Balanced Scorecard UsageSurvey 2010Summary of findings 2GC Limited, 2010. All rights reserved.This document is licensed under a Creative Commons License. You are free to copy, distribute, display, and perform the 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 to others the license terms of this work. Any of these conditions can 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/2Why do a survey?The Balanced Scorecard has been one of the worlds top-ten management frameworksof any kind, and the number one framework for Performance Management specifically,since it was introduced in the early 1990s. But despite (or perhaps because of) this,little is known about what kind of organisations use Balanced Scorecard , what they useit for, and how useful it is in practice.This survey collected information about the answers to these questions.Who participated?Well informed managers, in corporateor staff roles: a profile that helps ushave confidence in the quality ofresponses provided. Over 50% declared they were “very”knowledgeable concerning theBalanced Scorecard - 30% said theywere “extremely” knowledgeable. Over two-thirds worked in theheadquarters of their organisation. Only 18% were in a functional role.How did the survey work?A simple questionnaire developed from the survey tool used in 2GCs 2009 survey. Thequestionnaire publicised in February 2010 through various methods to people interested inor working with corporate Balanced Scorecards.The questionnaire was made available via a web-based tool, and as a printable documentthat could be completed and mailed or FAXed back to 2GC. Each version had identicalstructure and questions. Respondents from 50 organisations participated. Therespondents were self-selecting.Why did 2GC do this survey?We think that learning more about the answers to these questions will improve the use andunderstanding of the Balanced Scorecard and also help us do our work better. 2GC Limited, 20102GC Balanced Scorecard Usage Survey 2010 - Summary of FindingsOther18%3Participating OrganisationsTransport/UtilitiesFinance 10% Manufacturing14% 14%Who uses BalancedScorecard?Services24%Government10%NFP8%The survey was completed byorganisations spread across a numberof sectors: around 20% were not-for-profit or governmental.Three-quarters had less than 10,000Over two thirds report that theirBalanced Scorecards are for Executiveor Senior Management teams.60% reported that their organisationhas more than one BalancedSectors1,000 - 10,00020%employees.Reported role of users ofthe Balanced Scorecard?Scorecard.Is this what was expected?The mix of organisations reporting, their average size, and the emphasis on Balanced Scorecard as atool for senior managers are all consistent with 2GCs expectations, based on our 11 years of10,00024%Functions15%Executive &Board Level36%experience working with organisations around the world on Balanced Scorecard design.The bias towards smaller organisations, and towards more senior management teams is perhapsexplained by considering the decision making process required to choose to develop a BalancedScorecard . Designing and implementing a strategic Balanced Scorecard consumes managementteam time and resources. The more senior the team, the easier it is for the decision to be made toallocate these resources. In small and medium sized organisations, this required decision makingprocess may be easier to execute. This is something we hope to investigate in future surveys.Organisation SizeDepartment16%Division& BU Level33%Have things changed since the last survey?The 2009 survey had more organisations with over 10,000 people in percentage terms, but the balanceof sectors, and profile of roles is about the same. 2GC Limited, 20102GC Balanced Scorecard Usage Survey 2010 - Summary of Findings34%20%17%35%20104What is influenced by BalancedUses of Balanced ScorecardScorecard in your Organisation?StrategicManagementWhat areBusinessActions71%Reporting29%BalancedBehavioursAppraisalsIndividualRewards41%39%65%OperationalManagementGoals& IncentivesIs this what was expected?20102009Scorecards beingused for?Balanced Scorecards primary roles are as an aid toTeamRewards2009Using Balanced Scorecard forRewards: its a Finance ThingOver 80% of respondents from the FinancialServices sector reported the use the BalancedScorecard as an individual or team performancemeasurement / incentivisation tool.Fewer than 20% of the non-Financial organisationsthat participated in the survey reported similar use.Yes. The focus on strategic management isconsistent with the origins of Balanced Scorecard.Balanced Scorecard as a non-financial reportingdevice, and as a support operational managementare two popular alternative uses.Only two respondents said that Balanced Scorecardhad no influence on their organisations actions andbehaviours - a Balanced Scorecard that does notinfluence actions or behaviour is of little value.Have things changed since thelast survey?The apparent increase in use of Balanced Scorecardfor Goals and Incentives is mostly due to a greaterrepresentation in the survey from Financial Servicesfirms (14% this year, 5% last year).strategic management, informing decision making andthe reporting of results.Balanced Scorecard drives organisational performanceby influencing the actions and behaviours of managersand individuals.Apart from in the finance sector, the role BalancedScorecard plays in team or individual appraisals orrewards is a side-effect of its primary role in influencingactions and behaviours, rather than an end in itself. 