Magic For Sale

    Call it workforce reinvention with a scoop of Disney magic thrown in. Call it a great way of immediately getting rid of 10 percent of job applicants, who undoubtedly would have never worked out in the first place. Whatever it’s called, the Walt Disney Co. is so good at selling its people-management ideas that it has packaged them under the Disney Institute brand and is happily disseminating them to corporations throughout the nation, including Chevron, BMW, PricewaterhouseCoopers, Siemens Medical and Bank of America. The Institute, which has a staff of 20 instructors, is to the outside world what the internal training center Disney University is to theme-park employees--a citadel of knowledge about professional development, known as "the business behind the magic."

    Once housed in its own building at Disney World, the Institute now offers programs at six resort convention hotels and at convention or meeting sites in various cities. Disney doesn’t release information about how many people go through the Institute or how much revenue it generates, but some of the current offerings indicate the kind of numbers involved. One tour package put out by Florida Unlimited Incentives offers three nights at a Disney resort hotel, an Institute management program and goodies such as a park pass. The price: $3,495 a person. The Society for Human Resource Management last month sponsored a two-and-a-half-day Institute program for $2,395 per person, not including hotel costs or theme-park tickets.

    Getting a jump start on defining an employer’s culture by showing job applicants a video before even asking them to fill out an application is right out of the Walt Disney Co.’s playbook. The 3,500-employee University of Colorado Hospital, located in a Denver suburb, is one of many large employers that have sent key executives on a pilgrimage to Disney World for advice on how to hire, train and motivate a workforce. When Koeppel’s hospital decided to reinvent itself around the concept of patient service, Disney turned out to be the best example of what they wanted to accomplish. "Passion for the guest was one of the Disney concepts we wanted to build into our organization," Koeppel says. Passion, as Disney spokesman Terry Brinkoetter defines it, is "creating the ultimate guest experience," one that often includes reaching people on an emotional basis. "That is the heart and soul of our business," he says. "Disney is not shy. We go for the heartstrings."

    Workforce-management programs are a bright spot for Disney at a time when top executives at the Magic Kingdom are under fire. At center stage, dissident shareholders led by former directors Roy Disney and Stanley Gold are in rebellion. Punishing criticism is aimed at CEO Michael Eisner. And Comcast Corp. made a hostile bid, valued at $66 billion, to take over the company in February, only to withdraw it in April. But in the wings, Disney’s human resources divisions continue to hum along. And now the storied company moves its workforce-management practices as a product, much as it sells its film, television, retailing and theme parks, though on a smaller, less public scale.

    Disney World, with a workforce of 54,000--about half of them union members--is the incubator for many of the programs. Company-wide, Disney’s theme parks, media networks, movies, retail stores and other operations generate $27 billion in revenue a year, operate in 42 countries and have a worldwide payroll of 112,000 employees. But Disney World, the largest of its theme parks and one of the top destination resorts in the world, is where the entertainment company’s workers interact most frequently with the public and where its theories about training and developing a focused workforce are most often tested.

    The formula is relatively simple. Beginning with Walt Disney himself, the company has always thought that the best way to produce satisfied theme-park customers is with well-trained, dedicated cast members, as it calls its employees. Disney’s approach is deceptively simple--design a workforce culture that is aligned with its business model to get customers into the parks, make them happy and create a peak experience with enough "magic" to bring them back again and again. "You can build, create and design the most wonderful place in the world, but it takes people to make that work," says Bruce Jones, programming director at the Disney Institute. Only when you get the right people, Jones says, is it possible to create a culture that customers can depend on for "clean, friendly fun." But it is not nearly as easy as it sounds. "It takes an extraordinary amount of work," he says. Adds Koeppel, "There is nothing rocket science about it, but it is hard, hard to do."

Magic rewards
    But there is a big payoff. Perhaps motivated by Disney World’s policy of filling 75 percent to 80 percent of its jobs by promoting from within, the theme park’s workforce performs so well that roughly 70 percent of its guests are return visitors, company representatives say. Among full-time cast members, turnover is less than 20 percent, according to Disney, a figure that is less than half the industry average. Overall, theme parks and resorts produced 30 percent of Disney’s operating revenues in 2003. After down years in 2001 and 2002, when revenues at the parks and resorts dropped because of the softness in travel and tourism following 9/11, a surge in attendance at the theme parks is one of the bright spots on Disney’s balance sheet this year. Standard & Poor’s projects that Disney revenues overall may grow 14 percent this year and 9 percent next year, led in part by continued growth in theme-park attendance.

    The aggressive recruitment and training of theme-park employees is part of a hands-on, company-wide focus on human resources. In 2001, Disney began a long-range plan called Project Tomorrowland to link up its diverse business units, and targeted human resources as a top priority. As Disney came together in recent decades through organic growth and acquisitions such as ABC, the company found itself running 15 different major people-management systems, using a variety of software from Oracle, PeopleSoft and SAP. "You name it, we run it," says one top executive. Project Tomorrowland, a $400 million investment, is designed to link the company’s diverse business units with a centralized SAP system. It has turned out to be a big winner. The company estimates a return of about $100 million annually, the kind of savings that can have an impact on the bottom line. Just getting smarter about travel expenses is saving Disney approximately $16 million a year, according to one estimate.

    But saving money by getting on top of expense reporting is not the human resources program that outsiders are most interested in. What they do want to hear about is Disney’s formula for consistently turning out motivated park employees who in turn help define the theme-park experience. Much of the knowledge is passed on to outsiders by a team of 20 Disney Institute facilitators who provide on-site instruction and fan out across the country to hold off-site professional-development programs for universities, business groups and other customers. There are dozens of Disney employees who serve within the gates of the park as presenters to groups of touring executives.

