When profits fell at a hotel management company, it was time to slash human-resources spending. Or was it?
"We're number one.
Not number two.
We're gonna beat the WHOOP out of you."
-- MMI cheerleaders
"WE WON. WE SMEARED 'EM," SAYS Avanell Hurst, member of the winning bed-making team. Hurst, veteran maid at the Jacksonville, Fla., airport Holiday Inn, was competing in the 1982 Mississippi Management Inc. employee Olympic Games. Other events in the company's games: drink mixing, key sorting, sheet and towel folding, nail pounding, directory search, housekeeping-cart relay, egg cracking, table busing, wine relay, and commode seat change.
The games cost MMI, which owns and/or manages 14 assorted hotels, motels, and resorts in the Southeast, about $150,000 to stage. The employees enjoyed themselves for two days on company time, but what did MMI get for its money?
Or for the money it spends on employee training? Every year the 30-year-old, privately held company, with headquarters in Jackson, Miss., sends two housekeepers (room maids) from each property to overnight seminars; their rooms, transportation, meals, and entertainment expenses are paid. MMI cooks have their seminars, too. So do front-desk clerks and supervisors in every department. The company budgets nearly $100,000 for these jaunts and gets back . . . what?
Cash awards to 5- and 10-year employees, watches for those with 15 years, and trips awarded to employees with 20 or 30 years of service dropped $34,600 out of MMI's pretax profits in fiscal 1986.
Last year's budget for MMI's human-resources department, comprising a vice-president and a full-time trainer, came to $376,000. Too much? Too little? How do they know? How does anyone know?
Is MMI wasting its money?
What if you don't give a damn whether you win another award?" Joe Morgan demanded, by no means rhetorically, one Sunday afternoon. "What if you'd rather turn in a 32% [gross operating profit] instead? Do maids have to go to seminars every year? My people keep asking me, 'How is this, or this, going to improve my GOP?"
MMI's managers -- chief executive officer Earle Jones, the seven senior corporate staff people, and the two senior operational vice-presidents, Morgan and Dean MaKinster -- were meeting in a room at the company's Lake City, Fla., Holiday Inn. Instead of a bed, there was a table. They hashed over next year's plans and budget. Human-resources vice-president Jim Hart wanted 20% more money: $450,000 in '87, up from $376,000.
Nobody objected to Hart's programs. That wasn't Morgan's point at all. He was just reacting to another reality, which is that in the past two years, MMI has seen profits decline. Its room occupancy rate has dropped from 74% in 1984, eight points higher than the industry average, to 63% in its 1986 fiscal year. The industry average, computed on the calendar year, dropped less than a point. MMI's gross operating profit, measured in dollars, declined in 1984 and again in 1985. It rose in '86, but as a percent of revenues, GOP has continued to fall from its '83 high of 33.8%. It hit 31.8% in 1984; 26.5% in '85; and 24.7% in '86.
Jones blames this disappointing performance on overbuilding in the industry, lower demand for commercial hotel rooms in the Mississippi-Louisiana division's energy-depressed market, and the resulting pressure to keep room rates low. If Jones is right, it means, among other things, that he ought to be diligently cutting costs wherever he can to ease the pressure on profits. Which would suggest that Hart's nonessential human-resources spending ought to be reduced, not increased as Hart asked.
Cutting Hart's budget surely was tempting that Sunday afternoon.
The way Mississippi Management runs what it calls its human-resources programs, just to give a single name to a lot of different activities, suggests that you don't need the accountants' formulas to judge the value of human-resources spending. The company, with $40 million in revenues, uses informed common sense, plus a good deal of sensitivity, to sort out the worthwhile from the wasteful. The people running MMI don't pursue human-resources programs primarily for the sake of corporate culture. They won't undertake a program, retain a benefit, or expand a perk unless there's a pretty good business reason for doing so.
They are, for instance, very high on training.
At the annual seminar for housekeepers, corporate trainer Colleen Maloney has the maids play her version of "The Price is Right." Two teams, two tables. On the first table are a dozen items the housekeepers frequently use in their work -- bars of vanity and bath soap, for instance. On the second table sit 12 price tags. The first team tries to match prices to products. The second team tries to correct the first team's unspecified errors. The competition, reportedly, is keen, and the debate among team members gets hot, which is Maloney's cue to make her point. "'Let's see,' I'll say, 'what the cost of soap is for a 200-room property in a year. One vanity bar and one bath bar. Let's multiply by 200. That's so much per day. Now let's multiply by 365. . . .' If you walk it through with them, they're very comfortable. It ends up being $10,000 and something. 'Wow,' they say. Later I'll ask them, 'How much was that vanity soap?' 'Four cents,' they'll say. They wouldn't remember if I had just told them."
About a quarter of MMI's nearly 1,300 employees go through one of these formal seminars annually. Employees also see Maloney at ad hoc sessions, such as the three-day series she held for dining-room workers at the Radisson Walthall Hotel in downtown Jackson. MMI had taken over management of the hotel just six weeks earlier.
