Features Best Suited to the BSC.

• Author: Moriarty, George B.

Since the Balanced Scorecard emerged, it has been much ballyhooed as an evolutionary step in performance measurement. The question that emerges is how this performance measurement can be linked to an organization's strategic efforts. Of equal importance is the question of how the organizations that employ the BSC regard its usefulness as a tool.

To find answers to these two largely unresearched questions, the FEI Research Foundation commissioned a study intended to identify characteristics of companies that could benefit from employing the measurement, as well as to investigate scorecard practices that provide a competitive advantage. The study had four core objectives: to present factors that affect the satisfaction of CFOs with their performance measures; to identify characteristics of BSC users and non-users; to describe successful BSC user practices and contrast them with practices of non-users; and to examine the practices of four leading firms in the development of their BSC.

Results of this study enabled the research team to "put a face" on features that foster the development of an effective BSC. These features include culture, nonfinancial information, linkage and implementation of the BSC, effects on key constituents and change management and the BSC.

As Kaplan and Norton discuss in the preceding article, the BSC also has evolved into a mechanism that allows financial executives to manage for future growth. This ability reaches well beyond traditional reporting procedures, which focus on the past. "The executive leadership that creates the BSC becomes the guiding coalition for driving change in the organization" write Kaplan and Norton. The results of FEI Research Foundation's study show, indeed, that is quite true in practice.

The executive report contains the results of a survey the research team conducted, along with four case studies. There were 173 responses, which formed the basis for the analysis in the project. Respondent companies had average assets of S6 billion, average annual sales of $3.7 billion, average annual net income of $200 million and 23,340 employees. The research team organized the results into three groups: satisfaction with performance measures; characteristics of BSC users; and BSC impact on organizational practices.

The most interesting results emanate from the section on satisfaction with performance measures. Of those respondents using the BSC, 55 percent were satisfied, while 12 percent were not...