Lean management is a popular practice in manufacturing, but the concept is being adopted by other industries to help them cope with the ever-changing business landscape. One industry that could benefit from applying lean management methods is hospitality, which is estimated to become a $4.5 billion industry by the end of 2022, according to the Hospitality Global Market Report 2022. Ensuring continued growth while facing multiple global crises and new customer demands brought about by the pandemic will not be easy for an industry that is mainly about servicing customers.
A survey conducted by the American Customer Satisfaction Index (ACSI) found that customer satisfaction among 6,000 travelers fell to 2.7% over the course of 2021-2022. In addition, ACSI score has steadily decreased over the past decade, with 71 in 2022. Adopting lean principles can help hotels stay on top of shifting customer expectations.
What Is lean management?
Lean, according to the paper “Lean management in hospitality: methods, applications and future directions” published in the International. Journal of Services and Operations Management, is “a bundle of principles, methods and actions for the effective and efficient configuration and examination of the whole supply chain.”
The study pointed out that creating value without generating waste is the goal of lean management and that value is any action or process that customers would be “willing to pay for.” The researchers stressed that lean management tools help identify and eliminate waste of resources, and as waste is eliminated, quality improves while production time and costs are reduced.
Meanwhile, authors of the study “Lean management in hotels: Where we are and where we might go” published in the International Journal of Hospitality Management, explained that anything that buyers consider non-value adding to a product or service is a cause of losses.
The comprehensive framework developed by Malin Malmbrandt and Pär Åhlströmto and published in the paper “An instrument for assessing lean service adoption” for International Journal of Operations & Production Management shows how to apply and maximize lean benefits. It points out that lean service is enabled by employee training, management commitment and appreciation, infrastructure, and resources.
Customer identification value, customer involvement, waste identification, workplace design flow, alignment of organizational processes, standardization, continuous improvement, result visualization, and multi-functional teams are all important lean practices.
Evaluating lean methods
Not all lean principles are applicable to the hospitality industry. The 2016 paper “Lean Hospitality – Application of Lean Management Methods in the Hotel Sector” from Procedia CIRP examined the relevance of lean management methods to the needs of the hospitality industry. The methods evaluated are based on their performance using the following criteria:
Effort and costs for implementation: Ideally, resources should be used efficiently and at a low cost to ensure a short amortization period.
Time to visibility: Lean often fails due to missed results in the short term, so this criteria stresses the short-term visibility of positive effects.
Impact on performance KPIs: A company’s management makes decisions based on performance KPIs. Performance results from the lean method need to be “measurable and convincing.”
Sustainability of outcome and application: Lean-thinking aims for the long-term benefits of the organization. It takes time for people to change their mindsets. As a result, this criterion has also been incorporated into the validation model.
Using the evaluation process, the researchers came up with the top 20 lean hospitality methods (see Figure 1).
Successful lean practices
The hospitality industry has undoubtedly discovered the benefits of the lean phenomenon. In the hotel sector, Marriott in the U.K. conducted workshops on lean thinking and captured higher customer satisfaction rates in the post-implementation phase of lean. Sally Toister, the former senior director of operational excellence for Marriot Hotel, said in an interview with the CX Network podcast theatre that one of the ways they implemented lean strategies in their hotels was to refine food menus for guests who stayed five or more days.
Many guests staying at Marriot for longer periods usually dined outside, and since the hotel provided only standardized similar meals, they realized they were losing out their sales to other restaurants. Sally and other executives mobilized their experienced chefs to tailor different food offerings to cater to their customers’ needs but optimized costs by using the same ingredients for standard food meals. To track the performance of the project, they used a loyalty metric like the composite score (likelihood to recommend). They did not only boost sales in their menu but also drove up customer satisfaction.
Yukai resort in Japan is cited in the 2016 study mentioned above as a model for successful lean application. The establishment aims to eradicate wastes while not compromising quality of services. The resort provides half the standard market price of lodging services with the same industry-standard quality and less staff. Dinner, for instance, is served in a buffet manner to cut staffing costs, while receptionists work in areas that need assistance in their free time. Moreover, all the lodging duties are divided among all the employees. Training on Kaizen (continuous improvement) is conducted weekly and monthly by the managers.
