All posts tagged Balanced Scorecard

What is a strategy map? Is it just a nice presentation demonstrating company goals? Well, some top managers and business owners think so. In fact, this is not true as an effective strategy map shows both goals and ways to achieve these goals. Besides, some strategy maps are very difficult to understand since they contain complex terms and formulas from strategic management theory. An effective strategy map must be easy to understand even for a person without even elementary knowledge of strategic planning. Such a person should see goals and how these goals will be reached. All the rest is unnecessary. An effective strategy map and shows cause and effect ties between goals and measures. For example, if a strategy map contains just one goal of making much money and no ways to implement it this will be a useless document. At the same time, if such a strategy map demonstrates how this goal will be implemented and what needs to be done in several stages, this strategy map can be considered effective. In
this article well talk about hotel management strategy maps.

First and foremost a hotel should develop comprehensive and realistic strategy. It means that strategic goals have to be ambitious and achievable at the same time. On top of that, making a lot of money can be hardly called a strategic goal. A strategy is about future vision, and hotel industry is not an exception here. Thus, a good example of strategic goal would be gaining particular percentage of market share, improve and loyalty of existing customers and attraction of new ones, improving hotel business image and recognition throughout the world and of course increasing profits. Of an effective hotel management strategy map will show what needs to be done to achieve these goals. Balanced Scorecard is perhaps the best tool to design strategy maps that demonstrate cause and effect ties.

All financial goals can be implemented if some improvements are performed in other spheres. As known, Balanced Scorecard consists of four categories which are interrelated: financial, customer, internal business processes, learning and growth. A hotel strategy map will show cause and effect ties between all categories and key performance indicators that each category contains. For instance, in order to increase revenue (financial), it is necessary to attract new customers (customer) which is possible on lee through introduction of new services and improvement of internal procedures (internal business processes) while this is only achievable through improvement of personnel professional level (learning and growth). This simple example demonstrates cause and effect ties between Balanced Scorecard categories and key performance indicators. For example such key performance indicator as customer loyalty directly affects revenue growth since loyal and satisfied customers are more likely to stay and the same ho
tel again. Thus, the hotel strategy works in the long term which contributes to competitive advantage in the market. It needs saying that Balanced Scorecard will perfectly work and the hotel will improve its performance only if improvements in the four categories are achieved. This means that the hotel should be ready for changes.

Every respectable company must have an efficient customer support service. Most businesses operate in a very tough competition. Thats why they do not only have to offer customers high quality products and services, but also provide them with post sale support. What does it mean? It means that once a customer has purchased a product or a service he or she is eligible for support. For example, if you have purchased a brand new laptop or cell phone you should make sure that you can actually call customer support service of the producer company and ask questions as to products features, potential problems, bugs and other drawbacks. You can call even if you simply do not understand how to make use of a particular feature. There are two options here: you either get your questions answered and problems solved, and you stay loyal with the producer company, or customer support specialists failed to answer your questions and solve problems, and in such a case you will probably not buy this product ever again.
Thus, a particular company loses a regular customer in your person. If there are many people who are not satisfied with quality of customer support service the company loses many customers. By the way, one should know that if a customer decides not to buy from company A, he/she will most certainly buy with company B. This is how modern market works.

Why did we start with importance of customer support service? As you have understood this is a very important business unit in the company that directly contacts customers. Thats why it is very important and vital to evaluate customer support service performance and optimize it in order to deliver high quality services to end customers. You should know that many customers form their judgment about the company based on their communication experience with customer support service. This especially concerns webhosting and Internet service providers. So, evaluation of helpdesk performance is a must. So far, Balanced Scorecard is probably the best tool to be used to evaluate performance and communicate operational and strategic management. Why strategic management? Every business unit has its own goals in the company. The same time such goals should comply with general strategy, mission and values of the company. Balanced Scorecard helps align strategies of various business units in order to achieve ulti
mate strategic goals.

When talking about customer support service optimization and evaluation, key performance indicators from all four categories of Balanced Scorecard are vital: financial, customer, internal business processes, learning and growth. In order to correctly evaluate performance of a customer support service or a call center it is necessary to choose the right indicators. The right focus on most important things and proper analysis will provide top management of a call center with correct information to be used in decision making. For example, such indicators as customer satisfaction, abandoned calls rate, one and done calls rate, average waiting time, number of calls handled, number of problems solved, number of angry customers and many others may greatly help evaluate current performance, and locate weak points.

What is a universal success recipe in business? Even the most well known business gurus will not give you a definite answer. The problem is that every business is individual and thus requires individual approach. It should be noted that the situation is aggravated by a tough competition. If 30 years ago commercial businesses only had to offer high quality products at competitive prices, now the situation has entirely changed. These days, companies have to win loyalty of their customers. It especially concerns hotels. When vacation season begins hotel start a real fight for customers. Indeed, visitors have a very wide choice of hotels in different price ranges. As already said, hotels compete for customer loyalty. You know that in most cases those hotels win that have well thought and realistic strategy. One of the most common mistakes in strategic planning is that strategy unfortunately remains on paper. There is no problem in designing the most ambitious strategic plan but if they remain on the to
p management level there is no use in such a strategy. Thats why hotel owners and top managers are strongly recommended to use Balanced Scorecard which is known as one of the tools used for strategic management and performance evaluation purposes. Every strategy in a hotel is definitely customer focused. Sure thing, financial goals matter most of all, but the truth is that they simply cannot be achieved without retention and attraction of new customers. This is the only way a hotel can generate income.

As known, Balanced Scorecard employs very simple principle: it evaluates key performance indicators (KPIs) that represent critical success factors both in internal and external business environment. The four categories of Balanced Scorecard financial, customer, internal business processes, learning and growth cover the most important aspects of inside and outside the hotel. With a Balanced Scorecard it is possible to adjust internal processes in accordance to new market conditions and requirements. It is remarkable that the set of key performance indicators can be changed during evaluation process, as required by external changes. Lets review several key performance indicators used in hotel Balanced Scorecard.

Number of hotel guests per employee. This is a very important indicator that makes it possible to efficiently manage number of hotel employees and optimize personnel quantity. This indicator can also demonstrate group performance of employees. Naturally, the more hotel guests an employee can manage the better.

Net room revenue. This is a very important financial indicator that makes it possible to calculate total revenue for the entire hotel as well as offer valuable information on how to increase revenue without sufficient hike in hotel rates.

Percentage of international guests. This indicator can tell much of hotel quality and services. The more international get choose to visit a hotel that hire its reputation and the international and local community. If there are not many international guests in a hotel, perhaps new services and offers have to be introduced in order to attract such customers that are expected to spend much money.