Solved: Chip Conley is the founder of Joie de Vivre Hotels

Chip Conley is the founder of Joie de Vivre Hotels, the largest collection of boutique hotels in
California. Coley started the company in San Francisco in 1987. Of the more than 30 hotels that
the company oversees, each one is designed to “create joy for guests and employees“, and
reflects the uniqueness of the surrounding community. When Conley is not busy overseeing the
company’s operations, he spends time writing and lecturing. A staunch fan of Abraham
Maslow, Conley incorporates Maslow’s Hierarchy of Needs Theory in his management style.
Conley believes that in today’s business world, companies place too much emphasis on using
financial incentives to motivate employees. He notes that the hospitality industry is known for
paying low salaries and having a high rate of employee turnover. However, employees at Joie
de Vivre are not representative of the industry norm. Conley says that while most hotels
experience an average turnover of 60% to 100%, his company’s rate of 25% is only one-third to
one-quarter of the average. Joie de Vivre employees are paid an average hotel wage, yet the
company boasts a workforce that is known for its loyalty and long service. Conley says that the
reason for this is partly due to the company, and partly due to the relationships that employees
have with one another within the company. Joie de Vivre employees value their relationships
with one another over and above money itself. Conley says that when people feel good about
what they do and about the reputation of the company, they value other incentives more than a
wage increase despite being paid 2% less than a competitor down the street. When employees
at all levels of an organization are respectful and supportive of one another, they form a
cohesive and stable group. Conley says that too many business leaders focus only on easily
countable factors. While financial incentives may be effective in many cases, they ignore the
fact that many people are driven by the relationships they have with one another. Joie de Vivre
employees include hourly workers, executives, sales people, and both union and non-union
personnel. The company uses a variety of incentive programs to reward staff and help them to
feel satisfied in the workplace. Some hotel companies give their employees an opportunity to
stay at properties for free or at discounted rates on a yearly basis. Conley says that Joie de
Vivre offers this benefit to employees twice a quarter. This approach serves the company in two
ways. First, hotels are not always full for many reasons. Conley explains that empty rooms are
perishable assets. Rather than gaining no benefit whatsoever from its unused rooms, Joie de
Vivre chooses to give its employees the opportunity to enjoy the hotel and its services. This is a
cost effective way for the company to reward and recognize employees on a regular basis.
Guest employees offer a unique perspective when they are the ones using the services. It gives
them an opportunity to consider what the company is doing well and where improvements may
be needed. By reflecting about their experiences as guests, employees themselves may change
the way they do their jobs in order to provide customers with a more positive experience. Conley
says that sometimes the best perks for employees are those that don’t cost a lot and that
actually have some meaningful benefit to them, not just to their pocketbook, but also in terms of
enriching and educating them. The hotel industry is often one of the first to feel the effects
during economic downturns. During the post 9/11 years when the economy buckled and many
dot com businesses failed, Joie de Vivre was amongst other hotels in the same region to
experience the highest percentage of revenue drop in the history of American hotels. Conley
referred to Maslow’s Hierarchy of Needs Theory to plan a strategy the company could use

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 during the crisis. He says that in order to meet the survival needs of the company’s employees
at the base of the pyramid, Joie de Vivre had assure them that they were not going to lose their
jobs. In order to do this, Conley gave up his salary for over three years and imposed a 10% pay
cut for all senior executives. He also implemented a 2.5 year pay freeze for every salaried Joie
de Vivre employee. Conley explains that the measures the company took enabled the line level
workers, who were paid an hourly wage, to actually know that they had a job with benefits and
an annual wage increase. In October 2011, Conley led Joie de Vivre into a merger with
Thompson Hotels, which manages 12 luxury lifestyle hotels in the United States, Canada, and
England. The union, an equal partnership for both companies, represents 45 properties and
annual hotel revenue of approximately $500 million. Conley says that he is thrilled that the
marriage of Joie de Vivre and Thompson Hotels has allowed the spirit of the Joie de Vivre brand
to grow on a global scale, and that investors and owners who are the mainstay of the company
will enjoy the benefits that this growth will bring. Conley continues to hold a large equity stake in
the new company as its Strategic Advisor. The merger is expected to pave the way for potential
global expansion.

1. In an industry where monetary rewards are low and turnover is high, how does Joie de Vivre
Hotels maintain the level of motivation amongst their employees that ultimately keeps their
turnover down? Why do you think this is effective?

2. What are the five core job dimensions, as described in Hackman and Oldham’s Job
Characteristics Model? Which dimensions do you think are most important to employees of Joie
de Vivre Hotels?

3. What is job redesign? What methods of job redesign do you think would be most effective for
Joie de Vivre Hotels as a way to increase motivation?

4. What is employee involvement? How do you think it could be used to mitigate the negative
effects of an economic downturn for Joie de Vivre Hotels?

5. How do you think the merger between Joie de Vivre Hotels and Thompson Hotels may
impact motivation of the Joie de Vivre Hotel employees? If you were in Chip Conley’s position,
what would be important for you to keep in mind to ensure the transition is as successful as
possible as it relates to employee motivation?

ANSWER
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