Labour Management Challenges
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1 Labour Management Challenges In the Hospitality Industry Mark Patte, Account Executive - Canada Synerion Workforce Management Solutions
2 Agenda Hospitality Industry Defined Current State of the Hospitality Industry Rising Challenge/ Issues The Role of WFM for Hospitality The Benefits and Features of WFM for Hospitality Areas of Opportunity Areas of Risk The Future of Hospitality and WFM 2
3 Hospitality Industry - Defined The Hospitality industry The scope of the hospitality industry comprises of a range of businesses that provide services and facilities such as accommodation, food and beverage, entertainment, gaming and related products. The term Hospitality has become accepted over the years a generic word, which describes the well being of services and facilities related to tourists and travellers Source: OTAGO Polytechnic University 3
4 Current State of the Hospitality Industry Market Trends Highly diverse sector with many segments presenting a huge contrast and variety of businesses and establishments Success often depends on differentiation and appeal to the target market The Hospitality industry is one of the most dynamic and competitive sectors of the national economy 4
5 Current State of the Hospitality Industry Market Trends 2011 Facts (Source, Hotel Association of Canada and PFK Consulting) Generated revenues of $16.4 billion Generated value-added of $15.2 billion Generated Government Revenues of $7.2 billion Employed 283,000 people Total wages estimated at $8 billion 5
6 Current State of the Hospitality Industry Market Trends These industry identified issues have proven to be too complex for one organization to solve alone, and require the aid of workforce management solutions. The set of workforce solutions is based on the hospitality industry's priorities that address issues such as: Image Recruitment Retention Language Skills Employability/Soft Skills Consistent Training Models and Skills Certifications 6
7 Current State of the Hospitality Industry Composition of the Workforce Additional Statistics Huge growth in revenues over the last decade As much as 50% growth in Revenues in some sectors since 1999 Hospitality industries provide many young people with their first jobs In 2004 more than 21 percent of workers in these establishments (specifically food services) were aged 16 to 19, about 5 times the proportion for all industries 7
8 Current State of the Hospitality Industry Composition of the Workforce Workforce Representation With a young workforce comes increasingly high turnover and skill problems, resulting in high levels of: Vacant posts Hard to fill vacancies Skill Shortage Vacancies Internal Skills Gaps (where current employees lack necessary skills for the job) affecting a large proportion of the current workforce (Source, Managing an Aging Workforce in Hospitality The Centre of Research into the Older Workforce ) 8
9 Current State of the Hospitality Industry Composition of the Workforce Labor Demands of the Hospitality Industry Hospitality operations operate on slim margins The control of labor costs is critical to being competitive and to the survival of an operation As they commonly represent at least 30 percent of gross income Hospitality careers are often stereotyped as low-wage and entry-level with little opportunity for advancement As a result, high turnover is a key challenge due to poor image, low wages and relying heavily on the youth labor pool 9
10 Rising Challenges/ Issues The Hospitality Industry is facing pressure to generate revenue in order to be in a position to contribute back to to the overall growth of the economy Domestic and global uncertainties, such as 9/11, overseas issues, health epidemics, and the fluctuating value of the American dollar has put pressure and strains on the industries ability to flourish 10 With the right WFM strategies in place, the industry has the potential to expand to open more businesses, create more jobs and in turn contribute to the vitality of every local economy
11 Rising Challenges/ Issues Hospitality is a Labor-Intensive Sector Need to: Exceed Customer Expectations Control Labor Costs Retain Skilled Workforce Profitability and success is rightly dependent on these factors Gaining efficiency in workforce productivity is about simply planning: making sure the right numbers of people are in the right place at the right time, doing the right job to be most effective while preserving the desired service level 11
12 The Role of WFM in Hospitality To maximize yield and operate at full efficiency, hospitality organizations must: 12 Manage Excessive Labor costs Hospitality s largest operating expense Balance Payroll Costs without compromising Guest Services and Satisfaction Equip management with real time information to: Monitor staffing Analyze budget performance Control labor costs Focus on outstanding guest service
13 The Role of WFM in Hospitality Top WFM Labour Challenges in Hospitality 1. Coping with the dynamics of workforce planning Understanding if there is a variance between the forecast and the actual planning is crucial for budget control Balancing between the different budget perspectives by the divisional manager versus the department managers The divisional manager should be obligated to achieve the planned budget goals whereas the department heads priority is to be prepared to uphold a high level of service at all times by effectively allocating and supporting resources 3. Lacking visibility into the exact labor costs Differences between costs of employees can vary from 5-25% (dependent on skills and experience) There is a need to schedule employees while being aware of the costs according to budget
