2GC Conference PaperBalanced Scorec

2GC Conference Paper

Balanced Scorecard and
Results-Based Management:
Convergent Performance
Management Systems
Gavin Lawrie, Dirk Kalff and Henrik Andersen

April 2015
Developed from a paper originally presented at 3rd Annual
Conference on Performance Measurement and Management Control,
The European Institute for Advanced Studies in Management
(EIASM), Nice, France, September 2005


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2GC Conference Paper

Abstract
This paper compares and contrasts two of the most widely adopted Performance
Management (PM) frameworks – Balanced Scorecard and Results-Based Management. It
reviews the two frameworks’ independent origins and separate evolutionary paths, and
examines the resulting differences in practical application. Two case studies are presented,
one examining Results-Based Management implementation within a global UN agency, the
other describing work to build a 3rd Generation Balanced Scorecard within a Middle Eastern
government ministry. The authors propose that the two frameworks are converging in terms
of the approaches used for framework design and implementation.

Introduction
The use of performance data to monitor, evaluate and improve the effectiveness of
organisations has been a facet of human activity since the early days of civilisation. The
concept of trading between communities, the use of currency, and the creation of
monumental constructions such as the pyramids attest to an ability to envision, organise and
manage complex activity dependent upon reliable data that pre-dates the modern world.
The ability to engage in complex activities requiring large-scale organisational management
has been almost exclusively a public sector (or at least non-commercial) activity for most of
history. However, the development of financial accounting and banking in Italy the 15th
century and the subsequent emergence of the commercial joint-stock company in The
Netherlands and later Britain in the 1600s triggered the rise of truly complex organisations in
the private sector. A critical consequence of these developments was to allow for the
separation of the ‘management’ and ‘ownership’ of assets and the consequent emergence of
the modern private sector organisation. In such organisations, managers are held
accountable for the delivery of a narrowly defined set of financial outcomes related primarily
to the present value of the organisation’s traded share capital (shareholder value) by a
closely defined group of owners (i.e. the shareholders, and other providers of financial
resources) with broadly homogenous expectations.
This private sector focus on financial return is reflected by the pre-eminence of financial data
as a mechanism for performance monitoring, evaluation and control in the sector. In so far
as the effectiveness of management’s engagement in other aspects of organisational activity
(e.g. in commercial strategy, compliance with legal statute, procurement and management
of workers etc.) is evaluated externally, it is typically calibrated in terms of actual or
anticipated impact on shareholder value. This translation of private sector performance into
a set of performance measures that is common to all joint-stock organisations also enabled
inter-organisational comparisons, even between dissimilar private-sector organisations. The
rise of the ‘corporate raider’ is a powerful illustration of the transparency provided by the use
of comparable performance measures – with the raider opportunistically replacing
incumbent managers where it is apparent that they are making poor use (in terms of
financial return) of the assets entrusted to their care. However, this emphasis on financial
measures of performance began to be seen as sub-optimal by the 1980s, and recent
management reforms have focused on ways of expanding the range of non-financial

!2

Balanced Scorecard and Results-Based Management:
Convergent Performance Management Systems


