PERFORMANCE MEASUREMENT
Transcript: Performance Management in the International Hospitality Industry TOUR 503 - Managerial Accounting for Tourism and Hospitality Industry submitted to : Asst. Prof. Dr. Mine B. Haktanir by: Sanaz Vatankhah Claude Feh measures such has customers satisfaction,market share and quality(non-financial measures of performance) must be conducted as determinants of profitability along with financial measures of performance according to Fitzgerald et al 1991: customer satisfaction, market share are lead measures,whereas profit is a lag indicator. Nature & characteristics of hospitality businesses high fixed costs demand fluctuation cost structure capital intensiveness strongly market oriented changes are true for food services as changing patterns of behavior towards 'snacking & graznig' leads to increasing demand for mid-scale and quick service restaurants rather than fine dinning restaurants emphasizing shareholder satisfaction; gross/net profitability, return on capital employed, residual income/economic value added,sales growth,market position,cash flow etc. focusing on real customer satisfaction,key goals & indicators here typically stress common customer concerns;delivery time,quality,service ,cost etc. key goals &measures should highlight critical skills and competencies,process and technology that can deliver future organizational success key long-term goals and indicators in this regard typically relate to improving flexibility & investing for future development and new opportunity Brander Brown et al 1996: BSC can reduce managerial information workload through reducing strategy down to a handful of key measures also important to consider the casual relation ship between 4 perspectives,with innovation and learning as driving force to deliver success in internal processes ,which then will meet customer and shareholders needs key concept behind developing R&D model : information set used to monitor performance must include both financial and non-financial metrics,address issues of feed forward and feedback & also be both internally and externally focused. criticism to R&D model: it includes a large number of dimensions performance prism: although has a wide definition of stakeholders,it is not clear how the tension between measures can be resolved performance prism also shows the the drivers of stakeholder's satisfaction(strategies,processes,capabilities,contribution) BSC:in spite of good recognition about CHANGE and future orientation(emphasizing on speed,quality ,service as key success factors),it doesn't recognize all stakeholders ,ignoring employee and supplier's contribution and fail to identify the role of community R&D model: recognizes the importance of competition ,flexibility performance pyramid: is clearly linked to value chain of operation weaknesses in implementing BSC 1. lack of balance 2. lack of prioritization 3. tendency for top down approach 4. lack of double loop learning 5.interaction with other control systems performance measurement in hospitality industry starting points was from focusing on predicting failure and managing through difficult trading condition and were predominantly financially oriented after identification of key performance indicators by schmidgrall 1988 small organizations started to make some differences in their performance measurement with a bias towards cost orientation rather than market orientation Gller 1995: KEY SUCCESS FACTORS 1. financial factors(profitability and ROI at the top) 2. non-financial factors(guest satisfaction 4th and employee morale 6th) management information system was not in a position effectively to monitor the things that mattered(Gller 1985) Collier & Gregory 1995 found that incentive schemes were linked to budgetary control and thus financially oriented,showing these organization were still managing through financial measures Huckestein & Duboff 1999 reported a success at Hilton of implementing a BSC approach they had a review on their value chain established a series of integrated initiatives to improve performance they had a great focus on key value drivers of Brand management, Revenue maximization, Operational effectiveness, value proposition there is an interesting shift in the move to global scorecard: Global structure but Locally established measures & priorities Results and Determinants model Table de Bord Balanced Scorecard Performance Pyramid Result and determinant model Performance Prism Metapraxis' Performance Cluster foundation for Performance Measurement's Strategic Quadrants RSA's tomorrow's Company Atkinson & Brander Brown 2001: deregulation and privatization globalization and product differentiation increasingly sophisticated customers increased emphasis on the supply chain & stakeholders The future for research limitation in their accuracy &neutrality a dominance of lag/result over lead/determinant measures emphasis on short-term little appreciation of the links & relationships between key areas & aspects of an organization