26 Sep Budget vs Reality – The Great Expanse!
Every hotel has to pinch every penny and save as much as possible, but how is this affecting the actual core of your business? How many pen-pushers have sliced a few zero’s off a budget without caring for the actual people it affects or the overall impact it has on service?
There are many reasons that a business wants to increase profit and decrease expenditure, the recent economic crisis is a prime example of such a reason, but sometimes it could be down to new management wanting to further their own careers by appearing magnificent to their superiors, or it may be that a unit is being buoyed up by other units and now has to stand it’s own ground, or it may just be for sheer profit – no matter what, every budget cut has some motivation behind it that generally the ground level staff have no control over.
But it is always the ground level staff that it affects.
I know of people who have not had pay increases for 4 years; in that time their living costs have increased, but their wage hasn’t. Those who used to be able to afford holidays, suddenly cannot and people are working hard at home to make every penny stretch as far as possible, just like the (generally well-paid) accountants at the top of the chain. I also know of hotels in dire need of maintenance work, but have been cheaply patched-up for far too long, that the only salvation now is almost a total re-build. I even know of equipment being condemned, but no funding being provided to replace it, leading to very suspicious and probably law-breaking practices.
Should people or hotels ever be forced in to this position?
Now do not get me wrong – I am a strong proponent of ‘if you can’t afford it, don’t buy it’ – I possess no credit cards and have no loans; but even in my home life and home budget, I make allowances for emergencies and budget accordingly – I always have something to put aside to savings each month. Home and business are massively different though – business income and outgoings are not necessarily all that predictable; you could end up closing half the hotel because a roof collapses (not yet happened to me thankfully!).
There is an impact that goes beyond the physical though. It reaches beyond the actual decoration aspect and the debate over whether or not to get a new sofa for the guest lounge – it is the impact it has on your guests and staff. Those of you who have read previous posts from me will know that a lot of the time I attribute staff morale failings to poor management and cost-cutting; this time is no different.
Your staff will eventually end up having to look elsewhere for work – I stayed in a job I enjoyed, but for a company I hated, for 5 years. This was not choice, it was because I financially could not survive otherwise. When the time came, and finances were at a good situation, I could take that leap and go back to my passion. Never put your staff in that position. If you only concentrate on revenue and budgets, and lose sight of the reality that is your staff, then you will lose people; worse, you will probably lose your best people. Ultimately, regardless of how much someone may enjoy something, survival over-rides everything. If you are not paying someone enough, then they will ultimately find somewhere that will pay them more. I have moved jobs in a decision motivated purely by money as my own survival and cost-covering dictated I needed to. I know what my minimum earnings a year must be in order to cover all my costs, and I have to adhere t that; after all I am not going to starve, or freeze in winter, for the sake of my job!
The other effect on staff is that there is additional pressure placed on them – what was once 3 separate roles, is now 1, lumbered on to someone who is paid the absolute minimum possible. This is generally accepted if someone took the job in the first place, understanding the role and the requirements. But for someone who has been there through the changes and has seen the increase in workload, the non-inrease in wage makes them feel overworked, even though they may well not be. This additional pressure, whether it be real or imagined, can lead to staff looking for another job – remember it is psychologically generally easier to abandon or ‘run away from’ a bad situation than it is to change it – likewise it is easier for your staff to find a new job than it is for them to make themselves happy in their current one.
This reduction in staffing (which is inevitably one of the first actions in any budget cut scenario) is something that not only annoys staff, but also management – where they once had a team of 20, they may now only have a team of 6. This is fantastic on a spreadsheet, but actually makes the managers job ten times harder – less people to manage may seem like the ideal scenario, but actually, the larger a team, the more self-managed it is; this is because you get the luxury of team leaders and supervisors, who support the manager, you also find that you can have an additional person available to check other people’s work, or to prepare for that audit, or to provide that VIP service to a client. All these things can disappear in an age of austerity.
Even worse is when budget cuts put your staff and guests at risk. Take for example the hotel that staffs just one person overnight. Generally, this is fine in an area where there are plenty of people around and plenty of support available, such as a city centre or a unit that has clubs etc attached. But in a hotel where there is none of this around, ask yourself what would happen in an emergency. Can one person really evacuate the hotel in 2 minutes? What if the person on duty collapses or gets ill? What if there is a guest emergency that happens – how can one person actually deal with an emergency at the same time as maintaining the security of the hotel? Take for example the guest requiring First Aid attention whilst awaiting an ambulance, whilst another guest is raising the assistance alarm in a disabled bedroom. Look also at the stripping back of costs – where cracked tiles are not replaced and a guest then cuts themselves on said tiles; or the door lock that is not replaced and results in a security breach, or the dishwasher that does not get fixed or maintained and results in unclean plates and cutlery causing guests to fall ill…. suddenly the impact of budget cuts is stretching a lot further than anticipated when the numbers shrunk on a spreadsheet.
