McAdam2003 An Inquiry Into Balanced Scorecards Within Best Value Implementation in UK Local Government

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PUBLIC MANAGEMENT
AN INQUIRY INTO BALANCED SCORECARDS

WITHIN BEST VALUE IMPLEMENTATION IN
UK LOCAL GOVERNMENT
RODNEY MCADAM AND TIMOTHY WALKER
The aim is of this paper is to conduct an exploratory study into the use of Balanced
Scorecards as an approach to implementing Best Value in UK local government.
Furthermore, a participant-observation method is used to study the development
into a Balanced Scorecard within local government.
There is a need to critically evaluate approaches to implementing Best Value so that
local government can determine how to achieve the service performance levels laid
down in the framework. There is a paucity of systematic studies exploring and critiquing the effectiveness of using the Balanced Scorecard in Best Value implementation.
The paper describes an exploratory multiple case research study followed by longitudinal participant-observer research on Balanced Scorecard development in a Best
Value context. The findings show that the Balanced Scorecard can play a key role in
Best Value implementation. Moreover it is also useful in linking other improvement
initiatives. However, the Balanced Scorecard process must be informed by organizational and environmental information that is both accurate and adequate. The audit
functions of the Business Excellence Model go some way to providing this information.
INTRODUCTION
Over the last 25 years, there have seen substantial changes in the management
of UK local government. This trend shows no sign of abating. Since 1997 there
has been a number of new initiatives introduced; designed to both increase
the spread and the scope of local government change by introducing new foci
in several different areas simultaneously (Wisniewski and Stewart 2001).
In order to achieve the resultant, eclectic and often differing aims, a series
of programmes have been developed by Government. Davis and Martin
Rodney McAdam and Timothy Walker are at the School of Business, Organisation and Management,
University of Ulster.
Public Administration Vol. 81 No. 4, 2003 (873892)
Blackwell Publishing Ltd. 2003, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street,
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874 RODNEY MCADAM AND TIMOTHY WALKER
(2002) has stated that the Best Value initiative has been identified as the
current and most appropriate improvement approach in relation to UK local
government organizations. It was presented in 1998 as part of the Modernising
Government agenda. The implementation of Best Value requires the support
of business improvement methodologies and techniques such as the Business Excellence Model (BEM, EFQM 2002), the Balanced Scorecard (Kaplan
and Norton 1996a, b) and other Total Quality Management based approaches.
There is a lack of systematic studies in relation to Best Value implementation
using the Balanced Scorecard as indicated by McAdam et al. (2002). Key questions remain, for example, how have organizations systematically used this
approach, how is the Balanced Scorecard developed and what contribution
is made to Best Value objectives? Is the Balanced Scorecard seen as another
stand alone initiative, or is it a constructive framework?
Systematic studies in this area will help local government organizations
develop appropriate and rigorous methodologies for improving Best Value
implementation. In addition, any such studies should add to the body of
knowledge in this area within organizations and academia, leading to
further insights into improving local government.
The aim is of this paper is to conduct an exploratory study into the use of
Balanced Scorecards as an approach to implementing Best Value in UK local
government. Furthermore, a participant-observation method is used to study
the development of a Balanced Scorecard within a local government case.
QUALITY AND PERFORMANCE MANAGEMENT IN BEST VALUE
New Public Management and Best Value
New Public Management (NPM) is the term used to describe the UK Governments approach to improving public services (Dorsch and Yasin 1998). Cascading from an overall vision are targets, measures and frameworks, down to local
government service level. Public management reform over the past 15 years has
been focused on increasing efficiency and effectiveness, with the search for the
excellent organization (Bovaird 1997). NPM provides a key position for stakeholders and the resultant reforms, concentrated upon improving quality for
their needs. Fowler (1997) found that it is important for successful public sector
performance delivery to be disseminated to the public and between public sector organizations. Furthermore, service efficiency gains could not continue
indefinitely within tight resource constraints against an increasing customer
expectation, coupled with the need for resourcing being often overlooked by
Government policy. To address this apparent dichotomy, Massey (1999) suggested the use of Quality and Business Excellence approaches to assist in concurrently improving services and making more effective use of resources.
NPM has been fundamental to the development of the Best Value regime
as the main approach for achieving the overall goals of NPM at local government service level. Several public sector authors summarized the new regime
as: Best value is potentially one of the most transformative tools of the new
Blackwell Publishing Ltd. 2003
BEST VALUE IMPLEMENTATION IN UK LOCAL GOVERNMENT 875
public management ever introduced in local government (Black 2000), which

