Issue 2 158-170
What Makes
It So Great?
An Analysis of Human Resources
Practices among Fortune’s
Best Companies to Work For
by TIMOTHY R. HINKIN and J. BRUCE TRACEY
Although few hospitality organizations are listed in the
annual survey of Fortune magazine’s one hundred
best companies to work for, an analysis of companies
with similar operating challenges provides clear direction for hospitality and service companies’ human
resource practices. This study examined twenty-one
companies, including one food-service firm (Starbucks)
and three hotel chains (Four Seasons, Kimpton, and
Marriott). The remainder of the companies analyzed
were grocery and health care organizations, both of
which share human resources issues with the hospitality industry, such as long operating hours, relatively high
turnover, and relatively low pay. The innovative human
resources practices isolated in this analysis
were a culture that emphasizes the value of people,
scheduling flexibility, creative staffing practices,
people-oriented training programs, transparent and
158 Cornell Hospitality Quarterly
well-aligned performance management policies, and
compensation policies that reflect the organization’s
values and link pay to performance.
Keywords: human resources; service industry best
practices; Starbucks; Four Seasons Hotels;
Kimpton Hotels; Marriott International
E
very year since 1998, Fortune magazine has
published a list of the one hundred best companies in the United States to work for. Fortune researchers ask this question: “What makes it
so great?” They then try to answer that question by
examining a wide range of corporate human resources
policies and practices. The researchers examine the
following:
MAY 2010
WHAT MAKES IT SO GREAT?
· job growth, voluntary turnover, and the
number of job applicants;
· training provided for salaried and
hourly employees;
· compensation and benefits for hourly
and salaried positions, including health
care coverage;
· work-life balance and job design; and
· diversity initiatives, percentage of minorities, and nondiscrimination policies.
Although names come and go from the
list, 80 percent of those recognized in 2009
were also on the list in 2008. Our review
revealed that the list of top-ten companies
changes little from year to year. Seven of
the top-ten companies that appeared on the
list in 2009 were also in the top ten in 2008.
In addition, the firms that were new to this
elite group of organizations had moved up
from positions eleven, twelve, and fourteen
on the previous year’s top-one-hundred list.
Although firms in many industries are
represented on this list, we have also noticed
a conspicuous absence of hospitality organizations. The 2009 top ten includes a stock
brokerage, a consulting firm, an investment
bank, a hospital, four technology firms,
and two grocery companies. Looking at the
full list, only two hotel companies were
represented in 2008, Marriott International (ranked seventy-second) and Four
Seasons (ranked eighty-eighth), and one
food and beverage company, Starbucks
(ranked seventh). In 2009, these companies
were joined by Kimpton Hotels and Restaurants (ranked ninety-fifth). Not only were
these companies recognized as great to work
for, they are also industry leaders in financial performance and have received a variety of other awards, as we discuss below.
Benchmarking the Best
To better understand what makes a company great to work for, we conducted a
HUMAN RESOURCES
benchmarking assessment for the purpose
of seeing what we could learn from these
companies that might be applicable to the
hospitality industry. Yasin and Zimmerer
(1995) propose three basic forms of benchmarking: internal, competitive, and generic.
Internal benchmarking comprises an examination of work processes and products,
development of standards for those processes
and products, and measuring performance
over time with respect to attaining those
standards. This is a key component in continuous improvement efforts and total quality management programs. Competitive
benchmarking is the comparison of products and services offered by firms in the
same industry, often by a direct competitor.
STAR reports, produced by Smith Travel
Research, are a good example of competitive benchmarking in the lodging industry.1
In generic benchmarking, the processes,
products, and services of companies across
a wide range of industries are studied to
identify best practices that might be useful
in a different context. Although our inquiry
necessarily applies a generic benchmarking approach, we wanted to come as close
as possible to a competitive-type comparison by focusing on companies having similarities to the hospitality industry. This
approach was taken to ensure that our findings would be more relevant for industry
practitioners.
