The CPA Journal

Balanced Scorecard Step-By-Step: Maximizing Performance and Maintaining Results

By Paul R. Niven
Published by John Wiley & Sons, Inc., 2002; $45.00; ISBN 0471078727
Reviewed by Michael J. Fischer, PhD, CPA, St. Bonaventure University

Since Robert Kaplan and David Norton first introduced the balanced scorecard in 1992, it has come to be heralded as one of the 75 most influential business ideas of the 20th century. But despite the number of books and articles published during the past 10 years describing the concept and its benefits, relatively little has appeared that describes the nuts-and-bolts of successfully developing and implementing a balanced scorecard. Paul Niven succeeds at filling this gap.

Niven is well qualified to advise readers on the practical issues of developing and successfully implementing a balanced scorecard system. He initially gained experience with the development and implementation of a balanced scorecard system at Nova Scotia Power, Inc., in the mid-1990s. Since then, he has consulted on successful balanced scorecard projects in a wide variety of organizations, including large public companies, public sector agencies, and nonprofits.

The balanced scorecard was initially conceived primarily as an improved organizational performance measurement tool, one that sought to overcome many of the perceived limitations of traditional, historically-focused, accounting-based metrics. The balanced scorecard has since evolved—particularly in those organizations where it has been most successful—to be an integral part of an enhanced strategic planning and management system.

After a conceptual overview and description of its benefits, Niven systematically describes the start-to-finish development and implementation of a balanced scorecard. This description begins with the process of gaining organizational sponsorship for the project, selecting and recruiting team members, and setting up organizational communications. This essential discussion sets the tone for the remainder of the book.

Given the centrality of organizational strategy to the balanced scorecard, Niven fittingly starts the detailed portion of the book with a description of organizational mission, values, vision, and strategy. This discussion includes not only the abstract concepts, which appear in many other publications, but also detailed descriptions of the process of developing effective, linked mission, vision, and values statements, and tying those to organizational strategies.

Niven then gives detailed descriptions of the four perspectives of the balanced scorecard: financial—customer; internal process; and employee learning and growth—and developing related objectives and performance measures. The portion of the book devoted to step-by-step balanced scorecard development concludes with a description of the processes for, and importance of, using the scorecard to articulate and test cause-and-effect linkages, and the process of setting priorities in the pursuit of strategic initiatives.

Going beyond the development of the balanced scorecard, Niven then explains how to embed the balanced scorecard in an organization’s management system and sustain the scorecard once it has been developed.

While the majority of the book deals with the application of the balanced scorecard in for-profit companies, Niven also includes a chapter devoted to the public and nonprofit sectors.

The book is generally very well written and easy to follow, and Niven uses many examples, figures, and illustrations to emphasize and clarify his points. The book would have benefited, however, from more examples from actual organizations, such as following the cases through various stages of development of the balanced scorecard to illustrate key linkages. This limitation notwithstanding, the book is excellent, and should prove useful to those interested in developing and implementing a balanced scorecard system.

Anyone seeking to institute a rigorous, integrated strategic planning and management system in an organization would do well to consider the balanced scorecard. This book is highly recommended to anyone considering a balanced scorecard system for their own organization or adding balanced scorecard consulting to their professional services portfolio.

Editor’s note: The cover article in the March 2002 CPA Journal, “Balanced Scorecared: Two Perspectives,” discussed two companies’ differing experience with balanced scorecard.