Home & Away: Operational Management Concerns

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Introduction

Home and Away is a centre in Sudan that has a deli, wine cellar, a la carte restaurant, conference facilities, salon, boutique and laundry. The entire business was established about three years ago. Having initially joined the company as Manager H & A, I was faced with a peculiar situation in finding that a General Manager was already serving, which made the management to designate me as Operations Manager reporting directly to the General Manager. I have so far been unable to achieve any headway in contributing towards the smooth functioning and success of the company due to several reasons that have no bearing on my willingness to perform or my skills to contribute constructively for the betterment of the company. Firstly I was not entrusted with any portfolio for my functions nor was I briefed about the roles I had to perform as Operations Manager. I neither had any authority to make any changes in the present working system nor the permission to professionally implement the working systems in a way that the company operations run smoothly and successfully. I wish to state that I am not a business consultant and do not have any business qualifications. It is because of my previous exposure and experience in a similar environment that I have been able to identify shortcomings in the present system of working in the company. In view of my experience I have also identified the possible solutions which I shall present later in this report.

Present Problems

It is primarily due to an ineffective management that the company has been incurring recurrent losses. There is lack of support from the Directors who have not been effectively communicating and coordinating with the different functions in the facility. The infrastructure is in bad shape, in that all electrical equipments such as generators, coffee machines and cookers are not well maintained in the absence of adequate finance being provided for their upkeep and protection. The entire set up has to be revived and given a facelift in order to rejuvenate the working systems so as to trigger a new wave of activity and enthusiasm. There are no established and consistent systems for stock control and procedures in any department from finance to HR.

The main clientele of the company comprises of government ministries and the President’s office. Being government departments they are not prompt in making payments which are often delayed endlessly thus creating a liquidity crunch that is gradually eroding Home and Away’s credibility due to its inability to meet customer aspirations in a highly delicate hospitality business where high quality service is of utmost importance. The company has to invariably rely on its cash requirements on the erratic cash flows emanating from the bars. Majority of the cash collections are used up in meeting the daily expenses for generator fuel and for buying F&B stock, and essential spare parts.

Causes

The main causes for the problems and failures in the company pertain to management, procedures and quality control. Successive senior managers have not been able to maintain the required control over the functions of the company in effectively dealing with staff and workers. There is inadequate supervision, lack of training and absence of a system that ensures the checking of prevalent malpractices in the company. There are insufficient middle level managers to cater to such basic needs of the company. Proper financial controls are not in place and the internal procedures, including selection of staff are not in keeping with the needs of the company. There is complete absence of quality control and quality assurance which warrant immediate remedial measures if the company is to have a strong standing in the hospitality sector.

Management

A big shortcoming is the faulty job allocation of the middle management. Junior managers and supervisors that report to the General Manager are not kept in proper check which has made the faults to increase by the day while carelessness has become the norm with most of them. In the absence of the General Manager or the Operations Manager there is no check on the junior managers due to which quality of service is not maintained and the required activities are not carried out, thus resulting in reduced standards and a drop in the reputation of the company as well as a reduced morale amongst employees. Additionally, routine quality assurance and quality control are not carried out in right earnest which further result in an almost regular pattern of inadequate standards.

Although the company is using Tally, the facility is not fully exploited to reap the advantages of the advanced and convenient accounting system. There has not been any significant positive impact on the operations and several operations remain makeshift, chaotic and unchecked. Flow charts are not made available for procurement and staffs are not provided with job cards in guiding them with what is expected from them.

Procedures

The company has a lot of pending payment to be collected from internal entities such as directors, family and friends that owe substantial amount of money on account of outstanding on food and beverages. The pending payment on this account is approximately 55,000 SDG. It is imperative that this money is repaid and loans outstanding against directors, family and friends are recovered so that it is reinvested in the business. There is substantial outstanding of 500,000 SDG in the last thirteen months on account of conference bookings mainly by the Presidential and Government Ministry offices. The company also owes about 280,000 SDG to its suppliers. The company has debts on account of recurring generator expenses and on hiring of a cleaning company of 13,000 SDG pcm. Workers of cleaning companies are fed for half the day at the cost of the company and these expenses could fund the hiring of at least five cleaners at a wage rate of 400 SDG amounting to the sum of 2000 SDG per month.

