《2GCCPClassBSC090311.ppt》由会员分享，可在线阅读，更多相关《2GCCPClassBSC090311.ppt（11页珍藏版）》请在三一办公上搜索。
1、,Classication of BalancedScorecards based on theirintended use2GC Conference PaperMay 2002Presented at PMA Conference,Boston,USABy Ian Cobbold and Gavin Lawrie2GC Limited,2GC Limited,2009.All rights reserved.is document is licensed under a Creative Commons License.You are free to copy,distribute,dis
2、play,and performthe work subject to the following conditions:Attribution.You must give the original author credit.Non-commercial.You may not use this work for commercial purposes.No Derivative Works.You may not alter,transform,or build upon this work.For any reuse or distribution,you must make clear
3、 to others the license terms of this work.Any of these conditionscan be waived if you get permission from the copyright holder.More information on this license from http:/creativecommons.org/licenses/by-nc-nd/2.0/uk/2GC Limited Registered in England Number 3754183 Registered Office:16 Wentworth Road
4、,Oxford OX2 7TD,Albany HouseMarket StreetMaidenheadBerkshireSL6 8BE UK+44(0)1628 421506www.2gc.co.ukinfo2gc.co.uk,2GC Conference PaperAbstractIt is dicult to interpret impressive adoption statistics for the Balanced Scorecard withoutbeing clear on how it is dened.In practice,it appears,there are wid
5、e variations inunderstanding between organisations.is paper asserts that the Balanced Scorecard can be used to support two distinctmanagement activities management control and strategic control and that planned useshould inuence the Balanced Scorecard design adopted.e paper describes characteristics
6、of Balanced Scorecards appropriate for each purpose,and suggests a framework to help selectbetween them.Existing thinking on the concepts of Strategic and ManagementControle management of an organisation involves two key areas,planning and control.Everyorganisation requires plans(e.g.to determine pr
7、iorities and resource allocation etc.)and amechanism by which execution against the plan can be controlled.Whereas planning can bethought of as a process of creating a statement of intent,control can be dened as“assuringthat desired results are obtained”(Anthony,1965).Consider a room temperature con
8、trolsystem consisting of a thermostat and a heater.Planning in this case would relate to thedetermination of a desired room temperature,and setting the thermostat accordingly.Controlwould relate to the use of the heating system to achieve and maintain the target temperature.In most situations howeve
9、r,control is more complex,where a number of courses of action canbe used to eect control,requiring a choice of method as well as of overall goal(Anthony andDearden,1980).Compared to these examples,the control of an organisation is considerably more complex:Inaddition to having a substantial degree o
10、f choice about what outcomes to pursue,leaders oforganisations,especially large ones,need also to consider the many factors and circumstancesaecting control,including the availability of resources,specic and general constraints andthe ow of information(Mills,1966).erefore,to be eective,decision make
11、rs need tocombine an awareness of the factors and circumstances that will inuence choices made aboutwhich outcomes to pursue and how these might be achieved(planning),with a set of toolsand skills that will support the communication and implementation of the decisions made(control).While both these
12、activities are necessary,Mills argues that the control activity thatis more important:indeed it can embrace the planning element to the extent that a distinctplanning function becomes unnecessary(Mills,1966).In this view,eective controlmechanisms are central to the successful management of any organ
13、isation.For control to be eective,it needs to be informed about both the activities and resultsdelivered by the organisation,and the organisations prior expectations concerning both.Todo this,control activity needs to be complemented by“a means of comparing any state,actualor hypothetical with a sta
14、ndard”(Vickers,1958)in common terms measures and targets.e method of selection of these measures and targets is therefore a key element to whether ornot a good control system is eective.In 2GCs experience,organisations oen introducemeasures derived from experience elsewhere or benchmarks.Our experie
15、nce is that measuresselected in this way for purposes relating to the general control of the implementation ofstrategies are oen subsequently rejected by the users of the control system because they are2GC Conference Paper Classication of Balanced Scorecards based on their intended use,2GC Limited,2
16、009,Page 2 of 11,not perceived to be relevant.Others have argued that measures for this type of control systemshould be selected to represent an organisations desired outcomes(Anthony,1965,Kaplanand Norton,1992;1996).2GCs experience indicates that this perceived lack of relevance maybe because contr
