2gc balanced scorecard usage survey 2013 summary of findings

Balanced Scorecard Usage Survey 2013

Summary of Findings

2GC Survey Results New Version_Landscape 21/10/2013 11:45 Page 1

2GC is a Strategic Execution consultancywith particular experience in implementingthe latest generation Balanced Scorecards.With a global client list, 2GC are focused on helping organisations across every sector, with issues related to PerformanceManagement, Improvement, Employee Engagement and StrategicExecution/Management.

Based in the UK, with offices in France, Bahrainand Malaysia, the 2GC team applies its energiesto four main areas:

Working closely with senior management teams to articulate strategic priorities and implement reporting tools to help them control the delivery of these strategies;

Reviewing pre-existing performance management processes and systems to identify required improvements;

Delivering training on the design and application of Strategic Execution methods including the Balanced Scorecard at introductory and advanced levels;

Conducting research into Strategic Management topics in order to continually improve the 2GC service offering. 2GC staff regularly publish and present papers based on this research activity.

2GC is known as a leading expert on the use of Balanced Scorecard methods for strategicexecution purposes, and has a particularlystrong reputation concerning the design andimplementation of Balanced Scorecard'Cascades'. 2GC's track record includes deliveryof all sizes of projects for clients in private,public, Governmental and NGO sectors.

About 2GC

12GC.eu Copyright 2GC Limited 2013 October 2013

Balanced Scorecard Usage Survey 2013 Summary of Findings


2Copyright 2GC Limited 2013 October 2013


2GC.eu

The Balanced Scorecard (BSC) is one of theworld's top-ten management frameworksand has been the number one frameworkfor Performance Management since itsintroduction in the early 1990's. Despite this popularity, little is known about whichorganisations use Balanced Scorecard, what they use it for, and how useful it is in practice.

This survey is part of a multi-year 2GCproject to find answers to these questions in order to improve the use andunderstanding of the Balanced Scorecardand also help us to constantly improve ourservice and delivery to clients.

Who participated?Well informed managers, in corporate or staffroles: a profile that helps us have confidence inthe quality of responses provided.

38% declared they were extremely knowledgeable concerning the Balanced Scorecard - 37% said they were very knowledgeable.

Over 70% worked in the headquarters of their organisation, 12% were in a Division and 12% in a Functional role.

How did the survey work?The questionnaire was the same as 2012 but with the exception of an additional finalquestion around the impact of BalancedScorecard on employees understanding oforganisational objectives. It was made availablevia a web-based tool. Each version had identicalstructure and questions. Respondents from 65organisations participated. The respondentswere self-selecting.

Why conduct a survey?


Executive/ 71%Senior managerDepartment 49%

Board 43%

Function 41%

Division and 27%business unit


More American organisations responded this year - with particular growth seen from South America.

Over 50% of respondents organisations had less than 1,000 employees.

Over 70% reported that their Balanced Scorecards are for Executive or Senior Management teams.

Again over 30% reported that their organisation has multiple Balanced Scorecards in use.

Is this what we would expect?Yes. The mix of organisations reporting, theiraverage size, and the emphasis on BalancedScorecard as a tool for senior managers are allconsistent with 2GCs expectations, based onour many years experience working withorganisations around the world on BalancedScorecard design and implementation, and isvery similar to the profile we saw reported in 2012.

Is this different from the last survey?We see more smaller ( 10,00012%

Who uses the Balanced Scorecard?

Reported role of users of the Balanced Scorecard


Business 86%actions

Behaviours 64%

Appraisals 46%

Individual 33%rewards

Team 32%rewards



2GC.eu

What is influenced by BalancedScorecard in your Organisation?

2013 2012

What are Balanced Scorecards being used for? The Balanced Scorecards primary role

is an aid to strategic management, informing decision making and the reporting of results.

Balanced Scorecard drives organisationalperformance by influencing the actions and behaviours of managers and individuals and the way they are appraised.

Balanced Scorecard plays a key role for nearly half of respondents in appraisals of individuals.

Is this what we would expect?Yes. Increased focus on strategic management is consistent with the development of morestrategic Balanced Scorecards.

We were pleased to see that no respondentssaid that Balanced Scorecard had no influenceon their organisations actions and behaviours -a Balanced Scorecard that does not influenceactions or behaviour is of little value.

