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 sessionRecap of the Previous session

• What is meant by Compensation?What is meant by Compensation?• How does direct compensation differ from

differed compensationdiffered 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 SessionKCM of the Session• Explain the meaning and significance ofExplain 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 volumebusiness volume.

• Describe how to develop performance standards based on a test periodstandards based on a test period.

ScopeScope

• Establishing StandardsEstablishing Standards.• Features of the Organization Chart.

W iti J b D i ti• Writing Job Descriptions.• Keeping Records of Business volume.• Daily and Hourly Tallies.• Developing Schedules for EmployeesDeveloping Schedules for Employees.• Developing a Standard Cost for Labor.

Establishing StandardsEstablishing Standards

1 Quality Standard1. Quality Standard.2. Quantity Standard.3 C t St d d3. Cost Standard.Quality Standard:1. Depends on the menu.2 Competence of the Employee2. Competence of the Employee.3. Type of Restaurant.

Quantity StandardsQuantity Standards

1 Quantity standards must be established1. Quantity standards must be established after the quality standards are set.

2 Break down of tasks and compare it2. Break down of tasks and compare it against time.

3 E t bli h tit f f3. Establish quantity of performance on an individual in 1 hour.

4. In higher industries the time and motion concept is used to analyze each job.

5 The Production is normally linked to the5. The Production is normally linked to the demand from the market and hence quantity standards are also linked toquantity standards are also linked to scheduling which depends on demand.

6 Fast food restaurant chains define jobs6. Fast food restaurant chains define jobs and designate individuals to improve efficiencyefficiency.

7. Fried Chicken restaurant have standards7. Fried Chicken restaurant have standards that a product will remain on a particular stand only for a certain time after which it ywill be discarded.

8. The standards is established by manually y ycalculating a task and quantified in time.

9. In restaurant business the perishabilityp yand fluctuations in customer demand greatly affect quantity standards.

Steps required in Establishing S d d d P dStandards and Procedures

1 Organizing the enterprise by making an1. Organizing the enterprise, by making an organizational structure with jobs and designationdesignation.

2. Preparing job descriptions by listing them down sequentially later handing themdown sequentially later handing them over as you go on appointing people.

3 S h d li l b i3. Scheduling employees as per business hours, efficiency and job description.

Establishing an Organizational PlanEstablishing an Organizational Plan

1 Type of clientele1. Type of clientele.2. Nature of the products offered.3 T f i d d3. Type of service rendered.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 plan.g p

Features of the Organization ChartFeatures of the Organization Chart

1 The lines leading down show the chain of1. The lines leading down show the chain of authority.

2 The one below reports to the one above2. The one below reports to the one above.3. The Boxes next to each other work in the

l b t diff t i tsame place but on different equipment, co-ordinate and co-operate.

Features of the Organization ChartFeatures of the Organization Chart

4 The dotted lines vertically indicated co-4. The dotted lines vertically indicated coworking communication and co-operation between two positionsbetween two positions.

5. The lateral lines co-ordination in accomplishing respective tasks neither ofaccomplishing respective tasks neither of whom are taking directions from each otherother.

Steps in Job DescriptionsSteps in Job Descriptions

1 Using Job analysis1. Using Job analysis.

2 J b d i ti2. Job descriptions.

3. Job Specifications.

Preparing Job DescriptionsPreparing Job Descriptions

Using Job analysis:Using Job analysis:1. Use skills are featured in resume and on

job skills testjob skills test.2. Level of Education.3. Other specific qualifications.4. Interviewing workers and supervisors to g p

tabulate information.5 Observe workers perform their jobs5. Observe workers perform their jobs.

Job Analysis query structureJob Analysis query structure

1 Job Objectives1. Job Objectives.2. Specific tasks required to achieve

objectivesobjectives.3. Performance standards.4. Knowledge and skills necessary.5. Education and experience required.p q

Writing Job DescriptionsWriting Job Descriptions

• The process can be very detailed in someThe process can be very detailed in some may be specific but 3 questions are of importanceimportance.

1. What is to be done.2 Wh i it d2. When is it done.3. Where is it done.• The above are also known as

Performance Criteria.

• Most Job descriptions are the main headsMost Job descriptions are the main heads of SOP’s.

• At the heading that states job title and• At the heading that states job title and grade and division name.V ti l ti i t t d ll i• Vertical reporting is stated normally in appointment letters.

• A summary of the duties of the job in paragraph form.

• Specific duties are also mentioned whichSpecific duties are also mentioned which are assigned to the job.

• This increases and accountability with the• This increases and accountability with the management.It i ti th t l• Its imperative that employees are expected to sign the job description after th d d l i d t th ithey are read and explained to them in detail.

Job SpecificationsJob Specifications

• An outlining of qualifications needed toAn outlining of qualifications needed to perform the job.

• Its an outcome of Job analysis• Its an outcome of Job analysis.• It judges the incumbent’s qualifications

d kill h th i li ith th j band skills whether are in line with the job.• It becomes a standard till such time there

is a major change in menu or theme in the restaurant.

Variable Labor cost PersonnelVariable Labor cost Personnel

• Variable Labor Cost Personnel:Variable Labor Cost Personnel:• The personnel linked to business volume.

U ll th h fl t ff• Usually the shop floor staff.• The hours of work correspond to the

variable cost employees.• By careful scheduling the peak hours of a y g p

restaurant operation can be supported by Variable labor cost Personnel.

