Friday, July 1, 2011

Quality versus Costs

It should come at no surprise that a property which has really good labor margins also usually has really good guest feedback scores. Why? Because more often than not that property’s leadership is focused on using labor resources to provide a quality guest experience instead of simply being focused on reducing labor expenses.

At first this may sound like a paradox, how can a quality focus actually improve labor margins and reduce labor costs? Two ways: first, because if guests appreciate and recognize the quality experience they receive they will return more often and spend more money (higher volumes typically result in better margins), and second (listen closely now, labor managers and labor analysts), the delivery of a quality experience requires a lot more planning and analysis effort than if you simply wanted to cut expenses. To deliver quality you will be forced to adopt a more detailed and disciplined approach to labor management and because of this you will find more opportunities to reduce unnecessary expenses along the way.

Simply put, quality requires discipline and focus, cost cutting, well, that just takes cutting.

Delivering quality takes flawless execution from everyone in the organization and most especially from the labor planning and the labor scheduling aspects – get these parts wrong and no matter how comprehensive and detailed the hiring, training, management, or service initiative are the whole thing will fall flat. Organizations that are relentlessly focused on providing quality do not miss with their allocation of labor resources; they find their costs savings along the way as they eliminate waste and re-focus their staffing to provide the type of experience that brings their guests back.

A wise person once said that if you focus on quality then quality will improve and costs will go down. If you focus on costs then costs will increase and quality will go down. Hands down the best advice I ever got in this industry. As you analyze and plan for labor requirements and how they are to be allocated look first from a quality perspective, if you are successful then very often the costs will take care of themselves.

Labor Is Your Largest Controllable Expense...

So Take Control Of It!