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Management Case Study

Executing Strategy and Aligning Financial
Planning: Balanced Scorecard Best Practice
at RBGE

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Management Case Study. consulting and training to performance orientated companies. BWMC Ltd.marr@ap-institute.com).ap-institute. Bahrain and is a Fellow of the Advanced Performance Institute. © 2012 Advanced Performance Institute. research. B. J . It provides expert knowledge. The Advanced Performance Institute (www.Executing Strategy and Aligning Financial Planning: Balanced Scorecard Best Practice at RBGE API Case Study Executing Strategy and Aligning Financial Planning: Balanced Scorecard Best Practice at RBGE By Bernard Marr* and James Creelman Abstract: This case study explains how RBGE created a strategic performance management framework that contains objectives in five interconnected perspectives. and Creelman.(2012) Executing Strategy and Aligning Financial Planning: Balanced Scorecard Best Practice at RBGE. The framework depicts how its activities deliver the desired impact and outcome objectives. The Advanced Performance Institute (API) is a world-leading independent research and advisory organisation specialising in organisational performance. Version: 02January 2012 * corresponding author Bernard Marr is the Chief Executive and Director of Research at the Advanced Performance Institute.com Page 2 .ap-institute. governments and not-for-profit organisations across the globe. all of which are underpinned by resource and governance objectives. (All rights reserved) www.ap-institute. The case study also describes how the Strategic Objective Costing System has been aligned to the Balanced Scorecard so that it provides information to senior management on where staff efforts (and costs) are being deployed and how this is contributing to the delivery of the strategic objectives. E-mail: bernard.com James Creelman is working in the Strategic Planning and Quality Management Section of the Ministry of Works.. For more reading material or information on how the API might be able to help your organisation please visit: www.com How to reference this case study: Marr.

RBGE’s 250 employees are committed to the building of public understanding.and targets) is the RBGE’s framework for delivering its mission and therefore executing its strategy. adding that this failure was in part due to the vagueness of the generic performance guidelines that were issued by the Government. RBGE is a Non Departmental Public Body that is sponsored and supported financially (approximately 74%) by the Scottish Government’s Rural Payments and Inspections Directorate. ICT requirements. This commitment is crystallized in a focused mission: “Exploring and explaining the world of plants for a better future. BWMC Ltd.ap-institute. the Director of the Corporate Services Division (responsible for the organization’s finances. Dr Alasdair Macnab. Governed by a Board of Trustees appointed by Scottish Ministers. (All rights reserved) www. RBGE also receives income from research grants. Corporate Services and Enterprise. © 2012 Advanced Performance Institute. scientific capacity and world class research to shape a better future for all and to champion the importance of plants as the foundation of the biosphere.” Boasting a rich living collection of plants across four gardens in Scotland. RBGE is organized into four divisions: Science. with a directorate staff supporting the Regius Keeper (the Chief Executive Officer) Professor Stephen Blackmore CBE FRSE. estates management. Strategy Map – see Figure 1 – and an accompanying set of Key Performance Indicators – KPIs .Executing Strategy and Aligning Financial Planning: Balanced Scorecard Best Practice at RBGE API Case Study Executing Strategy and Aligning Financial Planning: Balanced Scorecard Best Practice at RBGE Introduction Founded in the 17th century as a physic garden. admisions. donations and other capital grants. the Reasons for Introducing the Balanced Scorecard Royal Botanic Garden Edinburgh (RBGE) is a The Balanced Scorecard (which comprises a world-renowned centre for plant science and education. education courses.com Page 3 .” he says. whom is also appointed the Queen’s Botanist in Scotland. personnel. “Although corporate planning commenced in RBGE in 1988. commercial activity. it had long struggled to produce corporate plans that were both of strategic and practical value to the organization while also being acceptable to the Scottish Office. Horticulture. The present Balanced Scorecard was configured in 2010 but evolved iteratively from an initial scorecard system that was established and implemented in 2004. corporate planning and performance management amongst other services) explains that the scorecard was introduced primarily as a mechanism for creating and implementing corporate plans that met the requirements of both RBGE and the Scottish Office (a department of the UK government until 1999) and then the Scottish Government (following that year’s establishment of the Scottish Parliament).

