Adopting a Risk Mindset in Hotel Management

By Christopher Bolger Senior Risk Manager, Venture Insurance Programs | June 26, 2016

A good corporate culture of safety and risk management starts at the top and spreads to all staff until it is woven into the fabric of the hotel’s daily activities. An effective safety program holds everyone from executives to housekeeping staff accountable for implementation and execution of clearly defined safety procedures. Hotel staff need to be proactively thinking and talking about safety – immediately wiping up spills, reporting pot holes in the parking lot and cutting off bar guests who’ve had one too many, among other things. By creating and implementing a top-notch safety program and holding employees accountable to it, hotels can significantly reduce their risk exposure and save millions of dollars in avoidable claims or potential reputational damage.

A Good Safety Culture Requires a Top-Down Approach

Overloaded housekeeping carts, heavy canned foods stored out of reach high atop kitchen shelves and extension cords snaking across ballroom floors all pose serious risks to hotels. Multi-million dollar claims may be easy to come by, but they can also be easily avoidable when hotel staff has a proper risk mindset.

For hotels, much like any business, a safety culture focused on risk mitigation starts with executive management. Not only must hotel executives understand safety initiatives and procedures, they must embrace and support these endeavors in their daily routines. It’s essential that hotel employees see that owners and management are supportive of safety initiatives. Though it will take time, employees will then incorporate these measures into their daily activities as well.

Proper risk management is not just important from a safety perspective, but also from a cost perspective. While many executives and employees may see insurance claims as a sunk cost, this is not necessarily the case. Hotel management and employees should understand that these claims do indeed cost the business because a hotel’s past claims history is reflected in its premium. In turn, these claims can have a bearing on the overall success of the hotel – which can directly impact staff via performance evaluations, be it the employee or the company.

One way executives might explain to employees the true cost of filing an insurance claim is to relate it to an employee’s personal auto insurance policy. Most individuals understand that if they file a claim on their auto insurance policy, it will most likely be reflected in the form of a higher premium in the coming months. The same for workers’ compensation claims, the experience of the hotel is compared against an industry standard and if the hotel’s claims’ rate is higher than the industry standard’s, that hotel’s future workers’ compensation premiums will likely reflect that difference.

Coming up in March 2018...

Human Resources: Value Creation

Businesses must evolve to stay competitive and this is also true of employment positions within those organizations. In the hotel industry, for example, the role that HR professionals perform continues to broaden and expand. Today, they are generally responsible for five key areas - government compliance; payroll and benefits; employee acquisition and retention; training and development; and organizational structure and culture. In this enlarged capacity, HR professionals are no longer seen as part of an administrative cost center, but rather as a member of the leadership team that creates strategic value within their organization. HR professionals help to define company policies and plans; enact and enforce systems of accountability; and utilize definable metrics to measure and justify outcomes. Of course, there are always new issues for HR professionals to address. Though seemingly safe for the moment, will the Affordable Care Act ultimately be repealed and replaced and, if so, what will the ramifications be? There are issues pertaining to Millennials in the workforce and women in leadership roles, as well as determining the appropriate use of social media within the organization. There are new onboarding processes and e-learning training platforms to evaluate, in addition to keeping abreast of political issues like the minimum wage hike movement, or the re-evaluation of overtime rules. Finally, there are genuine immigration and deportation issues that affect HR professionals, especially if they are located in Dreamer Cities, or employ a workforce that could be adversely impacted by federal government policies. The March Hotel Business Review will take a look at some of the issues, strategies and techniques that HR professionals are employing to create and sustain value in their organization.