Disney's formula
    Just what is it that executives line up to hear? The Disney formula is a mix of common sense, strictly defined corporate values and nonstop attention to detail. Employees are encouraged to give feedback to managers. Disney World executives are required to pitch in and do less glamorous jobs during peak holiday seasons when the hourly workers are stretched thin. Executives might sell popcorn from a wagon, bus tables, stir fudge or stock shelves. This not only helps with staffing shortages, but also sends a message to the frontline employees that their work is valued and provides important face-to-face contact with customers. George Aguel, senior vice president for Walt Disney Parks and Resorts, is an enthusiastic supporter of the "cross utilization" program. He has put on a costume for one of the four- to six-hour shifts in the Haunted Mansion and has worked behind the counter at a restaurant. "There is no better way for our leadership team to understand the essence of our business," Aguel has said of this flattening of the corporate hierarchy.

    Choosing employees with the right attitude is essential, summarized by the axiom "Hire for attitude, train for skill." As an example, consider the importance of park sweepers. Rather than just pick people out of a lineup and turn them loose in the park with a broom, Disney looks for personality, then spends time training sweepers on such things as how to read body language so they can offer help before it is requested. They even receive training on what to look for to avert child abuse. "Sweepers have some of the highest numbers of guest contacts in our theme-park and resort environment," says the Disney Institute’s Jones. "They are a key driver in guest satisfaction."

    The importance of sweepers is confirmed in an academic study by John Boudreau, research director for the Center for Effective Organizations at the University of Southern California, and Peter Ramstad, executive vice president for strategy and finance at Personnel Decisions International. The study found that Disney’s hiring and training of park sweepers gave it a competitive advantage. "One of the things that struck me about the sweepers is that in other places, they are not all treated with the importance Disney attaches to them," Boudreau says. "In many parks the sweepers are lower employees. The definition of their job is picking up trash."

    But sweepers are only one part of the Disney story. Getting job applicants at Disney World started with a video is an important part of the process. The idea is to give them the bad news first, as in "We work while others play." Because Disney World is open 365 days a year, working holidays, weekends and nights is part of the job, as is a strict dress code, grooming requirements (no exposed tattoos unless they are part of a costume) and the necessity of securing transportation. "We share the conditions of employment up front, which we think is the fair and reasonable thing to do," Jones says. As many as 10 percent leave at that point, according to one estimate. Those who stay are generally committed to the culture.

Hospitals listen
    Hospitals seem particularly well suited to Disney’s workforce-management approach, as odd as it may seem to connect the fun-loving culture of a theme park to the gravity of patient care. But care for the customer can easily be translated into care for the patient, hospital executives say. When patient-satisfaction surveys at Eisenhower Medical Center, near Palm Springs, turned up disappointing numbers, leaders of the nonprofit hospital put their heads together and decided to go to Disney for answers. "It is mind-blowing to go there, to go to the Disney Institute and see their attention to detail," says Mark Pederson, vice president of operations at the hospital’s Annenberg Center. "We wanted our management culture exposed to that. I can’t say we mimicked their culture here at Eisenhower, but we took a lot of what they did and implemented it here."

    Now two years into a three-year program, 200 Eisenhower executives and staff have made the pilgrimage to Disney World to soak up the culture and learn people-management secrets. The essence of what the executives learned was that small things count. Examples include making eye contact with patients and guests, picking up trash and looking for opportunities to be helpful, such as giving directions to someone who looks lost.

    Culture change involves infusing the hospital with a new spirit, Pederson says. He also uses the word passion and says that hospital workers are expected to embrace the program. "We can’t have high-passion managers and high patient goals if we don’t have caring, passionate, committed employees," he says. "You have to love what you do, you have to believe in this culture, and if you don’t, we might ask you to move on."

    Hospital executives took what they learned back to the desert and began exposing the medical center’s 2,000 workers to the new values. They launched a project called Catch a Shining Star, for example, which asks employees to nominate other staff members who have done something noteworthy or good that deserves recognition. "Some of us in management were skeptical about whether everyone would buy in," Pederson says. So far, it’s working, and patient-satisfaction scores have risen dramatically.

    At the University of Colorado Hospital, human resources chief Koeppel also talks about how a series of seemingly small things add up to big success. Hospital workers are encouraged to have a warm, friendly manner when speaking on the phone. Visitors who seem to have been waiting too long are offered a cup of coffee. Eye contact is encouraged. When constructing the new $145 million Anschutz Inpatient Pavilion, the hospital adopted Disney’s "on stage, off stage" approach, providing a special lounge where employees can relax and unwind out of view of guests. It also reinforces the idea that when they are dealing with the public, they are very much in the spotlight. As a result, Koeppel says, patient-satisfaction scores are soaring--from lows below 10 percent to scores as high as 80 percent satisfaction. Now the hospital pays as much attention to hiring for attitude as it does for skill.

    It is the same emphasis Disney has had since Disneyland opened in 1955. The workforce begins with "casting the show," the company’s term for hiring. Even before applicants at Disney World are shown the pre-application video, they enter the Casting Center near Orlando by turning a replica of the talking doorknobs from Alice in Wonderland. Then they stroll past an array of painted murals and artwork depicting scenes from Disney movies and gilded statues of Disney characters such as Mickey Mouse perched atop classical Greek columns. "Disney characters are the only ones we put on pedestals around here," Jones says. "The message is that we are looking for friendly, fun people." Only after a cultural fit has been established is a new cast member matched to an appropriate job. At Disney, the costume never comes before the fitting.