IMPLEMENTING A BALANCED SCORECARD
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Implementing a Balanced Scorecard
CPA Australia needs to continue serving its members successfully as well as fulfilling its professional body of finance expert’s role (CPA Australia report, 2019). The organization also needs to achieve its vision of partnering with members for future preparation in a connected global world (O’Connell et al. 2015). A balanced scorecard is, therefore, needed to fulfill these roles and the vision. Therefore, this paper will provide a balanced scorecard outlining performance objectives in four perspectives, an overview of the implementation plan, and the benefits as well as the challenges of implementing the balanced scorecard.
Financial/stewardship perspective
The objectives and measures undertaken under this objective are to ensure that CPA Australia is financially responsible and take further actions to ensure the achievement of the financial goals (Bedford, 2018). One of the objectives is to improve staff retention to cut or reduce the costs of hiring new employees. From the 2018 financial report, it is seen that the organization’s expenditure on its strategic goal of providing relevant learning and content development is 17%. The measure to be taken under this perspective is to improve the relationship of employees by involving them in the decision-making of the crucial matters governing the financial body. This improvement of employee relations is to ensure that employees are dedicated to the organization hence improving their loyalty. Financial performance will be enhanced because the employees are likely to be retained for long to reduce the costs of hiring new staff each fiscal year. The other objective is to reduce the amount spent on training and education of employees by 2%. The measure to be undertaken is to minimize the use of external instructors to a maximum of two instructors per year from a maximum of the previous six. According to Bedford (2018), external instructors are expensive because they need to be catered for everything from arrival to departure. This measure will lead to increased financial performance as it will reduce training costs by 10%, thus reducing the firm’s overall expenditure.
Customer perspective
According to Deegan (2017), the objectives are based on the appearance of CPA Australia to the internal and external customers to achieve the vision. One of the objectives to be undertaken is to meet the learning and development needs of staff in the CPA program offered. The measure to be taken under this perspective is to evaluate the score of the trainees or staff. This measure is essential to ensure quality professionalism in this financial body. Those chosen should have a rating of 4.5 and above to ensure they have quality skills for job performance. This measure will improve financial performance as it will reduce loss by ensuring quality and improved service delivery.
Internal Business Process Perspective
Under this perspective, the financial body has to excel in its processes to satisfy the customers (Thomson, 2009). The objective under this perspective is to improve the sustainability of the training materials. From the 2018 sustainability report, CPA Australia uses print and online publications because they have wide coverage on current and emerging financial issues. The measure under this perspective is by making these online learning materials accessible more preferably on the official online platforms of the financial body. This measure is essential for communicating information about CPA Australia and associated members and providing technical content to employees. The measure is done by eliminating 90% of paperwork issued in class during training, which improves financial performance by cutting the costs spent on the related purchases.
Learning and growth perspective
Here, the main focus is on how to sustain the ability to change and improve to achieve the vision (Hansen and Schaltegger, 2014). One of the objectives under this perspective is to increase professional specialists or managers that are of ages 50-59 by 2%. From the 2018 sustainability report, professional specialists in this range represent only 3% of the total. These professional specialists of this age range are studied or believed to have enough experience and skills to guide the employees as well as their training effectively. This measure will improve financial performance because it will ensure that the organization does not hire expensive external specialists, which will cut down the overall expenditure. Another objective that is important under this perspective is to increase male casual workers and reduce that of female workers ages 20-29. The measure is to increase male casual workers from 0.4% to 0.8% and reduce female casual workers to 0.6% from 1.2%. This measure is crucial because, from workforce diversity studies, male workers have a consistently higher work rate than females. This measure will ensure improved financial performance because the overall casual workers will be reduced that will lead to a consequent reduction of expenditure on the casual workforce.
According to (Nørreklit 2018), leading measures in a balanced scorecard are harder to identify; however, they are essential to an organization as they are the only ones that can influence and make a difference. The leading v, as from the perspectives discussed above, the increase of professional specialists might be hard for the financial body to implement if considered as a short-term objective. However, it is the only and recommendable measure that can make a difference when looked from a broader perspective of making long-term changes. Lagging measures are those that come as a result of continuous implementation that impacts the leading ones (CEBECI, 2020). The lagging measure is the monitoring of the casual workforce to determine the gender to increase or decrease and those to retain.
