Useful Equivalents

1/2................................................2/4
2/4................................................4/8
4/8................................................Hours per day GM is on MBUSA.com

F...................................................Full
T...................................................Time
E...................................................Equivalent
FTE...............................................I don’t get it

First 3 Weeks of Month..................Budget
Last Week of Month.......................Budget + Wild Guess
Last Day of Month..........................Vacation Day

More than 5%................................Understaffed
3% - 5%........................................Bad Overtime
1% -3%.........................................Good Overtime
0%................................................Overstaffed

First 9 Months................................Current Year
Last 3 Months................................Prior Year Budget
Current Year + Prior Year Budget.....Huge Presumption
Huge Presumption..........................Wild Guess
Wild Guess....................................Next Year’s Budget

4 Suggestions................................1 Comment
4 Comments..................................1 Rant
4 Rants.........................................1 Blog Post
4 Blog Posts..................................1 Blog
1 Blog............................................Too much time on hands

Creating Actionable Labor Standards – Step by Step

Okay, so you’ve had enough of wasting everyone’s time with building up labor targets that your Operators don’t agree with, that your Finance Director doesn’t budget to, and that your GM won’t even bother to look at. Time to take a hard look at whether or not you have enough reality built in so that that your results are actually usable. Or, put another way, are your results actionable in terms of “can we actually scheduled like this?” Or, "could we have actually operated like that?” If the answer is no, it could be time to go back to the drawing board.

So, how do you do it? Like any other analytical problem, I believe the right approach is to take it step by step and to not cut corners. At the risk of losing all of the Strategic Analysts who read this (and most of the Financial Analysts as well, these folks usually like their labor served up a little more abstractly, like, say, in terms of FTEs or productivity calculations), the first step is to actually understand the work being performed by employees working in the Job Class you are modeling. And this means you need to get a task list.

No, not a job description, I said a task list. Job descriptions are often too sanitized and too vague for analytical purposes and they do not have a listing of all the tasks associated with the performance of the work. Besides, in some cases if they actually put in a job description what the employee was expected to do while working then who would apply for the job in the first place? Seriously, take a look at what your Hotel Housekeeping staff has to deal with on a daily basis and then ask yourself if this is a gig you would be interested in. Here is the first thing Labor Analysts need to understand: there are people at your property who actually work for a living. You’re not one of them.

Building up labor standards without first understanding the actual work being performed is like dreaming of building up labor standards only to wake up finding yourself chewing on the corner of your pillow. So, while you are taking in knowledge of the actual work being performed you might as well understand what physical boundaries and timescales are in place which control (and sometimes limit), employees in their performance and delivery of the work. Put simply, here is the first step toward building actionable labor standards:

Identify all tasks associated with the Job Class and understand the physical plant that governs guest and employee interactions, including hours of operation.

A little reality never hurt anyone in analysis so step one should sound easy enough. Stay tuned for step two.

Labor Standard Benchmarking - A Part of the Process

Although your property’s actual labor performance should be evaluated using labor standards driven by actual volumes, as a part of the development process your models should be benchmarked against your competitive set and applicable industry norms. The trick is to understand the true value of the exercise.

Each job class should be carefully defined in order to fully understand its current labor structure in terms of paid productivity (satisfying volume demand), paid non-productivity (breaks, lunches, pre-shift meetings), and OCS Work (Opening, Closing, and Side Work). Each aspect of the job class labor structure can then be benchmarked against both your competitive set and industry norms, but (and this is a big but), this exercise will only get you so far with overall labor optimization.

Too often I see organizations search for a “quick fix” through benchmarking - without taking the time to ensure that all aspects of labor management are in place. Volume forecasting, employee scheduling, and headcount staffing all have to be correct before labor efficiencies can be realized. Individual components of the job class structure may pass a benchmarking test but this in itself does not ensure that optimum labor efficiencies will be realized.

I am, however, a big believer in benchmarking as the part of the labor standard development exercise because it applies more reality to each aspect of the labor structure I am modeling. Benchmarking can often point me toward efficiency opportunities when I am required to model results that fall outside of my experience with norms (but I also have to be prepared to learn something new when this occurs). I do not, however, view benchmarking as a quick fix or as an easy way to optimization. Benchmarking as a tool can help others to better understand how the current operations "fits" into the its competitive set or within the industry at large but in of itself will not bring about what you are truly looking for - optimized labor effectiveness. It is just a part of the process.

