Benefits and Problems of Implementing a Balanced Scorecard in a Council

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Implementing Balanced Scorecards in XXXXX Council

OUBS forms the basis of research and citation

Implementing Balanced Scorecards in XXXXX Council

Word Count: 3151

Contents Page

Question 1

1.0 Executive Summary……………………………………………….3 2.0 The Balanced Scorecard …………………………………………4 3.0 Implementing a BSC in XXXXX Council…………………….5 3.1 The Councils Strategy……………………………………..5 3.2 The Existing Performance Management System……….7

3.3 Key Stakeholders…………………………………………..8 3.3.1 External Stakeholders……………………………8 3.3.2 Internal Stakeholders……………………………9 3.4 Designing the Scorecard…………………………………10 3.5 What to Measure…………………………………………..11 3.6 Implementation Considerations………………………….13 3.7 Supporting Processes…………………………………….15 4.0 Summary……………………………………………………………15 5.0 References…………………………………………………………16

1.0 Executive Summary

This report examines how the Balanced Scorecard could be implemented in XXXXX Council, and what the benefits and problems of implementing it would be. The report also outlines what complimentary processes could be implemented to support the Balanced Scorecard. Explicit use is made of the lessons learnt from the Implementation of the Balanced Scorecard at Halifax PLC.

Recommendations

The Balanced Scorecard has the potential to provide numerous benefits to XXXXX Council although the Implementation of the Balanced Scorecard would be complex and would face several difficulties.

The Council should pilot the BSC in one service area and then assess its suitability to roll out to the rest of the Council. If the BSC is implemented it should be reviewed on a regular basis to ensure it remains fit for purpose.

2.0The Balanced Scorecard

The Balanced Scorecard (BSC) was developed by Kaplan and Norton as a performance management tool and was intended to assist organizations look beyond financially weighted Performance Management Systems. Their underlying premise was ‘what you measure is what you get’. (Fenton–O’Creevy, 2003, pp 14-7).

The intention of the BSC was to include other indicators that contribute towards strategic success into the organizations performance management system. Kaplan and Norton saw the over reliance of financial indicators as too simplistic a view of organization performance.

By including financial and non-financial indicators, organizations can manage the inter-relationships between activities more effectively. Kaplan et al explained that the performance indicators included in the BSC needed to be linked to strategic goals (Fenton–O’Creevy, 2003, pp 14-6). This ensures activities are aligned with strategic goals and helps employees see how they ‘fit in to the bigger picture’.

Norton and Kaplan advised that four different perspectives should be included in the BSC. These perspectives are, innovation and learning, internal processes, the customer and the financial perspective. Norton and Kaplan advised these perspectives should be modified based on the needs of the organization

Halifax articulated the relationship between the different segments of the scorecard well in their implementation of the balanced scorecard i.e. the Z approach ‘the right people (innovation and learning), doing the right things (processes) making the customer happy (customer perspective) generating income (financial perspective).

Fig 1.0 illustrates how the relationship between the perspectives and how they should align with strategic goals.

The balanced scored card has proved popular in the private sector because it helps an organization focus on some of the critical success factors which lead to financial performance. The BSC can also be a way of empowering employees by involving them in the design process and helping them to see how they assist the organization meet it’s objectives.

I am now going to examine how the BSC could be implemented in a Local Authority setting, specifically XXXXX Council.

Fig 1.0: Norton and Kaplan’s Four Perspectives

3.0Implementing...
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