How Do You Control Payroll Costs?

by Ken Vincent, Featured Contributor

IN MOST of the hospitality and service sector payroll is the number one controllable expense.  That is certainly true in hotels as well as in most restaurants.

You have limited control over pay rates of course.  Union contracts, minimum wage laws, and even the competitive market will place certain limits on your flexibility.

CashWhat you can and must do to be profitable is to control hours.  A manager is constantly in a juggling process of having enough manpower to provide the services expected and promised vs. having too much which quickly brings the GOP to a train wreck level.

Yes, there are a lot of software programs available to help.  But those are tools, they are only as good as what is put into them and even that does little or nothing to solve the scheduling problems.

To compound the issue is the hard cold fact that business volume is not a straight line.  Every day, and even every part of a day, has wild fluctuations in the business levels and therefore the demands for payroll.  It isn’t unusual for a hotel to flex from a 30% occupancy to 100% within a given week. Sometimes hitting extremes more than once.  With that goes various volume flexes in restaurants, and banquets all of which is spread over a 24 hour period.

There are many ways to control payroll however without wrecking service standards, and thus the business’s reputation, or bringing the GOP to a red ink level.

How do you do it?  What techniques do you find most useful that others can benefit from knowing?  What roll does forecasting play in your scheduling and how do you do that?


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Ken Vincenthttp://sbpra.com/KennethVincent/
KEN is a 46 year veteran hotelier and entrepreneur. Formerly owned two hotels, an advertising agency, a wholesale tour company, a POS company, a leasing company, and a hotel management company. The hotels included chain owned, franchises, and independents. They ranged in type from small luxury inns, to limited service properties, to large convention hotels and resorts. After retiring he authored a book, “So Many Hotels, So Little Time” in which he relates what life is like behind the scenes for a hotel manager. Ken operated more that 100 hotels and resorts in the US and Caribbean and formed eight companies. He is a firm believer that senior management should share their knowledge and experience with the next generation of management.

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