Performance Measurement and Management of Professi... - (The Use of The Balanced Scorecard To Measure Knowledge Work) PDF

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IJPPM REFLECTIVE PRACTICE

64,4
The use of the balanced
scorecard to measure
590 knowledge work
Received 22 August 2012
Revised 22 August 2012
Nicholas John Wake
Accepted 11 October 2013 Warwick Business School, University of Warwick, Coventry, UK
Abstract
Purpose – The purpose of this paper is to question whether the balanced scorecard provides an
appropriate control mechanism for management control of knowledge workers.
Design/methodology/approach – A case study approach is taken to explore the way in which
management control of employees engaged in research and development is undertaken.
Findings – The key finding of this work is that the balanced scorecard is not in itself a useful approach
to management control of knowledge workers but provides an important mechanism for ensuring that
there is alignment between the strategic objectives of an organisation and the work being undertaken.
Research limitations/implications – The inductive approach taken in a single-company case
study has provided a rich data set for exploratory research, however, this research design limits the
generalisability of the findings.
Practical implications – The work provides insights into how the balanced scorecard can be used in
knowledge-worker environments.
Originality/value – The balanced scorecard is often reported as a tool that allows organisations to
cascade strategic priorities down to the level of the individual though the use of measures. This
research provides an alternative explanation of how the balanced scorecard can support knowledge
worker control.
Keywords Control, Research and development, Balanced scorecard, Control systems
Paper type Research paper
Copyright © 2015. Emerald Publishing Limited. All rights reserved.
Introduction
Within the operations management arena, control of organisational activity is a key
managerial priority. One of the features of the last two decades is the evolution
of economic activity from operations that involve physical labour to those that
are cerebral. This phenomenon has been discussed by many authors. For example
Alversson (2001) discusses the phenomenon of the “knowledge intensive firm” as one
where “most of the work is said to be of an intellectual nature and where well-educated,
qualified employees form the major part of the workforce”. This paper explores the
issue of management control of knowledge workers.
One of the important contributions to the debate concerning managerial control is
the “balanced scorecard”. It was conceived in an era when there was a growing
discontent with existing approaches to control (Johnson, 1983; Kaplan, 1984; Johnson
and Kaplan, 1987). Kaplan (1984) identifies changes in economic activity in the USA
International Journal of from a manufacturing led environment to one in which process automation and
Productivity and Performance
Management information workers were the key drivers of organisational success. The balanced
Vol. 64 No. 4, 2015
pp. 590-602
scorecard (Kaplan and Norton, 1996a, b) was presented as an approach to performance
© Emerald Group Publishing Limited
1741-0401
measurement that could overcome the identified weaknesses with existing practices
DOI 10.1108/IJPPM-08-2012-0091 and provide a control mechanism for knowledge-based activities.
Burgess, T, & Heap, J 2015, Performance measurement and management of professional and knowledge work, Emerald Publishing Limited,
Bingley. Available from: ProQuest Ebook Central. [2 May 2023].
Created from pretoria-ebooks on 2023-05-02 18:27:03.
The objective of this paper is to provide evidence to support the notion that Use of the
management of knowledge work using the balanced scorecard though a process of balanced
measurement and control does not occur in the way conceived by Kaplan and Norton
(1996a). Instead, this paper presents evidence that the balanced scorecard can support two
scorecard
functions; communication of the strategic intent of the organisation and communication of
progress against these objectives. This proposition is supported by a critique of the
Kaplan and Norton (1996a) balanced scorecard work which purports to present 591
approaches to control of knowledge work. The paper then discusses the limitations of
using measurement-based control systems for knowledge work before presenting case
study evidence of how knowledge worker control can be effective and the role that the
balanced scorecard can play in both the articulation of strategic objectives and progress.
The balanced scorecard

