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Wednesday, April 17, 2013

China: Engage Your Hospitality Employees to Overcome Poor Service

By Steve Wang, Principal, and Daniela Yu, Research Manager

In an effort to rebalance China’s economy and promote more sustainable growth, the country’s new leadership pledged to transform China into a consumer-driven economy. The newly appointed premier, Li Keqiang, promised to further open China’s service industries, which are quickly growing. In fact, a recent blog from The Economist indicates that service and industry accounted for the same amount of China’s GDP in the last four quarters, which the author speculates has not happened since 1961. While service businesses operating in China could benefit from this domestic growth opportunity, they will face a major barrier: consumers perceive poor service quality throughout the country.

An Economist Intelligence Unit study found that China ranked last out of the 10 Asian countries they studied in the consumer perceptions of the quality of service level in the country. Gallup’s recent study on workers’ engagement in China supports this finding. Just 6% of workers in China and 4% of workers in Hong Kong were engaged in their jobs in 2012, significantly lower than other emerging economies such as India, Russia, and Brazil, and far behind the U.S., where 30% of American workforce were engaged in 2012. Over 30% of Chinese workers are actively disengaged, and this high level of unenthusiastic, even disgruntled, workers can pose a significant risk to China’s burgeoning service industries.

Companies in China that prioritize service excellence should view this trend as a golden opportunity to gain a competitive edge. One that is particularly valuable within the fast-growing hospitality industry -- where guest experiences can directly impact the performance of any property.     

Gallup research has uncovered the top three drivers of guest engagement. All are highly dependent on how hotel staff members actually interacted with guests. These top drivers of a premium guest experience are:

  1. Being treated as valued guests.
  2. The responsiveness and helpfulness of the staff during stay.
  3. The overall experience at check-in. 
These “people” factors outweigh other drivers, including those that require physical investments, such as the room decor, the availability of a gym or business center, and the quality of food and beverages at a hotel’s restaurants and cafes. 

To ensure this premium guest experience, first hotels have to focus on employee engagement in order to have a staff capable of building these emotional connections with guests. Gallup has long-found a direct link between staff engagement and guest engagement.

Gallup research shows that engaged teams outperform disengaged teams by 10% in customer metrics like loyalty and satisfaction. This can result in vast inconsistencies in performance between high- and mediocre-performing properties, even within the same brand. 

Based on Gallup’s years of research on staff engagement in hotels, the key working conditions staff need are:
  1. Knowing what is expected of them at work.
  2. Having the right equipment and materials to properly perform. 
  3. Having the opportunity to do what they do best every day. 
  4. Receiving recognition or praise for doing good work 
  5. Being cared for as a person by their supervisor or someone at work
When leaders and managers optimize these conditions for their employees, a hotel will see notable improvement in guest engagement. For instance, the Ritz-Carlton Hotel found its revPAR (revenue per available room) increases at a higher rate for its properties that improved employee engagement. According to John Timmerman, currently a Senior Strategist at Gallup and the former Vice President of Quality and Program Management at Ritz-Carlton, business units that leverage both guest and employee engagement “yield three times better outcomes than baseline, be those financial, safety, and other quality indicators.”
Therefore, to thrive in China’s rapidly expanding hospitality industry today, hotels in China need to focus on service quality above all else. And to excel in service, the most critical lever is the hotel staff’s engagement. Creating the right working conditions is the foundation in competing in this growing market. 
Senior leaders and executives from many world-class organizations across Asia discussed best practices for engaging their workforce and proven strategies for achieving key business outcomes on April 16-17, 2013, at the Gallup Asia Summit. For more information about Gallup’s work in the Asia Pacific region, click here.


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