Control labor costs by boosting productivity

Ralph Varble

Whether your revenues are up or down, controlling your labor costs is essential to maximizing your bottom line. Focusing on productivity as opposed to merely cutting hours or wages maintains the proper balance between labor and quality—it’s not efficiency, but effectiveness. If you cut labor and diminish quality, your revenues will go down. Labor costs can be controlled through careful planning, attentive scheduling and improving the productivity of your staff.  

Begin at the beginning

The first step in improving productivity is to have a plan in place that allocates labor hours based on actual needs and revenue drivers. Managers have a tendency to over-schedule “just in case,” but if the extra employees clock in, productivity automatically decreases. The time invested in a little extra planning will more than pay off on your bottom line.

A proactive approach to labor starts with examining the time it takes to perform tasks and how those tasks relate to service volumes. This approach enables an organization to build the labor forecast from the bottom up. What is the absolute minimum labor needed to function? And when and why are extra people needed?  

Figuring out what those triggers are, and building your schedule to them, will improve productivity. The peak time when a second person is needed may only be three or four hours, so a four-hour overlap shift is productive. An eight-hour shift gives more labor than is necessary, and is therefore less productive, unless you can find outside tasks for that person. Cross-training your staff to perform more than one function is one of the easiest ways to improve productivity.

Logistics, equipment and training

Many hotels and restaurants do things inefficiently because of a focus on the capital cost rather than the labor cost associated with the loss of efficiency without that item. One minute of extra vacuuming per room sold over a year would yield 167 hours of additional labor per 10,000 rooms sold. Multiply that by the hourly wage, and a newer, more effective vacuum might pay for itself in saved labor fairly quickly.

Logistics and layouts can be productivity killers. If a kitchen has an inefficient layout, it creates a need for more labor to work around the design flaw. Depending on the situation, correcting these design flaws may be cost-prohibitive; however, there are times it is simply a matter of improving organization of the work area that will immediately improve productivity.

Look at the layout and flow of your key work areas. Are labor dollars spent on team members moving items from a storeroom on the second floor to the kitchen on the first floor? Does it take longer to find things because storage rooms are disorganized? If so, productivity is lessened.  

Many businesses are strapped looking for “good help” and they can get desperate at times and make bad hiring decisions. Hiring the wrong person may feel like it is taking some of the load off of the existing team, but it often negatively impacts productivity even more. Training is essential. Hiring a new server and having them work with someone for a day, followed by putting them on a shift alone, guarantees a loss of productivity and can negatively impact guest satisfaction.  

Proper and thorough training of your team allows them to be far more productive and also ensures that quality and service standards are maintained. Think you can’t afford the time to train people? The reality is that you can’t afford not to—the loss in productivity, quality and service is far more than the cost of training.

Follow up and follow through

Once you have planned your labor, tailored your schedule to meet your actual work demands and improved the logistics and training for your team, you need to analyze your results. Follow up with your managers weekly to see if they are scheduling to the objectives you established. Walk the busy work areas and make sure the reorganization is improving the flow. Talk to your team and make sure they have picked up key practices and concepts in their training.

Following up helps cement the changes you are making, and can help the morale of your team as they become accustomed to higher productivity levels. Increased productivity requires an investment of time, and sometimes up front capital, but it will pay off on your bottom line for years to come.

Ralph Varble is director of operations for UniFocus, a leading hospitality provider of smart productivity tools for labor management, time and attendance, survey feedback solutions, performance productivity, consulting and training.