The one thing about mergers and acquisitions that isn't usually discussed? Bringing different company cultures together. That'll be key to the success of Marriott's acquisition of Starwood, and Marriott's Global Chief Human Resources Officer David Rodriguez knows it.
Now that Marriott’s acquisition of Starwood has a closing date, and no last-minute third-party by the name of Anbang can interfere, the monumental effort begins to bring together these two companies and their combined more than 500,000 employees.
All of this needs to be accomplished while Marriott also implements $250 million in synergies — a.k.a. cost savings and job cuts — most of which will be gleaned from the top of Starwood’s executive team.
A key player in this process is David Rodriguez, Marriott executive vice president and global chief human resources officer. Rodriguez, who’s been with Marriott for the past 18 years, sat down with Skift at the NYU International Hospitality Investment Conference in June to talk about the importance of getting the integration of the two companies right, addressing those $250 million in synergies, and building a great company culture.
He also gave us a few glimpses into what he has in store for the nearly 200,000 Starwood employees who are now part of the world’s largest hotel company.
If there’s a silver lining for anxious Starwood employees, they should note Marriott has been named to Fortune’s list of “100 Best Companies to Work For” for the past 19 years, and more than a third of its U.S. employees have been with the company for more than 10 years, Rodriguez included, and 12 percent for more than 20.
Note: This interview has been edited for length.
Skift: So we have to ask you about Starwood. We know it’s not officially closed yet, but I’m sure that you’re working right now on figuring out your game plan or how you want to address the merging of the two different cultures at both companies. What is your game plan, and in what ways do you think there are similarities or differences between the Starwood corporate culture and the Marriott corporate culture?
Rodriguez: Here’s what’s interesting about that. This is where a lot of M&A transactions go wrong, because I don’t think they think about the right way. Marriott culture actually is going to be one of the strongest reasons why this merger is going to be a home run. Marriott culture is actually very simple. It’s simply that we take care of each other. When I’ve talked to people at Starwood and I describe what Marriott culture is about, they get excited. By the way, they say, “That’s really what our values are, too.”
I think what sets Marriott apart from others, and we got into this downstairs at the panel, is every company is going to say, “We take care of our people.” The difference is, is what do you do when times are tough? For instance, in 2008, you know that the economic environment across the world was pretty distressed. What’s happened in the United States was, across industries, hourly employees were working fewer hours because business volume was down. In the U.S., your medical benefits are actually tied to your employment, unlike Canada, for instance. A lot of hourly employees in the U.S. lost their medical insurance, when, of course, they could least afford to lose it. They were also working less hours and making less pay.
I remember when I brought that issue up to Bill Marriott at his staff meeting. I said, “This is a moment of truth for us. This is where we show everybody whether we mean what we say by our culture.” He took 30 seconds to decide no one at Marriott would lose their medical benefits coverage. He suspended the measurement of hours for determining medical benefits eligibility. I still have hourly associates in hotels walk up to me to say, “Thank you,” for something that happened in 2008. It’s very much about the proof points.
This year, Arne [Sorenson, Marriott’s CEO], who very much has embraced the spirit of the Marriott family, of taking care of people, he made a decision that full-time hourly employees in the United States, beginning around July 1st, they are going to get short-term disability. We call it the Take Care Income Protection Plan. Basically he decided that every hourly employee, every full-time hourly employee, would get this coverage at no cost to them. As we thought about what was the most impactful thing we could do for employees, it isn’t the kinds of things that sometimes get headlines, like, “We have a ping pong table in the lounge.” We knew that wouldn’t add any value. We said, “You know, the most valuable thing we can do is to give them this coverage so they and their families never have to worry.” Of course, people started learning that this is now something that they have are just enthralled by it.
That’s the essence of Marriott culture and we feel that at Starwood, associates are learning about what Marriott culture means, which is we have these values and we work very hard to bring those values to life, that they’re going to be very invested in the future of the company. There’s another part of culture that is what we really then have to focus on, which is it could be that, let’s take a term like autonomy. It could be that employees in one business feel they have much more autonomy to make a decision for something than, let’s say Starwood, than at Marriott. Those are kinds of things where we’re going to take the time to sit down and understand these issues and say, “OK, which is the better way?”
I think that’s going to be important. I think when M&A deals fail culturally, it’s because I don’t think companies take the time to listen to both sides and figure out what makes sense. Sometimes it’s not going to be how Marriott does things that’s going to be the best way. It’s going to be something that Starwood is doing.
