The Hotel Paris International: An example
Let us examine how the Scorecard process works by considering a fictitious, the Hotel Paris International (Hotel Paris). Starting as a single Paris suburb in 1990, the Hotel Paris now comprises a chain of nine hotels, with two in France, one each in London and Rome and others in New York, Miami, Washington, Chicago, and Los Angeles. As a corporate strategy, the Hotel’s Paris’s management and owners want to continue to expand geographically. They believe doing so will let them capitalize on their reputation for good services by providing multi city alternatives for their satisfied guests. The problem is, their reputation for good service has been deteriorating. If they cannot improve service, it would be unwise for them to expand, since their guests might actually prefer other hotels after trying the Hotels Paris.
Top management, with input from the human resources and other managers, and with board of directors’ approval chooses a new competitive strategy and formulates new strategic goals. They decide: The Hotel Paris International will use superior guest service to differentiate the Hotel Paris properties and to thereby increase the length of stays and the return rate of guests, and thus boost revenues and profitability. All Hotel Paris managers – including the director of HR services must formulate strategies that support this competitive strategy.
The value chain: based on discussions with other managers, the HR director, Lisa Cruz, outlines the company’s value chain. This should help her to identify those HR activities that are crucial in helping the hotel achieve it strategic goals. In a service business the product is satisfied guests. Producing satisfied guests requires attending to all those activities along the Hotel Paris’s value chain where the company has an opportunity to affect the guests’ experience. For the hotel Paris, there are in bound logistics activities such as getting the guest from the airport and check in. There are operations activities such as cleaning the guest’s room. There are out bound logistics activities such as picking up baggage and getting the person checked out and to his or her plane. There are marketing and sales activities aimed at attracting guests to the hotel. There are service activities that provide post stay services such as travel awards to guests for, multiple stays. And there are various support activities, such as purchasing information systems and human resources.
The strategically required organizational outcomes:
The Hotel Paris’s basic strategy is to use superior guest services to expand geographically. Each step in the hotel’s value chain provides opportunities for improving guest service. For HR director Lisa Cruz, reviewing the hotel’s value chain activities makes it clear that achieving the Hotel’s strategic aims means achieving a number of required organizational outcomes. For example, Lisa and her management colleagues must take steps that produce fewer customer complaints and more written compliments, more frequent guest returns and longer stays and higher guest expenditures per visit.
The strategically relevant workforce competencies and behavior:
The question facing Lisa, then, is this: what are the competencies and behaviors that our hotel’s employees will have to exhibit, if we are to produce required organizational outcomes such as fewer customer complaints more compliments and more frequent guest returns? Thinking through the sorts of activities that occur at each step in the hotel’s value chain helps Lisa answer that question. For example the hotel’s required employee competencies and behaviors would include, high quality front desk customer service, taking call for reservations in a friendly manner, greetings guest at the front door and processing guest room meals efficiently. All require motivated, high morale employees.
The strategically relevant HR system policies and activities:
The HR manager’s task now is to identify and specify the human resource policies and activities that will enable the hotel to produce these crucial workforce competencies and behaviors. As on example, high quality front desk customer service is one such required behavior. From this, the HR director identifies human resources activities to produce such front desk customer service effort. For example, she decides to institute practices to improve the disciplinary fairness and justice in the company, with the aim of improving employee morale. Her assumption is that enhanced fairness will produce higher morale and that higher morale will produce improved front desk service.