Performance Measurement at Great Persons, Inc.: An Application of the Balanced Scorecard
Performance Measurement at Great Persons, Inc.: An
Application of the Balanced Scorecard
Case
Author: Author:
William Bowlin
Online Pub Date: May 08, 2017 | Original Pub. Date: 2013
Subject: Management Accounting, Not-for-profit Accounting
Level: | Type: Indirect case | Length: 1416
Copyright: © 2013 IMA Educational Case Journal. All rights reserved.
Organization: Great Persons, Inc. | Organization size: Small
Region: Northern America | State:
Industry: Social work activities without accommodation
Originally Published in:
Bowlin, W XXXXXXXXXXPerformance measurement at Great Persons, Inc.: An application of the balanced
scorecard. IMA Education Case Journal, 6( 1), Article 2.
Publisher: Institute of Management Accountants
DOI: http:
dx.doi.org/10.4135/ XXXXXXXXXX | Online ISBN: XXXXXXXXXX
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Performance Measurement at Great Persons, Inc.: An Application of the
Balanced Scorecard
http:
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Abstract
This case provides students with a real-world, hands-on experience in developing a balanced
scorecard. It is different from other balanced scorecard cases in that it takes place in a
charitable not-for-profit environment. Unlike a business, profit is not the primary objective of this
organization’s existence. Great Persons, Inc.’s primary reason for existing is to provide services
to disabled individuals. Profits or finances are a supporting objective as opposed to an end
objective. Another interesting aspect of this case is the organization’s approach to developing
the balanced scorecard perspectives and critical success factors (CSFs). The perspectives were
identified after the CSFs were identified and aggregated into like groups by the development
team.
Case
Introduction: Great Persons, Inc.
Great Persons, Inc. (GPI) is a nonprofit corporation that was established in 1957 to create services that
met defined needs of the local community. Initially, GPI worked with other existing agencies or created new
agencies to provide services. Over the years, GPI started developing internal programs and its own services,
evolving the company into a services provider in addition to the original goal. GPI cu
ently provides services
in the areas of health equipment; residential services for people with disabilities; family support services
for children with disabilities; transportation for children and adults with disabilities; information and refe
al
services; consultation and coordination with affiliated agencies; daycare resources and refe
al grants; and
early childhood programs for children, their families, and caregivers. GPI operates on an annual budget of
$19 million and ca
ies over $7 million in net assets with 80 cost centers. Administrative operations account
for approximately 5% of the total budget.
GPI operates under the direction of a volunteer Board of Directors. A Committee of Directors—the business
director, adult services director, human resource director, child and family services director, and
communications and development director—reports to the executive director, Christine Sparkling, who then
eports to the Board.
(Note: The appendices provide summary information on GPI’s mission, vision, and values statements
(Appendix A); services provided (Appendix B); accreditation (Appendix C); and financial and other data
(Appendix D).)
Problem Definition
At a recent Board of Directors meeting, Board member George Parsons complained that “the Board is only
asing GPI’s performance and future on financial information. We need additional, nonfinancial information
to help us assess GPI’s performance, however. We are not in business to make a profit. We are in business
to provide services to the needy and disabled of the city. We need more information than we are getting. I
want to examine whether we are satisfying the needs of the community and our clients. GPI’s finances are
important but only as to how they permit us to provide services and satisfy our clients’ needs.”
Mary Smith, another Board member, said, “How do we know whether we are providing our services in an
efficient and effective manner? What are the critical factors that determine the success of GPI? The financial
information provided to us doesn’t help in making these types of reviews.”
Board member Rudy Bertrand, who works for the Multiple Sclerosis Society, chimed in to say, “Our purpose
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Performance Measurement at Great Persons, Inc.: An Application of the
Balanced Scorecard
is to make sure that people with disabilities receive the services they need regardless of the cost. Our
community cannot limit or ignore the needs of these individuals.”
