Labor Management in the Hospitality Industry continued

Reporting

Labor reporting is an essential component of labor management. Labor reports allow managers to answer the question, “How did we do?” Similar to how a report card in school measures a student’s performance, labor reports measure the labor management performance of the operating managers. Labor reports should be used by all levels of the organization.

• Junior/mid-level managers should be reviewing reports daily to identify successes and opportunities for improvement.
• Senior level managers should be looking at the overall labor management effectiveness of the business.
• Corporate/regional managers should be reviewing labor management reports across businesses, looking for labor management trends, patterns and best performances.

For many organizations, labor reporting simply involves senior management poring over data in order to find the failures of middle management. This approach can be ineffective and demotivating to the individuals that can drive profits.

In essence, a strong labor management reporting program provides a management information system. This system helps an organization move from a top-down critique where only senior managers know what’s happening to a bottom-up critique in which junior/middle managers tell senior managers what has happened and what can be done about it. Also, labor management reports can provide information for middle managers in dealing with needed additions to staff. Reports can be instrumental in pointing out where there are staffing shortages that can be satisfied in the short-term through cross-deployment. The same system, however, must also be able to support the decision to add positions to staff as part of a longer term strategy.

The key items to be measured in labor management reports are:

• Hours worked
• Overtime hours
• Labor standards
• Productivity
• Forecast accuracy

Evaluating

Reports give you information. Evaluation is the process of turning information into actionable knowledge. Reporting tells a manager what and evaluation tells a manager why (or leads one to ask why). An effective labor management process contributes to the evaluation process by presenting variances for you to review and highlighting exceptions.

Many organizations focus on benchmark comparisons within the industry. The danger this presents is that you are susceptible to managing expenses relative to these averaged ratios. The right ratio is the one that translates the labor standards as a ratio to volume, not the payroll dollars against revenues. Payroll dollars vs. revenue are susceptible to fluctuations in average unit price while productivity ratios provide a stable metric that is valid from year to year.

An effective evaluation tool shifts the focus to monitoring productivity rather than the percent of dollars spent.

Conclusion

For some, labor management is what managers get paid to do, and there is no need for technology. But as the technology has caught up with the concepts, more and more organizations are looking to automate this process. LMS programs are certainly not as widely used as other technology solutions. But we believe that they are increasingly desired, will become increasingly common, and that the first step in acquiring an LMS system is understanding what it is (and is not) and what it should do for your organization.

About the Authors

Ron Strecker is Chief Financial Officer for The Al J. Schneider Company. Previously he was with the Colonial Williamsburg Foundation. Ron first began his professional career 26 years ago at the downtown Hyatt in Louisville, Virginia. He spent 11 years with Hyatt, also working in Dallas, Austin and Kansas City. In addition, Ron has held positions at Crowne Plaza in Rockville, Maryland and Grenelefe Golf and Tennis Resort in Haines City, Florida. Strecker is a graduate of James Madison University and an active member in Hospitality Financial and Technology Professionals. His professional certifications include CHAE (Certified Hospitality Accounting Executive) and CHTP (Certified Hospitality Technology Professional).

Len Wolin is the Senior Corporate Director, Program Management for The Ritz-Carlton Hotel Company. During his 20 year hospitality career with Marriott International, Len has worked for multiple brands on both the property and corporate levels. His interest in labor management began as an operational manager for Marriott Hotels and Resorts and then expanded as his career progressed while working at five hotels. From a corporate perspective, Len spent six years developing and leading the labor management (LMS) initiatives for both Marriott and The Ritz-Carlton. He has experience implementing and developing labor management systems and processes both domestically and internationally.

Ken Heymann is Chief Operating Officer for UniFocus. With over 20 years of experience in the hospitality industry, he is an expert on organizational development, change and quality management. During his career, Ken has supervised major consulting projects in the areas of budgeting, forecasting, staff planning, quality management and information systems for numerous organizations such as Harrah’s Casinos, Ritz Carlton Hotels, KSL Resorts and Fairmont Hotels and Resorts. Ken has also contributed to such industry publications as The Cornell Quarterly, The Bottomline, Lodging Hospitality and Hospitality Technology. He is a member of the Board of Governors of the School of Merchandising and Hospitality Management at the University of North Texas.