Description of Your Firm’s client
Discuss about the Evaluate Balanced Scorecard of Hilton Hotel.
The ain of the report to analyze and evaluate that Balanced scorecard is suitable for the company or not. Being a graduate consultant in management consultancy it has been identified that one of the clients of firm recently evaluated the budgeting system. The firm that has been selected for the report is Hilton hotel. The CEO of the hotel currently attended a seminar related to the Balanced Scorecard in private companies. After conducting the seminar, company like to know whether BSC method is suitable for the company.
Balanced scorecard method is one of the effective ways through which the company can measure the four elements of BSC. These elements contribute in achieving the vision and strategy of the company. The strategies of the company change every year because the company makes the strategy to achieve the specific goals every five years. Moreover, these goals contribute to achieving the vision of the company. Therefore, the company wants to analyze that this modern approach will suit the current strategies of the company or not.
Hilton hotel is one of the important clients for the company as the company is well known in the market for its hotels and resorts. The company was founded in the year 1919 by Conrad Hilton along with the aim to achieve the lodgings facilities in the country. The company is able to manage its processes in more than 92 countries across the world (Hilton Hotel, 2018). The company made use of the modern accounting tool in their organization so that they can achieve the desired goals and get to learn some new aspects which will help the company in improving its activities in the near future. Hilton hotel makes the changes in their strategies as this is the only way through which they can come close to their mission and vision step by step.
Mission
The mission of the hotel is to blow-out the light and warmth of the hospitality across the market.
Vision
The vision of the company is to become the world most preeminent hospitality company. Along with this, they want to achieve the position so that they can become the choice and preference of guest, team member and others (Hilton Hotel, 2018).
Service differentiation is one of the strategies of the company through which the company can generate the competitive advantage with the other competitors. The company wants to support its entire services with high quality, maintaining the highest level of standards and the integrating the IT systems in their services which is one of the ways through which they can deliver the delight services to their customers. This will make the customers stay memorable and they would like to visit again to the hotel (Dudovskiy, 2016).
Mission and Vision
Moreover, the company is willing to add on digitalization in every service they make use of such as loyalty and data driven-personalization, guest experience and privacy and many others. This is the fact that this effective integration of the digitalization helps the hotel in creating the additional synergetic impact for the business.
Balanced scorecard
A balanced scorecard refers to as the performance metric that the company makes use of strategic management which contributes to improve the numerous interior functions of a business and their resulting exterior outcome. This method is considered as a modern tool for managing accounting information in a business. This method contributes to provide the feedback to the company after measuring all the aspects of the balanced scorecard (Balanced Scorecard Institute, 2017).
This method was first presented by the book-keeping academic Dr. Robert Kaplan and business executive along with the executive theorist Dr. David Norton. This method was first printed in a Harvard business review article in the year 1992 (Perkins, Grey, and Remmers, 2014).
The balanced scorecard is known as a set of the performance objectives and outcomes that are related to the 4 dimension of the performance. The balanced scorecard includes the four perspectives on which the analysis is based (Investopedia, 2018). These four perspectives of the company include Financial Perspective, Customer perspective, Internal business and Learning, and growth perspective. Each of these perspectives includes general objective, measurement, target, and initiative. All these perspective identify the responsibility that organization has towards their different stakeholder groups like employees, suppliers, community, customers and shareholders (Basuony, 2014). This modern approach reflects the performance of the organization in fulfilling its objectives that are related to stakeholders of the company. The description related to the four perspectives is given below: –
Financial Perspective
Balanced scorecard involves the financial measures that include net income and ROI (return on investment) due to all for-profit corporations make use of them. This measure offers a mutual language for analyzing and comparing different companies. Many persons who offer capitals to the companies’ like a financial institution and shareholders depend on the heavily on financial performance that measure in identifying either to invest funds or to lend funds (Coe and Letza, 2014). The proper design financial measure can help the company with the aggressive view of an organization success.
Customer perspective
In the customer’s perspective of the BSC, the supervisors of the organization determine customers and market subdivisions in which the corporate unit will compete. Along with this, they measure the units of the corporate performance in these targeted segments. This customer perspective includes the numerous core and non-specific measures of the achievable result from a well-formulated and the implemented strategy (Cooper, Ezzamel and Qu, 2017). Over here, the core measure includes customer satisfaction, the new acquisition of customers, customer retention and customer profitability. On the other hand, the specific measures of the customer perspective include the value proposition that the company will offer to their customers to whom the company targets.
