2GC Papers on Balanced Scorecard and Performance Management

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Evolution of the 3rd Generation Balanced Scorecard

This paper describes the changes to the definition of the Balanced Scorecard that have occurred since it became popular as a performance measurement framework during the early 1990s. The paper tracks development of the Balanced Scorecard across three distinct generations of thinking.

This paper concludes that these changes have improved the utility of Balanced Scorecard as a strategic management tool, and help to minimise the risk of Balanced Scorecards becoming merely elaborate performance reporting systems as opposed to effective strategic management systems.

Working Paper 

Classification of Balanced Scorecard Designs based on intended use

This paper describes a classification of Balanced Scorecard designs based upon intended method of use within an organisation. The paper describes how Balanced Scorecard can be used to support two distinct management activities, management control and strategic control, and asserts that due to differences in the performance data requirements of these applications, planned use should influence the type Balanced Scorecard design adopted. The paper describes characteristics of Balanced Scorecards appropriate for each purpose, and suggests a framework to help select between them.

Working Paper 

The BSC as a Communication Protocol in Organisations

The Balanced Scorecard is commonly associated with the area of performance measurement. However the Scorecard framework, and the processes associated with Scorecard design are more fundamentally concerned with communication and articulation of strategy at operational levels. This role for the Balanced Scorecard, specifically the use of the Scorecard to communicate operations strategy across intra-organisational borders is the subject of this paper. Research carried out in a multi-divisional organisation will be presented. The research shows how a modified Scorecard design process allows firms to rationalise strategic communication so that only strategically relevant information is transmitted in the design of the Strategic Control system.

Conference Paper 

Briefing: An introduction to Strategic Linkage Models

First appearing in the mid 1990s, strategic linkage models document managers' assumptions about the causal linkages between the strategic objectives they select to populate their Balanced Scorecard. This short briefing paper looks at the way in which modern thinking on Strategic Linkage Models evolved, and reflects on how they are used, and how best to approach their design.

Briefing Paper 

2GC Survey of Balanced Scorecard Usage 2009

This paper summarises the findings of a survey based research project carried out by 2GC in the Autumn of 2008. The survey looked for information about three key questions: what kind of Balanced Scorecards are used by organisations, what are they used for, and how successful are they at doing this? The findings were mostly reassuring - for example revealing that about 60% of Balanced Scorecard users thought their organisation benefited from their use of the tool (higher than some previous estimates). But in other respects they highlight major concerns - for example revealing that that most Balanced Scorecards in the survey were built using out-of-date methods and concepts, which means these organisations are probably missing out on the real benefits provided by improvements in design thinking introduced over the last five years.

Summary Report 

Organisational performance management in a UK Insurance firm

This paper explores two issues related to the performance management of individuals:

• the need for a personal goal setting process that is effective in changing individual behaviour, and;
• the need for this process to be aligned with business strategy at each level of the organisation.

The paper describes a successful approach based on use of the 3rd Generation Balanced Scorecard:

Conference Paper 

Related Case Study 
IIC — Aligning individuals’ goals with the business strategy

Balanced Scorecard Implementation in SME’s

How do the characteristics of an SME affect how (or even whether) you implement a Balanced Scorecard? This research paper looks at these issues and concludes with some robust recommendations about how best to approach Balanced Scorecard design within SME organisations.

Working Paper 

Presentation 

Performance management system design in a devolved organisation

This paper is a case study exploring the design of a new performance management system for the UK Environment Agency (11,000 staff, more than 40 discrete management units). The approach adopted was based on best practice 3rd Generation Balanced Scorecard processes and lead to the creation of a total of 44 unique but strategically aligned Balanced Scorecards across the organisation - one of the most complex strategic alignment exercises of this type ever undertaken or reported about in this way. The paper draws conclusions about how to approach this type of activity relevant to all complex Balanced Scorecard cascading projects.

Research Paper 

Risk Management and Performance Management

Executive boards seeking improved corporate governance have implemented new risk management solutions. But is risk management such a new activity? This paper looks at similarities - in design and use - between risk management and strategic performance management, and proposes an approach to efficiently integrating the two processes.

Working Paper 

Presentation 

Realising Strategic Success

In a survey of over 200 companies in the Times 1000 it was found that while almost all reported having a 'strategic vision', only one in three reported achieving 'significant strategic success'. This article explores some of the reasons that might explain why so many companies struggle to achieve their strategic vision. It concludes that for many the answer lies in the quality of the strategic management processes used.

Working Paper 

Presentation 

Improving public sector governance through better strategic management

Strategic management has recently become an imperative in public sector. This paper concerns the use of the Balanced Scorecard for strategic control purposes in public sector organisations. It shows how an improved Balanced Scorecard design has the potential to enhance strategic management and public sector governance.

Working Paper 

Conference Paper 

Balanced Scorecard and Results-Based Management: Convergent Performance Management Systems

This paper compares and contrasts two of the most widely adopted Performance Management (PM) frameworks – Balanced Scorecard and Results-Based Management. It reviews the frameworks’ origins and evolutionary paths, and examines the resulting differences in practical application. Two case studies are presented, one examining Results-Based Management implementation within a global UN agency, the other describing work to build a 3rd Generation Balanced Scorecard within a Middle Eastern government ministry. The authors propose that the two frameworks are converging in terms of the approaches used for framework design and implementation.

Conference Paper 

Selecting Measures of Intellectual Capital

Intellectual capital measures must have relevance to the organisation to which they relate, such relevance being obtained through linking intellectual capital measures to strategy. Literature on intellectual capital frequently advocates the route to strategic linkage through the use of taxonomies, however such taxonomies can lead to the selection of generic measures that may lack local relevance. This paper describes a process for the selection of relevant measures of intellectual capital. A key attribute of the process is its provision of an explicit method to link strategy to measure selection.

Conference Paper 

Working Paper 

The Balanced Scorecard & EVA

This paper discusses how the EVA measures of organisational performance can be used within the Balanced Scorecard approach to strategic management.

The paper paper notes that EVA has advantages over other measures of financial performance but has limitations when used to promote strategic alignment. The paper observes that a hybrid tool combining EVA with the Balanced Scorecard would by comparison be a powerful basis for encouraging organisational change and performance improvement.

Working Paper 

Presentation 

Enabling Quality Management

Since Western economies began to adopt Quality Management principles in the early 1980’s, it has been noted that Quality Management projects have produced limited long-term success when compared with equivalent initiatives in Japan, where Quality Management tools and processes were pioneered. Some argue that western practitioners and academics have overlooked a critical success factor – the need for an explicit link between strategy and operational initiatives: a link that also features in best practice performance management system design. Using case examples, this 2GC working paper discusses how performance management methods can efficiently provide this linkage and so enable improved application of Quality Management tools.

Working Paper 

The Balanced Scorecard vs. the EFQM Business Excellence Model

The Balanced Scorecard (BSC) and the EFQM's Business Excellence Model (BEM) have each been widely adopted in recent years, and are often assumed to address broadly similar issues. In this working paper we show that the two approaches come from very different backgrounds, and are designed and used using different processes. The paper observes that many active users of the Business Excellence Model have chosen to adopt in parallel Balanced Scorecard as a tool for strategic management activity, and uses this to highlight the valuable synergy that can exist between these two different tools.

Working Paper