Archive for the ‘payroll cost control’ Category

9 Steps to Control Payroll Cost in F&B Operations

Monday, June 15th, 2015

Payroll is the largest expense in food and beverage operations.  Coincidentally food and beverage is typically the department with the largest amount of overtime and employee turnover – both of which add significant cost to the operation.

So how do conscientious F&B managers go about getting some control over that which eats up so much of their departmental income?  Here are 9 steps that will create a significant improvement in any F&B department’s payroll expense and bottom line:

1.   Organization.  A well-organized operation is more efficient in both front-of-house and back-of-house.  If the Executive Chef and Dining Room Manager ensure work spaces are well-designed and well-organized with clear cut procedures for accomplishing all tasks; if storage areas are organized and properly stocked; if the kitchen staff has production sheets assigning daily tasks; if everyone knows what to do, how to do it, and when to do it – it doesn’t take as much time to complete daily set up, food preparation, service, breakdown, and closing duties.  A few hours saved daily amounts to a lot less payroll cost on a monthly and annual basis.

A key element in organization is written standards, policies, and procedures (SPPs) spelling out in detail how and why things are done.  Not only does this put everybody on the same page when it comes to expectations and standards, but it also becomes the basis for consistent training material.

Hospitality Resources International has created a large number of F&B SPPs that are available at no cost.

2.   Training.  The logical extension of good organization is the thorough training of all employees, both front- and back-of-house.  Better trained employees are more efficient, require less direction, and complete tasks in less time.

While training can be costly in and of itself because each hour of training is an hour of payroll, Hospitality Resources International strongly advocates the use of on the go training – a concept that uses spare moments during each shift to train and reinforce expectations to staff.  Two HRI programs, Food Service Management on the Go and Service on the Go, provide the framework for much of what managers and service employees need to know.

3.   Staffing GuidesDepartmental staffing guides establish core staffing levels – that staffing necessary for year-round functioning.  Beyond the core staff are the seasonal employees brought onboard to handle business levels during busy periods.  Since seasonal staff are not usually provided with benefits, there is a cost savings when core and seasonal staff needs are identified and utilized.

4.   Benchmarking.  Unless you measure your payroll cost every pay period, you cannot understand it.  If you can’t understand it, you can’t improve it.  Detailed benchmarking of payroll hours by employee position and type of hour (regular, overtime, vacation, holiday, sick/emergency) allows managers to see exactly where hours and payroll cost originate.

By benchmarking cover counts (meals served) by meal period and day of week, week by week throughout the year, managers will have a much better understanding of weekly and seasonal business variations.  This knowledge will help with the following step.

5.   Formal Forecasting.  By using historical benchmarks, as well as a knowledge of current trends and upcoming events, managers are able to schedule staff more accurately to handle expected levels of business.  This coupled with a willingness of managers to jump in when unexpected rushes take place will minimize payroll costs while maintaining service levels.

6.   Daily Review of Dining Flow and Service.  By keeping daily notes by meal period of forecasted and actual cover counts, staffing levels, smoothness of dining flow, and an estimation of service quality provided, managers are better able to adjust staffing levels during future meal periods for optimum service while identifying any issues that need to be addressed or improved.

7.   Daily Review of Hours Worked.  By taking a few moments at the end of the shift or day to record and compare hours worked with scheduled hours, as well as to tally any overages and overtime hours, managers keep track of actual to budgeted cost on a daily basis and are able to intervene as necessary in real time to control costs.

8.   Pinpoint and Understand Overtime Hours.  By closely monitoring overtime hours, managers can better understand why it was necessary and adjust scheduling to minimize it in the future.  Without an understanding of what’s causing overtime, there is no hope of coming up with plans to address it.

9.   Workweek and Payday.  By paying employees on a bi-weekly basis and establishing a workweek that runs from Friday to Thursday, a hospitality organization will have its usually busiest days (Friday and Saturday) early in the workweek, allowing managers to modify the work schedule of any employee who might be in danger of going over 40 hours because of extra hours worked on the weekend.  If the workweek ends on Saturday or Sunday and business levels required employees to work longer shifts on those days, there is no opportunity to make adjustment before the end of the pay period, thereby increasing the chances of overtime payments.

Bi-weekly pay periods also allow the optimum benchmarking framework of comparability because each pay period always contains two weekends (Fridays and Saturdays) instead of semi-monthly or monthly pay periods where there are odd numbers of these depending on the calendar.  For more information, read the article Why our Workweek and Pay Cycle? on the Hospitality Resources International website.

There is some effort involved in implementing steps 1 through 3 above.  But these are usually one time efforts requiring only ongoing tweaking to maintain.