17、ol system users are not aware of the implicit desired outcome carried withthe external measures/targets selected,and so have diculty working out how to use theinformation provided by the measure,or sometimes because they nd that the implicit desiredoutcome does not match their own explicit views abo
18、ut the future(Cobbold,2001;Lawrieand Cobbold,2001).A much better solution is to recognise that the organisation needs toensure that the control system adopted reects accurately its own desired outcomes,andrestricts measure selection to those that are relevant to these outcomes.A simple designapproac
19、h to useful to ensure that a common shared view of organisational desired outcomesare used to inform measure selection is described,based on three stages of development:Work out what the desired state isIn line with Anthonys denition of control,the starting point should be to determine what thedesir
20、ed results are and when they should be achieved.We will refer to this desired state as adestination.It is the destination that provides the point of reference that gives a controlsystem its context.But who or what determines the destination?For most organisations it is the collectivebehaviour of the
21、 top management team(Mintzberg 1990,omson 1967,Penrose,1957).erole of this group is to use discretionary control of some quantity of assets/resources tomanage the delivery of a result on behalf of someone else(usually the ultimate owner of theassets/resources being deployed).It is not uncommon for t
22、he elements of the destination tobe expressed by the ultimate owners in terms of outcomes sought,rather than course ofactions to be followed(e.g.DEFRA,2002).Where this is the case,it is also the rolemanagement teams role to determine some plan for how the destination will be achieved.Develop a plan
23、for delivery of the desired stateWhen the organisation has established what the destination state should be,it needs toestablish a plan of how to obtain and deploy sucient organisational resources to ensure itsachievement,and to manage the execution of this plan.Much work can be invested indetermini
24、ng the validity of the plan developed the extent to which this can be done reliablydepends in part on whether the context is one of Management Control(in which expectedoutcomes can be reliably predicted)or of Strategic Control(wherein reliable predictions of thefuture are by denition dicult).Consens
25、us support for the chosen plan within in themanagement team is probably more important than formal validation,due to a simplebehavioural asymmetry.Plans without consensus will be less likely to be implemented asdesigned(however good they are)(omson,1967).An obstacle to obtaining consensussupport is
26、belief by one or more of the management team(based perhaps on specicknowledge of local issues)that a plan,or elements of it,are infeasible plans(Mintzberg,1990).us we can conjecture that plans that receive consensus support are likely to be implemented(right or wrong),and so will benet from support
27、by a control system(for example to giveearly warning that the plan chosen is wrong).Plans that do not receive consensus supportmay also be infeasible,but whether or not this is true will probably not be implementedanyway.Determine how to check that the desired results are being achievedTo ascertain
28、whether or not the destination state is being obtained,the organisation needssome form of feedback on activities being undertaken,and the outcomes arising from theseactivities.As noted above,without measurement it is dicult to track delivery of plans,and soa key task here is the selection of the rig
29、ht measures to inform managers about activity andoutcome.But measurement data itself will not ensure that desired results are achieved the2GC Conference Paper Classication of Balanced Scorecards based on their intended use,2GC Limited,2009,Page 3 of 11,measurement data delivers value by triggering a
30、lterations in organisational activity in the lightof variations between actual and expected results(Vickers,1958).Managers need to haveaccess to methods of intervention that will allow the necessary alterations in organisationalbehaviour needed to respond to such variations between actual and expect
31、ed results incommon terms a control system.Planning and Control Systems in OrganisationsPlanning and control systems have always been present in organisations,however,in the mid1960s,attempts were made to classify the types of management process found in organisations(Anthony,1965).Anthony describes
32、 three types of management processes:Management control-the process by which management ensures that the organisationcarries out its strategies eectively and eciently.Operational control-the process of ensuring that specic tasks are carried outeectively and eciently.Strategic planning-the process of
33、 deciding on the goals of the organisation and on thebroad strategies that are to be used in attaining them.e rst two are examples of complex control systems.In Anthonys original classication thearea of strategic planning was highlighted as a distinct process separate from the ongoingadministration