is further summarized as costs count, but so does quality. Filkin (1997)
stated that Best Value is the continuous search by a LGA [Local Government Authority] to improve the quality, efficiency and effectiveness of all
activities for the public.
Best value is fundamental to the Modernising Government agenda. It was
introduced by the Government in the White Paper Modern Local Government:
In Touch with the People (DETR 1998) and is the replacement regime for
compulsory competitive tendering (CCT). It was followed in 1999 by legislation in England and Wales, and by a voluntary approach being adopted in
Scotland and Northern Ireland (DETR 1999). It applies to all LGA services
and is in place (with differences) throughout Great Britain and is built upon
a series of national organizational improvement principles. As shown by
Kouzmin et al. (1999) and Jones (2000) these principles are developed in performance targets at local government service level. Different areas within
the UK adopt different approaches. For example, local government in
Northern Ireland have adopted a clustered benchmarking approach within
the Best Value framework (McAdam and ONeill 2002).
The Audit Commission (the Commission) has been given responsibility
by Government for policing the implementation of Best Value. They established the Best Value Inspectorate (BVI) to assess LGAs Performance Plans
to assess implementation. LGAs need to demonstrate that they are delivering
continuous service improvement to the public in a independent and verifiable way and the Commission has stated that this is the key role of audit
within Best Value (Audit Commission 1998).
Best Value and quality management techniques
To facilitate service comparison, Best Value has raised the importance of
Benchmarking to determine service standards, methods and success (Bovaird
and Loffler 2002; Kouzmin et al. 1999). Part of Governments Best Value drive
has been to encourage LGAs to adopt quality models such as Benchmarking,
the Business Excellence Model (EFQM 2002), Charter Mark, ISO 9000 and
Investors in People (IIP). These schemes focus upon different aspects of
service quality. However, these approaches are often applied without sufficient adaptation to suit the complexity of public sector contexts. At best public sector managers are asked to adapt these models, at worst they are forced
to adopt them in their entirety (McAdam and ONeill 2002).
The best known has been Charter Mark, which focuses upon the services
that customers actually receive. Talbot (1999) highlighted that quality had
become nationally and internationally recognized through awards. Originally
almost all the awards were private sector orientated, established to encourage
global competitiveness. Governments Quality Schemes Task Force conducted
a survey of LGAs (including police and fire services), of which 549 responded:
85 per cent knew of IIP, 72 per cent knew of the Business Excellence Model,
65 per cent knew of Charter Mark and 53 per cent knew of ISO 9000.
Specifically, Charter Mark is a public sector award which recognizes and

encourages excellence in the provision of customer service; IIP is a national
public and private sector award whereby organizational improvement
delivered through staff performance and development is acknowledged;
and ISO 9000 is the global quality management standard. Another system,
the Business Excellence Model (originally designed in the private sector)
provides a framework for use in both the public and private sector within
which continuous improvement can be measured (Cabinet Office 2001;
Gaster 1999). However, these systems suffer from the limitation of attaining
accreditation rather than improving the organization (Kouzmin et al. 1999).
The Business Excellence Model (known formally as the Business Excellence Model (BEM EFQM 2002) has been promoted by the Cabinet Office
as the key approach to improving general public sector quality for over four
years. It has been recognized as a suitable method through which LGAs can
demonstrate Best Value by providing an impetus to benchmark and to
deliver performance improvement (Black 2000). The potential of the BEM
and Best Value as being appropriate for service delivery has been recognised (CPS 1998; IWM 2000).
Government considered that the BEM was valid within the Public Sector
by adopting the same methodology and scoring as the private sector and not
being distracted by areas beyond LGAs control (such as the political environment and public accountability). There was potential for those areas
within their control to be improved by public private comparisons (Massey
1999). In 1997, a pilot project (Audit Commission 1998) of some 30 public
sector organizations found that the BEM was applicable and provided areas
for improvement at a fraction of the cost of employing external consultants.
When the preliminary results were considered, the average score was 350 out
of 1000 points. This score was considered to be sound, especially considering
the factors existing beyond the candidate organizations control, such as
politics (the average UK private sector winner award score is around 600).
The model provided a solution to the initiative fatigue often experienced
within the public sector by highlighting where the different quality models
fitted within organizational performance. The problem of overload has been
commented upon by various authors (for example, Gaster 1999) and is
indicative of the culture of permanent change caused by the frequent shifts
introduced by Government throughout the 1980s and 1990s. The Cabinet
Office (2001) outlined how quality initiatives (Charter Mark, IIP and ISO
9000) reviewed by the Task Force complemented each other. For example,
the BEM self-assessment process posed questions while the other three
schemes provided answers by targeting particular aspects in greater detail.
Figure 1 shows how the initiatives overlap.
Moving beyond the Business Excellence Model, several public sector
organizations are employing BSCs as a tool to combine accountancy measures with three other soft metrics to address the Business Excellence Model
deficiencies in regard to strategy and to give direction to Best Value efforts.
Charter Mark
Charter Mark
Investors
in People
ISO 9000
ISO 9000
Investors
in People
FIGURE 1 Business Excellence Model: connections and critical overlaps with other
Quality Models
Source: Cabinet Office 2001.
Using implementation data from Best value pilots, Martin (1999, 2000) found
that there was a need for a more strategic approach and that the use of
appropriate tools and techniques could enable this to happen. The combination of the BEM and the BSC further helps to avoid information fatigue
and demonstrates some degree of constructive organizational development.
Talbot (1999) identified four recent public sector themes: (1) more sophisticated financial management; (2) bench-marking; (3) quality; and (4) holistic
management, to combine financial information with other measures (the
most common model being a scorecard).
BEST VALUE AND THE BALANCED SCORECARD
The balanced scorecard was introduced by the Cabinet Office (2001) as a key
public sector quality management framework as: a multi-dimensional
framework for describing implementing and managing strategy at all levels
. . . linking objectives, initiatives and measures to an organisations strategy.
This aimed to identify centres of excellence for the development and spread
of best practice within the overall remit of Best Value.
Development of the Balanced Scorecard
The Balanced Scorecard (BSC) was initially developed and refined by
Kaplan and Norton (1992, 1996a). They initially highlighted that accountancy measures were inadequate for future planning as they related to past
performance and the bottom line. They presented three new perspectives
within a framework to give a balanced view of performance (see figure 2).
The perspectives were generic and inter-related, chosen to provide information for better management. The framework provided (1) a methodology to
assess management decisions, and (2) measures to gauge improvements.
The four perspectives were: (1) the customer; (2) internal business; (3)
innovation and learning; and (4) finance. Each was distinct, but when combined, presented a general organisational overview of performance. The use of
a small number of measures avoided information overload for management.
Financial
To succeed
financially, how
should we
appear to our
shareholders?
Objectives
Measures
Targets
Initiatives
Objectives
Measures
Targets
Initiatives
To achieve our
vision, how
should we
appear to our
customers?
Vision
and
Strategy
To satisfy our
shareholders
and customers,
what business
processes must
we excel at?
Objectives
Measures
Targets
Initiatives
Internal Business
Processes
Customer
To achieve our
vision, how will
we sustain our
ability to
change and
improve?
FIGURE 2
Objectives
Measures
Targets
Initiatives
Learning and
Growth
The Balanced Scorecard
Kaplan and Norton (1996a) highlighted the design of a balanced management scorecard and demonstrated how it could result in comprehensive
strategic and operational management. The pilot organizations, which
implemented this system, were radically refocused to align strategies with
operations. Kaplan and Norton (1996b) outlined the entire process and its
evolution, from the development of a simple scorecard through the rationale
for use, managing business strategy and strategic alignment to target setting
and implementation.
The BSC focused specifically upon customer satisfaction and increasing
profitability. For LGAs, the customer is central in Best Value. Kaplan and
Norton (1996b) stated that the outcome for the customer was essential (not
lists of programmes and initiatives). Most public sector scorecards focused
upon excellence and sought to work more efficiently, for example, reduce
costs, fewer mistakes and more effective use of resources. However, this
operational approach was viewed as not being the best way to deliver customer needs. There is also a danger that the more straightforward customer
profiles in the private sector will be applied to complex customer and stakeholder profiles in the public sector leading to overly simplified measures
within the customer quadrant of the scorecard (see figure 2, above). McAdam
and ONeill (1999) also reviewed the use of the tool in the public sector and
concluded that, in contrast to traditional measurement, the framework had

