Is it fair to fire highly paid Managers and replace with lower paid ones !
This article is not necessarily linked to our current economic tough times where we are witnessing economy struggles and staff lay-offs that are taking place almost everyday in the #Hospitality and #Restaurant industry . But this is more an observation in my career where i have seen many companies following such strategies especially during pre-opening and first few months after opening of a new project - Either in hotels or restaurant companies , What happens is that highly paid senior managers get hired to benefit from their experience in ensuring all pillars of a project are in place since these experienced managers do have strong knowledge in setting what is called "Retro-planning " or "Critical Path pre-opening projects" , and once a projects opens and is on the right track these companies simply get rid of these seniors and run operations with their assistance or get a new manager that is less paid !
In fact those working in the Hotel industry particularly have a strong knowledge about certain successful hotel chains that do follow such strategies but this also has been observed in restaurant groups as well , The least that can be said is that this is not ethical and definitely if these companies tend to do so under pressure from owners to reduce operating expenses they should change their terms of contracting with these seniors by being transparent from the first moment of hiring by informing them that this will be a short term contract and their efforts are required for what is called "Task force" only and not for long term .
All companies do have a budget that is called "Pre-opening budget" where all expenses related to opening a new project will go under this budget and will not affect their P&L statements after opening , this pre-opening period might include a month or more after opening as you business flow will be slow during first period and expenses will be high with full staffing in place, this might be one of the reasons for taking decisions of terminating services of seniors that have helped in pre-opening duties of a project as company can put the expenses of such highly paid managers under "Pre-opening budget" which normally owners pay for it as part of their project investment expenses , and once a project is open and now all expenses Vs income are accounted to the "Operator " , Operators tend to take such decisions to show to their owner that they have reduced the expenses in line with the fact of having slow business in the first few months or first year of operation , until ratios come to the level of industry norms . Once again i am not highlighting decisions of terminating a senior manager that are linked to performance but purely those related to such strategies as highlighted above.
I call for transparency in discussing all challenges and plans with head of departments at the time of hiring for new projects , also operators should educate their owners about the need to be patient in the opening period until the business stabilizes and becomes profitable.