Executing Strategy and Aligning Financial Planning: Balanced Scorecard Best Practice at RBGE API Case Study Figure 1: RBGE Balanced Scorecard Strategy Map © 2012 Advanced Performance Institute.com Page 4 . (All rights reserved) www. BWMC Ltd.ap-institute.

” divisional plans useful for he suitable framework to bring says. “What was missing was an understanding that it was unsuitable for the needs of RBGE.” governance processes at RBGE. BWMC Ltd.” aware of thanks to his professional management accounting training (CIMA).ap-institute. Additionally. that would match costs to objectives then a more comments Macnab. Although supportive of the Model. who felt was the lack of a there was no useful collaboration with Scottish together all available information in a cohesive and Office officials and who therefore began to perceive integrated way that would permit a strategy for the corporate planning as little more than an annual future to be formulated and that would also capture exercise completed solely for the benefit of the and benefit from the input from a variety of expert Scottish Office. rational basis for resource allocation could be put in “However. “Because of the frustrations be trained to conduct the required assessments arising from this inability to communicate effectively against the Model’s nine criteria. Macnab had trained as a abundance of material contained in the plans. a resource downwards (to staff) or upwards (externally to the requirement that would not be tolerated within Scottish RBGE. despite the challenges staff at differing organizational levels. That said. that internal staff were intended to inform future work as well as would be better informed about how their activities serving as a useful internal communication contributed to the overall success of RBGE and mechanism. Macnab turned his carried on with its current work programs with little attention to the Balanced Scorecard. he concluded level. Office) these difficulties manifested to assist senior management with themselves in a failure to fully implement our strategy and typically the organization simply In scouting for an alternative. “It was clear from internal interviews would provide a basis for informed discussions with carried out in 2009/2010 that staff members did find the Scottish Government. our principle external the corporate and stakeholder. Macnab continues that although there was an With a previous employer.Executing Strategy and Aligning Financial Planning: Balanced Scorecard Best Practice at RBGE API Case Study “This became a source of irritation.com “I built on the Page 5 .” he recalls. if a learning more about their organization and what methodology could be identified and constructed activities other than their own were carried out”.” he says. “The amongst the senior staff that the divisions had to rigidity in applying the model was one downside as work together to achieve the overall corporate was the fact that a team of assessors would need to strategy. which he was concern for the future. “It was RBGE’s senior staff continued to expend significant concluded that if RBGE was able to identify a amounts of time and effort into developing corporate framework that would guide and focus the efforts in plans and supporting divisional strategies that jointly developing a corporate plan. what became apparent from the interviews and documentary place analysis was that staff suffered from a lack of clear prioritization of activities and thereby improve the understanding of what was required of them. they lead assessor for the European Foundation for lacked a logical way to synthesize the plans which Quality Management (EFQM) Excellence Model (1) came from the divisional levels up to the corporate . © 2012 Advanced Performance Institute. frustration and Macnab recalls that contributing to these failures ultimate disillusionment to RBGE staff. (All rights reserved) www.

