|
Improving
profits and peace of mind: a case study from Oaxaca, Mexico
Am I paying my staff too much?
|

|
Its now two months before Day of The Dead in Oaxaca,
and Juanitas hotel still has rooms available for one
of the busiest times of the year. The City of Oaxaca, a UNESCO
World Heritage Site in Southern Mexico, relies on tourism
for its very existence. Juanita is trying to figure out where
she went wrong, realizing that Día de Los Muertos
should top up her bank balance, just like the Christmas season,
the summertime festival weeks known as Guelaguetza, and Easter.
Time and again Juanita asks herself, Am I paying my
staff too much? Merely asking the question reveals why
her bottom line is so low.
Oaxacan business owners with non-unionized staff who either
think theyre overpaying, or provide a level of remuneration
only because they believe they cant get away with paying
any less, will never maximize their profit potential. Attitude
towards employees, and failing to recognize the importance
and potential value of each and every staff position, affects
how business fares.
Here in Oaxaca its a well-known fact that non-Mexicans
(extranjeros) pay their help more (i.e. too much)
money relative to Oaxacan employers. Until recently I had
assumed that the reason was simply that Americans and Europeans
resident in Oaxaca come from wealthy societies in which entrepreneurs
can afford to pay large salaries, and although now living
and working here in Oaxaca they still think and operate in
American Dollars --- not understanding or accepting Oaxacan
economics. But now, armed with data concerning the salaries
customarily paid to employees in diverse positions of trust,
authority and responsibility, and having conducted a rudimentary
analysis of comparative levels of success between foreign
and domestically owned businesses, its clear that the
differences are rather simple, and relate to three fundamentals:
1) business acumen; 2) attitudes towards leisure time and
piece of mind, and; 3) willingness to acknowledge that you
get what you pay for. Each is integrally related to
the other.
Juanita (names have been changed) pays her receptionists 115
pesos (roughly $9 USD) per day, and her chambermaids 100.
Mary, an American who owns a bed and breakfast, never pays
staff less than 150 pesos per day. The American travels outside
of the country to promote and conduct business, and to vacation,
on a regular basis. The Oaxacan rarely leaves the city or
takes a vacation of longer than three days, and does so only
when there are virtually no guests in the hotel. The Amercan
says that she knows she pays her staff too much relative to
Oaxacan salaries, but when she stops to think about what overpaying
enables her to do, and how her business fares, acknowledges
that perhaps she is not being unreasonably generous with her
staff.
Why is Marys B & B one of the top-ranked tourist
accommodations on a major international travel website, while
Juanitas is in the doldrums? Juanita says shes
paying her staff double minimum wage, and could pay even less
if she really wanted to. Mary has had the same staff for several
years, and even acknowledges their birthdays. Juanita has
high employee turnover.
Juanitas financial outlay is significant. She spends
an inordinate amount of effort making her hotel look pretty,
and money promoting it. Her hotel is in a high rent district
in the downtown sector of the city. It should be packed day
in and day out given its location and the expenditure to maintain
it. Yet two months prior to Day of The Dead, she is one of
only two lodgings in her association with rooms still available
for the high season. Funds are earmarked for the wrong places;
prioritization is skewed.
Juanitas retort strikes a familiar chord, and at first
instance might seem rational: It wouldnt matter
if I paid my receptionist 30, 40, or even 50% more,
she laments. She wouldnt work any harder or be
more dedicated, because more money doesnt motivate them;
thats just the way they are. And besides, I cant
afford any more, with all my other expenses, and business
generally down.
Juanitas response can be summarized as twofold: paying
more wont yield results, and; she cant afford
it anyway. Dealing with the first, Juanita has to step out
of the box, out of the colonial way of thinking. She sees
the culture of poverty, insofar as it relates
to native workers from small towns and villages, not allowing
employees to break from a fatalistic pre-determined mold,
because thats just the way they are. More money wont
make a difference to their lot in life and therefore wont
motivate.
It does not behoove me to tell Juanita shes wrong, and
it is beyond the scope of this essay to even try to illustrate
that she is, which may or may not be the case. But theres
another solution to Juanitas dilemma which does not
threaten or test her ingrained beliefs. She can seek out prospective
employees whose expectations are higher to begin with; those
who have perhaps had a taste of higher earnings and what they
can provide, or have achieved advanced education, if only
a high school diploma which has lead them to a career path
(una carrera). Juanita then begins with the knowledge
or at least an expectation that the change in hiring will
bear fruit. But that might entail going as far as paying her
receptionists 200 pesos a day.
Can Juanita afford to pay her daytime and evening receptionists,
Alma and Rosita, almost double? And why would she? After all,
reception is a non-management position. This leads us to the
second prong of the equation, that is, affordability and making
a difference. We must look at the question in terms of higher
profit potential, and peace of mind and its natural consequences.
What then would be the implications for Juanitas after-tax
income, and more generally the quality of her life?
