The impact of performance measurement in a service factory - IUBH

The impact of performance measurement
in a service factory
How performance measurement impacted employee behaviour and performance
of the housekeeping operations of a British luxury hotel
Working paper
Joachim Sandt, Christoph Hoffmann
International University of Applied Sciences Bad Honnef· Bonn, Germany
Park Plaza Westminster Bridge, London, UK
j.sandt@iubh.de
mail@chrhoffmann.de
The paper was accepted and presented by the 8th conference oft he PMA – Performance Management
Association at the University of Cambridge, 11th July 2012.
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The impact of performance measurement
in a service factory
How performance measurement impacted employee behaviour and performance
of the housekeeping operations of a British luxury hotel
Abstract
In hotel operations, especially housekeeping, financial and non-financial performance
measurement and management to impact employee behaviour to implement the
organization’s goals is often not systematically and formally applied. The case of the Park
Plaza Westminster Bridge hotel is used to show how the implementation of performance
measurement and management systems impacted the behaviour of the employees. With more
than 1,000 rooms and a high occupancy rate, housekeeping operations are repetitive and high
volume processes. They could be viewed to be a service factory. The management control
framework by K.A. Merchant and Wim Van der Stede will be used to describe performance
measurement and management control systems before and after the implementation.
Formerly, housekeeping operations in the case hotel relied primarily on informal action
control and personnel control. Then, formal non-financial results control and formal action
controls had been implemented. The new management control package resulted in significant
changes in employee behaviour and – thus – in the performance of department.
Keywords: Behavioural impact, hotel operations, housekeeping, management controls
systems as a package, performance measurement.
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Motivation
In the hotel industry customer and service orientation is paramount. Therefore, measuring
performance contributes to generate transparency and supports directing employee behaviour
to implement the hotel’s objectives. Hereby, especially non-financial performance measures
broken down to operational processes and linked to the financial ones are important for
managing (departmental) performance. However, the hotel industry still seems to have
potential for improvement with regard to performance measurement and management (see for
the UK hotel industry for instance Atkinson and Brander Brown 2001, 130, “... that UK
hotels companies still seem to be measuring the wrong things. In particular, it has been
suggested, that, in the main, the UK hotel industry appears to concentrate on financial
measures.”, see also Harris & Mongiello, 2001, 127, Evans, 2005, 376).
The hotel Park Plaza Westminster Bridge is a four-star deluxe luxury hotel opened in the
beginning of 2010. With more than 1,000 bedrooms it is one of the largest hotels in London,
the UK and Europe. With high occupancy and average rates the first years of operation have
been highly successful. However, for the operations high occupancy constitutes high
demands for operational excellence, especially for housekeeping that has to clean hundreds of
rooms daily.
The case of the housekeeping operations of the Park Plaza Westminster Bridge hotel will be
analyzed by using the framework of Merchant and Van der Stede (2012). The framework
enables to describe the configuration of performance measurement and management control
in different situations and/or organizations; the controls can be used more formally or
informally.
Performance measurement, management control and management
control systems as a package
Performance measurement and management control
Defining performance measurement and management control systems basically refers to
implementing organizational goals (e.g., “the formal, information-based routines and
procedures managers use to maintain or alter patterns in organizational activities”, Simons,
1995, 5, “Management control involves managers taking steps to help ensure that the
employees do what is best for the organization”, Merchant & Van der Stede 2012, 9).
Whereas performance measurement more strictly refers to quantitative information used to
support the organizational goals, management controls are more comprehensive. For
example, they include also procedures to describe how employees have to act. In this paper,
the more comprehensive management control approach will be used to describe and explain a
specific business situation.
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Management control systems as a package
Management controls do not operate in isolation. Therefore, they have to be considered as a
package (see for example Malmi & Brown, 2008). They might be intentionally designed and
coordinated. In this case one could call it a management control system. It is also possible
that the management controls are not intentionally coordinated, for example due to the design
and implementation by different organisational units, and should not be regarded as one
system but rather as a package of systems. Consequently, it is important to understand how
controls can be combined, to suit the particular circumstances of the organization.
The framework by Merchant and Van der Stede
For studying management control systems as a package many alternative conceptual
frameworks are availabe. For example, there are frameworks by Ouchi (1980), Merchant &
van der Stede (2012), or Malmi & Brown (2008). In this paper, the categorization of
Merchant & Van der Stede will be used as it is not complex, yet comprehensive.
