Measuring and Managing Labor Productivity

By David Lund Hospitality & Leadership Expert, The Hotel Financial Coach | August 27, 2017

In hospitality, the measurement and management of productivity is hit and miss and miss again. Time and time again hotels are using ineffective measures to try and capture labor productivity measurements.

“It’s not always that we need to do more but rather that we need to focus on less.” — Nathan W. Morris

Rooms Productivity

The goal in measuring productivity in the rooms division is to see, monitor and ultimately improve on the number of hours of work it takes to service a room. The expression to use is “hours per room occupied.” Hours worked divided by the number of rooms sold. This labor productivity statistic is the most important tool available to manage your biggest expense in the rooms division.

If you were making cars, you would want to know and continually improve on how many hours and minutes of labor it takes to make a car. Regarding rooms, labor comes down to how many hours it takes to service one room. You will want to see this at the total rooms level as well as how it stacks up.

The “rooms stack” is best laid out with the following sub totals: front office, housekeeping, room attendants, reservations and bell/door. These categories must be separate to see where there are productivity wins and challenges. To be able to see labor categories separately, use proper departments and job codes to fall into the different stacks. In addition to the separation of the stacks, you need to know the difference between hourly and management positions in each stack.

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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.