Maverick Lodging is a hotel management company that manages the day-to-day operations of third party franchisees of the Marriott Corporation. The company has recently implemented a balanced scorecard in an effort to align company strategy, structure, performance measurements, and incentives. The organization strategy involves growth in revenue and customer base with the use of differentiation. Issues with the current scorecard and its measures have been identified. Alternative solutions have been researched. A recommended course of action is presented that will allow Maverick Lodging to achieve its strategic goals and objectives.
Many hotel companies, such as the Marriott …show more content…
A requirement of the balanced scorecard was that it be easily understood. Maverick Lodging’s vice president of operations was very adamant that the scorecard should be understandable and useful to the hotel managers. The scorecard contains complex calculations. The color and point formula for manager bonuses is much too complex. It is difficult to connect a color to a point system and then to a weighted average. Additionally, the overall weighted average is assigned a performance factor percentage that is then multiplied by 40 percent of the hotel manager’s salary. This may cause confusion among managers.
Additionally, the flexible budget measurement incorrectly assigns base performance thresholds to hotels. According to Garrison et al. (2008) it would be misleading to compare the static budget to actual costs if the actual level differs from the planned level of activity. The base threshold calculation compares the actual house profit to the static budgeted house profit. Also, hotel managers are being measured based on budgets that they had no part in creating. This could pose a potential problem for acceptance, which is a requirement of the scorecard.
The criteria within the balanced scorecard do not fully focus on growth and differentiation. Maverick Lodging has two types of customers: hotel guests and third party owners. Revenue per available room growth rate is being measured. However, no customer growth rates are being measured. Also, only