Copyright © 2GC Limited, 2015

2 April 2015

2GC Conference Paper

measures used internally and externally to monitor and evaluate activity. These changes,
increasingly supported by firm evidence of success, have served to improve the ‘quality’ of
management, as measured (in part) by the ability of managers to successful achieve
‘strategic’ goals over time.
Conversely, in the public sector the separation of ‘owners’ and ‘managers’ is less clear: the
clarity of the private sector’s focus on simple financial returns is missing, with organisational
activity being based instead on the achievement a complex web of social, political and
ethical requirements set by a diverse group of stakeholders with heterogeneous motivations
and influences. Indeed, in the UK at least, the lack of capital budgeting provisions in public
sector accounting rules have traditionally made any determination of ‘financial asset return’
quite difficult. Consequently, monitoring and evaluation of activity in the public sector has
had to focus more on the achievement of non-financial goals, and methods of evaluation
have traditionally been more specifically tailored to the needs and interests of specific
stakeholders.
But this complexity of purpose and the diverse methods of activity monitoring adopted in
the public sector have lead to problems of transparency, which in turn have constrained the
ability of stakeholders to monitor and evaluate the performance of public sector
organisations. With a lack of effective oversight, it has been argued that public sector
activities have greater scope to be ‘inefficient’ compared to equivalent activities in the private
sector: leading to concerns both about ‘value for money’ and ‘ability to control’ public sector
activities.
In an attempt to redress these issues of oversight, and the associated issues of efficiency and
control, recent changes in public sector policy and management have promoted the use of
private sector tools and frameworks to manage public sector activity – e.g. Balanced
Scorecard mandated in the USA in the 1990s.

Hasil (Bahasa Indonesia) 1:

