Monday, November 30, 2009

Understanding Minimum Staffing Levels

No question 2009 has been a tough year on the Casino and Hospitality Industries. Low guest counts and reduced revenues have made the past year one of the most challenging for operations. For those of you in labor analysis, however, there has been one bright spot to all of this – there is no better opportunity to truly understand minimum staffing levels than during prolonged periods of low volume.

Okay, let’s get this clear from the beginning – no one likes (or wants), low volume to occur. It is times like these, however, when your organization needs solid analysis on minimum staffing levels more than ever, because your operators are probably experimenting with never-before used strategies to manage their labor margins. Managers can see a new picture of their operation during periods of low volume and are highly motivated to try new strategies for delivering great guest service with less.

I can’t tell you how many times I have been told by operators that the minimum staff required is different from one day of the week to the next. Don’t buy it, a true minimum staff requirement should hold up under all time periods. Volume demand should always carry the staffing requirements up from its base, getting your operators to understand this concept will help you gain acceptance to the overall staffing plan and will help when employee schedules are created using your analytical results as a guideline.

Also remember that the true minimum staffing requirement may be zero, with coverage picked up by another Job Class or by a Manager. Always apply a reality check to your proposed staffing adjustments, my favorite is, can your guests tell that you have made a change? After revising your staff plans has your sequence of service been compromised during low-volume time periods? If so, go back to the drawing board. And don’t experiment on your guests – try out your revised staffing plans with mock openings to truly understand the impact your adjustments will make on service delivery.

Sunday, November 22, 2009

Analyzing Scheduled Start Times for Variable Job Classes

Here is a quick tip (and a bit of really good advice), on analyzing the efficiency of individual schedule start times for employees working in 24-hour job classes with variable hourly demand – never start employees during time periods when demand for service is falling.

Before you dismiss this advice as being a bit too simplistic for analysis, take a look at the current start times scheduled for your Table Games Dealers, Slot Attendants, and Casino Cocktail Servers as compared to either forecasted or historical actual hourly volume demand. If you see scheduled starts occurring when demand for service is trending down (say, between midnight and 5:00 AM), then the overall efficiency of the daily schedule is usually reduced. Try adjusting these scheduled start times either forward or back while maintaining your desired minimum and peak staff counts and you may find that you need fewer overall scheduled hours to hit your daily staffing targets.

Thursday, October 22, 2009

The Problem with (Actual) Volume Data

One of the common mistakes I encounter while working with Planning and Analysis Departments is with their frequent use (and abuse), of actual, system-reported volume data. Yes, actual volume is required to fuel trend forecasting models and to create labor standard reporting, but analysts should take care not to perpetuate negative business performance by using actual data from time periods when guest service fell short or when targeted revenues were not realized. In many cases I observe analysts indiscriminately feeding actual data to their models from time periods of good business performance as well as bad, the result being inaccurate volume forecasting and reduced operational buy-in of their labor standards.

Take for example the case of a large Hotel Front Desk Operation using actual hourly check-in volumes to drive Guest Service Agent staffing targets – and then using actual volume counts reported during an hour when Agent understaffing resulted in line queue timings which significantly exceeded established service targets. Without adjustment the actual data reported during this hour would potentially drive labor standards which would perpetuate the same inadequate staffing levels that yielded the poor guest service performance in the first place! To make matters worse, if understaffing at a Hotel Front Desk resulted in long wait times in one hour then the opportunity existed to “push” a portion of the actual reported volume to the next hour. A labor model driven by the raw volume occurring each hour would then not only erroneously report the staffing levels as being correct in the first hour, it would also incorrectly report labor requirements during the second hour as well.

The answer, of course, is to refine the information being fed to your labor and forecast models by first analyzing the actual data reported by systems against multiple guest service and financial feedback channels (via direct observation, Supervisor reporting, financial reporting, and available guest feedback mechanisms). Make the appropriate adjustments to the actual volume being fed to your models during time periods when understaffing had a direct negative influence on the amount of reported volumes, I would also suggest that you re-label your volume indicator’s name to include the term ‘Adjusted’ so as not to confuse your report users.

Refining actual data prior to feeding forecasting and labor standard models affords an analyst with the opportunity to include Operations, Finance, and Marketing in the process. Not only will your models potentially yield more accuracy, you may also see the buy-in of your results go through the roof as well!

Tuesday, October 20, 2009

The Enemies of Labor Expense Management

For your consideration I would like to present a rogues gallery of the Enemies of Labor Expense Management (listed here in no particular order):

Expense Enemy #1 - Poor Employee Scheduling

A.K.A.: Bad Planning, We’ve Always Done It This Way, We Need a Schedule Re-Bid.

