Episode 99 - Taking Service to Another Level with Horst Schulze
Today’s guest is one that needs no introduction, and we’re so excited we got to have a conversation with him and that we get to share it with you. Horst Schulze is co-founder of The Ritz Carlton Hotel Company.
He is also partnered with Arch + Tower, a customer and employee experience consulting group, in order to produce a comprehensive masterclass of employee and customer experience training content.
Horst is the author of Excellence Wins: A No-Nonsense Guide to Becoming the Best in a World of Compromise. He is full of insight, wisdom, and experience that is ripe for any Faith Driven Entrepreneur, so don’t let me keep you from him any longer. Let’s listen in…
Useful Links:
Horst Schulze RightNowMedia Leadership Series
Ritz-Carlton Founder Horst Schulze On Creating A Gold Standard
Episode Transcript
*Some listeners have found it helpful to have a transcription of the podcast. Transcription is done by an AI software. While technology is an incredible tool to automate this process, there will be misspellings and typos that might accompany it. Please keep that in mind as you work through it. The FDE movement is a volunteer-led movement, and if you’d like to contribute by editing future transcripts, please email us.
Henry Kaestner: [00:03:11] Horst, we are so excited to have you on the show today and eager to jump right in our conversation. Our listeners love stories and we know that you've got a great one. And we establish before you live that you and I are both German, although you're gonna sound much more credible as a German than I. But share your story. Start in Germany and talk about your decision to work in the hotel business. [00:03:31][19.6]
Horst Schulze: [00:03:32] Well, yeah, I tell this in my book very carefully. But going back, I was eleven years old. There for some reason, I don't know why. Nobody knows why. I went to my parents and said, I want to work in the hotel business. And they said, OK, but then forgot about it. But I kept on saying it and kept on begging for it. But that was not the thing to do in Germany after the war. Yes. And everybody went into technical shop. It is on the table in Germany to have a hands working shop, meaning if I'm a carpenter that that's honorable, even a butcher, anything, it's honorable or an engineer. Now that would be really honorable but hotel business was about the lowest you could want, but I kept on insisting on it. My parents looked into it. They were advised to find the best hotel in their region. They found a hotel 100 kilometers away, which was by far the best in the region. So at 14, I left. But of course, my parents were very, at that time, because this is a famous, very excellent hotel, they had admonished me. Now this is a hotel where we could never go. This is a fine ladies and gentlemen goal. Important people got that. We couldn't go there. But at the same time, the village kind of laughed, going to work as a busboy and trying to become a cook and a waiter. So anyway, my mother taught me that the first thing that general manager meets me and tells me the same thing. You are the servants and the guests are very important. Don't be envious, etc etc.. And next, I meet the maitre d of the hotel who changed my life. [00:05:24][112.5]
[00:05:25] Frankly, it was that key moment. Of course, I was very young and accepted a lot of the time, but that was my key moment in my life when I met him. The first thing he said was there were two other kids, by the way, same age started sometime. He said, tomorrow morning. You'll all come to work at 7 o'clock, but really never from here on come to work, come to work every day to create excellence. And what you're doing well. Mind you would have been over my head at 14. What is excellent about washing dishes, cleaning tables, cleaning the restaurant and so on? [00:06:01][36.0]
[00:06:02] Now the system in Germany is such that once a week you go to a hotel school, in my case a restaurant. So all the kids from the region come down Wednesdays. We've been there after two years. In the meantime, I started to understand what you meant with excellence. But after two years, the teacher asked us and school right an essay of what you now feel about your business. Going back to work, I cleaned a table in the corner and I could feel that the maitre' d had entered the room. It truly, he was was some body that had such a presence. You could feel it. I turned around, saw him approach the table, and I realized I'd seen it. But I never really totally realized it. I realized that people at the tables that he approached were proud that he came to them. He'd talk to them, went to the next table, and I realized all guests in a room think he's the most important person in the room. So did we, the employees. So when I started my essay, which I was supposed to write. I want to write about him about that and I want to write something, I realized for the first time my life that I can define myself. [00:07:26][84.0]
