When three Boston-area Hyatt properties fired nearly 100 staff housekeepers last month and replaced them with cheaper contract employees, management employed a common tactic: Surprise.
Housekeepers at the Hyatt Regency Boston, Hyatt Regency Cambridge and Hyatt Harborside at Logan International Airport were informed of their demise 31 August and released the same day. Not surprisingly, many of them cried and screamed when they heard the news.
The sting of that message is familiar to the thousands of us who lost our jobs in the same, abrupt way during the last 18 months. We arrived at work one morning only to be told that our services no longer were required and that we should pack up and leave as soon as possible.
Like most employers, Hyatt managers executed the Boston terminations outside of the public eye. Companies rarely comment publicly on employment matters, citing respect for the privacy of the individuals involved (and thereby insulating themselves from lawsuits).
Terminated employees typically go away quietly, shocked or embarrassed into silence and loathe to suffer further humiliation. The colleagues they leave behind also suffer in silence, fearful of their own jobs and resentful that they were denied a chance to say goodbye.
Moreover, mass job losses have lost their shock value among the general public, which seems to have accepted downsizings and outsourcing as necessary evils in today’s global economy, especially during a recession.
Unfortunately for Hyatt Hotels Corporation, the housekeeper terminations became front-page news around the world 17 days later after Katie Johnston Chase of The Boston Globe reported Hyatt managers tricked the housekeepers into training their replacements.
Housekeepers told Chase their managers had asked them to train “some new workers” who would be “filling in during vacations.” The trainees, as it turns out, work for Hospitality Staffing Solutions, a Georgia firm contracted to replace the housekeepers.
Using language that has become all-too-familiar during the recession, Hyatt issued the following statement that was quoted in The Boston Globe story: “As part of an ongoing drive to address challenging economic conditions, the Hyatt hotels of Boston have restructured their housekeeping services. Regrettably, the restructuring included staff reductions.”
Hyatt’s words were logical, rational and consistent with explanations offered by countless other companies struggling to cope with the business downturn. The newspaper corroborated Hyatt’s claim, reporting that Boston-area hotels had suffered a 21 percent RevPAR decline in June compared with 2008, a fact attributed to PKF Hospitality Research.
But Hyatt’s public statement failed to move public sentiment. More than 600 readers posted comments on The Boston Globe’s Web site, www.boston.com, the overwhelming majority of which were negative. “Shame on Hyatt for being so deceptive,” wrote a reader identified as sheriadoc. “To lay off employees is one thing, but to lie about it to their faces is just disgusting.”
“Real classy, Hyatt,” wrote another reader, dirtywater1. “Could this company possibly stoop any lower? I'll be sure not to stay at a Hyatt any time in the future. There are plenty of other competitors to choose from.”
The public protests
The next day, hundreds of hotel workers and their supporters turned out for what The Boston Globe called a “raucous rally” to protest the terminations in front of the Hyatt Regency Boston, banging on drums and shouting, “Hyatt, shame on you!” The same housekeepers who went away quietly on 31 August had returned with a vengeance.
Politicians poured verbal gasoline on the fiery protest. U.S. Rep. Michael Capuano and state Sen. Anthony Galluccio called for a boycott of Hyatt. Mayor Thomas Menino characterized the terminations as a “crude business decision” and said he “stands with these workers.”
Hyatt fired back that day by e-mailing a page-long statement to the news media. The well-crafted comment expressed regret, sought to put the outsourcing decision into a national context, spelled out the economic necessity for the action, detailed steps to help the fired housekeepers and included an assurance that the contract workers would do a good job.
Most notably, the statement rejected claims that Hyatt managers deceived the housekeepers into training their replacements, calling those reports “absolutely false” and denying that the transition was either “sudden or secretive.”
Irate comments soon began to appear on national newspaper sites, including USA Today, and the blog of its reporter, Barbara Delollis, who covers travel and hotels.
“Shame on Hyatt,” wrote USA Today reader Davidwnv. “I will never stay in a Hyatt property again. I will also encourage my 300,000+ colleagues to avoid all Hyatt properties.”
RicMorgan stood up for the embattled hotelier, telling USA Today: “There are very difficult and perilous times economically, not just for individuals but for the corporate world as well. Hyatt is a good brand and has always fared very well in the past. But like everyone, they have to do what they have to do in order to stay in business and survive.”
In a further effort to pacify its detractors, Hyatt announced on 21 September the formation of a task force to provide “additional support” to the terminated housekeepers including “extended health-care coverage and retraining assistance tailored to the situation of each individual.”
Whereas the initial Hyatt statements were not attributed to a Hyatt executive, this one included the following contrite quote attributed to Phil Stamm, Hyatt Regency Boston GM: “Throughout this difficult period, we have treated our employees with dignity and respect but certainly have not adequately communicated that commitment to the Boston community.”
Once again, Hyatt’s public statements failed to stem the tide of criticism. Two days later, Massachusetts Gov. Deval Patrick raised the ante, saying he would instruct state employees to stop doing business with Hyatt until the company rehired the terminated housekeepers. In a letter to Mark Hoplamazian, Hyatt president and CEO, Patrick said he accepted the “business reasons” for the outsourcing, but urged the company to find ways to retain the employees.
Hyatt immediately issued a statement in response to the governor that quoted Stamm, the local GM. He said the boycott “directly threatens the 600 associates who work in Hyatt properties and who live and work in Massachusetts at a time when businesses and individuals are cutting back on travel during the worst economic period we have seen in decades.”
While the boycott threat engendered a mixed bag of comments on www.boston.com, with some readers questioning his political motives, Gov. Patrick was undeterred and met with the fired housekeepers the next day. One of them, Gisela Romero, told him, “We are not liars,” challenging Hyatt’s denial that housekeepers were deceived into training their replacements.
