Balanced Scorecard: An Article Summary

Summary

The article is called “The Politics of the Balanced Scorecard.” It was written by Sven Modell in 2012 for the Journal of Accounting and Organizational Change. It is a case narrative about a young woman named Mary Brown, who is a senior accountant at a company called IFS, which is a financial holding company based out of New York City. After starting a profession in public accounting, Brown is now in her hometown branch of IFS and has been for three years. Currently, she supervises three employees that work on the “managerial reporting” for the branch (Blaskovich & Mintchik). Karl Jones is their senior financial branch officer and, as Brown’s boss, has been one of her most important mentors since her bright start at IFS. The case analysis follows an ethical dilemma that Mary Brown faces after her branch implements a balanced scorecard system.

Two years prior, senior management at IFS was still using a single-minded focus on performance evaluation, pay-bonuses and promotions, but at that time switched to the balanced scorecard. The article reads: “IFS senior management identified several important categories critical for the company's long-term success: quality, cost, risk management, social responsibility (attention to customers and employees, social partnerships, etc.), and innovation” (Blaskovich & Mintchik). On the basis of these things, a survey was compiled at Mary Brown’s branch; 6 questions with a scale of 1 (not at all satisfied) to 5 (very satisfied). It was conducted by the marketing department. There were also five specific questions as a part of the survey:

1. Satisfaction with the quality of tellers,

2. Satisfaction with the quality of automated teller machines (ATMs),

3. Satisfaction with the quality of employees who aren't tellers,

4. Frequency of problem incidence, and

5. Satisfaction with the quality of the resolution of the problems (Blaskovich & Mintchik).

Previously Jones has only incorporated the results from the first question, but the customers’ answers from the second set of five questions were utilized to identify areas for improvement. The article writes: “Such an approach doesn't contradict IFS policy, which explicitly requires the incorporation of a single measurement of customer satisfaction in the final balanced scorecard performance number” (Blaskovich & Mintchik). The survey rates the average customer satisfaction rating at 3.1, which is much lower than the 3.9 for the first set of questions. Michael Peterson, having replaced Jones a few months ago, decides to keep the 3.1 as the average for the report. Others in the department agree, but Mary Brown does not.

This becomes an ethical dilemma for Mary Brown because this will affect the bonuses and promotions for the employees for the year, and she suspects that Peterson has other motives for his decision. She believes that, because it will not affect his bonus (he was transferred recently), it does not matter so much. When concerns are aired, Michael becomes defensive. A balanced scorecard system is a very good approach to customer service in relation to bonuses and promotions given to employees. It bases their rewards on their job performance and it is a motivation technique for employees to either continue on the proper path or improve themselves while also forecasting strategic growth for the organization. Peterson’s decision to report the lower rating only hurts the branch and reflects on the company itself.

Work Cited

Mintchik, Natalia, and Jennifer Blaskovich C.P.A. “Manipulating the Balanced Scorecard.” Strategic Finance, 90.1 (2008): 52-3. ProQuest. Web. 8 Dec. 2013.