Variable Labor cost PersonnelVariable Labor cost Personnel

• Personnel falling into these category arePersonnel falling into these category are affected by seasons in business. They may have a higher hourly ratemay have a higher hourly rate.

• Personnel falling into this category:Di h h Kit h l• Dish washers, Kitchen cleaners.

• Cleaning staff and garbage disposers.• Back up waiters.

Fixed Labor Cost PersonnelFixed Labor Cost Personnel

• The fixed cost personnel are whoseThe fixed cost personnel are whose numbers are unrelated to the business volume.volume.

• Managers, Book keepers, Chefs, Stewards and maintenance personneland maintenance personnel.

• In many establishments the fixed labor costs are derived in a later stage once thecosts are derived in a later stage once the organizations has operated for over a year.

Keeping Records of Business lvolume

• Actually is done by using automatedActually is done by using automated systems.

• All electronic cash registers and the• All electronic cash registers and the Micros systems has this provision in report generationgeneration.

• Daily Tallies• Hourly tallies.

Daily and Hourly TalliesDaily and Hourly Tallies

• The first technique is to draw informationThe first technique is to draw information from Sales history.

• Guest checks is also a source where the• Guest checks is also a source where the systems are still manually operated.Th d t ll t d i t i f ti• The data collected assists in forecasting business with a reasonable degree of accuracy.

Daily and Hourly TalliesDaily and Hourly Tallies

• The current happenings should be takenThe current happenings should be taken into consideration while using the daily Tally system Road construction PoliticalTally system, Road construction, Political rallies are examples.

• The Hourly tallies are a major help in• The Hourly tallies are a major help in keeping the labor cost at a bare minimum.A l th d f W kl d d il t ll• A manual method of Weekly and daily tally is illustrated on pages 27 and 28.

Number of Covers Served per day Daily

Tally methody

Number of Covers

40Number of Covers

The Features and results of ChartsThe Features and results of Charts

• Improve control over cost of laborImprove control over cost of labor.• Make scheduling effective.

I th t t k 5 i• In the next case we take 5 successive Friday’s and place their performances on a li h tline chart.

• The objective behind the exercise is to draw a median or an average.

Difference in Arithmetic mean and M diMedian

• The Arithmetic mean will be a numericThe Arithmetic mean will be a numeric average.

• Which is 90+85+105+100+105= 487• Which is 90+85+105+100+105= 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 E lEmployees

• To develop schedules for employees from:To develop schedules for employees from:• Using the appropriate records from daily

and hourly business volumeand hourly business volume.• The scheduling of fixed labor cost

l i di d l t i thiemployees is discussed later in this chapter.

• The scheduling of variable labor cost employees is exhibited in the next slide:

Sample Schedule based on di l f VLCEmedian sales for VLCE

X axis is Hours of Operation .

pY axis is # of Covers and

Staff Required80

Satff required

Anticipated Sales Volume in Covers

10 am to 11 am

11 am to

Noon to 1 Pm

1 Pm to 2 Pm

2 Pm to 3 Pm

3 Pm to 4 Pm

4 Pm to 5 Pm

5 PM to 6 PM

6 PM to 7 Pm

7 PM to 8 PM

8 PM to 9 Pm

9 PM to 10 Pm

10 PM to 11 Pm

11 PM to 12 Pm

Scheduling Variable Cost lemployees

• By applying the schedule if for 40 guestsBy applying the schedule if for 40 guests the outlet manager requires 2 employees then to cater to the peak period of 100then to cater to the peak period of 100 guests 5 servers will deployed.

• The total staffing is never 5 it may be 7 or• The total staffing is never 5 it may be 7 or 8, now this can be brought up by adding 3 part time employees and the rest would bepart-time employees and the rest would be permanent.

Sample ScheduleSample Schedule

Sample Schedule for Fixed Cost P lPersonnel

Scheduling for FC employeesScheduling for FC employees

• The scheduling of Fixed cost employees isThe scheduling of Fixed cost employees is unlike Variable cost labor.

• It can be done at the discretion of the• It can be done at the discretion of the Manager and as per job requirement.H f ti• Hours of operation.

• Hours of delivery of receipts.• Fixed cost personnel schedule usually

remain constant.

Standard Staffing RequirementsStandard Staffing Requirements

• Also known as manpower requirementsAlso known as manpower requirements.• Estimating efficiency of labor by

segregating covers and comparing againstsegregating covers and comparing against time on a daily basis.Th t fi i di t ti t f• The two figures give a direct estimate of evaluating employee efficiency.

• Finally summarizing them in a matrix that becomes a labor standard.

Standard Work Hours VCPStandard Work Hours VCP

Developing a Standard Cost for L bLabor

• As seen in on slide 43 for a maximumAs seen in on slide 43 for a maximum business of covers ranges from 500-599.

• If the servers for the max period is 8• If the servers for the max period is 8.• Then 8 servers x 3 hours = 24 work

hhours.• The same applies to the Ware washing

personnel and Preparation personnel.

Developing a Standard Cost for L bLabor

• If the hourly wage of a server is $ 4 00If the hourly wage of a server is $ 4.00 then 24 hours x $ 4.00 per hour = $ 96.00 as standard costas standard cost.

• The above is for a 3 hour period which is $ 96 0096.00

• The same calculation applies for ware hi l d di h hiwashing personnel and dish washing

personnel.

QuestionsQuestions

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

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