Maintenance

The general appearance of the compound is gradually deteriorating and is now in bad shape which is evident from the fact that the entire facilities need to be refurbished and repainted. Refrigerators are not well stocked, blackboards display on a daily basis a large number of items that are not available, table cloths are stained and torn and cutlery is chipped. The high salt content in the water has made the electrical fittings to be furred, there is no cleaning schedule maintained of fixtures and fittings and no spare parts are in stock to provide for maintenance of generators, water filtration systems, plumbing, electrical and mechanical equipments. It is a pity that the maintenance team has to repeatedly borrow implements from other companies to fix technical faults. There is no provision for departments to indent and seek spare parts and maintenance on a regular basis.

The sewage and rubbish trucks of the company are not in good running condition and will now take a fortune to repair. Three cars that belong to the company are also in bad shape and are often misused for recurring trips to the city without any control being exercised over their running and expenses. Drivers of company vehicles have a negative attitude and do not have the sense of duty to regularly check water, oil, tyre pressure and battery water. No log books are used by them thus making it difficult to ascertain the movements and mileage of vehicles.

There is no efficient music system in the restaurants and toilets are badly maintained with leaking soap dispensers and mirrors literally hanging of the walls. Basic facilities such as hand tissues are also not made available. Ladies toilets do not have bins with lids.

IT and Related Issues

The compound still does not provide any means of internal or external electronic communication. There is no internet facility available which has proved to be a deterrent for additional revenue in bars and restaurants since added clientele is lost in the absence of people visiting for internet access. There is acute shortage of electronic equipment for conferences and events and demands of clients for printing, scanning, binding, laminating and photocopying are not fully met in the absence of a well equipped centre for such services. The clients are not presently charged for these services but a separate office would have to be erected to provide efficient services in this regard since the present office is overcrowded. Another issue in regard to IT is the high incidence of people using office computers and posing the risk that they may access private and confidential financial information of the company. They also use their personal flash discs and compact discs which has started to infect the computers with viruses.

Staff

Managers are not allocated separately for different departments which results in deficiency of service and lack of control over subordinate staff. Although there are a large number of employees, the lack of qualified and specialist staff has made the efficiency levels to decline. There is urgent need for specialized job functions to be performed in the departments of food beverage, accounts, data entry, human resources and plumbing. People are not being hired as per established professional norms which has made the working systems to become highly disorganized. Lack of employee motivation and absence of targets and goals has made most of the employees to become less productive. The present work requirements do not warrant the presence of such a large work force which is presently more than 80. The imbalance in pay structures have made some staff members to get more pay than what is paid in other companies for similar jobs while a proper framework of pay as per job allocations is entirely missing in the company.

Surprisingly, I noted that most of the employees are not paid salaries in time which have been delayed for up to two months. Consequently they remain demoralized in being irregular at work, perform much below their full potential and become prone to pilfer food items thus adversely affecting the over all productivity of the company. HR systems are entirely missing; job descriptions are not provided, there are no employment contracts, no policies and procedures in place, all of which make dismissals, grievances, employment contracts, induction processes and goal setting futile exercises. It was shocking to note that the Events Manager is responsible not only for the events but also for other external and internal functions such as HR roles, payroll management in coordination with accounts, authorizing purchase requisitions, negotiation with suppliers, upkeep of compound and over all supervision of other departments. Obviously it is extremely difficult for one person to comply with all roles. There are no guidelines issued to staff in regard to employment laws which increase the chances of the company to be faced with exposure to legal action by the labour office.

Internal communication is not effective amongst managers and subordinate staffs since meetings are not called for by the Head of the Department. There is no systematic procedure to record the entry and exit of employees and it is doubtful whether workers of other countries have valid work and travel permits. Well defined leave rules do not exist and updated staff list is not maintained which makes it difficult to ascertain the antecedents of a worker in terms of job title, responsibilities, nationality and work permit. Mostly company transport is not readily available to take staff home at night and medical coverage for workers is not provided. The uniform provided to chefs is incomplete as they do not have gloves and caps.