14 The Role of WFM in Hospitality Top WFM Labour Challenges in Hospitality 4. Facing the risk of non-compliance with work regulations/ agreements Negligence to this can cost operations penalties at the end of the year and additional labor expenses 5. Making inaccurate and unnecessary payments of attended hours Unauthorized early entries and late exists, outside of the schedule result in an undesired increase of the budget Manual processing managed on spreadsheets and papers and manually typed into the payroll system is time consuming and prone to error 6. Controlling outsource expenses Overpayments can results from direct, automatic payments to outsource providers as there is limited control over the actual work that was provided 14
15 The Benefits of WFM for Hospitality Key Benefits Adopting WFM Solutions for Hospitality simplifies management of the workforce, resulting in: Cut Costs, Increased Yield Management and Improved Guest Services Automate complex time and attendance calculations Provide integrated scheduling tools which match employees with the demands specific to the operation Example: Revenue peaks and valleys, seasonal occupancy trends, special event fluctuations Reduction in the time required to manage the workforce Reduced time it takes to schedule labor resources in adherence with staffing guidelines Increasing manager and employee productivity spend on guest related function (increasing yield and guest satisfaction). Efficiency - Controlled and reduced labour costs Quickly identify gaps between the budget forecast and planned schedules Alerts to warn of deviation to work hours, exceeding overtime thresholds, number of shifts, rest time between shifts, number of consecutive days worked, etc 15
16 The Benefits of WFM for Hospitality Key Benefits Mitigate Risk and Ensure Compliance Administration Ensure compliance with complex federal, provincial and union requirements Reduced risk of statutory and/or union non-compliance and prevention of grievances and penalties Automate Multiple and Unique Scheduling Challenges WFM provides robust scheduling features focusing on areas such as: 16 Occupancy/ Volume Forecasts, Arrivals, Departures F&B Outlet and Banquet Forecasts/ Covers Historical Analysis, Special Events, Weather Conditions Employee Availability (School schedules, minor rules, etc.) Employee Skill Ratings or Certifications Company and Unions Rules Best Practices
17 Features of WFM for Hospitality Time and Attendance Flexible work rules Fair, consistent and real time calculation of pay polices, payroll hours and gross pay for hourly and salaried staff Complex wage calculations, premiums, overtime, OT distribution, holiday pay, and more are automated 17
18 Features of WFM for Hospitality Workforce Scheduling Automate labor scheduling process Help ensure adequate coverage for all departments and positions Accommodates forecasted demand, employee preferences, labor standards and special conditions, etc. 18
19 Features of WFM for Hospitality Accrual and Leave Management Automatically accrues and tracks employee benefits Example: Vacation and Sick Automates complex eligibility requirements and scheduling Supports unlimited vacation, sick, or lieu time plans, bank carryovers and forfeitures Provides scheduling features to fill vacancies with optimal staff 19
20 Features of WFM for Hospitality Activity Tracking and Costing Employees may hold multiple job positions With each position having different rules, rates and manager approval. Tracks labor costs to departments, projects, cost centers, work orders, etc. Supports multiple job positions at the time clock device. 20
21 Features of WFM for Hospitality Point Tracking and Alert Manager Policy Compliance Automatically alerts managers when labor thresholds or events occur so disciplinary action can be taken immediately. Helps ensure compliance by applying Government regulations Including multiple pay rates, proper overtime accounting, minor laws, meal penalties, tips distribution, Union policies, etc. 21
22 Features of WFM for Hospitality Flexible Data Collection Options Seamless Payroll Integration Accommodates hourly, salaried, and remote employees by providing a wide array of time collection methods; Including badge terminal, biometric terminal, telephone, web timesheet, smart phones/pdas, POS, etc. Interfaces with POS systems used to capture employee punches and number of covers. Automatic transfer of pay data to your payroll system. Speeds payroll preparation, increases accuracy, and eliminates data duplication. 22
23 Areas of Opportunity The key areas of opportunity of using automated workforce management solutions within the hospitality industry are as follows: Reduced labour costs by improving workforce productivity Visibility into labour costs, specifically planned costs vs. actual costs Comply with regulation and working agreements Pay based on more efficient schedules and compared to actual hours worked Control Outsource expenses Reduce administrative work 23
24 Areas of Risk Significant consequences can result from failing to address the hospitality workforce management challenges and issues, such as: Higher Operating Costs Fines Lack of visibility into exact labour costs Exceeding budgets due to mismanaged planned vs. actual schedules Inaccurate and unnecessary payments to employees Uncontrolled outsourcing expenses Regulatory non-compliance or union grievances Poor Image Reduction in customer service and satisfaction Creates a bad reputation within the industry no repeat business 24
25 The Future of Hospitality and WFM Hospitality operations are starting to see an upward trend. Dire need to implement WFM solutions to: Direct Improvement of Bottom Line Cut Largest Operating Expense: Labor Leverage Areas of Opportunity WFM solutions can be utilized to: Achieve optimum service levels and reduce staff costs. A WFM system can ensure the right levels of staff are scheduled against the right tasks at the right time to ensure optimum service levels This prevents wasteful overstaffing and reduced customer service and satisfaction and sales through understaffing 25
26 Mark Patte
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