By Prima Hospitality | January 08, 2012 at 05:59 PM EST |
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Human performance is variable and impacted by a myriad of factors, many difficult if not impossible to control. Human performance, good or bad, outstanding or abysmal, defines the outcomes of any business enterprise from product quality to guest service to financial results. Sometimes a change in management is the only productive move ownership can embrace to foster positive improvements and steer the business in a more profitable direction. Unfortunately, many businesses do not recognize the imperative for change in management until it is too late and sweeping damage has been caused throughout the organization.
Here are some definite indicators a change in management is required.
o Erratic Results – Many business owners only recognize pronounced, protracted downward trends in financial operating results, customer satisfaction or other metrics used to measure performance. Erratic results almost always precede precipitous declines. One property performing well one month but another property performing poorly in the same market, seesawing from month to month indicates a lack of focus and the ability to consistently execute by management. Beware of management that continually highlights successes and glosses over failures.
o Declining Guest Service Scores – There is a natural tendency for fluctuation in guest comments attributable to pricing. I have seen it repeatedly in markets where demand and pricing change dramatically from high season to low season. At $259 the beds are uncomfortable and at $79 they are the best beds the guests have ever experienced! That is natural and during high rate periods a decline in guest ratings should be expected. Examine moderate and low rate periods, measure and analyze both chain guest response metrics and other sources – TripAdvisor, chain surveys and comments escalated to senior management because problems were unresolved. If scores decline during low and moderate rate periods, there is a definite problem with management.
o Enthusiastic New Plans with Great Promise but Lackluster Results – Management which is always devising “the next best thing” or “the solution” for recurring problems and selling them enthusiastically to ownership, but then abandoning them when they are found to be ineffective might represent good salesmanship, but it is also indicative of poor management as well. Excessive gimmickry and unnecessary complexity in promotions are telltale signs management is grasping at straws either because of an inability to think of anything else to improve performance or an intentional avoidance of effectively solving serious operational problems either because of laziness or simple incompetence.
o Attempting to Redefine the Metrics for Measuring Success – Beware management that attempts to introduce new metrics for measuring success or shifts the focus to weighting one important metric more than an equally important one. The poor expense manager will argue that revenues are all important. The poor revenue driver will argue that expense management is the real game. When management reviews financial reports, watch to see if the focus is shifted to areas of good performance or areas of substandard performance are highlighted. Repeatedly negating the validity of poor guest comments or highlighting only areas where performance is good is another “red flag.” STAR reports, income statements and guest commentary reporting systems do not lie – they simply report data. If management is not utilizing this data to highlight both successes and failures and constantly minimizes the data which portray the operation in a negative light, future improvement will be futile at best.
o Maintaining a Power Base as the Ultimate Priority – Again, people or human resources factor the most in the success of any business. If management and employee coaching, disciplining, hiring and terminations are made with little positive change in the performance of the business, then you can assume these activities are geared toward fostering the politics of preserving the status quo and NOT towards the goal of improving the functioning of the enterprise. Allowing a company to function around success as defined as who is willing to “brown nose” the boss or support his or her failing leadership will only lead to catastrophic results for the business.
o Blaming Instead of Accepting Responsibility – Effective, mature, competent management accepts responsibility for everything that transpires with the business and maintains a “can do” attitude with regard to attaining positive results regardless of any situations that arise. If you hear repeatedly that the business is not performing optimally because of the competition, the property is in need of renovation, the labor market is terrible, the weather was poor, not enough is being spent on advertising, past management is at fault or a revolving litany of these items, management simply needs to go. Senior management that repeatedly blames subordinate management for failures and shortcomings, but does not recognize its ultimate responsibility for all results will never produce in a consistent manner over the long haul.
o Positive Public Relations are Not Present – It is critical for any business to have a proactive, positive public relations profile and media coverage which portrays the company in a positive light. If this vital component of success is not present or is diminishing, the truth is that the business has lost its luster and possibly the press is noticing what management is not – that the business is simply no longer worth covering in the media.
o Operations and Finance are Always Singing the Same Tune – When you hear the same story repeatedly from your C.E.O. and C.F.O. or your Manager and your Controller, something is definitely wrong. If operations and accounting and control are constantly in agreement in assessing financial performance or operational effectiveness, that represents nothing more than collusion. There should always be a healthy, frank, open dialogue between these two disciplines and separate reporting to ownership by each. When that does not occur, there is a definite problem.
Getting an independent review and assessment of business operations periodically, not just an audit or accounting review, is a wise component of any successful business plan.
