Is there any difference between a Balanced Scorecard that's used for the Board of Directors and one that's used for the management team? Can the same scorecard be used for both?

asked Apr 08 '10 at 14:21

Jason's gravatar image

Jason
11667


Boards of Directors have different roles in different types of organizations. Typically the board is responsible for the actions of the CEO or Executive Director as well as the results of the organization. They are responsible for the "What" and not the "How."

So, if your board meets my simple description above, then you might be more reluctant to share the "How" and more interested in just sharing the outcomes of your strategy. You could then see a BOD scorecard just having the outcome objectives on the strategy map. These could be the customer and financial if you are a for profit entity or the mission, constituent, and financial perspective in an nonprofit.

Directors also typically want to stay updated on the major initiatives of an organization as well. These should be able to be found on the organization scorecard also. So I guess, in summary, you might find that a BOD scorecard would be the same or just a summary of parts of the enterprise scorecard.

The only times that I have seen things on a BOD scorecard that are not on an enterprise scorecard is when the BOD is trying to measure or improve its own performance as a unit.

answered Apr 19 '10 at 17:16

Ted%20Jackson's gravatar image

Ted Jackson
1339915

Ted's right - the key issue here is the difference in role of the BOD vs. the executive team (or any other group within the organisation).

One way to approach this is to start with consideration of the points of intervention open to the management team in question - in practice if there was something amiss with the organisation's performance what could this team actually do about it? The activity objectives on their Balanced Scorecard should reflect this activity set (otherwise you are possibly reporting on things they can do nothing about). Clearly the scope of intervention open to the Board is of a different range and immediacy to that open to the Executive team.

Concerning Ted's comments about what you'd see differently on a BOD Balanced Scorecard he's missed one very important aspect of the differences between the BOD and the Executive - the relationship they have with investors. Formally, the BOD are employed to ensure the organisation (whether commercial, non-profit / governmental or NGO) delivers against the expectations of its major investors / stakeholders. A key part of this task is monitoring attitudes and perceptions of these investors, and it is not unusual for the BOD to agree on specific actions to engage with these investors on an ongoing basis to capture and manage these expectations / perceptions. For the Executive Team, the equivalent stakeholder is the BOD, and this proactive monitoring and engagement with the investor community is handled through the BOD not in parallel.

More generally, these changes in form and function of Balanced Scorecard are part of what is called often "Cascading" theory. This is an area where 2GC has particular experience and expertise, and has written about in a number of ways. Here are some links you may find useful if you want to find out more...

Case studies 3, 4, 5, 8 and 11 on this page describe various kinds of Balanced Scorecard cascade project that 2GC has carried out over last decade or so.

A few of the research papers on the site look directly at issues of intra-organisation communication and alignment, you may find these two in particular helpful:

"Performance management system design in a devolved organisation" - under the Balanced Scorecard application tab "The BSC as a Communication Protocol in Organisations" - under the Balanced Scorecard Theory tab

Finally there is a management briefing on cascading in the FAQ section. Look for "Cascading Balanced Scorecards" under the "Advanced Topics" tab.

Hope this helps. Any questions, let me know either directly or via this forum.

answered Apr 21 '10 at 09:26

Gavin%20Lawrie's gravatar image

Gavin Lawrie
1315

edited Apr 21 '10 at 10:09

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