Table Games Scheduling Biases

Many of you seem to be interested in the efficient staffing and scheduling of Table Games. For sake of the discussion, here are my Table Games Dealer and Supervisor schedule development biases:

1. Do not start variable labor when hourly forecasted table demand is declining. Solid advice for all scheduling strategies, not just Table Games.

2. Do not start variable labor more than two hours in advance of hourly forecasted table demand increasing (one hour in advance would be even better if your forecast is great). This strategy gives Shift Management more time to get games open and provides the potential to "spread" play more smoothly as the day opens.

3. Schedule staffing to allow all required tables to stay open two hours after hourly forecasted demand peaks. Shift Management can reduce staffing as necessary as the play dies off late.

4. Develop the entire schedule working from the top (peak hourly table requirements), down to the base (minimum hourly table requirements), not the other way around. Just watch how much inefficiency is created early in the day.

5. Scrutinize the minimum staffing scheduled for all game types, but especially watch minimum Craps staffing. Most Table Games Departments create a separate schedule for Craps Crews, keep in mind that these Dealers can (and will), often deal other game types during their scheduled shifts.

Put another way, here are the practical results of my biases:

1. Early Out potential should be planned for on midweek Mid Shifts.

2. Early Out potential should be planned for on weekend Grave Shifts.

3. Early Out potential should not be planned for on any Day Shift.

For example, if hourly demand appears to decrease at 2:00 AM Monday - Friday, and holds until 4:00 AM on Saturday and Sunday, for efficiency I would recommend that the overall pattern of primary start times be 6:00 AM, 2:00 PM, 8:00 PM, and 10:00 PM (with additional shifts layered in to "fit" demand, probably at 10:00 AM and, say either 4:00 PM or 6:00 PM). The Midweek "Early Out" shift would be the 8:00 PM start time; this is where I would concentrate Part-Time Dealers on the schedule. On weekends a part of the 10:00 PM start time would represent Early Out "opportunity" so I would again populate this start time with a number of Part-Time Dealers but would plan my 10:00 PM closers (the number required from 4:00 AM to 6:00 AM), as being Full-Time.

Now you may suggest that developing a Dealer and Supervisor schedule based on a peak staffing plan can in some cases violate my bias of not bringing in labor more than 2 hours in advance of Day Shift demand rising (based on early guest demand not typically rising until 10:00 AM or later), this is because I place an even greater emphasis on staffing to maximum guest demand periods. The number of daily 6:00 AM starts would therefore need to be scheduled carefully so as to only extend the 2:00 AM to 6:00 AM midweek minimums (or the 4:00 AM to 6:00 AM weekend minimums), until two hours prior to the forecasted Day Shift hourly table demand beginning to increase.

A Dose of Reality

Want your labor standards to be accepted and used by an operational department? Consider adding a dose of reality.

The most common mistake I see made by Casino Labor Analysts is that they attempt to model labor standards in a manner completely foreign to the target department’s operational strategy for deploying labor. Often the mistake is manifested by the analyst modeling a productivity standard instead of a true labor standard; the two standards are, more often than not, quite different in design and in how each type is used.

Here is a quick test you can apply to your newly-created labor standard – can it be supported (worked), by the department at all hours of the day and on every day of the week under all operational conditions? If so, you have probably got your methodology correct. If not, go back to the drawing board.

Another reality mistake common with Casino Labor Analysts is with their use of the wrong volume indicator to replicate demand for employee services. A quick tip – revenue indicators should rarely used to replicate demand for service. In most cases you should stick with volume indicators representing guests, such as food covers, floor occupancy, hotel arrivals, planes, trains, and automobiles. Ok, maybe not trains or planes, but you get the idea. Casino employees for the most part service internal and external guests, so stay with a guest-driven demand reality as you develop job class labor standards.

Speaking of volume indicators, you should be careful summing a really big one with a really small one in order to create a single demand driver. An example of this would be the summing of Slot Occupancy (big number), and Table Game Occupancy (smaller number), for a given time period into a single indicator called Casino Guests. While potentially appropriate when used to drive Security post assignments, this overall indicator will not work so well for other job classes such as Casino Beverage Servers (where you will need to model individual labor standards based on discrete guest types in order to gain acceptance).

