Chip Conley is CEO of Joie de Vivre Hospitality, the third-largest boutique hotel chain in the country. When his company was hit hard by the dot com crash Conley eliminated his own salary with no fanfare or announcement—he just stopped taking it.The situation got much worse after September 11, so Conley convinced his senior staff to take to take 10% pay cuts and froze all salaries, rather than lay off the rank and file.

In addition, Conley and his investors ponied up extra cash 22 times over the next few years to keep the hotels open and to meet payroll. Conley himself took out a second mortgage on his home and cashed out his retirement plans to help infuse cash into the business.

While a tough call, and not a popular one at first with his investors, Conley feels his decision was the right one. He kept the senior team intact—not a single senior manager left—and had to make virtually no layoffs, he says. Today, Joie de Vivre has annual revenues of more than $200 million, triple what they were in 2001.

Why? What made this CEO fly in the face of the normal approach as well as his own investors?

Joie de Vivre was known for its unique customer experience and gracious, service-minded employees. That, Conley believed, was the byproduct of the corporate culture he’d worked for years to develop. Known for its cushy benefits—Joie de Vivre offered sabbaticals for salaried employees every three years and English classes for its largely immigrant back-of-the-house hotel staff—the company had very low turnover. Its loyal workforce was its competitive advantage. Cutting costs and laying people off “would gut our culture,” Conley knew.

Best of all, Conley believes, the culture he’d built wasn’t poisoned by dread, anxiety, and alarm. “Companies have natural fear ripples,” he says. “In really rough times, they get to be big tsunamis. One person’s fear and dissatisfaction and discomfort becomes palpable to the person next to them, and then it just reverberates.”

There you have it. A CEO who truly walks his talk, recognizes the true source of his profits, and is willing to put his money where his mouth is.

Read the full article here. And see the book that came as a result of his experience.

How important do you think culture is to corporate success?

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This entry was posted on Tuesday, January 15th, 2008 at 3:00 am and is filed under About Leadership, What Leaders DO. You can follow any responses to this entry through the RSS 2.0 feed.
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