Here’s a news flash for you Casino and Hospitality Finance Executives – those FTEs counts you are trying so hard to manage did not just appear out of the void, that labor was planned to be there several weeks ago when the schedules were posted. It is amazing to me how much effort is put into managing labor after it has already been worked and how little effort it takes to effectively control expenses if (1) employee schedules are based on standards driven by accurate forecasts and (2) the posted schedules contain the appropriate allocations of Full-Time and Part-Time Employees. By the way, you can maintain employee satisfaction with scheduling if you create fairness and consistency with your work rules.

Expense Enemy #2 - Excess Full Time Headcount

A.K.A.: We are the Employer of Choice, We Can’t Hire Part-Time, It’s Too Hard to Manage Part-Time.

This Enemy has been hiding out for years on the Benefits Line, but, as the Recession has turned over many rocks, look what was found blinking underneath – too many Full Time Employees! In many cases the over-hiring of Full Time was brought about because Leadership had simply talked themselves out of hiring Part Time, not realizing that some jobs are inherently part-time (i.e., most toked and tipped positions), and that the appropriate use of Part-Time staff would actually insulate their Full-Time staff from negative turnover (because Part-Timers will, in most cases, happily work evenings and weekends). This enemy is hard to get under control (usually through attrition or layoffs), but easy to prevent (new-hire and replacement requisitions managed by FT and PT headcount staff targets based on accurate labor standards).

Expense Enemy #3 - Indifferent Management

A.K.A.: We Needed the Overtime, The Budget is Wrong, We Are Short Managers.

Great quote from Yogi Berra - "I never blame myself when I'm not hitting. I just blame the bat, and if it keeps up, I change bats. After all, if I know it isn't my fault that I'm not hitting, how can I get mad at myself?"

Hmm, sounds like several SVPs and GMs I have worked with over the years. Control indifference by creating management accountability for controlling labor expense, by recognizing and rewarding Managers who actually control their labor expense effectively, and by providing training and support for Managers who need additional help with controlling their labor expense.

Expense Enemy #4 – Lack of Management Systems

A.K.A.: We Don’t Have the Time, We Are Trying to Get Open, We Don’t Need a System, We’re Not Big Enough.

Ignorance is not bliss when it comes to managing a business. Yes, a comprehensive business intelligence / labor management system will take some time to implement, and yes, there will be a learning curve. But think of it this way: every dollar you save on the Salary, Wage, Overtime, Training, and Benefit Expense Lines can be re-invested in Marketing (driving business), and in Guest Service (keeping business). No matter how large the Operation is, the right Business Intelligence tools can empower Leadership with visibility into how they can improve the bottom line. Ignorance is the real enemy here because a comprehensive Business Intelligence System geared to proactive labor management, once properly implemented and utilized, will save you money. Don’t talk yourself out of one.

Monday, October 12, 2009

Traits of a Great Labor Analyst

A few weeks ago I posted on the merits of hiring analysts on the basis of potential or skill. Later, while discussing this topic with a good friend the conversation turned to identifying what traits actually make up a great labor analyst. While we agreed that no one characteristic was most important, here are some of the common strengths we found as being consistent with the great analysts we have worked with in the past:

Entrepreneurship – Great analysts approach their job as if they were building their own business. Call it being resourceful, call it taking initiative, the very best know where to get information and how to get things done. They look outside the box for new and valuable reporting products and analytical services to offer their customers (be it Finance, Operations, or Human Resources), and develop client relationships that keep their customers coming back. One of the first things I look for when initially working with an analyst is how much difficulty I have competing for their time – if they already have a steady stream of activity being generated by their Property’s Department Leadership then I know that they have a good “business” going.

Personal Skills – A great analyst is adept at building trust relationships with Operations. Let’s face it, from an Operator’s perspective a meeting with the labor analyst if barely preferable to a having root canal work done. Great analysts interact well with others and are skilled in asking questions and leading discussions, as a result they create relationships that are built on a mutual understanding of both fiscal and operational goals. Operators will actually want to partner with them because they trust the analyst to accurately represent the operational environment in which they work, and it is trust that brings about decisions and agreements.

Business Knowledge – Great analysts almost always have a varied background, either from multiple businesses or from having worked at multiple Properties. Never falling into the “this is the way we do things” rut, they bring a larger perspective to the table based on a rich background of operational experience. An observation (and this is perhaps why so many large Casino Companies seem to struggle with labor and operations analysis) – many organizations regard analysis positions as “entry level” and as such candidate are often hired directly out of school with little or no actual business experience. Hmm.

Being “Sharp” – Call them analytical, say they have technical skills, or just refer to them as being really, really smart. Analysts go by a lot of descriptions; I just say that the best of them are known as being “sharp.” Usually the Property GM will label them in this manner, when you hear this term referred to an analyst you know you may just have something. Note – the best analysts seem to be able to discuss technical concepts with Operations without becoming “preachy” or talking down – I have witnessed some of the smartest analysts get nowhere because they wanted to wear their intelligence on their sleeves. Real intelligence knows how to frame a discussion to get maximum value and buy-in. Trust me, the last thing Operations wants is to think that they need to go back to math class in order to understand the message.