There is however one thing that you as a manager, or as an employee, can do – that is stand up and be counted. Usually you cannot really get much of a budget increase, and your chances of winning are slim; however if you make a good business case then possibly, just possibly, you may get that extra funding. There is nothing worse than sitting back, doing nothing and then complaining when nothing changes!
Budgets restrictions extend further than staffing, health and safety and danger – they extend to the guest experience, and many of the people who are seated in their luxurious leather executive chairs, behind a large mahogany desk, in an office where the wallpaper alone cost your annual salary, believe that you, as their employee (translate as minion) are able to pacify that small contingent of complainers, and are able to enhance the guest experience, whilst also doing the job of 5 different people and cutting costs. Well, as a ground-level manager, I can assure you that this is not possible, and is not going to aid a business!
I have seen a variety of cuts across hotels, from reducing how many tea and coffee sachets go in a room, to the total removal of biscuits from the tea tray (Hint: Never take an English-persons biscuits or tea!); premium bedroom offerings reduced from being provided gowns, slippers, fruit and water, to having just a bigger room and no extras, but all for the same price. I have also witnessed hotels that have taken such drastic measures as removing room service and replacing it with a vending machine in the lounge, or remove evening cleaners and housekeeping, resulting in no turndown service and managers running around making beds (oh, for the want of a hotel that has extra beds that appear and make themselves at the push of a button!).
There are many ways that costs can be cut, but many hotels go the wrong way around it – on top of the short-sighted cost cuts seen above, I also know of hotels that do nothing to re-negotiate contracts or costs with suppliers. I know of global chains that still pay through the nose for items, or fail to actually re-negotiate year after year. I have seen hotel managers that accept the first deal put in front of them – when I was researching toothbrush and toothpaste kits for sale to guests, I researched prices, value for money, availability, shipping costs, and even asked guests which image they preferred out of the final shortlist. This ensured I had value for money, but also guest attraction to them. I was told ultimately to get the cheapest ones. This was the one chosen by guests, but what if it wasn’t? Well, I am in little doubt that the resulting purchase still would have been based on price.
In the background of all this, there are limits imposed on stationary costs (including the stuff used for conferences, which you really cannot do without!), there are limits imposed on staff working hours, and there is a limit imposed o ordering capability. The result here was overworked staff, no stationery, no stock – all resulting in higher petty cash spend due to the lack of stock, stressed out staff that tok more time off and a lack of stationery for basic things like printing – to a conference delegate or hotel guest, the entire thing must have looked like a shambles – sweating, stressed out staff and no basic supplied like paper!
This sort of thing happens on a daily basis in units across the world. Yet under all this cost-cutting, the senior managers still get to entertain clients in the hotel for free, or give away free rooms to friends and family; expenses are still claimed for basic things like uniform for managers when floor-level staff have to buy their own (I have never claimed back my uniform expenses as it is my responsibility to dress myself, if I want to look professional then I should be willing to pay a few pounds to look as such – particularly when I can get a suit for as little as £30!).
To summarise – There is a power differential here which is evident in all budgets I have seen and no doubt in budgets across the world. Floor level staff are sacrificed and sent to the slaughter, services are reduced and guest experience is hit hard; yet at the top, where all the decisions are made, expenses are processed without question, wages are increased or provided at such a high level that they do not need to be increased. I do not expect this to stop; there are some senior managers out there who are exceptional – I have worked with one who will always be owed a debt of gratitude by me – the manager who ran the business but got stuck in, cooking in the morning, then cleaning beds, then checking guests in, then cooking in the evening and serving in the bar – he did not want his staff to suffer because of a budget cut made by someone at the top; he believed he was paid more than everyone else, to do more than everyone else, so he got stuck in. Result was everyone else did as well and no-one complained about a crappy budget or crappy wage.
There are places that work differently, and there are hotels that are now investing more in the guest experience (hurrah to those hotels) – but for the smaller profit-loss led chains, or hotels that are run purely as money-making machines, I pity your employees and your guests, for it is they that shall suffer!
Budgets are more than just figures – every number has an effect on someone, somewhere!