“Think and act as if it is your own business”. The recipe for success?

Everyone has heard the phrase before. And did it work?

Even in the hotel and catering industry, everyone likes to imagine that this is their own business. It's called a dream when you're not the heir. A manager who requires his department heads, or even better employees, to imagine that they are the owner hasn't really thought about it beforehand. What does he expect? That his staff successfully lies to themselves? In fact, it's not their business! How this sentence is supposed to motivate remains a mystery to me.

Especially in hospitality it was always the case that bad wages were paid. If it were your own business, that would be the first thing to change. Is that what the boss meant?

Working hours are long, the job is physically demanding, overtime is unpaid and public holidays are of course worked twice for the same bad money. As an owner, you can change that immediately. But that's probably not what was meant.

And yet "think and act as if it were your own business" is the right starting point.

Complaining about the lack of willingness to work among the younger generations is simply an excuse for those responsible who do not have the creativity to inspire, motivate and grow with these generations. But this requires owners and managers who want and can change and learn from their mistakes in the past. These types of skilled workers seem to be really very scarce.

A few, however, manage to make their business their employees' business. It just has to be thought through properly, planned for the long term and requires trust. All things in times where only quick, immediate success and profit counts are rarely found.

Three changes will help:

Stakeholder, shares are an incentive that seems most successful with other factors. This does not mean distributing shares but creating incentives through commissions, for example.

1) Commissions

Have always been successful when properly planned. On many ocean-going ships, however, the commissions are structured in such a way that the employees only earn enough if they sell enough. This is not long-term thinking, but exploiting staff and often leads to the guest feeling ripped off or pushed. Bad for the guest, bad for the staff, only short-term profit for the company.

A model where staff are paid sensibly and are motivated by commissions to sell more, feel success at work and money in their pockets when it works is actually always successful. However, if this is only for a few days or a week, it will never be successful. Accurate planning is important. Often a percentage of 5% of the profit is ideal, but this can vary from business to business.

2) Payment tied to profits

More profit - more money for the staff. A successful model that requires a lot of trust but almost always promises success

A Swiss example shows that it works.

"We couldn't find any employees last year and had to take everyone who applied, there wasn't a choice," recalls Péclard. "It annoyed me incredibly, the people weren't motivated, they weren't funny and the customers complained about them.”

A solution was needed. Last winter, Péclard and Weber thought about how to get good service staff on board: "We then decided on profit tied wages in some of our 16 companies."

Péclard's employees now earn seven to eight percent of the profits that they achieve in the restaurant over the month - an average of 8,000 to 12,000 francs a month. In June, one of his waiters achieved a record salary of 16,500 francs, the equivalent of almost 17,250 euros.

The number of applications has increased massively, Péclard and his partner could now choose from a much larger group of people. "The best in the industry are now applying to us," says Péclard.

For the restaurateur, this is a win-win situation: Not only do the waitresses get more wages, the businesses also achieve significantly higher sales. Since the new model was introduced, sales have grown by 30 percent, which is mainly due to committed employees. "This is no longer just our company, but also that of the employees" - the employees are ill less often and are more motivated to earn more with good work. "As a result, we were able to make savings in other areas, so that we were able to reduce personnel costs by four percent compared to sales".

Angelica Melcher

August 28, 2023 Wirtschaftswoche

3) A package of pay, development and reputation

Reputation, financial incentive, further training, work that is fun, gets you ahead and is worthwhile. A dream? Maybe, but there are good examples. Peninsula has always been a hotel everyone would love to work for. For the new opening in London, there were 30,000 applications for 600 positions. That says a lot. Peninsula has always paid its staff very well, the training and thus career opportunities have always been excellent and it has maintained the standards and top class in the hotel industry for almost 100 years. So it's possible.

Why not?

For this, every owner will immediately find many reasons.

Commissions - you give the staff something that would otherwise have ended up in your own pocket. The real horror for many owners. Very short-sighted because you don't increase sales and profits this way.

Management changes are another reason why successful models are scrapped. A new manager takes over a hotel with a successful commission or stakeholder model, but thinking only that costs need to be reduced, cuts the commission, stakes and expects higher net profit. No joke - I've seen it often enough. Then one wonders why turnover, profit and motivation decrease while staff turnover and costs for repairs etc. increase. It’s difficult to understand.

It is possible to share and thus make a higher profit and I have often seen it succeed. It's not the employees who need to change - it's the owners and leaders who need to change first, and so their employees will change successfully. As described above - a win-win situation is possible if you really want to. Only greed and ignorance often stand in the way. One can only recommend trying it. Maybe only first in the shop or only with drinks. Then you can either stop or expand it. But try - change is needed!

Stephan Busch has an invaluable and diverse experience in the hospitality industry ranging from senior management positions with the most renowned hotel and resort companies to the project development - launch of operations, business development- for hotel and cruise companies in Asia, Europe, Canada and Russia.

His expertise includes not only planning, opening and operating of hotels, international golf clubs, airports, resorts and cruise ships, but also successful restructuring and repositioning of businesses during the financial crisis in Asia.

Stephan Busch earned his Master Certificate in Hospitality Management from Cornell University, USA and served many years as Academic Director / Faculty of Hospitality & Tourism at the State University for Humanities RGGU as well as the Swiss International University St. Petersburg.