Measuring for Success: Rating Your Management Company
By Jed Heller, President, The Providence Group
In an ideal relationship, you want your managers and management company to take credit for what they have done right and take responsibility and action when something isn't working. You also must be able to measure the results of the management company's service and, when appropriate, your general manager's performance. Just as you hold any employee accountable, you must hold a management company accountable, which will help your organization run more effectively and efficiently.
Plan for Success
Recently, I was hired to review a property in West Virginia where communication was minimal and management results were marginal at best. One huge problem struck me immediately - no one had set goals for the management team. There were no expectations, and in turn, no tangible results to measure.
The first thing I did was help the company set up a 2006 budget and marketing plan. We also scheduled regular reports and meetings, which serve as roadmaps. If you don't have them, how can you be sure that you are headed in the right direction?
Many business owners don't realize how important a business plan can be. It can be used to analyze the performance of your business so you can determine strengths and weaknesses - and assess what must be done to improve. As a roadmap, a business plan helps set your course and guide you to where you want to end up.
It can also guide conversations with management and your management company. With a solid business plan, you have an objective and a target. This also allows everyone to become more knowledgeable about the organization as a whole.
Additionally, the marketing/sales plan can be used as more of a microscopic tool and should updated every 30 days. It should include the market segment, action plans, responsibility assignments and measurement indicators for each area. Every month, management should document a variance report of any negative variances with an explanation.
With these plans, the property owners in West Virginia will measure the hotel's success monthly. The information is typically available; it just needs to be organized, agreed upon, and then communicated.
In your scheduled meetings, focus on the day-to-day operations of the organization-the way processes are performed every day. Some examples of work processes that you could rate are the customer complaint process, the billing process, and staffing. By making improvements at this level, performance improvements are quickly realized, which results in quick improvements to the organization.
If steps reveal problems with the management company or general manager, raise those red flags quickly. You must identify what needs improvement. Don't let managers dance around an issue. There's no gray area at the end of the day. Results speak for themselves. That's something you must always take into account.
Measuring Performance
The three critical areas to measure include quality of product, quality of service and financial results. If your organization excels in these areas, it means your managers and management company are probably doing their job and your hotel will have world-class standards.
Quality of product can be measured by cleanliness of both the outside and inside of the property. If the parking lot and common areas are littered with trash, it will immediately turn off the customer. Quality of service can be measured by how friendly and helpful the front desk employees are and if they're wearing their badges and following the dress code. You should also follow up with comment cards to guests.
Financial results should be assessed regularly. There are several areas where properties can be more efficient and make more profit. One way to ensure good financial results is a zero tolerance policy on overtime. It just isn't logical to pay one person time and a half when you could pay another person straight time. All overtime should be approved in advance.
Also, constantly monitor staff levels. When there's only a 20-room occupancy, it isn't profitable to have a general manager, front desk person and a breakfast set-up person. Someone on the night shift should set up the breakfast while the front desk person takes care of other responsibilities.
Last month, I spent five days at a well-known and respected hotel chain. Immediately, I noticed ways they could increase profits. In the winter, they only had 15 rooms occupied, but they were fully staffed. They could easily shuffle the staff to have some members do a couple jobs at a time.
Your management company should also look at what you may consider unimportant occurrences. For example, if your employees begin stocking the pop machines instead of the vendor, and revenue from those machines begins falling. If you notice a decrease in revenue, many things could be happening. Employees could be pilfering the product, they may not keep the machine adequately loaded, or they may even forget to check it often enough. Management companies should always look for efficiency.
The bottom line is if your management company can't get results, you must find somebody who can. Failure to meet predetermined objectives outlined and agreed upon in the business plan negatively affects your employees, your guests and the ownership entity. An organization's ability to evaluate its practices against specific business strategies and objectives is critical to leveraging its knowledge capital. It will gain the company long-term results.
Remember what Peter Drucker said approximately 40 years ago: "Accountability and measurement are the two strengths of business." Drucker then went on to say, "There are no good intentions, only results."
These good results not only depend on the quality of your management company and team, but also on how vigilantly you monitor them and their success. That way you remain in control and in a position to constantly improve the bottom line and ensure that guests continue to return to your property.
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