If you are a business owner considering using a framework for strategic management, you have definitely heard of BSC and KPI. While these acronyms may strike fear into the hearts of newbies, they are used globally to assess the performance of various institutions, from schools and government agencies to military units and small online businesses. Since its introduction in the early 1990s, this tool has gained enormous popularity due to its comprehensive approach to business assessment: in addition to the traditional financial and time perspectives, the developers of the Scorecard have offered three non-financial areas: education and learning, customer service, and Internal Processes Perspectives. Due to these aspects, this performance evaluation system can give a broad view of what is happening within your company. However, there are both pros and cons to this approach. Next, we will try to point out the positive and negative aspects of this tool in the example of a hotel company.
Finding a reliable officer who can properly design and identify the most essential components of your hotel business is crucial. Individual managers who belong to different departments may try to portray their divisions as the most important elements of the company (room service managers may focus on their work, while hotel restaurant managers may regard meals as the rock). cornerstone of the entire company). That’s why it’s a great idea to hire an impartial specialist or independent manager to design the BSC and list the key performance indicators.
Advantages: An experienced and unbiased manager can create a perfect scorecard template for your particular hotel unit or the entire network. In this case, the BSC will be a great tool to analyze the success of the hotel and see the cause and consequence relationships between the financial and non-financial perspectives.
Disadvantages: A manager with personal biases and preferences can create the wrong workforce with irrelevant KPIs (often too narrow to provide a holistic view of the company’s state of affairs). Wrong KPIs make the whole system difficult to understand and useless. In addition, wrong indicators can lead to wrong conclusions and decisions that can drastically affect a good business structure.
It is impossible to get an evaluation without collecting data. In fact, the entire Balanced Scorecard is about collecting and analyzing data. But how accurate is the information you get from your managers and customers?
Pros: In case you get information from an unbiased source, it serves as a great tool for evaluating your customers’ satisfaction and more. For example, you can use the ‘mystery shoppers’ service for your hotel unit: send them to the restaurant, reception hall, or wherever to get a third-party service quality rating. Mystery shoppers can be found at numerous market research agencies.
Disadvantages: Continuous reports can be very distracting and can decrease overall productivity. Staff may also take to the BSC idea halfheartedly and fill out the forms in a hurry. Also, sometimes KPIs can involve getting very obscure information that just can’t be measured in numbers.