There are no specified meal timings for staff and they presently eat as and when their schedule permits while a practice has developed whereby staffs from salon, shop and cleaning companies also eat at the expense of the company. This has led to a constant drain on the company’s resources since more food has to be cooked for them.

Water and Waste Management

There is no system to monitor water levels and water usage and there is lot of wastage as water leaks are not fixed by plumbers as they are not supplied with the requisitioned spare parts in time. It was surprising to find that the water filters in the deli had not been changed for over eight months. It was sad to see that they had become black with dirt and thus had the potential to create food poisoning. Water filters used for industrial ice making had also not been changed for five months and there is no confirmation if the quality of water has been tested in the recent past. The main water tank has a capacity of 50,000 litres but water is being requisitioned on a daily basis although so much of usage is not possible.

The company sewage truck is badly maintained and breaks down frequently. The daily rubbish and waste is being collected by an external agency at a cost of 40,000 SDG per month. The sewage tank is huge but regular checks are not made, and in collusion with hire companies sewage facilities in the compound are deteriorating. The sewage system is not efficient in the compound due to absence of septic tank and soak pits, which makes problems related to sewage levels to aggravate frequently. The company is unable to meet the huge expenses involved to set the sewage system in proper working order. The leaking sewage and waste near the conference facilities poses a severe health and safety problem especially because clients use this area in large numbers. Emanating from this problem is the added risk of the ground water being contaminated.

Accounts

The most immediate problem to be redressed in regard to accounts is the recruitment of a qualified senior accountant. There are presently no reliable figures and data available on creditors, debtors and asset values of the company. In fact there are no exhaustive financials available for the last financial year. Bank accounts are not managed efficiently since the two directors who are signatories are mostly not present thus posing severe problems when the need arises to withdraw cash. There is no systematic procedure to keep control over stock and purchases. All cash transactions and receipts do not pass through the company accountant, at times passing through several hands due to which many receipts remain lost or unaccounted. There is also no systematic approach for billing of services rendered by maintenance teams and no financial summaries are maintained about internal transactions amongst different departments.

Stock Control

There is considerable lack of consistency in some items of stock such as wines in the wine cellar and cheese, salamis, hams and ice creams in the Deli. The amount of food stocked in display refrigerators is very negligible in restaurants and bars while the basic stock of foods and beverages, housekeeping and cleaning products is continuously in short supply. Such shortcomings are gradually reducing income and clientele of the facility. The system of maintaining stock control is such that it is not updated on a daily basis. It is not possible to determine the amount of consumption of any product on a weekly or monthly basis, although it is required to engage in the ordering process every four to six weeks. Moreover, due to financial constraints it is not possible to purchase supplies in bulk to take advantage of resultant low costs.

The present stock system is highly ineffective in meeting the needs of the company. There is no approved product list and the stock control system is not updated by the data entry clerk on a daily basis. There is no monitoring of stock in terms of opening stock, stock received, stock issued to different departments, spoilt stock, closing stock etc. Bars continue to avoid taking responsibility for returning empty cartons, bottles and packages to the store thus putting the company to loss since large amounts of empty packaging can be sold at a good amount.

Coolers and freezers need to be monitored regularly but there are no thermometers and control sheets to keep track of temperatures. Store personnel freely help themselves to the products they control as and when they feel like. There is no fixed time allocated for issue of items from stores or for delivery and store personnel operate in a highly disorganized manner. A dedicated product list is not followed in requisitioning store items and all departments are not provided with such lists.

Purchase and Store Management

The system of requisitioning of items to be purchased is not in perfect order. The purchase requests submitted by chefs are not always checked by the F & B Manager and countersigned by the Operations Manager. The previous efficiency in the working of the stock control system has been gradually eroded and now it takes lot of time to check if an item is in stock or not. Accurate pricing for holding stock is absent and so is the accurate accounting for stock as issued to different departments. Economy measures are entirely missing because attempts are not made in discussing with chefs if certain indented items can be avoided or reduced. Most items are purchased at short notice instead of getting them at least a day in advance of the scheduled event. Moreover the company staff has to repeatedly run errands to the city in meeting purchase requirements at short notice thus leading to extra cost on fuel and on wear and tear to the vehicles. Storekeepers have to be on duty till late so as to receive purchases and to issue items at the last minute for conferences and banquets.

