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Designing a performance measurement system: accountants and managers diverge.

Evaluating departments' and employees' performance is essential in all organizations. Accounting measures form the basis of control through results, but both professionals and academics have noted that there are limitations to evaluating performance using traditional accounting measures. (1) They argue that managers lack an understanding of these measures, which are often imprecise, and focus particularly on measuring results and performance in the short term. Consequently, the reliance on accounting performance measures may lead to a dysfunctional organization and to disagreements between evaluators and the evaluated (the players involved). Moreover, depending on the context, negative consequences--tension at work, distrust of superiors, and the like--may occur when conventional accounting measures are taken into account in evaluating performance. (2)

To overcome the limitations of existing tools, Robert Kaplan and David Norton's study of the balanced scorecard (BSC) attempted to propose other, less conventional measures for evaluating performance. (3) Recent studies, however, have reported significant gaps among controllers, top management, and divisional managers regarding the design of the BSC for evaluating performance. (4)

In this context, we investigate how a performance measurement system (PMS) was designed for a large manufacturing company in France. We focus on one PMS, namely the French Tableau de Bord (TdB), and compare it to the BSC. Our aim is to highlight the differences between the design of a TdB, as conceived by the management control directors, and the expectations of the middle managers.

THE TABLEAU DE BORD IN THEORY AND PRACTICE

In French, Tableau de Bord means dashboard, and the manager is considered a pilot. Although the TdB has been in use since 1932, there are currently as many versions of it as there are management control authors. (5) In describing the TdB, we distinguish between how it looks in theory and how it looks in practice. Indeed, there is a large divergence between its theoretical foundations and how practitioners implement it. (6)

French TdB in Theory. The TdB is defined as a synthesized set of indicators organized into systems and used to aid in decision making and in coordinating and controlling actions. It should be clear and understandable. A manager should use it regularly, according to the needs of his or her business unit. Each TdB concerns a particular entity, and different TdBs coexist within a company:

* At different levels in the hierarchy, ranging from the TdB of an operational or functional team to the CEO's TdB, depending on the degree of responsibility.

* Horizontal TdBs for processes, projects, and product lines.

A TdB can be described as a tool that enables a manager to become "aware of the state and evolution of the business unit under his control, and to identify the tendencies that will influence it, in a way that's coherent with the nature of his function." (7) It is based on reports that show dynamic information from both financial and nonfinancial drivers. According to the layering principle of collecting information, management controllers consolidate TdBs from multiple departments until they reach the top-management level.

A CEO's TdB is often created by the corporate management control department at headquarters. The TdB makes it possible to monitor economic performance and make a number of rapid analyses. It provides a global vision of business operations and the state of the working environment, and it fosters dialogue between different hierarchical levels. (8)

The notion of a company's "network of TdBs" represents the essence of this tool better than any other concept. The next five steps define this network and its outcome (also see Figure 1):

1. Each manager sets his or her own TdB with appropriate parameters, given his/her local unit's objectives.

2. Each TdB has a column that describes the results realized, a second that describes targets, and a third that describes the differences between results and targets.

3. Each TdB at the same hierarchical or operational level should have the same unit structure to make it possible to combine the data.

4. The data collected should respect the hierarchical level.

5. Column totals are synthesized in an analytical manner to create top management's TdB. (9)

Divergences Between Theory and Practice. Empirical studies of the French TdB have revealed several differences between features in practice and those prescribed by academics. (10) Camille Carassus and David Carassus point out the following four key differences:

First, it appears that the TdB is "often used as a management tool based on a short-term perspective, which is influenced largely by historical data." Such measures essentially are based on previous budgets and the latest estimates. Only a few prospective indicators are integrated.

Second, the divergence between reality and a theoretical TdB stems from the nature of its measures. It is obvious that in practice the indicators remain mainly financial.

Third, the divergence between the theory and the practical use of TdBs is a result of their disassociation from the company's strategy. Several field studies show that a TdB is often produced on the initiative of middle managers and primarily to meet their own needs. These needs do not necessarily coincide with the company's strategic objectives.

