Page 22 - CIMA SCS Workbook August 2018 - Day 2 Suggested Solutions

SUGGESTED SOLUTIONS

There is an old saying in performance measurement – “what gets measured gets done”. By not
having any KPIs at the moment in two of the four Balanced Scorecard perspectives, there is a
danger that managers in FNG are not putting enough energy into dealing with the other two
important areas.

Application to FNG – the future
Colin Edgar’s email explains that he has been impressed by the way Nuncia have used the
Balanced Scorecard to create a broad appraisal of the company’s performance. It would seem
sensible for FNG to use a similar approach, to broaden out the number of factors we’re asking our
managers to consider, and to make sure that we are focussing on all important aspects of
performance, like our competitors seem to be doing.
To apply the Balanced Scorecard to FNG, we need to identify some critical success factors (CSFs)
under each of the four headings, and then set up suitable KPIs to measure performance in each
area. Targets would then need to be set to measure whether each KPI was being achieved or not.
I have presented an example below of the CSFs and KPIs that I think would be useful for FNG:

CSF KPI

Financial perspective Profitability Operating profit margin
Manage revenue decline Absolute (rather than %)
movements in revenue
streams
Internal business perspective Retain skilled journalists Staff turnover ratios

Purchase of recycled % of newsprint sourced from
newsprint sustainable suppliers

Customer perspective Accuracy of reporting Number of legal cases brought
against FNG

Accuracy of spelling, grammar Number of misprints identified
etc. by readers

Innovation, learning and Digital audience growth % increase in new users
growth perspective
Growth in contract printing Number of new contracts won

Conclusion
By using the Balanced Scorecard, and these KPIs to replace the existing FNG KPIs, I think we can
significantly improve the way we evaluate the performance of FNG.
The main improvement here is that we are now forcing managers to consider a far wider range of
factors.
However, the other key issue is that the existing KPIs actually gave a very misleading impression
of the performance of FNG. The recent annual report shows that we achieved three of the five
targets in the most recent year, but actually performance was not very good. The main problem
was that measuring revenue growth / decline in percentage terms ignored the fact that the

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