Post by Susan M. Sanders, Vice President of Strategic Planning and Human Resources, Hospitality Ventures Management Group
Transparency is one of those things that is either there or it’s not. You won’t see the word stated in a corporate vision or mission statement but the extent to which financial targets and results are known and shared is most assuredly a deliberate decision made by the company’s senior leadership.
It never ceases to surprise me when interviewing general manager candidates that their current employers don’t share revenue, house profit or market share goals and results with them. A GM makes or breaks the success of any given hotel. How could a GM prioritize scarce resources without this knowledge? The reality is they don’t have decision criteria to drive their decision making and this affects their success in prioritization. Nor do they know when to adjust their strategy because no one has defined what success looks like. In fact, I’d go so far as to say a property’s true potential will go unknown and unrealized until targets are established and monitored and the results against these are shared frequently.
Transparency enables a shared Vision and Mission. It is no secret that people deliver their best results when they feel they are part of the bigger whole and that their work contributes to a mission larger than what they directly control. At HVMG, each property has established performance targets against seven key performance indicators (KPIs). We measure and publish progress against these targets on a weekly basis, across both historical and forward looking time dimensions. Achievement or not is self-evident; the targets are met or they are not. Our GMs are never at a loss to know what is expected of them or where they stand. In our 2011 GM Opinion Survey, 94% of our GMs strongly agree with the statement, “I know my job requirements and what is expected of me” and it’s no surprise they gave similar scores to the statements, “I am an important component to the ongoing success of HVMG” and “I am involved in decision making as it affects my job.”
Transparency breeds competition. Imagine you are playing on a tennis team and there are five matches in the line-up for this week’s competition. In order for your team to win collectively, you must win three of the five matches individually. (Lucky) you are playing the fifth line. As the last to play, you want to know the results of the four matches ahead of you in the line-up. You will use this information to determine your strategy around how aggressively or conservatively to play. When we know what is on the line and what is expected of us as a result, it turns up the pressure and our natural inclination to compete and win shines through and (usually!) translates into better performance. At HVMG, not only do our GMs see their results against the seven KPIs on a weekly basis, they also see how their peers are performing. An unintended consequence has been very healthy and spirited competition within like brands/markets.
Transparency ensures you are rewarding the right behaviors. It is easy to get lost in the sea of property related data. There are easily hundreds of metrics that drive the overall performance of a hotel. By sharing targets and results across the property, performance expectations are widely understood. For example, say that the rooms division has only one known goal—to achieve budgeted cost per occupied room (CPOR). Without transparency of information, they may not be aware that the hotel also has an overall budgeted house profit number and if this number is not achieved the owners will have difficulty making debt service. You’d be sending the wrong message to financially reward the rooms division team for CPOR performance when the hotel overall didn’t hit the most important goal. Furthermore, without a complete picture, the rooms division leadership would be understandably confused and frustrated if they achieved their CPOR goal and didn’t receive a bonus. A better approach would be to share both the total hotel goals and the departmental goals and if one department does a better job of managing expenses, to use those best practices across the other departments. Then, reward the team once house profit is achieved and give the rooms division something extra for achieving budgeted CPOR. At HVMG, houses profit is one of the seven KPIs and also a gatekeeper that must be met before any performance bonuses are paid.
Regardless of what your stated corporate philosophy is around open lines of communication, you're not prepared to win if financial and related goals are not part of what is communicated.