Establishing performance standards

Establishing Performance
Standards

Monday, July 11, 2011 BAC-5132 Food and Beverage Management-II-Establishing Performance Standards Slide 1 / 47

Recap of the Previous session
• What is meant by Compensation?
• How does direct compensation differ from
differed compensation.
compensation
• Explain labor turnover.
• Discuss the difference between Part time
staff and Contractual staff in an
organization.
• How does the menu affect the labor cost.

KCM of the Session
• Explain the meaning and significance of
quality and quantity standards in labor
control.
• Explain how records of business volume are
used in scheduling.
• Describe how to prepare an hourly schedule
for variable - cost personnel using records of
business volume.
volume
• Describe how to develop performance
standards based on a test period
period.

Scope
• Establishing Standards
Standards.
• Features of the Organization Chart.
• Writing Job Descriptions.
W iti J b D i ti
• Keeping Records of Business volume.
• Daily and Hourly Tallies.
• Developing Schedules for Employees
Employees.
• Developing a Standard Cost for Labor.


Establishing Standards
1.
1 Quality Standard
Standard.
2. Quantity Standard.
3. Cost Standard.
3 C t St d d
Quality Standard:
1. Depends on the menu.
2.
2 Competence of the Employee
Employee.
3. Type of Restaurant.


Quantity Standards
1.
1 Quantity standards must be established
after the quality standards are set.
2.
2 Break down of tasks and compare it
against time.
3. Establish
3 E t bli h quantity of performance on an
tit f f
individual in 1 hour.
4. In higher industries the time and motion
concept is used to analyze each job.

Quantity Standards
5.
5 The Production is normally linked to the
demand from the market and hence
quantity standards are also linked to
scheduling which depends on demand.
6.
6 Fast food restaurant chains define jobs
and designate individuals to improve
efficiency.
efficiency


Quantity Standards
7. Fried Chicken restaurant have standards
that a product will remain on a particular
stand only for a certain time after which it
y
will be discarded.
8. The standards is established by manually
y y
calculating a task and quantified in time.
9. In restaurant business the perishability
p y
and fluctuations in customer demand
greatly affect quantity standards.

Steps required in Establishing
Standards d Procedures
S d d and P d
1.
1 Organizing the enterprise by making an
enterprise,
organizational structure with jobs and
designation.
designation
2. Preparing job descriptions by listing them
down sequentially later handing them
over as you go on appointing people.
3. Scheduling
3 S h d li employees as per b i
l business
hours, efficiency and job description.


Establishing an Organizational Plan
1.
1 Type of clientele.
clientele
2. Nature of the products offered.
3.
3 Type of service rendered.
T f i d d
4. Estimation of customer count and no of
meals to be served.
5. The smaller the establishment in the
service and product range the easier it is
to establish an organizational p
g plan.

Features of the Organization Chart
1.
1 The lines leading down show the chain of
authority.
2.
2 The one below reports to the one above
above.
3. The Boxes next to each other work in the
same place b t on diff
l but different equipment,
t i t
co-ordinate and co-operate.


Features of the Organization Chart

4.
4 The dotted lines vertically indicated co-
co
working communication and co-operation
between two positions
positions.
5. The lateral lines co-ordination in
accomplishing respective tasks neither of
whom are taking directions from each
other.
other


Steps in Job Descriptions
1.
1 Using Job analysis
analysis.

2. Job descriptions.
2 J bd i ti

3. Job Specifications.


Preparing Job Descriptions
Using Job analysis:
1. Use skills are featured in resume and on
job skills test
test.
2. Level of Education.
3. Other specific qualifications.
4. Interviewing workers and supervisors to
g p
tabulate information.
5.
5 Observe workers perform their jobs
jobs.

Job Analysis query structure
1.
1 Job Objectives
Objectives.
2. Specific tasks required to achieve
objectives.
objectives
3. Performance standards.
4. Knowledge and skills necessary.
5. Education and experience required.
p q


Writing Job Descriptions
• The process can be very detailed in some
may be specific but 3 questions are of
importance.
importance
1. What is to be done.
2. When i
2 Wh is it d done.
3. Where is it done.
• The above are also known as
Performance Criteria.

• Most Job descriptions are the main heads
of SOP’s.
• At the heading that states job title and
grade and division name.
• V ti l reporting i stated normally i
Vertical ti is t t d ll in
appointment letters.
• A summary of the duties of the job in
paragraph form.

• Specific duties are also mentioned which
are assigned to the job.
• This increases and accountability with the
management.
• It imperative that employees are
Its i ti th t l
expected to sign the job description after
they
th are read and explained t th
d d l i d to them iin
detail.


Job Specifications
• An outlining of qualifications needed to
perform the job.
• Its an outcome of Job analysis
analysis.
• It judges the incumbent’s qualifications
and skills whether are i li with th j b
d kill h th in line ith the job.
• It becomes a standard till such time there
is a major change in menu or theme in the
restaurant.