Implementation of the Balanced Scorecard
The implementation of the balanced scorecard at CPA Australia will be done in two phases. The first phase will involve a corporate scorecard, while the second one will involve the key stakeholders’ scorecard. Under the first phase, as stated by Lubis (2016), a high-level project plan for managing performance is carried out. This project plan involves an organizational assessment of the strategic elements, for instance, vision, mission, corporate values, and SWOT. This phase also involves a change management plan to determine the readiness of the financial body on a journey to ensuring total change. The second phase involves the critical stakeholders in that their associated scorecard is developed to provide a link between their day-to-day work with the goals and corporate vision. This phase also involves the evaluation of the high-level project plan to determine its success rate (Lubis, 2016). The key considerations in the implementation include financial management to ensure that each step improves financial performance and also maintaining or balancing the internal and external focus. For this balanced scorecard to be implemented successfully, the identified high-level risks that need to be mitigated are financial risks that include liquidity risk, funding risk, and interest rate risk. The other high-level risk identified is stakeholder fraud that has several typical categories, for instance, corruption, fraudulent accounting, and financial reporting and misappropriation of assets.
Pros and Cons of implementing Balanced Scorecard
Balanced scorecard implementation in CPA Australia is vital in better strategic planning. This strategic plan will improve integrated reporting that represents an essential opportunity for the members to ensure integrated thinking. Another pro is that a balanced scorecard ensures better alignment of projects and activities (Bezerra, 2020). In this financial body, the balanced scorecard will ensure that it is focused on its strategic objectives. One of the cons or weaknesses of implementing the balanced scorecard is that the focus might be heavily based on internal factors and leave behind external factors and competitors (Bezerra, 2020). Little focus on the external environment factors may hinder the achievement of the strategic goals. In CPA Australia, the scorecard may focus mainly on how to improve the skills and experience of employees but fail to compare with the level of skills and experience of the competitors. This unfair focusing is disadvantaged as competitors with high-skilled employees will be better in service delivery.
This financial body can use the balanced scorecard in balancing CPA Australia employees such that there is diversity at the workplace. Also, it can be used in gender balance in different activities such that each gender is assigned to an area where service delivery will be better. Another example where it can be used is in academic institutions in attraction and development of the future generation of CPA. The financial benefit of using the balanced scorecard is that it ensures proper accounting and management of finance that can be applied for future financial planning. On the non-financial part, is that it leads to proper stakeholder management to improve organizational relationships.
Reference list
Australia, CPA (2019). CPA Australia Integrated Report, 2018. CPA Australia, Melbourne.
Bedford, D. (2018). Best Practice In Performance Management – CPA Australia – MAFIADOC.COM. [online] mafiadoc.com. Available at: https://mafiadoc.com/best-practice-in-performance-management-cpa-australia_5b828e36097c47b9758b45db.html
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Bezerra, FWC et al. (2020). Implementation of Balanced Scorecard in public institutions: a brief bibliographic review. Research, Society and Development, 9(2), p.68922041.
CEBECI, U. (2020). A NEW DECISION SUPPORT SYSTEM FRAMEWORK FOR BALANCED SCORECARD AND ITS APPLICATIONS IN A LOGISTICS COMPANY. Journal of Global Strategic Management, 12(1), pp.17-27.
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Hansen, E., and Schaltegger, S. (2014). The Sustainability Balanced Scorecard: A Systematic Review of Architectures. Journal of Business Ethics, 133(2), pp.193-221.
Lubis, A., Torong, Z.B., and Muda, I. (2016). The Urgency of Implementing a Balanced Scorecard System on Local Government in North Sumatra-Indonesia.
Nørreklit, H., Kure, N., and Trenca, M. (2018). Balanced Scorecard. The International Encyclopedia of Strategic Communication, pp.1-6.
O’Connell, B. et al. (2015). Shaping the future of accounting in business education in Australia. Melbourne: CPA, Australia.
Thomson, A. (2009). Comment: Australia’s Adoption Of Ifrss–A Clarification From The AASB. [online] Ideas.repec.org. Available at https://ideas.repec.org/a/bla/ausact/v19y2009i2p153-153.html
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