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“May I have the bill now, please?”

Robert Hartnett, Senior Teaching Fellow

Faculty Blog

Thirty-five years ago a medium-sized luxury hotel in Southern Europe had a manual bookkeeping system in which guest bills were handwritten, and not very well either! In the cashier’s section the clerks would enter charges from dockets raised by various departments – restaurants, floor service, hairdresser, manicurist, boutique shops, car hire, theatre desk, concierge, florist, and visitors’ paid-outs.

But what are ‘visitors’ paid-outs’? This category was for expenses paid by the hotel on behalf of guests and chargeable to them, as well as the cashing of guests’ cheques. The hotel had a very well-functioning manual accounting and auditing system – the control section comprised 12 full-time employees who checked every transaction and monitored stock levels – and woe betide any floor waiter who tried to sell his own drinks and pocket the proceeds.

A new general manager, or direttore generale, decided to do something about the messy handwritten bills, so he employed consultants to computerise the hotel’s billing system. He then left them to it. Unfortunately, the new system had been developed for a budget hotel chain catering for family and business travellers. So what happened when the system went live? You guessed it. Many of the extras from the shops, etc. were left off bills, and visitors’ paid-outs disappeared completely!

There is a happy ending, though. Both the head cashier and the bookkeeper responsible for extras had been told that they could now ‘throw away their books’. Their splendid leatherbound ledgers could gather dust in some forgotten corner of the hotel’s basement. To their credit, however, they continued recording transactions secretly, and you can imagine the relief of the chief accountant when he discovered this.

This could not happen in real life, you might say. But it did, and it is an example of top management devising a strategy and then leaving it to an operational manager and consultants to implement. This is a major cause of strategy failure. Apart from senior management involvement and ‘ownership’ of strategies, there are two elements that are essential for successful strategy implementation: critical success factors and critical activities.

Critical success factors are elements that must be in place and performing well for the organisation to achieve its strategies. The production of accurate and timely hotel bills would be vital for the success of this hotel’s strategy, and an eye would need to be kept on whether this is being done, so key performance indicators should be developed to do this.

Critical activities are, as the name suggests, the actions that support critical success factors (getting the visitors’ paid-outs recorded correctly, etc). We can measure our success in these areas using activity performance indicators.

There are more things in heaven and earth, Horatio, Than are dreamt of in your philosophy,’ said Hamlet. And there are more things in strategy implementation too.