[FIGURE 1 OMITTED]

Fourth, in theory, a TdB should be a short summary that is easy to use. In reality, however, it seems that firms usually adopt an overloaded tool that suffers from a lack of prioritization. (11)

A CLOSER LOOK AT THE BALANCED SCORECARD

The BSC is a system for managing performance that stems from an organization's vision and initial strategy. Its measures span four areas: financial performance, customer relations, internal business processes, and the organization's learning and innovation activities. (12) The concept of the BSC is based on an organization's strategic plan that is implemented by unifying the actions in all the departments concerned through a common understanding of its aims that thus facilitates the evaluation and updating of the strategy.

Since the work of Kaplan and Norton, the balanced scorecard has stimulated a great deal of interest, particularly in the United States. (13) In France, however, enthusiasm for this new tool has been limited. In a study conducted in 2002 by Ingmar Gehrke and Peter Horvath, only 41% of French companies in the sample knew about the BSC, whereas awareness reached 98% in Germany, 83% in the United Kingdom, and 72% in Italy. (14) Moreover, only 3% of the French companies surveyed were ready to incorporate this tool. One explanation for this resistance to adopting the BSC seems to be the extensive use of the TdB in France over the last 50 years.

Beyond the similarities between the TdB and the BSC (integration of nonfinancial information, selectivity of indicators, and consideration of strategic objectives), four main differences have been clearly observed. Let's take a closer look at each one.

Link to Strategy. Unlike the TdB, the BSC links performance measures to the strategic objectives within an organization based on a carefully considered strategic map (strategy map). The TdB, on the other hand, shows a set of indicators without real explicit links, and the BSC leads to a complete model in which various goals and their links are clearly identified in "strategic maps." (15) Furthermore, the promoters of French TdBs do not provide a list of the factors generating performance and systematic causal relationships but suggest that every manager should carry out the necessary analyses to discover the appropriate, relevant factors in his or her job and company. (16)

Usage and the Organizational Dimension. Marc Epstein and Jean-Francois Manzoni highlighted the fact that one of the main differences between the BSC and the French TdB stems from the organizational dimension. (17) Field managers use French TdBs to reflect their objectives and their operating conditions within the business unit/department concerned. In a completely different way from the generic BSC, managers use multiple versions (rather than a unique one) and a coordinated (rather than strictly top-down) approach in which the aim of the various TdBs is to construct a consistent device that expresses a strategy. In this way, the TdB seems more convenient for organizations in which each level of the hierarchy and each department wants to maintain a certain freedom.

Financial versus Nonfinancial Indicators. The use of the TdB indicates that, in a decentralized organization, the action levers are in the hands of the operational managers. Thus, it is assumed that top management is not concerned with operational indicators. Consequently, the TdB in French head offices uses mainly financial indicators. In contrast, the BSC tracks causal links at all levels of the hierarchy in a systematic and harmonized manner. Hence, the BSC uses both financial and nonfinancial indicators at each level of the firm.

Managers' Responsibility and Compensation. Considered a holistic system for measuring performance, the BSC provides different explanatory elements that link together nonfinancial and financial measures. (18) Thus, actions that enable drivers to progress are likely to improve results. In this way, the BSC (more than the TdB) makes it possible to reduce divergences between the evaluators and the evaluated as far as performance is concerned. Moreover, there is the advantage of the diversity of measures (operational, strategic, financial, and nonfinancial) necessary for each BSC. This diversity enables each operational or staff manager to justify his or her contribution to the global performance of the company, making it easier to offer incentives by reducing the problem of goal nonconformity. (19)

Table 1 summarizes the key differences between the French TdB and the BSC and sheds light on the distinctive characteristics of French and American companies in order to underline the related differences in performance measurement systems. (20)

AN INTERNATIONAL MANUFACTURING GROUP CASE STUDY

The design of the French TdB has rarely been studied in the literature, so we undertook a qualitative study to obtain data about it. Our goal was to better understand the phenomena as they occurred in their natural context, which would help us understand the real conditions of the TdB's design, and to examine the "behind-the-scenes view" of the TdB's use. The study findings will be useful to both designers and users of performance measurement systems.

