Low Wage Lessons

How Marriott keeps good help--even at $7.40 an hour

At 5:30 a.m., the first workers arrive for the morning shift at the Marriott Hotel in downtown Chicago. They come from the farthest reaches of the metropolitan area and from all corners of the world: Bosnian refugees and born-in-America welfare moms, Chinese immigrants and black teenagers don their uniforms for the day. A few yards and a world removed from the crystal chandeliers and fresh flowers their guests see, a remarkable staff of hundreds whirs into motion.

Maria Martinez picks up her room-cleaning assignments. A Mexican immigrant, she takes citizenship classes at the hotel after work. Tommie Powell, onetime welfare dad and former factory worker from the city's North Side, heads to the basement and his job in the hotel's recycling operation. Arthur Seredyn, who arrived from Poland three years ago, scrubs out the swimming pool.

Their pay: about $7 an hour. That's typical for Marriott International Inc.'s 134,417 U.S. housekeepers, laundry workers, dishwashers, and other hourly staffers. It is, Marriott says, the wage that the labor market dictates. "If we pay wages in excess of the productive contribution of our people, we will become noncompetitive ourselves," says J.W. Marriott Jr., chairman of the nation's fourth-largest hotel company.

But a low-paid workforce brings with it a host of problems: lack of education, poor work habits, inability to speak English, culture clashes, financial woes, inadequate child care, and domestic violence, for starters. People don't show up when they should; they leave without explanation. Every day in every hotel, such issues threaten employees' livelihoods--and the hotelier's.

The needs of low-wage employees once were easy to ignore. If a dishwasher quit, after all, there always was someone else happy to take the work. Not today, though. While the economy demands more and more highly educated workers, the need persists for more maids, meatpackers, and sewing-machine operators. Nearly 30% of all U.S. employees make $7.28 an hour or less, up from 23.5% in 1973, according to the Economic Policy Institute. At the same time, with unemployment running at a low 5.2% rate in September, companies are hard-pressed in many places to find new workers. "It's critical that we become more skilled at managing this workforce," says Donna Klein, Marriott's director of work-life programs.

Marriott International, with a small group of other low-wage employers, is coming to terms with this challenging, increasingly important group. Paying its U.S. workers a median rate of $7.40 an hour, including overtime, the hotelier resists offering the higher wages that would attract more qualified workers. It has waged often bitter battles, moreover, against attempts at unionization. Instead, it has embraced a host of informal and formal solutions--including employee stock options, a social-services referral network, day care, and welfare-to-work training classes--designed to keep workers on the job and keep guests satisfied.

On one level, these are predictable responses as employers try to avert pay raises amid signs of a labor crunch. "They'll do a host of things before putting money into people's pockets," says Harvard University economist Richard B. Freeman. And critics insist that Marriott simply is taking advantage of vulnerable workers who can't get jobs elsewhere. But while its approach may hark back in some ways to the paternalistic labor strategies of old company towns, it has also launched something new: an attempt to forge a more lasting, more productive relationship with lower-wage workers. Employers "have returned full circle to a social contract with employees," notes Faith A. Wohl, director of the U.S. General Service Administration's Office of Workplace Initiatives.

"A LOT OF BABYSITTING." Amid ever more intense competition, Marriott will thrive only if it can wring out bigger productivity gains and provide world-class service. Its human-resources strategies win such results. Even without big pay hikes, Marriott employees often exhibit loyalty and even enthusiasm for their employer, and many feel they have a chance for advancement within the company. Analysts say its employee turnover rate is well below most rivals'.

There is a cost. Historically, it has been Marriott's hotel managers and supervisors who have helped solve workers' problems--playing social worker, in effect. "Many managers spend 15% of their time doing social work," explains Clifford J. Ehrlich, Marriott International's senior vice-president for human resources. "That's time not spent dealing with customer issues." They counsel employees confronting family problems, juggle shifts to accommodate erratic child care, or lend them money to pay pressing bills. "It's frustrating," says one Chicago area manager. "These employees need a lot of babysitting."

At Allie's American Grille at the Marriott in downtown San Francisco, for example, Donna J. Shepherd, human-resources director, had to intervene when non-Filipino food servers accused Filipino hostesses of steering more customers to their compatriots. Shepherd diffused the tension by running a computer survey of the number of customers given to each server, which helped disprove the charge. In Seattle, housekeeping supervisor Ildiko Szoros, herself a Hungarian immigrant, finally got Eastern European and Middle Eastern staffers to wash every day by encouraging them to shower at work. When they bathed at home, jealous husbands, noting their spouses' improved grooming habits, accused them of having affairs.

