During the glory days of the dot-com boom, Chip Conley built Joie de Vivre, a chain of 17 boutique hotels in the Bay Area. Then came the tech bust, 9/11, the outbreak of SARS, and margin-crunching travel sites such as Expedia (NASDAQ:EXPE) and Travelocity. "We fell from $100 million to $75 million in sales," says Conley. "I didn't take a salary for three years."
One day a despondent Conley wandered into a bookstore to look for a self-help title. Instead, he came across a copy of Abraham Maslow's Toward a Psychology of Being, a landmark text that he had read in college. It struck a chord. Six years later, Joie de Vivre is prospering again and Conley has written a book of his own, Peak: How Great Companies Get Their Mojo From Maslow. He recently explained to Inc. editor Mike Hofman how Maslow's writings saved his company.
What are Maslow's principles?
Maslow talked about a human being's "hierarchy of needs," which he charted on a pyramid graph with needs like food and shelter at the base of the pyramid, needs like good family relationships in the middle, and needs like self-actualization at the pinnacle. If you apply his thinking to an employee, the basic need that a job satisfies is money. Toward the middle are needs like recognition for a job well done and at the top are needs like meaning and creative expression.
It makes perfect sense, but what made this relevant to a faltering company?
I had had moments when I thought about closing the company, and a board member actually told me that a bankruptcy court would treat me better than I was treating myself. But when I reread Maslow, I was reminded of why I had started the company in the first place. I named it Joie de Vivre because I wanted to create for myself and for others a sense of the joy of life in the workplace. And I felt a real calling to the hotel industry. I know that sounds funny, but I really believe in hotels; I believe in the importance of making our guests feel comfortable and taken care of when they are away from home. So Joie de Vivre helped me achieve needs up and down the pyramid, and at its best it did the same for our employees and customers and even for some of our investors. In a promiscuous era, the company we ran had connected on a lot of levels with a lot of people, and if we could get back to that, I felt like we could get ourselves out of the doldrums. And we did.
What do you mean when you say "a promiscuous era"?
Because of the Internet and other changes in the economy, people are less loyal than they ever were before. The word "customer" comes from the root word "custom," as in it was your custom to buy something from one merchant rather than another. But now customs with respect to buying are weaker than ever. Companies see customer satisfaction programs as a way to get beyond this, but loyalty and satisfaction are two different things. A customer may tell you that he is satisfied with your room and then book a room in another hotel and be satisfied with that. Using Maslow, you realize that the customer's basic need is a hotel to stay in for the night. As you move up the hierarchy, if you cater to business travelers like we do, you need a nice business center. But many hotels have those amenities now. So to go higher still on the pyramid, we are developing business travel hotels that offer a spalike experience, with morning yoga classes.
How do you know if employees are merely satisfied versus loyal?
Many businesses, from smaller businesses to large corporations, hang out at the bottom of the pyramid, interpreting their employees' needs to be solely about their compensation package. But I think more businesses are also seeing that they have to think about higher-level needs such as meaning.
That can be a fuzzy term, though. What do you mean by "meaning"?
Recognition is important. People who feel recognized tend to be loyal. So for example, we set aside 15 minutes at every executive meeting to have a few people share examples of workers who really did something amazing. You know, the elevator in this hotel went down right around check-in time and Joe carried luggage up six flights of stairs for five hours and he smiled the whole time and didn't complain. After the meeting, we'd have someone unrelated to Joe--let's say the head of IT for the company, who would never meet a bellman--call him up and say, "At the executive meeting today I heard about what you did, and I want to thank you for doing a great job."
What is the effect of that call?
Joe feels recognized. Plus, by getting the head of IT and Joe to talk, you take a step toward busting the silos that naturally take shape within a growing company. Plus, I like it because lots of companies create motivational programs by and for managers but they have nothing at the line level, except maybe an employee-of-the-month program. That's boring.
What else do you do?
Well, half of our workers are housekeepers who clean toilets all day. To get them to feel meaning in their work, we do what I call the George Bailey exercise, based on It's a Wonderful Life. We bring in small groups of housekeepers from different hotels and we ask them to talk about what would happen if they weren't there each day. Carpets wouldn't be vacuumed. Trash would pile up. Bathrooms would fill up with wet towels. Then we ask them, based on these answers, to come up with alternative names for housekeeping. The suggestions are always great: "serenity keepers," "clutter busters," "the peace-of-mind police." At the end of the exercise, these workers develop a very real sense that the experience of the customer would not be the same without them. And that gets to a sense of meaning in your work that satisfies that high-level human motivation.
You mentioned investors. How does this thinking apply to them?
Some people have told me that asking what motivates investors on a human level is a very satirical question to ask. Like, are investors even to be considered human? Would a hierarchy of needs ever apply to them? I argue that yes, many investors are aligned with you in a returns-driven relationship at the bottom of the pyramid. But we also have investors who have higher motivations. In their world, the scarce commodity is not a deal but rather an interesting, worthwhile deal, and to the extent that we can provide them with that, they are gratified to invest in our company. Some of them have a very deep sense of pride in their ownership. So there is a range of human motivations with investors, although the baseline for all of them is that you operate your business well.
Are you going to make your employees read your book?
No, I don't think so, but you do have to think about these things as a CEO with a book out. The publisher asked if Joie de Vivre could place the book in the honor bars in all of our guest rooms. We're not going to do that, although we will have some at each of the hotels' front desks. We also have 30,000 people in our loyalty club--our Joie de Vivre addicts--and I'm guessing many of them will buy the book. They always seem to ask me, how do you do what you do? Here's the answer.