Consequently, we examined businesses
that reflected key characteristics of the
hospitality industry. In choosing companies to analyze, we looked at industries
with heavy guest or customer interaction;
extensive operating hours; and jobs characterized by low complexity, repetition,
minimal training or education, and relatively low compensation and high turnover; as well as a workforce comprising a
significant proportion of minorities and
1. See www.strglobal.com.
MAY 2010
Cornell Hospitality Quarterly
159
HUMAN RESOURCES
WHAT MAKES IT SO GREAT?
employees for whom English is not their
first language.
Examining the companies that appear
on Fortune’s top-one-hundred list, we concluded that hospitals and grocery stores
were the most similar in nature to the hospitality industry and shared most of the
characteristics noted above. This analysis
gave us a sample of twenty-one companies
that included five food service or grocery
companies, twelve hospitals, and four hospitality organizations. A brief description of
each company and their rank in the top one
hundred companies is given in Exhibit 1.
After identifying the companies for
comparison, we conducted an in-depth
examination of their HR policies, practices,
and systems using the Internet, the Fortune
rankings for the past several years, Wikipedia, Fast Company, company websites, and
related sources discussing the companies
included in our sample. The results presented below include research-based explanations regarding the effectiveness of the
practices that were identified. The primary
points that we discovered were a culture
that emphasizes the value of people, scheduling flexibility, innovative staffing practices, people-oriented training programs,
transparent and well-aligned performance
management policies, and compensation
policies that reflect the organization’s values and link pay to performance.
Organizational Culture That
Emphasizes the Value of People
One thing that each organization in the
sample had in common was an extremely
strong culture of caring that places great
emphasis on the importance of the people
working there. While there are many definitions of organizational culture, most
emphasize the shared values and assumptions that are communicated extensively,
both verbally and nonverbally (Tung 1995).
Culture is enacted principally by a company’s upper management, which in turn
influences the behavior of managers and
employees throughout the organization. It
is also reflected by the organization’s artifacts, ceremonies, stories, and rituals.
We found a wide array of formal efforts
to ensure that all employees have a clear
understanding of the firm’s culture. Stew
Leonard’s, a regional grocery chain, has a
Vice President of Culture and Communication whose primary role is “keeper of
the culture.”2 Additionally, all of the organizations in our sample had a strong and
almost singular focus on their employees.
They also made it very clear—internally and
externally—that being an employer of choice
was an important strategic imperative and
key to maintaining a competitive advantage.
In every case, it was clear that development
and retention of employees was seen as
critical to the success of the organization.
Rochester, New York–based supermarket chain Wegmans (ranked fifth overall)
exemplifies this employee-driven philosophy in several ways, starting with the most
fundamental and defining element of the
company’s identity, its philosophy: “The
values at Wegmans are not just something
you see hanging on the wall. They are values our people live every day and help guide
the decisions we make.”3 All policies, initiatives, and decisions are linked to this philosophy. For example, job tenure is viewed
as a point of pride, so employee name tags
denote the number of years of service. In
addition, Wegmans promotes a positive,
quality-focused work environment by
providing employees with comprehensive
training and development opportunities;
2. See http://www.stewleonards.com/html/08leonardteam.cfm.
3. See http://www.wegmans.com/webapp/wcs/stores/servlet/CategoryDisplay?categoryId=256609&storeId=
10052&catalogId=10002&langId=-1.
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Cornell Hospitality Quarterly
MAY 2010
WHAT MAKES IT SO GREAT?
HUMAN RESOURCES
Exhibit 1:
Best Companies to Work For in the Hospitality and Service Segments
Rank
5
8
10
19
22
24
45
53
62
63
67
Company
Overview
Wegmans
A family-owned company founded in 1916, Wegmans
consists of 72 grocery stores located in the mid-Atlantic
region with its headquarters in Rochester, New York. It
has 38,000 employees and 2008 revenues of $4.8 billion.
Methodist
This comprehensive teaching hospital located in Houston,
Hospital
Texas, is affiliated with the Weill Medical College of
System
Cornell University. It has 10,500 employees and 2008
revenues of $1.8 billion.
Nugget
A small family-owned upscale supermarket chain founded
Market
in 1926 located in Woodland, California, Nugget operates
12 stores in the Sacramento metropolitan area and
employs more than 1,200 people with 2008 revenues
approaching $300 million.