The other thing I would say is this: Obviously we acquired Starwood, so it’s important that we show respect and acknowledge that they’re a great company that’s done a lot of great things. I’ll tell you, in the HR space, one of the decisions we made, is we’re going to take one of their innovations and bring them into the company. I’m talking about something they call the Starwood Associate Relief Fund. Let’s say an employee at Starwood, they fall behind on their mortgage and the bank’s about to take their home. This is actually a fund that can provide some financial relief in that stressed moment. I looked at that and said, “That is a great idea, a great innovation. We’re going to bring it into Marriott.” Of course, what that does is it shows Starwood associates that we’re paying attention. They will have a lot of pride in knowing that we took one of their programs, one of their innovations, and it’s becoming part of the new company.
Again, it’s being very sensible that on both sides of this transaction. You have human beings who want to feel good about themselves, who want to feel respected. It doesn’t mean that you do things arbitrarily, but you’re very thoughtful. Again, whichever side, whether you’re on the Marriott side or the Starwood side, we’re going to take the best thinking and make that part of the new company. The foundation will be, this will continue to be a company that is very people-centric, that cares about people. What I’ve learned in my career is that that works across generations. There’s no Gen Yer or Baby Boomer who doesn’t like the notion that this is a company that takes care of people, and it works cross-culturally. In every culture that I deal with, no matter what their experiencing in their local culture, when they experience Marriott culture, it resonates with them and its individuals.
Skift: Are you at all a little bit concerned about the $250 million synergies, the job cuts that lie ahead in terms of how they relate to the acquisition?
Rodriguez: Here’s the thing about our company, our industry, but particularly our company. Marriott finished 2015 with, I think 218,000 employees, globally [According to Marriott’s 2015 Annual Report, the company had 127,500 employees by the end of 2015. A Marriott spokesperson, however, said the combined company will have more than 500,000 associates in total]. Starwood, I think they reported 188,000. Think of how many of those are managed. Here’s the bottom line: The people on the properties really aren’t affected. You’re now looking at 3,000 to 4,000 people above property at Starwood, most of them are going to come into the new company, at least for some period of time, until we figure things out. The reality is, there are going to be relatively few people that are affected.
At the top, as we’ve said, we’re not going to have two CEOs, right? That’s where the big money is, by the way. They won’t need two of me, so people who lose jobs will mostly be higher-paid, senior people in the corporate setting. The vast majority of people are coming into this new company. Most of the ones who will be affected will be the senior-most jobs, like the CEO and a couple levels below that. That’s why I can sleep at night.
Skift: What’s Marriott doing to try to attract Millennials or Gen Z talent?
Rodriguez: I wrote a blog last week [May 31] that actually gets at this very issue. It first sets out the premise that if companies aren’t careful, they’re going to get into a lot of trouble because of, again, this proliferation of online reviews. Who’s really looking at those online reviews? It’s Millennials. Millennials and, particularly top talent that always has choices, they’re going to be looking at what other people are saying about your company and they may make a decision about you before you even try to recruit them.
In my blog, I say there are three things that companies have to focus on to be what I call a top-talent magnet. One is that they have to have a compelling employment value proposition. It’s not about just programs and initiatives, it really is like a cultural movement. That’s what we have at Marriott. We have a holistic framework for how we attend to people’s well-being. It has three components.
One, people have to feel good about themselves, so we have a nationally recognized, actually it’s the platinum award winner. It’s a wellness program, so it’s about people’s health, both their physical health, their emotional health. We have programs that help people become better financial managers of their personal finances, and, of course, career management programs because the most important thing that people can do to safeguard their financial future is their career.
People have to feel good about themselves, people have to feel good about the workplace and most of that is about relationships in the workplace. Do you feel comfortable? Do you feel like you fit in at Marriott? We like to say, we don’t want anyone ever wasting energy trying to fit in or wondering where they could fit in. It’s our way of thinking about diversity and inclusion. The only thing that really matters at Marriott is you do the job you were hired to do, and second that you’re a good neighbor in the workplace, meaning you make it a comfortable place for everybody else.
The second component is people have to feel proud of the company. What it’s doing in society, how it contributes back to communities. We focus on making sure that we have a compelling employment proposition. If you think about the things that I mentioned, people feeling good about themselves, feeling good about whether the company is a place where diverse people feel comfortable, and then social responsibility, those are the things that millennials care about. We have that framework.
Secondly, I think I mentioned before, we are probably the most progressive company in hospitality in terms of being on digital channels and using things like animations and cartoons to really get the message out there. It’s all about getting your message out there so that people get a sense of who you are. Then the third component includes the proof points. I mentioned the decision in 2008 by Mr. Marriott, and Arne this year. This year we also announced expanded parental leave, whether you’re adopting or having a baby. We knew that’d be important, particularly to Millennials, because they’re looking to start families. You have to have proof points.
Photo credit: A promotional image of a Marriott front-desk employee. Upon the completion of its merger with Starwood, the combined company will have more than 500,000 employees. Marriott International