The case study was carried out within a corporation, which we have called MFG for confidentiality reasons. This is an international group headquartered in France. The company's activities center on manufacturing, which generates the majority of its revenues, and financial activities, which support sales. The company operates in five regions (France, Europe, the Americas, Asia, and Africa). Each region is run by a Regional Management Board (RMB) and is headed by a member of the group's board of directors. Each RMB includes representatives from all the functions within the company in all market sectors and countries involved. With this new mode of management, the managing directors believe that decisions are made close to the local markets to ensure that the products and services proposed are likely to meet clients' wants and needs all over the world (see Figure 2 for details). (21)

[FIGURE 2 OMITTED]

The case study specifically concerns the project of designing and implementing a new PMS using a new TdB for the CEO. This project was undertaken between the beginning of 2004 and the end of 2005. We collected data from different sources using interviews, archives, documents, and workplace observations. We interviewed the managers and management controllers of the group regarding the design of the tools and measures for evaluating performance. The field observations concerning the project team (headoffice management controllers) provided an opportunity to understand why the middle managers felt they were "not being understood" by the accountants regarding the design of top management's TdB. (22)

A new performance measurement system for the entire group was necessary because the existing tool was insufficient for managing the performance of different business units within MFG because of MFG's recent partnerships with large companies and the increased development of its international subsidiaries.

The following sections present the context of the project, its different players, and the attitudes of top management and the departmental directors toward the project. An explanation of these elements will be useful in understanding the differences in viewpoints between the players involved in designing this new tool.

Context of the Project. MFG had to face intensified competition in Western Europe, which is the group's traditional market. Its new strategy consists of expanding beyond Europe to reach international markets, particularly North America, South America, and Asia. The ongoing slowdown in the main activity sector meant that the sales objective for 2009 remained uncertain. This may explain why top management was looking for assistance from the management controllers. The group information system consisted of numerous parallel subsystems and channels by which to access management information. In addition, the group reporting system was not well adapted to the international networks of clients, suppliers, and subsidiaries. This control system required a more consolidated, more reactive reporting tool.

[FIGURE 3 OMITTED]

The Players. The project was initiated in January 2004 by the previous director for management control (DMC) and was implemented in September 2005. Its principal players were the new DMC, who was the project leader; the director of the reporting and consolidation department, who was the delegated project leader; the director for budget; the director for information technologies (DIT); and the director for central accounting (DCA). The project team also included five dedicated management controllers: two in sales and marketing, two in production and industrial design, and one in support functions. There were no direct relationships between the members of the project team and the operational directors, who had refused to participate in the design of the new TdB. Figure 3 represents the relationships between the players.

Objectives and Scope. This project was intended to integrate the evolving needs that had resulted from the group's increasing globalization:

* A change was made in the consolidated financial reporting tool to make it more adequate for the allied firms and more reactive internationally.

* The creation of a new TdB for top management was launched as a result of the change in the consolidated reporting tool. The DMC had already informed the CEO of his intention to abandon the use of the former TdB.

Attitudes of Top Management, Department Directors, and Staff Directors. The then top management had not participated in the design and the implementation of the new consolidation and reporting tool (including top management's TdB), despite its strategic advantages. This can be explained by the change in the board of directors, which made it difficult for management controllers to examine and identify the needs and preferences of top management regarding the new TdB.

When the DMC approached the operational directors (industrial design, production, commercial, regions) to inquire about their information needs, they refused to participate in the requirements-gathering phase. In fact, they had asked the DMC to propose a method for reporting their contribution to the performance of the group and to the indicators, which they would decide at a later date. The operational directors had avoided making decisions because the managing directors had not yet made a decision about the project.

With the exception of the information technology director and, to a lesser degree, the human resources director, all other support function directors disagreed with the DMC's recommendation to extend the use of the new PMS to the support departments.

ADJUST THE TDB OR GO WITH THE BSC?

Our interviews with the players in head-office management control and the various managers, along with the documentary analysis and the notes taken during our observation, enabled us to obtain a large volume of useful information. Therefore, we have chosen to present the results of our study in four parts: (1) the directors' approach for management control in the design phase of the TdB, (2) the measures contained in this TdB, (3) the expectations of middle managers, and (4) an explanation of the observed divergences between middle managers and management controllers.