[00:07:27] He was respected by everyone because he refined himself as a person of excellence and delivered excellence. And then it became clear to me my new view would help that people have laughed at me. It became clear to me I can define myself as a real gentleman. So it is up to me, not up to anybody else. Not any negative comment. I can define myself. So I named that essay, we are ladies and gentlemen serving ladies and gentlemen. If we are excellent on what we're doing, then we are ladies and gentlemen, and we serve, ladies and gentlemen. But we are not servants unless we assent and sell itself by mediocrity. To be just nothing but servants. And I wrote that essay and then it was a major success and that impacted me because it's the only A I ever had in my life before or after. So consequently it stayed with me and kind of made it the mantra of my life. Try and create excellence. And that delivered me. So that's kind of the story of where I came from and eventually from there on I worked in the finest hotels in Europe. [00:08:44][76.6]
[00:08:44] I don't just say that, but I actually worked in the finest hotel in Europe and came after a few years to the US and started working with the Hyatts and Hiltons and so on, and eventually was offered to start a new hotel company. [00:08:59][14.6]
Henry Kaestner: [00:09:00] Before you get there, though, Horst because I want to hear this part of the story, and I know there our listeners do too. But I wonder if they're like me. And then I'm finding myself fascinated by this maitre d because everybody knows what Ritz Carlton has become. But there is somebody who is so good about their craft and also beyond being good about their craft. He must have taken an interest in you. And a lot of entrepreneurs are influenced by mentors are influenced by role models. I don't know that his maitre d will ever understand. Maybe he does. Maybe you stayed in touch with him about what he birthed by believing in you and by being able to portray this essence and live it. How? Tell me a little bit more about your relationship with him and what it was that made such an impression. [00:09:42][42.6]
Horst Schulze: [00:09:44] Yeah, I'm sorry I had to laugh because the relationship was that he was constantly teaching. And at that time, mind you it was 54, 55. And so that was a totally different attitude about this. We work twelve hours a day and some a few times he kicked me literally in the dairy air. [00:10:01][16.6]
Henry Kaestner: [00:10:02] Literally kicked your ass. [00:10:04][1.6]
Horst Schulze: [00:10:04] Yeah, that's it. You know,. [00:10:06][1.3]
Henry Kaestner: [00:10:06] And we can say that on the FDE. I think so. [00:10:08][2.1]
Horst Schulze: [00:10:09] But it was simply a moment when it was very clear to me that I needed it. So it was there was a funny moment when we served a table. They had the service from Ob-La-Da onto the plate. That was a banquet. And mind you, this was a hungry time too, the food for the employees was lousy. Then there was a tray would be served as small filet of veal and a small filet of beef. And I served it. And the one lady said, no beef. So I had my tray, a little filet left and on my way out I thought nobody saw it, I took it and put it in my pocket of my tails that I wore, you know, the tails that they wear. And sure, there's a pocket in there and he ran behind. So I did know he saw it and put hot sauce into it and kicked me for stealing. Well. All right. There was some wine left and he took this wine out of it from there, from the bottle and bang it hit me from behind. I didn't know he was there. [00:11:10][60.7]
[00:11:11] He always did one thing: he explained. He said, here is what I did and here's why I did it. And here's what I want you to be. Or when he explained he always gave you more depth and objective, he said, here is the objective. What I want you to accomplish and here's why. That is a true mentor. It reminds me of Adam Smith's Wealth of Nations. He wrote another story about a human being and he said Adam Smith said, I don't know if my maitre d read that. Adam Smith said that people cannot relate to orders and direction. People can only relate to Objective and Motive. And he did that. He never gave an order, actually gave objective and motive that consequently was easy to buy in. And it's crazy that after 300 years after Adam Smith wrote that, what do we do? We give orders and directions knowing full well people cannot buy into it. And it seems he knew that he knew always explained any you know, he never kicked you that you got injured. You want to make a statement? Yeah. Yeah. And he laughed about it and we laughed about it. And nobody's sued him. He knew where he became. In fact, we appreciate it. Yeah. [00:12:35][83.4]
Henry Kaestner: [00:12:35] Does he know you became? [00:12:36][0.7]
Horst Schulze: [00:12:37] No. He passed away as I worked still as a waiter in Europe and came down to the United States. [00:12:43][5.6]
Henry Kaestner: [00:12:43] Tell us more about that. So bring us back in further on in your journey. I'd interrupted you before. Please continue going. [00:12:50][6.8]