Ohio Health
Ohio Health was founded in 1891 in Columbus and
operates 5 hospitals in central Ohio. It employs
approximately 12,000 people and had 2008 annual
revenues of almost $2 billion.
Whole Foods Founded in 1980, Whole Foods operates 276 stores in the
Market
United States, Canada, and the United Kingdom. It
pioneered the offering of natural and organic products and
employs 41,000 people with 2008 revenues of $6.6 billion.
Starbucks
A coffeehouse chain founded in 1971 in Seattle,
Washington, Starbucks has grown to more than 16,000
stores in 49 countries with more than 200,000 employees
and $10.4 billion in revenues in 2008.
King’s
This 385-bed hospital, founded in 1899, is located in
Daughters
Ashland, Kentucky. It employees more than 4,000 people
Medical
and had 2008 revenues of approximately $450 million.
Center
Stew
Stew Leonard’s is a family-owned regional grocery with 5
Leonard’s
stores in Connecticut and New York. It was founded in
1969 in Norwalk, Connecticut, and today has 2,219
employees and 2008 revenues over $300 million.
Griffin
An acute care community hospital with 160 beds, Griffin
Hospital
was founded in Derby, Connecticut, in 1909. With a staff
of 300 doctors and 1,200 other employees, it had
revenues of over $110 million in 2008.
Mayo Clinic
Located in Rochester, Minnesota, with 3 hospitals (also in
Arizona and Florida), this organization was founded in
1889 and today employs more than 42,000 people with
2008 revenues over $7 billion.
Children’s
Founded in 1998 with the merger of two health care systems,
Healthcare
Children’s Healthcare is a pediatric hospital with 5,850
of Atlanta
employees and 2008 revenues of approximately $1.4 billion.
(continued)
MAY 2010
Cornell Hospitality Quarterly
161
HUMAN RESOURCES
WHAT MAKES IT SO GREAT?
Exhibit 1:
Rank
68
75
76
77
78
79
85
88
92
95
162
Cornell Hospitality Quarterly
(continued)
Company
Overview
Southern
Ohio
Medical
Center
Based in Portsmouth, Ohio, this 222-bed hospital
provides emergency and surgical care, as well as a
wide range of other health care services. It has about
2,200 employees and 2008 revenues of approximately
$228 million.
Atlantic
This New Jersey–based medical center includes 3
Health
hospitals that offer a wide array of general and special
services, as well as 2 research institutes and a cancer
treatment center. It has a staff of almost 7,000 and
generated just over $1 billion in revenues in 2008.
Lehigh Valley With headquarters in Allentown, Pennsylvania, this
Hospital and
organization operates 3 full-service hospitals and several
Health
community health centers throughout the centralNetwork
eastern part of the state. It employs almost 9,000 staff
and had 2008 revenue of approximately $1.2 billion.
Northwest
Founded in 1959, this 488-bed facility located in Arlington
Community
Heights, Illinois, offers a full range of medical services. It
Hospital
has 3,400 employees and had 2008 revenues of
approximately $410 million.
Marriott
Opened as a root beer stand in 1927, this Washington,
International
D.C.–based lodging company operates more than 3,200
properties in the United States and 66 countries
around the globe. It employs more than 120,000 staff
and generated approximately $12.9 billion in revenues
in 2008.
Baptist Health This organization includes 6 hospitals and a research
South
institute in Miami, Florida. It has almost 11,000 staff and
Florida
had 2008 revenues of about $1.7 billion.
Arkansas
Sited in Little Rock, this is the only Arkansas hospital
Children’s
specializing in pediatric care (for children from birth to
Hospital
21 years old). It employs 3,527 staff and generated
approximately $450 million in revenue in 2008.
Publix Super
With headquarters in Lakeland, Florida, this company
Markets
operates 900 grocery stores in 5 states. It is also the
largest employee-owned company in the United States.
It had 2008 revenues in excess of $23 billion and has
more than 140,000 staff.
Four Season
Launched in 1960, this Toronto-based company manages
Hotels
more than 90 luxury hotels on every continent except
Antarctica. It employs 35,000 staff and generated
approximately $3.5 billion in revenues in 2008.
Kimpton
This San Francisco–based hotel company owns and
Hotels and
manages a diverse collection of 49 boutique properties
Restaurants
throughout the United States and Canada. It has about
6,500 employees and generated approximately $620
million in revenues in 2008.
