KWAME NKRUMAH UNIVERSITY OF SCIENCE AND
TECHNOLOGY, KUMASI
INSTITUTE OF DISTANCE LEARNING
MSc. ACCOUNTING AND FINANCE
ACC 557: MANAGEMENT ACCOUNTING
GROUP ASSIGNMENT
BALANCED SCORECARD
Question (a)
Characteristics that make the balanced scorecard special for worldwide adoption
The balanced scorecard is a performance measurement tool that translates an organization’s
vision and strategy into performance measures. Kaplan and Norton mapped an entity’s
strategic objectives into four perspectives of financial, customer, internal process and
innovation and learning.
The balanced scorecard has four (4) main appealing characteristics/features:
i. Focus on critical indicators
There are several key aspects of performance for which targets should be set.
However, the scorecard requires managers to focus on the factors/measures that are
most critical to the success of the company’s strategic objectives and competitive
demands.
ii. Balance between internal and external measures:
Although the perspectives of the scorecard might sometimes appear to be in conflict
with each, it encourages managers to identify where compromises have been made
among key success factors to ensure that future success on one measure does not
come at the expense of another. This indirectly removes emphasis on financial targets
and short-term results.
iii. Forward-looking
Unlike traditional financial performance measures which focus on past performances,
the scorecard addresses how managers can improve current and future successes of
the company.
iv. Reflection of company’s mission and strategy
The scorecard allows companies to track measures that reflect strategic or top-down
measures that are relevant to the overall strategy of the company. It facilitates the
measurement of performance in relation to long-term objectives.
Question (b)
The five-pronged strategy crafted by Rockwater in developing the scorecard
The elements of the strategy were:
i. services that surpass customers’ expectations and needs;
ii. high levels of customer satisfaction;
iii. continuous improvement of safety, equipment reliability, responsiveness, and cost
effectiveness;
iv. high-quality employees; and
v. realisation of shareholder expectations.
Question (c)
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Rockwater’s strategy translated into tangible goals and actions.
No. Customer Financial Innovation & Learning Internal Business
perspective Perspective Perspective Perspective
Pricing index (Tier Return on capital Hours with
i. Rate of improvement index
II customers) employed customers
Customer ranking Percentage revenue from
ii. Cashflow Rework
survey new services
Customer Profit forecast
iii. Staff attitude survey Tender success rate
satisfaction index reliability
Market share:
Business segment,
Project Number of employee Safety incident
iv. Value for money
profitability suggestions index
(Tier I Customers),
Key accounts
Project performance
v. Sales backlog Revenue per employee
index
Project closeout
vi.
cycle
Question (d)
The importance of the balanced scorecard to Rockwater
i. Unsurpassed level of market feedback
Rockwater was able to obtain and incorporate invaluable, unrivalled client feedback into
its operations by using monthly satisfaction and performance ratings, and an annual
survey to rank customers’ perception of its services compared to its competitors.
ii. Consensus with customers
By incorporating a metric that communicated to all members of the organization the
importance of building relationships with and satisfying customers, Rockwater developed
a consensus on the necessity of creating partnership with key customers. The
management team believed that spending quality time with key customers was a
prerequisite for influencing results.
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iii. Reduced indirect costs
The scorecard helped Rockwater recognize safety as a major competitive factor which
had costly implications (5 to 50 times its direct cost). The company included a safety
index to identify and reduce all undesired events with the potential to harm people,
property or processes.
iv. Motivated employees
To create a supportive climate of empowered, motivated employees, Rockwell introduced
a staff attitude survey, and a metric for the number of employee suggestions to measure
whether or not such a climate was being created. Further, Rockwell deliberately chose
measures to educate employees about the importance of working closely to satisfy
customer needs.
v. Emphasis on a process view of operations
Management of Rockwater shifted attention from measuring the performance of each
functional department, to focus on measures that integrated key business processes. For
example, the company defined the life cycle of a project from launch to completion, and
formulated measures for each of its five business-process phases.
vi. Improved products, services and revenue
Improvements came from product and service innovation that created new sources of
revenue and market expansion, as well as from continuous improvement in internal work
processes.
vii. Realisation of company’s mission
The company’s vision stated “As our customers’ preferred provider, we shall be the
industry leader...” The scorecard served as an invaluable tool to help the company
ultimately achieve its mission.
Question (e)
Factors that aided the switch to the balanced scorecard
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i. A dramatic change in industry competitive world in which Rockwater operated
resulted in keen competition which forced many smaller companies to leave the
underwater engineering and construction industry.
ii. The focus of competition had shifted where several leading oil companies wanted to
develop long-term partnerships with their suppliers rather than choose suppliers based
on low-price competition.
iii. Highly skilled and committed senior management and employees largely contributed
to attainment of the vision and strategy of the switch to balance scorecard.
Question (f)
Benefits of Balanced Scorecard to KNUST IDL
The vision of IDL-KNUST is “to be the leading institute in providing access to quality
continuing, tertiary education and training through distance learning in Africa, using an
innovative range of distance learning technologies.” Like Rockwater’s five-pronged strategy,
IDL-KNUST can use the scorecard to translate each of its five (5) strategic goals/themes into
tangible goals and actions. The Institute can further develop critical success factors and
indicators for each of the strategic goals. Suggested indicators are shown below:
Theme 1 (Quality Staff) – Attract, develop and retain quality staff in IDL
Reduce staff turnover rate
Increase percentage of qualified staff (according to the standards of the National
Accreditation Board) on payroll
Provide opportunities for staff participation in Continuing Professional Development
(CPD)
Number of articles written by staff published in reputable academic journals
Provide opportunities/avenue to promptly address legitimate staff concerns
Theme 2 (Financial Sustainability) – Develop and strengthen mechanisms to achieve financial
sustainability for the Institute
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Providing flexible but robust payment plans for school fees
Provide multiple payment platforms and outlets to collect revenue
Theme 3 (Expanded Access) – Access to undergraduate and postgraduate training programmes
Increase the number of Distance Learning (DL) centres established
Use survey on (prospective) applicants to estimate where IDL centres could be sighted
Theme 4 (Reliable Infrastructure) – Develop or acquire and maintain necessary physical
infrastructure and equipment for IDL
Develop and adhere to routine maintenance schedules for all fixed assets
Theme 5 (Technology savvy) – Enhance the development of print and electronic learning
materials in Distance Learning (DL) mode.
Ensure reliable access to virtual classroom materials
Increase internet data allocation to students, across all networks
The benefits to be derived could include, but not limited to:
i. Motivated and qualified staff of the Institute
ii. Improved skills of both staff and students of the Institute
iii. Identification and creation of strategic partnerships with key stakeholders like the
ICAG and professional bodies and institutions in Africa.
iv. Clarify and update its strategy by constantly reviewing its actual performance against
set targets to ensure that any variance is either corrected by adjustments of the
strategy or reinforced where the performance is on track.
v. IDL could also align units and individual goals with the Institute’s overall strategy.
Since BSC revolves around the vision and strategy, employees and departmental
goals must fit within the overall vision.
vi. The scorecard provides information on quality which was hitherto ignored by the
over-concentrated traditional accounting measures and IDL could leverage on that for
more successes.
