Making the Most out of Labor in Today’s Economy
By Mindy Letourneau
The global economy is experiencing a serious change in the availability of funds for consumer spending. No longer on a limitless spending spree, consumers are now tightened down and having second thoughts. The good times seem to be a vision of the past as consumers spend less and the gaming industry feels the pinch. While some casinos make adjustments to catch each nickel and dime, others are nickel and diming the operation in an attempt to reduce mounting expenses and declining revenues. The focus has changed from keeping up with demand to strategies that market value while operating efficiently.
Labor is a great place to start since it is 50 to 80 percent of operational expenses and defines the efficiency and productivity of a casino. A solid labor strategy can affect the bottom line and provide immediate relief to the operation. Measure your casino’s efficiency and productivity by answering the following questions.
How much are you spending in overtime?
Managing overtime is essential in today’s economy. Think about it, if a front-line team member making $15 per hour clocks in and out 15 minutes before and after his scheduled day, he is receiving 2.5 hours of overtime, or $56 a week, adding up to $2,900 a year. Consider this scenario with 100 employees and it adds to losses of $290,000 in annual overtime expense. Use weekly, monthly and year-to-date overtime reports to identify the departments and root causes of unnecessary overtime expense.
Common reasons for overtime are lack of staff and scheduling issues generally caused by one or more of the following:
• Inconsistent scheduling; employees not scheduled according to business demand.
• Scheduling vacations; multiple employees scheduled for the same day or vacation approval during peak business dates.
• Schedule management; employees clock-in prior to their shift (without approval) and use the time for personal needs such as grabbing a meal in the break room.
• Clock in errors; employees forget to clock in or out, resulting in an overtime payment for the entire shift, or missed swipes causing payment for multiple days as one day of overtime.
• Payroll input errors; inaccurate coding of employee position, rate or incorrect date causing overpayment or overtime payment.
A properly designed payroll report and audit process can significantly increase management’s ability to effectively manage overtime. The payroll process provides internal controls for reporting payments, including employee payment at multiple rates, shift cut-off times, overtime, clock-in discrepancies and missed swipes. Accountability is a joint effort between departments since the payroll department often depends on the proper operation of other departments for accuracy of time keeping and reporting.
Are you spending your overtime wisely?
Overtime is a valuable tool when appropriately managed in a casino. For example, a casino requiring security services for an event may schedule casino security overtime instead of hiring a security services vendor. In this instance, it might make financial sense to assign overtime if it is less expensive than hiring a security services vendor. A financial analyst can determine the most cost-effective method for managing this type of event. This information along with the value of controlling guest service through internal staff may be well worth the overtime.
Are you getting what you need from your employees?
Productivity promotes healthy competition among employees, similar to sales departments that set goals and provide recognition through sales awards. Give employees specific goals to measure performance against and watch as they measure each other’s performance too. Managers can use service standards and specific goal setting as an effective and measurable tool for recognizing employees that meet and exceed standards and coaching employees that do not meet the standards.
Assign standards and goals or employees may define the standards on their own. Failing to develop or communicate standards will result in an employee defining productivity according to his or her own definition and not necessarily the company’s. An employee’s personal standard may conflict with a casino’s, causing confusion and less-than-exceptional service for the guest.
How do your employees know what you need from them?
Developing and communicating productivity standards may result in significant labor savings. For instance, a food and beverage manager that communicates standards for serving a set number of tables in a specified period of time can forecast the staff required to service a venue or event. It is impossible to efficiently forecast staffing levels without standards. Doing so often results in over-staffing or overtime. In addition, employees need guidance for schedules, breaks and lunches. Schedules communicated in advance and standards set for breaks, lunches and shift change, help employees understand what is expected of them.
Is there a better way to reduce staffing levels than a reduction in force (RIF) or layoffs?
