Here is part two of David Lund’s Top Ten Blog on “How to Bring More Hospitality Financial Leadership Into Your Hotel.”
4) Talk about Agreements, Not Expectations
Expectations. I hear this word from almost all GMs, controllers and hotel executives. It’s the wrong word and it’s not an effective way to manage.
So here is the thing with expectations. Human beings don’t like having expectations placed on them. We actually really don’t like it and most of the time we revolt against others’ expectations at work and in our personal lives.
Just imagine someone expecting you to do something. How does that sit with you? Not well, I bet.
So why do we place expectations on people at work? Why do we place expectations on them as it relates to being responsible for numbers? Do we think it’s because it’s their job and they should just do it? Probably. But it’s not effective. There is a much better way to manage.
It’s called agreements. Make agreements with the people who work with you. In the case of the numbers, ask your managers to take this on and tell them you will support them and give them resources to master this. You will be there when they have challenges; you will be there to help celebrate the successes; and you will lead the hotel through agreements with your team. Humans love to honor agreements and they push back on expectations.
Check out your language. What do you communicate?
Agreements are creative and a lot more fun than expectations. They are also a lot more effective. Especially when it comes to managing the numbers.
5) Any Monkey Could
An old GM of mine was fond of saying “any monkey could run this place when the phones are ringing” and he is right. In good times, hotels are growing their top line and possibly ignoring problems that might be more evident in times of flat or declining revenues. A good hotel needs to ensure that its financial communication system is working all the time.
I have seen several hotels that have no idea what to do when business stops growing:
- They don’t know what’s in the middle of their statement.
- They don’t have a team of leaders working on knowing what’s in every line. They don’t practice every month.
- They’re asleep at the switch until they run into the iceberg—the next economic crisis around the corner.
Basically the party is on until we run out of gas. So what can hotels do to ensure they don’t fall asleep? Leadership is the key to ensure the financial communication and discipline are always in place and practiced every month to maximize results.
If you’re in a hotel right now that could be run by a monkey, then chances are good that the middle of your statement is in need of some exercise.
6) Flying By The Seat Of Their Pants
In some hotels, the system for financial management relies on the top line coming in. Under-promise and over-deliver. Low-ball the revenues and straight-line the expenses and hope for the best. When revenues are good, this hides many sins. This is called flying by the seat of the pants, and it happens more than you might think.
If hotels are not zero-basing their payroll and expenses and tracking revenues daily to ensure they’re on track and making the necessary adjustments to expenses and payroll, they will fly by the seat of their pants when forecasted volumes don’t materialize.
When we are in a fly-by-the-seat-of-your-pants hotel and we have a good month, things are great, but we really don’t know why, i.e. why were expenses so low this month? Or, perhaps payroll seems too good to be true.
When we have a bad month, the sins are obvious: missed invoices from prior periods; over-forecast in payroll and revenues below forecast. Didn’t anyone see this coming? Well actually, no. No one saw this coming because we don’t have a financial communication process to ensure were on top of the business.
We were flying by the seat of our pants. The GM points fingers at the controller; the controller blames the department heads who didn’t submit their forecast on time; the department heads blame the controller because he/she created the forecast anyway!
You see, it just goes around and around. No accountability, no ownership, lousy results and no financial leadership!
Check back with HFTP Connect tomorrow morning for the final installment of David’s series.
David Lund is an international hospitality financial leadership expert. He has held positions as a Regional Financial Controller, Corporate Director and Hotel Manager with Fairmont Hotels & Resorts. He authored an award winning workshop on hospitality financial leadership. David coaches hospitality executives, leads group facilitations with hospitality teams and delivers his Financial Leadership Training workshop throughout the world. He earned his CHAE from HFTP in 2006, and he is a Certified Professional Coach.