Creating Financial Leadership in Your Hotel
The How to Versus the Want to
By David Lund, Hospitality Leadership Expert, The Hotel Financial Coach
The business of managing the hotel finances is not terribly technical or complicated. What makes it challenging is that it's usually a very large job involving many people. In a 500-room hotel, you can easily have 20+ forecast contributors. The communication system in the hotel is the key to both smooth management and predictive financial results. This is the how to.
If hotel finances are not a complicated matter, then why is it such a challenge in so many hotels? The answer lies in finding the want to.
It's not a big surprise to learn that most leaders in the hotel don't naturally want to be managing numbers. They typically didn't get into the hotel business with the idea that they would be business people with forecasts and budgets to run. They're "people people"; artists and creators. We all know the stories of how so many of us found our way to hospitality and fell in love. Most of your non-financial leaders landed in hospitality for a short stay and decided to move in. Now a few years later they find themselves in roles with responsibilities to get the numbers done and they don't like it.
They Don't Like it for a Few Reasons:
- They are often responsible for numbers that are created by someone else; someone who expects that leader to own the numbers their given. This never works. If you're cooking up the numbers in your hotel and giving them to your department managers and expecting them to own those, then stop! This is a complete waste of time as they will not take any ownership with these targets, they're yours, not theirs. Know that these leaders are quietly thumbing their middle finger at you when you do this. You're placing a huge expectation on them and they don't like it one little bit. Sure, you might get lip service but they do not appreciate this one little bit. What they really want is to create and be responsible for their own numbers.
- They don't have a good financial communication system to use when dealing with the numbers. Non-financial leaders need a strong schedule and constant communication around the numbers. It needs to become part of the culture that the numbers are just as important as the guests and the colleagues. It's not enough to publish daily reports and expect that the managers will read and use them. You need to have the numbers be an integral part of the daily communication system in the hotel. Not just arrivals and departures, vip's, outlet hours and groups in house at your daily meetings. You need to shine a light on yesterday's revenues, month to date revenues and the variance to forecast. Every day your leaders should know if we're on track to make our top line and divisional revenues. If not, then how will they be able to react and adjust labor and spending to compensate and effect the flow? The finances need to become an integral part of your daily makeup. Exercise these muscles!
- They don't take the time necessary to properly manage the numbers. Your leaders will always treat the numbers as second place or worse unless you show them that the numbers are just as important as the guests and their colleagues. How do you do that? Simple - make the numbers real and treat the leaders as adults who have financial power. Invite them into the captain's lounge and show them the respect you have for their role. Be there and be supportive and helpful when things are not going well and be there to celebrate and encourage when times are good. We all know our business has ups and downs, its cyclical in nature so be the kind of leader who walks the talk and knows it's not always easy for your leaders and you have respect for their challenges. This translates into, you need to invest in financial leadership. Just like service and engagement we are never done our work. There will always be mountains to climb. How can we create the want to with hospitality financial leadership?
The want to do this in the three areas I identified is naturally low. Let's be realistic for a moment and ask ourselves: "If they really wanted to manage their expenses and know how much they spent" they could figure it out. So how do we increase the want to? We do this by showing our leaders what is possible with good financial communication by investing in financial leadership in our hotel. Leaders realize very quickly that it's not so complicated, and mastering the numbers is 100% possible. Your leaders really want to be responsible for their numbers. I am going to tell you why they want to master their numbers, but first, a little story to reinforce the how to vs. want to distinction.
A couple of years ago, our daughter moved in with Johanne and I while we were living in San Francisco. She had finished university and had come to start her career and was staying with us until she got on her feet. One thing developed that we were not anticipating. She was a messy housekeeper and her room was often a disaster. I asked her several times to clean it up and somehow this just wasn't working. In this situation, it would never dawn on me to send her on a course to learn how to clean her room or by her the latest book on how to clean your room! She knows how to clean her room! So, what's missing? Answer - she doesn't want to clean her room. Period full stop. Doesn't want to. If I am going to have any impact on this situation I need to operate in the realm of increasing the want to. Once someone, anyone has an increase of "the want to, the how to is everywhere".
Increasing the want to is always the answer we want to be looking for. What's in it for them? What will be better in their lives that will make them motivated to do the task at hand? With financial leadership in your hotel, there are lots of areas you can cultivate in the want to.
Financial leadership skills are extremely valuable tools for your non-financial leaders to have. In today's competitive world it's not enough just to be great with the guests and colleagues, leaders need these financial skills to advance. All your leaders want to move ahead, they all want to be executives and lead. When you present these as opportunities, your leaders will happily step up. We also must remember that the only place your leaders can get these skills is from you. They need you to create this environment, the environment that nurtures these skills. Your leaders see more dollars in their pockets and rightly so, with these skills they are much more valuable.
Your leaders all want to have more impact. Once you show your team what happens with their number and how they directly affect the business and that all stakeholders are directly impacted by their efforts they are going to naturally want to get on board. Maslow's hierarchy of needs shines a light on people wanting respect for their work and to have a meaningful purpose. When framed properly this is incredibly powerful. Self-esteem and self-actualization are direct by-products of having financial leadership skills and responsibilities. This comes with a warning label. Make the responsibilities a positive attribute and not one that is negative. Management by embarrassment will backfire big time, every time. The financial leadership in your hotel needs to be always be packaged with love and never fear. If we put fear and money in the same boat, we are literally sunk.
When you train and invest in financial leadership you slow things down with the financial piece and the byproduct of this is that your managers will see it's not complicated. Getting your leaders in the same room to study the P&L and how things come together financially in all the different departments is magic. The curtain falls and your team will stop believing it's a difficult subject because they all see this together. When a chef explains his labor and a sales manager talks about their expenses the whole room now has a new window into the story and the mystery evaporates before their eyes. How many of you have regular or even irregular classes on learning and understanding the financials? By teaching our leaders we show them the real story around the numbers and this cannot be accomplished without slowing down and taking the time to learn. Just like service training or engagement. We need to invest in what we want to grow. Regular ongoing creative training around the finances drives the want to.
The last part of the want to is my favorite. Why would I want to have a financially engaged team in my hotel? Don't forget to check in on your want to as well as your leaders. I want to have a financially engaged team because I'm committed to having my team be as successful as possible. I am personally committed to my leader's growth and their individual prosperity. Wikipedia, "Prosperity is the state of flourishing, thriving, good fortune or successful social status. Prosperity often encompasses wealth but also includes other factors which can be independent of wealth to varying degrees, such as happiness and health." When I have this kind of commitment to my team I am making a real difference in their lives and this is priceless. BTW - they will love you for being the one that leads the way. The one that gave them the biggest gift, the financial learning.
David Lund is The Hotel Financial Coach, an international hospitality financial leadership expert. He has held positions as a Regional Financial Controller, Corporate Director and Hotel Manager with an international brand for over 30 years. Mr. Lund has reviewed thousands of budgets, forecasts, month-end reports and commentaries. He has managed hotels with combined incomes of hundreds of millions and assets of more than a billion dollars. He has combined his hotel business knowledge and communication skills to create strong financial teams and break with accounting stereotypes. Mr. Lund believes that all hospitality leaders have financial skills and talents and he works to see these talents come alive. Mr. Lund can be contacted at 949-791-2739 or email@example.com Please visit http://hotelfinancialcoach.com/freecall/ for more information. Extended Bio...
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