by the RBGE. “I considered that of implementation phase. resources and infrastructure. articles on the Balanced Scorecard and I noted its commenced during the RBGE Senior Management popularity amongst a cross section of types of Group Planning Conference in September 2009: a organizations. These outcomes represent the vision of the Scottish Government “to create a more successful country where all of Scotland can flourish by increasing says Macnab.ap-institute. internal resources. (All rights reserved) www. the safe. “This forthcoming review very much which But a major scorecard update Macnab calls “the second focused the minds of the Senior Management Scorecard Evolution Group as the global reputation and standing of the The Balanced Scorecard was introduced to RBGE’s RBGE stood or fell by the report from the Strategic Senior Management Group during the 2004 annual planning conference. governance. and strategic management needs by associating a Visitor Services offerings by a panel of international costing system with the Balanced Scorecard (which experts on these various output activities carried out eventually led to fruition – see below).Executing Strategy and Aligning Financial Planning: Balanced Scorecard Best Practice at RBGE API Case Study knowledge I had by reading a number of books and organization. A Scotland that is fair. therefore. each of which claimed to be able to revision use it successfully. communicating with the Scottish and opportunities for all. tolerant and green.com Page 6 .” Scottish Government’s National Outcomes: A Fifth Perspective A more powerful reason for a substantive review of the scorecard was the introduction of the Scottish Government’s National Outcomes in January 2009. and staff. Government and for encouraging the divisions to work effectively for the greater good of the © 2012 Advanced Performance Institute. well-educated country. BWMC Ltd. Horticulture. The Senior Management Group Planning Conference reviews the Balanced Scorecard each September for currency and relevance and amends as required and which serves as the first stage of the annual corporate/strategic planning cycle. their views would be taken into account when formulating the Corporate Plan.” Macnab explains. Review Group. The original Balanced Scorecard comprised the four perspectives of audiences.” he says. with a vibrant economy ambition to live in a successful Scotland: a healthy. “Additionally. the Strategic Review Group was expected to make constructive suggestions to the RBGE on strategy and. The first iteration in 2004 posed challenging questions such as who were our audiences. Education.” all the popular frameworks available the Balanced Part of the reason for a major review and update Scorecard would be the most likely to meet the was that the senior management team was needs of RBGE. sustainable economic growth. Balanced Scorecard become a valuable tool for more effectively implementing the strategy of RBGE. All public bodies had to contribute to at least one National Outcome.” He adds that he believed that preparing for the November 2009 Strategic Review there was also an opportunity to develop an Group – a quinquennial (five yearly) review of the effective costing system to support RBGE’s RBGE’s Science. which was quite illuminating and it took time to remove the perception of that all the “customers” were internal.” This set out their Gradually evolving in content and form.

designed and written. National Outcomes”.” he says. was that of adding this fifth perspective. and new relevant measures discussed with staff and agreed with directors before being attached to the objectives within each scorecard. “The strategy maps for the RBGE and divisional scorecards were redrawn. Macnab adds that by understanding and as a centre of excellence in plant biodiversity. These capture the key effects that RBGE has on society and therefore the delivery of the outcomes: Impacts such as “discovery. the First Minister [the leader of the Scottish Government] wrote to express his appreciation of the way in which we had been able to make direct linkages from our Impacts to the RBGE 2010 Balanced Scorecard – The Corporate Plan Perspective 1: The Scottish Government National Outcomes Visually described in figure 1. (All rights reserved) www.” and “improving quality of life.” “conservation. This work is the foundation upon which our Institution’s reputation and expertise is built. anything this addition would fully align the work of environmental level. Our research is user driven and for the benefit of other bioscientists.” “environmental impact.” Figure 2 shows RBGE’s KPIs and Targets for the National Outcomes. “Discovery. Perspective 2: Impacts Descending down the Strategy Map we find RBGE’s “Impacts.” of which there are eight. © 2012 Advanced Performance Institute. the eleven Scottish Government National Outcomes with which RBGE is aligned sit at the top of the RBGE Strategy Map: outcomes such as “research and development.which described the supporting activities for objectives. relating to the macro-environment it became easier to better position RBGE when making cases for support from Government funding for projects of various kinds. with all divisions reporting to the new version from April 1 2010 – the beginning of RBGE’s financial year. A revised Balanced Scorecard was prepared in early 2010. called simply: Scottish targets as well as reducing significant energy costs. (see below for a description). and horticulture. perhaps.” and “public services.” Each impact has a brief description that is then more fully explained and is supported by KPIs as well as a listing of key partners with whom RBGE must work closely with to most effectively deliver the impact. As much as thereby increasing efficiencies at a micro-economic Government National Outcomes. Of the myriad benefits delivered through the new scorecard. RBGE presented a Corporate Plan that set out the direct contributions that we make to the achievement of eleven of the National Outcomes set by the Scottish Government.com Page 7 .ap-institute. RBGE with the requirement of the Scottish Government. systematics.” he explains. BWMC Ltd.Executing Strategy and Aligning Financial Planning: Balanced Scorecard Best Practice at RBGE API Case Study The requirement for RBGE to link to these refurbishment of the RBGE glasshouses – which outcomes led to the formulation of a fifth Balanced would contribute to Scotland’s carbon reduction Scorecard perspective. new objectives statements written. which had been evolving for a number of years from a very poor position (as cited earlier). Macnab argues that most importantly. For example. development of work programs . “An example being the major champion innovation and generate new knowledge taxonomy.” is described as: “We will Moreover. “In 2010. “Subsequently.” he says.

