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ACCA Strategic Professional · Strategic Business Leader · Enabling success: performance excellence

Tamsin Foods adopted a balanced scorecard with 35 measures, mostly financial and lagging. After a year, managers say they cannot tell which measures matter, and short-term profit still dominates decisions. Which is the most appropriate implication for improving the scorecard?

The scorecard should be cut to a few critical measures per perspective, derived from strategic objectives and including leading indicators. Too many mostly lagging, financial measures cause overload and reinforce short-termism. Adding more financial measures or dropping learning and growth would worsen the imbalance the scorecard is meant to correct.

  1. AAdd further financial measures so the board has more detailed information on profit drivers
  2. BReplace the scorecard with a budget variance report, since it is simpler to understand
  3. CLimit the measures to a few critical ones per perspective, derived from strategic objectives, and include leading indicatorsCorrect
  4. DRemove the learning and growth perspective because its benefits are hard to quantify

Explanation

A scorecard should be built from strategic objectives with a small number of critical measures per perspective, balancing leading and lagging indicators. Too many measures cause information overload and dilute focus. Adding financial measures worsens the imbalance, and removing learning and growth discards the drivers of future performance.

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