My Las Vegas Business Press column on the dubious benefits of cost-cutting in a hospitality company is out today:
It goes without saying that there are several ways to cut costs. Shaving off some perks — first-class travel for jet-setting execs or caviar in the employee dining room — makes eminently good sense when revenues are down. Likewise, optimizing employment levels, which often means finding ways to do more with less, can help strengthen a hospitality company’s bottom line and competitive position if it’s done sensibly.
But not all cost-cutting provides a net benefit.
I still don’t understand why you would want to incentivize your executives to make decisions that hold costs down without regard for performance or guest satisfaction. I don’t have any problem at all with people being well compensated for their work (I know I wouldn’t turn down a bigger paycheck if someone offered it to me, and it’s hypocritical to assume that others would), but they should be rewarded for either improving results or delivering better service, not just keeping costs down.
That’s my two cents, anyway. Though if I start cutting costs, I might only give you one cent’s worth next time.