A model for improving productivity

The task of management is to produce satisfied customers at a profit by planning, organizing, staffing, directing and controlling the input at its disposal. This model is illustrated in Exhibit 1.

American businessman J. C. Penney is credited with saying: "If we satisfy our customers but fail to satisfy our business, we'll soon be out of business. If we get the profit but fail to satisfy our customers, we'll soon be out of customers."

It is important to introduce the idea of customer satisfaction into the profit equation for two reasons. First, it forces us to take more of a long-term view of our business. A guest may be attracted to a hotel, stay one night, and leave dissatisfied after paying the bill. The property has profited in the short run, but the guest will not return and will tell friends not to visit; the end result will be lost sales.

A second reason is that employees can relate to and get involved with customer satisfaction as an objective. It is harder for the average employee to relate to company profitability. While employees most likely know that the business must remain profitable for them to keep their jobs, they may not think they get their fair share of the profits. On the other hand, they, too, are customers; they, too, go out to dine, to drink, or to take a vacation. They know what good service is when they demand it as customers. They can relate more to non-financial objectives, or output, than to pure profitability.

There are three types of resources available to management. Capital is available in the form of money, machinery, materials, and tools. Human resources represent the people part of the equation. Informationin its broadest sense refers to knowledge of new techniques, whether it is a new way to cook foods or advances in motivating employees.

Capital and human resources are subject to changes. For example, a chef who earns USD 40,000 a year might be replaced by a cook who earns USD 15,000 a year, along with standardized recipes and commissary-produced convenience foods. Information resources determine the degree of substitutability to a great extent.

It is management's responsibility to plan, organize, staff, direct and control the input mixture to maximize output. The direction must come from top management but the effort, if it is to be successful, must involve the entire organization. The process involves a series of steps.

The first step in the process of managing input to maximize output is to define the expected output clearly. Output is what we want to achieve. This involves setting specific standards and objectives in terms that are quantifiable and realistic and have a time frame. If standards and objectives are not formulated up front, there will be no way of knowing when or if the problems that exist have been solved.

As an example, we may wish to achieve a 98 per cent positive rating on room inspections while expecting attendants to complete a room in twenty-five minutes.

"What seems to be the matter?" This question will elicit the factors that lead someone to believe problems exist. It may be that midweek business is down or wine sales have dropped off. At this point it is important to separate symptoms that can be observed from those that cannot. This has implications for the next step, symptom verification.

It is also useful at this stage to place symptoms into appropriate categories, such as those relating to sales, facilities, or personnel. A combination of an outsider and an insider is important in evaluating symptoms. An insider, someone working on the property, has better knowledge of the operation's practices and procedures, physical layout, and employee characteristics. An outsider, on the other hand, can be more objective about the shortcomings of the property.

In our stated example, any of several things could bring the problem to our attention. It may be that labor costs for room attendants are higher than expected, or that the inspector's ratings are lower than the target, or that we have received a number of guests' complaints about the cleanliness of the rooms. Each or all of these items lead us to believe something is wrong.

Symptoms can be verified through personal observation and interviews. It is preferable that the problem solver observe and verify the symptoms firsthand. In our example, the manager might accompany the inspector on a tour of guest rooms, check the labor costs, and talk to several guests.

If the problem solver cannot verify symptoms firsthand, interviews may be in order. Such secondary information is less desirable than observation, however, because it is selective and filtered through the viewpoint and background of the original observer. If the manager relies on the opinion of the inspector instead of touring the rooms personally, improper weight might be placed on the inspector's interpretation of the standards. It may be that the inspector's standards are too high for the operation and this is causing the poor ratings.

The purpose of trend analysis is to limit the area of investigation. This is accomplished by asking several questions: When? Who? Where? How much?

Concerning our example, ask:

A common tendency at this point is to limit the problem to a few critical areas. The problem of guest rooms that are not up to standard may involve the following critical areas:

The problem may be that management has not expressed well enough how important clean guest rooms are, that the employees have not accepted the standards set, that housekeepers report to front-office managers who are not sufficiently skilled concerning room cleanliness, that too few employees are scheduled to get the work done, that poor-quality cleaning supplies are being purchased, and so on down the list.

The point here is to avoid limiting oneself to too few critical areas in attempting to identify the causes of a problem.

Critical principles are those specific standards or criteria within each critical area that apply to the problem at hand. In the area of scheduling, for example, the critical principles might be determined by asking:

At this point comparisons can be made between the critical principles and the actual situation, in order to pinpoint the causes of the problem. As before, this is done through observation and interview.

In our example, we might identify as a departure from critical principles the fact that the assistant housekeeper is reluctant to cut the hours of veteran employees, although weekend business is much less than that during the week; employees might see this easier work as a reward for good service.

Now solutions can be proposed to correct the deficiencies that have been found. We should be concerned that the proposed solutions will in fact correct the problems. It is important that the proposals are accepted by management and employees alike. This is necessary if any changes are truly to be implemented, rather than merely given lip service.

In our example, employees have to be told the importance of staying within the budget. Other incentives will have to be offered to them as rewards for their longevity. This may mean giving them more hours at the expense of newer employees; it may mean involving them in the process of setting standards; it may mean opening up promotional opportunities.

Bear in mind also that this involves only the scheduling and motivational aspects of the problem. Since this problem occurs only on weekends, it may be that supervision is lax and employees do not feel enough pressure to perform to weekday standards.

It may be necessary to test the proposed solution before proper implementation can occur. This means thinking through the impact of the new procedure on other parts of the operation. The output in one situation may be the input in another. More hours for experienced employees, for example, means fewer hours for newer workers.

It should also be noted that solutions may have to be implemented in phases, over time. New procedures may have to be implemented. The cost of training everyone at once may be prohibitive; the operation also could not afford to have everyone away for training at the same time. The solution might be to implement the program first by instructing the training personnel, who in turn would train the employees shift by shift.

Then, comparisons must be made to determine how successfully implementing the solution has met the original objectives that were set. Further changes may have to be made. The key is to solve problems, not make them bearable.

Evaluation is ongoing. Each month, profit-and-loss statements allow for fine tuning of the operation. Yet the ultimate goal is surely to do things right the first time rather than constantly be involved in putting out fires.