Experts define high-performance culture as a set of shared beliefs and values set up by leaders. These shared beliefs and values are then embedded and communicated through different strategies that eventually form employee perceptions, behaviors, and understanding.
All companies want their employees to arrive each day motivated, prepared, and energetic to do what it takes to make the work done. However, it’s more of an idealism than a reality. A State of the Global Workplace report from Gallup shows that only 15 percent of employees are engaged at work. Meanwhile, new research from Zenefits revealed that 63.3% of companies consider employee retention more challenging than hiring.
The pillars of a high-performance culture
Several reports and case studies emphasize the impact of motivation on employee performance. While there are means to address waning motivation, a “well-performing” company isn’t good enough. With the capacity to trade globally, and markets immersed with companies scrambling for market share, it is more critical than ever to have a distinctive, high-performance culture.
There are many frameworks to analyze high-performance culture in an organization. One example of a well-developed and data-driven framework for assessing a high-performance culture can be seen in the Organizational Health Index.
Developed by McKinsey in 2017, the Organizational Health Index (OHI) survey measures 37 individual management practices and nine outcomes against a global database of more than 1.5 million individual responses.
The pillars of a high-performance culture are:
Direction;
Innovation and learning;
Leadership;
Coordination and control;
Capabilities;
Motivation;
Work environment;
Accountability;
External orientation.
The role of OKRs in building a high-performance culture
Objectives and key results (OKR) is a goal-setting tool used for measuring organizational/departmental/individual objectives through challenging and ambitious key results. Extracted from the organization’s visions and missions and aligned with the department’s goals, OKR involves activities such as planning, activating, managing, and adjusting.
With OKRs, teams can cascade and align goals to the different levels of an organization, defining outcome-based key results that help verify the success of the objective. OKRs act as a guide for daily work and connect all employees to a larger purpose, which is what the organization intends to achieve.
If OKRs are perceived as more than just a goal-setting tool and instead as a communication one, it shows why the OKRs are brilliant at building a high-performance culture. The effort of achieving daily goals at the individual and team levels eventually leads to the achievement of the overall objectives at the organization level in the long run.
As a result, when implemented correctly, OKRs can help a company enable a high-performance culture and achieve far more than their team thought possible. OKRs help the organization adopts performance culture in the following ways:
OKRs provide organizations with a clear direction, coordination, control, and orientation.
Direction, coordination, control, and external collaboration play a vital role in helping organizations jump from their current state to the state they want to achieve. To guide the organization in achieving what they desire, it’s important that the organization ensures that its vision and strategic clarity are understood by the stakeholders in every layer, and while doing so, the organization must also facilitate the involvement of its employees.
OKR helps organizations align priorities and make sure everyone at every level in the organization moves towards the same goals. Employees must be given the opportunity to provide their insights when the organization decides in the next 12 months. It is recommended to start with an OKR workshop where all key stakeholders responsible for company strategy ask for and gather input from employees on what they think the top priorities should be.
Those inputs can then be aligned with the existing company strategy and broken down into three to five OKRs. The process can be done using collaborative notes and documents or even a whiteboard to ensure that collaboration and ideas are well-captured. The goal of the process is to reach an agreement on what priorities should be achieved in the following year.
The process is then followed by aligning the company OKRs with team and individual OKRs. OKRs provide teams and individuals with a clear set of directions and achievements. OKRs are also a reason to remove things that are unrelated to the scope of the objective they wanted to achieve, keeping their focus and avoiding unnecessary activities or resources.
If every team gets the opportunity to create their own OKRs that they will be working on in a particular quarter, for example, it can assure a successful OKR program while helping the organization realize its strategy and maintain its focus.
OKRs increase employees’ motivation, innovation, capabilities, and accountability.
OKRs can be used to develop a set of productive behaviors that establish an essential motivating culture. Through the process of building OKRs, employees set the outcomes they’ll achieve. These outcomes are in line with the organization’s setup that supports autonomy and motivation.
