Shah had a lot riding on Noble his father had handed over the family’s savings to help him start the national hospitality organization in 1994. So Shah developed a mission statement that would allow the company to stand apart from the competition and lead it to prosperity despite the condition of the economy.
“Our mission is to be the most respected hospitality organization in the United States as measured by the loyalty of our team members, our customers, our financial stakeholders and the communities in which we live and operate,” says Shah. “What all that means, outside of a whole bunch of nice words and some nice thoughts, is we measure everything in terms of outcomes that we want to get to.”
Shah has made metrics an essential part of his business. His management theory is similar to the balance scorecard theory a strategic management concept that gives managers a comprehensive view of an organization by using metrics to measure success.
With more than 3,000 employees and millions of people staying in his hotels, measuring has been an essential way for Shah to keep track of people and their needs. He has a separate spreadsheet at each hotel, which he calls a dashboard, that measures four factors: team member loyalty, guest satisfaction, financial performance and community involvement.
“If you look at a car dashboard and say, ‘Gosh, my RPMs are a lot higher than my speed is going,’ you stop and you go get it checked,” says Shah. “That’s what we do.”
If a hotel meets the goal for a certain metric, the spreadsheet is marked green. If the hotel is in a 5 percent variance, the spreadsheet is marked yellow; beyond that, it’s marked red. Shah strives for an all-green dashboard at all of his hotels, and as soon as a metric starts moving into the yellow, he applies resources to move it back to the green. He never wants to see red on a dashboard.
Although every company measures financial performance, by also measuring team member loyalty, guest satisfaction and community involvement, Shah is able to see the big picture, and that, he says, is a large part of his success.
To measure employee loyalty and satisfaction, Shah uses metrics to evaluate employee training, Noble’s culture and employee turnover. He also provides employees with professional development plans to make them aware of the opportunities that await them at Noble.
“We work very hard to take the time to understand our team’s professional ambition,” says Shah. “We’ve got a dedicated training force in our home office that, surprisingly enough, we added immediately post 9/11, because we wanted to ensure the fact that we were building leaders that would allow us to be the most successful through the dog days of our business. But as we got through that, really what we thought [is that it would create] a great window of opportunity, which we’re kind of in right now.”
Shah’s first metric measures employees’ training. All managers are required to go through 35 hours of training each year because Shah believes that by providing them with ongoing training, he is educating the future leaders of his company. And managers are motivated to complete the training because they know that Shah likes to promote from within.
For the past three years, Noble’s training program has been based on Stephen R. Covey’s book, “The 7 Habits of Highly Effective People.” Shah says that those seven habits - be proactive, begin with the end in mind, put first things first, think win-win, seek first to understand and then to be understood, synergize principles of communication and sharpen the saw are a stepping stone for team members to learn to be more effective and productive in their everyday lives.
“We basically go through each one of those disciplines and we use a lot of role playing,” says Shah. “We have certified training staff on board and we go basically hotel by hotel. What ends up happening is, whether it’s guest service agents or engineers or food and beverage professionals, we take different approaches for each utilizing each of the seven habits in terms of how to be more efficient and ... do their jobs better and actually function as people in a fashion which is more productive.”
All managers must complete all of their training for the year in order for the dashboard at their hotel to be marked green.
Noble team members, especially managers, are motivated to turn their hotel’s dashboard all green because that is the main way they are evaluated. A hotel’s dashboard reflects management’s performance and whether or not that manager will receive a promotion.
“Every one of our managers knows that when the time comes when we acquire another hotel or we’ve got a position relative to somebody getting promoted, we are going to go by the dashboard in terms of who has performed the best,” says Shah. “That’s our grading scale. It’s the highest weight relative to a person’s ambition in terms of their career goals within our organization.”
The next employee loyalty metric includes anonymous surveys which are given to team members twice a year. Team members then have the opportunity to comment on their work environment and tell Shah what they think Noble is lacking without fear of punishment.