Focus – Great analysts have the ability to focus on providing business value. They have a full understanding their organization’s strategic and tactical goals and find new a creative ways to solve business problems with their output. Efficient and effective, no opportunity is lost by a great analyst when it comes to delivering value, be it a report format, a budget review, a training exercise, or just as a meeting participant. Great analysts look through and use seemingly mundane tasks as opportunities to further business performance. They stay on point, never rest on their laurels, and embrace a “what have you done for me lately” attitude in their output.

These are just some of the traits we identified as being present in the great labor analysts we have worked with. How many of these characteristics can you apply to your own analysis staff?

Tuesday, September 22, 2009

All About Overtime, Part 1 - Basic Analysis

Overtime is probably the most often reviewed aspect of labor expense, partly because the overtime line tends to stick out on most P&Ls and partly because Property Leaders tend to jump on overtime as a way to engage in a larger discussion on operational efficiency. To aid in the understanding of overtime usage many Casinos and Hotels establish simplistic reporting thresholds for Job Class overtime hours as a percent of total hours worked (a 3% weekly threshold is common), exceed the established target and Operations will usually feel the heat. The questions usually go something like “was the overtime justified?” Or, “how can overtime expenses be reduced?”

In certain cases there are benefits to the operational use of overtime: overtime provides flexibility to match existing staff to variable guest demand and overtime coverage can be available on short notice, the staff working overtime requires no additional training to deploy and there are no additional wardrobe expenses associated (an especially important point with Job Classes like Casino Cocktail Servers). Finally, overtime can be seen as a morale-booster by some employees looking to supplement their income.

The problems associated with excessive overtime are also easily understood. Not only is overtime expensive, if prolonged it can reduce productivity, create employee morale issues and increase employee turnover. Perhaps most problematic is that some employees, after working prolonged periods of overtime will come to depend on the additional income and will be financially impacted if the opportunity for overtime is removed.

Overtime Work Rules

Understanding your local work rules regarding overtime is essential to producing an overtime analysis as a handful of states currently have work rules in place which supersedes Federal Guidelines. At the time of this writing California, Nevada, and Alaska all have 8 hour daily overtime rules while Colorado has a daily 12 hour overtime rule in place (the Federal rule is based on weekly hours worked). Some states have “rest” period rules in place which dictate the amount of employee time off between consecutive shifts, in Nevada, for example, an employee is eligible for overtime if their base pay is one and a half times the state-established minimum wage and if there is less than 16 hours between the end time and the start time of their work shifts on consecutive days. Note – Nevada employees can be scheduled for 10 hours per day for 4 calendar days per workweek without receiving overtime if mutually agreed to in advance.

Causes of Overtime

Excessive Overtime is almost always caused by one of three conditions:

1. The underlying structure of the Department or Job Class,
2. An incorrect understanding of the Department or Job Class operational conditions,
3. The scheduled availability of Department or Job Class staff.

I find it easier to understand the validity of overtime if I take all of three conditions into account in two different time contexts, first, the actual time of day in which the overtime occurred, and second, the actual duration of each overtime occurrence. Once I have completed my analysis using both time contexts a more accurate assessment of overtime validity can be reported to Senior Leadership.

Analyzing Overtime

Here are some strategies which may help you in preparing an analysis on the validity of overtime usage:

Structured Overtime tends to produce occurrences in durations of 30 minutes or less and is usually a byproduct of either clock management issues or gaps between job class shifts. Review employee historical pay records to identify patterns of potential clock abuse (and associated Supervisory issues), as well as the job class labor standards for shift end times and start times in order to reduce this type of overtime. Structured Overtime should be eliminated as quickly as possible and its trends should not be forecasted in future periods.

Operational Overtime tends to produce occurrences of less than 4 hours and is usually a by-product of some operational need to retain staff. Review the time frame in which these incidents occurred to determine if the overtime was a result of an overall Area Event or if it was due to a specific Property function, note the associated demand driver and review the Employee Schedules in use to determine if a re-deployment of staff can occur when similar circumstances are forecasted. Also note that in some cases Operational Overtime may be caused by intermittent family medical leave being taken during a scheduled shift.

Scheduled Overtime tends to produce occurrences of more than 4 hours and is usually a result of either a general lack of available staff or because a late call-off of a previously scheduled employee. Not enough available staff usually results in an overtime occurrence in the form of an additional day being scheduled, in the case of a call off; the overtime may be a result of an employee working a double shift. In either case a review of the Job Class standards for the same time period against actual staff available will give you a better understanding of whether or not the overtime was justified.