MAY 2010
WHAT MAKES IT SO GREAT?
a long list of financial and family-oriented
benefits and perks; and regular feedback
regarding individual, store, and companywide performance. The results are clearly
evident. In addition to the awards and
accolades, Wegmans enjoys an amazingly
low employee turnover rate of 8 percent in
an industry that averages 50 percent. We
also note that it employs some of the most
engaging employees we have ever encountered. Clearly, this culture of caring is not
only good for employees, but it is also good
business. Employee retention is directly
related to profitability (Simons and Hinkin
2001), and the costs associated with emp­
loyee turnover can be significant (Hinkin
and Tracey 2000; Tracey and Hinkin 2007).
These examples provide tangible reminders of the importance of a firm’s underlying values and the impact on employee
attitudes, motivation, and behavior.
Communication. Another dimension of
organizational culture that was evident
among many of the top companies was
clear and consistent communication throughout the organization. We found many
examples of direct lines of communication
between the top and bottom of the organization, as well as inside and outside the
organization. Much of this exchange and
connectivity is facilitated by electronic
media, including email, message boards,
and social networking sites. For example,
Marriott International recently launched a
CEO blog in which Bill Marriott communicates insights and views about a wide
array of issues—from recounting memories
about a property opening to expressing
concerns about world events. Northwest
Community Hospital publishes an online
magazine, YOU, that offers practical advice
for a healthy living. Whole Foods Markets
goes so far as to share financial performance and individual compensation figures, while Griffin Hospital measures patient
HUMAN RESOURCES
satisfaction with all services and shares the
results with employees. These practices
are critical for establishing and maintaining connectivity among the organization’s
key constituencies—employees, customers,
and their communities. While the organizational culture is extremely important,
the way in which it is operationalized to
reflect the company’s values is most critical.
We will now present the human resources
practices that reflect a culture of caring
and are among the key drivers of employee
satisfaction and firm performance.
Flexibility in Scheduling
Since the forty-hour week was codified
in U.S. labor law in 1938, many U.S. jobs
have been designed for a forty-hour, fiveday workweek.4 However, hospitality organizations, hospitals, and grocery stores
typically cannot run that kind of schedule
for all their employees, given their roundthe-clock operations. Combine that operating reality with changing demographics,
such as increasing number of single parents, dual-career couples, parents with child
care issues, people working more than one
job, and young workers who are concerned
about quality of life issues, and it is obvious that organizations will need to be more
flexible in their scheduling and design of
work to attract and maintain a quality workforce. The proactive scheduling stance of
many of the companies in our sample
appears to be popular with employees.
As we describe below, the three primary
approaches to workplace flexibility are
job sharing, a compressed work week, and
flextime.
Job sharing. Just as the name implies,
job sharing involves two or more employees sharing a single position. The job can
be divided in any way that suits both the
employer and employees, including split
4. Henry Ford is generally recognized as being the first U.S. industrialist to implement a forty-hour week, in 1926.
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Cornell Hospitality Quarterly
163
HUMAN RESOURCES
WHAT MAKES IT SO GREAT?
shifts and complementary days on the job.
In many cases, we found that it is up to the
individuals to create a schedule that ensures
adequate coverage. This program is especially popular with jobs such as nursing
at the Methodist Hospital System, Mayo
Clinic, and Children’s Healthcare, but at
least seven of the companies in our sample
are currently using this practice—and at
least one from each of our three industry
segments.
Compressed workweek. Eight of the companies in our sample allow employees to
compress their workweek by working long
shifts on fewer days per week, typically
four 10-hour days or three 12-hour days.
The idea behind the compressed workweek
is that it cuts down on commuting time
and gives employees more personal time.
A logical adjunct to job sharing, the compressed workweek has been commonplace
in certain professions; firefighters, for
instance, may work two 24-hour shifts per
week. Companies in our sample offering
a compressed workweek included Whole
Foods, Starbucks, Southern Ohio Medical
Center, Marriott, and Four Seasons.