Some casino operators may think it is too late to reduce staff through attrition. In my book, it’s never too late. It’s always a good time to increase productivity and reduce expenses. Start with the basics. For cage, determine the absolute necessary number of windows required to maintain guest services. Establish hours for each window and when the majority of windows should close and open for business. Build the cashier schedule around the window hours to determine the number of full and part-time staff required to operate in the cage. Consider additional schedule adjustments if a cashier can manage multiple windows, such as front and employee windows. Consider ideas such as rolling banks and streamlining shift change and involve supervisors in operational duties for better efficiency of significantly reduced staffing levels.
Restructure and consolidate responsibilities among existing staff instead of hiring more staff. As employees resign or leave the department, share the position and responsibilities among existing staff. In one instance, a casino slot department decided to consolidate responsibilities instead of hiring another staff member. In this situation, slot representatives picked up a cash bank from the cage employee window and walked 100 feet across the casino to a slot key control area to check out keys, radio and slot equipment. The cage department worked with the slot department to consolidate duties by providing the cash bank, radios and equipment at the cage employee window. The slot keys were placed in an automated key box for access right outside the cage window. This allowed the slot department to close the key control department of five employees and provide them with opportunities to apply for different positions within the casino. This move saved $200,000 in annual labor expenses.
Does your schedule help or hinder productivity and efficiency?
Remove restrictions that keep managers from creative scheduling by adjusting the criteria that defines a permanent schedule. A casino may consider introducing flexible scheduling and adjust daily or weekly assignments according to the business. Flexible scheduling balances employee morale with fair and consistent scheduling by offering employees the choice of shift and days off based on casino criteria such as seniority, without promising exact start times. Employees continue to enjoy scheduling choices while the operation gains flexibility in scheduling for business events and promotions.
Changing your recruiting strategy based on today’s economy?
Until recently, many casinos hired full-time employees to keep up with industry growth and business demand. Certainly, full-time employees are the backbone to most organizations, representing loyalty, strength and consistency. However, there are multiple positions that can be adjusted to part-time or on-call positions. Consider replacing such position vacancies with part-time or on-call positions and recruit prospective candidates that already work multiple jobs to make ends meet.
Be sure to define what is considered a part-time or on-call position. For example, part time may be 10 to 25 hours per week while on-call guarantees one shift or 10 hours per month. This strategy improves the bottom line since two part-time employees save company benefits and overtime expenses while gaining the flexibility of two employees versus one full-time employee. Imagine the savings with 50 employees. This concept may meet resistance; nevertheless, it is a better alternative to multiple reduction in force requirements. A reduction in force is challenging to execute and recover from since it affects employee morale and ultimately, guest service.
Who is responsible for looking after all the labor?
All of these ideas sound great; but how do you strategically implement them in your organization and who assures that everyone is following the new initiatives? Hiring a full-time labor manager is an expensive proposition. But then again, it depends on the size of the problem. There is significant interest in schedule automation and labor analytics to measure and manage labor expenses and productivity performance. Regardless of the choice, remember to implement the changes in strategic phases ensuring that the operation is heading in a positive direction.
Goal setting is a great option for managing labor initiatives by setting standards and providing incentives for proper labor management. Use job descriptions, annual performance planning, balanced scorecard initiatives and department goals to implement labor initiatives. For example, a goal or initiative may require a department to replace 10 percent of the workforce with part-time or on-call employees.
Get help. Managers may not be familiar with labor management, particularly those promoted when the organization’s focus was recruiting and expanding. Take advantage of experienced leaders to mentor, support and teach other organization leaders. Set the team up to succeed by clearly communicating consistent and measurable goals in a reasonable time frame. After all, requiring a team to perform without communicating the rules will surely set them up to fail. Know what your team knows. Learn what they don’t know. And coach them to succeed.
Exceptional teams work together to perform well and above expectations. Proper planning, strategy, communication and execution during stressful times allows the organization to function effectively, not just efficiently.
Mindy Letourneau is the founder and owner of Casino Essentials, which focuses on maximizing profitability through professional development, operational efficiencies and labor strategies. She can be reached at (858) 610-5053 or mindy[at]casinoessentials.com.