1. What happened in 1999? Was it a good year for the company?
In 1999, Maverick lodging started reviewing the result of the balanced scorecard (BSC) system they developed in 1998. Maverick implemented BSC to address some issues in the performance management system and to align the strategy, structure, and incentives.
Based on exhibit 7, we can see Maverick growth rate has increased by 3. 77% for the Maverick Courtyard, 2. 2% for Maverick Fairfield Inn, and 3. 5% for Maverick Residence Inn. Besides that, Maverick had achieved good result in flow-through flexible budget in two hotels - Maverick Courtyard and Maverick Residence Inn, while the Maverick Fairfield Inn had unexpected result. On the guest-satisfaction score side, the scores of two …show more content…
Maverick tried to increase the financial yield, to stimulate the performance of hotel’s managers, to retain 100% of the existing franchisees and boost their portfolio to meet the goal of managing 65 hotels with total revenue $225 million by 2001.
Maverick’s BSC and its bonus plan was a great step; however, there were a few issues in implementing this tool:
• BSC applied on part of Maverick Lodging’s structure – hotels’ managers. Regional managers & top management are excluded; Top management’s role was to set the goals & objectives. BSC was a reflection of top management thoughts only, and hotels’ managers had to implement the BSC. Also, hotels’ managers have no control in determining their hotel’s budget. This is unfair – to evaluate those managers if they can’t participate in setting their hotel’s budget.
• BSC design process was limited on three regional managers and five VPs. Targeted people – hotels’ managers – were not engaged in the design process. BSC imposed on those managers which might cause some managers to not accept it or don’t understand how to implement, especially many of them have little experience as stated in the case. Implementation team supposed to engage hotels’ managers and listen to their …show more content…
• Guest-satisfaction survey is very long and caused negative impact on hotels’ score because guests have no time to fill such long survey. Another point, why does Maverick developed long survey if they only care about overall satisfaction score in the BSC. Relying on guests’ satisfaction is not enough indicator; Maverick might consider customer growth as a new indicator.
• Finally, BSC implementation team didn’t account for individual changes in some hotels – as happened in Orlando, FL, hotels. This problem due to the exclusion of hotels managers and not listening to their input.
3. How does the flow through flexible budget work?
Maverick adopted the flexible budget in order to achieve target budget and generate high profit. The flow-through flexible budget breakdown the costs and expenses to: controllable and uncontrollable. Variable controllable costs and expenses are reforecast based on the appropriate drivers, while other costs and expenses are not reforecast such as fixed controllable costs and expenses and Uncontrollable costs and
In 1999, Maverick lodging started reviewing the result of the balanced scorecard (BSC) system they developed in 1998. Maverick implemented BSC to address some issues in the performance management system and to align the strategy, structure, and incentives.
Based on exhibit 7, we can see Maverick growth rate has increased by 3. 77% for the Maverick Courtyard, 2. 2% for Maverick Fairfield Inn, and 3. 5% for Maverick Residence Inn. Besides that, Maverick had achieved good result in flow-through flexible budget in two hotels - Maverick Courtyard and Maverick Residence Inn, while the Maverick Fairfield Inn had unexpected result. On the guest-satisfaction score side, the scores of two …show more content…
Maverick tried to increase the financial yield, to stimulate the performance of hotel’s managers, to retain 100% of the existing franchisees and boost their portfolio to meet the goal of managing 65 hotels with total revenue $225 million by 2001.
Maverick’s BSC and its bonus plan was a great step; however, there were a few issues in implementing this tool:
• BSC applied on part of Maverick Lodging’s structure – hotels’ managers. Regional managers & top management are excluded; Top management’s role was to set the goals & objectives. BSC was a reflection of top management thoughts only, and hotels’ managers had to implement the BSC. Also, hotels’ managers have no control in determining their hotel’s budget. This is unfair – to evaluate those managers if they can’t participate in setting their hotel’s budget.
• BSC design process was limited on three regional managers and five VPs. Targeted people – hotels’ managers – were not engaged in the design process. BSC imposed on those managers which might cause some managers to not accept it or don’t understand how to implement, especially many of them have little experience as stated in the case. Implementation team supposed to engage hotels’ managers and listen to their …show more content…
• Guest-satisfaction survey is very long and caused negative impact on hotels’ score because guests have no time to fill such long survey. Another point, why does Maverick developed long survey if they only care about overall satisfaction score in the BSC. Relying on guests’ satisfaction is not enough indicator; Maverick might consider customer growth as a new indicator.
• Finally, BSC implementation team didn’t account for individual changes in some hotels – as happened in Orlando, FL, hotels. This problem due to the exclusion of hotels managers and not listening to their input.
3. How does the flow through flexible budget work?
Maverick adopted the flexible budget in order to achieve target budget and generate high profit. The flow-through flexible budget breakdown the costs and expenses to: controllable and uncontrollable. Variable controllable costs and expenses are reforecast based on the appropriate drivers, while other costs and expenses are not reforecast such as fixed controllable costs and expenses and Uncontrollable costs and