The hand-holding doesn't solve all problems. Workers unschooled in basic business etiquette tend not to call in when they can't make it to work; many lack telephones and often can't be reached when they don't show. Employees also frequently can't hold down jobs because of turbulence in their lives caused by domestic abuse. And understandably, workers constantly chase higher wages. "If a restaurant offers $1 more an hour than you, young people want that dollar rather than the benefits," says Tandy B. Kraft, human-resources director of Florida's Marco Island Marriott Resort & Golf Club, which habitually has 20 vacancies out of a staff of 600.

Yet Marriott has forged unquestionably strong bonds with many employees. "Every day I put on this uniform, just like an NBA player," proudly proclaims Thong Lee, a bartender who has worked 16 years at the Seattle Marriott. Lee has never forgotten that his boss, Sandy Olson, shut down the hotel laundry where he used to work for a day so the entire staff could attend his mother's funeral. The gesture earned Lee's loyalty for life--though the stock options the company offers all employees haven't hurt, either. Lee, who learned all the English he knows from Marriott, now owns several rental properties funded by his Marriott stock and pay.

BIG EXPANSION. Now, Marriott is launching a range of corporate programs to alleviate the demands on local hotel managers--and to accommodate its aggressive growth plans. The chain expects to add 1,000 mostly franchised hotels by 2000, and managers who come aboard with franchisees may not buy into the social-worker role. At the same time, the ranks of Marriott managers have been thinned by about 5% in recent years. So new, institutionalized supports aim to replace the old one-on-one style. "Our philosophy hasn't changed...but it's a more professional approach," says J.W. Marriott.

Pathways to Independence, for example, is a company-developed class on basic work skills for former welfare recipients, offered at hotels in 15 cities. In June, the company finished rolling out the Associate Resource Line, a national toll-free referral service that hooks up its workers with local social services. In December, it will start a program in Washington, D.C., and two other sites to teach workers how to become better parents and partners. And next year, with two other hotel groups, Marriott will inaugurate Atlanta's Inn for Children, a 24-hour subsidized child-care center.

Marriott also has led 28 companies--including J.C. Penney, Hyatt International, McDonald's, ConAgra, and Levi Strauss--to study ways to improve management of low-wage employees. With the help of the Families and Work Institute, a nonprofit research outfit in Manhattan, the so-called Employer Group plans to share best practices, create the first comprehensive demographic profile of this workforce, and advocate public policies that benefit low-wage workers--such as broader application of the Earned Income Tax Credit.

Employers typically aren't spending big bucks to make low-wage workers happier. "They're coming up with things around the edges," says Basil J. Whiting, a New York human-resources consultant. "No one is doubling wages." Instead, for example, J.C. Penney Co. offers its store clerks some flexibility in scheduling shifts. ARAMARK Corp. provides English as a Second Language (ESL) classes to its hospital staffers and school dining-service employees (table, page 114). Says Penney's personnel director, Jay F. Hundley: "Sometimes we jump to the conclusion that the answer is more money. But for many, it's a good working environment and a sense of self-fulfillment."

Six years ago, ConAgra Refrigerated Foods Cos. started recruiting Hispanic and Asian immigrants for its rural meatpacking plants. Overwhelmed by homesickness, language barriers, unaffordable housing, and transportation snags, the newcomers didn't stay long, pushing annual turnover close to 100%. So ConAgra started on-site child care, prenatal care, and housing projects. Attrition quickly dropped. "The burden is on us, not on the employee, to change," says Charles R. Romeo, employee benefits director. "For many of us, that's a new recognition."

Labor is addressing the issue, too. In San Francisco, where the local union recently organized the Marriott Downtown, 12 unionized hotels agreed as part of a 1994 contract with the Hotel Employees & Restaurant Employees International Union to a $3 million training program and an $1.8 million child- and elder-care fund. The union and hotels now are designing the training program, which will teach problem-solving, communications, and conflict-resolution skills. By early next year, they hope to offer a subsidy for dependent care.

MISUNDERSTANDINGS. Yet companies and unions still know relatively little about low-wage workers and their needs. Marriott only began studying its hourly-wage workforce in 1993, after realizing that child-care benefits launched three years earlier had left many problems of this population unresolved. It immediately found that a quarter have some literacy problems--mostly difficulties speaking English. Overall, Marriott workers speak and read 65 different languages.

Language barriers in this massive Babel can disrupt hotel operations--and worse. William D. Fleet, human-resources director at the Seattle Marriott, where employees speak 17 languages, once fired a Vietnamese kitchen worker for wrongly accusing a chef of assault. Only after another employee was attacked by a kitchen worker did Fleet figure out that the Vietnamese employee had used the word "chef" to refer to all kitchen workers with white uniforms. The misunderstanding had led to the firing of a good staffer and delayed the arrest of a dangerous one.