The balanced scorecard was created at a time when there was increasing dissatisfaction
with managerial accounting practices: for example Kaplan (1984) documented the change
in economic activity in the USA from a manufacturing-led environment to one in which
process automation and information-workers were key drivers of organisational success.
At around the same time, there was an increased realisation that globalisation was having
an adverse effect on US manufacturing firms who were trying to compete with rivals from
countries like Japan who had higher levels of quality and better inventory control.
In this environment, it is perhaps not surprising that the balanced scorecard became
a very widely adopted performance measurement system with as many as 30-60 per cent
of firms reported as having implemented it (Neely, 2005). Whilst widely adopted it has also
been heavily criticised (see e.g. Norreklit, 2000, 2003).
Alongside increased global competition and dissatisfaction with the available
managerial accounting practices, Kaplan and Norton (1996a, pp. 5-6) recognised the rise
of importance of knowledge workers in companies. They provide a commentary on the
distinction between the industrial age and companies operating in the information age
in which all employees need to create value by contributing knowledge. They position
the balanced scorecard as an appropriate tool to manage performance in this
environment, stating that:

[…] navigating to a more competitive, technological, and capability-driven future cannot be
accomplished merely by monitoring and controlling measures of past-performance (Kaplan
and Norton, 1996a, b).
In providing evidence to support this notion, Kaplan and Norton (1996a, b, pp. 100-101)
case study a semi-conductor company, discussing performance metrics of the
innovation process. They identify five metrics as:
(1) percentage of sales from new products;
(2) percentage of sales from proprietary products;
(3) new product introduction vs competitors; also new product introduction versus plan;
(4) manufacturing process capabilities (density of chips that could be produced on
a silicon wafer); and
(5) time to develop next generation of products.
Kaplan and Norton (1996a, b) argue that through a process of goal and measure
cascade alignment is possible between the strategic priorities of the executive team
IJPPM with that of top management and of staff within the same performance measurement
64,4 system. This approach to control has similarities with the three-layer model proposed
by Anthony (1965). Anthony (1965) argued that at the top layer of the hierarchy
strategic planning occurs whilst at the next layer management control occurs.
He differentiates these two layers by saying that the first layer is concerned with
determining the organisational objectives and allocating resources, whereas in the
592 second layer, management ensures that the resources are being used effectively. He
defines the third layer in the hierarchy as the operational control systems that are
used to ensure that specific tasks are carried out. Whilst there area clear similarities
between the Kaplan and Norton (1996a, b) alignment and that proposed by Anthony
(1965), a key difference is that Anthony (1965) does not suggest that the same control
system can be used in each of the three parts of the hierarchy.
One of the key assumptions of the Kaplan and Norton (1996a, b) work discussed
above is that knowledge work is measurable, however, a number of authors
have argued that measuring knowledge work presents particular difficulties.
For example, Neely (2002, pp. 321-340) discusses a number of attributes of
knowledge work that make measurement difficult; these difficulties are summarised
in Table I.
Table I provides a useful framework with which to critique the measures
proposed by Kaplan and Norton (1996a, b) listed above. Each of the five measures
could be criticised for lacking precision, sensitivity and attributability. In addition
they appear to be proxy measures of performance. For example, the first item
assumes this relationship:
Changes in R&D worker effort→“better” R&D output→“better” products to market→increase
in sales of new products→increase in the percentage of sales from new products.
Measurement issue Description

Observability Inability to continually observe performance
Evaluation Specialised abilities of knowledge worker limits ability of manager to
understand and evaluate performance