Horst Schulze: [00:12:51] Well, I worked. As I said in the greatest hotels. And then came to the US, worked in various places around Hyatt, which was a wonderful company, just a tremendous company. But in the meantime, I was director of Food and Beverage for a hotel and became rooms director after two years, became general manager after two years. Three years later, became regional vice president and then Corporate Vice President for Hyatt for 65 hotels and then I got a call that there was people developing a hotel, two hotels in Atlanta, and they wanted to create their own brand. There were developers and financial people involved in construction, so they promised me that operationally I could do what I wanted with the company. I looked at it and I said, gee, the leaders and the corporate leaders, not individual hotels. There were many great ones, but the corporate leaders were Intercontinental Hilton in the National Hyatt in the world. And I thought if I would start a new brand, I would start above them and kind of incorporate the European service and professionalism. [00:14:08][77.0]
[00:14:09] But the caring and gentle attitude of American service and the more relaxing and that's kind of what I combined and that's when I accepted the job, moved to Atlanta and started a new hotel company. [00:14:20][11.7]
Rusty Rueff: [00:14:21] Can we guess that their last names were Ritz and Carlton or how did that come about? [00:14:26][4.5]
Horst Schulze: [00:14:27] Well, Ritz, by the way, the name goes back very many years. Mr Ritz created three or it's hotels in Europe and one of them in London. And he created a cardinal hotel in London. His family then came over here in the 20s and started new hotel company called Ritz Carlton. They all bankrupted. There was one or two left that carried the name. That was the Ritz Carlton Boston, an old very dilapidated hotel. No air conditioning and so on, it was a monthly, horrendous lift there by room and we started as no auto company and we were able to buy that hotel, which was in a great location. And also they had a name that was registered around the world. So we adopted the name but talked to the hotel and closed it for innovation. So the first hotel that we actually opened was the Ritz Carlton in Atlanta, Buckhead in January 1984. A little bit over a year after I joined here a few months later, we opened the Ritz Carlton, downtown Atlanta. [00:15:34][67.5]
[00:15:35] So the whole philosophy was to me to take service to another level and really understand the market. And align my employees against that market, against the expectation of what the market wanted, high end market and hotel business, and make sure that employees don't just know how to do the job, but want to do the job. That was the whole issue. How do I create an environment where employees want to do the job rather than have to do a job? Is it business is very simple. And then and you guys, you talk to other industries generally, but it's all the same. The decision is not made based on the product itself that the customer has about you. The decision is based on the relationship that you have with them. That may be business-to-business, whatever. Nevertheless, there is a person talks to them. So if you give them at the same time what they want and have a great relationship, they will be your customers. Think about your left hand over here. There are you see in your left hand a lot of people. Those are your customers. Those are potential customers and your customers. On the right hand, look out there. There are a lot of people that today your employees. So what happens if we know exactly what the people in your left hand want your customer want? And at the same time, your employees all know exactly what the customer wants. And you create as management, you create processes, controls, and systems. So your employees will deliver to this customers what they want, not what you want, but the customer. Then you have a business going. But if you add leadership to it. To your employees and create an environment where the employees don't only have to do it, but whether one to do it. And that moment, you will be invariably superior to your competition. [00:17:33][117.7]
Rusty Rueff: [00:17:35] Well, that comes back to that motive thing that you were talking about. Right. If you're going to get to the heart of the motive. Horst, To build on that and to bring this together. What role has your faith brought to finding that motive of excellence? Because, you know, we have many of the entrepreneurs that we talk to. We talk about the need to be excellent at what you do, and especially if you're trying to bring glory to God in your work. You need to strive for excellence. But I think your story of how you meld those together could be very informative to our listeners. [00:18:08][32.3]