There is a huge outstanding of 280,000 SDG against the company that is payable to suppliers. This is not in keeping with ethical business standards which further deteriorate relationships with suppliers, which is all the more harmful in a small business environment. In the absence of spreadsheets on comparative landed cost of suppliers’ products lists there is no means to ascertain whether the goods are purchased at the best prices. There is no check in the system to find if people who purchase are adding their commission over the price offered by suppliers. It is also observed that large quantities of one item are purchased instead of a range of mixed products to meet the requirements, such as smaller quantities of fish, chicken, pork, salami etc instead of purchasing only chicken in bulk. Moreover, the store personnel are not physically receiving the goods but receive them against purchase invoice and receipts. There is no systematic method adopted in ordering for different items as required on daily, weekly or monthly basis, which results in the purchase and receipt of some items which are not used and hence wasted, thus leading to financial loss.

Financial Management

The total debt outstanding against the company over the last thirteen months is 500,000 SDG. However this amount is at best an estimate only since most of the invoices are lost or unaccounted and are not countersigned by clients, because of which they refuse to pay when approached for the same. The invoices do not give details of whether the taxes have been included in them.

Events Management

The events and conferences are not managed professionally. Proper terms and conditions are not outlined for clients nor are quotes made professionally. Clients are not given options for dietary requirements except for vegetarian food. Internal staffs are not appropriately briefed before an event and necessary instructions are just typed and handed over to the respective departments or placed on the notice board. Proper follow up is not done with clients once the event is over. The managers need to realize the importance of feedback which is always helpful in enabling improvements to be made as per client requirements. Debriefing with internal staff is also not done after the event.

During events and conferences clients often complain that chicken is not well cooked which is because meat including chicken is normally delivered forty minutes before the food is to be served and in the absence of microwave the chicken cannot be defrosted quickly. It is unfortunate that in most cases the final set up is completed only a few minutes prior to the commencement of the event. Sometimes events get delayed due to lack of proper planning. Coffee machines are not always in proper working condition which results in the delay of morning coffee. A typical example in this regard is as follows:

A conference is due to start at 9.30 am in which delegates from the United Nations are to attend. The person who went to buy milk and coffee is able to come back only fifteen minutes before the start of the conference. However the coffee takes about thirty minutes to prepare and to be served on the table. Another situation of crisis management occurs when the chicken arrives frozen one and a half hours before it is to be served on the table. Although soft drinks are a part of the menu, yet only a limited selection of water, Sprite and Pepsi are provided, which is of course entirely unacceptable by clients. The selection is limited since the company has a large outstanding payment with the suppliers. The event planner arrived only at 9.30 am and the generator stopped working for about forty minutes. The generator has frequent breakdowns because it is not serviced in time and fitted with the required oil and fuel filters, again due to financial constraints.

Several of such hurdles and problems cannot be effectively resolved during events due to maintenance work being held up because of lack of funds. Cars are not kept in proper working condition; sometimes there is a puncture or some part gets broken. The pastry chef is unable to provide an impressive selection of cookies and pastries, and the presentation of dishes is not in keeping with hospitality norms. There have been several incidents in the recent past whereby the events have been badly mismanaged resulting in inconvenience to clients and guests. Guests who attend events have a difficult time parking their vehicles due to parking lot congestion and bad parking norms. Most drivers are not attentive to pedestrians thus increasing the risk of injuries to passers by. Invariably, most guests are forced to use the parking facility outside the compound thus adding to the inconvenience of guests. There is no emergency area provided in the compound which must be defined on top priority. It is evident that under the prevailing circumstances clients would soon start shifting to other locations and service providers since the hospitality business is highly competitive with lot of options available.