2GC konferensi kertasBalanced Scorecard danManajemen berbasis hasil:Kinerja konvergenSistem manajemenGavin Lawrie, Dirk Kalff dan Henrik AndersenApril 2015Dikembangkan dari kertas awalnya disajikan di tahunan ke-3Konferensi pada pengukuran kinerja dan kontrol manajemen,Lembaga Eropa studi-studi lanjutan dalam manajemen(EIASM), Nice, Perancis, September 2005 Manajemen aktif 2GC1 Bell Street Maidenhead Berkshire SL6 1BU InggrisT: [phone] E: [e-mail] W: 2GC.euHak cipta © 2GC terbatas 2015. Semua Hak, milik. Dokumen ini dilindungi hak cipta oleh2GC terbatas. Syarat dan ketentuan berikut berlaku untuk penggunaannya: Fotokopi-satu Fotokopi dapat dibuat untuk penggunaan pribadi seperti yang diperbolehkan oleh Nasional Hak ciptaundang-undang. Izin dari 2GC terbatas dan pembayaran biaya diperlukan untuk semua Fotokopi lainnya,termasuk beberapa atau sistematik menyalin, menyalin untuk keperluan iklan atau promosi, penjualan, dan semuabentuk dokumen pengiriman; Karya turunan-izin dari 2GC Limited diperlukan untuk semuakarya turunan, termasuk kompilasi dan terjemahan; Penyimpanan elektronik atau penggunaan-izindari 2GC Limited diperlukan untuk menyimpan atau menggunakan elektronik bahan yang terkandung dalam dokumen ini.Kecuali sebagaimana diuraikan di atas, tidak ada bagian dari dokumen ini dapat direproduksi, disimpan dalam sistem pencarian atauDikirim dalam bentuk apapun atau dengan cara apapun, elektronik, mekanik, Fotokopi, rekaman, atau sebaliknya,without prior written permission of 2GC Limited. 2GC Conference PaperAbstractThis paper compares and contrasts two of the most widely adopted PerformanceManagement (PM) frameworks – Balanced Scorecard and Results-Based Management. Itreviews the two frameworks’ independent origins and separate evolutionary paths, andexamines the resulting differences in practical application. Two case studies are presented,one examining Results-Based Management implementation within a global UN agency, theother describing work to build a 3rd Generation Balanced Scorecard within a Middle Easterngovernment ministry. The authors propose that the two frameworks are converging in termsof the approaches used for framework design and implementation.IntroductionThe use of performance data to monitor, evaluate and improve the effectiveness oforganisations has been a facet of human activity since the early days of civilisation. Theconcept of trading between communities, the use of currency, and the creation ofmonumental constructions such as the pyramids attest to an ability to envision, organise andmanage complex activity dependent upon reliable data that pre-dates the modern world.The ability to engage in complex activities requiring large-scale organisational managementhas been almost exclusively a public sector (or at least non-commercial) activity for most ofhistory. However, the development of financial accounting and banking in Italy the 15thcentury and the subsequent emergence of the commercial joint-stock company in TheNetherlands and later Britain in the 1600s triggered the rise of truly complex organisations inthe private sector. A critical consequence of these developments was to allow for theseparation of the ‘management’ and ‘ownership’ of assets and the consequent emergence ofthe modern private sector organisation. In such organisations, managers are heldaccountable for the delivery of a narrowly defined set of financial outcomes related primarilyto the present value of the organisation’s traded share capital (shareholder value) by aclosely defined group of owners (i.e. the shareholders, and other providers of financialresources) with broadly homogenous expectations.This private sector focus on financial return is reflected by the pre-eminence of financial dataas a mechanism for performance monitoring, evaluation and control in the sector. In so faras the effectiveness of management’s engagement in other aspects of organisational activity(e.g. in commercial strategy, compliance with legal statute, procurement and managementof workers etc.) is evaluated externally, it is typically calibrated in terms of actual oranticipated impact on shareholder value. This translation of private sector performance intoa set of performance measures that is common to all joint-stock organisations also enabledinter-organisational comparisons, even between dissimilar private-sector organisations. Therise of the ‘corporate raider’ is a powerful illustration of the transparency provided by the useof comparable performance measures – with the raider opportunistically replacingincumbent managers where it is apparent that they are making poor use (in terms offinancial return) of the assets entrusted to their care. However, this emphasis on financialmeasures of performance began to be seen as sub-optimal by the 1980s, and recentmanagement reforms have focused on ways of expanding the range of non-financial!2Balanced Scorecard and Results-Based Management:Convergent Performance Management Systems Copyright © 2GC Limited, 2015 2 April 2015 2GC Conference Papermeasures used internally and externally to monitor and evaluate activity. These changes,increasingly supported by firm evidence of success, have served to improve the ‘quality’ ofmanagement, as measured (in part) by the ability of managers to successful achieve‘strategic’ goals over time.Conversely, in the public sector the separation of ‘owners’ and ‘managers’ is less clear: theclarity of the private sector’s focus on simple financial returns is missing, with organisationalactivity being based instead on the achievement a complex web of social, political andethical requirements set by a diverse group of stakeholders with heterogeneous motivationsand influences. Indeed, in the UK at least, the lack of capital budgeting provisions in publicsector accounting rules have traditionally made any determination of ‘financial asset return’
quite difficult. Consequently, monitoring and evaluation of activity in the public sector has
had to focus more on the achievement of non-financial goals, and methods of evaluation
have traditionally been more specifically tailored to the needs and interests of specific
stakeholders.
But this complexity of purpose and the diverse methods of activity monitoring adopted in
the public sector have lead to problems of transparency, which in turn have constrained the
ability of stakeholders to monitor and evaluate the performance of public sector
organisations. With a lack of effective oversight, it has been argued that public sector
activities have greater scope to be ‘inefficient’ compared to equivalent activities in the private
sector: leading to concerns both about ‘value for money’ and ‘ability to control’ public sector
activities.
In an attempt to redress these issues of oversight, and the associated issues of efficiency and
control, recent changes in public sector policy and management have promoted the use of
private sector tools and frameworks to manage public sector activity – e.g. Balanced
Scorecard mandated in the USA in the 1990s.

Hasil (Bahasa Indonesia) 2:

2GC Conference Paper Scorecard dan Seimbang Manajemen Berbasis Hasil: Konvergen Kinerja Sistem Manajemen Gavin Lawrie, Dirk Kalff dan Henrik Andersen April 2015 Dikembangkan dari kertas awalnya disajikan pada 3 Tahunan Konferensi Pengukuran Kinerja dan Pengendalian Manajemen, The European Institute for Advanced Studi Manajemen (EIASM), Nice, Prancis, September 2005
 2GC Active Management 1 Bell Street Maidenhead Berkshire SL6 1BU Inggris T: [phone] E: [e-mail] W: 2GC.eu Copyright © 2GC Terbatas 2015. All rights reserved. Dokumen ini dilindungi hak cipta oleh 2GC Limited. Syarat dan ketentuan berikut berlaku untuk penggunaannya: 
 Fotokopi - fotokopi tunggal dapat dibuat untuk penggunaan pribadi sebagaimana diizinkan oleh hak cipta nasional hukum. Izin dari 2GC Limited dan pembayaran biaya yang diperlukan untuk semua fotokopi lainnya, termasuk beberapa atau menyalin sistematis, menyalin untuk iklan atau tujuan promosi, dijual kembali, dan semua bentuk pengiriman dokumen; Pekerjaan derivatif - Izin dari 2GC Terbatas diperlukan untuk semua karya turunan, termasuk kompilasi dan terjemahan; Penyimpanan elektronik atau Penggunaan - Izin dari 2GC Terbatas diperlukan untuk menyimpan atau menggunakan elektronik bahan yang terkandung dalam dokumen ini. Kecuali seperti diuraikan di atas, tidak ada bagian dari dokumen ini dapat direproduksi, disimpan dalam sistem pencarian atau ditransmisikan dalam bentuk apapun atau oleh berarti, elektronik, mekanik, fotokopi, rekaman atau sebaliknya, tanpa izin tertulis dari 2GC Limited. 2GC Conference Paper Abstrak Makalah ini membandingkan dan kontras dua Kinerja paling banyak diadopsi Manajemen (PM) kerangka - Manajemen Scorecard dan Seimbang Berbasis Hasil. Hal ulasan asal independen dua kerangka 'dan jalur evolusi yang terpisah, dan meneliti dihasilkan perbedaan-perbedaan ff dalam aplikasi praktis. Dua studi kasus disajikan, satu memeriksa pelaksanaan Manajemen Berbasis Hasil dalam badan PBB global, kerja menggambarkan lainnya untuk membangun Generasi 3 Balanced Scorecard dalam Timur Tengah kementerian pemerintah. Para penulis mengusulkan bahwa dua kerangka yang konvergen dalam hal pendekatan yang digunakan untuk desain kerangka dan implementasi. Pendahuluan Penggunaan data kinerja untuk memantau, mengevaluasi dan meningkatkan e ff efektifitas dari organisasi telah menjadi aspek dari aktivitas manusia sejak awal peradaban . The konsep perdagangan antara masyarakat, penggunaan mata uang, dan penciptaan konstruksi monumental seperti piramida membuktikan kemampuan untuk membayangkan, mengatur dan mengelola aktivitas yang kompleks tergantung pada data yang dapat diandalkan bahwa pra-tanggal dunia modern. Kemampuan untuk terlibat dalam kegiatan kompleks yang membutuhkan manajemen organisasi skala besar telah hampir secara eksklusif sektor publik (atau setidaknya non-komersial) aktivitas untuk sebagian besar sejarah. Namun, pengembangan akuntansi keuangan dan perbankan di Italia 15 abad dan munculnya berikutnya dari perusahaan saham gabungan komersial di The Belanda dan kemudian Inggris di tahun 1600-an memicu munculnya organisasi yang benar-benar kompleks dalam sektor swasta. Konsekuensi penting dari perkembangan ini adalah untuk memungkinkan pemisahan 'manajemen' dan 'kepemilikan' aset dan akibat timbulnya organisasi sektor swasta modern. Dalam organisasi tersebut, manajer diadakan jawab untuk pengiriman satu set didefinisikan secara sempit dari hasil keuangan yang terkait terutama dengan nilai sekarang dari diperdagangkan modal organisasi (nilai pemegang saham) oleh kelompok didefinisikan erat dari pemilik (yaitu