Horst Schulze: [00:18:09] Yeah, it's very simple. I mean, I believe in setting a vision that even the Bible says people will perish without vision. If you go back, I restored the role that people in order be fulfilled and need purpose, vision and need to belong. And everybody, any analyst ever has determined the same thing. If people need purpose then I have an obligation as a leader to give them purpose. That means the vision of the organization. I must lead. I have to establish the vision of the organization. Where do I want to be in five years or 10 years as an organization? Once I have established that, I have to question myself. As a Christian particularly, is this good is my vision, which I have established here for this organization or for myself, for that matter. What is this vision good for all concerned? In the organization I have to question myself, not just simple answers, but agonize about it. Is my vision of this company good for all concerned? Is it good for the investors? If it is, yes. I have to go on. Is it good for the customer? Yes. Is it good for the employee? Every employee if accomplish that vision. If it go for that vision. Yes. I have to question, is it good for society? If the answer is yes. Not just a simple yes. Please agonize. Is it really good for everybody? If this answer is yes, then you have to question yourself. Would God approve? And if that is all true, then you know what to do as a leader. In that moment, you have no more right to compromise. Not for yourself, nor anybody else. You know what to do. You know what decisions to make. Everything has to be driven by that vision because that vision was approved by God and is a value to all concerned. But there is no question about it. It is not that you run around and tell people you are a Christian company. The purpose of your organization. And are you concentrating on that purpose? There's nothing to do with hospitality and so on except hospitality. Is the relationship with your customer, which is the greatest driver of customer loyalty eventually, no matter what business you're in. [00:20:22][133.3]
Rusty Rueff: [00:20:23] I love the idea of asking. And as you said, really wrestling and struggling with each one of the constituents around the vision. But that finally would God approve? And I think that's something that, you know, people probably don't ask themselves enough. Right. You get all the way down through society and then you stop and say, would God approve? And then from then on, you can't compromise. [00:20:46][22.2]
Horst Schulze: [00:20:47] Well, absolutely, sadly. I mean, guys, sadly, I have worked with companies that start with a prayer and call them pro-Christian companies, but there is no value that really shows that there are Christian companies that they truly care for. Their employees study, truly respect them as part of the organization that does truly undercut excellence for all concerned. On the other hand, I sat down and this is that you must shocking to me. I sat down with an organization recently and said, let's establish what we want to be do we want to be a leader in our industry? And the country is a Christian company, is it? Oh, that's too arrogant. As a Christian company, you must be kidding me. As a Christian company, you don't want the best for your employees. You don't want the best for your customer. You don't want the best for you. This is ludicrous. We should shine as Christian companies. We should want the best for our investors, the best for our customers, the best for our employees, do the best for society. [00:21:47][60.4]
[00:21:48] So, you know, if you question yourself is my objectives. And do I concentrate on those objectives constantly? Would God approve of them? And that is, in my opinion, when you are a Christian company. [00:22:00][11.8]
Henry Kaestner: [00:22:02] So this is all fascinating to me. I think that some of the things that are picked up so far are, of course, the objective and the motive and being able to paint a vision with our vision, people perish, as you mentioned. One of the things that in my experience as a customer of Ritz Carlton is the quality of the people. Undoubtedly, casting a vision helps, undoubtedly given them objective and a motive. And yet there's another part of that equation, I think that must fall in as well, which is hiring people, bringing the right people on. Do you have a philosophy on that or is it that you can bring anybody into this? But something tells me you must be selective about who you bring into the company. [00:22:39][37.4]
Horst Schulze: [00:22:40] You cannot. Of course, your company is not being managed by the statements that I made. The company, consequently, as I said, I have to know what the customer wants. I have to align the processes and everything around what I want and be sure my employees know it. But the processes and so on have to be established. How do I have to? [00:22:59][19.1]
