The detrimental effect of a ‘silo mentality’

Hotels and hospitality businesses often excel at diversification and multi-channel offerings, attracting unique and diverse customer bases to each service.

Most commonly this means having a restaurant and bar to capitalise on a guest’s overnight stay, but other major infrastructure examples include health spas and leisure facilities, meeting and conference spaces and even self-catering units within the grounds. Each can attract its own customer base with unique service needs and pricing structures, so in response hotels frequently create departments or teams to specialise in each service, giving guests and users the best possible information and experience.

Departmental working has its advantages – specialist expertise, efficient processes and proactive customer service can all combine to give the best possible customer experience. It’s not flawless though and its very strengths can be the harbinger of inefficiencies, created by ‘silo mentalities’ in strategic operation decisions and the departmental workforces. A silo mentality is one where different departments, teams or team members operate their top and bottom line in isolation to other departments; it most commonly occurs as a natural side-effect of resource specialisation and it has financial and customer service implications too.

It’s something our assessors see all the time in visits to multi-discipline businesses; processes and procedures which foster a silo mentality, and which cost businesses in terms of added value income, productivity and wasted resource.

Statistics for the actual costs to hospitality businesses are hard to come by – no one has taken the time to quantify these hidden costs – but looking further afield to the list of Fortune 500 companies, and it’s estimated that these 500 businesses alone lose $31.5bn (£24.7bn) per year by failing to cross-pollinate knowledge and processes between different departments, and that implementing strategies to eliminate silo working would boost productivity by up to 30%. Even if hospitality costs were a fraction of this that’s an astounding figure.

Most commonly, our assessment visits highlight the process disparity in hotels with MICE facilities, and leisure or spa facilities. Processes, training and staff mentality all contribute to lost earnings through silo working, most likely because these are higher ticket items than overnight stays and therefore a dedicated team is understandably deemed essential.

This works fine until such point as departmental team members are unavailable for whatever reason – sickness, holiday, on-site event management etc. At this point, the entire process often collapses, with no other department or employee willing or able to take responsibility, or in fact contributing in any way to departmental transition. The processes and training which are being omitted relate specifically to what happens when your dedicated manager/ employee is not available. What is the customer experience then?

Reflecting on their recent experiences and the mystery shopping and assessment calls my team has made; on average, the assessor is only able to get a direct, immediate response to their question in one in eight calls (12%), and of the seven where the person is unavailable, only two go on to provide a suitable answer within 48 hours (28.5%). Three in eight didn’t respond at all (37.5%) – most likely due to communication breakdown between the teams – and four in eight didn’t receive full details of the request that was made in the first place requiring repeated information from us as ‘the customer’ (50%).

Of the calls where a MICE team member was unavailable, not one reception team were able to answer even basic details about conferences, and there was no clear process for recording information and requirements, or a clear expectation for when we could expect a response.

Not only this, but anecdotally, customer feedback also cites poor cross-pollination of services, including no automatic inclusion of information or incentives for delegate room booking, F&B booking for delegate evening meals, or cross-pollination with available spa treatments etc. Almost entirely in every case, the service that was offered was limited to only one or two aspects of the full hotel offering – a seriously missed opportunity.

On the flip side, businesses which have deliberately made shifts to reduce the impact of silo working are reaping the rewards in commercial income. It starts with establishing a common vision, particularly linked with sales, which may include a core financial target, collective performance measures and rewards, and strategies for supporting cross-departmental knowledge and support. Formalising strategies to handle not only positive customer interactions, but also interactions where dedicated team members are unavailable are essential.

Targets and processes are all very well, but then you must also identify opportunities to increase contact between departments. Short-term ‘work-experience’ for customer-facing staff members to visit and work in every department is a great start, as are strategic meetings which pull team members together and assess them against the common goal work too.

Mystery shopping can help too; both an external resource calling into your team, but also an internal resource too. What happens when your reception team need to book a conference – can they get all the answers they are looking for, and how long does it take. A great learning experience for both sides.

Finally, it’s time to look at the tech. It’s easy to opt for the best, simplest or most expert platform for your specific offering, but in doing so, it can easily create departmental divides.

Two questions you need to ask yourself; first, do other teams have access to the platform that hosts a particular function of the business? Even read-only access can suffice. Second, do they know how to use it and should they? Access and training can provide access to all the necessary information to support even basic introductory sales, but are easily overlooked.

Once you’ve sorted the staff aspect of tech, you can also consider how traceable your cross-pollination is. Do all the different platforms assign their own reference number, and if they do, how do you link up a conference with the delegate bookings and delegate spend?

How do you track this financially, and are you operating nominals which track both the F&B spend and the fact that it came specifically from a MICE experience?

I’ve focused largely on MICE, but the same applies to spa and leisure facilities and other big-ticket items too. Planning and tracking the customer journey for each type of guest, and then identifying opportunities to cross-pollinate into other marketplaces should be top of your agenda. Here’s to making more money from the guests you’ve got in the business, and not just the new ones you need to attract.