Four Season's Leadership Style and Business Model

From Book Review in WSJ, 4/29/09, "Rooms At the Top," by Laura Landro

The core reason for the Four Season's staying power, Mr. Sharp believes, is a credo that may sound almost quaint: Follow the Golden Rule. Workers, he says, are vital assets who should be treated accordingly. At most hotel companies, he notes, housekeepers, cooks, bell staff, waiters and clerks are often the lowest paid and "the least motivated people." But at the Four Seasons, those who might otherwise be considered the most expendable "had to come first," because they were the ones "who could make or break a five-star service reputation."

Turning the top-down management philosophy on its head, Mr. Sharp authorized every Four Seasons employee to solve service problems as they arose and to remedy failures on the spot. Managers were told: "Keep your egos in check and let the people who work for you shine." Mr. Sharp says that it took years to weed out of the company the many managers who disagreed with this philosophy and could only see staffers as a cost. (The chain appears to be continuing in this tradition under its new owners: It was just named to Fortune magazine's "100 Best Companies to Work For," for the 12th consecutive year.)

Another key to success was Mr. Sharp's business model. Though there were rough patches -- at one point he had to pledge his entire stake as collateral for a loan -- he eventually found a way of "growing" the business while curbing the risk. He kept investments in hotels to a small percentage of equity, signing 50-year (or longer) management contracts with property developers who owned the hotels. Four Seasons was paid a percentage of gross revenue and participated in profits.