Measure precision Whether changes in measured performance is due to changes in effort as
opposed to random externalities
Sensitivity Whether changes in effort changes measure
Completeness of measure Incomplete measures can lead to dysfunctional behaviour (e.g. work
centres on fulfilling the requirements of the measure)
Information asymmetry Asymmetry between manager and knowledge worker on “hidden acts”
Asymmetry of information, knowledge, skill, talent and expertise leading
to issues with understanding attributing and evaluating that which is
observed
Measurability The degree to which important aspects of the observed work yield
cognitively simple and relatively compact quantification
Attributability The degree to which a measurement can be attributed to some causal
object (an individual, group or process)
Evaluability Extent to which the normative adequacy of a measurement can be judged;
evaluability can be low where the work outputs are distinctive
Table I. Use of proxy measures The intangible and conceptually complex nature of knowledge work can
Issues with lead to proxy measures of performance being used. The relationship
measurement of between the proxy and “true” measures may not be adequately known
knowledge work Source: Based on Neely (2002)
Kaplan and Norton (1996a, b) make no attempt to demonstrate this causality. It is Use of the
possible to postulate many other reasons why the percentage of sales from new balanced
products might move in a favourable or less favourable direction (e.g. changes in
products being marketed by sales force, changes in customer requirements or changes
scorecard
in competitor behaviour) that have nothing to do with the knowledge worker activity.
The potential difficulties will be exacerbated by the time lag between changes in
knowledge worker activity and changes in the measures that would make attribution 593
difficult.
Kaplan and Norton (1996a, b, p. 100) do, however, recognise that measurement of
R&D process outputs is difficult stating that:
[…] the relationship between inputs expended (on salaries equipment and materials) during
the R&D process and the outputs achieved (innovative products and services) is much weaker
and more uncertain than in manufacturing processes, where standards can be established
relatively easily for the conversion of labor, materials, and equipment resources into finished
goods.
They recognise that cycle-times in manufacturing are often measured in minutes and
hours whereas the success measured in, say, units sold, of the products of R&D activity
may not be known for a number of years. Despite this Kaplan and Norton (1996a,
p. 100) argue that the:
[…] difficulty in measuring the conversion of inputs to outputs in R&D should not prevent
organisations from specifying objectives and measures.
This assertion by Kaplan and Norton – that despite the difficulties it is desirable to
measure knowledge work is questioned in this paper through identifying the nature of
knowledge work and drawing together the debate on alternative approaches to control
identified from the literature.
Knowledge workers
It is apparent from the extant literature that there is no consensus on definition of the
term and that different authors use different definitions of the term “knowledge
worker”. Indeed Scarborough (1999) recognises that “the term knowledge worker can
be easily criticised for a lack of methodological rigour” as does Davenport (2005) who
argues that this difficulty stems from the fact that most jobs require some sort of
knowledge. A number of authors have put forward definitions of knowledge workers,
for example Robertson and Swan (2003) who identify employees who “combine
significant levels of technical skill in problem identification and problem solving, with
marketing, strategic and financial acumen”.
However, in researching the phenomenon employees engaged in research and
development (R&D) are often cited as typical knowledge workers (e.g. by Robertson
and Swan (2003), Ramirez (2007), Thompson and Heron (2005) and Ash and
Smith-Daniels (2004)) as are consultants (e.g. Kärreman and Alversson, 2004; Kärreman
et al., 2002; Fenwick, 2007; Donnelly, 2008).
The definition of the “knowledge worker” used in this research is based on the work
of Neely (2002, p. 322) and Davenport (2005), and is “work in which important value-
creating transformations occur in the realm of ideas or symbols which requires high
degrees of expertise, education and experience”. For the purpose of this research
analysis will be undertaken of employees engaged in R&D, although it is recognised
that the definition provided encompasses employees engaged in a wider sphere of
IJPPM organisational activity. The limits imposed by the choice of employee on the
64,4 generalisability of the findings is a matter returned to in the conclusions.
Knowledge worker control

Having defined the term “knowledge worker”, the notion of knowledge worker control
is now discussed. A number of authors have discussed contingent theories of
594 management control, using attributes of the work being undertaken to analyse
different work contexts.
For example Goold and Quinn (1990) discuss contingent approaches to control
based on the knowledge of the transformation process itself or outputs of the
transformation process (Figure 1).
This work, based on the earlier contribution by Ouchi (1979), argues that in where
output measurability is low and there is little knowledge of the means-ends relationship
of the transformation process, “clan control” occurs. “Clan” control is described as
mechanism in which the culture of an organisation is aligned around common values
and beliefs through socialisation and members of the clan commit to socially prescribed
behaviour. In describing “clan” control mechanisms, Ouchi (1979) uses two
examples – health care workers and a research lab – where “task performance is
inherently ambiguous”. Kärreman et al. (2002) identify an alterative managerial control
mechanism found in knowledge work – bureaucratic control in which work process
standardisation, procedures for work processes and organisation hierarchy are seen.
Hofstede (1981) uses four diagnostic questions to suggest a contingent approach to
management control, which concern:
(1) objective ambiguity; whether the objectives are ambiguous or not;
(2) output measurability;
(3) extent to which effects of managerial intervention are known; and
(4) repetitiveness of the activity.
Knowledge of means-ends relationships