Generator Issues

Home & Away has two generators, 275 KVA. Both are currently at the Crusher awaiting spare parts to complete their overhauls. The current generator of 500 KVA was on loan from the Crusher for a period of two weeks. It is still here some five months later. The last service was done some 500 hours after what should have been a scheduled service, which makes it break down repeatedly thus adversely impacting the smooth functioning of the events and general business. The cost of fuel per day for the generators is 1240 SDG which is quite substantial. A lot of electricity is misused in that air conditioners are not switched off after conferences and the lights too remain on during most of the days. Since there is only one generator working it needs to be switched off during the morning for some two hours in order to give it rest.Presently it is shut from six to eight in the morning which adversely impacts the smooth functioning of the bakery. Pastries and bread required for the Dehli cannot be made in time which justifies the need to find remedial measures as soon as possible.

Security Issues

The company has spent a lot on maintaining security in the compound but the security personnel have not proved to be of much utility so far. All the four entry points are not manned regularly at all times. The security department is not headed by anybody with the requisite background. Regular security violations include unauthorized staff having access to all areas, misuse by way of taking away meals and snacks without authorization, absence of staff identity cards and the inability of security to curb the entry of undesirable and disruptive members of the public into the compound.

Menu Management

In most bars and restaurants there is an exhaustive menu but in F & B there is shortage of funds to maintain such a large menu. On most days there are only about eight menu options which depend on what is available in the stores. I suggest in the interim taking away the extensive menus and replacing them with a system to display the available menu items on blackboards. When there is a consistent supply of stock available we will return to full menus. The Nile River is misused because people have started the practice of gong there to watch TV without buying drinks. The kitchens are filthy revealing no concern for hygiene and are poorly equipped.

Public Relations

There is presently no PR strategy in place; there are no printed brochures that offer details of facilities and pricing, no advertisements in newspapers and magazines. There is no impressive signage to improve the visibility and reputation of the company. What ever signage is present is far too inadequate and unimpressive by way of the worn out signs that are placed intermittently.

Solutions

The most immediate requirement is to bring in a reputable and independent business consultant to do a full assessment of the business and to recommend an action plan that includes the implementation of proper business procedures, future strategies and a strategy for recovery of outstanding dues in a timely manner. The business strategy can be discussed with the directors and after consensus is reached all remedial measures may be implemented in true earnest. New management strategies have to be introduced in holding supervisors responsible for the effective implementation of company strategies. Job portfolios at all levels must be allocated so that overall standards are maintained. All senior functional and operational managers have to be impressed upon to keep the profitability and professionalism goals in mind.

It is very important to reconstruct the business practices and procedures and the Standard Operations Procedures must be implemented as a priority. To effect recovery of business, a substantial amount of funds will have to be pumped into the business and a majority of the finance can be collected by making recovery of outstanding payments with the help of the directors. Senior management has to be given clear directives to guide and motivate subordinate staff so as to extract maximum productivity from them. In being a business that has profit generation as its main motive it implies that credit should not be allowed beyond a reasonable limit. The directors should take a strong decision in this regard and make arrangements to recover outstanding dues at the earliest. The lack of financial resources has taken its toll on maintenance; crockery, table cloths, refrigerators and the complete painting and maintenance is in very bad shape. The entire compound must be refurbished and spare parts obtained for generator, water filter plants, plumbing, electrical and mechanical operations. All departments have to be provided with an effective system for requisitioning maintenance related work. Staffs that have not been paid so far must be immediately paid so that they are no longer demoralized and unproductive. Since staffs are a major resource for the company, such a resource must be secured for future success and profitability. They must be given proper training on health and safety issues.

Recommendations

It is recommended that the entire compound should be closed for a week for painting and decoration, fixing of all required equipments and installation of proper systems in all departments. The wine cellar should be closed in view of its being financially unviable, the coffee shop and dehli should be expanded and the Nile River Restaurant should be converted into a curry house or steak house. This will enable deployment of staff in the right jobs and enable full supply of stock. Once such functions are performed the compound can be reopened with lot of fanfare and publicity to start back with a big bang.

There needs to be an immediate cash injection of roughly $ 200,000 which will enable the company to tide over the crisis for about four months, which should be enough time for the management and workers to tighten up and show better results. The directors must take personal interest and make hectic efforts in recovering dues from the government and the Presidential office. Only upon receiving such dues can the company get financial relief. There should be immediate execution of the most feasible plans of operations as recommended by the independent business consultant so that the company gets back to rolling towards success.

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