combined with our Strategic Objective Costing system.Executing Strategy and Aligning Financial Planning: Balanced Scorecard Best Practice at RBGE API Case Study the Government.com Page 8 . is for organizations to switch to concentrating on saving input costs without due regard to the impact on outcomes which after all is the purpose of the organization”. and the recognition and “RBGE is Scotland’s leading international player in plant systematics and biodiversity and we contribute An Environmental Sustainability KPI is Tonnes of to the Nation’s role in global initiatives to describe CO2e Produced and key partners include The the world’s plant biodiversity”. including financial ones. (All rights reserved) www. a part of the description of provides useful insights into safeguarding strategic investments when purses are tight. BWMC Ltd.ap-institute.” Returning to the RBGE Strategy Map. For example.” “education. habitat restoration and poverty alleviation. and Consortium for the Barcode of Life (CBoL).” heritage. University of Edinburgh. “One of the dangers of any crises. meaning that we will be better placed to deploy our scarce resources to best “Environmental Sustainability. Collectively these represent the primary work of a research botanic garden. supporting A KPI considers the total number of publications and key partners include Scottish Government’s Directorate for Rural & Environment Research and Analysis (RERAD).” reads. naturalists and to place the principles of sustainability at the heart the public. climate change impacts. These Activities are aligned upwards to achieve the Impacts. For example. which in turn contributes to achieving the National such buildings. and later states: “Our Scottish Government and Carbon Trust Scotland science (an independent not-for-profit company set up to underpins environmental endeavours challenges in that address biodiversity accelerate the move to a low carbon economy). The detailed explanation considers the role of the the protection and enhancement of the natural and discovery objective on both a national and cultural international level. conservationists. a section reads: understanding of the effects of climate change.” and “finance.” of all its activities. explains Macnab.” and “environmental sustainability.” These Resources are described and have fully fleshed out strategies. will help keep the organization focused on its outcomes. Strategic Objective Costing System Given the enormous resourcing challenges that UK public sector must contend with over the coming System has been implemented by RBGE and Next on the Strategy Map we find RBGE’s five Activities investment: resources such as “people. promotion of sustainable Resources use. “The Balanced Scorecard. which is an international initiative devoted to developing DNA bar-coding as a global standard for the identification of biological species Activities. a pioneering Strategic Objective Costing Perspective 3: Activities Outcomes: Activities we find the resource areas requiring as “biodiversity.” As with Impacts. conservation. the Activities are fully explained. These principles will embrace the fundamental role of plants to a sustainable planet. “RBGE aims © 2012 Advanced Performance Institute.” “land and years. conservation of ecosystem services. and are supported by KPIs and a listing of the key partners.

