Many are familiar with the 'Balanced Scorecard' as a methodology for measuring corporate performance. Not everyone, however, knows the source of inspiration for the name of this tool. Robert Kaplan and David Norton, the scholars who formalised the model and then exported and applied it in companies, were inspired by the scoreboards used in basketball and baseball.
In these two sports, in fact, several factors and variables come into play when scoring a point. Just as in day-to-day work, there are many elements we have to consider in order to determine whether an activity is 'travelling well' or whether a course correction is needed.
The Balanced Scorecard, literally "Balanced Scorecard", balances measurements of a purely economic nature (lagging indicators) with others of a non-economic nature (leading indicators); it also includes outcome measures and targeting measures for future performance.
It therefore proves to be a very useful tool for the strategic management of a company, at any level and in any sector; in fact, it allows for clear reference points for a precise and accurate evaluation.
BALANCED SCORECARD IN HOTELS: WHAT ARE THE KEY FACTORS
How is a Balanced Scorecard structured in a hospitality company? According to the model I introduced in Italy during my experience with the Melia Hotels International group, the KPIs (Key Performance Indicators) identified as constituents are:
1. Turnover: certainly an essential aspect, of an economic nature, but it is only one of the 'pictures';
2. Profit: an equally essential indicator as it measures the operating profitability of a hotel;
3. Benchmarking: allows one to evaluate one's own structure in relation to competitors and also judge it according to the positioning of competitors. We could consider it as the strategic part, always of an economic nature
4. Customer Experience and Customer Satisfaction: indicator of a non-economic nature, but no less important. In fact, it measures a figure that encompasses both guest and employee satisfaction.
THE RIGHT BALANCE OF FACTORS
The sum of the four KPIs must give 100, but the results must be equally distributed over the four frameworks of the board. Having a percentage preponderance in the economic indicators, but poor performance in strategy and customer satisfaction, may give an idea of success, but it may be a short sighted view.
On the contrary, having good percentages in customer satisfaction might make the company look like a happy place, but, perhaps, at the expense of profit... Just as in the case of sports scorecards, the result is given by the consideration of the different variables, so too the balance of indicators in the Balanced Scorecard is represented by the right distribution of percentages. If there is balance, there is management control. And if there is management control, there is also company success.
Read also TOURIST SECTOR: I EXPLAIN HOW TO DEFINE BUSINESS OBJECTIVES AND KPI
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