Hospitality Financial Leadership – A White Paper – Part 1 – By David Lund
The following is an overview of a six-month financial leadership project that I recently completed at a full-service hotel. The project consisted of six half-day hospitality financial leadership workshops delivered in-house and monthly 1-1 leadership coaching appointments with the 15 managers assigned to the program. Each month of the project we completed a group workshop and each manager had a coaching meeting with me.
The project goal had five measurable elements. It was to get the managers and leaders of this hotel to complete their monthly departmental financial forecasts, track their results throughout the month, adjust their spending on labor and supplies according to business volumes, review their month-end statements for accuracy and finally write their departmental monthly hotel management commentary.
In other words, get the core management team to do these tasks each month while improving forecasts and the hotel’s financial results.
Part 1 of 3
Early in 2017, I was contacted by a hotel company president who read one of my articles in a hotel association newsletter. He asked me a little bit about how I worked with hotels and then he asked if I would come to his offices and meet with his people. To which I agreed. I went to his office the following week and the receptionist showed me to a well-appointed boardroom with a big table, beautiful art, and 10 chairs. I waited what I thought was a long time, probably no more than 10 minutes.
The company president, the CEO, and VP of Human Resources joined me. We exchanged pleasantries, and then they asked me to explain what I do and how I could help them. I started by telling them my story of how I was a failure at a previous role as the controller of a large hotel some 10 years earlier. Not always a strong start but it usually gets people’s attention. I explained that the reason I was failing was because I could not get the other managers to give me their monthly forecasts and as a result, I was communicating financial information that was wrong. I then explained that I discovered the cure. The cure to getting my fellow department heads to do their forecasts was to educate them on the hotel financials. I explained that the education was delivered in the form of a workshop that showed the leaders what the profit and loss statement was all about and why we needed their input.
Then I explained the results of the work I did in the hotel and that in a very short period of time we totally turned things around and how the managers really liked the training—how they responded and the great results we created.
The CEO asked, “In your opinion, who is ultimately responsible for the finances of the hotel?”
To which I replied, “The most senior person, usually the GM.”
To which he replied, “So, not the financial person?”
“No,” I said, “The financial person has a big role to play but the GM must set the tone and lead the team in all matters including the financial piece.”
With this 5000-pound rhinoceros on the table, my audience had a moment to huddle and the CEO then said to the president, “Well, that’s it then, the GM must be the one to lead the charge and they are ultimately accountable for the financial results,” to which the president eagerly agreed.
I explained to the group the importance of having the senior leadership of the hotel firmly believe that the money is equally as important as guest service and colleague engagement. This conviction needs to be part of the hotel’s culture. Leaders in their hotels need to see this, have a system to use and the proper support. Not that service takes a back seat to profit. Equal, that is the key!
With my story told and their revelation out the president asked me when I could start and how much for my six-month program. We shook hands and I was told they would contact me shortly with the details of which hotel would be my first project.
The revelation we danced around that day is all too common in our industry. Owners, brands, and executive teams are often confused and misaligned when it comes to putting the accountability for the financial results in the right place.
I received an email the following week and the note contained the name of the GM, his hotel, and phone number. I called him, and we agreed that I would come and meet with him and his Director of Finance.
We got together in a meeting room and I requested a whiteboard. I explained the same story of my failure and finding the cure. I then drew a chart with fictitious names down the left side with five columns: F, T, A, R, W across the top. Forecast, Track, Adjust, Review, Write. I then said to the gentlemen, I was pretty sure that on that day their department managers’ report card probably looked something like that whiteboard—blank and empty.
Next, I said, “I will work with your managers, educating them with the workshops and coaching them 1-1 to get them to willingly do their monthly forecasts, track their results, adjust their spending, review their statements and write their commentaries.”
The two gentlemen just looked at each other and smiled and the GM said, “How did you know that no one is doing their forecast?”
To which I replied, “Just a guess.”
The GM was very curious about why a six-month program.
“Why so long?” he asked. “I get this question a lot”, I said. I explained that in reality the project really never ends.
“The financial discipline in your hotel will never be completely mastered,” I replied.
“It’s just like guest service and colleague engagement, the job is never done. We use six months because that’s how long it takes to educate your team with the workshops, coaching them individually so we can remove what’s holding them back, practice for your leaders on their financials, time for your leaders to see your committed to this, time for your leaders to see that it is not going away, and finally time for your team to get their financial act together.”
In a hotel, each month equals one financial practice. Like anything in business this takes some practice and, if we are willing to stick with it, we will get results! The GM and DoF looked at each other and again smiled. With this out and on the table, I asked them both if they were committed to this plan. I also strongly cautioned them that if they were not committed to walk away! The GM’s and DoF’s roles in the process are just as important as mine.
I explained this important aspect to both and told them we would be coordinating a “triangulated fire” throughout the venture. The three equal forces that need to be utilized throughout the project: My workshops and coaching, their commitment and support with this project from the top with their leaders and, the third piece, the element of time. Me, you and time will win this.
The great thing about the monthly financial cycle in business is we get to start over each month. Take what we learned and fix what didn’t work. Every month we are improving and that is what we are playing for.
With that out, and clearly understood they made the commitment to the project.
The first workshop was critical. I coached the GM and DoF on how to invite their team to the party we were throwing. Leaders will sit back and assess the situation and they can smell a rat a mile away. A genuine invitation to learn and grow with financials is what we created. A steadfast commitment to their personal success and prosperity.
In the opening workshop, we were joined by three members of the corporate team. You know how the saying goes, “We are from corporate and we’re here to help.” In this case, they were a huge help. They provided the leadership their support for the project through their participation in the workshop exercises and debriefs. When we wrapped up the opening workshop everyone knew what we were working on, why and, most importantly, they all had the opportunity to verbalize any concerns they had and express their commitment to the project’s goals, F TAR W.
Another really important element in this workshop setting is the way we present the project. It is like an invitation to the hottest party of the year and you are invited. We make a big deal out of the participants, their learning and most importantly their contribution. AKA – you make the difference. No mention of corporate mandates, financial Armageddon or any other rat-like tactics.
If you would like a copy of any of the following send me an email at email@example.com
- EFTE and Productivity Exercise
- Hotel Financial Policy Manual – Inventory of “Sections”
- Hotel Financial Coach “Services Sheet”
- F&B Productivity Spreadsheet
- Rooms Productivity Spreadsheet
- Financial Leadership Recipe F TAR W
- Hotel Financial Coach – “Speaking Sheet”
- Flow Thru Cheat Sheet – Enhanced
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