Optimizing teams and controlling labor costs through fluctuating demand

By Chad Halvorson 

In March 2020, in the midst of the spring break travel season, the hospitality industry went from bustling to grinding to a virtual halt as cities, states and countries imposed COVID-19 shutdowns. A year later, industry organizations, like the American Hotel & Lodging Association, predict a recovery, but a slow one, with hotel occupancy and room revenues growing in 2021 but still hitting below pre-pandemic levels.

Labor costs can be one of hotels’ highest expenses, and it can be hard to figure out how to manage your staff as customer demand remains uncertain and continues to fluctuate. Schedule too many workers, and it’ll eat into your tight margins. Schedule too few, and customers might feel like they aren’t getting the quality of customer service they’ve paid for.

Here are some tips to set your staff up for success in an uncertain market while controlling labor costs.

Try flexible scheduling
In this method, managers create a schedule based on the minimal essential employee coverage the hotel needs in the upcoming week or two—looking at customer demand, room occupancy and other factors. Then instead of assigning shifts, employees can look at available hours and choose which ones they’d like. If demand increases, supervisors can quickly make extra shifts available, and employees can also swap shifts with each other.

This technique is also known as self-scheduling, and it not only saves managers time and unnecessary labor costs from overscheduling workers, it also provides maximum flexibility to accommodate a sudden change in demand or hotel needs.

Employees also enjoy flexible scheduling because it gives them more control over their own lives and allows them to better manage work against their other commitments. This method has been shown to decrease no-shows and increase productivity because employees are able to choose the shifts that fit well with their lifestyle.

Managing a flexible schedule can be very tedious to do manually, so we recommend investing in a technology platform that allows managers to easily build schedules and then send available shifts to employees’ personal devices. Employees can then choose their own shifts, and managers can assign any remaining ones or quickly add more hours if demand changes.

In 2020, we saw the adoption of flexible scheduling increase 10-fold among our customers. We anticipate that this model will only continue to grow as employers realize how useful it is a time and cost saver, as well as a recruitment and retention tool for employees.

Manage overtime
Overtime can be a hidden source of significant labor costs for a hospitality business. Pay attention to data; if overtime is high, it’s a likely indicator that work schedules are off and not planned efficiently.

To begin to remedy this, establish that working overtime is the exception rather than the rule for your team. Flexible scheduling can help managers make sure they are actually planning enough shifts to cover customer demand the first time around. We also recommend managers set an overtime cap and make sure workers are aware of how much overtime they can work per pay period.

Consider doing an audit of the tools and resources that employees use during regular working hours. Are they getting bogged down by inefficiencies like clunky software or old equipment? New technology can do wonders to save employees time on day-to-day tasks and allow them to maximize their regular shift rather than dipping into overtime hours.

Finally, make it a habit to monitor your team’s overtime on an ongoing basis and be ready to fine-tune the schedule as needed. Scheduling software can be a great tool to help managers monitor overtime. Technology can track employees’ hours and send alerts if someone is working over their usual average, giving managers an early head’s up to adjust schedules.

Try to control employee turnover
Hiring and training new employees not only takes time, it also costs money every time a business hires a replacement. In recent years, the turnover rate in the hospitality industry has topped 70% annually, and Cornell’s Center for Hospitality Research has found that replacing a typical front-line employee costs employers an estimated $5,864 per person.

Retaining employees can actually be one of the most effective cost-saving tools. For hotels that have highly seasonal business, like summer vacation destinations, we recommend starting to recruit seasonal employees early and commit time to training them well, just like a year-round employee.

People are the most important part of any hotel team. If managers view employees as temporary or replaceable, this mindset doesn’t do much to foster a workplace where workers feel valued and want to stick around.

Good team communication is also key. Keep communication open with employees rather than punitive. Celebrate team wins and offer rewards when employees meet key milestones. Offer a listening ear when employees are dealing with work or life stress and talk about the value of mental health and work-life balance.

While businesses can’t plan for every reason an employee might leave their job, workers who enjoy what they’re doing and feel listened to by management are more likely to remain year after year.

As we head into summer 2021, the hospitality industry still faces many unpredictable factors after the pandemic disrupted the market. However, by heading into the season with a solid management plan and helpful tools for your staffing needs, businesses will be better equipped to navigate and adapt to unknown obstacles on the road ahead.

Chad Halvorson is founder and chief experience officer at When I Work, a market leader in hourly workforce management that provides a fully integrated scheduling, time tracking and team messaging solution to nearly 200,000 workplaces.

This is a contributed piece to Hotel Business, authored by an industry professional. The thoughts expressed are the perspective of the bylined individual.

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