(i.e. ability to predict what will be the outcome
of given decisions/policies/strategies)
High Low
Ability to measure outputs
“Action” or “Results”
precisely and objectively
High
“Results” Control
“Clan”
Low “Action” Control
Control
Figure 1.
Contingencies of
control
Source: Goold and Quinn (1990)
He uses these to define two broad approaches to management control, which are Use of the
summarised in Table II. balanced
Juxtaposing the work of Hofstede (1981) with that of Ouchi (1979) and Goold and
Quinn (1990) the authors identify certain antecedent conditions that they argue
scorecard
preclude measurement based management. These conditions – non routine work in ill-
defined or structured situations where output measurability and an understanding of
the means-ends relationship of the work – are conditions that are likely to be observed 595
in knowledge work (Table I).
This is significant since Kaplan and Norton (1996a, b) argue that despite problems of
measurement that are likely to be associated with knowledge work, the balanced scorecard
provides a mechanism for management control. Given the high incidence of companies
reporting use of the balanced scorecard, this research sets out to answer the following
question: how does the balanced scorecard support management control of knowledge work.
Research methodology
The research aims to explore how the balanced scorecard supports management
control of knowledge workers. Given the research is exploratory in nature an
interpretative approach appears appropriate. This allows observations and findings
to be used to build theory Bryman (2001, p. 10). This approach aligns with a
phenomenological research paradigm which should provide a “richness” (Silverman,
1993) that would not be possible using quantitative approaches to research.
In exploring this phenomenon, a case study approach has been chosen since it is
“the method of choice when the phenomenon under study is not readily distinguishable
from its context” (Yin, 2003, p. 3). Participant observation, in-depth interviewing and
documentary data analysis were selected as data collection methods that would align
with a phenomenological paradigm and would ensure a rich data set.
A company was selected for research based on two criteria. First, that they used the
balanced scorecard as a form of management control and second that they had
employees engaged in research and development activities. Based on these criteria a
company was identified which was a division of a large global multinational. The
company produces bespoke machines to customer orders that are used in a number of
applications. The division in which the case research was undertaken is based in the
UK and employees approximately 250 people. The division undertakes the design and
fabrication of machines to customer orders and services machines which are in
operation. In addition to this, the company employees a number of design engineers
that undertake research and product development. This activity aims to engineer new
products to bring to the marketplace.
Cybernetic management controla Non-cybernetic management control

Routine situations Non-routine
Mechanistic Ill-defined
Not too dependant on actor’s values Ill-structured situations
Traditional management principals apply (technical, Cybernetic model (of MC) emphatically
economical and psychological) does not apply
Note: aIn this context, the term “cybernetic” is used to signify the notion of control through Table II.
measurement, and not the notion of cybernetic systems that apply Approaches to
Source: Hofstede (1981) management control
IJPPM The division is run by a director into whom six senior managers report, covering the
64,4 R&D, finance, commercial projects, sales and marketing, human resources and
manufacturing functions. Interview data were collected through semi-structured
interviews which were typically between 45 minutes and one hour in length.
The interviews were recorded, transcribed and analysed using NVIVO software.
The division holds senior management meetings which are held monthly and which
596 are attended by the divisional director and the senior management team. Two of
these meetings were observed by the researcher and in addition the researcher was
given access to the work areas. Documentary data analysis was undertaken of the
balanced scorecard used by the division. In the next section the balanced scorecard
used within the division is described and summary analysis on how the balanced
scorecard is used is presented based on the participant observation of the
management meetings and interview data.
Case study data