In addition, OKRs focus on outcomes over outputs. It is a way to resolve organizational problems and gives employees the flexibility to experiment, innovate, and think outside the box. It also allows a humanistic approach, rather than a systemic approach. OKRs promote positive behavior by providing continuous reflection and iteration about the organization’s goals, sharing progress updates, and keeping goals collaborative, all while observing freedom and trust.
More than just a goal-setting framework
OKRs are more than just a goal-setting framework. They enable stronger and healthier relationships within companies and support powerful dynamics in an organization that will significantly increase performance levels.
To start doing the OKRs right, companies can hire an OKR expert to start partnering with their organization or provide their managers with training. The KPI Institute’s Certified OKR Program can equip them with the right tools, knowledge, and guidance in deploying OKRs in their organizations.
Editor’s Note: “Fraud in the Travel Industry: Is Digital Footprinting the Solution?” is originally published in the latest edition of PERFORMANCE Magazine – Printed Edition. This article is written by Gergo Varga, Senior Content Manager / Evangelist at SEON.
Businesses in the travel and ticketing industry are seeing more and more customers buying travel tickets online rather than in person. With this convenience come some risks, creating the need to mitigate against established and emerging types of digital fraud alike.
Of course, fraud is not just an issue for ticketing companies but any industry that focuses on card-not-present transactions and services to streamline customer payments. However, there are different touchpoints and pain points in each sector, and you can only mitigate it if you know what kinds of fraud can hit your business and how you can deploy the right strategies to stop cybercriminals in their tracks.
According to Condor Ferries, online travel bookings now exceed $817 billion around the world in total worth, with an estimated 148.3 million individual bookings completed annually. Following this rise closely,travel and ticketing fraud has become an increasing problem for companies, with fraudsters usually targeting the online ticketing process itself.
Different Kinds of Fraud in Travel and Ticketing
Carding is one of the main types of fraud faced by companies. Carding involves the illegal acquisition of debit and credit card credentials and their use by fraudsters pretending to be the legitimate cardholder.
Tactics employed by fraudsters to gain this information from their victims include card cloning, RFID skimming, phishing, spyware, data breaches and BIN attacks, for instance. In the case of RFID skimming, for example, the public has been so concerned about this in recent years that companies like Duo have had to create guides explaining RFID blockers and similar devices to inform their customers. Fraudsters using a cloned card or stolen card information can then create an account on a website and attempt to buy tickets using it.
But why does this matter to companies selling travel and other types of tickets online? One concern is chargebacks. When the legitimate cardholder realizes a criminal has used their funds, they will ask the card-issuing bank for their money back. In these cases, the merchant ends up losing both the money and the ticket issued, as well as incurring certain admin fees to the bank.
Sometimes, fraudsters use ticketing websites to do testing – to test if the cards they’ve acquired illegally are still “live,” meaning that they haven’t already been frozen or canceled. This entails attempting a payment with each card number, usually small in value, before marking the live ones still in use and moving on to larger, more ambitious schemes with them.
Even when the money the ticketing service loses is small, this can have a knock-on effect because card-issuers keep track of what’s called a chargeback ratio, or how often a merchant incurs chargebacks. If it’s too often, they increase the standard processing fees the merchant pays for each payment — legitimate or not – and, in some cases, even ban merchants from using their networks outright. This means you can no longer serve customers paying with specific types of cards, such as Mastercard or Visa.
Criminals can also try to make a profit by reselling certain types of tickets (usually last-minute flight offers) on dark web marketplaces or via encrypted social media, such as Telegram, as explained in an article on the dark web on Peraton.
Other tactics that cybercriminals use on airline sites include booking a flight using card details that they’ve stolen and then cancelling them. This is so that their account can still be credited with any adjacent bonuses and miles, even if they have canceled the flight, which they will use for other fraud moving forward. Although not as common as they once were, bonus miles and other extras are advertised by airlines and other companies, such as United, as an incentive for travelers to choose them over competitors.
Ticket scalping is another pain point for travel as well as other types of ticketing websites. This occurs when fraudsters use bots to bulk buy tickets from ticketing or travel companies online, causing the flight or event to sell out.
