Former SVP of Hilton Speaks on Balanced Scorecard
Dennis Koci, former SVP of Hilton and leading expert on the Balanced Scorecard answers questions regarding his views on the BSC and the impact he has experienced first-hand as a BSC implementer and user.
Q: Could you please explain your role with the BSC when you worked with Hilton?
A: After managing three Hiltons in Los Angeles, Dallas and Hawaii, I moved to Hilton’s world headquarters and most recently, served as the Senior Vice President of Operations Support. I was responsible for supervision of internal Support of functions that included: Front Office, Engineering, Housekeeping, Safety, Security, Telecommunications, Food & Beverage, Commercial Leasing, and Technical Services. With the ‘subject matter experts’ aligned at corporate, my responsibilities were later expanded to include Performance Management, where I led the team that introduce the Balanced Scorecard to Hilton.
Q: There are four principles of the BSC: Customer, Business, Learning and Growth and Financial. Which principle do you find most important or valuable when it comes to benchmarking? Which produces long term results if recorded accurately? Which principle do organizations most often struggle with?
A: They all obviously play a role. Results benchmarking is by its nature is generally looking at the past, which is what most Financial Perspective measures involve. But historically, companies were financial data driven. So, often, the struggle is in recognizing that the other three perspectives not only are important, but often are leading indicators of how the business will perform. Long term results require that the organization not only recognize this, but to be successful their inter-relationship needs to be focused on as well.
Q: In one of your sessions at ASMI’s 2007 Performance Conference, you discussed tools for BSC implementation – could you list a few of those and highlight what you feel is most essential for implementation success?
A: The goal of Performance Management is to organize the company’s strategic thought process to focus on results. In that sense, the Balanced scorecard is the tool. Implementation is more of a commitment to use the BSC as a tool to change the focus of the organization to results, and not to stop until it is engrained in the culture of the entire organization. That takes commitment, follow-thru and execution. Start with the four perspectives, then set objectives, and then establish measures and targets that are relevant and fair. So, it really comes down to Leadership. But not text book (charisma, vision, control) but the ability to change, and the ability, despite all obstacles, to get things done. In my experience, most companies know what to do. To a lesser degree, they know how to do it. But few are committed to see the process through.
Q: In terms of reporting BSC measurements, where do you face the most challenges? Is it communicating the results to top management or reinforcing BSC initiatives with support staff?
A: The biggest challenge is more in the setting of measurements, not the reporting of them. If the key performance indicators you’ve decided to measure flow from your strategy, and the metrics you use relevant and the targets you set are fair, you’re in good shape. Keep in mind; a strategy focused organization spends almost no time reporting results. They’re visible to everyone. And with both operations functions and staff support teams aiming at the same targets, the process is self-reinforcing.
Q: You have had real-world experience with the Balanced Scorecard from your work with Hilton, and now the work you are doing with other organizations – can you provide a real-world example where you have seen value emerge as a direct result of using the BSC?
A: A company in Southern California was pretty typical. The financials drove the company. The so called ‘senior leadership Team’ all reported directly to the division president, but the group’s CFO ran the show. Numbers were hard. They had dollar signs and percentage signs and they had decimal places. Customer data and things like standards, training, values and morale were nice, but they were ‘soft’. With growth stuck at 1% over the past 3 years, the president felt the need for change. She recognized that the numbers were the baseball score, but that scoring had to do with leadership, and training and skills and dedication and team work. The BSC helped her measure those, and as the focus on the other perspectives of the BSC came into ‘balance’ their growth rate score improved as well.
