ACCA Strategic Professional · Advanced Performance Management · Non-financial performance measurement
Tessaly Manufacturing's scorecard has 38 measures, many used for bonus calculation, and managers say they cannot tell which matter. Some perspectives show strong results while profit is falling. Which action is most consistent with good scorecard design?
Tessaly should cut the scorecard to a few measures tied to strategic objectives and test whether the assumed links to financial results actually hold. Strong non-financial scores with falling profit suggest poorly chosen measures or faulty strategy assumptions, and adding more measures would deepen information overload.
- AReduce to a small number of measures tied to strategic objectives, and test the assumed links to financial results with dataCorrect
- BAdd further measures so that every operational activity is covered
- CRemove the financial perspective since profit is already falling
- DBase the bonus entirely on the best-performing perspective to motivate staff
Explanation
Scorecards should focus attention on a limited set of strategically relevant measures, and the assumed cause-and-effect links should be validated. Strong non-financial results alongside falling profit suggest the links are weak or the measures are wrong. Adding measures worsens overload, and dropping financial results removes the balance.
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