Understanding Incremental Overtime Expense

To complete an overtime analysis it will be necessary to understand the incremental cost of overtime over the use of straight time. For example, a 35% benefit load with 20 annual days of PTO and a time-and-a-half overtime rate would result in a 12% incremental overtime expense of overtime over the straight time rate. The use of Part Time Employees would reduce the coverage expense even more; however, an incremental analysis would need to be performed on the training and wardrobe costs associated with the use of greater headcount to deliver the same number of FTEs.

Next time out we will discuss strategies for effectively managing Overtime expense.

Tuesday, September 15, 2009

Shift Work Design and the Responsibility of Analysis

Much has been written on the potential impact of Shift Work on Employee Wellness, especially when an overnight shift is required. The Human Species by nature is diurnal, as such we naturally organize our activity around a day-night 24-hour cycle called a Circadian Rhythm where most activity takes place during the day and sleep takes place during the night (some mammals are nocturnal and do the opposite). Within this 24-hour cycle are rhythms of our body’s alertness, temperature, and a variety of other physiological functions; central to the theory of Circadian Rhythm is the concept of an Anchor Period, or, a 3-4 hour period when our bodies demand for sleep is strongest in order to preserve the day-night cycle. Loss of anchor sleep potentially disrupts the natural 24-hour cycle and can lead to chronic fatigue, a variety of illness, and a loss of productivity. Preservation of sleep during the Anchor Period preserves the Circadian Rhythm and potentially offset the negative aspects of performing night shift work.

While an individual may develop over time their own unique Anchor Period, it is generally recognized that the period between 2:00 AM and 6:00 AM is when our body’s natural demand for sleep is at its strongest. Now contrast the 2:00 AM to 6:00 AM Anchor Period for sleep with the three classic shift design strategies:

Continental Shift – Most often used in Europe (although I have seen this shift used in some Table Game Departments), the Continental Shift sets up a 2:00 AM start of day.

Casino Shift – Developed originally to coincide with the Gaming Day (drop-to-drop), the Casino Shift normally sets up a 4:00AM start of day.

Production Shift – Designed around factory production schedules and set up to correspond with the 24-hour Pay Day, the Production Shift normally sets up either a 7:00AM or a 8:00AM start of day.

When reviewing the three basic night shift patterns the value of the Casino Shift becomes immediately apparent, as this design affords its participants the ability to sleep at some point within the 2:00 AM to 6:00 AM Anchor Period. Research has shown that the Casino Shift preserves more quality sleep and is preferred by a majority of participants. Cognitive impairment is reduced on this shift and work performance is generally improved.

Whenever possible I design labor standards which preserve the Anchor Period for sleep when there are employees in the Job Class who will be working night shifts. While Casino drop schedules can vary from one property to another, I believe that it is the responsibility of analysis to take into account not only the business aspects of labor management but to act in the best interest of employee wellness too.

Take a look at your Property’s night shift designs by Department and note those which allow for the preservation of Anchor Period sleep. Compare your findings to your Departmental Employee Feedback survey results, you may just find there is also a corresponding pattern of enhanced overall employee satisfaction when quality sleep is preserved.

Friday, September 4, 2009

Calculating Short Abandonment

Here is a quick tip on calculating Short Abandonment telephone calls for your VIP / RES / PBX Call Centers:

Short Abandonment = 50% of your Target Service Level + 1 Second

For example, if your call service target is 80% of all calls to be answered in 20 seconds, then the calculation for Short Abandonment would be (20 Seconds X 50%) + 1 Second, or, 11 Seconds. Any calls abandoned that were less than 11 seconds in wait time would be designated as “Short Abandoned” and this total would be subtracted from the reported number of Abandoned Calls for labor analysis purposes.

Of course all Abandoned Calls should be investigated but why subtract Short Abandonment calls when reviewing staff levels? The answer is that because the Abandoned Calls volume indicator is one of the primary testing statistics for staffing in a call center you will want to use a value that is relevant to the planned service level in place. Your Call Centers did not have a reasonable chance to answer these short abandoned calls as they were staffed to a 20 second service level, and, if your staff were actually answering calls in 10 seconds instead of 20 then you would be over-staffed against your stated service goal.

