A Brief History of the Corporate Culture Transformation at Hilton - Part 2

Part 2: Alignment

When Chris Nassetta joined Hilton in 2007, he used his first 100 days to listen to Hilton hotel leaders around the globe.(1) He then described Hilton as several companies that were not aligned, somewhat like “getting into a boat with oarsmen rowing out of sequence.”(2)

The problem was that the company was almost 100 years old and had been put together through merges and acquisitions.

• - In 1985 Hilton purchased the Statler chain for $111 million, the largest real estate deal in history at the time.
• In 1964 Hilton International spun off as a separate corporation; this created two independent companies, Hilton Hotels Corp. in the Americas and Hilton Group plc in Europe.(3)
• In 1996 Hilton acquired Grand Vacations Limited, formalizing a four-year-old partnership that was the beginning of Hilton Grand Vacations.(4)
• In 1999 Embassy Suites, DoubleTree, Homewood Suites, and Hampton Inn were acquired by Hilton for $3.1 billion in cash and stock. At the time, all four brands were owned by Promus Hotel Corp.(5)

Some of these acquisitions were already the result of previous purchases, for instance, Doubletree acquired Red Lion Hotels in 1996, but in 1997 Doubletree merged with Promus Hotel Corp, creating the six-largest hotel company in terms of the number of hotels. Promus Hotel Corp was later acquired by Hilton in 1999. All these mergers created a “Frankenstein” hotel company, made up of different cultures, different goals, and different people overlapping similar roles. Chis said at the time that it was, in fact, like seven different companies operating in silos without any alignment.(2) Hilton at the time looked like one company to the outsiders, but it wasn’t, it didn’t have a consistent mission, vision, values, or key strategic priorities.

From day one, the message was clear; Chris had to unify the company and rally employees in the same direction. The process took three phases:

1. Increase efficiency by eliminating redundancy
2. Unify values, mission, and vision (the purpose platform)
3. Set a true North (strategic priorities) 

Increase Efficiency by Eliminating Redundancy

One of the first things Chris did when he started at Hilton was to move the headquarters from Beverly Hills to McLean. This was the fastest way to fight complacency and eliminating redundancies that were very common within the company. The move was not smooth and somewhat criticized, some people even claimed that Chris was homesick and saw a chance to get back to his hometown.(6)

Chris saw layers over layers of duplications in different roles that were costing a lot of money and created many more layers of decision making steps that were slowing Hilton down. Hilton was not competing effectively in the market place and he thought the company could do much better.(2)

Moving the headquarters to McLean would make Hilton nimbler and rationalize the cost structure that was “literally blown at the time,” in his own words. With the move, out of the 600 headquarter employees in Beverly Hills, only 130 moved east.(7)

Chris said, “If you want to change a culture, you change 80 percent of the people, we had lost touch with the front line,” and that’s exactly what he did.Hilton

Hilton Headquarters in McLean Virginia

This change created an opportunity not only to bring new fresh talent, but also to redeploy some of the savings in building technical resources, services, and salesforce, among others.(2) Today Hilton has more than 1,000 employees in McLean, (8) which means only 13% are legacy assuming they are still working for Hilton.

Chris did not also change the corporate employees, he also changed his management team, 9 out of the top 10 people in the executive committee was brought new after Chris, and from the top 100 leaders at the time, 50% were brought new.(2) This radical change was necessary to establish a new culture on the right foot. When I meet our leaders or some of my corporate peers, I’m always impressed to see how similar they speak about our culture. Sometimes it feels like listening to Chris himself. When you create a team from the bottom up, first of all, they tend to stay for a long time, and secondly, they blend exceptionally well with the culture. Leaders that identify with the culture and pursue the same goals share these principles over and over in their careers, straightening the corporate culture in the long run.

