Creating employee trust: The unseen but decisive factor in corporate success

It's been suggested that I tell you what sets Four Seasons apart, and how a little Canadian company with one small motor hotel in a somewhat seedy area of Toronto, could become, in a relatively short time, the leading luxury hotel group worldwide. At least that's how analysts have been putting it, and, of course, I don't dispute it. Though 40 plus years, to me, doesn't seem such a short time.

Now I realize it's currently trendy for a company's founder to start with vision. And often over the years I've been asked, what was my vision of Four Seasons? What was my grand dream?

Well, to be honest, there was no vision. No grand dream. I was just trying to put one deal together. A concept of combining the informality of a motel with the convenience and facilities of a downtown hotel. And if I'd thought it would take five years to sell that idea well, I'd probably have kept on building houses. But it was my night job, so I kept trying.

And when the Four Seasons Motor Hotel finally opened, in 1961, my vision of the future was to take in enough cash today to pay yesterday's bills. And if my tradesmen hadn't trusted me enough to wait for their final pay cheques until the hotel was making money, then for sure I wouldn't be standing here talking to you today.

Now, over the years I've often been asked which is my favourite hotel. And because I've played a part in creating every hotel and because, like our children, each is a favourite, though all different, my answer has always been, "The hotel I'm in is the favourite of the day." And that is really the case.

But if the question was, which hotel has been most important, then there is only one answer, and that is the Four Seasons London, England, formerly the Inn On The Park. A hotel we built and opened in 1970.

So let me share with you a little history.

Negotiations for building that hotel spanned several years. Flying overnight to London, Meeting and leaving the next day. Coming back thinking, "It's over". Having them call and say, "We're still interested." And this went on and on and on.

One day Sir Gerald Glover, the associate I negotiated with, said, "Next time, my boy, you really must bring your wife." So the two of us flew over for dinner. A formal dinner in his town home with about 10 business associates.

After dinner the cigars were passed and, surprisingly, offered to Rosalie. I couldn't believe it when she said, "Oh yes, thank you." and held the cigar aloft as if to smoke it. What did she know about this deal that I didn't?

Then when the butler came round with a light, she put the cigar in her purse, saying, "No thanks, I'll have it later." Everyone laughed. Rosalie, just being her playful self, probably cemented this deal.

But now, when I look back, I believe that particular London deal illustrates two primary aspects of success.

One, is how we assess and deal with risk. You see, the London developers wanted to build a mid-priced hotel of about 320 rooms. I held out for a luxury hotel with 230 larger rooms. The idea of luxury without formality and service without a class attitude. Sir Gerald Glover and his people said it could never compete with London's world-famous hotels. But when I said I would pay them the same rent they expected from 320 rooms, they went along with me. Though they called me "the crazy Canadian" and said I'd probably go broke.

And, of course, had our London venture failed they would have been right. And over the years I've often been asked how one controls the fear of failure.

The answer, of course, is you don't. You never think of failure. You're well aware of the risk and the accountability, but you think only of succeeding. You're focussed on succeeding and convinced you will. It's an intuitive conviction embedded in self-belief, which gives you the self-assurance and perseverance to find a way to succeed despite all doubters and difficulties.

And years later, I asked Sir Gerald, "How could you trust me with such an important project when you knew I didn't have the wherewithal to cover my obligation if things didn't work out?"

And he said, "My dear boy, over time you make a judgment about people. You develop a belief and a trust — the foundation of all relationships." You see, those meetings hadn't been all about business per se. They were about the foundation of business: trustworthy relationships." The other, and most essential factor in long-standing success.

Everything I have learned since then confirms that he was right. A company's success is largely dependent on its belief system: a deep-rooted belief in one’s self that overrides the fear of failure. Plus the depth and width of belief by employees throughout the company in what management does and how it does it.

It was trust that enabled me to finish building our first hotel and trust that gave us the go-ahead in London that set our course for the future. And that was to only operate medium-size hotels of exceptional quality, and to be the best wherever we locate. And that set a goal and a purpose beyond making money that all our people could relate to.

By 1978 we were in every Canadian city big enough to support a five-star hotel. To grow without lowering quality we had to go for broke in the big league, an American market dominated by giant chains.

We knew we had to set ourselves apart. We had already upgraded five-star standards: aesthetics, convenience, comfort; every aspect of every room, from the softest towels to the quietest plumbing.