Juanita has eight rooms in her hotel. She would be increasing
the pay of only two of three receptionists, on the basis that
the all-night position might not yield results with a higher
level of pay. It would therefore cost an additional 170 pesos
per day to raise each of the two shifts to 200 pesos, plus
other sundry expenses, so call it 200 pesos more per day.
Juanita could make it up by raising room costs by 25 pesos,
or roughly 4%. Or she could absorb the extra cost and see
if it makes a difference. Lets assume, although Im
not certain we should, that vacationing couples would resist
paying 625 instead of 600 pesos per night, or 12.5 pesos more
per person.
How would Alma react to having a 200 peso per day job, rather
than working for 115? Her sense of self-worth would receive
a shot in the arm; her name would be on her uniform; she would
be more likely to stay at work after her shift has ended,
without resentment, if for example Rosita arrived late on
occasion; she would less likely be constantly looking for
a job paying 10 pesos more a day; and she would feel that
her education has paid off. Juanita might even give her the
responsibility of making bank deposits if she proved completely
trustworthy and loyal. Without a doubt she would be more likely
to provide hotel patrons with value-added service
and with a smile, literally.
Alma and Rosita would remember patrons returning the next
year, and the guests would surely recall them, because of
their friendly faces and the service they provided. Theres
nothing like returning to a hotel and seeing familiar faces.
It breeds comfort
more so than a soft duvet. Both Mexican
nationals and foreigners tend to be family oriented. They
would perceive the hotel and its staff as a family, again
leading to familiarity and comfort. They will be more likely
than not return to the same establishment next year, and recommend
it to friends.
Over time the nature of and expenditure for advertising can
be adjusted, from paying out higher costs every year for the
same and new promotional techniques, to the more economical
promotion of emailing those on the client list from time to
time to keep the hotels name in their minds. The hotel
will be able to use the written testimonials of its guests,
which will undoubtedly be received, instead of pay its marketing
specialist to come up with catchy slogans of questionable
value (at least thats the Oaxacan norm).
Staff staying with Juanita for longer stretches of time means
Juanita spends less time interviewing and hiring and firing,
and less money advertising for positions. Juanita can spend
more time with her family, or find more productive ways to
keep business growing, instead of constantly being on the
defensive by having to staff, yet again. She will no longer
have to constantly be looking over the shoulders of Alma and
Rosita, since shell know that theyre doing their
jobs, because theyre happy to be doing them; Alma and
Rosita will have begun to appreciate the monetary and non-monetary
rewards resulting from meeting and exceeding expectations
of management. It takes time and energy to always be watching
over the work that staff is doing to ensure that its
being done competently. If paying higher wages relieves Juanita
of that responsibility, she will then have more opportunities
to perform other tasks more directly relating to marketing
and making money.
Once the level of trust has been established, Juanita can
take the odd day off, knowing that Rosita will be able to
resolve small problems on her own such as calling the plumber,
the electrician, the water delivery man and the municipality.
Shell have the confidence and the sense to call Juanita
when she cannot resolve problems, not feeling as though shes
been a failure for not dealing with issues on her own. Juanita
wont be constantly calling the hotel to make sure everything
is running well.
Rosita will sense her value to Juanita, and anticipate regular
raises, which will keep her content. And Juanita will hopefully
have the sense to not wait until Rosita takes the bold step
of asking.
Juanita
will be able to take off not only the odd day, but actual
vacations.
Reception is the most important staff position a hotel can
have. It provides the first impression that a prospective
patron will receive about Juanitas hotel, whether the
inquiry is by phone, or in person. Unless Juanita wants to
be the one answering the phone and selling her hotel to off-the-street
tourists, shed better begin paying Alma and Rosita the
value of their positions
or theyll be gone, and
Juanita will in fact be working 24/7.
Once her staff is patterned to provide value-added service,
Juanita can raise her prices. No one will begrudge that extra
25, or better yet 125 pesos per night. After all, Alma and
Rosita will be doing the selling for her.
Next adjustment? Think of the level of responsibility entrusted
to chambermaids, and how much they are being paid. They ensure
patrons valuables do not disappear, and the cleanliness
of surroundings and level of comfort for a full one-third
of the time travelers are on vacation!
Casa
Machaya Oaxaca Bed & Breakfast ( http://www.oaxacadream.com
) ©
Casa
Machaya Oaxaca Bed & Breakfast ( http://www.oaxacadream.com
) is a founding member of the Oaxaca Bed & Breakfast Association,
its members providing an attractive alternative to lodging
in a Oaxaca hotel. Our member Oaxaca bed and breakfasts are
committed to providing value-added service in a quaint, personal
touch environment, a contrast to traditional Oaxaca hotels.
Casa Machaya co-owner Alvin, the Oaxaca destinations expert
for a major international travel website, provides Oaxaca
tours to his house guests as well as those staying in other
Oaxaca accommodations.
ARTICLES
MAIN PAGE | CONTACT
US | LINKS | HOME
|