clear advantages for evaluating all aspects of the organization.
Use of the BSC in the public sector has been researched by several
governments, specifically regarding introducing performance measures to
management and procurement. In the US, research identified that a fifth
perspective, employee satisfaction, could be added to gauge personnel
issues, and that the tool had been deployed widely in all sectors. The use of
the BEM in support of BSCs offers an in-depth approach to measuring
people satisfaction, which could be incorporated within the learning and
growth quadrant (figure 2). In the UK, there is a paucity of research on BSC
use in relation to Best Value (Hepworth 1998). In 1998, the Accounts
Commission for Scotland prepared a public sector management paper,
which promoted the development of scorecards to deliver performance
management. It outlined the BSC, the role of measurement within such a
regime and how a BSC could be designed and used. An implicit assumption
within the BSC is accurate and adequate information and measurement to
enable the model. In the public sector, even with the BEM assessment
process, this information may be difficult to obtain as found by Kouzmin
et al. (1999).
The Balanced Scorecard can help in relation to Best Value by linking operations to strategy on an on-going basis (McAdam et al. 2002; Johnsen 2001).
Talbot (1999) highlighted that a scorecard was not just a set of measures and
a model of organizational performance, but that it could also identify conflicting measures and allow for prioritization (for example, economic use of
resources versus adequate staff remuneration, Amaratunga et al. 2002).
Therefore, a BSC is as much about reconciling competing priorities and
goals to produce a balanced set of perspectives, as about performance management and control (Kaplan and Norton 1996b). Thus, the strategic element
of BSCs within Best Value helps to avoid the impression of initiative overload. The BSC does not directly address risk management in the form of scenario planning (for example, the UK BSE crisis), however, the development of
lead or predictive performance measure enables some degree of scenario
and hence risk planning.
The part that performance management and a scorecard could play in
public organizations was outlined in US guidelines (published in 1993 and
1994). Chesley and Wenger (1999) used the LGA of Charlotte (USA) as a
detailed example of its successful implementation. The various differences
between private and public sectors approaches to strategic planning were
outlined in detail. The authors highlighted that a scorecard could be used
successfully by senior managers from all sectors to:
clarify and translate vision or strategy;