Thursday, September 3, 2009

Forecasting Federal Holiday Weekends

A Four-day Federal Holiday Weekend normally represents a tremendous boost in business volume for Casinos. Guest service plans are put to the test and everyone wants to put their best foot forward with a full house watching in order to maximize gaming revenue and employee tipped income. In order to focus the available staff on maximizing profits there should be a solid set of employee schedules based on a comprehensive forecast of daily and hourly guest volumes. And while no advice can be considered hard and fast when it comes to forecasting, here are some tips that may help you become more accurate in predicting how much daily and hourly volume will occur during these very important Friday through Monday holiday time periods:

Divide and Conquer. Separate your daily volume forecast activity from your hourly volume prediction – in most cases you will be more accurate if you to focus on each independently. For example, you should finalize your Saturday forecast of Coin-In independently of how you feel that Saturday volume will be distributed on an hourly basis. Here is a tip – don’t over-analyze your daily volume forecast, pick a representative sample of similar past historical days as a trend reference and then make a call. And remember this bit of advice - always ask for feedback from both Marketing and Operations on Daily volume predictions but rarely ask for assistance on developing forecasts of hourly volume. In the case of hourly volume, Marketing will typically over-estimate the impact of a holiday weekend promotion on hourly volume patterns while Operations will usually give you the worst-case staffing experience they can remember. Neither will help.

Fridays and Saturdays stay closer to Trend. In many cases the actual daily volumes reported for the Friday and Saturday of a holiday weekend will stay very close to recent (non-holiday), trends. Test this theory by reviewing the actual holiday week from prior years with the historical Fridays and Saturday’s leading up to the weekend. Watch for a potential “displacement effect” produced by local Guests moving their normal visitation patterns from one day to another – in the case of Friday and Saturday, if the holiday is more family-centric then some of your higher-frequency Guests may move their normal visitations to earlier in the weekend in order to spend more time at home on Sunday and Monday.

Make the Call on Sundays and Mondays. Here is where the rubber hits the road, for in most cases one of these days will by higher in volume than the other (and both will normally be higher than their recent trends). Remember that on most Federal Weekends either the Sunday or the Monday will be focused on family / religious activities while the other day will be “free” - and that will be the day when the volume increase will really hit. The trick is which day will be high and which low? For the answer look to previous actual volume recorded on the same holiday weekend in prior years, then, review any local event / concert / promotion which could change this year’s daily volume pattern.

Sundays will be like Saturdays (and so on). You have probably heard the old adage that says the Sunday will be like a Saturday and the Monday will be like a Sunday. From an hourly volume percentage this is pretty close to correct – as a starting point. Again, look for area events and activities that could disrupt or displace this pattern, but guest arrival / departure habits usually remain strong and will carry over to holiday Weekends.

Account for Area Events. Federal weekends are noted for large area events and community activities. For example, is there a huge fireworks display in the area? If so, this could reduce the volume during the hours leading up to and during the show, usually family-type events will not produce a big late rush as everyone tends to go home together. Big sporting events (either local or national), may also have an impact on volumes, especially in the area of Table Drop and Poker Rake. Watch for table volumes to lag leading up to and during the event, then brace for a late rush (especially if the home team wins). Remember that Slot volume is usually less impacted by competing sporting events than Table Games / Poker volume.

Finally, don’t forget about the rest of the Holiday Week’s daily forecasting, as in many cases the actual volumes reported for the Tuesday through Thursday time period will be significantly lower than their normal trending, (with Tuesday being the most impacted through Thursday being the least). If you see this trend available then capitalize by reducing the number of employee hours scheduled throughout the balance of week so that any potential overtime expense driven by the big weekend is minimized.

Friday, August 28, 2009

Efficiency “Tells”

One skill almost all good Poker Players possess is the ability to read their opponent’s behaviors and actions; this skill is called reading “poker tells.” A “tell” is an action or habit that is indicative of a Player’s hand, good players will often spend as much time watching their own behaviors in order to mask their “tells” as they do watching their opponent’s.

When I visit a Casino Property as a Management Consultant I also look for “tells” on how efficient overall operations are, as it is rare that one area of expense is managed well while another is not – think about it, how many times have you seen a Kitchen which consistently returns excellent Food Cost percentages be completely out of whack on wage line? A little out maybe, but with efficiency, I believe, one good thing usually goes with another.

So what are some of the common “tells” on Casino Operations efficiency? While I am sure everyone has their favorites, below are some classics, this time in the area of Food and Beverage. And remember, no "tell" is for certain, and neither are these:

PM Requisition Activity. Before I visit with the Chef I like to take a little trip down to the Warehouse to discuss the number of daily requisitions being generated by each Food Outlet. Most kitchens will have a standard morning order (Specialty Rooms such as Steakhouses should put in their orders the night before), but a well-run outlet should generate no more than one or two additional orders throughout the day. The Requisition “Tell” - too many PM requisitions are often indicative of organization and planning issues in the Kitchens – and may be driving too much Warehouse staff as well.

Scales on the Line. This is an easy one; if you see a lot of food scales on the kitchen line then the Cooks may be handling the majority of portion control. When things get busy, they go visual. Bad. The Line Scale “Tell” – Prep activity may need to be evaluated; portion control may be inconsistent with volume fluctuations.