Variable Labor cost Personnel
• Variable Labor Cost Personnel:
• The personnel linked to business volume.
• Usually th shop fl
U ll the h floor staff.
t ff
• The hours of work correspond to the
variable cost employees.
• By careful scheduling the p
y g peak hours of a
restaurant operation can be supported by
Variable labor cost Personnel.

Variable Labor cost Personnel
• Personnel falling into these category are
affected by seasons in business. They
may have a higher hourly rate
rate.
• Personnel falling into this category:
• Di h washers, Kit h cleaners.
Dish h Kitchen l
• Cleaning staff and garbage disposers.
• Back up waiters.


Fixed Labor Cost Personnel
• The fixed cost personnel are whose
numbers are unrelated to the business
volume.
• Managers, Book keepers, Chefs, Stewards
and maintenance personnel
personnel.
• In many establishments the fixed labor
costs are derived in a later stage once the
organizations has operated for over a year.


Keeping Records of Business
volume
l
• Actually is done by using automated
systems.
• All electronic cash registers and the
Micros systems has this provision in report
generation.
generation
• Daily Tallies
• Hourly tallies.


Daily and Hourly Tallies
• The first technique is to draw information
from Sales history.
• Guest checks is also a source where the
systems are still manually operated.
• Th d t collected assists i f
The data ll t d i t in forecasting
ti
business with a reasonable degree of
accuracy.


Daily and Hourly Tallies
• The current happenings should be taken
into consideration while using the daily
Tally system, Road construction Political
system construction,
rallies are examples.
• The Hourly tallies are a major help in
keeping the labor cost at a bare minimum.
• A manual method of W kl and d il t ll
l th d f Weekly d daily tally
is illustrated on pages 27 and 28.


Number of Covers
Served per day Daily
Tally method
y


Number of Covers
100

90

80

70

60

50

40
Number of Covers

30

20

10

0


The Features and results of Charts
• Improve control over cost of labor
labor.
• Make scheduling effective.
• I the next case we take 5 successive
In th t t k i
Friday’s and place their performances on a
line h t
li chart.
• The objective behind the exercise is to
draw a median or an average.


Difference in Arithmetic mean and
Median
M di
• The Arithmetic mean will be a numeric
average.
• Which is 90+85+105+100+105= 487 487.
• 487/5 = 97.4
• While in case of a median it is 100.
• We arrive at this by eliminating the two
y g
lowest and the two highest counts on all 5
Fridays and retaining the middle figure.
y g g

Developing Schedules for
Employees
E l
• To develop schedules for employees from:
• Using the appropriate records from daily
and hourly business volume
volume.
• The scheduling of fixed labor cost
employees i di
l is discussed l t i thi
d later in this
chapter.
• The scheduling of variable labor cost
employees is exhibited in the next slide:

Sample Schedule based on
median sales f VLCE
di l for


120

X axis is Hours
of Operation .
p
100
Y axis is # of
Covers and
Staff Required
80

60
Satff required
Anticipated Sales Volume in Covers

40

20

0
10 am 11 am Noon 1 Pm 2 Pm 3 Pm 4 Pm 5 PM 6 PM 7 PM 8 PM 9 PM 10 PM 11 PM
to 11 to to 1 to 2 to 3 to 4 to 5 to 6 to 7 to 8 to 9 to 10 to 11 to 12
am Noon Pm Pm Pm Pm Pm PM Pm PM Pm Pm Pm Pm

Scheduling Variable Cost
employees
l
• By applying the schedule if for 40 guests
the outlet manager requires 2 employees
then to cater to the peak period of 100
guests 5 servers will deployed.
• The total staffing is never 5 it may be 7 or
8, now this can be brought up by adding 3
part-time
part time employees and the rest would be
permanent.


Sample Schedule


Sample Schedule for Fixed Cost
Personnel
P l


Scheduling for FC employees
• The scheduling of Fixed cost employees is
unlike Variable cost labor.
• It can be done at the discretion of the
Manager and as per job requirement.
• H
Hours of operation.
f ti
• Hours of delivery of receipts.
• Fixed cost personnel schedule usually
remain constant.

Standard Staffing Requirements
• Also known as manpower requirements
requirements.
• Estimating efficiency of labor by
segregating covers and comparing against
time on a daily basis.
• Th t
The two fi
figures give a di t estimate of
i direct ti t f
evaluating employee efficiency.
• Finally summarizing them in a matrix that
becomes a labor standard.

Standard Work Hours VCP


Developing a Standard Cost for
Labor
L b
• As seen in on slide 43 for a maximum
business of covers ranges from 500-599.
• If the servers for the max period is 8
8.
• Then 8 servers x 3 hours = 24 work
hours.
• The same applies to the Ware washing
personnel and Preparation personnel.


Developing a Standard Cost for
Labor
L b
• If the hourly wage of a server is $ 4 00
4.00
then 24 hours x $ 4.00 per hour = $ 96.00
as standard cost.
cost
• The above is for a 3 hour period which is $
96.00
96 00
• The same calculation applies for ware
washing personnel and di h washing
hi l d dish hi
personnel.


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