Olive Garden wants to know.

So do Target and PepsiCo. Even your local car dealer and transit authority are curious. They all want to know whether they are meeting their goals. Many companies, like Barclays PLC in the United Kingdom, have successfully used the balanced scorecard approach to measure their progress.

Barclays Turns to The Balanced Scorecard^*

A series of scandals from 2008 to 2012 tarnished the reputation of Barclays, the British multinational bank. From fraudulently selling mortgage-backed securities in the run-up to the financial crisis to rigging a key interest rate called LIBOR, a benchmark rate that helps set global borrowing costs, Barclays’ image and financial performance took a beating. When new leadership was tasked with turning Barclays around, the company turned to the balanced scorecard to change the company’s performance goals and incentive structure.

Matthew Horwood/Alamy Stock Photo

Introduced in 2014, Barclays’ balanced scorecard set out specific goals and metrics across each of the company’s “5Cs”: customer and client, colleague, citizenship, conduct, and company. With the goal of becoming the world’s “go to” bank, the balanced scorecard became the instrument to ensuring Barclays was “helping people achieve their ambitions—in the right way” and balancing “stakeholders’ needs across the short and long term.”

Rather than focusing solely on short-term financial results, Barclays’ balanced scorecard aligned the company’s 5Cs with the broader perspectives of the balanced scorecard. Most notably, the learning and growth perspective incorporated Barclays’ conduct and citizenship goals, which included new purpose and value statements for the company. The company even took the extraordinary step of tying the performance bonuses of managers to Barclays’ corporate ethics and citizenship goals, rather than just quarterly profits and stock price gains.

The company evolved its balanced scorecard performance measurement in 2016 to identify new key performance indicators (KPIs) that continued to prioritize customer and client, colleague, and citizenship metrics, underpinned by conduct and culture (renamed from company) firmwide. By 2018, Barclays was making significant progress toward its new KPIs. The company’s recent annual report noted, “By incorporating a broad range of financial and non-financial measures, our framework is focused on achieving positive and sustainable outcomes for our diverse group of stakeholders, and influences incentive outcomes for Barclays’ employees.”

This chapter focuses on how management accounting information helps companies such as Cigna, Disney, Pfizer, and Siemens implement and evaluate their strategies. Strategy drives the operations of a company and guides managers’ short- and long-run decisions. We describe the balanced scorecard approach to implementing strategy and methods to analyze operating income to evaluate the success of a strategy.