Masons Masons is a professional accounting and consultancy firm specialising in audit, tax and consultancy services, operating in three main offices located in Melbourne, Sydney and Auckland. Masons has seven partners and a managing partner: Sam Kean. Sam has been managing partner for just twelve months and she is intent on implementing some new practices in an attempt to re-invigorate the firm after what has been a decline in financial performance over recent years. Masons has a clear strategy: remain in the top three accounting and consultancy firms in its market segment, where top three is measured by client growth, built on long-term relationships developed through professional competence and integrity. Soon after becoming managing partner, Sam set out to try and bring this strategy to life through the development of a more comprehensive performance measurement system in the form of a balanced scorecard. Up until then, Masons had focused on just two key measures: total billable hours and operating profit. The first attempt at a scorecard by the partners in conjunction with the chief accounting officer is shown in Exhibit 1. Exhibit 1 Draft Balanced Scorecard by office location Financial Perspective Service revenue growth Profit margin % Professional salaries growth Melbourne Sydney Auckland Target Actual Actual Actual 12.0% 10.0% 8.0% 13.0% 15.0% 12.5% 13.5% 15.5% 5.0% 6.5% 10.0% 9.5% Customer perspective Number of new clients against target 100.0% 86.0% 79.0% 88.0% % of Client complaints resolved within 3 days 100.0% 79.0% 72.0% 78.0% Billed hours v's estimated hours 100.0% 94.5% 83.0% 89.0% Page 21 Internal process perspective Total billable hours against target 100.0% 73.0% 69.0% 76.0% Administration costs as a % total costs per client job 25.0% 33.0% 35.0% 33.0% Overhead expenses as a % of total expenses 30.0% 77.0% 90.0% 83.0% Learning and growth perspective Number of valid employee suggestions received 100.0% 24.0% 26.0% 26.0% annually against target Employee turnover 5.0% 7.50% 12.00% 9.00% Total training hours against target 100.0% 79.5% 55.0% 66.0% Sam was not too sure whether this scorecard properly captured what she had hoped. Masons had recently hired a new graduate accountant - Alex - to help drive the improved financial performance required at Masons. At first glance, Alex was relatively unimpressed by the balanced scorecard (developed by the partners) as well. Alex had studied performance management and scorecard issues and suggested to Sam that a strategy map might be useful in producing a better scorecard. Alex and Sam met a number of times to work towards the development of a better scorecard. The first thing they did was to develop three strategic levers as a way for staff to better connect with Masons strategy. These strategic levers are provided in Exhibit 2. Alex explained that the strategic levers would be able to facilitate the development of a strategy map, which in turn would inform a new scorecard with suitable (financial and non-financial) performance metrics. Exhibit 2: Masons Strategic Levers 1. 2. 3. Attract and retain the best talent and focus on the development of our people Grow the client base through high quality work based on long-term relationships Improve long-run profitability Required: Alex has been assigned the task of preparing a draft strategy map for consideration at the next partners' meeting. State and briefly explain TWO key characteristics of a good strategy map. Use the case facts to clearly illustrate. (6 marks)