Measurement before Management
Richard Brusher works for a major global food & beverage management company. His corporation has decided that his talents, honed as head of strategy for the brand, need to be targeted towards the north-eastern sector of the United States. This region has sixty-four restaurants and is presently the corporationâ€™s weakest performing region. Of particular concern to his boss is the ability of one of the competitors in the region to respond to market forces more readily, leaving the company at a major disadvantage. One competitor in particular always seems to have its finger on the pulse and adjusts its menu pricing perfectly to meet shifting demand seen in the region. It packages deals constantly to meet with high approval, and owners couldnâ€™t be happier.
Having been burned from the many â€œif you buy it, they will comeâ€ computer solutions offered by many dot com vendors, management is skeptical of purchasing new systems. Fortunately, Richard has a history of solving problems with little increased spending due to his ability to manage and use information effectively. Management is in clear agreement that the company presently at a competitive disadvantage. Rather than react to every new offering a competing restaurant may introduce to the marketplace. Richard and his boss concur that the best strategy to compete is to better use information and to build a solid foundation of smart business practices blended with customer focuses services and quality food & beverage offerings. The following five goals have been established and will be used as the basis of measuring Richards performance over the next year:
- Increase revenue by 5%
- Increase customer covers by 6%
- Increase Guest Service Index (GSI) scores to 3.5 (on a scale of 1 to 5, with 5 being the most satisfied and 1 being the least satisfied)
- Decrease food cost by 5%
- Reduce employee turnover by 15%
Luckily for Richard, each restaurant recently upgraded its technology applications portfolio. Currently each restaurant shares similar network infrastructure and common operating system. High-speed internet access is available at all properties on personal computers using Microsoft Windows Software, despite being upgraded, has not been standardized throughout the company. Among the sixty-four restaurants in Richards region, there are three different restaurant POS systems, and three different database architectures in use. Additionally, work processing, spreadsheets and other productivity software differ from property to property. Browser software is equally divided in the company between Internet Explorer and Firefox.
Report compilation and dissemination requires each restaurant auditor to fax flash reports to the regional office where the numbers are entered manually into spreadsheets so that a consolidated report for the region can prepared. Comment cards, the sole measurement of the GSI scores, are mailed to the corporate office each week. The corporate office compiles the scores to create the GSI index and then mails a printed report to the regional office each month. The food and beverage director submits bi-weekly purchasing history and nightly sales data to the restaurant manager who compiles the data and emails a series of reports to the regional office. Each month, the regional office emails a series of summary financial and operating reports to the corporate office and each property in the region detailing actual performance versus budget and year-to-date-statistics. These reports are then reviewed by the general manager and become subject to discussion in manager meetings in each restaurant.
Richard has some great ideas for a new strategy, He knows that he has to be able to measure what he is about to manage. Our learning activity is based on that theme.
- What are the key problems facing Richard and his organization as described in this scenario?
- If you were in Richardâ€™s shoes how might you go about addressing these challenges?
- What would be your strategy and why?
- Be sure to provide appropriate justification and a specific (i.e., detailed and measurable)action plan.
- Before any action is taken, what managerial measurements must be implemented for the companyâ€™s five goals, and how should these be implemented?
- What procedural changes are required at each property and at the regional and corporate offices?
- How should these changes be introduced, and who should lead the change effort?
- Would any of data required access restriction?
- If so, who should have access, and to which data?
- Evaluate the technology applications portfolio and infrastructure for Richardâ€™s company.
- What are the strengths and limitations?
- In what ways is technology being used effectively?
- Where is there room for improvement?
- What changes would you suggest and why?
- If you were to design a balanced scorecard approach for measuring and monitoring performance and the overall health of the organization for Richardâ€™s company, how would you go about it?
- Where would you start?
- What issues might you face, and how would you overcome them?
- What would your proposed balanced scorecard look like?