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How expensive is "here anyway"?

When talking about cost of manager time, some people belief like "what does it matter, the [salaried] employee is here anyway. " Is that really a valid perspective? Do we find work that fills a manager's day? Or, do we look at the value created with a task?

Time is Money, right? How much money is generated, while the manager's cost per hour is spent? That depends on the task a manager has at hand. How do you establish a reasonable number for calculations? According to my research using Google and the US Bureau of Statistics and Labor a solid median number for a restaurant manager's salary is $53,000 p.a. or $25.79 per hour. Entry Level positions are offered at $35K and 45K p.a.

We will agree, that the manager's hour can be spent walking and holding a mini-conference or chit-chatting.

It can be spent with customer oriented tasks or by sitting in the office and doing data entry.

Here is the question: what happens if a $53,000.-- p.a. person performs a task like data entry? The average Data Entry Clerk salary is $24,380.-- as a national median. That's $11.34 per hour. For this discussion we can ignore the fact that the true cost to the business is higher than just the basic salary, There are employment taxes and benefits, typically in the 1.25 to 1.4 times base salary range- e.g. the cost-range for a $50,000/year employee might $62,500 to $70,000.

The question in a nutshell: what does it cost the hotel or restaurant, when a $25.-- per hour person does an $11.34.-- job?: Cost more than doubles. The median cost for data entry goes to $25.-- per hour, to be exact. With ANDADO's workflow manual data entry of bills is eliminated entirely. This is what Parkinson's Law says: "work expands so as to fill the time available for completion." The opposite is also true: when the owner announces a visit, suddenly, things that had been procrastinated get done way faster...

The principle of "highest use value" that I learned in real estate class applies here as well: what is the highest income generating, cost reducing, risk mitigating or agility improving use of a manager's time? That's what they should focus on. Anything that automates a manual task, like the My ANDADO "business process as a service" frees up managers for higher level uses, such as analytical work, staff improvement by training or customer facing work.

Epilogue /Conclusion.

In the mid 90s I met Larry O'Connor, back then president of Fastech, an inventory management software provider for restaurants/hotels. Larry is a brilliant speaker and deeply knowledgeable about inventory management. His company was later acquired by Aloha, the POS software manufacturer. Lately I found an article by Larry about inventory management (click this link for the full article). Here is his take on who should do inventory management related tasks:

Your manager is not the person who has to enter invoices, record waste, promos, etc. This is actually an opportunity to take a rising star in your crew and train them in a critical business management discipline that can make them future managers at your next location. This approach avoids adding hours to tired managers, and gets your data entered typically at a [more] reasonable hourly rate.

Your manager should be responsible for the physical count process (whether he/she does it or supervises it) and should know for what products usage variances need attention, sign off on them, and be prepared to offer ideas about how to better manage items with significant cost variance.

One final point: on December 1, 2016, the new federal overtime rule will go into effect*. This rule doubles the current salary threshold to $47,476. Anyone who makes less than $913 a week and works more the 40 hours is guaranteed time-and-half pay. Until 2020 this threshold will go up to a projected $51,000 p.a. = anyone up to that salary is entitled to time-and-half pay for overtime. So it may also be a smart thing to consider how to automate much of the back office work.

* presently on hold; pending judicial review.


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