Hospitality Financial Leadership – Every Line Needs an Owner
January 29, 2018 12:19pm
By David Lund
My dear mother Donna often recited her favorite sayings, especially when she wanted to make a point. She had some really good sayings, and several have stuck with me. One of them I relate to hotel financial leadership. Her saying was “Many hands make light work.” How does that relate to creating an engaged leadership team at your hotel? Let me explain.
It is true in any aspect of our lives at home and work that teamwork makes things easier. The reason it makes them easier is that we have more effort directed toward the thing we are trying to do. The simplest example is trying to lift a heavy rock. If we work in a coordinated fashion and do it together, it is much easier.
In hotels, it is precisely the same with financial lifting. If the GM or director of finance tries to do it alone, it is hard. It is impossible to lift this thing alone. But how do they get the others to lend a helping hand?
In hotels, you have an amazing tool to help you distribute the lifting. It is called the financial statement or the P&L. What I want you to do with this tool is tear it apart and put it back together, giving every single line of revenue, cost of goods, payroll, expense, and statistics to the appropriate manager or leader on your team. That’s right, every single line. By using this strategy, you now have a blueprint of your business that shows whom you need to communicate with when a certain line of a financial statement is out of whack. Agreements need to be made with these individuals, so they clearly understand their role and responsibility regarding their lines of the statement. I ensure you they have what they need to get the job done.
Once you have an owner for every line, you then need to work with these individuals to help them learn how to forecast and budget their lines each month. Once the forecast is consolidated, you now have a team member to call on if you need to make changes. You no longer tweak the forecast in a few areas to get the bottom line you need. You go back to the line owners and negotiate the changes.
So, stop right here. I know what you are thinking: How is this possible or practical? STOP! This is the most important pivot in the creation of financial leadership. If you change the forecast for that line and give the consolidated forecast back to the team, and you have changed the line items without the agreement of the owner of that line, you have just fallen all the way back down the financial leadership ladder. You will have zero credibility with your leaders; they will quietly thumb their nose and middle finger at you.
You are thinking you do not have time for this
Make the time and it will reward you handsomely.
The very essence of your hotel and financial leadership is built on this discipline. It is not possible to throw blankets at this and say that rooms look after their accounts and I will just deal with the rooms division manager. Do not do this. It is not an effective strategy because too many P&L lines intersect in your hotel—especially in rooms. Just sit down with the rooms division manager and go through their statement with them and agree on who will be assigned each and every line. Every line needs an owner!
A good example of the intersecting is a line like “guest supplies.” Housekeeping, front desk, concierge, guest service and even sales spend money that ends up an expense in this account. So, who is the right individual to manage it? Do not be fooled into thinking the rooms division manager will handle it. It will not happen. Get a name that you believe is the right person and make an agreement with the rooms division manager on how this person is going to corral the others. This move is golden. The person you pick to quarterback this account must have great diplomacy and negotiation skills. You have just deputized a leader with a very important task; one that requires your commitment, patience, and resources.
Play this right and the leader will love you for this responsibility. Play it wrong and they will resist.
Make sure all other constituents who use mixed accounts know and agree that the owner of this account is the one who will prepare the zero-based budget and work equitably with all to make sure they know what they have to spend and when.
With most lines in the P&L, the owners are obvious. Take the time necessary to work with every single owner on their accounts. This is the foundation of your financial leadership in the hotel.
“Every line has an owner” will revolutionize your business and the engagement in your business.
This is your garden. Tend to it and watch it grow.
Tags: david lund,
hospitality financial leadership,
hotel financial coach
David Lund is The Hotel Financial Coach, an international hospitality financial leadership pioneer. He has held positions as a Regional Financial Controller, Corporate Director and Hotel Manager with Fairmont Hotels for over 30 years.
He authored an award-winning workshop on Hospitality Financial Leadership and has delivered it to hundreds of hotel managers and leaders. David coach’s hospitality executives and delivers his Financial Leadership Workshops throughout the world, helping hotels, owners and brands increase profits and build financially engaged leadership teams.
David speaks at hospitality company meetings, associations and he has had several financial leadership articles published in hotel trade magazines and he is the author of two books on Hospitality Financial Leadership. David is a Certified Hotel Accounting Executive through HFTP and a Certified Professional Coach with CTI.
Contact: David Lund
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