The Balanced Scorecard conjoined with this costing system increases the Board’s and executive the relationships between the objectives in each perspective with those in other perspectives.” and “External Relations. Macnab continues: directs and controls its functions and relates to its stakeholders: There are three Governance objectives: “Management and Control. BWMC Ltd. calculated. retail.” “Strategy.Executing Strategy and Aligning Financial Planning: Balanced Scorecard Best Practice at RBGE API Case Study effect by understanding the impact of our actions on is doing and achieving and.” To explain. by selecting suitably qualified staff (people) and investing sufficient financial resource (cash) high quality biodiversity research (Activity) can be carried out leading to RBGE’s Discovery (Impact) occurring which in turn contributes to Research and Innovation (Scottish Government’s National Outcome). therefore. For control purposes the budgets are allocated to Divisional Directors and then delegated to cost centre managers and therefore the Strategic Objective Budget is also reconciled to the traditional centre budgets to enable effective management control activity to occur. As a consequence of this investment the visitor numbers increased. (All rights reserved) www.” Macnab neatly describes the causal link from the Governance perspective through the other enabling perspectives and ultimately to the Scottish National Outcomes.” he says.” management’s knowledge of what the organization © 2012 Advanced Performance Institute. and also how the staff members grouped by cost centres contribute to one or more strategic objectives. catering and exhibition offerings. governance the objectives. “The results from this innovative accounting process overcome such deficiencies by showing information on which staff members contribute to each strategic objective. Macnab explains that because organizational structures do not necessarily follow the corporate strategy. the principal purpose of strategic Governance objective costing is to provide information to senior A Governance perspective is found at the base of management on where staff effort is being deployed – either directed or self–managed.” is improved.com Page 9 .ap-institute. the financial returns dramatically improved and greater communication of our purposes was achieved by the increased visitor flow through our exhibitions. there is inherently a disconnection between the financial information provided from cost centre reports and reporting on the achievement of strategic objectives.” he says. “A great benefit of the Balanced Scorecard is that it enables the Senior Management Team to assess With costs for achieving the strategic objectives cost the RBGE Strategy Map and is the way that RBGE “As we monitor progress monthly we can adjust emphases throughout the year to maximize overall achievements. “As one illustration. Another example of the cause and effect relationship could be the investment of capital funding in a new Visitor Facility to provide improved educational. a Strategic Objective Budget is then developed. The Strategic Objective Costing system provides the necessary information to show the input costs for each strategic objective which can then be married up to the KPIs that are linked to these objectives.

“This is attributable to the fact that He continues that those Heads of Departments will Scorecard provided them with the means to the staff care about their work and the Balanced have consulted with their staff. “There is much greater awareness of what the organization is trying to achieve and how it is going about it.” he Scorecard. a staff member from Corporate Services produces reports from the performance management system (RBGE © 2012 Advanced Performance Institute. that discussions on objective definitions and the selection of metrics has led to strategy and corporate planning entering the everyday vocabulary of staff and so is no longer confined to just a few very senior members of staff.”” Macnab explains. Macnab cites the Staff Involvement “By developing the fifth perspective in the Balanced link with Scottish Government’s National Outcomes. It should be made clear that there is sufficient flexibility to allow for emergent strategies to come forward during the planning period and for the system to be amended articulate their concerns and hopes.Executing Strategy and Aligning Financial Planning: Balanced Scorecard Best Practice at RBGE API Case Study Divisional Scorecard says. Macnab stresses the critical importance of involving staff in developing the divisional scorecards.” explains expected performance in days of severe restraint in public sector financing and the resultant resourcing constraint that RBGE. thus ensuring organizational buy-in to the goals and objectives. (All rights reserved) www. “These objectives are then reflected in the individuals’ forward job descriptions against which individual performances are judged during the personnel appraisal process.” he comments. “It is also easier to communicate The RBGE Corporate Balanced Scorecard is in an intelligent manner the future strategy and supported by aligned scorecards for each of the four divisions. as with all similar organizations. “The contributing divisional objectives are discussed and agreed by me and our coordinator in consultation with the divisional directors who will have previously held discussions with and obtained ideas and agreement from their Heads of Departments.” Moreover.” organizational strategic objectives. thereby ensuring alignment.ap-institute.” As a measure of how the scorecard is enabling lineof-sight from individual performance to /updated reflecting agreed changes. BWMC Ltd. making process. must live with.com Page 10 . staff are more aware of the Scottish Government’s agenda and are able to see where their personal contributions make a difference to RBGE and in turn those of the Government. Performance Reporting To report performance to the scorecard. in such an environment some unpleasant truths will emerge but as long as management view this as a positive outcome rather than destructive criticism then the organization can improve its performance as a consequence. the Balanced Scorecard is proving a useful framework for encouraging continual dialogue between the various levels of the RBGE’s hierarchy with emergent views on how to improve the current strategies being proposed by staff members who had engaged with the strategy Macnab. “Of course. Each divisional scorecard is designed to contribute to the corporate objectives and the measures attached to each divisional objective are capable of being abstracted up the hierarchy. adding that.