We also expanded the use of the bedroom for business with two telephone lines and a well-lit big desk. We became the leader in innovation, the first in many things. Like 24-hour room service, shampoo, bathrobes, make-up mirrors, hair dryers, overnight laundry and shoe shining and many, many more. These were all popular ideas, but very quickly and widely copied.

But we needed something more. So we studied, surveyed and listened to our customers. Most were business executives, often pressured by time and the need to be productive. Luxury was seen then chiefly as architecture and decor. We decided to redefine luxury as service, a support system to fill in for the one left at home and the office.

And that customer-service strategy made our customer-employee contact the most meaningful of all our working relationships. And that customer-service focus helped us foresee changes and trends. Kept our priorities straight, challenged employees and gave us growth in the United States.

But with growth and new employees came problems of control.

We had always had an implicit operating philosophy. So in 1982, as we expanded, I decided to make it explicit. Spell out our goals, beliefs and values. Tell everyone how to act. Give us a reference point from which to ask: "Does this deal, this decision, this action, square with our values?"

I tried to put this into a few words and took it to our senior people. Some scoffed, called it trite and unnecessary. Some agreed, but only in principle, implying no intention of acting it out. That worried me. Unless all our executives shared the same values, we'd be working at cross-purposes. Employees, even then, believed only what they saw. If we were seen showing greater concern for profit, prestige or quotas than for customers and employees there would be no belief in our values and no wholehearted commitment. We can't communicate persuasively across a trust gap.

So I sat down with our public relations director and detailed a formal credo based on the Golden Rule. The cornerstone of what would later be called our corporate culture. In essence, to treat others — all others: customers, employees, partners, suppliers — as we ourselves would want to be treated.

There was nothing new about this, of course. Even back then, such credos were common — though seldom believed. What was new was that we enforced it. Senior managers who couldn't or wouldn't walk the talk were all winnowed out within a few years.

It was a painful process, personally distressing. Perhaps the hardest thing I ever did. But the fastest way for management to destroy its credibility is to say employees come first and be seen putting them last. Better not profess any values than not live up to them.

Now, conceiving a vision and strategy is relatively easy. The hard part was selling it: getting it across to design staff, purchasing people, engineers. Getting it down to the bottom: bellmen, waiters, chambermaids, dishwashers, the lowest-paid and traditionally our least-motivated people, but the ones who can make or break a five-star reputation.

I became an evangelist, preaching the gospel of service every hour of every day on every trip to every hotel. Continuously restating it. Clarifying it. Developing it. Reinforcing it by rewarding and celebrating outstanding performance. Focussing employees at every level on one priority: giving customers added value through service.

When I was a young builder, I worked side by side with my crew, digging ditches, pouring concrete in the rain. And when I had to leave they would go on working as if I was there. An attitude based on mutual respect and trust.

This was the attitude I wanted to develop in Four Seasons. First, by hiring more for attitude than experience. Then by establishing career paths and promotion from within. By paying as much attention to employee complaints as to guest complaints. By upgrading employee facilities whenever we upgraded a hotel. By disallowing class distinction in cafeterias and parking lots. By pushing responsibility down and encouraging self-discipline. By setting performance standards high and holding people accountable. And most of all by unfailing adherence to the Golden Rule: generating trust.

By the late ’80s, service was being depicted in the media as "the ultimate strategic imperative for the ’90s." And providing it had become our core competence. Year after year, in the annual surveys of the best hotels in North America, customers were putting us in first place, slowly equating our name with outstanding service.

By the end of this year, we'll have more than 70 hotels in 30 countries, each hotel a showpiece of outstanding quality. Irreplaceable buildings in irreplaceable locations. All built to retain their appeal, not for five, 10 or 20 years, but at the very least for the next half-century.

This was not growth and success based, as hoteliers so often said in the past, on "location, location, location." This was success due primarily to employee commitment and, fundamentally, to belief. Belief that a fully committed workforce is a company's greatest asset.

I know this is not the prevailing view. With so many companies exporting jobs abroad by the thousands and simultaneously laying off employees, a committed workforce is more often seen as an oxymoron.

But every day, in every hotel, our employees confirm our belief in their value by consistently delivering error-free service. And it is this service consistency that has proven to be what every company dreams of: a sustainable competitive advantage.