[00:22:59] I have to make sure that I have employees who will understand, who will buy in. Who will have the talent to do what I expect them to do in that particular shop category for the customer. And those are processes. Consequently, we didn't hire people. We selected people. We determined. What is the talent needed in each shop category? What is the talent needed? Now, we had an outside company help us with that. And then we created a selection process whereby which we identify if the employee has that talent, etc. And that's what's the selection process. So the whole system of making sure your employees work right starts with a selection very clearly. And then you don't just hire anybody in my industry. During my time in Ritz-Carlton, mind you, I created another company which is higher luzury, which I sold two years ago. But in the industry of my Ritz current time in the US, the employee turnover was over 100 percent a year in the hotel. Now, if you have that type of a turnover. How do you hire? Then I can tell you if they hired a guy that was able to walk without falling down for the last 50 feet, I hired them. If you didn't fall down because he was too drunk to hire the then you have 100 percent turnover. That's what you do. But that's what you get. In turn, that's how you get to 100 percent turn away if you don't spend the time and carefully selecting. And our turnover in Ritz Carlton was under 20 percent. We did not pay more. Now, they naturally made more money in tips and I won't tell us they made another, but we had people desiring to work for us. Everybody industry was crying that you can't get any help and it's up to you. You're the leader you have to establish. What can I do to overcome this situation and not just explain the situation that exists? [00:25:02][122.5]
Rusty Rueff: [00:25:03] So on that idea of assessment, which, by the way, for anybody who's listening or doesn't understand 20 percent turnover in hospitality is an amazing number one to me. When I worked at when I worked at Pizza Hut for a short amount of time at PepsiCo is one hundred and forty percent...One four zero. So the 20 percent is phenomenal. In that assessment and testing that you were doing, though, to find that quality talent, were there certain indicators that you saw as a pattern in the employees that you looked for? [00:25:37][33.1]
Horst Schulze: [00:25:37] Yeah. In each job category that we had, we identified those issues and determined them during our interview process. Silliest things. For example, I always had to laugh about it because when I run into this issue, this situation to be our doorman and we understand doorman outside by window whether there's snow, ice storm and heat they're outside. So we select somebody. And so we've found after we did after we found we had to look for people that like outside activities and after we were in business for a while to be again analyzed and took our five best doormen and analyzed them again, what is common to them? So we prefer to improve our interviewing process for doormen. It turned out that all five liked gardening. Those are our five best doorman, I had to laugh so much over that. Yeah, but what would we do under normal hiring without having this careful selection? We would probably hire somebody like that and put them into a computer room and after a few weeks they absolutely hated the insides and quit right enough. So. Yes, we've found clearly common and that's of course, that doormen had other common denominators, but we found very clear common denominators to each job category. And consequently, they have the talent to do that job well. [00:27:08][90.6]
Rusty Rueff: [00:27:10] That's fascinating. Well, you mentioned the gardener, right? You know what you sow, you reap. Right. So that person who's out front matter so fascinating. Hey, Horst, in this time that we're recording this and someone may be listening to this years from now. But you know, the mark this time we're in the middle of this Corona pandemic and we have hospitality service industries that are in this very moment trying to figure out what to do next. And I'm sure you've been through your many different kinds of crises and emergencies and things that are urgent. [00:27:46][36.1]
[00:27:47] What words of advice would you give the entrepreneurs who are out there who have service or hospitality employees in a time where we're seeing that the tide just kind of go away? [00:27:59][12.0]
Horst Schulze: [00:28:00] Well, if I would run a hotel or I know the first thing I would think, wait a minute, I'm going to call the hospitals if they need beds. I have beds here. It doesn't have to be fancy. Maybe somebody can really serve here very, very well. If I'm close to the hospital, I want to help. In Atlanta, we were close to several hospitals, I would call them. So. All right. Is there something I can support you with? [00:28:21][21.0]
Henry Kaestner: [00:28:22] And then when that happens, how is it that I then am able to check into the Ritz-Carlton if I get sick? [00:28:26][4.3]
Horst Schulze: [00:28:27] But no, I would I would offer them. I just have offered the hospital something. [00:28:31][4.0]
Henry Kaestner: [00:28:32] I shouldn't joke about, something as serious as this. I spent some time in a hospital. [00:28:35][3.2]
