The Hindu Business Line : ROI has many a shortcoming

TO MANAGE quality in a `total' way, you need a new model, says John S. Oakland in the latest edition of TQM: Text with Cases, from Elsevier (http://books.elsevier.com). The core of the model will always be performance in the eyes of the customer, but you need to extend it to include performance measures for all stakeholders, explains the author.

"This new core still needs to be surrounded by commitment to quality and meeting customer requirements, communication of the quality message, and recognition of the need to change the culture of most organisations to create total quality," he emphasises, because these three Cs are the `soft foundations' to encase the `hard management necessities' of planning, people and processes.

The chapter on `performance measurement frameworks' cautions against `so-called' systems that only fail because: they produce irrelevant or misleading information; track performance in isolated dimensions; generate finance measures too late; ignore the customer perspective; distort management's understanding; and promote behaviour that runs counter to strategic objectives.

"One example of a `measure' with these shortcomings is return on investment (ROI)," avers Oakland. ROVA or return on value added, computed as net profits before tax upon value added, multiplied by 100.

Accountants would love to read the section on cost of quality or COQ. There are `prevention costs' or `costs of doing it right the first time', including product/service requirements, quality planning, quality assurance, and inspection. Appraisal costs, for tasks such as verification and quality audit, are the next; these are followed by internal failure costs, classifiable into waste, scrap, re-inspection and so on. External failure costs arise because of problems arising after the product/service got transferred to the customer; these include repair, warranty, returns and loss of goodwill. The equation COQ = COC + CONC looks at costs of conformance and non-conformance.

Useful and quality reference.

Rehearse till you're confident

FIVE things that make a presentation good are content, structure, self-presentation, interaction, and audio-visuals, says Kerry Shephard in Presenting at Conferences, Seminars & Meetings, from Response Books (www.indiasage.com). If you find `humour' missing in the list, there is a helpful quote from Lenn Millbower's article for Presenter's University, a site devoted to presentation skills:

"Laughter is an important component in any presentation. Even when the presenter ignores humour, the attendees find it, sometimes at the presenter's expense. The need for laughter is so strong that participants seek out opportunities to laugh throughout every seminar."

An instructive table lists things that make presentations bad — such as: wrong level for the audience, reading from a script, lacking enthusiasm, absence of logical structure, no summary at the end, not looking relaxed, inappropriate use of data, unprofessional appearance, not looking at the audience, handling questions badly, just reading the PowerPoint bullet points, and so on.

An unusual chapter discusses the theoretical underpinning of presentation, where the author refers to F.E.X. Dance's ideas on oratory, and those of Aristotle. Other fundamental questions also crop up: Why have conferences? Why are presentations necessary? Can good presentation skills be taught? Shephard offers inputs on how to design presentations, use of tools, and importantly, preparing you. "This is all about confidence," notes the author, and advises rehearsals till you are confident that it will work. Of use are chapters on videoconferencing and tips on what to do when things go wrong.

A book that can give your presentations an edge.

Benchmarking benefits

ACCOUNTANTS busy themselves with metrics, and so of relevance should be Benchmarking in Hospitality and Tourism, edited by Sungsoo Pyo, and published by Jaico (www.jaicobooks.com). Benchmarking is a learning process, says the intro, because this involves a search for industry best practices that will lead to superior performance. There are different types of benchmarking, such as internal (`two-way communication and sharing opinions between departments'), competitive (`comparison with direct competitors), functional (comparison with those operating `in similar fields and performing similar activities'), generic (seeking `world-class excellence' by looking at `best-in-class organisations'), and relationship (as an alternative to competitive, and so the other name is `collaborative benchmarking').

One of the chapters in the book informs how `guest satisfaction', which is so important for the hospitality industry, is often not systematically measured, and "key drivers of satisfaction and causes of dissatisfaction are not identified."

A chart titled `customer value analysis' captures `relative satisfaction with service' on the x-axis, and `price satisfaction' on the y-axis. Another, more detailed, chart titled IPA or importance-performance analysis (of Martilla and James) to provide insights into which product or service attributes a company should pay attention to, and which of them may be consuming too many resources.

Towards the end of the book is an environment-friendly case of `five properties in Jamaica', in which authors Bill Meade and Joe Pringle examine the cost savings achieved by `proactive environmental management'. "Total cost savings for the five properties is estimated to be $6,15,000 or $910 per room. The properties had achieved a cumulative water savings of 41.4 million Imperial Gallons (IG); total electricity savings of 1.67 million kWh; total diesel savings of 1,69,000 litres; and total liquefied petroleum gas (LPG) savings of 2,59,000 litres. Expressing overall energy use in terms of kWh, the total energy savings is 5.67 million kWh."

The section `lessons learned' notes: "The properties tended to focus on fixing leaks, changes in staff practices (e.g. towel and linen reuse programmes) and water conserving devises that pay back in a matter of days or months. Higher cost measures (e.g. high efficiency lighting or water saving toilets) tended to be put off until the second year of EMS implementation when some savings were already realised."

What merits special attention of your accountant is this: "The daily monitoring of water and electricity meters saved several of the hotels from erroneous utility bills that would previously have been paid directly from accounting."

Good work.

BooksOfAccount@TheHindu.co.in

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