Upon entering the field, it became apparent that the balanced scorecard played a small
although important part of a package of management control activities that
encompassed a range of different activities and systems.
The divisional director (and the directors of the other divisions within the same
group) report into a group director who was responsible for several divisions who
operated in similar markets. Two mechanisms were used to both cascade strategic
objectives from the group director to the divisional director and to report progress
against these objectives back up. The first was the “budget”, an annual set of
financial objectives that were agreed through a process of negotiation between the
divisional and group directors. The division was run as a profit centre and the
divisional director was responsible for ensuring that he returned a profit. The second
system was the balanced scorecard. The key strategic priority of the divisional
director was the attainment of key financial targets (turnover and return on sales).
The importance of attaining financial targets was reflected in the balanced scorecard
in which 19 of the 47 targets are financial and as a result there was overlap between
the financial targets contained in the budget and those in the balanced scorecard of
the division.
There are four measures on the balanced scorecard relating to the work of the
R&D personnel. The first two measures track the progress of the R&D department
by measuring “R&D spend” and “R&D milestones achieved”. The two measures
complement each other in that one measure is of actual progress against an agreed
plan whilst the other measures performance against financial targets. In the context
of an R&D project, it is necessary to consider these measure together as well as
individually since a variation in spending over or under the set target may not in
itself require managerial intervention if the project is simultaneously progressing
faster or slower than expected.
The other two measures are related to the responsiveness of the R&D
department to customer queries. The first measured the number of “open” customer
issues and second summed the number of days customer issues had been open
for. The R&D department is responsible for supporting the engineered solutions
provided for the customer. These measures were created because employees
were focusing their attention on new R&D activity at the expense of resolving
customer problems and it was felt necessary to focus more managerial attention on
supporting customers.
In the R&D area, the manager discussed how the strategic priorities from the Use of the
director are translated into tangible goals (contained in the balanced scorecard) within balanced
his part of the organisation. He said:
scorecard
[…] we have been sitting down. And working out what’s important for us. Why are we
actually here. And we have come up with these three things: Deliver drawings/BOMs on time,
deliver R&D programme on time and provide required support.
597
The balanced scorecard is reviewed monthly by the senior management team of the
company. The meeting is chaired by the divisional director and meeting dates are
published a year in advance. The divisional director insists that all members of his
team attend and it is seen as a key meeting. The meeting is:
[…] run by the balanced scorecard- we only look at the balanced scorecard, then we do AOB.
And not very much comes under AOB” (Divisional Director).
In the meeting, the 47 measures are discussed in turn. The division uses a traffic light
system to indicate performance against target as follows:
Red Below the minimum acceptable level
Amber Fair
Light green Attainment of target
Dark green Good performance – over target
Blue Outstanding performance – well above target
Unlike the balanced scorecard proposed by Kaplan and Norton (1996a, b), these items
were not contained within the four perspectives on performance suggested (learning
and growth, internal business process, customer and financial). Instead the scorecard
measures are clustered into groups that reflect the target owners; so, for example the
four targets relating to R&D are discussed by the head of department. Other clusters
were; financial, product quality, growth, efficiency improvements, human resources,
aftermarket, product development and customer responsiveness.
The researcher engaged in participant observation of two of the monthly
management meetings. In each of the meetings, the company director ran through the
balanced scorecard a measure at a time, engaging in discussion with the manager who
was responsible for each of the measures. Where performance was less than expected,
the director quizzed the manager on why this was and a debate often ensued between
the manager and the director with other managers providing additional input and
elaboration. The meeting proceeded at a brisk pace and was completed in 90 minutes.
When reviewing the R&D measures, the discussion of measures was undertaken
with reference to the underlying control mechanisms within the department which are
discussed in more depth in the next section. So, for example, where there was a variance
between the targeted result and actual performance, the head of the R&D department
would refer to the underlying issue that resulted in the reported result, drawing on a
number of supporting control systems.
It was clear that whilst the measures on the scorecard for the R&D department were
an important part of the discussion, management control within the R&D department
was supported through a number of other control systems. When this was discussed
with the R&D departmental manager, he used a sporting analogy to explain why this
was, stating that:
I get the feedback, the information quicker, much quicker [via other control mechanisms] than
this [the balanced scorecard]. But for a business to tell for example [the head of] Finance
IJPPM what’s going on in engineering, maybe by watching the scoreboard when he is watching the
basketball game he can see what is going on. But he has no idea what is going on the pitch, on
64,4 the court (R&D Manager).
Control mechanisms
Within the R&D department there were a number of different control systems.
598 The departmental manager explained how they were used by discussing the difference
between the “what” and “how”. He stated that the balanced scorecard is used to
determine what needs to be done, but that three other systems – project control,
a system to resolve outstanding customer problems and annual development reviews
are used to determine how it is done.
It became evident that within the R&D function, the predominant managerial
control mechanism was not the balanced scorecard by the company’s project control
system. This proprietary system for running projects encompassed the stages of a
project life cycle from inception to completion. It provided a stage-gate approach to
project management supported by a comprehensive range of documents and business
processes. The system supported control of the project but built into the system were
a number of check points, or gated reviews these review points required higher-level
authorisation for the project to proceed. The link between the balanced scorecard and
the project control system was through these reviews which were identified as
milestones on the project plans. These reviews encompassed both completed tasks and
the budget spent and hence aligned with the measures on the balanced scorecard.
In addition to this, there was a separate system to use to resolve customer problems.
The high level results contained within the balanced scorecard were disaggregated to
their constituent parts and this data held on a summary spreadsheet. The information
held was very detailed. The researcher attended one of the monthly meeting in which
resolution of customer problems were discussed. A discussion was undertaken for each
outstanding issue in which the engineer responsible for resolving the issue providing
an explanation and analysis of the problem to date and how it was likely to be resolved.
In distinguishing between what needed to be done and how it was done, the
manager discussed the annual development reviews as a way of ensuring employee
engagement with strategic objectives stating that:

And if it means we tie it together with individuals, with training plans, with annual development
reviews, we should be able to deliver the milestones for R&D and deliver the contracts.
He identified issues with the use of annual development reviews (which was a relatively
new system) but stated that the “link between the annual development reviews and the
business objectives […] is starting to get clearer and clearer” (R&D Manager).
Results and discussion

A number of phenomena were identified through analysis of the case study data.
First, it was clear that the results contained on the balanced scorecard were used
formed a key mechanism for managerial control in the monthly management meeting.
To use the Anthony (1965) three layer hierarchy to frame an explanation of this, strategic
plans are articulated through goal setting which were documented as measures on the
balanced scorecard, a process which aligns with Anthony’s (1965) notion of strategic
planning. At a managerial level, the balanced scorecard is used to ensure that
organisational resources are being used effectively – that is to say that the measures are
used within this meeting to determine progress against an agreed set of plans.
At this point, the use made of the balanced scorecard diverges from that which Use of the
would be expected based on the notion of cascading of measures suggested by balanced
Kaplan and Norton (1996a). There was no evidence to support the notion that these
measures cascaded into the R&D department. Instead, the data suggest that the
scorecard
balanced scorecard targets informed lower level managerial controls systems
(project control, the “resolve customer problems” system) and that in addition to
these annual development reviews were used. In this respect, the data suggest that 599
the third layer of the hierarchy which Anthony (1965) describes as operational
control was not through cascaded measures within the balanced scorecard but
through other control systems.
The work of Ouchi (1979) and Goold and Quinn (1990) would suggest that
management control of the R&D function is most likely to occur through normative
control mechanisms, described as clan control. This is a view supported by Robertson
and Swan (2003) and Neely (2002) who point to the difficulties inherent in measuring
knowledge work. Clan control was, however, neither observed nor discussed by the
respondents to the in-depth interviews.
During the feedback session given to the senior management team, the Ouchi
(1979) matrix was presented to open a debate on control mechanisms in the R&D
function, with the researcher suggesting that “clan control” would be likely. This
notion was put forward by the researcher despite the evidence collected from the
field research pointing to project management control mechanisms, identified as a
form of bureaucratic control, being used. The theoretical proposition was met by
laughter by all members of the management team who suggested that this research
was done by someone who “did not understand engineering”. The management team
argued that management control was exercised through the project management
processes.
The literature does provide two alternative theoretical propositions regarding the
likely control mechanisms of knowledge work; clan control, proposed by Ouchi (1979)
and Goold and Quinn (1990) or “bureaucratic” control systems, observed by Kärreman
et al. (2002). An explanation of the phenomenon observed can be provided using this
theory and through analysis using the simple input-transformation process-output
model to identify the nature of control.