Merchant & Van der Stede (2012) differentiate the following management controls to direct
emloyees’ behavior according to the object of control: results, action, personnel and cultural
controls:
Results controls are an indirect form of control because they do not focus explicitly on the
employees’ actions or decisions. Results control often encompass financial or non-financial
performance measures, e.g. profit.
Action controls focus on actions taken by employees. They are the most direct form of
management control as they ensure the desired behavior by describing how employees have
to do certain actions. Standard operting procedures are an example for action controls.
Personnel and cultural controls focus on the types of people employed and their shared
norms and values. Therefore, they will be grouped in this paper under people control. People
controls focus on self- and mutual monitoring , e.g., by personnel selection and placement,
codes of conduct, tone at the top.
In addition, management controls can be used either formally or informally (see for example
Fisher 1995). A formal results control could be the operating profit of a unit. A formal action
control would be a documented standard operating procedure (SOP). If the SOP is not
documented and desired actions are directly enforced by a supervsior, it would be an informal
action control.
Figure 1: Management Control Package – general categorisation
Combining Merchant & van der Stede’s framework and the differentiation formal and
informal controls, the categorisation shown in Figure 1 can be used to describe and explain a
management control package used in a given situation.
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Housekeeping operations of a British luxury hotel
The hotel: Park Plaza Westminster Bridge London
The hotel Park Plaza Westminster Bridge, a four star deluxe hotel in the heart of London, is
owned by PPHE Hotel Group Limited which “owns, leases, develops, manages and
franchises primarily full service four-star, four-star deluxe and contemporary lifestyle hotels
in major gateway cities and regional centres primarily in Europe”
(http://www.parkplazahotels.net/default.asp?section=1166).
The Park Plaza Westminster Bridge hotel is the biggest hotel in the PPHE Hotel Group and
one of the biggest hotels in Europe. The hotel was opened early 2010 with 1,019 bed rooms
in total, separated in several room categories, e.g., Superior, Studio or Suite and 31 state-ofthe-art
meeting rooms. Since the opening the hotel operates very successfully with high
occupancy and average rates and contributes significantly to the success of PPHE Hotel
Group Limited (refer to annual reports PPHE Group, 2012).
Housekeeping operations in the hotel
In hotels “(…) the housekeeping department personnel will be responsible for cleaning the
rooms and associated public facilities areas, the offices, the recreation facilities, and all public
restrooms” (Jones, 2007, 32) this is true for the Park Plaza Westminster Bridge hotel.
Furthermore, the housekeeping department in the case hotel operates an in-house towel
laundry, as well as a uniform room and valet, which is responsible for washing uniforms and
guest laundry in-house.
The daily activities of cleaning hundreds of rooms, dozens of meeting rooms and offices as
well as all the public washroom facilities is a highly repetitive task; arguably like a assembly
line type process. The housekeeping management team has to balance productivity and
quality to ensure that the department operates efficient and effectively and to the satisfaction
of the guests, while ensuring employee satisfaction and motivation of the biggest department
in a hotel at the same time. Schmenner (1986, cited in Verma, 2000) developed a service
process matrix which included the definition of a “service factory”:
“Services with both low customer contact/customization and a low degree of labour
intensity are classified as service factories. Analogous to assembly line type processes
in manufacturing, the facilities and equipment account for a large fraction of costs.
Much of the transportation industry (airlines, trucking companies), hotels and fastfood
establishments can be classified as Service Factories.”
Considering housekeeping as a service factory, productivity of e.g. room attendants is defined
by number of rooms cleaned per person in a defined period of time, Jones and Siag argue that
“understanding this key activity within the hotel and managing it efficiently is extremely
important” (2009, 277). Quality is important as well and needs to be measured to ensure that
hotel and cleanliness standards as well as the customer expectation are met or exceeded. It
becomes clear that the housekeeping operations have a financial impact (productivity, cost
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per room cleaned etc.), but also a non-financial impacts like guest experience and employee
satisfaction. This is understood at the Park Plaza Westminster Bridge hotel and lead to
implementation of performance measurement and management tools in the housekeeping
department.
Performance measurement in the housekeeping operations of a
British luxury hotel
Status quo ante
During the opening phase early 2010 the housekeeping management focused on snagging
rooms after the builders, first cleaning and setting up rooms, as well as recruiting the initial
team. Right after the opening of the Park Plaza Westminster Bridge hotel, housekeeping
operations were traditionally organized: according to the framework of Merchant & Van der
Stede, it was mainly informal action and personnel control with few performance measures
(results control).
The main focus of the housekeeping team was to turn the dirty rooms into clean and
inspected rooms on a daily basis. Room attendants were asked to clean a set amount of rooms
during their shift, no matter how big the rooms were or how complex the set up was.