Strategies of the Company
Internal business perspective
In this perspective of the BSC, the managers of company determine the critical internal process in which the association must excel. This process allows the company to offer the value propositions that help the company in attracting and training the customers in the targeted segments (Smith, 2010). Along with this, this process enables the company to fulfill the expectations of the shareholders by offering them excellent financial returns for their investment. The company will be able to achieve the success when they will be able to control its processes to produce reliable and consistent products and services. The company can measure their performance towards the consistency of the product and services with the help of balanced scorecard. Moreover, this process measures that are typical monitors every day or at least very weak.
Learning and growth perspective
In BSC, the learning and growth perspective of the company emphasis on the capabilities of the people in an organization. Managers of the company are responsible for developing the employee capabilities (Hoque, 2014). The key measure for analyzing the manager’s performance includes employee retention, employee satisfaction and the productivity of the employees.
- Employee satisfaction identifies the significance of the employee morale for enhancing the quality, productivity, customer’s satisfaction as well as the responsiveness to situations of the company. Managers of the company can take the feedback from the employees through surveys, interviews, one-on-one meetings and observe the employees at work.
- Employee retention is essential for every company in this competitive market as these employees work as an asset to the company. Further, the company incurs addition cost when hiring new employees in place of the employee who left the organization.
- Employee productivity identifies the importance of the output for every employee. An employee in the organization creates both physical output and financial output.
Many companies make use of balanced scorecard because it is a strategic planning and management system. Some of the characteristics of this modern accounting tool are given below.
- It offers an effective Communicate related to what companies are willing to accomplish
- Alignment of all the day-day to operations that everyone is doing with the strategy is one of the features of this method (Hansen and Schaltegger, 2016).
- It assists in prioritizing projects, products, and services
- Monitor and measure the progress towards the strategic targets can be done with the help of balanced scorecard.
- The balanced scorecard limits the measures and analyses the most crucial one.
- In the company where companies are seeking for the profit, this balanced scorecard focuses on the financial objectives and measures (Agarwal, 2018).
- Balanced Scorecard should highlight a company’s strategy by focusing on the cause-and-effect relationship.
The balanced scorecard is different from the traditional performance system as BSC is one of the modern accounting tools. Traditional performance system tracks only the financial performance of the organization that is related to the profit earned by the company from selling to the capital required. Though on the other side, BSC focuses on the financial and non-financial measures for assessing the performance that is linked to the strategy of the company (Coe and Letza, 2014).
In the current world scenario, the environment changes frequently due to which the company is not able to conduct its operations perfectly. The traditional performance systems are neither appropriate in the changing environment, nor for the uncertainty that might take place in the organization. Along with this, traditional performance system doesn’t acknowledge the improvement and capabilities of an organization. On the other side, the BSC is a strategic management system which was introduced to overcome the limitations of the traditional management system. Therefore, BSC method delivers the stable view of an organization inclusive performance that gets align with the companies activities along with the vision and strategy of the company (Striteska and Spickova, 2012). Moreover, this method helps the company to evaluate the measures of not only the financial perspective but the internal business, customer and learning & growth perspective also which is not possible in the traditional management system.
Balance Scorecard and its Features
This method provides a feedback to the company for the future operations and strategies that will help the company to grow in the market. Though, the feedback sharing facility was not available in the modern approach of BSC. The limitation of traditional management system led to the development of the modern approaches. Therefore, the BSC introduction helps the company as their strategic decision making improved which was earlier weaker in the traditional performance system (Melnyk, et.al, 2014). It has been analyzed that implementation of the balanced scorecard is one the difficult task for the company but the implementation of the traditional methods like ratio analysis, cash flow system, fund flow and many others were easy to implement for the company. Therefore, the company needs to appoint an expert in the accounting so that they can get accurate results and can implement the BSC easily.
This has been analyzed that the traditional performance system is not linked to the organizational strategy which is one of the biggest limitations of the traditional management. Though, on the other hand, the BSC model measures and performance evaluation is totally based on the vision and strategy of the company. Therefore, the performance measurement in balanced scorecard method is more accurate when it is implemented correctly by the accountant of the company (Striteska and Spickova, 2012). The above given are the major differences between the traditional management system and the modern management system of accounting. The overall analysis reflects that modern management system like BSC was introduced so that the limitation of the traditional management method can be removed and organization can achieve their vision more effectively than previously.
This section of the report will talk about the Suitability of the balanced scorecard management tool for the client firm’s that is Hilton hotel. The suitability can be measured by linking it to all the four perspectives of the BSC. The firm found that this tool supports the strategic management and helps them in improving the internal activities through feedbacks of each perspective (Sivaraman, Al Balushi, and Rao, 2014). This tool contributes to the effective expansion and growth of the business around the world.