Breakfast Fruit Plates. This one is a real classic, order the fruit plate at breakfast, then evaluate what is served to you in relation to the menu price. Produce is pure expense; if they bring you a quarter of a fresh pineapple with your $4 fruit plate then you will have your answer. The Fruit Plate “Tell” - too much produce = too much $$$.

Lunch Specials. Visit a Restaurant running specials late in the lunch meal period and see how many are sold out. In this case, sold out is good. The Lunch Special “Tell” – sold out late usually indicates solid planning and food cost management.

Beef Soup at Dinner. Another food cost classic, order a soup with a base made of beef stock in a Restaurant featuring steak or Prime Rib. How thick the soup is will often indicate how good the planning and production is, using up materials like Prime Rib in soup stock will hit food costs hard. Stew-like consistency is really bad, unless of course, you have ordered the stew. The Beef Soup “Tell” – too thick is too much.

Beverage Station Condition. Here is one for Casino Beverage, if there are self-service beverage stations on the casino floor check to see how clean and stocked they are between 5:00PM and 7:00PM – clean stations during this heavy arrival time generally means that the Cocktail Servers are out on the floor delivering that first drink fast. Yes, I know that the classic “tell” here is to walk the low-denomination slot banks to see how many self-serve cups are being used, but I’m lazy. The Beverage Station “Tell” – clean and stocked self-service stations in the early evening = first drink in hand fast = increased Guest satisfaction with Casino Beverage.

OK, I'm not really lazy (although my wife may occasionally disagree). Every area of Casino Operations has a unique set of “tells” on overall efficiency, today I have shared a few classic favorites with you while picking on the area of Casino Food and Beverage. I am sure you have your own favorites as well, if you want to share yours please drop me a line!

Thursday, August 27, 2009

Calculating Hotel Departures

Here is a quick tip for calculating current day Hotel Departure counts:

Yesterday's Rooms + Today's Arrivals - Today's Rooms = Today's Departures

Try this formula the next time you need to forecast departures, it may save you a little time.

Wednesday, August 26, 2009

Hotel Occupancy and Optimized GRA Staff Planning

Over the course of my casino career I have enjoyed the opportunity to work in almost every major U.S. Gaming Market, including Las Vegas, Atlantic City, Chicago, Reno / Tahoe, Tunica, and most places in between. The one major market I had never worked in, or, for that matter, had never even visited before, was Laughlin, Nevada. That all changed recently when I got a chance to work at what the locals call “The River” for a couple of weeks.

Coming into a new market is always interesting and Laughlin proved to be no exception. It quickly became apparent (at least to me), that the current economy has had a dramatic impact on area hotel room rates and has forced Laughlin to become somewhat of a “value” market (along with being somewhat of a seasonal market as well). I also noted that many Laughlin hotels had high (80%-90%), weekend occupancy rates but dramatically lower (40%-50%) mid-week counts.

There are some interesting labor analysis concepts that can be applied when hotel occupancy swings widely from day-to-day, particularly in the area of optimizing Hotel Housekeeping room credit targets and with the concept of “dragging” dirty rooms from heavy departure days to lighter departure days for cleaning. Volatile day-to-day arrival / departure swings create the need for differing credit targets for check-out and stay-over rooms. For example, a 16-credit per shift house standard results in approximately 24 minutes per checked out room, given that a normal 8-hour Guest Room Attendant (GRA), shift including a lunch, breaks, and cart stocking time. The time to clean a stay-over room, however, is usually 35% or so less than a check-out, which results in a credit target of approximately 24 credits per shift using the same GRA availability described above. Note – the credit targets and employee availability numbers used here are for illustration purposes only; you will need to carefully evaluate the time required to clean both check-out and a stay-over rooms according to your hotel's standard operating procedures and to ascertain the available GRA time per shift available to clean in order to develop accurate credit standards.

Once you have an approved credit targets for both check-out and stay-over rooms the normal methodology for determining the required number of daily GRA labor hours is to use the volume indicator Current Day Departures to drive your daily Check-Out credit standard and to use Prior Day Rooms Sold – Current Day Departures to drive your daily Stay-Over credit standard. Divide each room type total by their respective credit target and sum the two results to return required number of daily employee shifts required to clean the house.

If your Hotel has high weekend occupancy highlighted by heavy Friday arrivals and large numbers of Sunday departures then you may find that you have labor efficiency opportunities on Saturday due to the increased volume of stay-over rooms available to your GRA staff on this day in relation to scheduling.