34、of the organisation(Otley,1999),but the ongoing administration of thebusiness was thought to be so closely aligned to other control activities that a separatecategory to describe this(what might have been called operational planning)was notwarranted:non-strategic planning and administration activiti
35、es were incorporated under thebanner of Management Control,though these activities were generally recognised ascomprising a distinct activity within Management Control(Anthony,1965;Anthony andDearden,1980).Since Anthonys initial work an additional management process has been dened inmanagement liter
36、ature,that of Strategic Control(Harrison,1991;Bungay and Goold,1991).Anthonys work on control and planning is a useful starting point to understand theseparation between the types of control system that are found in organisations(Langeld-Smith,1997),and his three management areas will rst be describ
37、ed from a historical point ofview.Following this a discussion on strategic control will demonstrate deciencies in thistraditional view of management processes and how strategic control has developed to ll thegaps in the original analysis.Strategic Planning:Strategic planning can be thought of as a f
38、ormal process to formulatestrategic plans(Mintzberg,1994).e main function of the strategic plan is to articulate long-range the goals for the business(strategy formation).In the traditional model plans are madeduring the planning stage of the management process and therefore act as the focus forcont
39、rol almost a starting point from which the organisation can then monitor and controlthe achievement of its strategic goals.ese goals form the basis upon which,according toAnthony,the Management Control function is driven.is view is based on the premise thatthe targets used in the Management Control
40、activity are set within the Strategic Planningprocess,and therefore planning in this case is a separate function(Mills,1966).However,thistraditional concept changes when we consider the development of strategic control later inthis section.Management Control:In the traditional view,strategic plannin
41、g is associated with goalsetting for the organisation(Anthony,1965).In this context,the management control systemis designed only once the goals are agreed and aims to inform the management of progresstowards these goals.Viewed this way,Management Control is a system of processes only2GC Conference
42、Paper Classication of Balanced Scorecards based on their intended use,2GC Limited,2009,Page 4 of 11,intended to facilitate the achievement of these goals,the goals themselves are taken as given.is view also implies that Management Control is concerned with processes and systemsused primarily by line
43、 managers(Anthony and Dearden,1980).Operational Control:Rather than dealing with the organisation as a whole,operationalcontrol systems are more concerned with individual tasks or transactions(Anthony andDearden,1980).ese types of control systems are highly automatic and are analogous to oursimple d
44、enition of control in the previous section.is is the most basic level of controlprocess involving little more than regulation.Strategic Control:e view of three management processes encompassing strategic planning,management control and operational control places heavy emphasis on a discrete planning
45、process not devolved of control but certainly a signicant separate entity.In this instance thefeedback process and hence the control function serves to ensure that the organisation simplyimplements the plans without deviation;providing a mechanism to compare targets andperformance.Anthony recognised
46、 that feedback from those participating in control activitiesmight lead to modications to both goals and plans adopted.Anthonys original concept wasthat line managers would act as the focal point for an organisations control system,and theirlocal judgements would be subsequently incorporated into th
47、e approved plans duringexecution.But it remained unclear how this judgement information would be collected andacted upon,and in practice such feedback was poorly used.In Anthonys view there is little need for a control system that drives strategic content as thereis a separate Strategic Planning fun
48、ction that is informed by Management Controlinformation,but crucially not driven by it(Anthony,1965).Others have argued that formalseparation of strategic planning and operational control can cause diculties(Muralidharan,1997).Mills proposed an alternative approach under which control and planning a
49、ctivitiesbecome closely linked.Writers advocating this view(e.g.Mills,1966;Schendel and Hofer,1979;Bungay and Goold,1991)describe a strategic control function that supersedes thestrategic planning activity as described in the traditional model.With the addition of strategiccontrol,the management pro
50、cess model now has four elements;Strategic Planning,StrategicControl,Management Control,and Operational Control.In the rst instance Strategic Control initially aims to ensure that strategy is beingimplemented as planned and that the results produced by strategy are those intended(Schendel and Hofer,