Due to the size of the new operations and the high volume, the housekeeping management
team was satisfied when (enough) team members showed up to complete the daily workload.
The quality of work of the team members was only controlled through constant presence of
the housekeeping management team. Shortfalls were dealt with on the spot by addressing the
issues with the individuals directly. No track of (individual) performance was kept; all
previous incidences were “in the head” of the housekeeping management team and not
compiled in a formalised way.
Only individual guest feedback was discussed with the individual team members as indicated
above. The overall satisfaction of guests with regards to the cleanliness of the hotel and/or
rooms was not analysed and communicated by the housekeeping management team.
In summary the housekeeping department was focused on turning the rooms around on a
daily basis, dealing with (the same) problems on the spot and by ensuring quality shortfalls
and guest complaints are followed up right away with the individual team member
responsible (see Figure 2).
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Figure 2 Management Control Package - Status quo ante
Performance measurement and management control initiatives
The newly appointed Head Housekeeper introduced formal standard operating procedures
and non-financial performance measures:
Figure 3: Attendance Tracking
Figure 3 Attendance Tracking
Figure 3).
First, to get more transparency and a better basis for workload
assignments a credit system for different room categories was
introduced, a function that is supported by the Property
Management System (PMS) Opera. Due to the size and the setup
of rooms, some rooms take longer to clean than others.
Different room categories got different credits to ensure that a
Room Attendant has sufficient time when cleaning a room.
The credit system is used to automatically assign workload to
the room attendants each morning and to distribute the work
fairly. The credit system forms the basis for accurate billing
(important as the room cleaning activity is outsourced), but
also ensures that productivity can be calculated and monitored.
Second, lateness, absenteeism and sickness are recorded per
position reflecting the employment type. The monthly report
(see Figure 3) shows the total amount of shifts planned as well
as the number of shifts started on time; the percentage of shift
started late or had to be covered due to sickness or absenteeism
is shown as well. The report has a breakdown per different
employment types (Hotel Staff, Agency 1, Agency 2) and a
break down for lateness (including the total number of minutes
lost), absenteeism and sickness (per employment type). The
figure, percentage of shifts that were not started on time or had
to be covered, is tracked over the year to identify trends (see
Third, to ensure quality of housekeeping operations a spot checklist per room category was
developed. Supervisors use the spot checklist for checking their room attendants’
performance. A so-called league table is reported monthly showing all room attendants and
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their scores from the spot checklist. It is subdivided in three sections: > 90% (green) - Well
done!, between 85% and 90% (orange) - Good job, however there is room for improvement!,
below 85% (red) - Oops, what happened this month? You need to work on achieving
standards. We will help you with it!. In addition, the top three room attendants are rewarded
with vouchers and can apply for the next position (self-checking Key Maid) if they perform
above 90% in three consecutive months. A retraining programme is in place to support low
performers.
Furthermore, the hotel uses an online standardized customer feedback form that is distributed
via email to all guests after their stay. Housekeeping related scores and customer feedback
are now reported in regular team meetings to show the direct impact of their work on the
guest experience. Changes in scores for key areas, e.g. (bath)room cleanliness are tracked
over time (See Figure 4), discussed, and form the basis for corrective action.
Figure 4: Example Customer Feedback Tracking
Finally, all of the initiatives described above are integrated in the Housekeeping Key
Performance Indicator (KPI) system, creating a monthly performance report that is reviewed
in detail and builds the basis for any decisions, focus areas, and changes in the housekeeping
department – this includes the housekeeping management team of the hotel, but also the
contracted service partner (mainly for room cleaning) that are vital for the housekeeping
operations at Park Plaza Westminster Bridge.
Figure 5: Management controls in use –
status quo ante and additional management controls
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In conclusion, the additional management controls are formal action controls and nonfinancial
results controls (see Figure 5).
Behavioural impact of performance measurement initiatives
After the changes the performance measurement and management system for housekeeping
was much more formal for the action controls and more performance measures were used. As
a result, the performance of the housekeeping has gone up significantly and is more stable,
which enables the housekeeping management to fine-tune the operations and to focus
strategically on performance shortfalls. Furthermore, the use of formal action and results
controls has started to impact the departmental cultural values.
Distributing the workload in a fair way, had a huge impact on the team performance. Team
members are able to see that each worker has to ‘pull their weight’; there is no favour
towards certain team members, as everybody receives the same amount of credits to clean.