First, they might use an auto refresher to spot when tickets have gone on sale. Then, they’ll employ scripts to automatically fill out forms and details during the transaction process. Fraudsters might also use pre-bots to create multiple fake accounts across many different websites. If a site requires customer identification, then fraudsters might attempt to provide this in the form of stolen or synthetic IDs.
Ticket scalping is a form of arbitrage, as they then resell tickets to customers for a marked-up price, generating a profit. This is also known as ticket touting or ticket reselling and doesn’t just affect travel companies but also music, entertainment, and sporting events.
One prominent case of ticket scalping in the travel industry was during the height of the COVID-19 pandemic, at the start of which airports canceled flights in the face of impending lockdowns. In a report, CNN describes how scalpers seized an opportunity to sell air tickets on the black market to Chinese students looking to travel from the US to China to join their families. With rumors of airlines slashing seats and inbound flights, agents turned into scalpers by putting up a premium on these now highly desirable tickets.
The CNN reporter found a $300-450 booking was hiked up to the equivalent of $1,650 by agents acting as scalpers. According to the report, the Civil Aviation Administration of China claims that it has lost $70,000 to ticket scalpers and has since rolled out price control and outright bans on some ticket exchanges and proxies.
How Digital Footprinting Can Address Fraud
With the right fraud prevention and detection software in place, organizations can spot and prevent fraudulent accounts before they have a chance to target your transaction process.
Digital footprinting can be part of that process, helping assess the true intentions of any customer looking to transact. Imagine a fraudster who has acquired card details stolen during a data breach and is looking to register an account to buy tickets fraudulently and then resell them for a profit.
It’s at this sign-up touchpoint that digital footprinting techniques, such as reverse email and phone lookup, can help. The digital footprint module will check this new user’s email address or phone number to see if they have social media or other web histories.
Why does this matter? Because reverse lookup tools, as a form of data enrichment, tell you a lot about a user. Starting with information the customer submits, such as an email or phone number, digital footprint analysis sources hundreds of data points to create an accurate, real-time profile of the person who uses the address or phone number, from which we can evaluate their intentions – or even automatically ban or approve them.
For instance, when a customer provides a phone number as part of their check-out process, you can use the resulting data points to find out if this phone number is a disposable or VoIP number, as well as any associated names and addresses. As SEON’s guide to phone lookup explains, using reverse phone lookup, you can find out whether the phone number is valid, the country the carrier is based in (which you can combine with IP analysis), and any connected social media or instant messenger accounts, among other information.
Real people, even those who aren’t techies, almost always have some sort of online presence. But if a new user’s phone or email address is not linked up to any social media or online platforms – for instance, accounts on Airbnb, Skype or Facebook – you have good reason to be suspicious and thus request additional verification and proof of their identity. Furthermore, each country has its own mix of popular digital services, so a customer that deviates from the norm could also signal an anomaly that warrants closer inspection.
It’s incredibly difficult and complex for fraudsters to fake a legitimate digital footprint. The email address they create to defraud you will not have a digital presence, instead having been created recently just for this purpose. Scalpers use bots to bulk buy tickets, and these are typically in control of multiple accounts at a time (multi-accounting). All these accounts, of course, will have registered using new, not-before-seen-online email addresses. This is a huge red flag.
Digital footprinting can be a good low-friction fraud prevention and detection option, as it can help keep the transaction experience for your genuine customers efficient and enjoyable. With risk ratings, each individual looked at can be assigned a risk score on the basis of their profile, and a customer with no digital footprint will have a much higher risk score than a user with one. Such risk scoring can help introduce friction only where it is needed, in what’s called dynamic friction that changes based on the customer’s score.
Additional Considerations
Although digital footprinting is an excellent, cutting-edge tool for spotting fraudsters, it works most effectively when combined with other fraud prevention and detection tools. Device fingerprinting involves collecting information about a user’s device, while IP analysis looks at where in the world they connect from and how. These help in multitude ways. For example, it is suspicious if several different users use the exact same device and IP, so an extra check can be introduced.
Another consideration of fraud prevention is velocity checks, which examine customer actions through the lens of time. For example, if a customer has attempted to purchase multiple tickets from your website for events at various locations over the course of just a few hours, then this will be flagged by the velocity-checking process. While some customers may do this for legitimate, non-fraudulent reasons, it can also be a sign of fraud. Other kinds of behavioral analytics include looking at abnormal interactions and a user’s typing cadence.
