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!
Thursday, October 22, 2009
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.
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?
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?
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