You should also reality check to see if the labor standard can actually be scheduled by the department. To do this you first need to calculate the number of full-time and part-time employees your standard calls for on a weekly basis, then, model daily schedules using these headcounts. After you make it all fit compare your results to the department’s existing schedule to understand just how much change (and potential pain), will be associated with them converting to your standard. Remember, too much pain = not much gain.

Finally, for financial reality your labor standards will need to be converted into the language of the Property budget. Here is when productivity modeling usually comes into play as the department will require financial approval for the labor to be used and for the associated employee benefit costs.

Some Days I Just Want to Shoot Myself

But I’m not depressed, dammit!

I have been told there is a thin line between sadness and depression. And what makes me sad in the business of managing labor expense is the needless waste of time and talent required to constantly “fix” the labor expenses and the staff allocations in the same department over and over again.

Here is one way to avoid labor management sadness – check to see if there are problems with how a department is scheduling their leadership staff. Start with the Department Manager’s schedule, are his or her scheduled days off the same as the Department Director’s? If so, an Assistant Manager or a Supervisor is probably in charge on those days. If there are Assistant Managers or Supervisors, check their schedules to see if the days off and start times correspond to times when demand for department services is at its highest levels. If so, this is a pretty good indicator of other issues exist with line staff deployment, guest service delivery, and labor expense.

I once was asked to review the labor effectiveness of a busy Players Club at a large local’s casino in the South and guess what - not one of the schedules for department leadership corresponded to the peak demand patterns of guests visiting the Club for services! Players Club Manager, scheduled off on Saturday and Sunday day shifts. Day Shift Supervisor, scheduled to be off Fridays and Saturdays. Swing Shift Supervisor, scheduled to be off on Fridays and Saturdays. Late Shift Supervisor, scheduled to be off Saturdays and Sundays. On every shift when guest demand for services was high the line staff was being managed by an Assistant Shift Supervisor. Top Department Management was nowhere in sight when business levels peaked!

As I said, schedules like this one can make you sad but should not make you depressed. In this case, all was fixed after a short visit with a General Manager (who probably wanted to shoot himself after our review)!

Employee Schedule Change Management

Few things are as important to both casino employees and casino employers as the work schedules in place; therefore, making changes to employee schedules should reflect the interests of the entire organization and should be supported by all levels of leadership. Determining what factors identify the need to change an existing employee work schedule should be carefully considered with the interests of both operations (the work), and employees (the workers), then balanced to be realistic for both. Many Casinos have attempted to adopt a “just in time” strategy for developing employee schedules, creating multiple start times and shifts lengths in an effort to closely match changes in hourly demand, only to discover later that the resulting schedule is difficult to manage operationally and drives dissatisfaction and turnover with their employees. Again, realism is the key and the final test which should be applied before change is implemented.

Strategic operational changes, such as adjustments to hours of operations, the opening of new venues, or the creation of new work assignments will often establish the driver for employee scheduling change. The need for change can also be driven by seasonal demand patterns, the creation or movement of casino marketing or promotions, significant employee turnover, or by a change to the Department or Property organizational structure. For whatever the reason, the need for change should be identified through careful analysis by Operations, Finance, and Human Resources in order to fully understand the risks and rewards associated with changing employee schedules.

Key to the identification of need for change is an understanding of the volume indicators that represent demand for employee services with the use of indicators, both forecasted and actual, and to test the current employee work schedule for validity. Several aspects regarding volume indicators should be kept in mind. First, the indicator must be relevant to the work being performed by the Job Class. Second, the indicator should available from a reliable source, preferably from a system source instead of being manually created. Finally, the indicator should be readily available for all required time periods being forecasted.

One of the common mistakes made by casinos 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 forecasts, 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. Casino Analysts should not indiscriminately feed actual data to their models from time periods representing good business performance as well as bad, instead, a careful review of business performance should be undertaken to insure that volume data used to produce forecasts is an accurate representation of the desired business performance.

Finally, the volume forecast must be translated into the number of employees required with the results being applied to the current employee schedule to see if a change is actually needed. Adjustments to current employee schedules should be resisted unless significant operational and financial outcomes are to be realized as a result of making the change.

Besides, in the Casino and Hospitality business an even bigger need for change may be just around the corner. Don't wear out your employees unnecessarily.