The concept of dragging check-out rooms will add another labor analysis dimension to the mix - dragging rooms will potentially allow you to develop daily standards that will better “fit” employee schedules. Dragging rooms can also be effective in controlling overtime expense, for as most GRA schedules are loaded for heavy occupancy days, in some cases there are more total rooms to clean than staff available when the house is full. In Laughlin the heavy check in day was Friday and the big check out day was Sunday (while mid-week departure counts dropped dramatically). Spreading a percentage of Sunday check-out rooms to later in the week creates a more even workload while preparing for the next heavy check in day (in this case, the following Friday), and may better allow you to provide work for Part Time GRAs working mid-week.

To create a standard for dragging rooms first establish the number of rooms to be drug by reviewing the daily arrival patterns and then analyze employee schedules to determine which days will best accommodate the extra workload. Deduct the number of rooms to be drug from their normal departure day and add these totals to the departure counts for the target days. Remember to allow for some time in the current day for either House Persons or GRAs to remove trash from each room to be drug, and always make sure that enough clean rooms are ready for next day arrivals throughout the week.

A caveat on developing a drag rooms standard - you should look for seasonal / event trends that will potentially disrupt the normal daily arrival / departure patterns and make adjustments to your daily drag percentages as required.

I had a great time in Laughlin and had the opportunity to meet with some really good Casino Operators while there. If your hotel has similarly wide mid-week to weekend occupancy swings then the use of individual credit targets for both check-out and stay-over rooms will result in more accurate daily labor standards for your Housekeeping GRAs. The dragging of check-out rooms may smooth out your GRA work flow, provide additional opportunities for part-time staff, and result in less overtime expense for your Property.

Wednesday, August 5, 2009

Analysts – Hiring for Potential versus Skill

Here is an interesting overview by Dr. Charles Handler on the relevance of hiring for potential versus skill. Reading it I am reminded of the many times I have been asked by Casino Organizations to interview their analyst candidates, usually as a part of the final selection process prior to an offer being made. As an interviewer I always looked for specific traits in an analyst candidate – the ability to communicate effectively using a variety of mediums, a background exposed to critical thinking, and, most importantly, the ability to “sell” a specific idea or viewpoint. In short, I generally espouse a strategic view of candidates during the hiring process.

Dr. Handler has challenged my strategic thinking by making an excellent tactical point on the need to understand the culture of the hiring company when determining which candidate traits actually represent the best “fit.” For example, if the hiring company does not possess the mentors required to develop a candidate into a polished analyst then raw potential will usually remain just that – having not actually accomplished anything. Also representing the tactical argument is the pain threshold of the hiring organization. In cases where a Casino is desperate for analytical output I would recommend that a more experienced candidate be brought on board so that already-acquired industry skills can be put to immediate use. Short of bringing in independent consultants to assist the organization, the tactical hiring for skill in these cases would seem to make good business sense.

As Dr. Handler suggests, the reality of the situation probably lies in between on the hiring of potential versus skill. A careful understanding of the hiring organization’s business situation, culture, and ability to develop potential should be undertaken prior to beginning the hiring process. Knowing the correct balance of the strategic and tactical needs in advance will allow the best candidate to receive the offer.

Monday, July 20, 2009

Table Games Labor Standards - Dealer Break Schedules

While establishing labor standards for a Table Game Department is a fairly straight-forward exercise, the entire process requires several steps – Dealer Coverage, Supervisor Coverage, and Tables Required by Game Type will all need to be created in order to produce and accurate overall Department labor standard. This time I will discuss establishing Dealer Coverage requirements, or, calculating a Dealer work-to-table ratio using break schedules.

Most Nevada and East Coast casinos utilize a 60 minute on - 20 minute off Dealer break schedule, a ratio commonly called a 60:20. Essentially, a 60:20 target is the same as covering 12 tables with 16 Dealers, by using this ratio the following standards can be used to calculated the number of Dealer labor hours per open table hour:

Blackjack, Carnival Tables - 1.33 Dealer hours per Table Hour.
Roulette - 1.33 Dealer hours per Table Hour + Racker (Mucker) coverage if Roulette Chippers are not installed.
Craps - Typically 3 X 1.33 (3.99) Dealer hours per open Table Hour + Box coverage if provided by Dealers (normally the Box Person is a Supervisor; however, some jurisdictions allow Dealers to set Box).

Most Midwestern casinos favor an 80 minute on - 20 minute off Dealer break schedule, a strategy which results in a bit more than 6% of increased labor efficiency along with higher Toke Rates for participating Dealers (essentially, using 15 Dealers to cover 12 tables). Using an 80:20 break standard the following ratios can be used to determine required Dealer labor by Table Hour:

Blackjack, Carnival Tables - 1.25 Dealer hours per Table Hour.
Roulette - 1.25 Dealer hours per Table Hour, again, + Racker (Mucker) coverage if required.
Craps - Typically 3 X 1.25 (3.75) Dealer hours per open Table Hour, again, + Box coverage if provided by Dealers.

