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Options to Avoid Struggling To Measure Performance. (Part 2 of 2)
By Dr. John Hogan CHE CHA MHS
Thursday, 22nd October 2009
 
Measuring staff performance has been a challenge over the years for many hotel managers and supervisors; Most people want to be fair and equitable in the evaluations for their staff, 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. 

Common sense should prevail, but it too often becomes obscured in either meaningless bureaucracy or in a lack of planning, a lack of concern for staff development and a disregard of the cost of turnover.

"Nothing astonishes men so much as common sense and plain dealing." Ralph Waldo Emerson (1803 - 1882) American essayist, philosopher, and poet, best remembered for leading the Transcendentalist movement of the early 19th century.

As stated in part one of this series, I suspect many of us in our careers at some point have been in an organization that does not have a structured performance management plan.  Reviews may be conducted annually or provided sporadically, depending on the current executive's leanings.    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.

Part one identified a number of ways to assess performance at almost every level within a hotel structure, including:
  • Forced Ranking systems that specifically rate and compare every person
  • Management by objectives (a Peter Drucker-inspired method to focus on both long and short term activities and planning)
  • Key result areas that focus on specific areas of measurement
The Harvard Business Publishing this week promoted a series of articles on "What Makes a Decisive Leadership Team, 3rd Edition" [1]*   There is discussion on "Bad choices. Endless bickering. Lost opportunities. Wasted time."  and more that affect many organizations. The article analyzed that many teams stumble over common obstacles while making crucial strategic choices because they hit impasses that do not look beyond their own group's interests to see what's best for the organization overall.

Strategic management has always been important, but what has changed in the last generation (or less time) is the way in which value is being created in the new economies of information, communication, "instant everything" and the shift in manufacturing and services.

Today's value drivers are intangible assets, including knowledge workers, technology, processes, and what is called today the "corporate culture".  This evolved "corporate culture" must adapt to changes in the global market, but the creators of the The Balanced Scorecard believe that   7 out of 10 organizations do not have the management tools to allow them to do to execute a successful strategy to allow them to compete in the new markets.  [2]

David Norton of high tech business and Robert Kaplan from the Harvard Business School developed The Balanced Scorecard in the early 1990s.  Its focus was addressing  the intangibles of a changing  economy that requires managers to look at relationships between today's actions and their long term-impact.

Many performance systems tie raises, bonuses or promotions to only financial benchmarks, yet the changing economy requires a balanced strategy between short-term productivity, mid term customer value, and long-term innovation. Things like customer retention, product or service quality as well financial measurements are now part of the equation of things to be measured

We have all heard the maxim "What you measure is what you get."  This is basically true – if we establish people targets or goals and reward them when they meet these targets, people will often do all they can to achieve them.

In hotels, this may seem like a fabulous theory, but it can be unsuccessful in practice if one does not set balanced measurements.  It is easier to measure financial results in ReVPAR, revenues, departments' margins etc, than to gauge other essential areas, such as guest satisfaction, staff turnover, innovations in marketing, etc. 

An over-reliance on financial goals means that people will disregard other meaningful areas of concern to meet the financial goals.  This can suggest that hotels or management companies often direct their efforts to short-term financial results, while undermining the "heart" of their hospitality business.

The Balanced Business Scorecard can be an important tool for improving the performance and accomplishments of an entire organization, a department, a team and individuals.

For example, if you have an objective to decrease operating expenses in housekeeping by 8% or X dollars, you may set a goal to clean more rooms per day per room attendant. The financial target targets increased efficiency and lower cost, but if guest satisfaction declines as a result, this could lead to lost customers, reduced revenue, and so on.

This action could also affect staff turnover, causing additional short-term and intermediate costs.  All of this yields the net effect that this well-meaning financial objective actually damaged the hotel's overall performance. When one achieves a goal in one area at the expense of operating performance in other areas, the results can be demoralizing.

Measurement Reinforcing Your Vision[3]

An internet search of the topic The Balanced Scorecard provided an excellent resource from a company called MIND TOOLS.  The reference noted ways to facilitate setting goals that provide appropriate weight to financial and non-financial measures by starting with the vision and strategy that drive the business. From there, one identifies the drivers of success for that vision, and then develops targets that measure progress towards that success. By focusing on these targets, your team will adjust its efforts to focus on the successful overall delivery of your vision.

Their research identified key factors that contribute to organizational success - known as Critical Success Factors - the Balanced Scorecard limits measurement to the things that really matter, which allow your company, hotel department or team remains competitive by examining both financial and non-financial measures, even if the non-financial activities have a less direct effect on the bottom line. 

Major Performance Areas for hotels include
  • Financial Perspectives
  • Guest/Customer Perspectives
  • Business Processes Perspectives and
  • Staff Development and Learning Perspectives.
The three assessment methods outlined in part one of this short series on performance each has its supporters and detractors, with various levels of success in the past 25 years.  A major challenge is that they often do not adequately make clear who is accountable for decisions, and without measurable accountability, cycles tend to repeat which in a changing world is not a successful strategy

The Balanced Scorecard is currently used at a number of industries and varying sizes of companies.  I have personally been involved with the process and approach - it does take much of the other outlined approaches and combines the best of them.  Please contact me if I can be of service to you in refining the performance assessment at your hotel or company.

What are you doing at your hotel today?

http://harvardbusiness.org/product/what-makes-a-decisive-leadership-team-3rd-edition-/an/12186-PDF-ENG?referral=00104&cm_mmc=npv-_-SpecOffer-_-Oct2009-_-DecisiveLdrTeam (HBR Article Collection)   by Bob Frisch, Paul Rogers, Marcia Blenko, David A. Garvin, Michael A. Roberto, Kathleen M. Eisenhardt, Jean L. Kahwajy, L.J. Bourgeois    44 pages. Publication date: Nov 01, 2008. Prod. #: 12186-PDF-ENG

2 interview with David Norton from the book ""Intangible Assets and Value Creation""2 by Juergen Daum, published in the German Newsletter "Controlling & Finance", issue 6/2001.

3 www.mindtools.com/pages/article/newLDR_80.htm


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 VP of Operations.    

www.linkedin.com/in/drjohnhoganchache
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