Flextime. The variable work schedule
popularly known as flextime includes an
almost unlimited number of scheduling
arrangements, all designed to suit an individual’s schedule while still completing the
necessary tasks. We found that many of our
employers maintained a core period when
all employees are expected to be at work
and designated the rest of the working day
as flextime, allowing employees to choose
when they work. The policy also includes
what has become known as “flexplace,” in
which part of the job may be done offsite, usually at the employee’s home. Stew
Leonard’s provides flexible hours and a
“Moms Program” that lets mothers schedule
their work around their children’s activities,
and Starbucks offers flexible schedules
for its workers, a plan that is particularly
attractive to older workers.
164
Cornell Hospitality Quarterly
Innovative Staffing Practices
Creating and maintaining a large applicant pool of high-quality job candidates is an
important part of ensuring that an organization can meet both its short- and long-term
human resource needs. The “employer of
choice” strategy is a key element in this process. The manner in which potential employees are attracted, selected, and hired sends
an important message about how they will
subsequently be treated. Many of the companies in our sample are using a wide range
of creative ways to win the war for talent.
Publicizing awards. All of the companies
in our sample publicize the awards they have
received, primarily on the firm’s home web
page. Not only do these awards make a company appealing to prospective employees, but
research has shown that this kind of promotion can have a significant impact on attracting a large and qualified applicant pool
(e.g., Collins and Han 2004). The Wegmans
homepage prominently displays the award
the firm received from J.D. Power and
Associates as “Highest in Customer Satisfaction with Supermarket Pharmacies.”
Marriott has devoted an entire section of its
company website to awards and recognition, which includes one of the “Best Places
to Work,” one of the “Greenest Big Companies in America,” and a perfect score on “The
Human Rights Campaign Foundation’s Corporate Equality Index Report.”
Use of dynamic media. Most of the
companies have created web pages on their
company sites that are specifically aimed
at recruiting potential applicants. The Mayo
Clinic provides extensive information about
specific jobs, benefits, professional development, and recognition programs. Four
Seasons has developed online job previews
that give prospective employees a realistic
perspective about work life. In addition,
individuals can watch a video presentation
by Isadore Sharp, the company’s founder,
chairman, and chief executive officer, who
MAY 2010
WHAT MAKES IT SO GREAT?
describes Four Seasons’s history and the
“four pillars” of success that are instrumental in helping the company achieve its
business objectives (namely, quality, service, culture, and brand).
Referral awards. Many of the companies
in our sample use referral awards to attract
employees. The idea behind this practice is
simple. If competent employees are offered
a financial incentive to attract others to the
organization, they will usually only solicit
those candidates who would be similar to
themselves in terms of work ethic and ability. Not only will they have to work with
this new recruit, but their reputation would
be at risk if the new employee failed. There
is usually a minimum time period that a
new employee must be employed before the
award is granted. King’s Daughters Medical Center offers referral awards ranging
from $250 to $5,000 depending on the
position, which contributes to an annual
employee retention rate of 96 percent. Children’s Healthcare of Atlanta was suffering
from a shortage of nurses, so they offered
incentives such as one hundred tanks of
gas for successful referrals. In addition to
more job candidates, the program improved
employee retention and workforce morale.
Rigorous selection procedures. Sometimes given short shrift, employee selection
is an important tool to ensure that an organization is staffed with people with the
right attitude, knowledge, skill, and abilities. In most companies, employees are
interviewed by managers who then make
the hiring decision. All of the companies
in our sample set high standards for selection and go beyond the manager interview
by using comprehensive procedures for making hiring decisions. For example, Publix
Supermarkets requires all applicants for
store-level jobs to complete a twenty-fiveminute online test that assesses several types
of knowledge and skill that are critical to
job success. Research has reflected the
MAY 2010
HUMAN RESOURCES
value of this approach, as formal testing has
been shown to play a critical role in predicting job performance (Tracey, Sturman,
and Tews 2007). Whole Foods utilizes team
interviews for management positions, followed by a team vote on whether to make
the position permanent after a specific period
of time. Starbucks also employs both managers and peers in the selection process.
The rationale behind this is that if people
are going to be working for or with a person, they should have a voice in the hiring
decision. They then also have the responsibility to help that person be successful.
