BizSugar.com › Management › Labor Efficiency Modeling For Your Small Business Success

Getting yourself and your business unit into the mind-set of thinking about labor efficiency modeling is one of the keys to running a profitable business.

The last time you looked at your current standards was when? Do you know what the correct production efficiency from each of your job codes is, even yours? What is your monitoring frequency? Are your current efficiency modeling standards relative and timely with the current work force, market conditions, pricing structure, technology, and machinery in place? When do unacceptable results on each end of the parameter's spectrum trigger that an adjustment needs be made?

Do you share your statistical results from the modeling output calculation with the associates, HR, and supervisors for constructive assimilation and benchmark performance managing? You cannot tell someone to do better at something if you cannot show them why and where they are not meeting standards. Are you making labor efficiency part of the corporate culture and driving performance, retention, rewards, and career paths with them? Is your monitoring on efficiency placed upon the greatest job code that will yield the highest returns? Can your associates deliver upon current standards without task saturation overcoming them and quality being affected?

All of the answers to these above questions and more, along with revenue and greater efficiency, can be generated when you apply labor efficiency modeling to your business unit. Always focus your labor efficiency modeling to the greatest payroll burden and work backward throughout your business unit as you are re-implementing your standards.

How do hotels use labor efficiency? One way is in the form of cleaning rooms, the “minutes per room” or M.P.R. that it takes a room attendant to clean a room. At the end of that workday, all of the time from a room attendant is added up and then verified that it fits within the “minutes per room” standards for all of the rooms that were assigned to them for cleaning. When these numbers are reviewed, deviations can be determined that very day, so corrective action can be taken to balance out the week's labor efficiency model before the overages hit a profit and loss statement. Labor costs on cleaning rooms can greatly impact the bottom line of a hotel, so that is why daily monitoring of this labor cost component (labor efficiency) helps a hotel bring down the appropriate payroll percentages and budget adherence is achieved.

Labor efficiency modeling can bring great success to your business unit if implemented successfully. What are yours and how are you going to make them better?