Steps 4 through 8 require organization to set up the tracking and evaluation mechanisms.  Using a spreadsheet program such as Microsoft Excel is the best way to go about doing this, as all the math is handled by the program.  Once set up, all the manager has to do is establish and maintain the discipline of entering each day’s numbers and assessments – which shouldn’t take more than 10 to 15 minutes.  Periodic analysis and evaluation of what the numbers are showing will allow managers to formulate ideas and take steps to reduce staffing and payroll.

If not already doing it, step 9 is a one-time change that will yield returns for the life of the operation.

The ultimate requirement to implement all 9 steps is the “will to make it happen” and discipline to do it.  The payoff is in improved financial performance.

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the hospitality industry and its challenges. From time to time, we will feature guest bloggers – those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking hospitality managers throughout the country and around the world.

Hospitality Resources International – Management Resources for Hospitality Operators!


Labor Cost Control Strategies

Monday, April 22nd, 2013

While there is no single answer to controlling labor costs, there are many different things that can be done to ease the task.

Forecast Scheduling.  Using various tools at our disposal such as benchmarked levels of business, the schedule of club-sponsored events, and the catering forecast, supervisors should attempt to forecast their staffing needs at least one month out.  The one-month horizon is important in that it allows time to contact, hire, and train seasonal help.

Seasonal Hires.  When business conditions dictate (i.e., when the forecast shows business levels surpassing thresholds), supervisors should begin bringing in seasonal hires.  They can be people who you have already interviewed, hired, and trained such as former employees or employees hired specifically for seasonal work.  In either case, these new hires should be given some indication of how many hours they can expect to work each week and how long they’ll be kept on the payroll.

Conversely, supervisors should also plan for the sudden deceleration as the busy season comes to an end.  Intelligently managing both the expansion and reduction of staff results in satisfied members and significant payroll cost savings.

Budget Time Off.  Clubs have fluctuations in business on a daily and weekly basis as well as seasonally.  These fluctuations can result in legitimate overtime.

Having also said that we want to avoid overtime costs as much as possible, the same fluctuations in business that cause these costs can also help us balance them out.  Using the concept of Budget Time Off, a supervisor can send an employee home early on a slow day.  Budget Time Off is used frequently in housekeeping and the food and beverage area.  When the work is done or it’s slow, employees are sent home.

Budget Time Off should also be applied in areas where staff work established shifts, such as the reception desk, maintenance, or in administration.  The concept works like this – if, because of circumstances, an employee works more than eight hours in one day, the Supervisor should send him home early on another day in the same workweek to avoid surpassing 40 hours worked in a given week.

Cross Training and Departmental Shares.  In a small organization like the club, it does not serve us well to have a large staff of specialists.  Rather, we should have a smaller staff of people who are cross-trained to work other positions.  Often while one area of the club is slow, another is busy.  Most cross training takes place within departments and allows a supervisor to deal with sickness and emergencies.

Another form of cross training is inter-departmental and results in departmental shares – employees who can work in two or more areas as the level of business requires.  Departmental sharing requires close cooperation and communication between department heads to ensure that the needs of both staffs are met and cumulative overtime is avoided.  Supervisors who are interested in exploring the possibility of departmental shares should pick other departments whose workload is dissimilar to their own.

Project Work.  When fluctuations in business leave us with short-term lulls, supervisors who are concerned about keeping staff productively employed should assign project work.  In a club operation, particularly one that has been busy, there are many things that get deferred in the crush of business.  These deferred items, such an intensive cleaning, polishing the details, straightening out back- of-house areas, etc., make excellent project work.

Because we never know when business will suddenly be slow, supervisors should have a ready list of necessary project work.  With this list at hand, it’s a simple thing to assign the work whenever staff have excess time on their hands in lieu of sending them home.

Sending Home Early.  Sending home early is self explanatory and fairly easy to do.  It requires the will to do it, vigilance on the part of the supervisor, and a feel for the business.  While there is always some risk involved that we may suddenly get busy and need the full staff, supervisors should take the risk and depend on the dedication and professionalism of remaining staff to rise to the occasion.  Experienced supervisors know that we all have an overdrive that we can kick into for short periods of time to get the job done.  For those of us who are “adrenaline junkies,” (and who in this business isn’t?), we actually get a rush from it.

Layoffs.  As long-term busy periods wind down, supervisors are often faced with the difficult task of reducing staff.  While no one enjoys laying off employees, it is much easier to do if the employee(s) involved were hired seasonally and already know that their hours will be reduced or they will be laid off when the busy season is over.

Voluntary Leaves of Absence.  Before a supervisor considers layoff staff, he should inquire if anyone on his staff – core or temporary – wants to voluntarily leave.  There may be a temporary employee who for some reason wants to leave or a core staff member may want to take an unpaid leave of absence.

While no one may be interested, it’s always worth asking before another staff member is involuntarily laid off.