Business director Deb Young interjected, “Let’s not get ca
ied away here. We need funding to operate and
e successful. Without successful fundraising, we cannot provide the necessary services.”
Board President Katy Williams concluded, “There seems to be a tendency here at GPI to focus on financial
performance as a measurement of operational success. While some level of financial health is necessary,
earning a profit is not one of GPI’s objectives. GPI’s main objective is to provide services to the community.”
She turned to Christine Sparkling and said, “You need to have your staff develop a performance evaluation
system that addresses the concerns expressed by the Board members today. Please have a proposal ready
for the next quarterly Board meeting.”
At the following week’s Committee of Directors meeting, Christine opened the discussion with how they could
address the Board’s concerns. All of the directors had been at the Board meeting and were familiar with the
discussion that had taken place.
Mary Seehouse, director of adult services, was the first to speak. She said, “I think the Board members are
co
ect in their concerns. We need to do a better job of focusing on satisfying the community’s needs.” Deb
Young, who was also a recent MBA graduate, suggested “using a balanced scorecard. It is a mechanism
to communicate goals and objectives, provide diagnostic information of agency operations, and allow for
more informed, strategic decision making. This results in an environment conducive to quality improvement
of services that can be measured and recognized while still considering the importance of adequate funding.”
Developing the Balanced Scorecard
After obtaining Christine’s support, Deb formed a Committee of Representatives from each of the directorates
to develop the balanced scorecard.
Generating Perspectives and Critical Success Factors (Objectives)
The Committee decided that the best way to generate ideas for the balanced scorecard critical success
factors (CSFs) was to use a variant of the nominal group technique. The first step was to have each
Committee member write down his or her ideas on GPI’s CSFs. Then Committee members called out
ideas from each list one at a time, while another Committee member recorded the idea on a flipchart. No
discussion or evaluation of ideas was allowed at this point so that the focus remained on
ainstorming. After
each Committee member had finished reporting, new ideas were generated through group discussion then
evaluated and added to the master list.
The next step was to write each CSF on a Post-It note and place them randomly on the wall. The Committee
was then divided into two teams: Team A and Team B. Team A grouped the notes however they felt was
appropriate. They were only allowed to use nonve
al communication. Team B then reviewed and revised
the groupings through discussion of their ideas in this process. The Committee as a whole then reviewed the
esults, making appropriate revisions. Generally, a cluster of Post-It notes would produce a single balanced
scorecard perspective through this process. The Committee identified and named the perspectives based
on the similarities of the CSFs. Overall, they determined that client satisfaction, quality of services provided,
efficient operations, and financial viability were critical to the success of the organization.
Through the Nominal Group Technique process, the GPI Committee generated several CSFs for each
perspective. In order to avoid the development of a tool that would be overwhelming in its implementation
and use by the Board of Directors, the Committee decided approximately 20 CSFs would be identified for the
alanced scorecard. To help identify the most important factors, the Committee used the example of returning
from a two-week vacation: On the first day back from a vacation, what are the first items a director or manager
looks at, in terms of the CSFs that were being proposed? If these factors are not important enough to review
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Performance Measurement at Great Persons, Inc.: An Application of the
Balanced Scorecard
after an extended period of absence, are they critical? The Committee reduced the number of CSFs to five or
less for each perspective based on these questions.
In order to provide greater contextual justification for the CSFs chosen, the Committee also developed a
strategy map. The strategy map linked a success on one CSF with the success of another CSF. For example,
successful accomplishment of the employee training CSF should lead to success in another CSF, such as
more efficient operations. That, in turn, should lead to the success of maintaining financial health.
Generating Performance Measures
Once the perspectives were identified and CSFs determined, the team discussed how GPI should measure
whether a CSF was accomplished. The team
ainstormed and openly discussed ideas, identifying one or
two performance measures for each CSF. For these measures, targets for GPI’s future performance were
developed. Finally, someone was assigned to be responsible for reporting