communicate and link strategic objectives and measures;
plan, set targets, and align strategic initiatives; and
enhance strategic feedback and learning.
Specifically, they identified that there were certain hard constraints

which applied to public sector organizations: various Government regulations which restricted and directed operations; institutionalized budget cycles
which impacted upon and constrained strategic management planning; and
organizational charters established by Government which were not open to
strategic interpretation. A number of soft constraints were also present
including the culture of the public sector (which the authors argued had
imbued the term bureaucracy with such pejorative overtones that it had
lost its technical meaning) co-ordination and reallocation of resources tended
to occur within formal strictures; the background of many of the public
sector staff was restricted solely to technical and/or professional expertise.
The number of initiatives being imposed upon public sector management
meant that the time to do the real job in addition to applying new management techniques was minimal. The nomenclature of the BSC was geared to
the private sector, and while it could be viewed as being applicable for public
sector organisations. It needed to be adapted and placed within a context
that encompassed the relevant culture, structure and strategies, especially in
regard to defining customers in the public sector and being based on reliable
information. Thus, the BSC cannot simply be applied in a public sector context without considerable adaptation and nomenclature change.
Sheffield and Bowerman (1999), Johnsen (2001) and McAdam et al. (2002)
conclude there is little specific or general research on the BSC in the UK.
Thus, there is a need to move beyond anecdotal and descriptive references
to the use of the Balanced Scorecard in a Best Value context. There is a need
to conduct an exploratory study into the use and development of Balanced
Scorecards as an approach to implementing Best Value in UK local government, which will lead to the improved use of local government resources
and planning in this area.
KEY RESEARCH QUESTIONS AND RESEARCH METHODOLOGY
There is a lack of in-depth studies on the use of the Balanced Scorecard as a
means for implementing Best Value in local government, beyond that of
recognizing the potential, anecdotal comments and descriptive accounts.
Furthermore, there is a lack of consideration of the complexity of localized
conditions in existing studies. Therefore, the key research questions relating
to the use of Balanced Scorecards within Best Value, arising from the aims of
the paper and the critique of existing literature can be summarized as follows:
how have Balanced Scorecards been applied in support of Best Value?
what are the strengths and weaknesses of the BSC approach to Best
Value in a local government context?
how can a Balanced Scorecard be developed to suit localized conditions
within a local government setting?
Initial exploratory research included a review of the literature, a critique of
the Audit Commission findings on Best Value, discussions with a range of
government agencies and evaluation of the IDeA/LGA and BVI databases

to which researchers were granted access. The exploratory discussions indicated that there were two main sources of data on Best Value. Firstly, the
LGA/IDeA survey was a regular, rolling survey of local authorities use of
performance management tools and results. This was used to identify a
relevant service subjected to Best Value reviews, in this case Environmental
Waste Management Services (EWMS). The population size covered by local
authorities within this sample was from 76000 to over one million people,
with waste management costs ranging from approximately 1.1 million
through to 13 million in 2000. These budgets encompassed a range of
different cost centres. The data set helped to identify seven of the 13 local
government cases for the current study. Only these seven local authorities
were listed on the IDeA/LGA survey as having used Best Value management tools on EWMS service reviews.
Secondly, the BVI had assessed the waste management functions of six
local authorities as of February 2001. The population size ranged from just
under 100000 to 350000 in this data set, with budgets ranging from 2.5
million through to 9.5 million in 2000. These figures also covered a range of
different cost centres and this represented the other data set and the remaining six of the thirteen cases chosen for the current study.
From this analysis 13 local government authorities were identified as having a systematic and mature approach to using business improvement and
quality related approaches to support Best Value. The implicit hypothesis
behind this choice was that organizations which has adopted a systematic
approach to organizational improvement were more likely to apply more
developed models and methodologies in a more effective manner. This
argument is supported by Dale and Lascelles (1997) who found that organizations which had not systematically developed along the quality journey
were unlikely to apply more developed models and methodologies effectively. The authors have had similar experience in working with local government authorities: hence the initial choice of those cases which had a
systematic approach to organizational improvement. Furthermore, all of the
13 cases had been recorded as having used an Environmental Waste
Management System (EWMS) under the remit of Best Value. The local
authorities population numbers ranged from 76,000 through to over one
million, with the average being 200,000 plus people. The EWMS services
were chosen for the case inquiry as of all the local government services, they
have been most developed and focused upon (IWM 2000). Thus, the case
inquiry focus on organizations with services which have well developed
approaches to organizational improvement, consistent with Dale and Lascelles
argument (1997).
Based on semi-structured interviews and use of the databases, organizational and archive materials, a list of four local government authorities were
identified as having most systematically applied the Balanced Scorecard in a
Best Value context. Although, not an explicit best practice study, this
systematic filtering of the cases (Remenyi et al. 1998) allowed the inquiry into
BSCs within Best Value to be more focused. Yins (1994) exploratory multiple case study methodology was chosen as being suitable for addressing
the what and how questions arising in the research. In this approach, as
suggested by Eisenhardt (1989), the cases were selected and analysed on an
ongoing basis using Yins (1994) replication logic, where sufficient cases
were judged to have been selected when key issues arising from the research
were repeated. Thus, an overall picture of the use of the Balanced Scorecard
in a Best Value context gradually emerged throughout the inductive
research process. The unit of analysis (Yin 1994) was each individual case
application of the Balanced Scorecard in support of Best Value. Semistructured interviews were conducted with the person most responsible for
Best Value implementation in the cases. Each interview lasted between one
and two hours. Further follow up interviews were carried out to clarify
issues raised, including telephone and email based discussions with the
cases. The questionnaire protocol for the semi structured interviews was
composed of three parts: a general information section, part 1 on management tools and techniques previously or presently employed in Best Value
(specifically the Business Excellence Model), and part 2 on Best Value, in
particular the 4Cs. In general, the semi-structured interviews sought to
determine how the local authorities were using the Balanced Scorecard in
support of Best Vlue.
Having obtained the case data and analysis it became apparent that a key
feature of the Scorecard approach is the development process associated
with the BSC, rather than solely concentrating on the entity of the Scorecard.
Thus a longitudinal case was established between the university and a local
government authority to study the longitudinal development of a Balanced
Scorecard in a Best Value context. The research methods used were participantobservation (Easterby-Smith et al. 1993) and critical action learning (Pedlar
et al. 1998).
RESULTS AND DISCUSSION
Multiple case analysis
The data relating to each case was coded using Yins (1994) replication logic
and after the manner of Remenyi et al. (1998). To reduce individual bias the
coding categorization was checked independently by members of the research
team as suggested by Easterby-Smith et al. (1993), until final agreement was
reached.
Case A
In the early 1990s, this local government authority had been familiar with
performance measurement through the widespread use of MBO (Managing
By Objectives), which was started in the 1970s, for strategic planning purposes. Measures had been established for every area of work, however this
led to information overload with lengthy reports, which were inadequately
used. In 1992, the authority developed five corporate strategic objectives

