Business

What goes up can come down

Written by Jill Fraser

A Californian hotelier turned around his organization by using Abraham Maslow’s Hierachy of Needs.

Inspired by Abraham Maslow’s iconic Hierarchy of Needs, Chip Conley, celebrity CEO and founder of Joie de Vivre Hospitality, America’s second largest boutique hotel company, insulated his business from the threat of the 9/11 fallout, the dot com crash and the SARS epidemic by focusing on “what could be” as opposed to “what is”.

The year was 2001 when, after a successful climb to the pinnacle of the hospitality industry, Conley was rocked to his foundation by a dramatic economic downturn.

On reflection he says: “I went from being a genius to an idiot in one short year”. His company was suddenly under-capitalized and overexposed in the post-dotcom,
post-9/11 economy, a dire situation that caused him to turn to the vision of Maslow, the 20th Century father of motivational psychology he had studied in his Stanford MBA class.

Maslow’s hierarchy of needs, a pyramid that ranks human needs from base to self-actualizing - which translates as identifying motivation drivers - is de rigueur in
business schools. Conley claims to be the first CEO to apply the theories in tangible business practices. No stranger to the concept of thinking outside the square, Conley says he has been doing so for as long as he can remember.

“A combination of influences has led me to be willing to be contrarian and unconventional in the way I look at things,” he muses. “I am artistic so I tend to view life in a more creative way, I am a Californian and Californians by nature are a bit unique and I am a gay man, so from a young age I thought “okay, I am a little different so how does that manifest itself in my world view?”

Conley’s rebellious spirit has been apparent to the hospitality industry since 1987 when, with virtually no industry experience, he opened his first hotel, The Phoenix,
a quirky rock ‘n’ roll influenced digs for musos, at age 26 in San Francisco’s edgy Tenderloin district. His company now consists of over 40 hip, urban, wardwinning
hotels, restaurants and spas.

Each distinctive property caters for a niche client base and is designed to produce what Conley calls “identity refreshment” for his guests. The company gleans
inspiration from popular magazines such as Rolling Stone (The Phoenix), The New Yorker (Hotel Rex), Real Simple “meets” Dwell (Vitale), Wired (Avante) etc. But it is what occurs on a management level that makes Joie de Vivre Hospitality stand apart. Conley sees no difference between the aspirational goals of individuals
and those of the organization. “We often forget that a company is simply a collection of individuals,” he says.

“Employees are looking for meaning. Customers are looking for a transforming experience. Investors are looking to make a difference with their investments. If
individuals aspire to self-actualization, why can’t companies aspire to this peak, too?”

Conley maintains that the short-term focus of most CEOs will fail to attain the results that they are seeking.

“Employees can be motivated by three things,” he says. “Money, how they are recognised and appreciated and the inspiration or calling they have for what they do.

“Employers that focus mostly on the money possess a short-term mentality, which doesn’t work because the moment another employer comes along and offers
their employees 5% more they will leave.

“They haven’t created loyalty or differentiated themselves except in terms of pure dollars and cents. Companies that do best and are the real peak performers are those that recognise that they need to create long-term loyalty and differentiation.”

Joie de Vivre puts great effort into creating positive relationships between team members, conducive work environments, loyalty and recognition programs and a “sense of trust between staff and senior management”.

Yet while working conditions are well above the industry standard financialcompensation to staff is close to average.

But Conley must be doing something right because while the turnover rate for the hospitality industry is 70-100%, at Joie de Vivre it is under 25%. Conley turned to Maslow when the travel industry, closely followed by the hotel industry, went into a tailspin in 2001 to try to get back in touch with why he went out on a limb and started the company in the first place. He began reading Maslow’s work for his own purposes, not because he thought it was going to sprout into a business philosophy.

But as he read he started thinking that if individuals can be self-actualised and if companies are full of individuals, why can’t a company be self actualised?

Conley explains it like this: “There are 3 key groups of people in just about any company; employees, customers and investors. What I premised was that each
of these groups has some kind of survival needs (at the base of the pyramid) and self-actualisation needs (at the peak of their pyramid).

“As you move your employees or your customers or your investors up that pyramid you are creating a deeper, stronger, long-term relationship with that particular constituency and if you are creating a long-term relationship with them, you are move inclined to be successful.

“If you walk into a hotel and see and experience a fulfilled, self-actualised workplace where say, the employees have a spirit of hospitality and love to serve and love to give and seem to be having a good time and seem to be recognised by their managers, you, as a customer feel that you have received an experience that is beyond the generic hotel experience. So in essence, by creating a self-actualised workplace for the employees, you can start to create a self-actualised customer experience.

“So my premise is that focusing on these higher needs of people, helps to create a more successful company. In other words, creating peak experiences for your people will create a peak performance for your company.”

Conley maintains that every employee can have one of three relationships with their work. It can either be a job, a career, or a calling. Employees who think of their work as a job are focusing just on survival and money and are stuck at the bottom of the hierarchy of needs pyramid. Employees who think of work as their career are focused on what Conley calls “the success level” of the pyramid where they feel recognised and appreciated and are having their needs met by their boss and the company.

Employees who have a sense of inspiration and meaning in what they do everyday and what the organisation does, have a sense of calling. “As you move an employee up from job to career to calling, you are creating a much more empowered, engaged and fulfilled employee and partner in the business,” he says.