The Delicate Balance between Controlling Labor Costs and Impacting the Customer Experience

It’s a dilemma that has plagued hospitality professionals for decades: how much does one constrain labor before service is impacted. There are many variables that impinge upon scheduling such as demand, business mix, and market fluctuProductivityations. Striking a balance is as much art as science. Schedule too heavily and you place GOP and flow at risk. Schedule too lightly and you risk jeopardizing guest satisfaction and place your business at competitive risk.

The first lesson we learn as managers is that labor is the #1 cost that can be fully controlled. According to Lodging Magazine 44.8 percent of total hotel operating spend in 2013 went to labor related costs. So it is easy to see how a lax approach toward labor costs can quickly spiral out of control. How then can we better manage the process? The key is to employ a standard metric, such as productivity factors. The benefit of utilizing this standard, as opposed to solely analyzing labor as a percentage of revenue is that anomalies in operating procedures are more readily apparent. When incorporated into a scheduling tool overages and deficits can be identified, analyzed and corrected prior to roll out and before service to the guest is adversely affected. When integrated in a labor analysis tool managers can identify departmental inefficiencies that not only impact the bottom line but affect guest satisfaction. Caught early enough action plans can be devised and launched to hedge against dissatisfiers.

Hospitality businesses necessitate accurate scheduling to properly service both their internal and external customers. Managers will continue to have to juggle the competing interests of financial and service goals. However committing to a productivity measurement system will ensure that a harmonious balance between the two is struck.

In the spirit of hospitality…

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