(called focus areas) and in 1994, following the development of BSC theory
and practice (Kaplan and Norton 1992) the potential of the BSC to clarify the
weaknesses inherent in the existing performance measurement system, was
recognized. Case A began to implement Best Value with a corporate BSC to
inform the annual plan (distributed to all citizens within the authority
remit). The Customer Perspective quadrant (figure 2, above) was placed at
the top of the scorecard, reflecting its importance in the LGA, in relation to
Best Value (similarly to that of Amaratunga et al. 2002).
The management team identified critical questions from a Best Value perspective for each quadrant of the BSC, as suggested by Massey (1999) and
Kaplan and Norton (1996a):
Customer Perspective Is the LGA delivering the services the citizens
want?
Financial Perspective Is the service delivered at a good price?
Internal Process Perspective Can the LGA change the way the service
is delivered and improve it?
Learning and Growth Perspective Is the LGA maintaining technology and employee training for continuous improvement?
The resultant Balanced Scorecard for the authority was completed in 1996
and included 19 objectives in support of the four strategic objectives. Each
objective was placed within its context and the implications for the other
perspectives was identified and determined. This development resulted in
each of the four balanced perspectives having between three and seven
objectives which linked upwards to one or more of the corporate strategic
objectives. Therefore, all of the resultant improvement initiatives were
strategically linked as advocated by Bovaird and Loffler (2002). However,
the BSC was not used to develop strategic scenario planning leaving a
vulnerability to exceptional environmental events and a lack of risk analysis.
The general objectives were chosen to be cross-functional in regard to their
strategic importance (for example, Learning and Growth Perspective Close the
Skills Gap: Increase Availability of Leadership). There were no specific function
based objectives at the corporate level, thus avoiding reinforcing the existing
silo culture.
Once designed, the corporate Balanced Scorecard was then cascaded in
1997 throughout the LGAs functions with devolved BSCs being designed at
each of the 13 service levels (demonstrating how each service was addressing the local government objectives). The corporate and service measurement of performance was recorded at this level. Initially, difficulties were
encountered with obtaining sufficient information to service the Scorecards,
however this problem was alleviated as improved data gathering techniques were developed (for example, stakeholder voices, focus groups and
benchmarking).
The authoritys use of the scorecard reinforced several points:

