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The ‘more or less’ dilemma in hotels

7 July 2015 03:20 am - 0     - {{hitsCtrl.values.hits}}

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How many people? This is a critical question as adhoc recruitment could result in an excess work force and higher payroll expense. 

Many hotel operators believe that a generous staff-to-guest ratio is a safe-to-play-with arrangement where every need of the guest is fulfilled, because there are more people on hand to deliver the goods. Unfortunately, in the majority of cases, this belief is one that serves the imagination rather better, than the reality. Having a pack of employees hover around, constantly invading your private space, crosses that fine line between being in someone’s face and delivering great service. 

Hotels that operate on a ‘more-staff-will-get-the-job-done’ approach are usually characterised by issues such as low pay, low skill and weak training systems, leading to a high degree of job casualisation and a corresponding lack of permanency. Several Sri Lankan hotel operators defend the decision to hire larger than required staff with the excuse, ‘It’s not a big deal because in any case their salaries are low’. This is one of many reasons why the current state of the hotel industry is perpetually in a human resource quagmire. 

We create a barrier to employment at entry level, where the most unfair situation that can arise is the exclusion from the workforce of those that genuinely wish to enter the hospitality industry as a career. Why? Because of a low wage that is grossly inadequate to secure the basic socially accepted standard of living. 

A low wage sets in motion a chain reaction. It cuts ‘too’ deeply into the wage distribution of affected workers, such as the youth and the low-skilled, particularly in the socio-economically lagging regions. As a consequence, offering poor recompense for employment leads to employing poor staff who will commit to poor performance.



The chicken and egg problem
Seven decades ago, Frederick W. Taylor, the father of scientific management, said that it was possible to give the worker what he wants - high wages - and the employer what he wants - low labor cost. The secret is high productivity. 

There is nothing wrong with high wages as long as they result in higher productivity. High wages with low productivity is charity; low wages with high productivity is exploitation; low wages with low productivity is suicide; high wages with high productivity is progress. Despite this, and in the trance of mediocrity, the hotel industry slowly rotates on the wobbly wheels of low wages and low productivity. As Rene T. Domingo comments, “Now the problem: which comes first, high wages or high productivity? This is not a chicken or egg problem; it is a chicken and egg one. The answer is both - ideally, both should be increased at the same time and raised continuously as long as the company is in business”. 

He goes on to add “Wages will go up whether we like it or not. What is important is low labor cost, not wages, for it is total labor cost that affects profits, not the wage rates. Low labor cost can only come from a productive workforce that may be receiving high wages. In fact, most products in Japan, Korea and Taiwan, are cheaper to produce in these countries even though their wages are much higher than less developed Asian countries”.



Staff-to-room-ratios
In the hospitality industry, staff-to-room ratios vary markedly around the world, clearly reflecting their relative labour costs. Consequently, it follows then that the ratios for operations in countries where labour is cheap easily overshadow those in countries where labour costs are high. 

However, this is swiftly changing, as the cost of labour all over the world is no longer an inexpensive item. As the hotel inventory in Sri Lanka increases, the cost of labour is expected to increase. Additionally, attracting the ‘right’ labour is likely to become even harder. Unless, hotels pay a lot more attention to quality and proper training of employees rather than tossing numbers to manpower, they will come under enormous pressure - making cheap labour unsustainable. With rising labour costs, the need to rationalise ‘staff-to room ratio’, is a critical component. 

The room-to-staff ratio is derived by considering two prime elements: staff productivity and definition of the service limits. Linking productivity outcomes in hotels presents a number of problems. 

First, productivity lacks an agreed definition and benchmark. (In a simplistic explanation, Productivity is a ratio between input and output at a given quality level. It can be calculated for specific shifts, for individual jobs, departments, or for a property as a whole).   Secondly, productivity and quality is an outcome of both management choice and guest expectations: they are, therefore conditional. Hence, it is vital for hotels to research and rationalise their room to staff ratio. Matching property size and its footprint with the appropriate quantity of manpower ought to be diligently considered. 

By now, it should be more obvious that reducing labour costs is not as simple as merely reducing staff counts by a given percentage in order to meet financial expectations. Additionally, cutting the wrong staff in the wrong departments may also result in difficulties that are realized farther down the line. Either approach could impact guest service by placing additional strain on staff or effecting business operations in the future. 



Productivity is almost everything
While most people talk today about the room-staff ratio and, amidst ceaseless discussions about skilled manpower, productivity and wage analysis, the hotel sector in Sri Lanka needs to determine the present ratio standards at which various parts of the industry, in various parts of the country, operate. Unless, and until this is done, one is left with hazy numbers and industry guesstimates and conjuncture. 

The fact of the matter remains that today, the staff room ratio issue has moved beyond mere numbers. The industry’s changing dynamics have led to various hotel formats that determine service standards. Another notable feature amongst several Sri Lankan hotels, particularly in the newer, standalone builds, is the absence of any hotel employee manuals or Operating standards. Manuals or Standards become an important mechanism and is the glue that binds together quality, productivity and consistency. 

Not having a standards manual is like driving a vehicle without insurance - dangerous. Time is limited in many ways today, it also consumes costs, and more so, when operating beneath the heavy weight of a longer than expected drag in any increased revenues. More simply stated, hotels simply cannot continue to operate with the same labour force and expense for what should be a longer than expected time period of diminishing revenues. Those who recognise this, need to take control by utilising the best tools available to measure labour and productivity statistics more effectively – against proper indicators, historical evidence, forecast and budget data. As the old adage says, “productivity isn’t everything, but in the long run it’s almost everything”.

(Shafeek Wahab has an extensive background in Hospitality Management spanning over 30 years. He is a customer experience transformist, helping organizations improve business results by changing how they deal with customers. Whilst focusing on corporate education, training, consulting and coaching he is passionate about identifying emerging best practices and helping companies become more customer-centric. He can be contacted on shafeekwahab@in2ition.biz. Website: www.in2ition.biz)
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