Marriott managers fear the inability to speak English also may get in the way of service. "People will do the things they do well and shy away from things that make them look foolish," says Fleet. That's why he instituted a comprehensive ESL program for staffers to take on company time. After all, workers who know English interact better with guests. Teresa Ortiz, a housekeeper at the downtown San Francisco Marriott, once took a couple to the service elevator because she didn't know how to tell them how to get to the 39th floor. (An ESL graduate now, she says proudly: "I can tell them.")

More than half of the Marriotts in the U.S. offer workers ESL classes--a relatively cheap and easy productivity device. Beyond language, however, looms the far greater challenge of managing epic cultural divides. Last year, with the help of a local refugee resettlement organization, the Des Moines Marriott hired 20 Bosnians immigrants to join a 60-member housekeeping staff. The Bosnians, who easily got legal status as refugees, helped plug the holes left by Mexican workers who fled after managers installed a new screening technique for uncovering illegal immigrants. After finding a handful of undocumented workers, Marriott watched its applicant pool of predominantly Mexican workers evaporate.

While the Bosnians came to the rescue, they brought other problems. New to America, they "don't have anybody" to help them here, says hotel services director Wanda Johnson. "You figure out their phone bills, enroll their kids in school, and set up doctors' appointments." More than that, their arrival was resented by remaining Mexican workers who still were being checked for immigration status. Managers had to keep the peace by reassuring them that the company was screening workers to comply with the law, not to dump them.

A PHRASE A DAY. When managers can overcome cultural divides, they win commitment. Sara Redwell, an assistant general manager at the North Arlington Heights (Ill.) Courtyard Hotel, started working at Marriott 12 years ago at age 23 as a housekeeper after immigrating with her mother from Mexico. While taking ESL and other college classes, she was promoted to housekeeping manager in 1990 and, last year, to her present job. There, she supervises 20 employees, most of whom are Spanish-speaking. She mentors food server Elodia Lopez, a Mexican immigrant whom she would like to promote to restaurant supervisor, by teaching her a new English phrase every day. "What Marriott gave to me, I want to give to others," she says.

Can Marriott reproduce the same dedication with human-resources systems sent down from headquarters? In some ways, such standardized programs could prove more effective. Marriott's Associate Resource Line is offered in more than 100 languages--more than any one manager could handle. So far, about 7,000 staffers have called and been assigned a social worker, who finds them local help. Marriott anticipates savings of five times its $2 million investment from reduced turnover, absenteeism, and tardiness.

Gladys Chacon, a single mother who is an accounting clerk at the Chicago Downtown Marriott, found child care last year for her six-year-old, Jazmine, through the resource line. "If I hadn't found good day care, I would have had to quit my job," she says. In her previous job at a grocery, she had to stay home many days when an unreliable sitter didn't show.

The Fatherhood Project, to be launched by the Families and Work Institute in December for Marriott in Washington, will teach male employees and spouses of female ones how to become better fathers--a benefit other companies offer primarily for white-collar staffers. Surveys show that women view a more involved partner as a key stress-reducer. "Less burnout at the workplace is the big payoff," says Marriott's Klein. Single fathers, such as Chicago recycling worker Tommie Powell, can take advantage of the program, too. "It's hard working full-time and having teenagers at home," says Powell, who has a 16-year-old daughter and 19-year-old son.

Powell and 600 other Marriott employees also have benefited from Pathways to Independence. The six-week program, which could serve as a model as welfare reform takes hold, teaches business basics, such as showing up on time, and life lessons, such as self-esteem and personal financial management. One of the few companies with such a plan, Marriott works with federally funded local organizations to split the $5,500-per-person costs. By targeting welfare recipients, it harvests an overlooked labor pool--and Pathways graduates placed in Marriott jobs have a 13% turnover rate, far below the company's national average.

Sabrina McWhite, who took the Pathways course last year and then left welfare, works in the kitchen at the Metro Center Marriott in Washington and wants to become a chef. A high school graduate who dropped out of the University of the District of Columbia, McWhite credits Pathways for teaching her "how to manage money correctly, how to always have backup for child care," and other responsibilities. With a regular paycheck now, she has been able to buy her four-year-old daughter a special book bag. "I feel so good I could give it to her," she says.

Still, Marriott's critics keep asking: Why can't it simply pay higher wages? "Their hypocrisy stands out," says John W. Wilhelm, secretary-treasurer of the hotel workers' union. Marriott, which insists its pay is comparable to union wages, says it has always tried to treat workers fairly. "We hire people who have never had jobs before and give them a chance," says J.W. Marriott. That's largely true. But this isn't a story about altruism. Marriott's unusual approach to the low-wage dilemma is dictated by corporate self-interest: Helping workers can cut costs and lift productivity. And that goes right to the bottom line.

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