Options to Avoid Struggling To Measure Performance. (Part 1 of 2)
By Dr. John Hogan CHE CHA MHS
Friday, 16th October 2009
Each year, hotel managers and supervisors face the struggle of annual evaluations for their staff - 

The reason for this 'struggle' should be obvious to most professionals who have been in the workforce for 5 years or more, but I have discovered in my career as a manager, corporate executive and consultant that many organizations and individuals make it more difficult and less rewarding than it should be.

If your actions inspire others to dream more, learn more, do more and become more, you are a leader.  John Quincy Adams (6th President of the United States)  

Many companies and hotels claim, "their staff is one of their most important assets,:" yet execute the feedback system very poorly.   Reasons may vary, but too often, it is due to lack of planning, a lack of concern for staff development and a disregard of the cost of turnover.

Without a doubt, the past 18 months have been a challenge for many industries, and the hospitality industry   (travel companies, food service and lodging) has been experiencing tremendous variances in volume, revenues and profitability.   Downsizing of staffing levels and cutting costs have been commonplace, and innovative professionals have also focused on revenue management, cash flow and maximizing customer satisfaction.

If in fact a hotel, management company or brand does have a commitment to their staff (and business) well-being,  the need for managers to have better results in filtering out their underperforming employees is a critical action step that needs to be addressed in  performance management,

I suspect most of us in our careers at some point have been in an organization that does not have seem to have a structured performance management plan.   Reviews may be held annually (with or without compensation adjustments), or they may be provided intermittently depending on the "manager of the day."    Some managers are unwilling to address poor quality performance, due to either through a lack of supervisory competence in delivering this kind of review or a lack of confidence in the system.

Large organizations tend to have more structured programs with mandated systems of feedback and scheduled reviews.  Small hospitality organizations are often less structured, because the owner is often part of the daily activities and views performance first-hand with ongoing two way communication.  The need for every size organization is to get managers to "manage" all staff, whether they are at exceptional or underperforming levels.  Effective performance management supports the stated, shared and communicated priorities  through ongoing open and honest feedback between leader and employee and by building managers' competence and confidence in how to conduct these important  discussions.

There are many ways to assess performance at almost every level within a hotel structure. These can include:

1. Forced Ranking systems that specifically rate and compare every person
2. Management by objectives (a Peter Drucker-inspired method to focus on both long and short term activities and planning)
3. Key result areas that focus on specific areas of measurement
4. Balanced Scorecards that may include portions of both of the above, as well as department , team or organizational success or performance

Forced Ranking systems

In a number of my earlier columns, I have shared approaches of former General Electric Chairman and CEO, Jack Welch.  In his book,  "Jack: Straight from the Gut" (Warner Books, 2001), he discussed  his operational philosophy.  Welch was a fervent sponsor of forced ranking, which required managers to rank every staff member as a means to identify and reward high-level performers, as well as the low-level performers.

At Welch's GE, each year 10 percent of managers were assigned the bottom grade and if they did not improve, they were asked to move on.  Welch believed that too many managers were not properly addressing the low-level performers and at times not effectively developing the potential high team members.  In a USA interview on April 18, 2005, Welch maintained his "differentiation" approach to evaluations remained the way "to let people know where they stand."

This system has been used at a number of large companies, including 3M,  Ford Motor Company, Yahoo and Motorola.  Online research shows mixed results, with  both lawsuits and success stories shared publicly.

Management by objectives (MBO)

Management by Objectives was introduced by Peter Drucker in his 1954 book, The Practice of Management (Harper & Row) . It gained a great deal of attention and was widely adopted until the 1990s, when it began to evolve into other programs.

The purpose of MBO was to motivate people by aligning their individual objectives with the goals of the organization. For of us who have worked in larger organizations, it is challenging to remember a point in time when non-managerial staff was not involved with linking personal objectives to corporate strategy and goals.

We were regularly exposed to the corporate mission statement, invited to participate in some decisions at we have strategy planning sessions where the "big picture" was revealed and reminded how our day-to-day activities supported the corporate goals.

Key result areas

Key Result Area, or KRA, is one of the valuable transitions from the time when  management by objectives, or MBO, was the most used planning structure of business. 

MBO was sometimes misapplied, but its key precepts were timeless. One of principles was to identify a few areas for concentrating attention over future performance period (usually for the upcoming year and measured each quarter), and using these key result areas, as a way to keep individuals' work plans focused and inter-dependent as appropriate.

Key result areas are tools and measurements in change management, either externally or internally directed, that need action in order to close the gap between the status quo of today's business and the point the organization wants to reach.  A few high-impact KRAs key result areas are usually more focused and reflect the conscious decision to meet significant change, rather than a quantity of activities.

Each of  these methods has their supporters and detractors and each of them have worked well at  various points in the past 25 years.

Every size hotel and hospitality business relies heavily on professional staff at all levels within its various departments to provide the level of service appropriate to the hotel.  The "high touch" of hospitality requires paying attention to those professional staff members.

This means a system that is equitable and understandable by all parties. 

Part 2 of this series will focus specifically on the Balanced Scorecard as a performance evaluation tool.

The Balanced Scorecard

Developed in the early 1990s by Robert Kaplan from the Harvard Business School and David Norton, the founder of an IT consulting firm, this management system has been applied to many organizations and across many industries with great success.

In the meantime, what are you doing at your hotel today to measure, identify and reward performance?

Feel free to share an idea for a column at johnjhogan@yahoo.com anytime or contact me regarding consulting, customized workshops, speaking engagements …………. And remember – we all need a regular dose of common sense.

Autographed copies of LESSONS FROM THE FIELD – a COMMON SENSE APPROACH TO EFFECTIVE HOTEL SALES can be obtained from THE ROOMS CHRONICLE www.roomschronicle.com www.smartbizzonline.com  and other industry sources.     

All rights reserved by John Hogan and this column may be included in an upcoming book on hotel management.   The opinions expressed in this article are those of the author and do not necessarily reflect the views of this publication
John Hogan, a career hotelier and educator, is a frequent speaker and seminar leader at many hospitality industry events.  He is a successful senior executive with a record of accomplishment leading organizations at multiple levels.  His professional experience includes over 35 years in hotel operations, food & beverage, sales & marketing, training, management development, consulting, management, including service as Senior Vice President of Operations.

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