Sharing financial performance with staff can lead to greater efficiency
Giving numbers context, such as how much beer wastage impacted profits, has been an important think for Mark Holden
When staff understand how their day-to-day actions impact overall company performance, it can reduce costs, drive efficiency, increase sales and often leads to higher customer satisfaction.
Financial transparency drives efficiency
Sharing financial information with staff allows them to see how their actions impact profitability. For the Inn Cornwall team, the strategy has helped to reduce wastage considerably.
The hospitality business, which has three pubs, shares a profit and loss statement with staff every week. This includes year-on-year and week-on-week comparisons for spending, labour and gross profit.
Director Mark Holden said that transparency around company performance needs to be backed up with an understanding of how individual staff can have an impact.
Failing to do this can impact motivation as staff look at the turnover numbers and think: “What does that have to do with me?”
“For us, it’s about trying to get everybody to understand monetary value no matter what it is that they’re doing,” he said.
Wastage can have a big impact on profitability in the pub business. Mark estimates a staff member miss-pouring pints regularly could cost £16,000 a year.
“It’s easy to miss-pour a pint, so it’s about training our staff, giving them a visual and having that monetary value of everything they’re in control of,” he said.
Additional reporting is developed for key staff members. For example, purchasing is integral to the profitability of Inn Cornwall’s food business and the company publishes twice-weekly reports for kitchen staff.
“This helps them understand the level of purchasing to sales and predicted gross profit levels. They can look at the stock levels on a regular basis. If they see the purchases are quite high they can respond,” Mark said.
“For us, it’s about trying to get everybody to understand monetary value no matter what it is that they’re doing."
Mark Holden, director, Inn Cornwall
Linking incentives to company performance motivates staff
Linking employee incentives to company profitability can be a great way to motivate your team. The strategy has enabled Inn Cornwall to surpass its highest profit predictions.
Timely reporting helps improve this process. Inn Cornwall takes the time to run payroll weekly and bonuses are paid on the previous week’s performance. This helps connect the day-to-day actions of staff and their impact on the business with personal reward.
Staff can be paid bonuses based on turnover or profit, particularly for roles that generate revenue or directly impact costs.
In roles that are not directly linked to revenue, though, incentives that focus on profit can be demoralising if employees feel they have no impact.
An alternative would be to incentivise actions that drive profit. These could include customer feedback, the growth of social marketing channels or training, which are all metrics Inn Cornwall uses.
Setting staff goals that link with company profitability can have a positive impact on revenue. Mark said that small initiatives like aiming to sell an extra half pint of beer per table culminated into big wins. All these actions have helped push turnover to a record high.
“At £1.2m gross profit we thought that was it because we were flat out. But the team has constantly pushed it,” Mark said.
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website: http://www.cornwallpub.co.uk
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location: South West (England)
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business type: Hospitality & tourism
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business size: 50-99
Top takeaways
Helping staff understand how their actions impact company performance can boost turnover and profit.
When employees understand profits and costs, it can allow them to spot opportunities to reduce wastage.
Staff incentives linked to overall profitability can motivate your team.