Effective Performance Management With The Balanced Scorecard Technical Report

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Effective Performance Management with the Balanced Scorecard Technical Report

Writers: Liz Murby Stathis Gould

CIMA CIMA

CIMA gratefully acknowledges the contributions of Gary Ashworth, Philip Barden, Peter Brewer, Gavin Lawrie, Bernard Marr, Professor Bob Scapens, Dr Mostafa Jazayeri-Dezfuli, and Francesco Zingales. Contact: liz.murby@cimaglobal.com Copyright © CIMA 2005 First published in 2005 by: The Chartered Institute of Management Accountants 26 Chapter Street London SW1P 4NP Printed in Great Britain The publishers of this document consider that it is a worthwhile contribution to discussion, without necessarily sharing the views expressed. No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication can be accepted by the authors or the publishers. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means method or device, electronic (whether now or hereafter known or developed), mechanical, photocopying, recorded or otherwise, without the prior permission of the publishers. Translation requests should be submitted to CIMA.

Effective Performance Management

1

Contents

1. Development of scorecard thinking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 From performance measurement to strategic management . . . . . . . . . . . 1.2 Strategy mapping. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.1 An introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.2 Decision support. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Effective scorecard design. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 3 4 4 6 6

2. Implementation and practicalities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.1 Kaplan and Norton’s five guiding principles . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.1.1 Translate strategy into operational terms . . . . . . . . . . . . . . . . . . . . . 8 2.1.2 Align the organisation to the strategy . . . . . . . . . . . . . . . . . . . . . . . . 8 2.1.3 Make strategy everyone’s job . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2.1.4 Make strategy a continual process – strategy management meetings and the learning process. . . . . . . 11 2.1.5 Mobilise change through executive leadership . . . . . . . . . . . . . . . . . 14 3. Beyond Kaplan and Norton – alternative complementary approaches . . 15 3.1 Strategy mapping. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 3.1.1 The value creation map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 3.1.2 The value dynamics framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.2 Scorecard implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.2.1 The business modelling approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 4. Dimensions of scorecard application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 4.1 The balanced scorecard in the public sector 4.2 Embedding a sustainability focus with the balanced scorecard. . . . . . . . . . 19 5. Software in scorecard development and application . . . . . . . . . . . . . . . . . . . 21 6. The balanced scorecard – a resounding success? . . . . . . . . . . . . . . . . . . . . . . 23 6.1 Why balanced scorecards sometimes fail . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 6.2 Presentational/stylistic criticisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 7. Case studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 7.1...
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