Are things different from the last survey?Yes. We see an additional increase in strategicuse of Balanced Scorecards. This is furtherindicated by nearly half of respondents using aDestination Statement as part of their design.Also there is a major increase in those who havea BSC just for Reporting - 17% up from 6% in 2012.

Balanced Scorecard - An ActiveManagement toolOver 80% of respondents use their BalancedScorecard to influence Business Actions - ahighly encouraging figure that shows thedynamic nature of the tool.

Uses of Balanced Scorecard

Strategic 34% management

Reporting 34%

Operational 17%management

Calculate 15%incentives

2013 2012




2GC.eu

How is the Balanced Scorecard used? Three-quarters of the Balanced Scorecards

covered by the survey are reported either quarterly or monthly - an encouraging increase on last year. We do not believe that six-monthly or annual review is of much use for actions/decision-making or in performance management terms.

MS office tools such as Excel remain the most used software with a surprisingly high number of respondents not even using office software.

Under 1 in 5 of the reporting systems were web enabled, a function perhaps of the higher number of smaller organisations in the survey this year.

Whilst 3 out of 4 users had traffic light reporting - nearly 40% of the sample said there were no consequences for missing targets, indicating Balanced Scorecards without teeth.

Is this what we would expect?Yes, although we would hope that morerespondents would have consequences formissing targets.

Are things different from the last survey?Yes, there is an increase in the use of specialistBSC software this year. Also much morefrequent review of the BSC with 75% reviewedmonthly or quarterly. This year a higher numberof respondents said that there were noconsequences for missing targets - 40%.

Over 70% of respondents use a Traffic Light system to highlight performance intheir Balanced Scorecard reports.

Reporting frequency

Monthly 35%

32%

Quarterly 39%

25%

Six-monthly 11%

18%

Annual 15%

25%

2013 2012

Reporting software

None28%

Specialist BalancedScorecard software19%

Bespoke Software14%

Officesoftware

39%


National outcomes

Risk

Users

Self

Manager



2GC.eu

Which Balanced Scorecard design is in use? The survey asked about the design

elements that featured in respondents Balanced Scorecard. Over 70% (2012 - 66%) featured elements specific to the 2nd or 3rd Generation Balanced Scorecards, with a particularly high number having strategic 3rd Generation elements, such as Destination Statements.

Organisations reported using between 2 and 5 perspectives (average 4). Many used unique names for some perspectives, and common names for others. As demonstrated by the chart, the 'standard'perspective names dominate. Although, as in previous years, few Balanced Scorecards actually use all four of the standard perspective names.

As per previous years the reported Balanced Scorecards had on average 14 Objectives, 30 Metrics, 27 targets and 24 initiatives - indicating that each objective had on average 2 metrics/targets.

Is this what we would expect?Yes very much, but we are particularly pleasedto see a further increase in the use of StrategicBalanced Scorecards where both a Strategy Map and a Destination Statement were used in the design of the Balanced Scorecard. Users, consultants and academicshave continuously proposed changes to the number of, and names used for, perspectives. The survey shows that the original four headings remain dominant - although thenames are personalised according to thenature of the organisation. This year we hadfewer perspective names of a one-off nature.

Types of Balanced Scorecard usedPerspective names (Multiple answers could be selected)

2nd Generation26%

3rd Generation45%

1st Generation

29%

Financial

Ops/operational efficiency

Stakeholder/strategic

Customer or similar, sales and marketing

Internal process, or similar/organisational excellence

Learning and growth/development/innovation

People/organisation and culture/employee development/skills/

capabilities/human capital and technology

Infrastructures/base process/resource mgt/enablers

Governance, value, output deliverables

62%

76%

83%

52%

21%

7%

17%

21%

14%

3%

7%

3%

7%

7%




2GC.eu

How many and how were they designed? A slightly higher proportion of

respondents report using multiple BSCs this year - of these about three-quarters (up from only 40% in our first survey) were created using a structured sequential approach known as cascading, an approach that embeds alignment in objective-setting.

42% of organisations design their BSC themselves, which we considerkey to successful implementation. The proportion designed by specialist consultants remains below 20%.

Two-thirds of organisations have refreshed their Balanced Scorecard design: most during the previous 12 months. Over 80% of the revisions were linked to updated Strategic Plans. 85% of the revisions involved changes toobjectives, measures and targets, which is the favoured approach.

Who designed the Balanced Scorecard

Sundry specialists11%

Others inorganisation28%Consultants

19%

Managementteam itself

42%

No34%

Which elements were changed?Has it been reset? When was it last reset?