Shah says it’s important to do these surveys twice a year because if a problem has gone on for an entire year, a lot of damage has already been done. Surveys are graded on a point system, and in order for a particular hotel’s dashboard to be marked green, the total points of all surveys must meet a minimum threshold and be higher than those of the previous year for that hotel.
Finally, Shah measures turnover. He stresses that it’s more important to measure turnover of managers because hourly employees, such as waiters, housekeepers and valet parkers, tend to move around a lot.
“Our industry has historically been a higher turnover industry,” says Shah. “Seventy-five percent turnover is in the top 5 percentile in our business, but in most other businesses, that seems like a lot of turnover. We target 50 [percent], but we target less than 10 [percent] from a manager standpoint.
To keep turnover low, Shah performs extensive personality profiling to make sure that he is hiring the right people for the right jobs.
“If a team member is either terminated or leaves on their own, there is a process that has failed us,” says Shah. “It’s either in the selection process or ongoing motivation or training.”
The fact that Shah works with team members to create professional development plans and provides them with many opportunities for advancement also keeps turnover down.
“We like to say that if your career is in lodging or hospitality, we hope that you can accomplish all of your professional goals inside the Noble organization,” says Shah. “At the same time, we believe that the loyalty metrics are very fundamental to being able to deliver great experiences in our hotels.”
Focusing on the future
But having loyal, satisfied employees is not enough to ensure satisfied guests, so Shah also extensively surveys guests to find out what they think about every aspect of their stay.
“They’re not like the surveys you get in restaurants where you’ve either had a really great meal or a really horrible meal, which is the only time that you’re really filling those things out,” says Shah. “These things are done a lot differently to really give us a great sample as to where we are. It judges everything from how our exercise room was to how the heating and cooling was to room cleanliness, all of those different things.”
Guest surveys are graded on the same point system used for team member surveys. Everything is evaluated in terms of processes, because Shah says that processes fail, not people.
“If there’s a failure where a guest doesn’t have a good experience, it’s not the person who made the mistake, it’s a process that broke down,” says Shah. “Did the executive housekeeper and the front desk supervisor not connect on an issue? Was there a training snafu that the organization missed? What are the series of things that happened that caused it?”
These surveys also provide Shah with ways to improve his hotels. Recent surveys have told him that guests would like higher thread count sheets, more pillows, more user-friendly desks and bathrooms that are more spa-like, so Noble developed a plan to gradually change its hotels to better reflect guest preferences. However, when Shah noticed that one hotel’s dashboard had gone into the red in the guest survey area, he decided to speed that process along.
“There was a certain hotel that we planned to invest capital in in terms of new bedding programs, etc., in the fall,” says Shah. “It was spring, and we started noticing trends where our customers were saying that they were not as happy with the bed product as they had been. That ended up making us move our capital investment up a full quarter to nip that in the bud.”
By continuously surveying guests and listening to and measuring what they say, Shah can continue to increase revenue in his existing hotels and build his brand.
Another way he builds his brand is by contributing to the communities where his hotels are located. The main organization that Noble partners with is America’s Promise - The Alliance for Youth, which was formed to strengthen the character and competence of America’s youth. Also, all hotels in specific areas often come together to support a charity of their choice, for example the March of Dimes.
“We basically have a national platform with America’s Promise that we ask our hotels to be very visible in the local communities in terms of providing mentorship and internship opportunities in local high schools,” says Shah. “We measure that in terms of ongoing activity.”
As long as hotels provide ongoing support to the community, the dashboard is marked green.
By measuring the factors that drive Noble’s growth, Shah has been able to grow his company at a higher rate than the industry average, and Noble is on track to reach $380 million in revenue in 2006, up from $210 million in 2005.
“Our ability to translate our mission into day-to-day business practices has allowed us to be successful in great economic times and allowed us to really maintain our course during difficult economic times,” says Shah. “That strategy of having that mission connected to all parts of our organization, so when we were a very small company to now where we have 3,000 employees, it’s still been the thing that drives us is the thing we measure.”
HOW TO REACH: Noble Investment Group, (404) 262-9660 or www.nobleinvestment.com