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Laboring Over Staffing Issues Sure cutbacks have been essential, but are you making cuts that are smart and will help you keep employee loyalty? Tuesday, November 17, 2009 Glenn Haussman

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With the economy wreaking havoc with traditional hotel labor models, it’s forcing human resource executives to rethink compensation plans. Yet, if cuts are too deep or onerous, it could have far-reaching effects in the organization.

For example, lay off too many employees and service suffers. And cutting back on existing employees’ hours could create a scenario where motivation declines to the point where the ability to appropriately service the guest also suffers. Either way, it’s a not a good situation for HR execs to be in when they have no choice but to lower costs.

“This is the most difficult economic environment in just about anyone’s life here. We are not in a recession in my view; this is a depression,” said Alan Momeyer, vice president human resources, Loews Corporation, during the AHLA Fall Conference held in conjunction with the International Hotel/Motel & Restaurant show held earlier this month. “At least for this industry you should not expect a robust environment where you can do a lot of investing in HR anytime soon.”

He did say the recovery will come and that he didn’t want to “sound like all doom and gloom,” but since lodging is a labor-intensive business, it is not difficult to come up with options to save hotelier money.

To keep the company in good shape for when the hotel business does rebound, Momeyer said they did not lay off their corporate training manager. “For us to dismantle that would be the exact wrong strategy,” he said. Instead, that individual is now working to hone current employee skills.

And while they did cut down on the hours many full-time employees worked, Loews also lowered the threshold for hours an employee had to work to retain full-time status and subsequent benefits. He said converting them to part-time employees would cause ill will and, though the Loews will have to shell out more in benefit costs, Momeyer said the strategy would help retain good workers.

They are also boosting their employee recognition programs such as Employee of the Month and Employee of the Quarter, an essential requirement to keep employees in the right mode to keep treating guests right.  Loews also didn’t scrimp on its Employee of the Year program, which rewards an employee from each hotel with a trip the company’s annual conference, red carpet treatment and a film highlighting their work effort. Costly, yes, but well worth the price motivationally Momeyer said. “We did it for the other 6,980 employees to communicate to them they are our most precious brand resource. Those are intentional decisions to not eliminate things.”

Loews did cut a student training program and eliminated merit increases for now. Incentive pay is also temporarily gone, but it’s expected to be reinstated for 2010.

“The real issue is not now, it’s later when the recovery comes. If you don’t do right by employees now, then they are out the door when the market comes back,” said Momeyer.

Meanwhile, the five-diamond rated Broadmoor in Colorado Springs is a meeting-focused hotel that has been particularly hard hit by the so-called “AIG Effect” that has spooked meeting planners from booking luxury resorts. Group business alone is down by 40 percent, said Cindy Johnson, director of human resources at The Broadmoor. “This year has been challenging, not only to the economy but to employees, too. We have all had to look at some cost-savings measures,” she said.

One unique program at The Broadmoor cross trains employees, a strategy Johnson said helps maintain the hotel’s top talent. The hotel has also lowered hours worked to be classified as full-time, and an “extra hours hotline” helps cross-trained employees add extra hours in different departments to help them put more money in their wallets.

Johnson said The Broadmoor is also maintaining its 401k funds matching program, and will continue merit increases for hourly employees but has frozen wages on salaried managers. Additionally, all new hires need to be approved by the resort’s president and staff has been reduced mainly through attrition.

They have also been able to reduce accidents by 33 percent this year through aggressive case management and increasing safety culture. Training has also been maintained or increased, as well as a strategic initiative to better position the property on the other side of the downturn.

“Employees have a long memory and they will remember some of those small things you take away. We truly feel and weigh each decision very carefully and for the most part tried to keep them whole and feeling appreciated and intact even in this difficult time,” said Johnson. 

Andria L. Ryan, an attorney with Fisher & Phillips, LLP, said all human resources decisions need to be approached from a cautionary standpoint. She said cutting back hours or slicing benefits is a lower risk option to exposing the hotel to lawsuit compared to layoffs.

Voluntary sabbaticals or furlough is another way to slash hours without worrying about legal ramifications. “The risk gets much higher when you start terminating employees,” said Ryan, who warned that companies with more than 50 employees have to warn employees 60 days in advance of impending layoffs. Employees may also not work as hard during that period as morale crashes.

She also noted that there has been the highest number of discrimination suits filed this year from disgruntled former hotel employees, particularly age discrimination suits.

Other cost-saving tips she provided are to observe COBRA rules to the letter, do not give excessive grace periods, and eliminate auto-enrollment in 401k plans. Also she said to conduct an employee audit to make sure all dependants on employee health plans are actual dependants.