First line managers can learn the details of their business by the Jerry Maguire (Tom Cruse) “Show me the money” process.
I managed several businesses without training or background in the business. Tracking the costs helped me learn the business. I tracked the costs from the financial reports to the individual purchases and salaries. This process surprised me, I learned so much about the details of managing the business. Here are examples of how I tracked cost to learn a business.
The restaurant Manager of the Ramada Inn South in Tuscaloosa, Alabama was my first management job. My performance target was to keep the food and Labor cost below 65% of the restaurant’s monthly sales. The previous manager never got the costs below 72%; most times she was closer to 80%. She had been in the restaurant business for years. The restaurant’s labor cost was within budget. Labor cost was easy to control by use of proper work schedules. I realized food waste was a big part of the food cost. The lunch and dinner menus prices were”OK”. The weekly daily special lunch menu was the problem. There was no consistency. I devised a 16 day menu cycle with different selections on each day (3 weeks and one day). For instance, one day the menu had roast beef, the next day we had beef stew. This process worked food leftovers from one day into the next day’s menu. This rotating menu allowed me to plan purchases and manage inventory more effectively. I tracked the cost of each entrée. The high cost entries I limited over the span of the menu cycle. I tracked the cost of each food item; thus, I could predict my food cost over the cycle. After a couple of months, I had the restaurant’s food and labor cost below 65 % of the restaurant revenue. I accomplished my budget without sacrificing customer satisfaction.
As General Manager of the Admiral Ben bow Inn in Birmingham, I required my housekeeping manager to give me the number of rooms each employee cleaned daily and the hours the employee worked. I took this information and entered it into a spread sheet. On a daily basis, I calculated the cost for each employee to clean a room. I tracked this information over time. This information is an effective performance measure. I informed the housekeeping manager on employee performance. If an employee’s cost per room was low, I wanted to know if she was following our rules for cleaning a room. When an employee’s cost per room was too high, did we need to follow-up on her performance? This data allowed the housekeeping manager to schedule the most efficient employees when she had to work employees on week-ends or overtime. Tracking the cost in this way let her control the labor cost and keep our quality of service high.
Sometimes, I did not have a budget for my department. I still managed key components of my department’s cost: labor and material. I established key measures, such as orders worked per day, hours of overtime, and material usage records. I determined the time required to do a certain job; I tracked this over time. If an employee was not performing the task in a timely manner, I knew. I documented the service orders worked daily by each worker and tracked this over time. This document gave me the number of orders I could expect a worker to work daily. This information is great performance management check on a worker’s performance. This information is critical to planning the departments personnel levels; whether to eliminate or add employees.
Each activity performed by my department has an associated cost. By the “Show me the Money” process, I found the high cost activities to control. This process was a path to the expenditures I must to control to stay within my department’s budget. Most importantly, by tracking costs, I learned that I could manage most any business and be successful. If you can manage the details of the business, others will not manage it for you.
Front line manager your key responsibilities are to manage the cost and quality of work in your department. You can do this best if you track the key costs as they occur and flow through your department. This tracking will also lead you to a better understanding of the business.