Specialty games not listed here may require different Dealer coverage per open Table Hour. Establish Baccarat coverage based on game requirements (Mini-Bac versus Full Bac). Also, you may need to factor in fixed Toke Committee labor standards if members of the Committee perform their functions while on the clock.

Poker Dealer break schedules are normally a little different from Table Games targets, I have encountered many combinations or work-to-break ratios while working with different Properties. Determine the work-to-break ratio in use and calculate accordingly (some Card Room Dealers work a 120:30 break schedule, or, a 1.25 factor of required Dealer coverage per open Table Hour). Because in many cases Poker Dealer keep their own Tokes, break schedules can be even more aggressive than Table Games Dealers and at times I have observed the ratios going to 1.20 Dealer Hours per open Table Hour or more.

Multiplying open tables by game type using your break schedule calculations will yield the number of Dealer headcount required to cover. Check your results paying close attention to low-volume hours (particularly at closing), if you see the calculation returning a headcount target value slightly higher than your desired target (due to rounding), then adjust using a maximum Dealer headcount threshold.

Next time we will cover the second component of developing Table Games Labor Standards, that being the calculation of Supervisor Coverage requirements using Break Strings.

Wednesday, July 15, 2009

Labor Management System Philosophy

Here is a link to a short magazine interview I gave several years ago (called Improving Collaboration), my comments here will shed some light on my philosophies regarding the selection of a labor management / labor scheduling system.

From my comments you can take that I feel that there is a cultural "fit" that needs to be respected when selecting a labor management software package. I have in the past worked with Casino operations who quite clearly were attempting to institute software packages whose core design philosophy was at odds with the culture of their organization (with predictably unsuccessful results).

The core design of Labor Management / Labor Scheduling systems generally fall into one of three categories:

1. Rostering Systems. Generally lower in cost and in many cases not suited to entire Property or Enterprise installations, rostering systems can be very comprehensive in the production of daily and weekly employee schedules. In many cases rostering systems work off pre-planned templates which represent forecast demand (in Casinos these are called Spreads), so this type of program is generally less comprehensive in developing labor forecasts and complex labor standards. The specialized rostering system approach has been somewhat successful in the Table Games market.

2. Time and Attendance Systems. Usually developed in the school of "better labor management through clock management" thinking, these systems are notable for their interface capabilities to time clock systems. By the way, it is generally the sale of time clock systems that purveyors of these systems crave, for that reason there has been in the past less of a commitment to consistently developing and supporting the labor management aspects of these programs. One big advantage of these systems is the somewhat forced usage by operational departments, because one thing is for sure, Operations has to edit time clock records on an on-going basis. Look for a track record of installation success with these types of systems because all of the time clock companies seem to be jumping into the market now.

3. Resource Management Systems. Typically skewed to the fiscal aspects of labor management, resource management systems are typically the most comprehensive in allowing complex labor standards to be configured and reported, and generally have the most built-in volume forecasting tools. Scheduling tools run the gamut from rudimentary to very comprehensive. The best of this breed also has built in budgeting modules, although in most cases the Casino Industry has favored the Excel Add-In approach with budgeting software. Again, look for a good track record of installation success with these type of systems, in many cases, the companies designing / developing in this area are in the market for consulting fees (so initial costs may be higher than with a straight software purchase).

There are many competing labor management / labor scheduling products on the market, understanding the core design values of each will help when making the proper selection for your organization's needs.

Friday, July 10, 2009

Understanding FTEs

One of the first things I do when I work with someone new in a Casino or Hotel is to ask them what an FTE is, and - don't laugh - more often than not what I hear in response is "an FTE is a Full Time Employee."

Now in the labor management game we all know that the term FTE stands for Full Time Equivalent, but it never hurts to ask just to make sure everyone is on the same page. I recently worked with a hospitality group whose senior leadership had for years conducted detailed FTE reviews with their line operators; imagine their surprise when it was pointed out that many in their organization did not know what the term FTE actually meant!

For reference, the Government's definition of the term FTE is available at the National Parks Service Budget Glossary.

Even more interesting is when I hear or see the term Daily FTE. As an FTE exists only in a minimum of 40 worked hours (anything time period less would essentially represent either shifts or headcount), be especially careful when you encounter this concept, the user is probably using a daily Salary calculation to return the result.

I like to compose FTEs with Regular (worked), Hours plus Overtime Hours, in this way I can offset the Actual FTEs with Forecast, Scheduled, or Standard FTEs and have the labor effectiveness reporting become meaningful. I have, however, worked with Properties who include certain types of Training Hours in their FTE calculations, and, at times, I have seen Property Finance Departments include other benefit hours into the calculation (typically this happens on Daily Operating Reports).

Moral of the story - take the time to ask, do not always assume you are on the same page as your audience.

Labor Is Your Largest Controllable Expense...

So Take Control Of It!