1. The Approach. In contrast to the BSC fundamentals, the TdB initially proposed by the central management control department (CMCD) did not sufficiently take into account the corporation's strategies. Thus, there was little connection between the strategic orientations and the measures used in the TdB. This model was based mainly on financial and accounting measures originating from the income statement, the statement of cash flows, and, to a lesser degree, the balance sheet.

When the TdB was designed, the CMCD had not succeeded in involving either the departmental directors or the regional directors in proposing measures that they might then use. Moreover, there was little communication about the project between the departmental directors and the staff directors within the group. This may be explained by unexpected turnover at the governance level of the group. The CMCD was therefore unable to determine the expectations of the head office and the board of directors concerning the performance measures. As such, a basic element of the BSC approach did not receive the attention it deserved.

2. The Structure. The model template for the TdB (Table 2) initially was proposed by the director of the CMCD and mainly concerned financial performance. It gave less consideration to the other aspects suggested by the BSC advocates, such as clients, internal processes, and organizational learning.

The structure of the TdB template is based on the contribution of each sector of activity to the corporation's financial performance. Each sector is divided into commercial regions that make their own contribution to the global results. This structure shows that the main measures are directed more toward short-term results than to how the financial output is generated. The operational managers contested this approach.

3. Expectations. The managers interviewed did not hide their dissatisfaction with the TdB. They said the TdB lacked flexibility, was unduly oriented toward reporting, and, as a result, it took quite long to obtain information. For all these reasons, the managers were somewhat uncomfortable with the accounting information systems and their outputs in terms of measuring performance. As one manufacturing manager explained:

Apart from certain tools which I have to use, the accounting systems aren't sufficiently oriented toward operations but really toward accounting professionals. An operations manager doesn't do accounting; he should be given something simple so he can have a quick look to give him the current situation, so that he knows how to act.

The tool proposed by the CMCD was viewed as inadequate for managers' decision making. Consequently, in contrast to the master scorecard promoted by the CMCD, middle managers within MFG tended to develop their own parallel TdB. In fact, as one manufacturing manager pointed out:

Often the indicators exist at a local level, but the management control directors do not know about them, and I mentioned that to the director for reporting and consolidation. But it's true that the reporting that we have at our level remains basic. It's Excel spreadsheets. Our own TdB is simple and based mainly on physical indicators.

[TABLE 2 OMITTED]

The managers used other types of information--process indicators, mostly--either to complement the accounting data or as a substitute for it. Similarly, the sales directors did not seem particularly interested in accounting devices. For them, qualitative indicators, such as the brand image, were more relevant than the accounting indicators.

One of the criticisms of the TdB project concerns the proposal to use return on invested capital (ROIC) as an indicator for performance management. Managers judged this indicator as potentially disadvantageous to the relationship of confidence that they wanted to establish with their collaborators. ROIC seems to be an inappropriate measure for evaluating the performance of business units and managers. For example, if the ROIC of region 1 is higher than that of region 2, this does not necessarily mean that 1 has performed better than 2.

Other parameters may come into play and distort the comparison. For example, when the MFG group uses the facilities of its division in South America, the ROIC of this region will not necessarily be higher because there are relatively few investments there. In fact, the ROIC will certainly be lower in France as most investments (in factories) have been made in France. In certain regions, such as South America, the ROIC may be in double digits, whereas in others it is less than 10%. Here we can see that such an accounting measure, which the designers of the TdB recommended, was not easy to implement. It was also considered unnecessary, and the middle managers did not welcome it.

4. Explanatory Factors. The following factors explain why middle managers are unhappy with using the TdB designed by the head-office directors for management control:

(a) The TdB is a power device.

The departmental directors and the staff directors were aware of the connection between the existing system of financial reporting and consolidation and the power that it gave them. Maintaining the power structures was connected with maintaining the status quo, despite the overt criticisms that could be made of the existing TdB. Managers saw the creation of a new TdB as an attempt to reduce the extent of their power by a proportionate increase in the blocking role of management controllers. This issue concerned both the French TdB and the BSC. It was a question of resistance to an accounting change, which could have been overcome by a better and continuous communication process.