The Hilton approach today is different from five or ten years ago. Before, Hilton was recruiting for skills to cover a particular function. It was about filling gaps; now, Hilton is growing skills, knowledge, and capabilities internally. Today is about culture and how everyone works together. It’s how can the group be better than the sum of its parts. Hilton is no longer looking for functional expertise. If you don’t have a certain skill, there’s an assumption that you are smart enough to learn on the job. The most important thing for Hilton is to look for people who can work together and help make the group better than the sum of the parts.(9)

Unifying values, mission, and vision (the purpose platform)

Chris knew from the beginning that he had to align the values, mission, and vision of the company around the world; for this task, he brought Matt Schuyler, probably the most capable executive at the time for a mission like this one.

Matt and the executive team came together and created what Matt calls the purpose platform that consist of a mission, vision, and values (8).

The purpose of the company today (on top of what Hilton Conrad laid out decades ago) is “To be the most hospitable company in the world,” that means to be hospitable not only to the outside but also to the inside. This mission is not about being the “best” or most “well-known”; it’s about something employees can impact, day in and day out (10).

Once the purpose was defined, Matt and the executive team came up with the second piece of the puzzle: a new set of values. To do this correctly, they had to be sure that the values were easy to recognize regardless of geographic location, language, or culture. The executive team came up with a clever solution: “HILTON (Hospitality, Integrity, Leadership, Team Work, Ownership, and Operating with a sense of urgency – or Now).” To further expand on the meaning of these words, here below an expanded description:

Coming out with this set of values was very smart because the message stuck, and more importantly, they were livable. The recognition of these values today is 99% around the world, which is an incredible achievement (8) from where Hilton was years before.

Establishing these values was just the beginning, spreading the message worldwide to corporate offices and individual properties has been a massive project. Whenever Hilton has a corporate office, the first thing you can expect to see at the entrance is a list with these values, that not only remember to employees what we stood for, but it is an excellent reminder to corporate office’s visitors what Hilton believes in.

One of the things that have to be done first when establishing new values is setting the tone at the top. In Hilton’s case, once leadership was aligned, the message cascaded to more than 6,000 hotels and more than 400,000 team members around the world. This process took a while, but the key to success was to continue driving that message and making sure everyone understood it. This perception is measured annually, a process that started in 2010, which now has a 92% completion rate and measures how the message resonates across the entire organization. Measuring and reinforcing has made a big difference over the years (11).

Setting a true North (strategic priorities)

When Chris Nassetta started at Hilton, he was determined to paint a clear picture of the future and make people buy into it. He felt that the company had lost its way, and it didn’t have a purpose (12). After listening to people across the organization, he understood what inspired people to be part of Hilton.

What he did to guide the company into the future was to develop with four strategic pillars that had been consistent over the years. The first pillar was to align the culture throughout the organization. Given the different components at the time, he says, it was a challenge. “There were many efforts to achieve a culture at a local property level and at our corporate office level, but every view was very different (13).”

The four core pillars Chris work towards from day one were:

1. Culture Alignment

According to Chris, that was foundational to do anything else he wanted to accomplish. When Chris joined Hilton, the company had just merged into one, and many of the acquisitions took place just years before he took over. As described previously, this caused operational and management deficiencies that needed to be addressed. Different cultures and priorities were mixed, and there wasn’t a clear north.

2. Optimizing Performance

When Chris Joined Hilton, there were 10 brands, far from the 18 brands it has today. He saw great opportunities to strengthen those brands that, in some regard, were dysfunctional as a result of all the mergers and acquisitions that took place over Hilton’s 100 years. One of the clever things he did was to start attaching “Hilton” to all existing brands, Hilton has a great brand equity, but that wasn’t true for other brands at that time, for instance, Doubletree or Homewood Suites. Now it is easy to recognize these brands because they are called Doubletree by Hilton or Homewood Suites by Hilton.

