Sometimes the easiest way to make money is to stop losing it. In a perfect capitalistic world, your business generates revenue, subtracts its costs and enjoys a profit. But there are two parts to left side of that equation — the revenue and the costs — and if you’re not looking for ways to minimize costs, you’re doomed chase more and more revenue to make money.
If you’re a typical business owner, you work hard to attract customers to your business and compensate you for your goods or services. You pay your bills — labor costs and otherwise — and, if the gods smile upon you, you’re left with a little bit for the Church of You. Let’s say your business keeps 10c on every dollar of revenue generated (that is, you expend 90c in costs for every $1 of revenue). In that model, you need to generate $1,000 in revenue to make $100. But in that same model, reducing your costs by $100 is financially equivalent since each results in the same thing — $100 more for the Church of You.
But in today’s competitive, information saturated world, revenue is tough to come by and customers and guests are more sophisticated, market savvy and critical than ever. Therefore, if you can achieve the same result by controlling costs better — often easier that attracting new clients — you should take a hard look at it. This isn’t to say you can cost cut your way to success, but there are ways that you can pick up easy dollars and avoid chasing customers out the door especially in service businesses, i.e. by eliminating or minimizing mistakes.
In our business (land-based casino), we estimate that each mistake costs us $100+, including the cost of business interruption (we generate revenue from continuous gaming), management time (money to review, document and address mistakes) and future revenue foregone (customers can and will vote with their feet). We have humans throughout our organization — dealers, chip runners, servers, bartenders, etc. — so we’re inevitably going to have mistakes. But given their impact on revenue, direct costs and unsatisfied guests (one star social media reviews!), we want to minimize them. So how to do so?
We’ve found that by tracking mistakes with documentation software like
HR PaperTrail, we can aggregate mistakes by staff member, analyze the cause and figure out how to avoid them in the future. We can look for patterns — dealer mistakes in specific games, kitchen errors on certain shifts or transaction errors with certain cage personnel — and take steps to address those specific areas. A bar/restaurant might look at errors with orders (it costs money to send the order back), walk-outs or credit card miscues. A healthcare concern might look at entry errors in patient records, medication issues or even missed diagnoses. Some mistakes are out of our (or our staff’s) control, but we’ve found that most result from concentration, training or decision-making shortfalls, all of which we can improve upon. It’s really no different than figuring out how to limit unforced errors in tennis (hit crosscourt, six feet over the middle of the net!) or reduce drop passes in football (watch the ball into your hands!).
It’s important to communicate with your staff that you’re looking for ways to improve staff performance, not to fire staff members. I’ve never met a business owner who hired someone to fire them and the cost of recruiting a new staff member is more time-consuming and expensive than calibrating the ones you have. At first, your staff members might be nervous to have mistakes tracked, but once they realize that you’re looking to make them better, not fire them, they’ll get it.
Furthermore, by tracking mistakes for all staff members, you can head off the inevitable “You’re picking on me!” arguments. When you can show a staff member that he or she has an above average mistake ratio relative to his or her peer group, you’re in a better position to have them accept the feedback and embrace the need for training and improvement. You worked hard to bring revenue in the door. Now work on keeping it by reducing staff mistakes with HR management tools like
HR PaperTrail software.
About the author
Kyle Kirkland is President of Brick HR, Inc., the developer of HR PaperTrail documentation software. As owner, President and General Manager of Club One Casino in Fresno, California, Mr. Kirkland has extensive experience managing employees in gaming, food and beverage, facilities, security, administration and managerial positions. He has direct experience in dealing with the challenges California employers face and how to mitigate the related risk. Mr. Kirkland is also the president of the California Gaming Association, a non-profit trade association which represents California cardrooms.
Prior to joining the gaming industry, Mr. Kirkland served as the chairman of Steinway Musical Instruments, the world-renowned musical instrument manufacturer, a position he held for 17 years. Earlier in his career, Mr. Kirkland worked at Bain & Company, an international management consulting firm and Drexel Burnham Lambert, an investment bank specializing in high yield securities. Mr. Kirkland has served on the boards of several public and private companies and non-profit organizations.
Mr. Kirkland holds an A.B. degree from Harvard College magna cum laude in Economics and an MBA degree from the Graduate School of Business at Stanford University.
He can be reached at kyle@hrpapertrail.com.