Right after the implementation of the control mechanism of starting times, number of shifts
started on time and the amount of minutes of working time lost, became the focus of attention
of the housekeeping management team as well as of the hotel management. The availability
of the data “forced” the housekeeping management to look into the matter and implement
changes to achieve better results. The measurement tool enabled the management team to
follow up with the individuals: “Return to work interviews” were reinforced. These changes
educated the housekeeping team, and made them understand that it is important to show up
for work on time as otherwise the behaviour of one person has an impact on the workload of
others, as the work had to be covered. Furthermore, the management team got tougher and
started to send team members home who showed up late; ultimately this means for the team
member no earnings for the day, which then leads to a change of behaviour of the team
member in the future.
The cleanliness quality is very important as the output of the housekeeping department has a
direct impact on the guest experience and this ultimately has an impact on the guest’s future
purchasing decision. The implementation of regular spot checks and the display of names and
scores in a league table, as well as rewarding top performers have a direct impact on the
behaviour of the team members. The league table creates a positive competitive environment
and animates team members to perform better next time and better than their colleagues. At
the same time, the spot check list system gives the supervisor team the opportunity to lift
their work from a personal to a professional level; the tool supports their work, as the
standards are clearly indicated and the scoring system gives a true reflection of the
performance of each Room Attendant. The same measurement system is used by the senior
management team on the supervisors to ensure their standards are met as well. The
implementation gives the management team the opportunity to track performance over a
period of time; in combination with personal feedback sessions the numerical feedback
proves to be very successful. These data are used in annual performance reviews to create
personal development plans for the team members.
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Figure 6: Percentage absent / late / sick & Minutes lost due to lateness
Regular housekeeping communication meetings are held, to ensure a continuous flow of
information. The scores highlighted above as well as guest feedback (collected via an online
guest survey) are communicated and explained. These communication sessions help to
educate the team and ensure that each team member understands the direct impact on the
guest experience. The communication of “hard facts” instead of subjective observations of
the management team is much appreciated by the team. Successful initiatives like “spring
cleaning” can be seen in the graphs by the team. For 2012 goals were set for each measured
category – this communicates the goal of the hotel and it is broken down to the operational
level and gives the team an indication how they are performing compared to the hotel
management expectation. Instead of “just cleaning rooms every day” the team can work
towards to hotel’s goal and see how the hotel is performing.
The KPI system for the housekeeping department had a huge impact on the way the
housekeeping department is managed, this includes the way the hotel housekeeping
management team manages itself, but also the management of the contracted service partner.
The KPI report also gives the hotel management useful insights into the work of the
housekeeping department; the availability of data changed the way how the departmental
mangers are managed by the hotel management.
Conclusion
In conclusion, the case shows the behaviour and performance impacts of two different
management control configurations in a service factory: a configuration characterized by
informal action control and personnel control had been changed to more formal action
controls and more results controls (i.e. performance measures) with a significant behaviour
changes and a performance increase. In this case, the introduction and formalization of nonfinancial
results and action controls has yielded changes in employees’ behaviour and
improved non-financial results. Financial results had not been implemented yet. It could be a
further step to show the impact of employees’ behaviour also in the financial management
report. However, the most important aspect had been achieved: to ensure that the employees
do what is best for the organization – in this case the housekeeping of the Park Plaza
Westminster Bridge hotel.
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BIBLIOGRAPHY
Atkinson. H., & Brander Brown. J. (2001). Rethinking performance measures: assessing
progress in UK hotels. International Journal of Contemporary Hospitality Management. 13
(3), 128-135.
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Harris. P.J., & Mongiello. M. (2001). Key performance indicators in European hotel
properties: General managers’ choices and company profiles. International Journal of
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Jones, P., Siag, A., (2009). A re-examination of the factors that influence productivity in
hotels: A study of the housekeeping function. Tourism & Hospitality Research 9, 224–234.
Jones, T.J.A., (2007). Professional Management of Housekeeping Operations, 5th ed. John
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AUTHOR BIOGRAPHY
Joachim Sandt
Dr. Joachim Sandt is Professor for Management Accounting and Control at the International
University of Applied Sciences Bad Honnef · Bonn, Germany, and consults companies on
issues of performance measurement and management. E-mail: j.sandt@iubh.de.
Christoph Hoffmann
Christoph Hoffmann is Head Housekeeper at the Park Plaza Westminster Bridge hotel in
London, United Kingdom. He founded and manages an online forum for housekeeping
professionals: hsk-knowledge.com. Formerly he worked on Six Sigma projects for Starwood
Hotels & Resorts. E-mail: mail@chrhoffmann.de.
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