Training and Development
The organizations in our sample recognize the critical importance of the first few
weeks on the job. This idea is supported by
research that has shown that poorly handled organizational entry processes will
result in higher levels of employee turnover
within the first several months of employment (Allen and Meyer 1990). The initial
stages are important not only for acquiring
the knowledge and skills that are necessary
for effective job performance but, perhaps
even more importantly, for becoming socialized and gaining a clear and comprehensive
understanding of the firm’s culture. The
most admired companies are also aware that
ongoing development opportunities and
clear career paths are important motivators
for promoting retention and professional
growth.
Emphasis on organizational entry.
Socialization is the process by which a
new employee learns about the organization’s culture. The formal process for this
activity takes place during orientation,
which in our sample ranged from several
days to several weeks, and then continues
for the first several months on the job. The
greater the consistency between the message delivered during this time and the
Cornell Hospitality Quarterly
165
HUMAN RESOURCES
WHAT MAKES IT SO GREAT?
information provided during the recruitment
and selection stages, the greater the likelihood that the socialization process will
succeed (Thomas and Griffin 1989). Griffin
Hospital requires every new employee,
regardless of position, to attend a week-long
orientation program to learn about the hospital’s culture and philosophy from senior
leadership, as well as additional information about safety procedures, human resource
policies, and legal priorities. The newemployee training program at Four Seasons
lasts twelve weeks and includes a wide
variety of experiential activities, many of
which are facilitated by senior managers.
This comprehensive program also includes
thirty hours of classroom training; crossfunctional exposure; formal testing; and a
twenty-four-hour stay at the hotel, which
offers new employees a direct means for
learning about the company’s guest service
philosophy and standards.
Development from within. Virtually all
of the companies in our sample provide
extensive training that encompas­ses
many different types of development
opportunities—from technical skill programs to leadership and executive coaching. Whole Foods encourages innovation
through “retail experiments,” which are
created by the line-level associates. Moreover, the firms in this sample assign a strong
value to continuous learning, and training
is viewed as a long-term investment in an
important organizational asset rather than
an expense for an expendable commodity.
This approach is supported by research that
has shown that a strong training climate—
exemplified by supportive management,
flexible job designs, and accountability
and reward systems that reinforce the
application of newly acquired knowledge
and skills—can enhance the effectiveness
of both formal and information learning
efforts (e.g., Tracey, Hinkin, Tannenbaum,
and Mathieu 2001).
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Cornell Hospitality Quarterly
In addition to training, most of the
companies in our sample have developed
specific and clearly defined career paths,
placing an emphasis on retaining and developing their own employees. For example,
87 percent of managers at Stew Leonard’s
have been promoted from within. In addition, many of the companies in our sample
offer employee education scholarship
or assistance. Finally, companies such as
Lehigh Valley and Marriott offer work-study
mentoring programs for high school and
college students to assist young people to
begin careers in their respective companies.
Performance Management
Many of the companies in our sample
take an effective approach to performance
management by ensuring that the criteria
for gauging effectiveness are clearly defined
and understood by all employees, using
comprehensive performance measures that
account for both individual and collective
contributions, and employing a transparent
process so that all employees understand
how well they and the firm are doing. In
particular, we found that the information
generated from the process is clearly linked
to development initiatives, incentive programs, and the like.
Comprehensive, continuous, and openbook assessment. One of the ways to ensure
the utility of a performance management
system is to obtain performance data from
multiple sources and use the information
for both evaluative and diagnostic purposes.
Lehigh Valley Hospital and Health Network has engaged in an ongoing validation effort to ensure that key performance
indicators associated with individual performance requirements are aligned with
patient satisfaction and service quality
indices. In addition, 40 percent of its employees’ annual performance reviews are based
on behaviors that are directly linked to the
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WHAT MAKES IT SO GREAT?
organization’s mission and values. Similarly,
Atlantic Health uses an online, portfoliobased evaluation process that accounts for
individual- and aggregate-level results and
links the performance information directly
to training opportunities and rewards.
Companies such as Wegmans, Nugget
Market, and Griffin Hospital use upward
feedback to generate ideas for improving
performance and promoting innovation. On
a more strategic level, Marriott has created
a Center for Excellence in Diversity Assessment, which conducts ongoing audits of
the company’s diversity initiatives.