The conclusive test of this came with Sept. 11. We had just completed the best year in our history when our industry was plunged into the deepest slump since the great depression. Many people stopped flying. The airlines were devastated. For hoteliers the outlook was bleak.

It was a time for critical decisions. Other hotel companies were focused on squeezing costs, cutting staff, cutting product standards, cutting everything.

We decided on a different course of action. We believed the downturn would be relatively short, so we decided we would not change the product and we would not wage a discount war. And, above all, we would not let people go. We would go on giving our customers the service they expect, and we would do it in the most cost-effective way: by being creative. "Control without compromise" — that was our direction to all our hotels. A strategy most other companies greeted with skepticism.

And all our people rose to the challenge. Employees voted almost unanimously to work, temporarily, four days a week instead of five, and to do whatever job was required to maintain service proficiency.

As a result, we came through our worst crisis with heightened credibility. And not only did we maintain our highest-ever rate structure while other hotels were discounting rates, our market share actually increased. And, most important, our profit margins were and still are one of the best in the industry, making us, indisputably, the world's leading luxury chain.

Our successful service culture has grown stronger with each passing year. The strength of this value system was illustrated more profoundly than any of us could have imagined during the Tsunami crisis in Southeast Asia. Fortunately, only our Maldives hotel was affected and, thankfully, none of our guests or employees was seriously harmed.

Nonetheless, it was a frightening experience for all.

Some say we were lucky, but I believe our good fortune that day had more to do with the actions of our quick thinking employees.

When the wave struck, each of them acted intuitively to ensure the comfort and safety of our guests and each other. Some were even credited with saving lives. They did everything they could think of to ease minds and calm nerves. Within 24-hours they evacuated the island and chartered a plane to fly all of the guests to safety.

The actions of our employees that day, and in the days following, are the ultimate expression of our Golden Rule culture. Since the Tsunami there has been an outpouring of gratitude from the guests who were there. One of those guests wrote, and I quote:

"Let me stress that your Group's strength ...rests on rock... This rock is firstly made up of the local employees who — while having been selected for doing their job well — have shown in a time of utmost crisis their true value and a level of dedication that no training and no amount of money can ever generate; it is innate and ingrained in them."

Clearly, the actions of our employees that day have created memories our guests won't ever forget. And while the situation in the Maldives is a rare and unusual event, the efforts of our employees around the world are always impressive. The passion of our workforce is truly the power behind our business success.

In creating a workforce of exceptional people, we believe we have found the holy grail of business success for the 21st Century.

For 15 years Jim Collins, a distinguished management consultant and best selling author, has been studying how merely good companies become great, and in his latest book, "Good to Great", he summed up his conclusions. "Great companies," he wrote, "first build a culture of discipline...and create a business model that fits squarely in the intersection of three circles: what they can be best in the world at, a deep understanding of their economic engine, and the core values they hold with deep passion."

I would suggest that Collins is describing, in exact detail, our business model. We have built an economic engine of exceptional service by understanding our customers' needs and desires, and we've made it the best in the world. And we maintain and perfect it through the discipline of a culture based on deeply felt core values: the values embodied in the Golden Rule.

The Golden Rule is not, as some may think, applicable only to Boy Scouts and Girl Guides. It is surely the most profound behavioural statement ever made, a universal principle compressed to one simple sentence. And this, for us, has been an internalized control system, telling everyone how they should act, integrating and guiding the company everywhere we locate in the world. The greatest integrator of trust ever devised.

Trust is the unseen and too often neglected determinant of corporate success. It's the emotional capital of leadership, the tie that binds: building community spirit, certifying communication, fostering teamwork while permitting constructive dissent. It's the essence of the brand name, a synonym for customer loyalty. And it's the sum of our reputation, which precedes us in every transaction.

It would seem that ethical credibility, until recently, did not rank high in a lot of corporate planning sessions. Business ethics were usually considered to be a matter of personal conscience.

Well, not anymore. The lengthening list of companies paying dearly for lack of investor trust has put ethics at the forefront of everyone's mind, and the value of an ethical reputation is rapidly rising.

I believe this is all for the best. When the clouds of deceit blow over, as of course they will, all of us who manage companies and all who depend upon our management, will be immeasurably better off. For the basic human values of honesty and fairness and respect and concern for others all the ethical values that create trust are as basic to free enterprise as they are to a free society.