Interview with a successful travel agency CEO who puts his employees first, not his customers.
Hal Rosenbluth, CEO of one of America's most successful travel agencies, says it's smart business to put employees -- not customers -- first
It was the close of a hard day's interviewing, and to wind things up, we asked Hal F. Rosenbluth, president and chief executive officer of explosively growing Rosenbluth Travel Inc., what really set his company apart from the thousands of other travel agencies in the United States. We already knew it was big -- 2,350 employees in 340 offices spread over 41 states, the District of Columbia, London, and Singapore. We already knew it counted dozens of blue-chip giants such as Du Pont among its customers. But Rosenbluth Travel had grown very large very quickly, and indeed seemed to be stealing market share virtually as we spoke. (This year alone it has opened 43 new offices.) So what was the secret? Was it the company's proprietary technology, as yet unduplicated by the competition? The continual introduction of new products and services, which won Rosenbluth a Tom Peters award as Service Company of the Year? The industrial-style quality-assurance systems?
Hal Rosenbluth -- curly-haired, round-faced, a youthful 38 -- turned his earnest brown eyes on us. "It's the happiness," he said. "Our people are happier."
We had been hearing a lot of such language that day, and frankly it seemed a bit much. Not just Rosenbluth's repeated use of words like happy and nice; not even that everyday terms such as employee and manager are banned from the Rosenbluth Travel lexicon (the company has associates and leaders instead). No, it was the whole touchy-feely, power-of-positive-thinking culture at this far-flung enterprise. The Live the Spirit hoopla. The Up Interviewing and the Happiness Barometer group and the High Teas. The fact that Rosenbluth would send crayons to his employees -- sorry, associates -- and ask them to draw a picture of the company. A hokier organization we never saw.
And yet a scant 15 years ago Rosenbluth Travel was a sleepy, four-generation family business employing a few dozen people. How many scions can walk into such a company, as Hal Rosenbluth did, and in a short time transform it into one of the biggest businesses of its kind in America? Indeed, how many entrepreneurs find growth of any sort in so cutthroat an industry as the selling of airplane tickets and hotel rooms? The man who adopted the salmon as his company's mascot -- because the salmon's a contrarian, swimming against the current -- was evidently doing something right as well as something different; maybe there was a connection between the saccharine style and the hard-driving performance. One day of interviewing might be complete, but there were obviously a few more questions to ask.
So back we went, tape recorders in hand, to Rosenbluth's spectacular headquarters at the top of a Philadelphia skyscraper. There, 51 stories above the city, the young CEO talked with writers John Case and Elizabeth Conlin about happiness as a method of management.
INC.: You say you want your associates to be happy; in fact, you use that word more than any CEO we've ever heard. Why?
ROSENBLUTH: You want the real reason? Our time on earth is finite. The majority of everyone's waking hours are spent at work. A company has an obligation to the people it employs to make that part of life pleasant and happy.
INC.: You answer like a philosopher, not like a company owner.
ROSENBLUTH: There's no contradiction. In the travel business, gross margins are 3% or 4% tops, often less. So you have to keep costs in line if you're going to make any money. If I see an office that for one reason or another is unhappy, its expenses will be increasing.
INC.: Why?
ROSENBLUTH: Errors. Time lost to office politics or to worrying. And there's a lot of stress in this business -- it's like being an air-traffic controller, one call after another. If you remove the stress, you cut turnover.
INC.: How does your turnover compare with others in the travel industry?
ROSENBLUTH: Ours is about 6%. For the industry as a whole, I've heard numbers as high as 45% to 50%.
INC.: That must make your replacement hiring easier.
ROSENBLUTH: Last year we had 21,000 job applicants. Taking both growth and turnover into account, we hired 800.
INC.: We want to come back to the issue of removing stress -- how you can remove stress on the employee and still provide high-quality service to the customer. But start at the beginning of this Crusade for Happiness. How do you choose people? How do you train them?
ROSENBLUTH: For key positions -- vice-president, say -- I interview people in some unusual ways. I throw a baseball around with them. I go for a drive in a car and watch how they get around in traffic. I play basketball with them.
INC.: Basketball?
ROSENBLUTH: I like to see who's passing the ball, who's hogging it, who's taking shots they shouldn't. I had a candidate for a sales executive position and his spouse go on vacation with my wife and me. On the third day of a vacation, things start to come out.
INC.: Wouldn't it be hard not to hire him after spending a vacation together?
ROSENBLUTH: Absolutely not.
INC.: What about lower-level jobs? You can't play basketball with 800 people.
ROSENBLUTH: It begins with the ad. One of our ads might say something like, "We're not just offering you a job, we're offering you a lifestyle." That will trigger something in a certain type of individual. Then we'll go through telephone interviews and personal interviews, maybe three or four hours in all. No matter which office is doing the hiring, all candidates are screened by someone in our human resources department.