Horst Schulze: [00:28:36] I mean, I can guarantee you I would let disinfect the hotel again and make sure that that you're safe. That's my responsibility. My responsibility is to do the best for you as a customer. And that means to protect you, protect the employee. And so at the same time. That's the first thing. If they don't need me. And I would say, all right, I'm absolutely running a totally clean hotel and people are not traveling. That's the issue. I would promote here in Atlanta. This is a chance to experience the Ritz Carlton. I promise you one thing. We check everybody's temperature before you come in. But if you forget a little money for one so of normal costs of the rooms come experience the Ritz Carloton. Somehow you're going to get an answer to that. And that's for sure. I would do. I would say, come in. Enjoy the spa. We will disinfect nonstop in this hotel. You have very little chance to catch the virus yet less than you have it in the street. That's how it would work it out. And said this expense comin and experience a great weekend. We can be serving great food, keeping people far apart. There is an answer to everything. The leadership is not there to constantly explain what is wrong in the moment. Leadership has to constantly seek answers to the pressing situation. [00:29:47][70.8]
Rusty Rueff: [00:29:49] Well said. That's great. That is great. [00:29:51][2.2]
Henry Kaestner: [00:29:52] One of the things we like to wrap up with on every podcast interview horses, a little bit of a view into the way that you see God working in your life, particularly in his word. Is there anything over the season, maybe over the course of last month, maybe this last week, maybe even today, that in God's word, you're finding some encouragement, something that you feel that God is speaking to you about? [00:30:14][22.5]
Horst Schulze: [00:30:16] Well, I think I mean, people say that. Why would God let that happen? I trust that God has a good plan on sometime, we will all understand that and we will say, wow, why didn't we see it? And like I can tell you what I think right now is happening for me. [00:30:31][14.4]
[00:30:32] Twenty five years I had cancer. I was told that would have yet to live at the time. And there's no doubt. And I'm still here. By the way, this was 25 years ago. All I did at the time I went on my knees and I had a new relationship with God. I believe that God was knocking on my door at that time. He had knocked on my door many times before, I heard him for a moment. And I drifted right into the world again. At that time, God decided in his goodness could knock very loud on my door. And I listned, and I listened. And I think he is. And we better listen now. Otherwise, He may just be preparing us for much more unless we listen. Let's listen. And that's a the corona thing and changed my life time. I just tried to understand totally how to finish better, how to finish well. And I'm trying to listen very carefully. And seeking how to finish well. [00:31:30][57.5]
Henry Kaestner: [00:31:35] Give us a view into that a little bit? [00:31:36][1.0]
[00:31:37] You know, I can tell you, when I turned 80, I made you one little bit more than 81. When I turned 80, I woke up and said gee how great I made it to here. Mind you, I had 24 years ago, I was told by every doctor that would die. I was so thankful that morning. And then I said, this is just wonderful. And I looked back at my life. I spent some good time contemplating my life. And you know what? The only regrets that I hit was the sin stuff that I committed. It shows you how right God is. So with other words. If I would have read that book right, at least now in the present, I would have had that life without regrets. Wow. Wow. And so so he tells me that it has been done. So what then? I exploring I'm exploring that very strongly now in any way and how I could communicate this in the right way to people. If you stay away from doing things wrong, you leave a life without regrets. Wow. Nobody has accomplished that. But I had that chance. But I have the chance to do that, at least for now, and serve the Lord at the same time. Yeah. [00:32:45][67.8]
Henry Kaestner: [00:32:46] There's an incredible amount of wisdom in that. Thank you very much for sharing. Thank you for this whole podcast. Thank you for your leadership and the example you set. Thank you for the millions of customers that you've loved. Well, thank you for the thousands and thousands of employees that you've done the same with and shown them how to love. Great example for all. We may not all be in the hospitality business, so to speak, and that we run hotels. And yet hospitality is absolutely something that every entrepreneur encounters. And so we've gotten a glimpse into how to do that. Well, and I thank you very much. We thank you very much for sharing your story and being with us. [00:33:20][34.3]
Horst Schulze: [00:33:21] Great to be with you. And I hope you're reading my books and you'll know, even much more. [00:33:26][4.4]
Henry Kaestner: [00:33:27] Yes, absolutely. Check out that book on Amazon and anywhere that you'd buy books by Horst about excellence. It's a great one. [00:33:34][6.8]
Horst Schulze: [00:33:34] Excellence Wins because it does. [00:33:34][0.0]