Scheduling Vacations.  Full time employees earn vacation time.  Some employees, by virtue of their longevity, have substantial amounts of vacation to use each year.  Supervisors should schedule their employees’ vacations during slow times when you will not be forced to replace them on the schedule.

Summary.  Regardless what combination of strategies ultimately proves most helpful to a particular supervisor, continuing success depends upon vigilance and attention to business levels and scheduling on a daily basis.  The easiest way to achieve this is to make this vigilance and attention part of your daily routine.  Compare daily hours and schedules frequently to ensure compliance.  Checking employee hours daily will help avoid overtime.  Pay close attention to levels of business.  Know who is on the clock, what their schedule and rate of pay is.  Act decisively to control cost.  Act as if your job depends upon it.  Ultimately, it may.

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the hospitality industry and its challenges. From time to time, we will feature guest bloggers — those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hospitality hardworking  managers throughout the country and around the world.

Hospitality Resources International – Management Resources for the Hospitality Industry!

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Guest Blog: Who Should Manage Labor Cost?

Monday, March 5th, 2012

peter_dehlinger-79x80At a recent HFTP sponsored event I was engaged by the Controller and HR Manager of a prestigious private South Florida club on their challenge with department heads to use their recently installed time and attendance system.  As a web-based system, managers could access the data base at any time and from remote locations if they chose, providing them the ability to manage their employee time data at their discretion.  Sounded like a good system, however, systems and software are only as good and productive as the people who ultimately use them.

So let’s review the management team that makes it all happen at a club.  The F&B Director has overall responsibility for delivering excellent service to the members in the dining room, grill room, or other outlets.  The Superintendent has to maintain the fairways and greens in optimum playing condition at all times.  The Director of Golf organizes events, runs a retail outlet, manages a fleet of carts, and delivers professional services.  The Executive Chef oversees the selection, pricing, and preparation of menus for regular and special events.  There could also be a Spa Director, Tennis Pro, and others depending on the amenities offered.  The bottom line is all these managers direct the staff that perform the tasks to make all the above areas of operation function over a wide area, and in most instances seven days a week and not limited to banking hours!

As examples here are just 18 different instances involving situations on a daily basis where the department head is best suited to manage and account for an employee’s time, instead of having the Controller/HR Manager do this.

The Employee:

  1. Was absent
  2. Arrived late
  3. Forgot to clock in
  4. Was scheduled and did not show
  5. Was called in to cover for someone else
  6. Called in sick
  7. Clocked into the wrong department
  8. Was not scheduled but clocked in for work
  9. Started on the weekend when HR was closed
  10. Left before his scheduled time for personal reasons
  11. Was borrowed to work in another department
  12. Earned a bonus or tip
  13. Had a worker’s comp accident
  14. Worked through a meal hour
  15. Forgot to clock out
  16. Had to work unscheduled overtime
  17. Was sent home for disciplinary reasons
  18. Clocked out for another employee

Since we know that the largest single operating expense of a club is payroll, then effectively managing labor cost at the departmental level is critical to meeting or beating budgets.  Pushing this responsibility away from the immediate manager is a formula for inefficiency; increases the opportunity for errors and oversight; and reduces the ability to effectively control labor costs.

Best practices would dictate that rules to ensure compliance with state and federal wage and hour regulations are implemented at the accounting / HR level, and incorporated with the labor management and time keeping system.  Likewise personnel exceptions that happen at the operational level are best resolved by the immediate, authorized supervisor, and not by a department manager who is removed by time and distance from when an event happened.

If this sounds logical, then why do clubs handle this differently?  From our experience with installations at clubs nationally, we find resistance to delegating these tasks to department heads comes from multiple sources:

  • Club legacy practices that time and attendance is an accounting / HR responsibility.
  • Department heads that promote their member-related services as primary and push back on employee time management.
  • Controllers and HR Managers that resist letting go of control of elements of the process involved with payroll generation.

The bottom line is that the cultural change and implementation of best practices has to originate from the top of the organizational chart.  This process begins with an inclusive job description that defines not only the service aspects of the department head position, but also the administrative functions, including budgeting, reporting, and accountability results including labor cost management.  When the club makes the investment in a modern labor management system including secure biometric time terminals, a manager has access to the tools to positively impact his department’s bottom line.  They should be held accountable accordingly, and any good manager would want the responsibility for managing the employee time related data that drives his department cost, and ultimately his performance-based income.

Peter J. Dehlinger, MBA, is President for Gatekeeper Business Solutions, Inc. and can be reached at  Gatekeeper Business Solutions, Inc. specializes in a proprietary suite of software tools (LMS) that includes time and attendance, scheduling, and integrated payroll processing for midlevel private and public sector companies. To learn more, visit

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the club industry and its challenges. From time to time, we will feature guest bloggers — those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking club managers throughout the country and around the world.

Club Resources International – Management Resources for Clubs!

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