MBO had not reflected the emerging emphasis on strategic goal setting
and changes;
measurement gave clarity to vague concepts, such as strategic goals, to
all of the stakeholders;
measure what matters, it allowed the LGA to establish the strategic
direction for the LGA, and to relate it to individual services and staff;
measurement was for communication, not control, and allowed for
more relevant performance measures to be established;
the process of building a BSC developed consensus and teamwork
throughout the organization; and
developing an effective performance management system takes considerable time and commitment, especially in a culture of ephemeral
initiatives.
The LGA operated more strategically as a result of developing a BSC to
implement Best Value, as it required the organization to become more
focused, with more attention being given to measurement as a catalyst for
action. Similarly to Blacks (2000) findings, it also focused the LGA on the
detail of running the area by reducing the amount of information generated, . In the early 1990s (under the MBO system), the authority was recording 800900 measures, while with the BSC in place there were only 266. The
authority highlighted that there were several key lessons from designing a
corporate Balanced Scorecard:
The criticism of initiative fatigue must be continuously addressed by
showing longitudinal organizational development;
Identifying valid corporate strategic objectives and attaching measures,
required critical reflection and time;
A champion was needed at the strategic level to promote the programme and ensure that it received the appropriate backing, as it could
take up to five years to implement;
It took time and resources installing a BSC was all encompassing and
took commitment from staff to learn about the approach. The pilot programmes took between 1520 hours per week for three months solely to
design a service-specific scorecard;
There was resistance some were sceptical of another initiative and the
changes were difficult to implement;
Target setting had to be non-punitive commitment was reduced if
staff perceived that there was any threat to jobs or roles arising from
implementation.
Case B
This LGA case combined the use of the BSC and the BEM to implement Best
Value, as suggested by McAdam and ONeill (1999). The two models were
linked to determine if joint application would improve their service performances. In this approach one model was used to prime and direct the
application of the other. The LGA recognized that the BEM could be linked
with the BSC for general management and strategic planning leading to
organisational improvements. This approach was found to systematically
involve senior management and imposed a structured approach to management planning for Best Value, to the benefit of the organization (this
approach also simultaneously facilitated the achievement of IIP see figure 1,
above). The LGA initially defined the standard BSC perspectives (see figure 2,
above) in a similar manner to that of Case B. Problems with insufficient
information to drive the BSC, as experienced by Case A, were addressed to
some extent with closer links to the BEM. However, the approach to
customer measures was limited by the BEMs mainly private sector use of
customer measures.
In order to progress, the BEM self-assessment was used to create an action
plan, and a scorecard was then used as a framework within which the Best
Value services were developed. The process started in 1999 with the Business
Excellence Model self assessment process identifying areas for improvement
(Talbot 1999), which were then framed within the context of a series of BSCs
developed from the corporate level objectives, down to service level. The
initial corporate BSC was developed in a five-month period.
The LGA found that the BEM was comprehensive, fact based and objective and an audit of the present situation; while the BSC enabled focused
and subjective analysis of issues, in addition to forward planning. Therefore, the BEM identified strengths, areas requiring a wide range of information and measures, while the scorecard permitted strategic prioritization
and communication. From this process, ten specific objectives were set for
the entire LGA (three each in the Financial and Process, and two each in the
Customers and Learning and Growth Perspectives) with a number of associated measures, targets and actions.
The LGA discovered that this combination allowed them to (1) understand the need for balance better, (2) resolve conflicting priorities, develop
better measures for performance, (3) improve strategic planning, and (4)
benchmark more effectively. There were a number of key findings in
relation to Best Value, which included:
there was a need for more adaptation of the BSC to suit the complexity
of the public sector context;
the BSC and BEM worked well in tandem in relation to information
gathering;
they could be employed as good diagnostic, measurement, planning
and communication tools;
senior management backing was necessary;
flexibility (including changing objectives and measures) was essential; and
implementation required both adequate training and resourcing.
Case C
The LGA adopted the BSC for performance management at service level,
and aligned performance appraisals against a series of BSCs for each level of
each service. An evaluation has shown that this approach:
enabled staff to see the bigger picture while focusing upon staff development, customer satisfaction, costs and service quality;
broadened the indicators in use to include soft local measures, recognized as key to long term performance; and
enabled productive discussions about resource allocation within the
LGA based upon information on measurement and service improvements.
However, there was a tendency to oversimplify the process, especially in
regard to the inadequate and inaccurate use of supporting information, a
problem experienced by Cases A and B. This resulted in some initial loss of
credibility among senior managers, especially those who were sceptical of
yet another initiative. The LGA had achieved major cost savings under
CCT and saw a scorecard as having the potential to be instrumental in the
delivery of Best Value. Initially, the Environmental Services and LGA Tax
collection were specifically chosen for Best Value. The LGA envisaged
encouraging greater local democracy by having the public involved in the
design, monitoring and review of the services from the outset. The development of a BSC and its ability to link strategic objectives to service operations
was seen as instrumental in this process (as also found by Davis and Martin
2000). Consequently, the Environmental Services operations (which were
provided on a fragmented functional basis) were integrated to improve
service delivery. The LGA Tax collection service focused upon customer
satisfaction and reducing costs.
As found by Dorsch and Yasin (1998), competitiveness and benchmarking
were recognized as being key elements of the LGAs service reviews. Consultation, user involvement, and the development of appropriate standards
and targets were also found to be crucial for success. The LGA combined all
its baseline information (it conducted consumer surveys every two years),
and identified that the standards of neighbourhood services (for example,
increased graffiti, poor street lighting and rubbish collection) were perceived
as falling.
The LGA developed its two pilot reviews around individual BSCs, as
well as developing a combined BSC, which split the objectives onto a fourplot axis covering internal and external, and measurable/financial and
conceptual/non-financial perspectives. As suggested by Bovaird and Lffler
(2002), the LGA focused on its present operations, its proposed reorganization, how it would address competition elements, how it would monitor
performance, existing (and strengthening) community involvement, and the
establishment and promotion of best practice examples. The scope of the
new services was presented. Integrated Environmental Services would
include combining (1) rubbish collection; (2) street cleansing; (3) roads and
footpaths maintenance; (4) grounds maintenance; (5) pest control; and (6)
winter maintenance in four particular neighbouring wards; while LGA Tax
collection would apply LGA-wide as was the management of the pilots and
the budget.
The LGA was subjected to a District Audit (DA) review in early 2001 to
ensure compliance with Best Value requirements. The DA identified that the
LGA had made effective preparations for the implementation of Best Value
and had produced a good corporate Performance Plan and review programme, with a more advanced performance management system being
installed to support the regimes requirements. The DA recommended that
the LGA develop more comprehensive use of performance information in
select(ing) . . . Best Value review areas. The review of the LGAs Best Value
programme made several recommendations about specific elements (for
example, increase the scope of service Challenge and better co-ordination of
Consultation across the services). Focusing specifically upon performance
the DA noted that the LGA had established an effective BSC framework,
which supported the setting of corporate objectives, monitoring and evaluation. The framework (the BSC) was being rolled out across services to
address Best Value implementation. In this case, the DA stated that the
LGA needs to ensure that planned improvements in service planning and
performance monitoring are fully implemented and linked into the Best
Value Performance Plan . . . . The action plans included relevant objectives,
time-scales, targets and allocated responsibility to the appropriate officer
(similar to Gaster 1999).
Developing a Balanced Scorecard by participant observation and critical
action research Case D
In each of the cases it was found that the process of forming the BSC to support Best Value, was as important as the end result, or the entity of the BSC,
as also found by Davis and Martin (2002). Therefore, more longitudinal
in-depth research into the formation of a BSC in an LGA case was carried
out by a participant-observer research methodology.
In terms of measuring success, Kaplan and Norton (1992, 1996a) considered that successful scorecards resulted if the following five steps were
achieved:
1. translating strategy into operational terms by defining visions, objectives and measures which specifically gauged performance improvement;
2. aligning the strategy to all levels of the organization in order to create
synergies and maximizing communication and co-ordination between
services;
3. achieving ownership by ensuring communication and accountability
extend to all staff;
4. making strategic planning a continual process by linking personal and

