Determining Hospitality/Food Service Incentive Pay

From Chase’s Hotel F and B “Staffing Doctor” Column:

CSM ASKS …
I’m the catering sales manager at my hotel. Earlier this year, I just missed making a bonus, but my colleague who specializes in wedding events received one. Our bonuses are paid on revenue goals, but I don’t think that’s fair. I don’t offer many “freebies” and try to keep our execution costs low. How can I suggest to our manager that she look at factors other than just revenue when determining incentive pay?

THE STAFFING DOCTOR ANSWERS …
CSM, for a business, cash is air, and, like a person, a business needs air to live. You can really get the attention of a business or a person when you cut off their oxygen supply. On the other hand, if all else is even, air is not what most people or businesses “live” for. A business can live for its customers, stakeholders, and employees, or ideally all three. People can live for their families, faith, or even to recklessly tempt fate by managing a hospitality business, if they so choose.

Now, follow me as we put our toes into the water. Running a business is a lot like learning to swim. At first, it can be a daunting proposition with a broad mixture of feelings and quite a bit of thrashing about—all fused to the sentient tracking of oxygen in and out. Hospitality businesses that focus primarily on the top and bottom lines (cash in and out) at the expense of other success factors, drivers, and line items, are essentially dogpaddling, which is elementarily effective but also stupendously inefficient.

Any business that rewards performance based upon simply “closing the books” or “coming up for air” from any accounting period is merely guessing at what’s really happening now and can be referred to as having an unbalanced scorecard. When it comes to the net profits or bottom line, most people share the opinion that the bottom line is the bottom line—either you got it done or you didn’t. However, at some point in any swimming lesson/running a business progression, a person grows in confidence or gets bored by just not drowning; though it will remain certainly imperative, it is not very self actualizing. An experienced business operator starts adding strokes to his or her repertoire, wisely looking for patterns and systems to leverage, in order to replicate successes.

Most hospitality businesses would (and do) benefit from tracking more push/pull triggers. For example, they need to further drill down on financial data such as revenue management, productivity improvement, risk assessment, and cost-benefit measurements or mission metrics—staff turnover ratios, a promotability index, innovation benchmarks, guest satisfaction ratings, referral percentages, etc. This, of course, requires detailed monitoring of many contributing factors and the gathering of information from far and wide and between the top and bottom lines.

So the smart trend is away from simplistically bonusing on month-to-month or top or bottom line results, even though that is obviously straightforward. Most companies are trying to achieve consistent positive financial results by rewarding the people, systems, and behaviors that drive better results, or, in our analogy, synchronized swimming.

CSM, here is the short answer to your question: Come up with a bonus plan that emphasizes equitably rewarding the drivers of sustained success. If your manager doesn’t go for your plan, at least you will have a greater depth of applicable knowledge on which to base your own actions. Or you could also go the long way around and leave this quote from Albert Einstein on her desk as a conversation starter: “Not everything that counts can be counted, and not everything that can be counted counts.”

Chase LeBlanc is the founder and CEO of Leadagers, LLC, and is a hospitality management performance coach with more than 25 years of experience in the industry. He is also the author of High Impact Hospitality: Upgrade Your Purpose, Performance and Profits!

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