(b) The TdB does not help with forecasts/simulations.

The major difficulty for managers was the low reactivity of the TdB, which happened to lack visibility/predictability. They (particularly the commercial directors) considered the existing TdB limited in helping with simulations. In the words of a sales director:

Today, the S3 tool (of the sales directors) originates from accounting; it is accounting, whether we like it or not. In fact, the advantage of accounting is to say if something is correct or not. It's not to be discussed. On the other hand, to make the S3 into a management tool, and for it to interest me, it must help in decision making. To bring a particular amount of money into the company, must I act on such and such a section? In fact, our S3 tool is much too accounting oriented; all it does is give the results. It's not sufficiently directed toward simulation and decision making.

The same sales director added:

On the other hand, we have a very good tool for Plans: SM, which is a simulation tool. And obviously one isn't used without the other. We need to rethink how these tools are structured. I think we need a sales tool that is not necessarily precise, but is correct in general. It must be a real simulation tool that enables decisions to be made.

The TdB did not seem to provide enough help with forecasts at the operational level. This is one of the most critical factors highlighted by the company's managers. Kaplan and Norton stated that a BSC is a proactive device because it abandons the historical and short-term drivers. (23) This is exactly what the managers of MFG pointed out.

(c) The TdB does not make it easy for middle managers.

To be able to fulfill its decisional role, the TdB must be capable of helping managers identify the relevant action levers. The tool in use at that period, however, was not seen in this way because the indicators originated mainly from accounting and financial measures. The latter can be qualified as "autonomous" and disconnected from other management parameters. As a sales director commented:

Generally, an indicator must provide a sense, a direction, and must be thought of in terms of an action lever. The correctness, the excessive accuracy of the figures isn't the problem. The other thing that's interesting is to have the figures over a long period, to know the historical situation, to be able to see the evolution. It's also necessary to be able to create internal and external benchmarks, above all with regard to competition. An indicator that's too local and internal isn't of much use.

It cannot really be said that the managers use the accounting information to provide themselves with a representation of their organizational reality. Nevertheless, in the MFG group, certain accounting indicators, such as the product converting value, commercial contribution margin (CCM), and guarantee costs (GC), contribute to structuring the managers' understanding of their business unit and that of the group when one of the group's strategic objectives is to reduce costs substantially.

Our study indicates that the designers of the TdB for top management listed the accounting indicators without giving deep consideration to their links to the strategic axis of general management. (24) Obviously this is a central difference from the BSC approach. Consequently, it was not easy for MFG managers to use these indicators to represent reality in their business units.

Despite the importance of the management controllers' efforts, managers had continued to see top management's existing TdB as ineffective from a decision-making point of view. This is because of its failure to fully consider the complexity of the working environment, its low involvement in the evolution of an activity (product life cycle; project, investment, and production phases; etc.), and an excessive focus on the exactitude of the figures rather than on improving decision making.

The findings of this case study show that, despite the efforts agreed upon by the head office to create a new TdB that would meet the needs of both top management and middle managers, significant misunderstandings remain. The BSC approach could provide practical solutions to the design and communication difficulties experienced by the designers and the users of the TdB. Table 3 summarizes the differences among three approaches to designing a TdB for top management: the BSC according to Kaplan and Norton, the TdB as proposed by the head-office controllers, and the TdB to manage performance as the operational managers would want it to be.

BUILDING A BETTER PERFORMANCE MEASUREMENT SYSTEM

This case analysis discussed an international industrial group that has unique and complex characteristics connected to its strategy, organizational structure, organizational change, management style, and way of measuring performance. Our results showed that it is difficult to propose a single tool for measuring performance in a consistent way that integrates the multiple dimensions of performance as perceived by all the players concerned, including management controllers and managers.

Operational managers did not divide performance into operational aspects or use controllers' accounting and financial measures. The cause of this divergence can be explained by (1) the differences in viewpoint between the two categories of players regarding those attributes of accounting information that are necessary to measure performance and (2) by the intrinsic biases between the former (evaluators) and the latter (evaluated) as individuals.

