Given the industry recessions and economic downturns that have occurred, hotel operations are facing greater pressure to increase efficiency, while still remaining profitable.
The current objective of hotel managers is to emerge from the downturn stronger than ever, and at the same time, identify ways to more closely manage costs. Those that are effective will remain competitive in the short-term, attract more capital, and experience accelerated growth in the next up-cycle.
Labour costs are likely amongst the largest expenses in the industry, commonly between 15 and 30 percent of gross income. Gaining efficiency in managing your workforce is essential to remain competitive. Workforce productivity is all about planning; it is important to make sure the right number of people are in the right place at the right time, doing the right job, in order to remain effective and preserve the desired service level.
Managers in various departments, including Human Resources and Operations, need to recognize the obstacles they must overcome in order to gain workforce efficiency:
-
Coping with the dynamics of workforce planning
-
Balancing between the different budget perspectives by the operational manager versus the department managers
-
Lacking visibility into the exact labour costs
-
Facing the risk of non-compliance with work regulations and agreements
-
Making inaccurate and unnecessary payments of employee hours
-
Controlling outsource expenses
While the HR manager is required to be part of the hotel's strategic management team, he or she is also obligated to align workforce needs with the company’s strategic goals. Knowing more about the obstacles for efficient budgeting, and understanding that there are times when actual results vary significantly from the planned ones can help the manager control expenses and achieve excellent operating margins.
Coping with the dynamics of workforce planning
Understanding the variances between the forecasted planning and the actual results are crucial for budget control. It is not always possible to work according to plan, when an unplanned bus arrives at your entrance, or you receive a prompt request to host a special dinner for the following night. Walk-ins and extra covers are part of any hotel’s day-to-day routine. Some will attend to these unexpected customers by overstaffing, while others will rely on allocating employees from different departments and alerting employees from home as needed. In any case, analyzing the variances and determining the corrective actions should help you avoid putting your budget at risk.
Balancing the different budget perspectives of the operations manager and department managers
-
Different Goals: Though it is agreed that hotel profitability should be achieved by all managers, the operational manager is obligated to achieve the planned budget goals, while the department heads have different priorities. They focus on being prepared and maintaining a high level of service, even if this means a few extra employees, longer hours or using the more experienced staff (who are normally the most expensive).
-
Time Perspective: The operations manager looks at his or her budget goals on a yearly, monthly, weekly and even daily basis. Department heads view the budget as an annual goal. If during a specific month there was a budget deviation department heads believe they can adjust that deviation during another month. However, reality shows that most of the time this does not happen.
-
Limited Information: Discussions about the forecast and the planned workforce budget usually happen after the fact. The operations manager sets a target for the department, and only a month later the management discovers the actual deviation. In this case, meeting the budget requires a significant cutback rather than a focused adjustment.
Lacking visibility into the exact labour costs
The difference between your most expensive employees and your least expensive ones, even in the same department can vary between 5–25% of employee costs, depending upon employee skills and experience. When scheduling employees manually, the supervisors are unaware of employee costs. By making the supervisors aware of these costs, he or she can schedule employees properly. This does not mean selecting the least expensive employees; it means scheduling employees while being aware of the costs and budgets.
Facing the risk of non-compliance
When assigning employees to a shift, managers tend to ignore the employees’ vacation balance or overtime. These put the hotel at risk of paying penalties at the end of the year, due to non-compliance with labour regulations. It also leads to undesired work expenses that could have been avoided if exact information about employee time and attendance was known prior to the planning.
Making inaccurate and unnecessary payments
Manual processing of the payroll system, managed on spreadsheets and papers is time consuming and prone to error. Having an automated time and attendance system leads to more accurate information, and significantly reduces the risk of administrative errors. Every company faces the risk of unauthorized early entries and late exits that deviate from the official schedule, resulting in an undesired increase of the budget.
Controlling outsource expenses
Payments to your outsourcing providers are frequently calculated according to the contract agreement with the provider. The HR or operations department receives an invoice for the service, but there is very limited monitoring of the actual work that was provided. This lack of control sometimes results in overpayments. When working with more than one outsource agency, it is important to compare labour expenses, making sure to choose one that provides the best possible value.
Implementing a Workforce Management system into your hotel can save your company money, while increasing control and productivity.