Realigning administration costs during the COVID-19 pandemic

At the height of the pandemic, a joint group of owners and brand executives approached Carpedia Hospitality to explore ways to best optimize their on-property administrational & general departmental processes by challenging traditional workstreams and responsibilities at four properties within their portfolio. The project not only set out to construct a revised staffing model to drive long-term financial improvements, but also sought to improve the consistency of services provided across the four properties.

The Challenges

Carpedia Hospitality was brought in to support a taskforce of internal team members that set out to identify opportunities to improve the human resources and finance departments. With combined annual pre-covid revenues of approximately $500M, the properties have experienced significant success over the years. However, as a result of the pandemic’s impact on the hospitality industry, coupled with a largely fixed administration & general departmental expense representing nearly 6% of pre-covid revenues, the ownership group looked to Carpedia Hospitality’s expertise and methodology to realign their organizational structure.

Although regional oversight existed for the properties, when examining the current state of operations, Carpedia Hospitality identified that there was almost no consistency in departmental processes between the properties or synergies being deployed. For example, it was common for more than one property that operates within the same labor market to have the same candidate apply for an open position at each property. As a result of limited communication between the recruitment functions at each property, a candidate would be reviewed independently. Carpedia Hospitality’s analyses demonstrated the frequency and degree of excess work that this practice had been generating, and further identified occurrences where candidates were lost to a competitor because of the length of time needed to process a recruit due to these breakdowns. In addition, the properties did not have visibility to each other’s talent pipeline. This resulted in the inability to prioritize resourcing across the properties which led to talent imbalances at each property. Similar redundancies and unnecessarily elongated processes were identified in each of the areas reviewed by Carpedia Hospitality.

While multiple cutbacks had already occurred due to the COVID-19 pandemic prior to the start of Carpedia Hospitality’s engagement, the ownership group and brand were more interested in Carpedia designing a sustainable, efficient, and agile post-pandemic organizational structure that took into consideration four key pillars:

1. Clustering – The organizational structure is organized by knowledge set to maintain focus on a common mission.
2. Efficiency – The organizational structure unifies like-oriented functions while eliminating redundant process steps.
3. Skills – The organizational structure strengthens the skills, knowledge, and abilities of all team-members.
4. Scalability – The organizational structure allows the organization to be agile and nimble in periods of business volatility.

The Solution

Historical data was collected and analyzed to build improvement models independent of the pervious COVID-19 resourcing adjustments. Doing so allowed for the creation of an unbiased model that was designed to sustain short to longer-term requirements. In addition to the data analyses, Carpedia Hospitality conducted several virtual meetings with the key stakeholders from the respective human resources and finance departments to thoroughly understand four key components:

1. Nature of Work – How similar is the work to which other direct report perform?
2. Standardization – Can any of the work / processes be standardized?
3. Complexity – How complex is each of the activities the direct report performs?
4. Interdependency – How involved must the manage be to coordinate activities with the group?

What’s more, to further understand each organization in greater detail, a Span of Control Analysis was conducted to analyze the different constructs and layers being deployed relative to the outputs and behaviors within each of the departments and properties.

Throughout the engagement, various organizational structures were modeled for both human resources and finance through a series of data-driven working sessions and from the compilation of feedback from all stakeholders – it was essential that employee and guest satisfaction would not be impacted, and equally, that departmental leaders were bought in at the design stage.

The Results

Upon finalizing the new organizational structure, it became imperative to understand the functional or technical barriers that would prevent the teams from being able to seamlessly conduct their work. For example, a technology process map was produced to identify enhancements and new solutions needed to allow individuals to work cross-property and across geographic areas without uprooting to a new location. Parts of the new organizational structure involved creating a virtual regional central services group, which meant certain job functions would now need access to all properties. While the very nature of the reorganizational design generated resourcing and processing efficiencies, it also spawned the adoption of technological solutions and practices, such as e-signatures and an improved suite of remote desktop web access to further improve workflow and visibility across the properties.

More specifically, the new regionalized strategy empowered key functions such as Accounts Receivable, Accounts Payable, Payroll, Training and Recruitment to operate as verticals. Team members within each vertical became “specialists” in their respective field which further generated operational efficiencies and enhanced productivity levels. Additionally, a net increase of available resources operating within the collective unit was generated when compared to the allotted headcount previously staffed at a single property. As such, the team was more appropriately sized to handle the varying workload peaks that occur at differing points across the four properties and knowledge could be more easily shared within their functions to continuously improve upon the design and testing of best practices within each of the verticals.

While the project generated an important and material enhancement to the bottom-line, the considered approach taken by Carpedia Hospitality has ensured the redesign will remain a fit as volume continues to scale. Moreover, the project improved processing times and the quality of outputs for both internal and external customers, guests, vendors and recruited team members. Finally, the work would not have been deemed a success if employee satisfaction suffered. As the redesign led to an increase in remote work – which had been identified as net promoter of job satisfaction – and simultaneously broadened potential career paths to span outside of a traditional single property track, the program was well received by the team. What’s more, unused office space could be repurposed for revenue generating opportunities.

While the ownership group was impressed with the leaders’ adaptability and appreciated Carpedia Hospitality’s support on another effective project, a weekly steering committee has been convened by Carpedia Hospitality to aid during the transition and to provide guidance when variances arise.

Identifying sustainable opportunities for improvement while continuing to operate is generally not a simple task – let alone during a crisis. The partnership formed with Carpedia Hospitality generated the necessary and timely win-win for this joint owner-brand group.

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