Essay on Scorecard System

Essay on Scorecard System

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When an organization implements any management control tool, the cost/benefit balance is vital. The decision to deploy a scorecard system requires the same analysis. The costs of implementing a new tool are relatively easy to appraise, but often, there's a lack of reliable information about the benefits. This article explores the extent to which organizations have realized significant benefits from using a scorecard system. (We use the term "scorecard system" to include both the scorecard as a control tool and the process, or technique, of integrating the scorecard system into the overall performance-achievement cycle of the firm.)

Over 150 service, manufacturing, and government organizations have responded to an on-line scorecard survey sponsored by the AICPA, CAM-I, CMA Canada, IQPC, Targus Corporation, and Hyperion ( This article is the first in a series focusing on key themes from our findings. Almost two-thirds of the survey respondents agreed that significant benefits had been realized from using a scorecard system.

During the data analysis, respondents were divided into two groups: those that reported significant benefits from scorecard implementation (the "significant benefits group," hereafter SBG) and those that reported no significant benefits (the "no significant benefits group," hereafter NSBG).

Organizations can maximize the benefit they receive from a scorecard implementation by following the recommendations provided below. These recommendations also provide a gauge by which to appraise existing scorecard systems.

Impetus for Scorecard

Aligning employee behaviour with organizational goals and communicating strategy throughout the organization are important objectives of the scorecard system. The SBG unanimously set these reasons as a top priority, whereas only 39% of the NSBG cited these as objectives for implementing a scorecard system. A typical comment of the respondents was, "Perhaps the best benefits have been a disciplined approach to agreeing on what is most important to the organization and developing consensus on how to measure it."

Thus, a careful appraisal should be made of the reasons your organization is considering a scorecard system. Organizations that have had difficulty communicating strategy and aligning behaviour should realize significant...

... middle of paper ...

...gnment with objectives) can only be answered by analyzing the activities that are needed to attain objectives." Thus, it may not make much sense to deploy a scorecard system that relies on inaccurate cost data.

It's important to evaluate the overall cost accounting system before making the decision to deploy a scorecard system. The benefits achieved will be greater if the costing system is highly accurate. It would be wise to consider deploying both systems simultaneously if resources permit.

Based on the findings reported above, we have developed a short questionnaire shown in Table 1 that can be used as an assessment tool. The attributes listed in Table 1 can be thought of as key value drivers for this management control tool. If any check marks are in the shaded boxes or if the total score is greater than 15, we highly recommend a careful review of the factors in question. While there are other factors that play a role in the successful deployment of a scorecard system, from our findings, these appear to be the most significant. Indeed, our findings strongly suggest that the absence of these drivers may result in an unsuccessful experience with the scorecard system.

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