The project management system serves two purposes. First, it provides a link
between the measurement-based system that is the balanced scorecard. This occurs
through delegation of targets down to the department and through providing
a mechanism that facilitates accountability through reporting of outputs. Second, the
project management system provides a bureaucratic control mechanism. Through the
many processes that the project management system dictates, the knowledge work
which, as identified in Table II can be non-routine and ill-defined is standardised. This
standardisation allows outputs, agreed through milestones and financial targets to be
measured and hence controlled.
The project management system proved beneficial to the R&D employees. It is
a large and well developed project control system that provides support for the
complete life-cycle of an R&D project from inception through to delivery and hand-
over. The R&D personnel appeared to be willing participants in the management
control system since they recognised the benefits that it brought in terms of supporting
their work. Management control is enabled through measurement of outputs, based on
targets set that are reflected the balanced scorecard whilst operational control is
enabled through use of the project management system.
IJPPM In a similar way, the resolve customer problems system is also used to ensure that
64,4 targets set on the balanced scorecard are achieved; and as with project control the
outputs of the transformation process are measured.
This finding triangulates with the departmental manager who said that the
balanced scorecard defines the “what” needs to occur, whilst the “how” is determined
by lower-level managerial control mechanisms; in this case project control, the resolve
600 customer problems system and personal development reviews.
This finding is interesting; the senior management team used the system for
cybernetic measurement – the attainment of pre-set targets aligned to the balanced
scorecard measures, whilst the R&D personnel and project managers used the
system to assist in their day-to-day activity. The way in which the project
management system was being used is analogous to the findings of Kärreman et al.
(2002) who identified bureaucratic control mechanisms being used to standardise
work procedures and to provide predictability of outputs in a consulting firm and in
the research and development activities of a pharmaceutical company.
The project management system is a bureaucratic mechanism that serves a number
of functions. It provides alignment between the strategic priorities of the organisation
and the work of the department through explicit target setting. In doing so, it provides
some predictability of outputs of the work being undertaken. It provides management
control of the workers in as much as it is used as a way of negotiating targets, however,
it also provides support of the work itself – since the tools and frameworks within the
project management system provide a common language and methodology for
undertaking the work.
Conclusions
The empirical investigation shows that the cascading of measures through an
organisation – a notion suggested by Kaplan and Norton (1996a) was not evident. The
Anthony (1965) three-layer hierarchy of control system provides a useful way of
framing an understanding of the managerial control systems that were present. The
balanced scorecard provided strategic and managerial control whilst operational
control of knowledge work occurred through bureaucratic means.
This finding supports the work of Kärreman et al. (2002) who identified
bureaucratic managerial control mechanisms in knowledge work – specifically
R&D and management consultancy. In identifying the similarities between the
work of Kärreman et al. (2002) and the phenomenon observed in this case, the
work also counters the claim made by Ouchi (1979) and Goold and Quinn (1990)
that clan control mechanisms exist in setting where knowledge workers are
employed.
The research also demonstrates the important role that the balanced scorecard plays
within the organisation in linking the strategic priorities of the company to the work
that is undertaken. The scorecard provides a link between the strategic, managerial
and operational control systems within the division.
One of the key issues alluded to in the literature review section of this paper is the
extent to which the findings are generalisable to other knowledge worker groupings.
Whilst the research set out to look at “knowledge workers”: it is recognised that in
looking at R&D employees, the findings are not necessarily generalisable to other
types of knowledge workers. An area for future research is to create a more robust
definition of knowledge worker and, if necessary some sort of classification system
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Corresponding author
Dr Nicholas John Wake can be contacted at: nicholas.wake@wbs.ac.uk
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IJPPM REFLECTIVE PRACTICE

The balanced scorecard

environment, stating that:

Measurement issue Description

understand and evaluate performance

Knowledge worker control

Knowledge of means-ends relationships

Cybernetic management controla Non-cybernetic management control

Case study data

engagement with strategic objectives stating that:

Results and discussion

model to identify the nature of control.

Management Review, Vol. 39 No. 1, pp. 53-79.

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