Targets only5%

Measures and targets12%

Objectives,Measures

and Targets83%

Over 12 months ago16%

Withinlast year84%

Yes66%


Planning 77%

Budgeting 65%

Quality management 54%

Goal setting 48%

Pay/rewards 40%

Risk management 38%

Other 2%

Not linked at all 2%



2GC.eu

Realising the value of Balanced Scorecard The value rating is in line with last year

with over two-thirds finding thetool either very or extremely useful.

Management of Balanced Scorecards shows Strategic Planning as thedominant department with HR as the Function of choice - with the current emphasis on employee engagement, we see this as an interesting development.

A high proportion of organisations link their Balanced Scorecards to Planning andBudgeting. Around half also link them to Personal Goal setting and Quality - the latter showing an increase on last year.

Is this what we would expect?Yes, indeed we believe the tool can add value to many organisations if well used. We wouldexpect a high involvement from Strategic

Planning given the high proportion of strategicscorecards in this years survey and lowerinvolvement from Finance and IT, as this is amanagement tool not just a measurement one.The growth in linkage to Quality this year is alsoreflective of more respondents mentioningBusiness Processes as a key element of theirBalanced Scorecards. Linkage to Planning andBudgeting is on a similar level to last year butlinking to Risk management surprisingly shows a slight fall.

Who manages the Balanced Scorecard?

Specific PM unit12%

Unit usingBalancedScorecard14%

Qualitymanagement8%

Others8%

Human resources14 %

IT4%

Finance2%

Strategicplanning

38%

How valuable is your Balanced Scorecard?

Extremely 37%

29%

31%

Very 38%

54%

31%

Somewhat 25%

18%

15%

Not at all 0%

0%

2%

2013 2012 2011

Processes linked to Balanced Scorecard




2GC.eu

Conclusions and observationsWe added a question this year about the role of the Balanced Scorecard in the understandingof organisational objectives - over 90%confirmed that it had helped with this. Ourinterest in this issue arises from its closeness tothat of employee engagement (for employeesto engage with their organisation they MUSTunderstand its objectives in some way) which is a hot topic and also one about which 2GC are frequently asked. We are confident that the survey endorses our view that the use of strategic Balanced Scorecards has ademonstrable part to play in increasingemployee engagement where seniormanagement ensure that the BalancedScorecard is appropriately communicatedthroughout the organisation.

As last year, the survey shows that BalancedScorecard is a useful management tool. A typical Balanced Scorecard in our survey has14 objectives and 30 metrics/targets, is based

on the strategy of the organisation, is usuallyone of several Balanced Scorecards within the organisation, and is directly influencingmanagers actions and behaviours.

We see that organisations are linking theirBalanced Scorecard to planning, budgeting,goal setting and increasingly qualitymanagement - the challenge is to do thisseamlessly and without adding unnecessarycomplexity, an area which 2GC is currentlyworking on with a large client.

Overall, the survey shows that BalancedScorecard remains an important and effectivemanagement tool, one whose value relies on sponsorship by senior managers, fullcommunication and regular results to achievethe expected benefits.

Find out moreRead some materialSee 2GCs collection of FAQs, Papers,Presentations, Case Studies http://2gc.eu/resources

Get some training2GC runs one-day and two-day training courses on Balanced Scorecard design andimplementation throughout the year http://2gc.eu/training

Ask us a questionWe will send you an answer for free (if weknow the answer!). Send an email to [email protected] No coursework questions please

Use this materialIf you are interested in using this material, or area complementary organisation who would beinterested in working with us on the 2014survey, then please email [email protected].

Copyright 2GC Limited, 2013. All rights reserved. This document is licensedunder a Creative Commons License. You are free to copy, distribute, display, andperform the work subject to the following conditions: Attribution. You mustgive the original author credit. Non-commercial. You may not use this work forcommercial purposes. No Derivative Works. You may not alter, transform, or

build upon this work. For any reuse or distribution, you must make clear toothers the license terms of this work. Any of these conditions can be waived ifyou get permission from the copyright holder. More information on this licensefrom http://creativecommons.org/licenses/by-nc-nd/2.0/uk/


2gc balanced scorecard usage survey 2013 summary of findings

Documents

balanced scorecardand

gc limited

euthe balanced scorecard

survey work

gc team

gc staff

gc service offering

strategic management