In keeping with the need to make sure
that the data used for evaluative and developmental purposes are accessible and available for timely decision making, several of
the health care organizations in our sample,
such as Southern Ohio Medical Center and
Northwest Community Hospital, have developed publicly available performance dashboards that report on a wide range of key
performance areas, such as safety, quality,
and service. Providing wide access to this
type of evaluative information demonstrates
a commitment to open-book management
and encourages employees to share ideas
and concerns that may be instrumental for
solving important problems and improving
performance.
Compensation and Benefits
Given the importance of rewards and
incentives in an organization’s efforts to
attract, retain, and motivate employee performance (Fay and Thompson 2001), those
incentives must reflect the values of an
organization. For example, the Mayo Clinic
pays physicians a salary rather than paying
by the treatment or patient because it wants
to emphasize quality patient care, rather
than volume. To promote the importance
of the team, Whole Food limits top executive
HUMAN RESOURCES
compensation to nineteen times the average
compensation of all full-time employees.
This may still seem like a large ratio until
one compares it to the average compensation of the CEOs at the twenty-four largest
U.S. banks, who received more than four
hundred times the compensation of the
lowest-paid individual.5
Profit sharing and gain sharing. All of
the organizations we examined had implemented reward and incentive programs
that were consistent with the need to maintain logical, transparent reward programs
that are meaningful to recipients and relate
to the organization’s goals. In particular,
every firm maintained a clear connection
between performance results and incentives.
Performance bonuses were among the most
common incentive practice. For example,
Whole Foods offers a gain-sharing program
that rewards employees on factors that they
have the most control over, such as scheduling and customer service, where a portion
of savings is shared with employees. Nugget Market offers both profit sharing and a
generous 401(k) retirement program. These
programs and practices provide a strong
foundation for creating and sustaining a highperformance work culture and motivating
employees to go beyond expectations.
Comprehensive, competitive benefits. In
addition to linking performance outcomes
to valued incentives and rewards, all of the
organizations in our sample offered a wide
array of benefits to their employees, including several options that further enhance
their distinctiveness. The extensive list of
benefits includes generous retirement savings programs, 529 college savings plans,
choice of health insurance plans (e.g., PPO,
HMO, universal), disability insurance,
dental and vision insurance, life insurance,
auto and home insurance, flexible spending accounts, healthy partners programs,
subsidized child and elder care, tuition
5. See www.TheCorporateLibrary.com (June 2008).
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HUMAN RESOURCES
WHAT MAKES IT SO GREAT?
reimbursement programs, paid time off
(including cash-out options), legal and financial services, and company-sponsored credit
unions.
Family and community emphasis.
Another key feature of these firms’ reward
and incentive programs was their emphasis on families and the local community.
Southern Ohio Medical Center provides
homework assistance from 2:00 p.m. to
10:00 p.m. every day for their employees’
children in grades K-12, as well as assistance for introductory college courses and
several continuing education programs for
adults. In addition, King’s Daughters, the
Mayo Clinic, Marriott, and others offer
subsidized child care programs; some also
provide on-site care.
A strong community focus was also
salient a feature of the reward and incentive
programs among the companies we examined. Lehigh Valley Hospital and Health
Network committed $146 million in community service incentives to provide free
health care for people without insurance.
This initiative is supported by a strong
emphasis on volunteerism and is enabled
through flexible work schedules that allow
employees to dedicate time to causes that
are personally important and support Lehigh
Valley’s core values. A related prominent
theme was an emphasis on sustainability
and environmental stewardship. Awards
for green initiatives were common among
the best employers in our sample, and
many companies have fairly elaborate and
formal programs to support their efforts.
For example, Starbucks has created a position of director of environmental affairs
and produces a corporate social responsibility annual report that describes the results
from numerous efforts to create a healthy,
environmentally responsible, and sustainable business enterprise (e.g., from tracking the number of employee volunteer
hours to employee engagement and diversity results).
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Cornell Hospitality Quarterly
Summary and Conclusion
We have identified six categories of
human resources practices used by the
companies in our sample of hospitals, grocery stores, and hospitality organizations.
