By David Lund
In the hotel business, there are three pillars: the guests, the colleagues and the money. They are not equal.
They are not equal because we ignore the third pillar and we do so at our own peril and out of a bad habit.
We are lazy about what we can do to manage this cagey and slippery bugger. There is a fundamental disconnect in our industry, and it is high time that changed. It is no longer acceptable to throw our hands up in the air and say the numbers are the accounting department’s responsibility as if the rest of us are 5-year-olds without a clue what to do. If you are one of those, it is time to move and get some financial leadership game on. This article will show you what is possible and points you to a fantastic model that has your owner happily paying for the whole deal.
Pillar 1 – Guest Service
We manage guest interaction with an understanding and belief that we are all invested in good guest service. Even the departments that do not have direct guest contact help support the colleagues and departments that do. We are all responsible. Good guest service is a no-brainer for anyone in the hotel business. It is the very moral foundation that our business is built upon.
Finding ways to increase guest service is just good business. We invest in guest service at all levels in our hotels and we take the function of providing great service very seriously. In branded managed hotels, the management company typically has guest service programs they have either created or they provide in alliance with a vendor.
In addition, we spend serious dollars asking our guests how we are doing. Guest service scores are critical to the operations of the hotel. In every instance the brand mandates the guest service programs inside their hotels and the owners pay 100 percent of the tab for everything related to creating and maintaining guest service. Many owners question the management company’s programs, which can be very expensive with results that are hard to nail down.
Annually, the brand will send their hotels the yearly programs via budget documents that outline all the programs the hotel needs to add to their upcoming year. Even if the hotel adds labor for training, the owner, in the end, pays 100 percent. When you think about a brand and its service reputation, it is interesting to see through this mirage—to look and see that ultimately the owners of the hotels are paying to create the brand's service promise.
This is largely a secret to most people. Understanding the relationship between the brand, the owner and what is created via this dance is an interesting segue. In most branded hotels, the annual guest service score forms part of the executive team’s bonus criteria and achieving the targeted number or better is a direct link to their pocketbooks.
The last thing I will say about guest service: Owners and managers should not tolerate leaders or staff members who do not provide excellent service.
Pillar 2 – Colleague Engagement
With colleague engagement, it is the same: We are all involved and implicated in managing departments and creating hotel teams that have high colleague engagement. No leader or department manager is excused from the mission of colleague engagement.
We have a myriad of tools to engage the staff, from employee newsletters, town halls, monthly colleague meetings, seasonal parties, special celebrations, sports teams, long service awards, employee of the year, employee opinion surveys, whistle-blower lines, employee assistance programs, employee benefits, employee meals, etc. I could go on and on—this list is very long. The irony in all of this is the owner pays 100 percent of the cost of any program or event. Once again, this dynamic between the brand and the owner is an interesting dance to watch. Owners question many expenses related to “creating” colleague engagement, but in the end, they pay.
So what is the benefit of good employee engagement? It is obvious: Good engagement coupled with great service equals a fantastic opportunity for our guests to have a wonderful experience.
It used to be the case that human resources were “responsible” for creating colleague engagement, but not any longer. Each department has its own employee opinion survey score and a bad apple in the bag will not last long. No leader is excused from the necessity of great colleague engagement.
Pillar 3 – The Money
The money, the P&L, the owner, it all boils down to the same thing, providing a superior return for the stakeholder. How is this pillar different? Well, really it is not different. We just treat it differently.
When we talk about the money and we ask ourselves what we do to create financial leadership inside of our hotels, the answer 19 times out of 20 is NOTHING. We do nothing to lead and educate our management teams on the matter of financial skills.
I am not talking about the accounting department and the financial function. I am talking about the education and the skills of the non-financial leaders in your hotels. What do we do inside our hotels to create management teams that have a solid financial foundation? The answer: NOTHING.
Why might you be asking is this the case? There are three reasons that I will point out:
- We still live in an owner/operator mindset that still echoes the idea, “look after the guests and the money will look after itself.” But the reality today is that we manage hotels and as a management company we sell expertise to owners. Brands need to slow down long enough to realize they need to evolve.
- The finances and talking about the money for many people is still “Taboo.” The idea that we share the P&L and the managers get to see the financial results is a sacred cow for many people. To this notion I can only say, “Get over it.” If we want to have mature responsible leaders, we need to trust them and share the financial information.
- We seemingly do not know how to lead and educate our managers financially. We hide behind the numbers and push it off as the responsibility of the finance department. This is really the opportunity in all of this. We have the ability to train and lead our managers financially and it is not difficult to accomplish. In fact, the owner will pay 100 percent of the cost to create the financial leadership in your hotel. Just as we discussed in the other two pillars the brand can mandate the training program and the owner will pay 100 percent of the cost.
Leaders want to be educated financially and they want to have financial responsibility. The idea that leaders do not want to do this work is nonsense. Today’s leaders literally are dying to get financial leadership skills. They know without these abilities their careers are limited.
There are some conditions to this
Leaders need to know you are there to support them, to provide the education and the training to facilitate the creation of financial leadership as part of your culture. Giving your leadership the responsibility for the numbers is not enough, you need to give them a system and be there when it counts. Be there when it is a mess and support their efforts. Be there when it is a win and celebrate their success. The brand and the general manager need to get behind this initiative. It is not a finance and accounting function, it is one of the three pillars and it is a front-line management function for every single leader. It is not someone else’s responsibility.
Hiding out behind the numbers is not a viable strategy. Leaders need to know you have a system for them to follow, a predictable process with defined timelines and accountability for all. Leaders want to produce their own budgets and forecasts, not be given numbers that someone else has cooked up and then they are told, “Good luck—here are your numbers.”
Leaders need to see that you are investing in them, in their career and in their success. Once they see you are committed to their success, it is a game changer. If they sense in any way that it is anything less you are offering, you will not succeed.
The benefits of financial leadership are everywhere
Leaders who know what is happening financially in their departments can plan and execute better.
Imagine a leader who knows their expenses and payroll and he or she tracks the sales and volumes in the month and adjusts spending and schedules accordingly. The flip side is flying by the seat of your pants. We have all been there. What will happen the next time you have financial headwinds in your hotel? If you have created a financially engaged team, you will have choices and buy-in when it comes to cost reduction.
The brand also benefits from financial leadership training, building bench strength as leaders move throughout the organization. A brand with this kind of talent will quickly make a name for itself. The owner benefits big time. Having a financially engaged leadership team means the team is all in when it comes to maximizing resource and profits. We all know that in our industry we have a million ways to waste money— it is literally everywhere.
On the flip side, with a financially engaged team, we have a million ways to save money. It is all about the culture you create, and it is fun!
Like building a great service culture or a colleague engagement machine, financial leadership teams are every bit as possible.
How do you grow a garden? You plant seeds and you nurture and care for them.