his properties’ housekeeping labor
costs. Ransone’s team provides
support for housekeeping operations at all 165 properties managed
by White Lodging. To get a better
sense of the total cost of housekeeping staff, a group that has notoriously high turnover rates industry-wide, Ransone began factoring
other expenses into the equation.
“Your costs can look low on
paper, but when you consider all
these other things, costs are high,”
he says. “What’s the cost of recruit-
ing, interviewing and hiring? Train-
ing time? Onboarding? How long
does it take a person to get to full
After several years of calculating
TCOW, Ransone and his team now
take a broader view of how these
labor expenses fit in with a prop-
erty’s overall success. For exam-
ple, they compare the relationship between housekeeping costs
and guest satisfaction scores. The results can reveal a variety of
things. “If you really look at the data, paying a little more [in sal-
ary] may reduce costs because turnover is lower or … because the
employees are more efficient,” Ransone says.
Recruiting, onboarding and training costs are common variables in TCOW calculations. All three data points typically fall
under HR’s purview—which is one reason HR’s perspective is
critical to incorporating and interpreting these elements.
Other, more complex factors will vary by industry and economic forces. “In a period of growth, you may have recruitment costs, training costs [and] diminished productivity due to
employees on a learning curve,” Stoskopf says. “During periods
of contraction, you are faced with costs associated with outplacement.” Employee characteristics can also affect your calculations: “Perhaps your workforce is more tenured, and your rates
of pay and vacation benefits are higher than they would be with
a growing workforce,” he adds.
Other variables that may impact your analysis include short-term and long-term disability insurance premiums, workers’
compensation payments, and expenses related to ongoing certifications and training mandated by your industry. Your experience as an HR professional is invaluable in helping the business
identify and evaluate all these factors.
You’ll also need to figure out where various data are housed.
Often, datasets will be stored in different computer systems so
those platforms must be configured to “talk” to one another.
For example, at Phillips Screw Co., data that contribute to the
TCOW calculation exist within three different systems. “Our
ERP [enterprise resource planning] and time and attendance systems hold some data, our HR database has other information,
and it’s all brought together,” Stoskopf says.
Those kinds of silos are another reason to start small. Rather
than leading with a request for systems integration to facilitate
TCOW analysis, first work with what you have to show the
impact on business goals.
PRESENT YOUR CASE WISELY
Whether the term TCOW is used or not, chances are your finance
Talk This Way
team is already crunching data to create a labor cost figure. Think
about what their goals are, and present yourself as an ally in that
process. “[Finance] is trying to tell a story with the data,” Ran-
sone says. “But there may be a bigger story than they’re aware of.”
Schedule a meeting with the appropriate finance employee,
ask questions about the current calculation, and share your
ideas about how to make the analysis more robust. “Talk to each
other, respect each other’s expertise, and listen,” Stoskopf says.
“Brainstorm [together] on the elements of cost in relation to your
Once finance is on board, consider scheduling a joint pre-
sentation to managers to explain the new calculation. “Plan a
training session to walk through [TCOW’s] purpose and com-
ponents,” Stoskopf says. “And have your finance counterpart
by your side when you do. Be prepared to be peppered with
questions. Ideally, if management is receptive, they will come to
understand at a macro level how certain decisions they make will
affect the overall number.”
Depending on your company’s structure and internal factors,
you may want to cultivate key alliances in other departments
to collect the data. Remember to try to see the issue from oth-
ers’ perspectives and express TCOW’s value in terms they can
Do you shrink at the prospect of approaching your finance department with questions about total cost of workforce? Don’t.
As with any type of interpersonal communication, the key is identifying common
ground. Here are some tips:
Do your homework. Closely read
finance reports on labor costs, and note
the terms used and the data points
emphasized. Learn how to read a balance sheet, and identify the line items
that relate to labor costs (and any missing
pieces). Come into your initial meeting with questions, as well as some
HR-related calculations of your own, to
show that you are prepared and have
insight to offer.
Use terms that resonate. Leave the
HR-speak at the door. Talk about quantitative information that can be measured
Show the value. It’s human nature
to think in terms of “What’s in it for me?”
If you’re not careful, your proposal to conduct a more comprehensive analysis may
just seem like extra work for your colleagues in finance. Remember to show
how the analysis will tie into both overall
business goals and individual employees’
key performance indicators whenever
possible. Emphasize that you want a
partnership, with shared responsibility
and recognition, to develop a new report
based on this analysis.