Critical Success Factors and Performance Management and Measurement: a Hospitality Context

Abstract

This paper reports on research carried out in the hotel sector of the Irish hospitality industry on critical success factors and their impact on performance management and measurement. The paper outlines the industry context and reviews the literature on critical success factors. This literature presents a discussion of the concept of critical success factors (CSFs) in the context of performance measurement and the hospitality industry, which are considered necessary for organisational prosperity because of the impact they have on the organisation’s potential performance. Critical success factors are those factors capable of providing the greatest competitive leverage upon which resources should be focused.\nAccording to Brotherton, (2004:a; 2004:b) critical success factors are those factors capable of providing the greatest competitive leverage upon which resources should be focused. For example, Flanagan (2005) has identified a critical success factor as a position where the organisation’s pricing is considered to be in the realms of competitive pricing and where the organisation’s technical capability can match or outstrip competition. Brotherton, (2004:a; 2004:b) considers critical success factors to be combinations of activities and processes designed to support achievement of such desired outcomes specified by the company’s objectives or goals. Consequently, they can be partially controlled by management and thus can potentially be managed. This is further developed in the paper.\nCritical success factors emerge from a number of aspects of the organisation’s operating context, such as its competitive strategy (Said et al., 2003; Farmer, 2004), stage of the product life cycle (Andersen, Cobbols and Lawrie, 2001; Hoque and James, 2000), size (Hoque and James, 2000), culture, values and beliefs (Neely, 2004; Rejc, 2005), cost structure, management style, location, position, competitor activity, financial strength (Flanagan, 2005). The paper will set out examples of the critical success factors that have emerged from relevant research carried out in the national and international hospitality industry in this field.\nIn order to investigate the phenomenon of performance measurement in hotels, empirical research was carried out with hotel managers, owners and operators of hotels in Ireland. This research included research into critical success factors in hotels. The research into the critical success factors was carried out with focus groups and a series of in-depth interviews conducted with managers and owners of small and medium-sized independently owned hotels. The focus group methodology was chosen to investigate in depth the types of critical success factors owners perceived to be important to them. The focus group stage of the research offered the opportunity to investigate these phenomena of performance measurement and critical success factors. Three focus group interviews were conducted with 8 – 10 people in each group. The in-depth interviews offered the opportunity to carry out an analysis of the critical success factors of a number of hotels and to investigate why these operators considered these to be critical success factors and if any success factors were unique to a particular organisation. Five case studies were carried out with owners / managers of independently owned hotels in Ireland.\nThe research found that there are a number of critical success factors that are common to all the hotels. However, the research highlights that a number of these critical success factors are difficult to measure in terms of performance management. This commonality of critical success factors is somewhat unusual, as it could have been expected that different hotels had different success factors that were unique to their own operation. This commonality is a significant finding and suggests that critical success factors can be included in a hotel specific model for performance measurement. The research also shows that hotel operators recognise their critical success factors although they may not be using the benefits these factors bring to their organisation as a strategic tool.\nAlthough there were a number of common critical success factors, each interviewee also identified factors that they perceived to be critical to the success of their individual operation. These factors are highlighted in the paper.\nWork in this area to date has not been able to draw any commonality among the critical success factors in any other sector researched so far. In addition, the primary research reported here provides evidence of a discernible link between critical success factors, industry context and performance measurement. Thus, performance management and performance measurement aligned with critical success factors is a complex and under-researched activity of hotel management.

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