unit targets to the corporate scorecard and incorporating feedback, and
5. mobilizing change was fundamentally achieved through leadership
and senior management backing and a champion being available to
initiate the process (Kaplan and Norton 1996b).
Consideration was given to the introduction of a BSC for the Environmental
Waste Management Service within an LGA by adopting these principles.
This service was chosen as it is a significant function within all LGAs, is
subject to changing legislation and is heavily impacted by Best Value. The
researchers, one of whom is also a senior manager within the LGA, began
detailed discussions with the service managers with a view to developing
the BSC. In the following months, the original intention was to build a BSC,
similar to that suggested by Hepworth (1998), with the four BEM results
(figure 1, above) elements being used as a BSC in themselves. Following
management discussion on the scorecard arising from advice from the
Policy Improvement Unit, it was decided to keep the services BEM work
separate from the BSC and to develop a BSC combined with regular
(annual) operational input from the BEM.
The initial work was conducted to develop a loose framework scorecard,
which could then be adapted and changed later. On the first day, the skeletal
outline of the scorecard were laid with significant attention being given to
the Customer Perspective in addition to identifying roughly how many objectives and measures should be set for each perspective. Discussion was continued with the service management over subsequent months, as well as three
separate design periods, which resulted in revisions being made to the outline
BSC. The result was a service level BSC being completed in October, which
linked upwards to corporate strategic objectives, and downwards to the four
individual units, in support of Best Value. Throughout this process a lack of
definitive measures and information limited the effectiveness of the outcomes
despite the contributions from the BEM. This highlighted the need for improved
measuring and data gathering systems, formatted to suit the BSC. A varying
number of objectives were set within each of the perspectives: Customer
six; Learning and Growth four; Processes four; and Financial three.
These 17 objectives were carefully chosen to be measurable and to record
performance at both the corporate and unit levels. There were a variable
number of measures within each perspective to gauge achievement, as well
as targets which were proposed to measure specific functions and crossfunctional activity within the EWMS scope.
One limitation was identified from the outset there was a lack of Vision
and Strategy which should play a central role in the development of a BSC
(Bovaird and Loffler 2002). This has been caused as the service is experiencing
major change on several fronts four Best Value reviews have been
conducted by the service over the last two years which have highlighted
that CCT, while being resolved temporarily with the creation of soft splits,
needs a more corporate and in-depth response. Several other weaknesses

