HAS Case

Following your successful consulting task at Kilgors where you assisted the Wine Division with the development of a balanced scorecard, offers of more work are coming your way.

A professional consulting firmHepburn Architectural Solutions (HAS)has engaged your services to assist with improving the performance evaluation system.New managing partner - Mackenzie Lorry -is very keen to improve the quality of the performance measurement system.Mackenzie has asked the new accounting graduate - Bindiya Byno -who recently joined the firm, to make this a top priority.

HAS is an architectural professional services firm specializing in the design, construction oversight and delivery of educational spaces.HAS is organisedin four work-unit areas (design, construction oversight, delivery services and professional support services).However, it is common to see the use of short-term cross-work-unit teams formed to work on specific projects.

HASs overall strategy relates to its desire to be in the top-3 architectural firms in the Asia-Pacific region for education-baseddesign-and-buildprojects. HAS has three keystrategic planksdriving organizational priorities and operations.These are shown in Exhibit 1.

Believing it should be the feature of the new performance measurement system, Bindiya set about developing a balanced scorecard.Her first draft of the balanced scorecard is provided in Exhibit 2.

Once an organisational-level scorecard is agreed upon, Mackenzie wants to explore the use of scorecards across different work-units within HAS.She has asked Bindiya to explore how scorecard performance for the main work-unit areas could form the basis of a new bonus plan across HAS.In the past HAS has not used bonus plans, but MacKenzie really wants to disrupt current practices and norms. While only in the early stages, Bindiya has decided the following:

1.A scorecard would be prepared for each of the four-key work-unit areas: design, construction oversight, project delivery and professional services.

2.Most measures will be common across the four scorecards but up to 25% of the measures will be unique to reflect the specifics of the work-unit.

3.All measures will be weighted equally in the determination of a weighted index, reflecting work-unit performance

4.For each metric, actual performance against target will be measured in a simple system of a score of '1' if target is reached; but '0' if target is not reached.

5.The bonus pool (based on organisational profits) will be distributed to the work units on the basis of relative performance as reflected in the weighted index of each work unit.

6.The practice-manager for each work-unit will be free to distribute the bonus within the work unit as they see fit.

Bindiya is expecting a lot of opposition to

the idea of relative scorecard performance across work-units being used as the basis of thenew bonus system;and

the specific structure of her proposed bonus plan.

She seeks your help in framing her views for future meetings.She asks youto provide a caseagainst the useof the scorecard [as outlined above] asthe basis of the bonus systemat HAS.To streamline her views, Bindiya requests you focus on THREE key potential shortfalls/issues. (9 marks) (up to 300 words).