Wednesday, January 12, 2011

Balanced Scorecard

I’m a big fan of the balanced scorecard approach to management, or leadership, as I prefer to look at it.

I think it can (and should) form the base of your operation and be your organizations over-riding focus when it comes to everything that you do.

Assuming it has been developed from your company’s Vision, Values and Guiding Principles, it should, in my opinion, be the gage by which you measure everything, and the means from which you set your goals and objectives, for your Hotel, every division within it, and every division head.

And it should be widely and regularly communicated to every team member within your Hotel.  Everyone in your organization should know what the priorities are for your business, what they mean to the success of the organization, and how each of them can and do impact the results for those areas of your business that you have defined as crucial.

The reason, in particular, that I think that it is so important to identify the components or themes of your balanced scorecard, and to ensure that everyone is equally aware of your commitment to these areas, is so that they are not forgotten in the decision making process, which seems to happen all too often.

All too often, especially it seems when times get tough, people seem to forget the commitments that have been made to run the business from a balanced perspective and decisions are made in isolation, and no one stops long enough along the way to look at the impact that these decisions will have in other areas of your operation, most often service.

As an example, someone comes along and says that “we need to cut costs” and with that wide spread changes are made without a thought for how this will impact employees’ ability to deliver service, or, how it may even directly impact guests and their perception of service at the Hotel as a result.

To me, the components of a balanced scorecard, the areas that you have identified as critical to your business’ long-term success, are like the pillars of a building, forming the foundation, that supports everything else.  

Assuming, for the purpose of my argument, that there are four pillars, (let’s say; strong financial results, exceptional guest service and guest loyalty, and employee engagement.), you can imagine what would happen if you remove one of the supporting pillars, or, if you start to chip away at one of them.  The integrity of your foundation is compromised at the least.  Remove the entire pillar and your building is going to come toppling down.

Based on that, can you really afford to ignore any of your pillars?

You may be able to make subtle changes to the structural components of one or more of your pillars, but you must consider the impact on the remaining pillars and potentially take action to reinforce them in light of the changes that you feel it is necessary to make.

It’s a great reminder that there is no one component that can guarantee business success, but rather it is the combination of a number of things, brought together and combined in the right way, that creates a successful formula for success.  In a number of presentations I made to newer managers several years ago now, I used to describe it as the “recipe for success” and in that instance, draw the comparison to baking a cake and the impact of removing any one of the key ingredients from the recipe.  It was a simple but effective message that has stood the test of time.

It is a complicated task to create, refine and hopefully, perfect your own recipe for success.  Once you have done so, do you really want to risk throwing it all away in an instant by making decisions in isolation?  

Need an experienced hospitality professional to help your property reach its full potential?  Contact me.

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