3. Expansion

Chris was clear that the ten brands he found when he joined Hilton were not enough to satisfy the needs of an increasing variety of guests across different regions and lifestyles. Under Chris belt, Hilton had created eight more brands, almost duplicating the portfolio of brands Chris found when he joined the company. Some of these brands are revolutionary such as Motto or Signia. In addition to creating these brands, the pace of the expansion has picked up over the past few years, Hilton has opened more than one hotel per day since 2015 (14). Under Chris Nassetta, Hilton has opened more hotels that Conrad Hilton ever did (2). When he joined the company, Hilton had 3,700 hotels, compared with 6,110 today, a 65% increase.

4. Maximize Performance

From day one, Chris saw an opportunity to strengthen Hilton’s commercial capabilities, establish a better relationship with owners, and maximize stakeholders’ return. Although these improvements are not as noticeable to outsiders as the previous ones, nevertheless, this has been a core pillar that has helped Hilton move forward with determination. I’ll expand more on this in future chapters.

Although these core pillars have evolved over the years, the foundations haven’t changed over a decade. I have seen many presentations from leadership where small updated to the core pillars have been made, but the pillars themself haven’t changed. For instance, the alignment in 2007 was more focused on establishing the same mission, vision, and values across the organization, but today is more focused on activating a purpose-led culture and build “Thrive@Hilton” to attract, develop, and retain best-in-class talent. Over the last few years, I’ve seen people joining Hilton that have come from big tech companies such as Google or Facebook, which is a confirmation that Hilton’s culture is becoming very attractive.

Note from the author: To follow the complete story about Hilton’s corporate culture transformation visit my blog.

References

1.        Hancock A. Chris Nassetta: old values for a modern resilient company: Financial Times; 2019 [Available from: https://www.ft.com/content/555f9a90-ded3-11e9-b112-9624ec9edc59.

2.        Nasetta C. Christopher J. Nassetta on the four Ps of Transformation, an Interview with the President and CEO of Hilton Worldwide. In: Boston Consulting Group, editor.: Boston Consulting Group; 2011.

3.        Hotel Business. Hilton Hotels Corp. To Buy Hilton Group PLC 2005 [Available from: https://www.hotelbusiness.com/hilton-hotels-corp-to-buy-hilton-group-plc/.

4.        Buy A Timeshare. History of Hilton Grand Vacations 2020 [Available from: https://www.buyatimeshare.com/hilton-timeshare-history.asp.

5.        McDowell E. Twice Burned, Hilton Hotels Discusses Deal With Promus. The New York Times. 1999.

6.        McClain B. How NoVA native Chris Nassetta successfully revamped the Hilton brand: Northern Virginia Magazine; 2019 [Available from: https://www.northernvirginiamag.com/culture/culture-features/2019/08/14/how-nova-native-chris-nassetta-successfully-revamped-the-hilton-brand/.

7.        Inc. How Hilton's CEO Led the Company's Massive Turnaround: Inc.; 2014 [Available from: https://www.inc.com/associated-press/how-hilton-ceo-turned-around-his-hotel-business.html.

8.        Great Place to Work. Watch Hilton CHRO Matthew Schuyler Speak at GPTW4ALL Summit. In: Schuyler M, editor. GPTW4ALL Summit2018.

9.        Schacknies F. Hilton’s treasurer talks technology and people. In: Clark A, editor.: The Global Treasurer; 2019.

10.      Hammett G. This Giant Hospitality Company's Journey From 33rd to 1st in Great Places to Work. Inc Magazine. 2019.

11.      Schuyler M. Why Hilton Is the Best Company to Work For in America. In: Tkaczyk C, editor.: Great Place to Work; 2019.

12.      Nassetta C. How CEO Chris Nassetta Turned Hilton Around. In: Gharib S, editor. On Leading with Suzie Gharib: Fortune Magazine; 2020.

13.      Meyer E. Hilton's Champion Culture - Hilton Celebrated Its 100th Anniversary and Bolsters the Culture That Will Take It Into the Future. Lodging Magazine. 2019.

14.      Hilton. Hilton Annual Report 2019. 2020.