How to Think Your Company into a PR Mess

<We've come to expect inhuman treatment by the airlines. As the carriers struggle to stay afloat, we have learned to live with the results of their short-sighted cost cutting. We strap ourselves in seats that have all the comfort of the rack, pay outrageous fees to hazard our checked luggage will arrive when we do, and purchase snacks that must have been deemed unfit for penal institutions. Given the way flight attendants have been treated by management, we know that the skies will be anything but friendly.

But hotels are different. We usually have a choice, so we’re lured with amenities and promised the best service. It is, after all, called the hospitality industry. Advertisements often include pictures of friendly staff members, eager to please.

I don’t really care about fruit baskets or complimentary continental breakfasts, but I do want a clean room and pleasant interactions with the hotel staff. We all know that in a service industry, the attitude of employees has an enormous impact on quality, and the way employees are treated is mirrored in the way they treat customers.

Apparently, the management of Hyatt Hotels knows this too. In the career section of their corporate website, under pictures of smiling and satisfied employees, they entice prospective job candidates with the offer, “Discover your place to shine in our warm, respectful, and inclusive culture.”

I owe a debt of gratitude to Hyatt, because I’m alway looking for good examples of bad thinking in business. If they had set out to illustrate every flaw in conventional management thinking, they couldn’t have done a better job. And as if to illustrate how flawed paradigms can lead to a succession of self-defeating decisions, their attempts to mitigate their public relations disaster has created an even bigger one.

I can see how it happened in my mind’s eye. Well intentioned managers are gathered in a conference room with a spread sheet projected on a screen. It shows that occupancy is down and room rates have been cut, so margins are being squeezed. Finance is driving for expense reduction and somebody comes up with the idea of outsourcing housekeeping. The business model shows that the savings go right to the bottom line. It’s hard to argue with the objective logic of the decision.

But another manager, perhaps from HR, raises the objection that it will be difficult to train the new staff. This objection is addressed logically with the suggestion that the current housekeepers train the new employees. When somebody suffering from a short spasm of empathy raises the further objection that the housekeepers may be unwilling to train those that are taking their jobs, one of the more creative members of the group comes up with the idea of telling them that the new people are just substitutes for those on vacation. The meeting adjourns with everyone comfortable that they have executed their responsibility for prudent financial management.

The thinking may be logical, but it’s a perfect example of how costly an exclusive focus on measurable objectives can be. By viewing the employees as no more than a cost, management lost sight that they are also human beings capable of both thought and independent action. Of course, they weren’t going to go quietly, and inevitably their story would find its way to the press.

The morality of tricking long term employees into training their replacements and then firing them may be an issue for the managers and their consciences. But the idiocy of the decision from a long term business perspective ought to have Hyatt’s shareholders up in arms.

Not only did management forget that employees are people, they somehow missed the populist anger against large corporations welling up in the country. Apparently, they also forgot they were in liberal Boston and even more liberal Cambridge, where the rights of working people are held sacrosanct. The resulting boycott of the hotel by the populist mayor, governor, and even the taxicab drivers may have been an unintended consequence, but it should have been anticipated.

And, of course, the logic also obscured critical interdependent relationships. No attention was paid to how employee relations impact customer relations, or how the “talk” on the website ought to match the managers’ “walk.”

Focusing on numerical objectives and driving for cost reductions may be conventional wisdom, but it creates tunnel vision. So management also missed that the company they outsourced to has a record of labor law violations and of employing illegal aliens, but the  Boston Globe didn’t.

This morning, Hyatt announced they will now give the laid off housekeepers either a job with an outsourcing company or career training, and will continue to pay them their original salary for the near term. If there was some soul searching at the company, the search didn’t go very far. Predictably, the housekeepers aren’t simply interested in a job or in the money. They want their original jobs and their relationships with their coworkers back. They want to “shine” in Hyatt’s “warm, respectful, and inclusive culture.”

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