These include
· a culture of caring for employees and
open communication;
· flexible scheduling to meet the needs
of a changing workforce;
· innovative methods to attract, select,
and retain a loyal and competent
workforce;
· training programs that are viewed as
an investment in people with emphasis
on career tracks and promotion from
within;
· performance management systems that
are aligned with organizational objectives; and
· compensation programs that reflect
the values of the organization and link
pay to performance.
Within each of these categories we have
identified specific practices that may be
implemented in many—and perhaps most—
hospitality organizations. One of the most
interesting findings in our study was that
most of these practices cost little but offer
substantial benefits. The challenge for all
businesses is creating momentum for change
as well as sustaining efforts that promote
continuous improvement.
The accompanying tables present some
of the some of the key metrics from our sample, which readers can use as benchmarks.
Exhibit 2 lists the average training hours by
employee type (i.e., hourly vs. salary), and
Exhibit 3 presents the average voluntary
turnover rate for each of the categories. We
note that the hospitality firms lead with
19.2 percent, but what is more interesting
is the comparison of each firm’s rate to industry averages, noted in parentheses. In all cases
the sample firms’ turnover rates are less than
50 percent of the average for their industry.
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WHAT MAKES IT SO GREAT?
HUMAN RESOURCES
Exhibit 2:
Average Hours of Training per Year for Hourly/Salary Employees
Segment
Average Training
Hours: Hourly
Average Training
Hours: Salaried
50
69
43
67
176
53
Grocery
Hospitality
Hospital
Exhibit 3:
Average Voluntary Turnover Rate per Year
Segment
Grocery
Hospitality
Hospital
Average Voluntary
Turnover Rate—
Most admired
Average Voluntary
Turnover Rate—
Industrya
13.2%
19.2%
7.1%
34.7%, Retail trade
56.4%, Lodging/food service
19.6%, Healthcare/social asst.
a. U.S. Department of Labor, Bureau of Labor Statistics (2006).
Exhibit 4:
Average Compensation per Year for Most Common Job, Hourly/Salary
Segment
Grocery
Hospitality
Hospital
Average
Compensation: Hourly
Average
Compensation: Salaried
$29,020
$30,545
$68,578
$76,006
$76,464
$82,392
Finally, Exhibit 4 presents average compensation for the three industries. These
figures are interesting because hospitals
have a substantially higher average, while
compensation for both hourly and salaried
workers is virtually the same for supermarket and hospitality organizations. We see
these two industries as being quite similar,
based on the characteristics we examined.
The hospitality industry has the reputation, well or ill deserved, of being slow to
adopt innovations. In contrast to that argument, we have seen considerable changes
in the use of technology, lodging concepts,
healthy cuisine, and revenue management
in recent years. What we have not seen is
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substantial change in the way that people
are managed. Individual firms stand out,
but too many firms accept “industry realities” such as substantial turnover and
“learn as you go” training. Whether it is
recognized by managers or not, people are
the greatest asset of virtually every organization. An uncompromising focus on this
philosophy is arguably the most important
factor that separates the top one hundred
from the thousands of companies that did
not make the list of best companies to
work for. It is worth noting that each of the
companies on this list is not only successful as an employer but also in both financial and competitive terms.
Cornell Hospitality Quarterly
169
HUMAN RESOURCES
WHAT MAKES IT SO GREAT?
In closing, we would like to dispel the
notion that the hospitality industry faces
special problems that other industries do
not. In contrast to the mentality that “we
can’t do that here,” we firmly contend that
what can be done in the grocery business
or in hospitals—both of which have substantial operating challenges—can be
done in hospitality organizations. We
know that when there is a link between
performance and rewards, people’s performance and satisfaction will increase. Why
can’t profits and savings be shared with
employees who have contributed to the
organization’s success? We know that
behavior that gets rewarded gets repeated.
Why can’t management compensation be
tied to employee retention and development? We know that economic pressures
and demographic changes are affecting
peoples’ lives. Why can’t scheduling be
done creatively to meet the needs of
employees? All of these things and many
more can be done, and becoming an
“emp­loyer of choice” can be the result.
In the words of Bill Marriott, “If we take
care of our people, they will take care of
our guests.”6 This is the fundamental reason why Marriott and all the others we
examined are on the list of best
employers.
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