1. Summarize the process that Deb Young used to develop a balanced scorecard for GPI. 2. Identify the advantages and disadvantages of having a balanced scorecard at GPI. 3. Develop a proposed balanced scorecard to be presented to the Board of Directors at its next meeting.

4 Diagram a strategy map for a set of CSFs that you have included in your 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. ( 2013). Performance 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/10.4135/9781526426796 | Online ISBN: 9781526426796 SAGE 2013 IMA Educational Case Journal. All rights reserved. 2013 IMA Educational Case Journal. All rights reserved. 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This content may only be distributed for use within Wentworth Institute of Higher. http://dx.doi.org/10.4135/9781526426796 SAGE Business Cases Page 2 of 5 Performance Measurement at Great Persons, Inc.: An Application of the Balanced Scorecard SAGE 2013 IMA Educational Case Journal. All rights reserved. SAGE Business Cases 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 currently 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 referral services; consultation and coordination with affiliated agencies; daycare resources and referral grants; and early childhood programs for children, their families, and caregivers. GPI operates on an annual budget of $19 million and carries 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 Directorsthe business director, adult services director, human resource director, child and family services director, and communications and development directorreports to the executive director, Christine Sparkling, who then reports 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 basing 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 Page 3 of 5 Performance Measurement at Great Persons, Inc.: An Application of the Balanced Scorecard SAGE 2013 IMA Educational Case Journal. All rights reserved. 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 carried away here. We need funding to operate and be 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 correct 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 brainstorming. 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 nonverbal 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 results, 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 balanced 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 Page 4 of 5 Performance Measurement at Great Persons, Inc.: An Application of the Balanced Scorecard SAGE Business Cases SAGE 2013 IMA Educational Case Journal. All rights reserved. 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 brainstormed 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 on the performance for each CSF and explain any variance from the target. Assignment 1. Summarize the process that Deb Young used to develop a balanced scorecard for GPI. 2. Identify the advantages and disadvantages of having a balanced scorecard at GPI. 3. Develop a proposed balanced scorecard to be presented to the Board of Directors at its next meeting. 4. Diagram a strategy map for a set of CSFs that you have included in your balanced scorecard. About IMA IMA, the association of accountants and financial professionals in business, is one of the largest and most respected associations focused exclusively on advancing the management accounting profession. Globally, IMA supports the profession through research, the CMA (Certified Management Accountant) program, continuing education, networking, and advocacy of the highest ethical business practices. IMA has a global network of more than 80,000 members in 140 countries and 300 professional and student chapters. Headquartered in Montvale, N.J., USA, IMA provides localized services through its four global regions: The Americas, Asia/Pacific, Europe, and Middle East/Africa. For more information about IMA, please visit www.imanet.org. http://dx.doi.org/10.4135/9781526426796 SAGE Business Cases Page 5 of 5 Performance Measurement at Great Persons, Inc.: An Application of the Balanced Scorecard