Management Accounting: Balanced Scorecard Implementation at Hilton

This report evaluates the suitability of the Balanced Scorecard (BSC) for Hilton Hotel, a prominent client of a management consultancy firm. It begins by describing Hilton's mission, vision, and strategies, including service differentiation and digitalization. The report then details the BSC framework, highlighting its four perspectives: financial, customer, internal business processes, and learning and growth. Each perspective's objectives, measurements, targets, and initiatives are discussed, emphasizing stakeholder responsibilities. The features of the BSC, such as its communication effectiveness and alignment with strategic targets, are outlined, along with its differences from traditional performance measurement systems. The analysis concludes that the BSC offers a more comprehensive and strategic approach compared to traditional methods, enabling Hilton to better align its activities with its vision and strategy, despite potential implementation challenges. Desklib provides access to similar solved assignments and past papers for students.

Management Accounting

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Contents
Introduction......................................................................................................................................2
Description of your firm’s client.....................................................................................................3
Mission and vision.......................................................................................................................3
Strategies of the company............................................................................................................3
Balance Scorecard and its features..................................................................................................4
Balanced Scorecard.....................................................................................................................4
Features of Balanced Scorecard...................................................................................................8
BSC is different from traditional performance measurement systems............................................9
BSC is suitable to your firm’s client..............................................................................................11
Financial perspective.................................................................................................................11
Customer perspective.................................................................................................................12
Internal business perspective.....................................................................................................12
Learning and growth perspective...............................................................................................13
Conclusion.....................................................................................................................................15
References......................................................................................................................................16

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Introduction
The ain of the report to analyze and evaluate that Balanced scorecard is suitable for the company
or not. Being a graduate consultant in management consultancy it has been identified that one of
the clients of firm recently evaluated the budgeting system. The firm that has been selected for
the report is Hilton hotel. The CEO of the hotel currently attended a seminar related to the
Balanced Scorecard in private companies. After conducting the seminar, company like to know
whether BSC method is suitable for the company.
Balanced scorecard method is one of the effective ways through which the company can measure
the four elements of BSC. These elements contribute in achieving the vision and strategy of the
company. The strategies of the company change every year because the company makes the
strategy to achieve the specific goals every five years. Moreover, these goals contribute to
achieving the vision of the company. Therefore, the company wants to analyze that this modern
approach will suit the current strategies of the company or not.

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Description of your firm’s client
Hilton hotel is one of the important clients for the company as the company is well known in the
market for its hotels and resorts. The company was founded in the year 1919 by Conrad Hilton
along with the aim to achieve the lodgings facilities in the country. The company is able to
manage its processes in more than 92 countries across the world (Hilton Hotel, 2018). The
company made use of the modern accounting tool in their organization so that they can achieve
the desired goals and get to learn some new aspects which will help the company in improving
its activities in the near future. Hilton hotel makes the changes in their strategies as this is the
only way through which they can come close to their mission and vision step by step.
Mission and vision
Mission
The mission of the hotel is to blow-out the light and warmth of the hospitality across the market.
Vision
The vision of the company is to become the world most preeminent hospitality company. Along
with this, they want to achieve the position so that they can become the choice and preference of
guest, team member and others (Hilton Hotel, 2018).
Strategies of the company
Service differentiation is one of the strategies of the company through which the company can
generate the competitive advantage with the other competitors. The company wants to support its
entire services with high quality, maintaining the highest level of standards and the integrating

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the IT systems in their services which is one of the ways through which they can deliver the
delight services to their customers. This will make the customers stay memorable and they would
like to visit again to the hotel (Dudovskiy, 2016).
Moreover, the company is willing to add on digitalization in every service they make use of such
as loyalty and data driven-personalization, guest experience and privacy and many others. This is
the fact that this effective integration of the digitalization helps the hotel in creating the
additional synergetic impact for the business.
Balance Scorecard and its features
Balanced scorecard
A balanced scorecard refers to as the performance metric that the company makes use of
strategic management which contributes to improve the numerous interior functions of a business
and their resulting exterior outcome. This method is considered as a modern tool for managing
accounting information in a business. This method contributes to provide the feedback to the
company after measuring all the aspects of the balanced scorecard (Balanced Scorecard Institute,
2017).
This method was first presented by the book-keeping academic Dr. Robert Kaplan and business
executive along with the executive theorist Dr. David Norton. This method was first printed in a
Harvard business review article in the year 1992 (Perkins, Grey, and Remmers, 2014).

