AGENDA How to link measures in different levels of organizational hierarchy How to use scorecards as part of management system Issues in using scorecards in not-for-profit settings Do BSC pay off? Validating measurement systems Problems of strategic performance measurement systems Accounting for Management Control / Teemu Malmi 2016

LINKING SCORECARDS Scorecards between levels may be linked directly or logically Direct linking means that measures at top level scorecard are summed up from the lower level scorecards Logical linking means that lower level identifies which measures at above level scorecard they can have an influence on Those measures serve as strategic objectives for the lower level Following cause-end effect reasoning the rest of the measures are identified Accounting for Management Control / Teemu Malmi 2016

ONE POSSIBILITY FOR LOGICAL LINKING Accounting for Management Control / Teemu Malmi 2016

LINKING SCORECARDS Recall that BSC was originally a construct for SBU level If derived using logical linking, there is no need to stick with certain perspectives at all levels. This may save a lot of effort and money in measurement Measures close to action tend to be more often non- financial Note: Linking returns to a question of how accountability, authority, and autonomy are delegated within the organization Accounting for Management Control / Teemu Malmi 2016

CASE TELECOM COMPANY Accounting for Management Control / Teemu Malmi 2016

AGENDA How to link measures in different levels of organizational hierarchy How to use scorecards as part of management system Issues in using scorecards in not-for-profit settings Do BSC pay off? Validating measurement systems Problems of strategic performance measurement systems Accounting for Management Control / Teemu Malmi 2016

How to link BSC into existing management system If you were to design and implement a BSC for a company / organization you work for, what would be the key issues to consider in making sure BSC would also become as a key part of the management system? Accounting for Management Control / Teemu Malmi 2016

AGENDA How to link measures in different levels of organizational hierarchy How to use scorecards as part of management system Issues in using scorecards in not-for-profit settings Do BSC pay off? Validating measurement systems Problems of strategic performance measurement systems Accounting for Management Control / Teemu Malmi 2016

Issues in using scorecards in not-for-profit settings Nature and number of objectives? Outcomes vs. impact How about strategy in not-for-profit setting? The role of financial measures? Nature of work – give examples of easy and difficult to measure tasks in not-for-profit sector Target setting culture …… Accounting for Management Control / Teemu Malmi 2016

AGENDA How to link measures in different levels of organizational hierarchy How to use scorecards as part of management system Issues in using scorecards in not-for-profit settings Do BSC pay off? Validating measurement systems Problems of strategic performance measurement systems Accounting for Management Control / Teemu Malmi 2016

DO SCORECARDS PAY OFF? If you were to conduct research on the benefits of BSC, how would you design your study? What would you think, how strong research based evidence there exists showing the benefits of BSCs? Accounting for Management Control / Teemu Malmi 2016

AGENDA How to link measures in different levels of organizational hierarchy How to use scorecards as part of management system Issues in using scorecards in not-for-profit settings Do BSC pay off? Validating measurement systems Problems of strategic performance measurement systems Accounting for Management Control / Teemu Malmi 2016

VALIDATING MEASUREMENT SYSTEMS How would you be able to assess whether the measurement system (BSC) is well constructed? Think of measurement system as a whole, not individual measures Accounting for Management Control / Teemu Malmi 2016

AGENDA How to link measures in different levels of organizational hierarchy How to use scorecards as part of management system Issues in using scorecards in not-for-profit settings Validating measurement systems Problems of strategic performance measurement systems Accounting for Management Control / Teemu Malmi 2016

POSSIBLE CONCERNS How to identify strategy? Is the selected strategy appropriate? Complexity of cause-and-effect relationships Measures are often averages What to measure and how to make sure data is accurate How balanced a measurement system should be? Linking strategic measurement systems to existing management system Strategy maps and measures remains as a tool for top management only Building a measurement system can be totally delegated The best is the worst enemy of good Accounting for Management Control / Teemu Malmi 2016

SUMMARY Accounting for Management Control / Teemu Malmi 2016

TRANSLATING STRATEGY INTO ACTION Clarifying strategy and gaining consensus Linking strategy and measures (leading indicators!) Targets for measures and accountability Communicating strategy measures and strategy map will communicate what is important Accounting for Management Control / Teemu Malmi 2016