By combining data points from digital footprinting, device fingerprinting, velocity checks and more, through sophisticated fraud prevention software, travel companies can be better protected.
Some vendors allow the merchant to fully customize each of these elements to match their risk appetite and past fraud events, while others promote a set-and-forget approach, often making use of blackbox (non-transparent) machine learning.
Digital footprinting is a great tool to stop fraudsters from hijacking your ticketing and other transaction systems. Thanks to data enrichment, it crucially involves scaling, which means that you can introduce as many or as few checks as you need, from 100 checks an hour to one check an hour.
By adopting strategies such as dynamic friction, suspicious accounts will need to provide more information, while customers proven to be trustworthy will enjoy frictionless check-out – all keeping you safe from instances of carding, account takeovers, and ticket scalping, as well as every other type of fraud.
About the author
Gergo Varga has been fighting online fraud since 2009 at various companies – even co-founding his own anti-fraud startup. He’s the author of the Fraud Prevention Guide for Dummies – SEON Special edition. He currently works as the Senior Content Manager / Evangelist at SEON, using his industry knowledge to keep marketing sharp, communicating between the different departments to understand what’s happening on the frontlines of fraud detection. He lives in Budapest, Hungary, and is an avid reader of philosophy and history.
The business intelligence and analytics industry reached over $ 19 billion globally in 2020, albeit the derailed economic performance caused by the pandemic. The business intelligence market growth experienced a 5.2% increase, and the data analytic growth rate is expected to rise in the coming years as companies realize the need to manage data to make better decisions.
According to Angela Ahrendts, a former retail Vice President at Apple Inc., customer data is the most significant differentiator among businesses in this era. Companies that know how to maneuver heaps of data to create strategic moves usually succeed. To determine how companies adopt and implement data analytics, let’s first understand how data can make a company’s operations efficient.
Data Analytics: Four Ways to Increase Company Performance
As discussed earlier, data analytics is beneficial for making more accurate business decisions. Managers and executives can take action on the data insights they get to drive better competitive advantages in their markets. There are four ways data analytics can accelerate business performance:
The first way is by creating informed decisions. One of the key benefits that businesses look out for when dealing with data analytic solutions is developing better and more accurate decisions from the insights they get from analyzing data.
There are two processes that ensure the development of better decisions: predictive analytics and prescriptive analytics. Prescriptive analytics are utilized to project the way companies react to forecasted trends, whereas predictive analytics focus on events that might occur after analyzing collected data.
Improving efficiency is another route. Data analytics is highly beneficial especially in the operation management for streamlining operations. For example, companies can retrieve and assess their data relating to supply chains to discover where delays in their supply networks happen or to forecast areas where problems emerge and use these insights to prevent any issues.
Data analytics also enables risk mitigation. To cut down losses, data can be utilized to reduce physical and financial risks in business. Through collecting and assessing data, inefficiencies can be either identified or predicted. Also, potential risks are revealed to inform management on creating preventive policies.
Lastly, data analytics enhances security. As many businesses confront numerous data security threats in today’s era, it is essential to keep the company’s cybersecurity out of dangerous attacks that cause financial or brand image blow. A company can evaluate, process, and draw insights from its audit logs to showcase the source of previous cyber breaches. The outcome of this exercise would be to recommend possible remedies to the problem.
Join The KPI Institute’scertification course on data analysis today to learn more about data analytics, improve your analytical skills and make wise business decisions.
Empathy has started to become one of the most essential skills that management should foster amongst their leaders. The Center for Creative Leadership conducted a study that included 6,732 managers in 38 countries and concluded that empathy has a positive impact on job performance. Namely, bosses perceive their subordinates (managers) who practice empathetic leadership as better performers in their jobs and it has proved to have a vital role across the business functions, such as Marketing, Customer Service, and Human Resources. Ultimately, it showed that embracing empathy within the culture of the workplace can positively influence the employees’ job satisfaction.
