by Dennis Koci

My responsibilities as the senior vice president of operations support for Hilton Corp. include coordination and supervision of most of the revenue-generating operational departments and staff support functions found in typical full-service hotels.

It also means assisting Hilton in maintaining its strong position in technology related areas such as front office, food-and-beverage, telecommunications, engineering, housekeeping, safety and security, as well as ensuring that all departments of all brands work together to create value and meet the goals set for them. Thatís where Enterprise Performance Management (EPM) comes into play.

The Road to EPM
First, a brief summary of the steps that led to where we are today. During the past several years, the road to EPM has included direct involvement in a number of specific projects:

Organizational Realignment (1997). In the mid-90s, Hilton Hotels Corp. had separate divisions (and support functions) for its managed hotels and franchised hotels. The result was inconsistency at the support and customer level, as well as duplication of effort. The realignment resulted in a rare blend of reduced overhead and improved consistency and coordination of internal support and guest experiences.

Hilstar (1998). My responsibilities included supervision of the functional specification design, user-acceptance testing, enhancement planning, field training, and implementation rollout of Hiltonís $30 million state-of-the-art enterprise central reservation system supporting Hilton Hotels worldwide.

Y2K (1999). In late 1999, Hilton Hotels Corp. was in the final stages of separating its hotels division from its gaming operations. We were a single company with two structures, including two chief information officers. My role was to head the corporate Y2K steering committee to lead the combined Y2K readiness planning, compliance, and property-level emergency contingency planning process, including updates to the audit committee of the board of directors.

Promus Merger (2000). The world didnít end as the new millennium arrived, but by the time weíd reached the year 2000, Hilton had acquired Promus Hotel Corp., whichincluded such top-rated brands as Embassy Suites, Hampton Inn, Doubletree, Homewood Suites and Red Lion. Such a massive merger meant an equally massive integration process. I was made responsible for the full-service brand standards integration of the Hilton and Doubletree brands, including standards monitoring and internal support integration, as well as for directing and quantifying synergistic savings within the full-service brands.

The Next Step
Within the huge lodging organization that Hilton had become with the merger, it was critical to establish a corporate strategy and to assure that it was communicated to the properties so they in turn would execute that strategy. In 2001, I was asked to chair the Enterprise Performance Management (EPM) project that sought to integrate the internal financial and customer measurement tools, link the source databases within the Hilton Balanced Scorecard Process and rollout to the field for all owned and managed hotels across all brands.

EPM is based on the concept that corporate performance can be accelerated if performance tools are able to translate corporate strategy into fully integrated operational activities at the business unit level (hotels) across the enterprise.

The process starts with an organizationís strategic vision. Then, with recognition that all key value drivers within a business must be represented if an organization is to be successful long term, the EPM process facilitates the translation of the companyís strategy into tactical, operational objectives and actions.

The Balanced Scorecard
The core of Hiltonís EPM is a concept called the Balanced Scorecard (BSC). Originally developed by Harvard Business School professor Dr. Robert Kaplan, and business theorist Dr. David Norton, it is a technique for integrating strategic planning into the day-to-day work of the company, and measures performance against strategic goals.

Before BSC, although customer data was being gathered, the focus was largely in terms of financial success or failure. In other words, it was a measurement of what had happened in the past, rather than predicting what was going to happen. It has been said that basing corporate strategy on past accounting measurements is like driving a bus using only a rearview mirror. You can see where youíve been but you donít know where youíre going.

The Balanced Scorecard, on the other hand, tries to develop a "balanced" perspective, focusing on financial results as well as forward-looking measures that tend to predict future business, such as customer satisfaction and intent to return.

Adapted from the Kaplan/Norton model, the Hilton BSC model consists of five "value drivers":

These drivers of value represent the corporate strategic direction for Hilton. But every company has a strategy. When it fails, itís largely due to the inability to execute ñ to find a way to translate this corporate "strategy" into something meaningful for the strategic business units (hotels) in the field.

The answer for Hilton is to incorporate the BSC into its Enterprise Performance Management process. Based on these value drivers, Hilton creates property-specific goals called Key Performance Indicators (KPIs). For example, as noted above, Revenue Management is part of Hiltonís corporate strategy. Under this value driver, the hotel-level KPI is Revenue Per Available Room (RevPAR). Applying an improvement factor to the individual propertyís actual results creates a property-specific KPI for RevPAR that applies to that specific hotel. The process continues for all the Hilton value drivers. The result: realistic, quantifiable property-specific goals aligned with the overall corporate strategy direction.

Add a Proprietary Continuous Improvement process that, on a corporate level, incorporates tools like Six Sigma (an approach to implementation of a measurement-based strategy that focuses on improvement), root cause analysis, and "Kaizen" (the Japanese business strategy that involves everyone in an organization working together to make improvements). Then add prioritized property-level tools that, through matrix weighting, provide the dimensions of customer importance and "gap to perfection," and you will have an idea of how Hiltonís focus on Enterprise Performance Management strengthens its leadership position.

The Balanced Scorecard approach is also applicable to a small chain or an individual property. Establish your strategic vision, identify key value drivers, and develop a plan to translate vision into reality, using the value drivers as the translator.

Dennis Koci is senior vice president of operations support for Hilton Hotels Corp.