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By Pamela Samaniego, Account Manager, UniFocus - I will never forget the look on my F&B Director’s face when I walked into his office to discuss budget variance after a challenging month. The revenue forecast had shifted higher almost daily. Two associates left his department. It seemed like every business in the area needed last-minute catering orders. The poor guy had worked at least 80 hours every week himself, but with a limited staff and significantly higher demand, everyone went into overtime. His labor budget was off the rails, he was exhausted, and I still had a variance report to deliver to regional management. I wasn’t sure if he was going to scream or break down and cry. “I killed myself the whole month for this place,” he said, “and all I get for the effort is trouble over my labor variance.” This is a common scenario across the hotel industry. With few exceptions, monthly variance reporting is almost entirely labor related. It’s a big source of frustration for department managers, who find themselves in the hot seat, feeling like they are being punished despite Herculean efforts to ensure that every guest received great service. These managers have been hired because they are service-savvy professionals, capable of working minor miracles to diffuse tough situations and empower their teams to deliver the quality of service expected by hotel guests. They are fully aware that they have more control over service execution than the fluctuations in demand, so they do their best with staffing and hope that maintaining high guest satisfaction ratings will keep them out of trouble when labor costs are higher than projected. Unfortunately, we’re talking about the single highest cost in any hotel. Keeping labor costs in line is key to profitability, and if you’re missing the mark it will catch up to you. In most hotels, labor forecasting and scheduling is pushed down to department managers, who have varying degrees of experience and a significant workload managing day-to-day operations. They are handed a monthly revenue forecast to work from, yet they typically generate schedules for a week – sometimes two, if needed for compliance with regulatory or union requirements. Most managers feel they cannot possibly schedule farther in advance with any accuracy because the revenue forecast fluctuates continuously throughout the month. When schedules are done, unless they have a tool that helps them navigate and adjust in real time, managers are simply reacting to what happens as it occurs day-to-day. They attempt to work through the daily fluctuations to achieve the originally forecasted bottom line for the month because despite continuous changes to the revenue forecast, they remain accountable for delivering that margin. ...most [managers] can identify a number of ways their teams could operate more efficiently by improving the way work gets done. The general expectation in the hotel industry is that department managers will just naturally master labor management over time in the course of their work – despite very little experience or training in labor standards, planning, and scheduling. They typically have only a small percentage of their time to give to the task, and very few tools and processes at their disposal. Much of the time, the data needed is not available in time to proactively impact labor. To access the data that is available, managers often have to leave the floor and go to their desks to pull a report. If hotel guests are standing in front of them, those guests are their focus and labor metrics become a post-mortem story. The problem is that the post-mortem is often painful, as in the scenario with my F&B Director. It doesn’t have to be this way. The industry has taken a very different approach with revenue management. We’ve invested in talent, training and technology to generate and manage the monthly revenue forecasts, ensuring a well-understood and supported process at all levels of the organization. Monthly revenue forecasts are managed by a designated Revenue Manager who has education and training in data analytics and is armed with a host of support tools. Yield management systems utilize historical and competitive data to generate the forecast that drives all other planning. Revenue Managers have the opportunity to collaborate with the property team and get input from very experienced regional support team members before finalizing the forecast. The systems used for revenue management facilitate reviews and approvals, making approved budgets available to key stakeholders: GMs, department managers, regional managers, and corporate leadership. Once approved, the forecast is monitored daily and adjustments are made up or down, allowing the hotel to react by changing offers or rates against demand. Updates regarding adjustments or reforecasts can be pushed by the system to the appropriate people across the organization.
So why isn’t labor management part of the vernacular of a hotel in the same manner as revenue management – with comparable processes, technologies, education, and training? This can be partly attributed to the fact that management compensation has more to do with top-line results than bottom-line flow through, but the issue it is primarily cultural. The bias that managers should inherently understand labor management extends beyond corporate and regional leadership to the managers themselves. Discussions regarding adopting labor management systems and processes often result in defensiveness on the parts of managers, who perceive it as an attack on their management skills or an effort to prove that they don’t need to hire open positions. Managers will assert that a labor management system is an unnecessary expense because their departments “are already operating at minimum or optimal staffing levels”. They raise concerns that implementing a system will translate to spending more time at their desks on administration and less on the floor with guests and staff. If they trust you enough to have a transparent discussion, you’ll discover that many are fearful that a labor management system will make them appear less competent…and there will be negative consequences. Your managers know that given enough time, they could develop more accurate labor forecasts and schedules. Catch them away from the property, when they don’t feel vulnerable or under pressure, and most of them can identify a number of ways their teams could operate more efficiently by improving the way work gets done. These are the basics of disciplined labor management, which your managers will accept if they are approached positively rather than punitively. As revenue slows and wages increase, disciplined labor management is an imperative. The key is enrolling department managers in the value of expanding their knowledge and skills in labor management as part of their career development. Telling busy managers who are already experiencing burnout that they need to reduce their labor costs without negatively affecting guest satisfaction or staff attitudes is a losing formula. A winning formula starts with a cultural shift: acknowledgement that labor management is a critical management discipline the entire organization needs to develop at corporate, regional, and property levels. And demonstrated commitment by investment in the supporting training, processes and technologies that save managers time and make the process easier – just as the industry has done with revenue management.
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Today’s technologies can similarly support labor management. Systems can utilize AI to develop more precise forecasts, while automating accurate schedules directly related to projected service needs – which is especially useful to organizations with Food and Beverage operations. This process results in saving managers hours each week and helping them produce schedules that are much better aligned to the actual demand their teams will experience. They can access mobile applications that give them the data they need to know what’s happening with labor and take action before overtime gets out of hand – without leaving the floor. They can receive alerts to ensure that they are compliant with meal and rest breaks. When someone calls out, mobile applications let them see who is available and immediately make calls to specific people or broadcast the available shift to everyone who isn’t working.