One of the buzz-word business concept in last 20 years was the Balanced Scorecard. It was adopted by biggest retailers, banks, IT companies, hospitals and universities. The unique features of the Balanced Scorecard concept help companies all over the word to put together strategy and action, improving service and client satisfaction as a result.
Hospitality industry is not an exception, the Balanced Scorecard concept is successfully used in many large hotel chain as well as in local bed and breakfasts.
Balanced Scorecard Basics
Any business website will tell you that there are 4 perspectives in the Balanced Scorecard: Education and Growth, Internal Business Processes, Finance and Customers. What book-smart consultants forgot to share in their article is how to get the Balanced Scorecard work for your business.
Balanced Scorecard is not a KPIs
There are some typical pitfalls one could face during implementation of Balanced Scorecard in hotel. The most important problem is that Balanced Scorecard and KPIs is not the same.
I’ve seen projects where people took some industry-standard KPIs, such a “occupancy rate” or “Average room service time” and now think that they have Balanced Scorecard that help them with their hotel business. KPIs are not Balanced Scorecard. Balanced Scorecard is a management system, while KPIs provide only measurement.
From measurement to management
The next logical question would be how to move from measurement (KPIs) to management. We could use the Balanced Scorecard framework or we could you any other Business Intelligence system.
With Balanced Scorecard strategic objectives need to be defined first.
- What is the goal of your hospitality service?
- How do you see your hotel in few years?
- What kind of guests visit your hotel?
- What service is provided?
Start “dreaming” about your future hotel. Get a list of objectives that you want to achieve. Then put these objectives together, link the way you want to move from the one objective to another one. In Balanced Scorecard terminology we call it “Strategy Map”.
Linking strategy to actions
Here is where we need your KPIs. How are you going to measure the progress of your hotel business towards the strategic goals that you have on your list? Assign a specific KPI to each strategic goal.
Do you have some industry-default KPIs in mind that you have not used? This might have happen because of two reasons. First, you was not “dreaming” good enough about how your hotel will be within 5 or 10 years. Second, you don’t actually need these KPIs, because your business is different.
Important note: don’t use KPIs just because other hotel chain use them. KPIs should appear naturally from your strategic goals.
Improve your hospitality service
Your strategic goals are now connected with each other in a strategic map. KPI is assigned to each strategic goal.
The final step of the Balanced Scorecard is the most important one. Each KPI and strategic goal should be accompanied by the action plan. How are you going to act to improve your hotel business?
The number of Balanced Scorecards
How many Balanced Scorecards you need for your hospitality service? Just 1? Well, then it will be hard to translate your top level goals, to say, cleaning department of the hotel.
The top management Balanced Scorecard should be cascaded to the lower level departments. During this process you will need to collaborate with employees of other departments to create a new department-specific Balanced Scorecard.