Group-based Balanced Scorecard Development

A balanced scorecard is a tool for managing business performance “that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions.[1]Typically, when developing a balanced scorecard, a group of managers from across the organization form a team that is responsible for identifying the key objectives and the performance measures that will make up the scorecard.   A study[2] published in Management Accounting Quarterly examined the difference between the quality of balanced scorecards that were developed by individuals and those that were developed by groups.  Scorecard development can take up to nine months according to[3].  While developing the balanced scorecard, team members will be pulled away from their day-to-day responsibilities of managing the organization.  The authors of the study wanted to “evaluate if the group time spent developing the scorecard is cost beneficial.”[2] As the authors expected, the result of the study was that group developed scorecards were generally of a “higher quality” than those that were developed by individuals.  However, while group-based development was found to have several benefits, there was one very clear drawback that should be taken into consideration.

            The study found that the primary benefit of group-based balanced scorecard development is that a group tends to “filter out” the inappropriate (bad) ideas that were developed by individuals.  These inappropriate ideas were included on  individually developed scorecards, but the discussion of these same ideas in a group setting tended to remove these ideas from the resulting group scorecards.  Additionally, it was found that the groups tended to successfully promote the majority of the individual’s appropriate (good) ideas to the group developed scorecard.

          The potential drawback to group-based balanced scorecard development is that “the team dynamic resulted in good quality but fairly mainstream ideas.”[2] The authors stated that these mainstream ideas do not help the company gain a “competitive advantage”[2] in their industry.  Instead, the company’s objectives and performance measures would very likely resemble those of their competitors.  As a result, some of the benefits of developing a balanced scorecard would be diminished.  To counter this, the study concluded that ultimately the group needs to be comprised of a “diverse set of individuals, each with different training, skills and perspective.”[2]  This would help ensure that a wide spectrum of ideas would be considered by the group and improve the likelihood that some of these ideas would lead to a competitive advantage for the organization.


[2] Hughes, Susan B., et al. “How Groups Produce Higher-Quality Balanced Scorecards than Individuals.” Management Accounting Quarterly 6.4 (2005): 34. ProQuest. Web. 1 Feb. 2014.