Hilton hotel gets an advantage of the improved value of the shareholders and the rise in the profit of the company which is possible by offering the value-added services to their customers. BSC support the company in bringing the changes in the cost structure which is essential to improve the prices (Sainaghi, Phillips and Corti, 2013). Moreover, this perspective also contributed in the mergers and acquisition across the world. The below given are goals, measures, target, and an initiative of the Hilton hotel for the financial perspective.
- Goals: -The goal of Hilton hotel is to accomplish the rise in the revenue and the productivity of the company. Along with this, the aim is to increase the hotel assets and determining the new investors. This is supported by the balance score method of accounting management.
- Measurement: – Company can analyze the achievement of goal with the help of evaluating the rise in the percentage of the booking by the customers. Moreover, Hilton can compare the percentage rise in the revenue of the company.
- Targets: – The target of the company is to increase the number of property by adding new hotels.
- Initiative: – Hilton hotel initiative is effective monitoring within the hotel and resorts.
Financial Perspective
BSC tool supports the company in analyzing the customer satisfaction, retention, and rise in the number of customers. Hilton hotel always ensures that they are offering the high-quality services to their customers as this is the effective way through which they can win trust and loyalty of the customers and leads to the customer satisfaction and retention (Erbasi and Parlakkaya, 2012). Therefore, it can be said that BSC will support the company informing the long-lasting relationship with the customers.
- Goals: – The goal of the company is to offer the delight services to their customers which will lead to the delightful experience. This goal is supported by the BSC model as they will provide the feedback to the company for improving the customer relationship.
- Measurement: – Hilton hotel can measure this goal with the help of BSC by analyzing the rise in positive feedback from the customers.
- Targets: – Analysing increase in a number of visit of a particular customer.
- Initiative: – Monitor on monthly sales and services that contributes to form a strategy.
The company believes in adopting the updated technology which will help them in improving the internal performance. The implementation of the updated technology is not enough as there is need of the evaluation of the performance after the implementation of the technology is essential which will be possible with the help of BSC tool (Shields, et.al, 2015). Therefore, this tool is effective for the assessment of internal business processes.
- Goals: – The goal of the hotel is to upgrade their internal operations with the help of the technology. Moreover, another goal of the company is to retain the talent in the organization.
- Measurement: – The effective use of the resource and evaluation of the performance with the help of BSC will be effective measurement. Along with this, the hotel can analyze the turnover rate of the employees in the company.
- Target: – The target of the hotel is to remain on top quality with the experienced staff in the office. Effective internal business operations are a target for the company.
- Initiative: – Hilton can make the strategy for using the cross audits, weekly follow-up, and other methods as this are the effective way of evaluating that objectives are fulfilled or not.
Learning and growth perspective is one of the significant perspectives for the organization as this is the only way through which they can improve the productivity and efficiency of their employees (Savkin, 2017). Moreover, the motivated team and skilled employees help the company in delivering the effective services to the customers which lead to the customer satisfaction because the employees are the foremost person to whom the customer interacts.
- Goals: – Management of sustainable human resource in hotel and resorts.
- Measurement: – Evaluation of the eligibility of the employees for the ability, their patience level, skills and capabilities that they maintain.
- Targets: – Hilton Hotel target is to provide the best training and development facility or programs to their employees. The company also ensures that the employees of the company are engaging in development programs or not.
- Initiative: – Hilton Hotel should plan for the effective communication for engaging the employees towards the training and development programs.
Hence, the above analysis clearly states balanced scorecard model is one of the effective models that will enhance the operations of the Hilton Hotel. Moreover, this model suits the current strategies of the Hilton hotel and will support them to bring the changes in their future strategies.
Conclusion
In the end, it can be concluded that balanced scorecard model is one of the effective management accounting tools which is used by the company for evaluating the performance and to get the feedback so that they can improve their future operations which will lead to the development and growth of the company. The report includes the description related to the BSC tool and its features which is totally different from the traditional management system. Moreover, the suitability of the BSC tool for the Hilton hotel has been evaluated which states that this tool is suitable for the company. Moreover, this model will bring the improvement, growth, and expansion in the internal processes of the company which also create an impact on the external working of the company.
References
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Customer Perspective
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Basuony, M.A. (2014) The Balanced Scorecard in large firms and SMEs: A critique of the nature, value and application. Accounting and Finance Research, 3(2), p.14.
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Coe, N. and Letza, S. (2014) Two decades of the balanced scorecard: A review of developments. The Poznan University of Economics Review, 14(1), p.63.
Cooper, D.J., Ezzamel, M. and Qu, S.Q. (2017) Popularizing a management accounting idea: The case of the balanced scorecard. Contemporary Accounting Research, 34(2), pp.991-1025.
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