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(Source: Kaplan, Norton and Rugelsjoen, 2010)
The balanced scorecard is known as a set of the performance objectives and outcomes that are
related to the 4 dimension of the performance. The balanced scorecard includes the four
perspectives on which the analysis is based (Investopedia, 2018). These four perspectives of the
company include Financial Perspective, Customer perspective, Internal business and Learning,
and growth perspective. Each of these perspectives includes general objective, measurement,
target, and initiative. All these perspective identify the responsibility that organization has
towards their different stakeholder groups like employees, suppliers, community, customers and
shareholders (Basuony, 2014). This modern approach reflects the performance of the
organization in fulfilling its objectives that are related to stakeholders of the company. The
description related to the four perspectives is given below: -

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(Source: Agarwal, 2018)
Financial Perspective
Balanced scorecard involves the financial measures that include net income and ROI (return on
investment) due to all for-profit corporations make use of them. This measure offers a mutual
language for analyzing and comparing different companies. Many persons who offer capitals to
the companies’ like a financial institution and shareholders depend on the heavily on financial
performance that measure in identifying either to invest funds or to lend funds (Coe and Letza,
2014). The proper design financial measure can help the company with the aggressive view of an
organization success.
Customer perspective

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In the customer’s perspective of the BSC, the supervisors of the organization determine
customers and market subdivisions in which the corporate unit will compete. Along with this,
they measure the units of the corporate performance in these targeted segments. This customer
perspective includes the numerous core and non-specific measures of the achievable result from
a well-formulated and the implemented strategy (Cooper, Ezzamel and Qu, 2017). Over here, the
core measure includes customer satisfaction, the new acquisition of customers, customer
retention and customer profitability. On the other hand, the specific measures of the customer
perspective include the value proposition that the company will offer to their customers to whom
the company targets.
Internal business perspective
In this perspective of the BSC, the managers of company determine the critical internal process
in which the association must excel. This process allows the company to offer the value
propositions that help the company in attracting and training the customers in the targeted
segments (Smith, 2010). Along with this, this process enables the company to fulfill the
expectations of the shareholders by offering them excellent financial returns for their investment.
The company will be able to achieve the success when they will be able to control its processes
to produce reliable and consistent products and services. The company can measure their
performance towards the consistency of the product and services with the help of balanced
scorecard. Moreover, this process measures that are typical monitors every day or at least very
weak.
Learning and growth perspective

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In BSC, the learning and growth perspective of the company emphasis on the capabilities of the
people in an organization. Managers of the company are responsible for developing the
employee capabilities (Hoque, 2014). The key measure for analyzing the manager's performance
includes employee retention, employee satisfaction and the productivity of the employees.
 Employee satisfaction identifies the significance of the employee morale for enhancing
the quality, productivity, customer’s satisfaction as well as the responsiveness to
situations of the company. Managers of the company can take the feedback from the
employees through surveys, interviews, one-on-one meetings and observe the employees
at work.
 Employee retention is essential for every company in this competitive market as these
employees work as an asset to the company. Further, the company incurs addition cost
when hiring new employees in place of the employee who left the organization.
 Employee productivity identifies the importance of the output for every employee. An
employee in the organization creates both physical output and financial output.
Features of Balanced Scorecard
Many companies make use of balanced scorecard because it is a strategic planning and
management system. Some of the characteristics of this modern accounting tool are given below.
 It offers an effective Communicate related to what companies are willing to accomplish
 Alignment of all the day-day to operations that everyone is doing with the strategy is one
of the features of this method (Hansen and Schaltegger, 2016).
 It assists in prioritizing projects, products, and services

