I was recently speaking to the owner of a small hotel and he raised an important question, which set me thinking. He was a big fan of excellence frameworks such as the EFQM Model but felt that they were somewhat complicated for a small business such as his. So, we decided to have a go at putting together a new model – shown below - which I think summarises the key strategic and operational concerns that all owners/managers have to cope with and places them within a simple conceptual framework.

Source: HTC ConsultingSource: HTC Consulting
Source: HTC Consulting

As you can see from the diagram, the framework is progressive, and indeed continuous, in nature and comprises the following important elements:

Vision, Mission and Strategy

It begins with a focus on the vision, mission and overall strategy for the business which, for me, is all about getting the 'big picture' thinking right; every business, regardless of size, needs a strategic context to guide decision-making, and that context begins with having vision and mission statements. By the way, whilst on the subject, the raison d'être for any business is not 'to make a profit'; now, don't get me wrong, profit is great, but it is a desired outcome from, and not necessarily the sole reason for, running a business. Vision and mission statements are critical because they create the context so that profit can be made: a subtle but vital distinction.

Of course, tools like vision and mission statements get a lot of bad press, and rightly so, because they are widely misused, but when developed and applied correctly they can provide an effective strategic context - known to all - from which the business strategy can be developed. Once vision and mission statements are established, broad strategies must then be developed which are, in essence, decisions taken as to how to bring the business from the current position to the desired vision whilst at the same time living up to the commitments made in the mission statement.

Strategic Goals

Once a broad strategy for the business has been developed, this must then be translated into concrete goals for the medium-term, across three dimensions:

  • Management Goals – financial targets, and other non-financial goals; for example, in relation to quality, environmental management, hygiene & safety.
  • Customer – targets in relation to customer satisfaction, loyalty, retention, market share etc.
  • Employee – goals in relation to employee satisfaction, turnover, productivity etc.

I firmly believe that we don't make enough use of the 'managing-by-goals' concept in our industry, particularly in smaller independent operations, and where goals are effectively developed and applied, I have seen how they make a real difference to business performance.

Effective Leadership

Nothing can be achieved in any business without effective leadership, and in its absence, goals – no matter how well defined - remain but empty wishes. Although there is much hype surrounding the topic of leadership, it essentially means that managers, at all levels, can fully engage with their teams to achieve outstanding results.

Annual Planning

In order to make the strategic goals a reality, the focus has then to shift towards the preparation of an annual business plan to drive the achievement of the goals. This integrated plan, which is prepared with input from all managers and staff as appropriate, combines the financial, marketing, HR and operational measures to be addressed in any given year to progress the business towards the goals. For sure, every hotel plans to some degree, but often the greater focus is on operational planning, which is of course vital, but it is not the same as annual planning. Planning, for me at least, has two dimensions: operational planning so that you 'do things right' in terms of customer service and so on and annual planning so that you 'do the right things' to achieve your goals.

Key Operational Processes

The annual plan is then implemented through a focus on key processes and, in my opinion, there needs to be a shift away from thinking about what managers do, to a closer examination of what they achieve. This means that individual managers must take greater ownership for their 'process' and continuously improve it, so that defined outcomes related to that process (specific targets across financial, non-financial, customer and employee dimensions) are achieved. This requires process owners to first work with their team to 'map-out' the key activities and sub-tasks within their area, and then to constantly enhance and improve on those activities and tasks in order to deliver the defined results.

The application of process management principles is relatively new in our industry but I really believe that it is the way forward for generating improved operational effectiveness and ultimately increasing profitability. In the companies where I have applied this approach, it does take time to change mindsets from a past focus on what we do, to one centred upon what we achieve, but once that mindset changes, the benefits seen in terms of performance improvement is substantial.

Performance Measurement and Review

The final phase of the model relates to defining key performance measures globally for the hotel. Through constant measurement and review of those metrics, this helps to define progress and identify where changes/improvements have to be made. Again, even though we have always had financial measures to guide us in hotels, there has not always been the same attention placed on non-financial aspects, so this takes time to set in motion. But having created a dashboard of financial and non-financial measures, this provides a much more holistic, and therefore useful, analysis of how the business is really doing.

The clarity of performance gained from better internal and external benchmarking of results in turn drives innovation and continuous improvement through: the redefinition of strategy and goals; improved planning effectiveness; greater employee involvement in decision-making and better management of processes as a result of the introduction of new ways of doing things.

Conclusion

Of course, applying a model such as this is more complicated in practice than this brief overview suggests, but the framework offers a template for owners and managers which will support decision-making and forward planning. It simplifies what needs to be done from defining the broad strategic context all the way through to the measurement of progress. The framework is comprehensive, easy to communicate, readily applicable and more importantly, it works, in terms of the results it delivers for the business.

Enda Larkin has over 25 years experience in the hotel industry having held a number

of senior management positions in Ireland, UK and the US. In 1994 he founded HTC Consulting, a Geneva based firm, which specialises in working with enterprises in hospitality and tourism. Since that time, he has led numerous consulting projects for public and private sector clients throughout Europe and the Middle East. He is author of Ready to Lead? (Pearson/Prentice Hall 2007), How to Run a Great Hotel (How to Books 2009), 'Quick Win' Leadership (Oak Tree Press 2010) and Journeys – Short Stories and Tall Tales for Managers which is due to be published in March 2012. He may be contacted via www.htc- consult.com or at [email protected]. Read his Blog at www.htc-consult.com/new/blog

Enda Larkin
HTC Consulting
+41 (0) 22 700 8675
HTC Consulting