The Contribution Factor has been used by many industries. Purpose: to quantitatively measure effectiveness of management teams.
Extremely easy tool to use. Compute in 10 minutes a month.
Hotel GM’s appreciate walking into staff meetings. Immediately start addressing opportunities and challenges.
Owners and corporate offices liked simplicity. Enables them to compare results from similar hotels/brands. Dual-branded hotels? See how they stand individually. Is payback from each franchise as expected?
Several years ago, we started using this tool to evaluate the profitability of hotels and resorts. The Contribution Factor turned out to be very accurate.
Why would a search firm care about hotels Contribution Factor? We offer 4 month free replacement guarantee. We started to see managers/department heads released. Why? Because they were not hitting numbers. These were good people. Stable job records. Great recommendations from direct bosses. What was going on?
We knew about Contribution Factor. Tested it with 100 hotels. We were never off more than 5%. We started requiring Contribution numbers before we would accept a hotel search. Bingo! Number failed placements dropped...like a rock. Next few years one placement in every 83 fell apart.
Hotels and companies asked if we would show them how to use Contribution Factor.
Contribution Factor is still accurate. Why? Simple answer. Hotels still track revenues and watch payroll. Contribution Factor identifies opportunities and challenges. It does not solve them. That’s role of management and ownership.
Value?
Knowing challenges at start of month…every month…in 10 minutes.
Quickly identify existing opportunities. Or fine tune existing opportunities.
Be aware when new opportunities need to be sought.
Assess team strength in relation to projected profits.
Anticipate! Better to respond than react.
Articles on Contribution Factor will in their own website category. Watch for them 1-2 times a week. Like them? Sign up.
Tom Ferree is the founder of Ferree & Associates and SecureEmploy, organizations focused on helping companies find exceptional talent and helping professionals advance their careers. Since founding Ferree & Associates in 1977, Tom has worked extensively with hospitality companies, executives, and rising leaders across the industry. Through SecureEmploy, he shares practical career strategies, leadership insights, and real-world advice to help professionals grow their careers and help organizations build stronger teams.