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 Monitor and measure the progress towards the strategic targets can be done with the help
of balanced scorecard.
 The balanced scorecard limits the measures and analyses the most crucial one.
 In the company where companies are seeking for the profit, this balanced scorecard
focuses on the financial objectives and measures (Agarwal, 2018).
 Balanced Scorecard should highlight a company’s strategy by focusing on the cause-and-
effect relationship.
BSC is different from traditional performance measurement systems
The balanced scorecard is different from the traditional performance system as BSC is one of the
modern accounting tools. Traditional performance system tracks only the financial performance
of the organization that is related to the profit earned by the company from selling to the capital
required. Though on the other side, BSC focuses on the financial and non-financial measures for
assessing the performance that is linked to the strategy of the company (Coe and Letza, 2014).
In the current world scenario, the environment changes frequently due to which the company is
not able to conduct its operations perfectly. The traditional performance systems are neither
appropriate in the changing environment, nor for the uncertainty that might take place in the
organization. Along with this, traditional performance system doesn’t acknowledge the
improvement and capabilities of an organization. On the other side, the BSC is a strategic
management system which was introduced to overcome the limitations of the traditional
management system. Therefore, BSC method delivers the stable view of an organization
inclusive performance that gets align with the companies activities along with the vision and
strategy of the company (Striteska and Spickova, 2012). Moreover, this method helps the

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company to evaluate the measures of not only the financial perspective but the internal business,
customer and learning & growth perspective also which is not possible in the traditional
management system.
This method provides a feedback to the company for the future operations and strategies that will
help the company to grow in the market. Though, the feedback sharing facility was not available
in the modern approach of BSC. The limitation of traditional management system led to the
development of the modern approaches. Therefore, the BSC introduction helps the company as
their strategic decision making improved which was earlier weaker in the traditional performance
system (Melnyk, et.al, 2014). It has been analyzed that implementation of the balanced scorecard
is one the difficult task for the company but the implementation of the traditional methods like
ratio analysis, cash flow system, fund flow and many others were easy to implement for the
company. Therefore, the company needs to appoint an expert in the accounting so that they can
get accurate results and can implement the BSC easily.
This has been analyzed that the traditional performance system is not linked to the organizational
strategy which is one of the biggest limitations of the traditional management. Though, on the
other hand, the BSC model measures and performance evaluation is totally based on the vision
and strategy of the company. Therefore, the performance measurement in balanced scorecard
method is more accurate when it is implemented correctly by the accountant of the company
(Striteska and Spickova, 2012). The above given are the major differences between the
traditional management system and the modern management system of accounting. The overall
analysis reflects that modern management system like BSC was introduced so that the limitation
of the traditional management method can be removed and organization can achieve their vision
more effectively than previously.

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BSC is suitable for your firm's client
This section of the report will talk about the Suitability of the balanced scorecard management
tool for the client firm’s that is Hilton hotel. The suitability can be measured by linking it to all
the four perspectives of the BSC. The firm found that this tool supports the strategic management
and helps them in improving the internal activities through feedbacks of each perspective
(Sivaraman, Al Balushi, and Rao, 2014). This tool contributes to the effective expansion and
growth of the business around the world.
Financial perspective
Hilton hotel gets an advantage of the improved value of the shareholders and the rise in the profit
of the company which is possible by offering the value-added services to their customers. BSC
support the company in bringing the changes in the cost structure which is essential to improve
the prices (Sainaghi, Phillips and Corti, 2013). Moreover, this perspective also contributed in the
mergers and acquisition across the world. The below given are goals, measures, target, and an
initiative of the Hilton hotel for the financial perspective.
 Goals: -The goal of Hilton hotel is to accomplish the rise in the revenue and the
productivity of the company. Along with this, the aim is to increase the hotel assets and
determining the new investors. This is supported by the balance score method of
accounting management.
 Measurement: - Company can analyze the achievement of goal with the help of
evaluating the rise in the percentage of the booking by the customers. Moreover, Hilton
can compare the percentage rise in the revenue of the company.