By the end of the week, the controversy had “gone viral,” as noted by Barbara Hernandez in her Bnet.com blog. Union protests erupted in Chicago and San Francisco. The union representing Boston cab drivers joined the Hyatt boycott. Bloggers on the Consumerist, Executive Nomad and Harvard Business Review joined the chorus of support for the fired housekeepers. Union activists launched a Facebook site, Save the Hyatt 100.
“The controversy seems to have struck a chord in people who are fed up with corporate downsizing, have been laid off themselves or just may be upset about the injustice of it,” Hernandez said. “Hyatt doesn’t have seem to have a PR strategy … and won’t give interviews to the press. Call it a day, Hyatt. You’ve been outmaneuvered.”
Paul Michelman, writing in a Harvard Business Review editor’s blog on 18 September titled “Lessons From Hyatt: Simple Ways to Damage Your Brand,” said “I'm sure our indignation will temper and pass over time. But were I personally planning to spend the night in the Boston area sometime soon, I'd do my best to avoid staying at a Hyatt.”
Angela Norena and Lucine Williams, two of the terminated Hyatt employees, discussed their dilemma on the National Public Radio program On Point: Life on the Edge in Hard Times with Barbara Ehrenreich, a journalist and author who writes about the struggle to make a living in America.
The Telegram of Worcester, Massachusetts, contrasted Hyatt’s economic claims in the housekeeper controversy with its initial public offering disclosure statement filed in August. “Hyatt officials boasted of cash and cash equivalents of (US)$968 million and a ‘committed and undrawn’ borrowing capacity of (US)$1.4 billion,” the paper said.
According to its disclosure statement, Hyatt intends to use its “significant liquidity and resources” to expand its market presence in emerging markets including India, China and Brazil, and to acquire other brands or hospitality-management or franchising companies.
Amid building public pressure, Hyatt’s corporate office issued a statement 25 September offering all of the terminated housekeepers “new, full-time positions in the Boston market” provided by “an affiliate of United Service Companies,” which it said will “match the employees’ previous Hyatt rate of pay through the end of 2010.”
In addition, Hyatt said its Boston hotels would extend health-care coverage through 31 March 2010, for terminated employees who accept positions with United Service Companies.
Once again, the statement quoted Phil Stamm rather than a Hyatt corporate executive.
“Every housekeeping employee who wants a job will have one,” he said. “That’s our promise.” Terminated employees “who wish to pursue a different employment path” were invited to pursue career services and training and receive financial support “equal to their Hyatt rate of pay through March 2010 or until they secure permanent jobs, whichever comes first.”
The statement closed with this admission by Stamm: “Contrary to the way our actions have been characterized by many, we did attempt to implement this staffing change in a respectful manner, and many of the assertions that have been made are false. We do, however, recognize and regret that we did not handle all parts of the transition in a way that reflects our organization’s values.”
“Hyatt Blinks on Firings,” proclaimed a 26 September headline on the Boston Herald site. But so far, the offer hasn’t satisfied the Boston hotel workers union, which characterized it as a “smokescreen” and a “PR scheme” and called for the reinstatement of the housekeepers “to the jobs they have held for years.”
Gov. Patrick was reported to be reviewing the proposal over the weekend to ensure it would be fair to the terminated housekeepers, according to his spokesman, Kyle Sullivan, who added: “Having been treated so unfairly, they are understandably hesitant to trust any proposal short of restoring them their jobs.”
The backlash is beginning to affect Hyatt’s group business in Boston. According to The Boston Globe, the National Employment Lawyers Association canceled its contract with the Hyatt Regency Boston and the Eastern Sociological Society said it would withdraw its business unless the chain reconsidered its actions. The Boston Herald reported that the Greater Boston Chamber of Commerce relocated a financial services forum to the city’s Four Seasons hotel to “mitigate any potential disruption to its members.”
In a 26 September story, “Firing Housekeepers Creates PR Mess for Hyatt,” Megan Woolhouse of The Boston Globe observed that public “indignation has been fueled” by Hyatt’s “muted response to the uproar” and that company officials “have declined to give phone interviews and have issued only e-mail responses” to inquiries.
William Holstein, author of the book, How to Manage Media, told The Boston Globe that Hyatt reacted too late and stonewalled the press. David Sexton of Columbia Business School suggested that damage to the Hyatt’s brand reputation “might cost them much more than the money they save replacing the housekeepers.”
“Helping people get jobs at a temporary employment agency doesn’t feel right,” Holstein said. “The logic of this is they have to admit they made a mistake, say they were insensitive and do the right thing. It’s a minor league issue, they’re a global company, and this has really hurt them.”
Harvard Business Review editor Paul Michelman urged his readers to study the lessons of the Hyatt housekeeper controversy: “Think about the way your actions will be perceived by all your stakeholders before you take them. Will these actions affect the way your customers feel about you? Might they impact worker morale? How will they look on the ‘most-e-mailed’ list of your local paper? If you're not asking these questions and imaging the worst-case answers, you're that much more liable to do something you regret.”
Hyatt attempted to manage the housekeeper crisis by issuing a series of statements from its corporate office in Chicago. While well-crafted, those documents failed to address the deep-seated emotions and resentment spawned by the employee firings that resonated first in Boston, then around the world.
At no time did a Hyatt corporate executive step forward to take responsibility and speak for the company. Instead, it placed that burden on one of its Boston GMs, albeit only through written statements. Where was Mark Hoplamazian, Hyatt president and CEO? Why didn’t he step up, take personal responsibility and express regret?
Hoplamazian’s failure to engage with Gov. Patrick and the public almost certainly will prolong the housekeeper controversy unnecessarily. It also may handicap Hyatt’s initial public offering later this year.