Creating a financially engaged leadership team in your hotel is no different from creating a strong guest service culture or a team that has colleague and leader engagement as their mission. What you attend to grows, it’s that simple. What’s different with the finances is you and your focus. The picture you want to create needs to be clear, and you need to have a plan to follow and resources to employ to create financial leadership. It’s no different from guest service or colleague engagement. We would not expect these two disciplines to grow and prosper in our hotel on their own. No, we recognize that these require constant attention and nurturing. The financial leadership in your hotel is exactly the same.
Begin with the End in Mind means to begin each day, task, or project with a clear vision of your desired direction and destination, and then continue by flexing your proactive muscles to make things happen. Stephen Covey
First, it starts at the top. The brand, the owner, and the General Manager all need to have the concept of financial leadership as their mission. Not just saying so, but actually having the tools, the processes, and the measurement to follow. I am not talking about financial audits and internal controls. I’m not talking about the accounting function. I have seen so many hotels and their executives hide behind the financial function and the financial leader. It’s like saying HR is handling the colleague engagement piece and the rest of us can sit on the sidelines and watch. The focus and attention to financial leadership need to be continuously delivered from the highest level in any hotel organization. What are we doing in our business to raise the level of financial leadership? How much have we invested to train and educate our leaders on the art of financial planning in our hotels? Is this investment and the attention I place on financial leadership equal to or greater than the attention and investment we make in service and engagement? It’s that simple, and that’s great news because there are no superpowers required to master the financial function, only attention, dedication, and purpose.
In regard to financial leadership, it needs to be said that most of our executives and our hotel General Managers don’t come from a financial background, and that’s perfectly okay. It’s usually sales or operations that produce the GMs, so the financial piece with these individuals is almost always missing or it’s not their strong suit. When I say the financial piece, I mean a solid understanding of the basic fundamental accounting equation, how it all ties together, and the knowledge it takes to explain how the underbelly of the financial machine of a hotel works. This is something that needs to be compensated for. Why would we put someone in charge and not have them equipped with the financial leadership skills they need to succeed? We have a long history of this, and it’s driven by the ancient ideology that says “look after the guests and the money looks after itself.” That is the very crux of the problem. That myth comes from our owner-operator lineage. This is the misguided myth that plagues our business, and we mix this myth with the fear of numbers and the idea that the finance department will carry the day. Today we’re management companies and we sell expertise. So, in short, the executive sticks his or her head in the ground and ignores the real mission, which is to ensure that every manager and leader who consumes resources is properly trained and supported to ensure they maximize their part of our business. It’s that simple. If you’re running a hotel and the leaders who prepare their schedules and order their supplies do so without the necessary P&L knowledge, then you’re running the Titanic. The iceberg is straight ahead, and the collision is not a matter of if, it’s only ever a matter of when, and in this case, the when is now, and it’s ongoing.
The picture you want to create in your hotel is one where each leader produces their forecasts and budgets for all revenues, payroll, and expenses, never one where someone else produces their numbers for them. Their forecasts are consolidated, and if changes need to be made to achieve an overriding financial goal, then agreements need to be made with the line manager and the finance leader. This is financial management 101. The emphasis you place on getting this piece ensconced is paramount to your hotel’s financial health. If you live in a hotel world where the finance department cooks up the numbers and hands them out, then you’re missing the biggest financial opportunity of your year, and your lifetime. I had a discussion with a GM recently from a very prominent brand, and he proudly told me there are only four people in my 600-room hotel who even get to see the P&L and participate in the budgets and forecasts. I, in turn, asked him what it would be like if he had 40 managers really running his business. He just looked stunned and was speechless.
The fact is all your managers and leaders want to have the responsibility for their numbers, they just really need the training and support first. They want to because they see the career opportunities, and they will also quickly see that it’s not so complicated. Your leaders want to have the ability to make a difference financially. You need to make the investment and commitment in your organization and pull the financial leadership piece into your culture. You will quickly find that your managers and leaders love this work, and now that you’re willing to treat them like the responsible adults that they are, they will run their part of your business with much greater care and respect. All of this has a really nice impact on your bottom line, and just watch their leadership engagement soar.
David Lund
The Hotel Financial Coach
+1 415 696 9593
David Lund
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