were recognized upon a six monthly review of the BSC. The initial questions
posed per Perspective around which the objectives were designed were not
set tightly enough, the consequent objectives were focused upon measurable
results (creating a form of Key Process Indicator (KPI) scorecard) and finally,
the lack of an overall framework (strategy and centering questions) has
resulted in poorer clarity and less established linkages within and between
the perspectives. Furthermore, a lack of inherent strategic scenario planning
within the BSC resulted in strategy, which needed more work to address
unexpected environmental changes.
The planning process instilled by the BSC was found to be useful in focusing attention upon measurement and performance issues, which are both
essential in Best Value. Combined with using the Business Excellence Model
as a point in time audit, the BSC provides a flexible system of management.
The service has begun to refine much of the information presently generated, similar to Sheffield and Bowerman (1999), with a view to minimising
information overload, revising service areas and functions and focusing
upon the important services (both expected and existing). Considerable
work still remains to evolve and install both the above tools and to refine
them to best meet the needs of Best Value for the Environmental Waste
Management Service.
CONCLUSIONS
The aim is of this paper was to conduct an exploratory study into the use of
Balanced Scorecards as an approach to implementing Best Value in UK local
government. In this context the Best Value framework is a key part of the
UK Governments Modernising Government and improving local government services agenda.
It was found, along with Gaster (1999), that the local government authorities in the study were attempting to use a range of Quality Management and
Business Excellence approaches, primarily adopted from the private sector,
to assist in implementing Best Value. The emergent use of the Balanced
Scorecard in support of the more established Business Excellence Model was
found to be effective in developing Best Value within some of the LGAs. The
LGAs found that combining the BSC and the BEM enabled a comprehensive
range of measures to be developed for Best Value. Furthermore, The BSC led
to improved strategic planning in support of the more service level based
audit function of the BEM (McAdam and ONeill 1999). The combined
strategic and operational improvements enabled more effective benchmarking in some cases, where the benchmarking was supported by strategic
improvement initiatives.
Specifically, in relation to the BSC, a key strength was found to be its
ability to help in translating strategic objectives into a tangible improvement
in operations at service level. The flexibility and lack of bureaucracy resulted
in this translation process taking place relatively free from distortion and in
relatively short time scales. Moreover, the BSC process encouraged involvement at all levels leading to increased staff acceptance of the Best Value
objectives and measures (Kaplan and Norton 1996a). The need was stressed
for everyone from the top executives downwards to spend time building
consensus in developing performance indicators and measures, in addition
to gathering the information and analysing the results to refine the tool. The
study found that increased involvement from senior management resulted
in more successful deployment of the BSC and Best Value. The research
findings were in agreement with those of Dinesh and Palmer (1998) regarding complexity, management buy-in and cost when considering the BSC.
They highlighted that both represented tools based on achieving strategic
objective congruence within an organization, linked with a significant input
from staff. They identified that MBO failed because of partial implementation (where management focused upon command and control measures to
install appraisals systems, and did not set these targets collaboratively), and
that this was the greatest potential weakness in misapplication of the BSC.
The BSC was found to be limited by a lack of measures, information and
data collecting systems, leading to ineffective objectives in some cases.
Moreover, a lack of adaptation to public sector contexts led to overly simplified views of key issues such as customer and stakeholder needs.
The planning process instilled by the scorecard proved to be useful in
focusing attention upon measurement and performance issues in the LGAs,
which are both of relevance in the Best Value regime (Amaratunga et al.
2002). Using the Business Excellence Model as a point in time audit, being
augmented by a BSC, which picks up on the areas for improvement and provides a moving system of management, the LGAs have begun to refine
much of the information generated. The goals are to minimize information
overload, revise service areas and functions (to resolve CCT issues), and to
focus upon the important services (both expected and existing). In most of
the LGAs considerable work still remains to evolve and install both the
above tools and to refine them to best meet the needs of Best Value.
The longitudinal study showed that the process of forming the BSC was
as important as the entity of the BSC (Amaratunga et al. 2002). This process
was found to generate many of the benefits of using the BSC in support of
Best Value implementation: the generic approach suggested by Kaplan and
Norton (1992, 1996a) for forming the BSC. Furthermore, the BSC formation
process was effectively combined with the four result areas of the Business
Excellence Model giving an effective linkage of initiatives. It is important to
develop objectives with clearly defined measures if the BSC approach is to
be developed at levels below that of corporate. Development of BSCs down
to service level is essential if Best Value objectives are to be met. The
upwards and downwards linking of objectives within the organization is
crucial to the success of involving management and employees in Best
Value. The LGA must continue to adapt the BSC to the public sector context
as distinct from excepting it as being unchangeable. Moreover, there is a
need to develop a clear view of vision and strategy to support the use of Best
Value and the BSC. This approach is essential to ensure that the BSC is
developed to all levels in the organization.
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AN INQUIRY INTO BALANCED SCORECARDS

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public management ever introduced in local government (Black 2000), which

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Specifically, Charter Mark is a public sector award which recognizes and

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The Balanced Scorecard

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concluded that, in contrast to traditional measurement, the framework had

clarify and translate vision or strategy;

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Specifically, they identified that there were certain hard constraints

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government agencies and evaluation of the IDeA/LGA and BVI databases

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used. In 1992, the authority developed five corporate strategic objectives

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The authoritys use of the scorecard reinforced several points:

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4. making strategic planning a continual process by linking personal and

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needs a more corporate and in-depth response. Several other weaknesses

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