Hotelier Chip Conley talks about why purpose not money is what cements employee loyalty.

Question: How do you boost morale in a downturn?

Chip Conley: So, I, you have to start with the premise that the hierarchy of needs, Maslow’s hierarchy of needs applies to this collection of people and my transformation pyramid of survival, succeed, transform is relevant. So the survival, succeed, transform for employees is money, recognition and meaning. So the base line survival need, the best motivation is please pay me. I’m working for you, I need to get paid, I need to be able to pay my bills that sort of the bottom-line of why people work. And that really correlates with having a job. A lot employers think that that’s the number one reason why people leave their work, because their compensation package was improved somewhere else.

But in fact, it’s the fourth most likely reason a person leaves her job, it’s not first. And so what we have to look at is, what is it that actually keeps people loyal, and it’s not just the compensation, it’s the step up from that, it’s what’s the succeed level for the employee is recognition. How do you critique a culture of recognition so that people feel like they’re seen in the workplace? That’s what creates loyalty. And I will tell you, as a company, we’re, within the hotel industry, we’re average in terms of how we pay people. In a part of the country, the bay area and now we’re all throughout the city California, we’re frankly, there’s a lot of other industries that pay better.

But our average turnover as a company is one fourth the industry average and that’s because of that recognition level. We really have helped people feel a sense of success in what they do. At the top of the pyramid is meaning. And again as you move from the bottom survival to transformation at the top or from money to meaning at the top, you go from the tangibles of life to the intangibles of life. And MasterCard was masterful in their ad campaign where they talked about what’s most important in life is what’s priceless. Well that’s sort of true not just in our lives as parents or consumers, just true of us as employees.

The most valuable is when you feel like you’ve moved beyond just having a job, base of the pyramid or career, that recognition to living a calling. Now, pyramids by nature are bigger at the bottom so most people have a job; very few people have a calling. But with fifteen hundred people in my company who actually clean toilets for a living, for hotels, we really look at what is it that’s going to give our housekeeping staff the sense of living and calling in what they do. And it a was a big piece of how we sort of transform their company and our relationship with our employees and the housekeeping staff at a time where the world was falling apart such that what we found was that the employees in variety of things that we did, felt more internal motivation than external motivation because the two bases of that pyramid, money and recognition are external motivators, Whereas, meaning is more of an internal motivator.

And so, I can tell you as a manger and as leader, I would much rather have a collection of intrinsically internally motivated people working for me than feeling like I have to externally motivate people in order for them to actually do the job. So, the kinds of thing we did to get there? And we study. Before we actually started doing this, we studied hospitals. And the number one indicator of why hospital is successful depending on what kind of metric you use whether its patient satisfaction, profitability, market share, is how happy are the nurses. And interesting, so nurses, when nurses feel like they’re a patient advocate, which is sort of a calling, as opposed to the person with the syringe that creates pain, which is a job. You have better outcomes. It’s true of airlines too. Look at Southwest Airlines with their flight attendants versus United. Its job versus calling. So we started to look in that and said how could we actually apply that to housekeepers to everybody.

We did a variety of things from doing off-site retreats not just for our managers but for our whole staff. We would take a whole staff of the hotel offsite for the day and give housekeepers, and bartenders, and bellmen with their manager, with the facilitator from our HR department. The opportunity to talk about where’s the hotel going in the next years, strategy wise. So we gave an expansive view for the house keeping staff to talk about where they want to go. If you give people a sense that their role is bigger than just their task that their role has a bigger impact and purpose, and you can even make the connection with our housekeeping staff on what impact they’re having on their customer, because we’re doing the annual housekeeping lunch where we have all the housekeepers come together. Actually we do it two days in a row so some of them cane have a one day off and some can avail the day off.

And we have customers get up and tell their stories about something that our housekeeping staff at one of the hotels has done that really made a difference in their lives. And when you do that you help people move up that pyramid such that they’re not just doing their job but they’re doing something that’s more important.

Recorded on: April 14, 2009