The case analysis emphasized the divergence between the theoretical foundations of the TdB and how practitioners implement it. We showed that, for the PMS designers (accountants), the technical value of the measure is the most important attribute, but the users (managers) evaluate the system in terms of organizational and strategic value and how it improves efficiency. In addition, the designers should keep in mind that accounting knowledge differs between managers and accountants. The study also highlighted the lack of connection between the measures used in the TdB and the managers' needs, the somewhat ineffective communication process in its design, and the use of some inconsistent measures for managing the company's performance, which originated mainly from external benchmarking. These limitations were partially related to the organizational change that MFG had experienced. This did not make it easy for the management controllers to implement the TdB appropriately, despite their willingness and praiseworthy efforts.

The case analysis suggests that adjusting MFG's TdB project by incorporating ideas from the BSC model might resolve some of the difficulties that the controllers encountered. Performance measures should not be chosen bottom-up according to local situations but, rather, should emanate from the company's strategic objectives and the associated action levers.

We view the two performance measurement systems--the TdB and BSC--as useful and necessary for both top management and middle managers. The needs of each category are different, however, and this often leads to middle managers underusing these tools and questioning their usefulness in decision making. Consequently, customizing performance measurement tools will enhance their adaptability and acceptability, thereby reducing the number of disagreements between management controllers and managers.

Finally, we highlighted the shortcomings of performance measurement systems based on accounting measures in precisely quantifying the costs and profits of a client-oriented strategy based on a multitude of objectives. More in-depth studies of the difficulties involved in controlling performance will be necessary to minimize the divergences observed in this case study.

ENDNOTES

(1) Robert S. Kaplan and David P. Norton, The Balanced Scorecard: Translating Strategy into Action, Harvard Business School Press, Boston, Mass., 1996; Robert S. Kaplan and David P. Norton, The Strategy-Focused Organization, Harvard Business School Press, Boston, Mass., 2001.

(2) David Otley and Raili M. Pollanen, "Budgetary Criteria in Performance Evaluation: A Critical Appraisal Using New Evidence," Accounting, Organizations and Society, May 2000, pp. 483-496; Henri Bouquin, Le Contrdle de Gestion (Translation: Management Control), 5th ed., Presses Universitaires de France, Paris, France, 2001.

(3) Kaplan and Norton, 1996.

(4) Christopher D. Ittner, David F. Larcker, and Taylor Randall, "Performance Implications of Strategic Performance Measurement in Financial Services Firms," Accounting, Organizations andSociety, October-November 2003, pp. 715-741; Mary A. Malina and Frank H. Selto, "Communicating and Controlling Strategy: An Empirical Study of the Effectiveness of the Balanced Scorecard," Journal of Management Accounting Research, Vol. 13, 2001, pp. 47-90.

(5) Annick Bourguignon, Veronique Malleret, and Hanne N0rreklit, "The American Balanced Scorecard Versus the French Tableau de Bord: The Ideological Dimension," Management Accounting Research, June 2004, pp. 107-134.

(6) Bouquin, 2001.

(7) Ibid., p. 397.

(8) Jean-Loup Ardoin, Daniel Michel, and Jean Schmidt, Le Controle de Gestion (Translation: Management Control), 2nd ed., Publi-Union, Paris, France, 1986; Michel Lebas, "Management Accounting Practice in France," in Alnoor Bhimani (ed.), Management Accounting: European Perspectives, Oxford University Press, Oxford, England, 1996, pp. 74-99.

(9) Charles T. Horngren, Alnoor Bhimani, Srikant M. Datar, and George Foster, Management and Cost Accounting, 3rd ed., Financial Times/Prentice Hall, Harlow, England, 2005; Charles T. Horngren, Alnoor Bhimani, Srikant M. Datar, and George Foster, Management and Cost Accounting, 4th ed., Financial Times/Prentice Hall, Harlow, England, 2008.

(10) Phillipe Lorino, "Le balanced scorecard revisite, dynamique strategique et pilotage de performance. Exemple d'une entreprise energetique." (Translation: "Balanced scorecard revisited, strategic dynamic and performance control. The example of an energy company"), French Accounting Association Conference Proceedings, 2001.

