The Balanced Scorecard and Its Application to Hospitality Businesess
Introduction
This essay will try to explore the role of the Balanced Scorecard in today’s organisations, in particular in hospitality businesses. The research will start by exploring performance measurement and later will describe the basics of the Balanced Scorecard to finish with a practical example of the implications of not applying correctly a performance measurement system in a hospitality business.
Performance measurement is described by Neely et al (1995) as the process of quantifying action, where measurement is the process of quantification and action leads to performance. Therefore performance measure is the metric used to quantify the efficiency and effectiveness of an action.
These actions refers in other words to the changes that an organisation experiment by achieving performance goals through allocating and prioritising resources. This valuable information is later used by managers to conform or modify their strategies in order to meet these goals.
Performance measurement is crucial in today’s organisations because:
• It helps identifying and tracking progress against organisational goals
• It helps comparing performance against both internal and external standards.
• Ensures customer requirements have been met
• Helps setting sensible objectives and work towards them
• Provides a physical scoreboard for employees to monitor their performance
• Highlights quality problems and suggest areas for action (Kald and Nilsson 2000)
Within this context, the Balanced Scorecard (BSC) can be described as a strategic performance management framework that integrates a coherent set of performance measures with the organisation’s strategic plan. This allows organisations to define their strategic priorities and design indicators to monitor how well they are executing their strategy. (Kaplan & Norton, 1992). The main innovation from this approach is that it provides a multifaceted view of the organisation’s performance and balances the traditionally
This essay will try to explore the role of the Balanced Scorecard in today’s organisations, in particular in hospitality businesses. The research will start by exploring performance measurement and later will describe the basics of the Balanced Scorecard to finish with a practical example of the implications of not applying correctly a performance measurement system in a hospitality business.
Performance measurement is described by Neely et al (1995) as the process of quantifying action, where measurement is the process of quantification and action leads to performance. Therefore performance measure is the metric used to quantify the efficiency and effectiveness of an action.
These actions refers in other words to the changes that an organisation experiment by achieving performance goals through allocating and prioritising resources. This valuable information is later used by managers to conform or modify their strategies in order to meet these goals.
Performance measurement is crucial in today’s organisations because:
• It helps identifying and tracking progress against organisational goals
• It helps comparing performance against both internal and external standards.
• Ensures customer requirements have been met
• Helps setting sensible objectives and work towards them
• Provides a physical scoreboard for employees to monitor their performance
• Highlights quality problems and suggest areas for action (Kald and Nilsson 2000)
Within this context, the Balanced Scorecard (BSC) can be described as a strategic performance management framework that integrates a coherent set of performance measures with the organisation’s strategic plan. This allows organisations to define their strategic priorities and design indicators to monitor how well they are executing their strategy. (Kaplan & Norton, 1992). The main innovation from this approach is that it provides a multifaceted view of the organisation’s performance and balances the traditionally