2GC Limited, 20102GC Balanced Scorecard Usage Survey 2010 - Summary of FindingsNone24%5Reporting Frequency64% of respondentsuse a “Traffic Light”Monthly43%system to highlightperformance inQuarterlySix-monthlyAnnual13%13%30%20102009How is BalancedScorecard used?their BalancedScorecardreportsOver 70% of the Balanced Scorecards covered byReporting Softwarethe survey are reported either quarterly or monthly.Balanced Scorecards that are reported six monthly orannually were used exclusively for paying incentives.Is this what was expected?To have any real chance of triggering changes inperformance, a Balanced Scorecard needs to bereported. The Balanced Scorecards in this surveyOffice Software58% 2GC Limited, 2010SpecialistBalancedScorecardSoftware13%Other5%Two-thirds reported that there were clearconsequences for poor performance againstBalanced Scorecard metrics and targets.About one in four of Balanced Scorecard reportingsystems were web enabled, with this feature beingseen in the smaller as well as the large organisations.2GC Balanced Scorecard Usage Survey 2010 - Summary of Findingsare being regularly reported, and are alsodescribed as being effective at changing actionsand behaviours (see previous page).Have things changed sincethe last survey?This year more Balanced Scorecards are beingreported on a monthly basis than before.Use of standard office software to generateBalanced Scorecard reports has increased sharplysince last year.1st Generation7%6What sort ofBalancedTypes of BalancedScorecard used3rd Generation37%Perspective NamesCustomer 22%Financial 19%Scorecard designis in use?The survey asked about the design elements thatfeatured in respondents Balanced Scorecard. Most(over 90%) included elements specific to 2nd or 3rdGeneration designs.We also asked respondents to list the perspectivenames used in their Balanced Scorecard:organisations reported between 2 and 5perspectives (average 4).2nd Generation56%Is this what was expected?The results reflect how Balanced Scorecard designmethods have evolved since the early 1990s. Forover a decade, books and articles have beenencouraging use of the more advanced and moreeffective 2nd and 3rd Generation BalancedScorecard designs methods. It is encouraging to seethat these modern design concepts are widely used.Since the mid-1990s commentators have proposedchanges to the number of and names used for theBalanced Scorecard perspectives. The surveyshows that the original four headings remainStakeholderLearningInternal ProcessesPeopleOperations15%15%13%11%6%The reported Balanced Scorecards included, onaverage, 26 measuresdominant - though the emergence of stakeholderand learning as popular headings may indicatethese suggestions are beginning to have an effect.Leadership 4% 2GC Limited, 20102GC Balanced Scorecard Usage Survey 2010 - Summary of Findings14%7How valuable is yourBalanced Scorecard?50%45%41%27%18%9% 9%0%Extremely Very Somewhat Not at allManagement team involved in designDesigned without the management teamBalanced Scorecard ResetsWho designed theBalanced Scorecard?ConsultantsOthers inCompany27%Performanceteam3%ManagementTeam Itself56%How was theBalanced Scorecarddesigned?Involving the management team that will use theBalanced Scorecard in its design dramaticallyimproves its value. Over 90% of such BalancedScorecards were rated as very or extremelyvaluable compared with just 45% for those designedWITHOUT management team involvement.33%Yes15%Within last12 months84%Objectives, Measures& Targets56%Targets only7%Two-thirds of organisations have refreshed theirBalanced Scorecard design: most during theprevious 12 months. Over 80% of the revisionswere linked to updated Strategic Plans. Over 50%changed objectives, measures and targets.67%Measures & Targets37%In organisations with multiple Balanced Scorecards,over two-thirds were created using a structuredsequential approach known as “cascading”.Has it been reset?When was it last reset?What elements were changed? 2GC Limited, 20102GC Balanced Scorecard Usage Survey 2010 - Summary of Findings8Conclusions / ObservationsAs last year, the survey shows that Balanced Scorecard is a useful management tool. Atypical Balanced Scorecard has between 20 and 30 measures, is based on relatively moderndesign principles, is one of several Balanced Scorecards within the organisation; it mostlylikely being used by a senior management team as an aid to strategic management, and isdirectly influencing their actions and behaviours. Well designed Balanced Scorecards “work”.The survey shows that Balanced Scorecards provide the highest value when they aredesigned and implemented with user involvement - confirming a design policy that has beencentral to 2GCs work on Balanced Scorecard design and implementation.The survey identified important secondary uses of Balanced Scorecard - supportingoperational management, and the delivery of individual appraisals or rewards. This findingreconciles well with another 2GC design principle - that there are different types of BalancedScorecard application, each needing its own specific design approach.Overall, the survey shows that Balanced Scorecard remains an important and effectivemanagement tool, but one whose value relies on getting the design and implementation right. 2GC Limited, 20102GC Balanced Scorecard Usage Survey 2010 - Summary of Findings09Find out moreRead some stuff - See 2GCs collection ofFAQs, Papers, Presentations, Case Studieshttp:/www.2gc.co.uk/resourcesGet some training - 2GC runs one-day andtwo-day training courses on Balanced Scorecarddesign and implementation throughout the yearhttp:/www.2gc.co.uk/trainingAsk us a Question - We will sendyou an answer for free (if we canand if we have the time).Send an email to Ask2GC2GC.co.ukWe may choose not to answer.No coursework questions 2GC Limited, 20102GC Balanced Scorecard Usage Survey 2010 - Summary of Findings10Help us withthe 2011SurveyPlease let us know if you would like toparticipate in or help with carrying out the2011 Survey. Send us an email to at2011survey2gc.co.ukThe questionnaire will be available fromFebruary 2011. 2GC Limited, 20102GC Balanced Scorecard Usage Survey 2010 - Summary of Findings