(11) Camille Carassus and David Carassus, "Apports et Principes d'une

Tableau de Bord Prospectif de type Balanced Scorecard" (Translation: "Usefulness and Principles of a Prospective Tableau de Bord"), Conference of the French Accounting Association, Tunis, May 2006, pp. 28-29.

(12) Kaplan and Norton, 1996.

(13) Christopher D. Ittner and David F. Larcker, "Innovations in Performance Measurement: Trends and Research Implications," Journal of Management Accounting Research, Vol. 10, 1998, pp. 205-239.

(14) Ingmar Gehrke and Peter Horvath, "Implementation of Performance Measurement: A Comparative Study of French and German organizations," in Marc J. Epstein and J.F. Manzoni (eds.), Performance Measurement and Management Control: A Compendium of Research, Studies in Financial and Management Accounting, Vol. 9 [book series], JAI Press, London, England, 2002, pp. 159-180.

(15) Kaplan and Norton, 2001.

(16) Michel Lebas, "Management Accounting Practice in France," in Alnoor Bhimani (ed), Management Accounting: European Perspectives, Oxford University Press, Oxford, England, 1996, pp. 74-99; Annick Bourguignon, Veronique Malleret, and Hanne N0rreklit, "Tableau de Bord and French Reaction on the Balanced Scorecard, paper presented at the European Accounting Association Conference, Athens, Greece, April 1820, 2001; Bourguignon, Malleret, and N0rreklit, June 2004.

(17) Marc J. Epstein and Jean-Francois Manzoni, "The Balanced Scorecard and Tableau de Bord: Translating Strategy into Action," Management Accounting, 1997, pp. 28-36; Marc J. Epstein and Jean-Francois Manzoni, "Implementing Corporate Strategy: From Tableau de Bord to Balanced Scorecards," European Management Journal, April 1998, pp. 190-203.

(18) Ittner, Larcker, and Randall, October-November 2003.

(19) Srikant Datar, Susan Cohen Kulp, and Richard A. Lambert, "Balancing Performance Measures," Journal of Accounting Research, June 2001, pp.75-92.

(20) Bourguignon, Malleret, and N0rreklit, April 18-20, 2001; Bourguignon, Malleret, and Hanne N0rreklit, June 2004; Horngren, Bhimani, Datar, and Foster, 2005.

(21) These elements are taken from the annual report of the group's activities for the year 2005.

(22) The TdB project team is made up entirely of accountants and management controllers.

(23) Kaplan and Norton, 1996.

(24) We use the term "listed" because the indicators contained in the top management's TdB do not originate from a map of the links of causality between the strategic objectives (see Kaplan and Norton, 1996, on how to construct a strategic map).

By Walid Cheffi, Ph.D.; Ananth Rao, Ph.D.; and Adel Beldi, Ph.D.

Walid Cheffi, Ph.D., is an assistant professor in the Rouen Business School in Mont-Saint-Aignan, France. He can be reached at +33 (0)2 32 82 46 98 or walid.cheffi@rouenbs.fr.

Ananth Rao, Ph.D., is associate professor and dean of the College of Business Administration at the University of Dubai. You can contact Dr. Rao at +97 1420-72-618 or arao@ud.ac.ae.

Adel Beldi, Ph.D., is assistant professor in the IESEG School of Management in Lille and Paris, France. Dr. Beldi can be reached at +33 (0) 320 545 892 or a.beldi@ieseg.fr.
Table 1: The Distinctive Features of French and American Companies

Theme                    France                   U.S.

