What is it?
Scorecard
The CIMA Strategic Scorecard® was developed in 2004. It was the result of research by CIMA, in collaboration with the Professional Accountants in Business Committee (PAIB) of the International Federation of Accountants (IFAC), into major corporate failures at the time such as Enron and WorldCom. An important finding was that company boards had failed to oversee strategy and risk effectively. The global financial crisis of 2008–09 reinforced these conclusions.
The scorecard aims to help boards of any organisation engage effectively in the strategic process.
It recognises that boards struggle to engage in strategy because of: lack of time and crowded agendas; information overload; lack of robust, board level processes for dealing with strategy; and greater complexity of business.
What benefits does the Scorecard provide?
The CIMA Strategic Scorecard® provides a simple, effective process that helps the board to focus on strategic issues and ask the right questions. It is structured around four key dimensions of strategy:
strategic position
strategic risks and opportunities
strategic options
strategic implementation.
This means that the board can work constructively with management to promote the future success of the organisation. It can help to ensure a high-level perspective on strategy, thus avoiding the ‘comfort zone of detail’.
The discipline of preparing and updating the scorecard also helps management to keep its focus on strategic issues, and facilitates discussion within the executive team so that it can refine proposals prior to exposure to the board. The scorecard can also help to identify gaps in knowledge and analysis, so improving the quality of information presented.
The scorecard framework helps boards and the businesses they control to:
summarise key aspects of the operating environment
highlight risks and opportunities
identify major strategic options
chart and track progress against significant milestones.
The implementation of the scorecard is based on the assumption that the organisation has already determined its broad strategic direction and has a strategic plan in place. The scorecard provides a process for developing and moving this strategy forward in a dynamic way. For boards that need to do more foundational thinking about what the company stands for, a good starting point is to develop a ‘board mandate’.
The format of the scorecard is very flexible and can be adapted to meet the needs of the organisation. For each of the four dimensions, high-level information is provided in a format that provokes high-quality, constructive and effective strategic discussion. Achieving this in practice is a challenge.
The format of the scorecard has evolved since its initial creation, and CIMA is continuing to undertake further development work to strengthen the ability of the scorecard to support the level of strategic and risk discussion necessary to help boards and their organisations to avoid major problems.
Questions to consider when implementing the CIMA Strategic Scorecard
How are we going to achieve buy-in from both executive management and the board to introduce the scorecard?
Do we have a strategic plan in place? If not, this will have to be completed first before attempting a scorecard.
How are we going to present the information for each of the four scorecard dimensions?
What information do we have already to support a scorecard?
When are we going to introduce the scorecard? And would it help to have a facilitator?