Executing Strategy and Aligning Financial Planning: Balanced Scorecard Best Practice at RBGE API Case Study uses a customized performance management nature.” he says. explain what responsible for the success or otherwise of the they were doing. he against the notion of being held accountable for explains.ap-institute. full explanation. continually endorsed the purpose of the Balanced The decisions taken on the recommendations by the Senior Management Team Scorecard and supporting performance are recorded and the report is then published on our management system and reaffirmed their backing intranet for all staff to view. feedback of results to staff. “It is they who are ultimately being directed on their work or. “The well- Macnab explains that when discussing the matter documented critical factors for a successful with some of the individuals involved it became Balanced Scorecard implementation apply as much apparent that some staff were simply. training on their past working practices where they. One challenge was that there were staff members that did not complete their reports on time. part. and related to buy-in. BWMC Ltd. reports and articles visit www.” Trustees.” and certainly since 2007. However. “However.com For more case studies. They were not used to team. indeed. “A report is presented monthly working to a plan not of their own making was no to the Senior Management Team and the Board of longer foreign to them. “railing to RBGE as any other organizations. objective costs. “This seemed to reflect on purpose. for the most process and performance management systems.” explains Macnab. states that there is nothing particularly out-of-the ordinary to explain the success. “The reports provide quantitative data (the KPIs).ap-institute. the most their science strategy had been largely a rehearsal critical factor is most definitely strong leadership of the work they wished to carry out to pursue their and commitment from the senior management own academic interests.” he says. RBGE has experienced to what was required and what sort of information some challenges in scorecard implementation. narrative analyses.com other plant science strategies of a more global © 2012 Advanced Performance Institute. despite they should put into the system. include adequate communications on their actions. Macnab measures within the system had been afforded. the Senior Management Group risk profiles.” These. strategy. Therefore. “I also realized that I would need to spend a considerable amount of time Key Challenges in Scorecard Implementation communicating with and teaching my colleagues as As with most organizations. self-determined their research activities and cascading to lowest level etc.ap-institute. consultation and training had taken Conclusion place and the opportunity to be involved with the Although the Balanced Scorecard is now well- descriptions of the objectives and design of the established and successful within RBGE.” for its implementation. (All rights reserved) www. in more recent times. To overcome this challenge and others that were recommendations for action. the Science Division had developed a strategy which aimed to align with Scottish Government’s biodiversity strategy and www. to some extent the concept of software application).com Page 11 .” comments Macnab.

Butterworth Heinemann.efqm. Butterworth- Bernard Marr (2010). Harlow 4.ap-institute.ap-institute. Partnerships & Resources. The EFQM Excellence Model is used as a basis for self-assessment. Society Results. Oxford Bernard Marr (2006). People. “Balanced Scorecards for the Public Sector”. “The Intelligent Company: Five Steps to Success with Evidence-Based Management”. “Key Performance Indicators – the 75+ measures every manager needs to know”. . “More with Less: Maximizing Value in the Public Sector”. Processes. Bernard Marr (2012). Palgrave Macmillan. five enablers :Leadership. 5. FT Prentice Hall.com Page 12 . Strategy. and Key Results This exercise helps organizations to identify current strengths and areas for improvement against strategic goals. London Heinemann. 3. and Not-for-profit Organizations can Measure 9. Bernard (2010). Public Sector and Manage what Really Matters. “Strategic Performance Management”. (All rights reserved) www. Ark Group. Managing and Delivering 8.com/books. This gap analysis then facilitates definition and prioritisation of improvement plans to achieve sustainable growth and enhanced performance. an exercise in which an organisation grades itself against nine criteria. Wiley. People Results. 6. Products and Services. For more information see http://www.org Further Reading 2.Executing Strategy and Aligning Financial Planning: Balanced Scorecard Best Practice at RBGE API Case Study References: 1. Basingstoke 7. and fur results criteria: Customer Results. Oxford Find out more and read free sample chapters: http://www. BWMC Ltd. Performance: How Government. Bernard Marr and James Creelman (2011). Oxford Marr. Bernard Marr (2009).aspx © 2012 Advanced Performance Institute.

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