Performance              Tableau de Bord          Balanced Scorecard
Measurement System

Year of introduction     1932                     1992

Underlying strategic     Managers' subjective     External (objective,
concept                  conception               Porter's model)

Focus                    Process of               Ready-to-use tool
                         construction
                         (conceptual)

Deployment               Negotiation between      Strictly top-down
                         different levels

Main emphasis            Learning                 Rewards

Responsibility level     Process-oriented         Individual
                         Collective               responsibility
                         responsibility

Compensation             No relationship          Linking reward to
                                                  performance measures

Extent                   Differentiated systems   Common system

Indicators               Financial and            Mixed and organized in
                         nonfinancial: mixed      four categories

Link to strategy         Not direct overall       Direct (the BSC is a
                                                  strategic management
                                                  system)

Causal relationships     Relatively open          Systematic and strict

Local application        Explained using          No detailed method
                         examples and methods

Link between type of     Mainly financial at      Balance between
indicators and           top levels of            financial and
hierarchy level          hierarchy                nonfinancial
                                                  indicators at all
                                                  levels

Basic elements of society

Individualism            Lower                    Higher

Hierarchy in society     Omnipresent              No hierarchy

Centralization           Higher                   Lower

Basic social demand      Respecting honor         Respecting contracts
                                                  and fairness

Perception of            Threat                   Opportunity
performance-based
rewards

Attitude toward          Negative                 Positive
external control

Employee dismissal       Almost taboo             Legitimate

Top management           Practically no           Extensive management
                         management education     education

Social status of         Lower                    Higher
management

Belief in management     Lower                    Higher
tools

Future orientation       Lower                    Higher

Adapted from Annick Bourguignon, Veronique Malleret, and Hanne
Norreklit, "Tableau de Bord and French Reaction on the Balanced
Scorecard," paper presented at the European Accounting
Association Conference, Athens, Greece, April 18/20, 2001; and
Charles T. Horngren, Alnoor Bhimani, Srikant M. Datar, and George
Foster, Management and Cost Accounting, 3rd ed., FinancialTimes/
Prentice Hall, Harlow, England, 2005, p. 800.

Table 3: Three Design Approaches to Performance
Measurement Systems

Theme          The Model of the TdB as       The Balanced Scorecard
               Conceived by Controllers      (Kaplan and Norton)

The Approach   Traditional value chain       Traditional value chain

               Static hierarchical           "Top-down" construction
               construction (from
               controllers to top
               management)

               Weak links between the        Strategic map and links of
               indicators and the            causality between the
               strategic objectives          indicators and the
                                             strategic objectives

               Low involvement of top        Total involvement of
               management                    top management

               Main communication plan       Communication plan prior
               envisaged after the TdB       to the process
               implementation

The Contents   Financial perspective         Balance between financial
               dominant                      and nonfinancial
                                             perspectives

               Financial performance         Overall performance
               management                    management

               Monitoring indicators,        Performance indicators
               mainly of a financial type    that monitor and forecast

               Few operational drivers       Operational drivers taken
                                             into account

The Layout     Voluminous scorecard          Synthesized scorecard

               Some missing indications      Indication of drivers'
               of targets                    targets
               Presence of graphs and
               commentaries

The Main       Income statement indicators   Financial ratios (income
Performance    according to the strategic    statement and balance
Drivers        analysis axis of CMCD:        sheet), ratio of strategic
               ROIC, working capital,        positions coverage, ratio
               assets turnover, and a few    of availability of
               balance sheet ratios          strategic information,
                                             customer satisfaction,
                                             internal processes
                                             quality, number of
                                             initiatives per employee

Theme          The Tool as Required by
               Operational Managers

The Approach   Links of cause and effect for
               each manager

               Participating

               Map of objectives at a local
               level, not necessarily linked to
               corporate strategies

               Imperative involvement of
               top management

               Prior and continuing
               communication plan

The Contents   Balance between physical,
               financial, and nonfinancial
               indicators

               Management of
               "departmental" performance,
               which is qualitative

               "Departmental" type

               Dominance of physical
               operational drivers

The Layout     Synthesized scorecard

               Importance of targets, graphs,
               and commentaries

The Main       Components processing in
Performance    minutes, Kaizen, sales
Drivers        contribution, level of
               customers' and employees'
               satisfaction, internal
               production costs, brand
               image, "POKAYOKE,"
               supply chain quality,
               number of initiatives per
               employee, and implementation
               percentage
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Author:Cheffi, Walid; Rao, Ananth; Beldi, Adel
Publication:Management Accounting Quarterly
Geographic Code:1USA
Date:Mar 22, 2010
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