Empathy and Marketing/Product Development
In marketing, trying to understand your customers and putting yourself in their shoes, will definitely help you to better understand their needs. Consequently, this would help in creating and promoting the right products and services for the right customers. Empathizing is actually the first step in the design thinking process, which includes understanding the customers before you start to design your product. According to Stanford, empathy is an integral aspect when designing a human-centered process, and it further explains that the “Empathize mode is the work you do to understand people, within the context of your design challenge.”
Empathizing means observing, engaging, and listening to your customers; it does not focus only on talking with your customers and getting insights from interviewing them. It is about putting yourself in the customers’ shoes to try and figure out their pain points and thoughts concerning their attitude and behavior with a specific product/service while still having the perspective of a marketer or product developer. Marketers or product developers might even reach conclusions that could lead them to a whole new product that would actually create a need that their target market has not thought of.
An example that could illustrate this is IKEA’s marketing strategy involving products of flat packs and self-assembly furniture. One of the company’s frontline workers found difficulty in trying to get a table into his car, so he took the legs off to make the table fit. This led to an empathetic insight that consumers might be facing the same problem. To address the issue, IKEA initiated flat packs and self-assembly furniture. This example highlights empathetic reasoning in which employees are keen to put themselves in the shoes of customers, resulting in higher market performance.
Empathy and Customer Service
If you want to better serve your customers and solve their problems, empathy is the main key to a better customer experience and should be embraced in a customer service function’s strategy and culture. When customer service agents answer their clients, whether it is over the phone or face-to-face, they should show that they care about solving their clients’ issues and offer better alternatives. This is one way of keeping their customers and turning them from one-time purchase customers to loyal ones.
Talking and listening to your customers in an empathetic way is one of the strategies that will enable customer service functions to handle difficult customers while gathering more data and insights. This could help other departments in improving their products and services, such as adding more features or even coming up with new solutions. Empathetic behavior in customer service also helps organizations in maintaining good relationships with their customers, especially for industries that rely on the customers to create their image of the organization through their customer service agents.
Empathy and Human Resources
Dealing with your employees in an empathetic manner will definitely have a positive impact on their job satisfaction and performance. Empathy should be involved across the different HR areas and not just in communicating with employees, such as feedback meetings or training and development programs. Having an empathetic attitude will enable HR people to gather more data for developing better rewards, benefits systems, and training and development programs. Moreover, embracing an empathetic attitude will enable HR functions to foster inclusion and diversity in the workplace, which is one of the top priorities for HR leaders and managers.
Empathy in HR has never been more important than today as people and businesses around the world are trying to recover from the effects of COVID-19. Encouraging and supporting managers and leaders to practice empathetic listening with employees is not a waste of time. While leaders and managers do not have to agree with everything being said by their employees, it is imperative for them to show their employees that they care about their opinions, ideas, and thoughts. With the challenges of remote working amongst others, empathy has become vital as it increases the employees’ sense of belonging and appreciation in the workplace.
However, some business owners might think that empathy is overrated and can have a negative impact. For instance, some managers or leaders may think empathy could cause emotional and psychological burdens that could lead to burnout. Moreover, it might even lead to poor decision-making as it encourages managers and leaders to be emotionally involved which may push them to make wrong decisions rather than focus on data and facts. Furthermore, some organizations might be worried that empathy may create a messy or chaotic environment to work in; structured and professional feedback meetings, for instance, may turn into informal chats.
Conclusion
Everything has its pros and cons, but it depends on how the organization embraces empathy in the workplace and to what extent. It is essential that organizations differentiate between empathy and sympathy as the two concepts are completely different. It is the responsibility of HR people to highlight the difference between the two concepts starting from the top management to the most junior person in the workplace. Moreover, setting the limits of practicing empathy in the workplace is essential; it is not about agreeing to everything being said by the employees or giving false promises, but it is about listening and making an effort to understand what the other person is trying to explain to reach a decision that can benefit both employer and employee.
Like any skill, empathy is good up to a certain extent. Organizations need to understand how they want to involve it in their culture and in what sense. HR functions should provide sessions/workshops or training sessions that explain the definition of empathy and the methods of practicing it. HR functions also should monitor how leaders and managers are practicing empathy within their functions and how their employees are perceiving it.
