Throughout this current industry recession there has been greater pressure on hotel operations to increase efficiency and remain 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.
Labor costs are likely amongst the largest expenses in the industry, commonly between 15 and 30 percent of gross income. Nevertheless, the number of service providers effects the quality of service and customer experience. Gaining efficiency in workforce productivity is about simply planning: making sure the right numbers of people are in the right place at the right time, doing the right job to be most effective while preserving the desired service level.
HR, Operational and other department managers need to recognize the obstacles they must face in order to gain workforce efficiency:
1) Coping with the dynamics of workforce planning
2) Balancing between the different budget perspectives by the operational manager versus the department managers
3) Lacking visibility into the exact labor costs
4) Facing the risk of non-compliance with work regulations and agreements
5) Making inaccurate and unnecessary payments of attended hours
6) Controlling outsource expenses
These days while the HR manager is required to be part of the hotel strategic management team, he is obligated to align workforce needs with hotel strategic goals. Knowing more about the obstacles for efficient budgeting, understanding that there are times when actual results vary significantly from planning and therefore need to be adjusted accordingly can help the manager better control expenses and achieve excellent operating margins.
1) Coping with the dynamics of workforce planning – understanding there is a variance between the forecast and the actual planning is crucial for budget control. It is not always possible to work according to plan-when an unplanned bus stops at your entrance or you received a prompt request to host a special dinner tomorrow night. Walk-ins and extra covers are part of the hotel’s day-to-day routine. Some will conclude overstaffing is appropriate while others will be understaffing, relaying on allocating employees from different departments and alerting employees from home as needed. In any case, analyzing the variance and determining the corrective actions should help you avoid putting your budget at risk.
2) Balancing between the different budget perspectives by the operational manager versus the department managers
o Different perceived 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 whereas the department heads believe their priority is to be prepared so that the level of service is not negatively affected, even if that means supporting a few extra employees, extra hours or using the more experienced staff (which is normally the most expensive).
o Time perspective – the operational manager looks at his budget goals on a yearly and also on a monthly, weekly and even daily basis. Department heads view the budget as a yearly goal. If during a specific month there was a budget deviation department heads believe they can adjust that deviation during another month. Reality shows that most of the time this does not happen.
o Dialog about the forecast and the planned workforce budget usually happens after the fact. The operational 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.
3) Lacking visibility into the exact labor 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 and depends upon employee skills and experience. When scheduling employees manually, the supervisors are unaware of employee costs. By making the supervisor aware of the cost, s/he can schedule employees properly. This does not mean selecting the least expensive employees: it means scheduling employees while being aware of the costs and according to budget.
4)Facing the risk of non-compliance with work regulations and agreements: 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 labor regulations and also undesired work expenses that can be avoided if information about exact employee time and attendance data was known prior to the planning.
5) Making inaccurate and unnecessary payments of attended hours
o Unauthorized early entries and late exits, outside of the schedule result in an undesired increase of the budget.
o Manual processing, managed on spreadsheets and papers and manually typed into the payroll system is time consuming and prone to error.
6) Controlling outsource expenses
o Payments to your outsourcing providers are frequently calculated according to the contract agreement with the provider. HR or operations receive an invoice for the service; however there is very limited control over the actual work that was provided. This lack of control, sometimes results with overpayments.
o When working with more than one outsource agency, it is important to compare labor expenses, making sure to call the one that provides better value.
About Synerion
Synerion, formerly LAVIE TimeTECH, is a workforce management (WFM) software company that provides organizations with comprehensive solutions to manage employee performance. Synerion WFM solutions include tools for forecasting and planning, scheduling, time capture, absence and leave management, as well as time and task evaluation against organizational goals and budget requirements.
By successfully leveraging three decades of workforce management experience, with more than 5,500 installations worldwide and tracking over 4M workers, Synerion has developed a full range of state-of-the-art, modular WFM solutions that grow with your organization, and provide lasting value for short and long term needs.
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