para pemegang saham, dan penyedia lainnya dari keuangan sumber daya) dengan harapan luas homogen. Ini fokus sektor swasta pada pengembalian keuangan tercermin dari keunggulan data keuangan sebagai mekanisme untuk memantau kinerja, evaluasi dan pengendalian di sektor ini. Sejauh sebagai efektifitas e ff keterlibatan manajemen dalam aspek-aspek lain dari kegiatan organisasi (misalnya dalam strategi komersial, sesuai dengan undang-undang hukum, pengadaan dan manajemen pekerja dll) dievaluasi secara eksternal, itu biasanya dikalibrasi dalam hal aktual atau yang diantisipasi dampak pada nilai pemegang saham. Terjemahan ini kinerja sektor swasta dalam satu set ukuran kinerja yang umum bagi semua organisasi saham gabungan juga memungkinkan perbandingan antar-organisasi, bahkan antara organisasi sektor swasta berbeda. The munculnya 'pemburu perusahaan' adalah ilustrasi yang kuat dari transparansi yang disediakan oleh penggunaan ukuran kinerja yang sebanding - dengan raider yang oportunis menggantikan manajer menjabat mana itu jelas bahwa mereka memanfaatkan miskin (dalam hal pengembalian keuangan) dari aset dipercayakan pada mereka. Namun, penekanan pada keuangan ukuran kinerja mulai dilihat sebagai sub-optimal oleh 1980-an, dan baru-baru ini reformasi manajemen telah berfokus pada cara-cara memperluas jangkauan non-keuangan 2! Seimbang Manajemen Scorecard dan Berbasis Hasil: Manajemen Kinerja Konvergen Sistem
 Copyright © 2GC Limited, 2015
 2 April 2015 2GC Conference Paper tindakan digunakan secara internal dan eksternal untuk memantau dan mengevaluasi kegiatan. Perubahan ini, semakin didukung oleh bukti kuat dari keberhasilan, telah melayani untuk meningkatkan 'kualitas' dari manajemen, yang diukur (sebagian) oleh kemampuan manajer untuk sukses mencapai tujuan 'strategis' dari waktu ke waktu. Sebaliknya, di sektor publik pemisahan 'pemilik' dan 'manajer' kurang jelas: kejelasan fokus sektor swasta pada pengembalian keuangan sederhana yang hilang, dengan organisasi kegiatan yang berbasis bukan pada prestasi web kompleks sosial, politik dan persyaratan etika yang ditetapkan oleh beragam kelompok pemangku kepentingan dengan motivasi yang heterogen dan pengaruh. Memang, di Inggris setidaknya, kurangnya ketentuan penganggaran modal di depan umum aturan akuntansi sektor tradisional membuat setiap penentuan 'kembali aset keuangan' cukup di FFI kultus. Akibatnya, pemantauan dan evaluasi kegiatan di sektor publik telah memiliki lebih fokus pada pencapaian tujuan non-keuangan, dan metode evaluasi secara tradisional telah lebih khusus disesuaikan dengan kebutuhan dan kepentingan tertentu pemangku kepentingan. Tapi ini kompleksitas tujuan dan metode beragam kegiatan monitoring yang diterapkan dalam sektor publik telah menyebabkan masalah transparansi, yang pada gilirannya telah dibatasi dengan kemampuan para pemangku kepentingan untuk memantau dan mengevaluasi kinerja sektor publik organisasi. Dengan kurangnya e ff efektif pengawasan, telah berpendapat bahwa sektor publik kegiatan memiliki ruang yang lebih besar untuk menjadi 'ine FFI efisien' dibandingkan dengan kegiatan setara dalam pribadi sektor: mengarah ke kekhawatiran kedua tentang 'nilai uang' dan 'kemampuan untuk mengendalikan' sektor publik . Kegiatan Dalam upaya untuk memperbaiki masalah ini dari pengawasan, dan isu-isu terkait e FFI efisiensi dan kontrol, perubahan terbaru dalam kebijakan dan manajemen sektor publik telah mempromosikan penggunaan alat sektor swasta dan kerangka kerja untuk mengelola aktivitas sektor publik - misalnya Seimbang Scorecard diamanatkan dalam Amerika Serikat pada 1990-an.