A final step in designing accounting-based performance measures is the timing of performance feedback, which depends largely on (1) how critical the information is for the success of the organization, (2) the management level receiving the feedback, and (3) the sophistication of the organization’s information technology. For example, hotel managers responsible for room sales want information on the number of rooms sold (rented) on a daily or weekly basis because a large percentage of hotel costs are fixed costs. Achieving high room sales and taking quick action to reverse any declining sales trends are critical to the financial success of each hotel. The company’s top managers, however, might look at information about daily room sales only on a monthly basis unless there is a problem, like the low sales-to-total-assets ratio the Chicago hotel has. In this case, the managers might ask for the information weekly.
Similarly, human resources managers at each hotel measure employee satisfaction annually because satisfaction is best measured over a longer horizon. However, housekeeping department managers measure the quality of room service over much shorter time horizons, such as a week, because poor levels of performance in these areas for even a short period of time can harm a hotel’s reputation for a long period. Moreover, managers can detect and resolve housekeeping problems over a short time period.