performance measurement cube Technique that measures performance, considering the type of organisation, its strategic situation and the industry it is in.
Focusing the scorecard: the performance measurement cube > ► ►
One problem with the balanced scorecard is that it does not provide indicators of what specific measures should be used by organisations. Based on empirical research with the LEK Partnership, studying organisational performance measurement used in Australian organisations, Hubbard developed a performance measurement cube which addresses measurement issues for all types of organisations in all types of industries, taking account of their particular strategic situation (see Figure 5.5).
FIGURE 5.5
Hubbard found that the; type of organisation had an impact on the measures that were used. Non-profits, government business enterprises (non-commercially oriented and commercially oriented), private business organisations and listed companies had significantly different profiles of the measures they used. For instance, while all organisations are concerned about 'financial' measures, for not-for-profits, break-even is the measure used rather than profitability, since the more money they can get, the more they will spend, figure 5.6 shows the types of measures being used, in order of importance. It also shows that the number of measures increases when moving from non-profits to listed companies, reflecting the increased size and complexity of operations.
Hubbard also found that each industry had a particular 'recipe’ for success, so that measures used needed to take account of the particular industry in which the organisation was operating. For instance, in chemical industries, a key measure is the. number of environmental incidents, such as toxic spillages, while in retail industries, turnover per square metre is a key measure.
The measures also varied according to the long-term and short-term strategic positions of the organisation. For instance, organisations in strong long- and short-term positions tended to have 'themes of the year' in their measurement systems. This did not mean other measures were not important—simply that most measures were under control, so the organisations was mountion a campaign to concentrate on a small number of less well-controlled measures.
Figure 5.6 shows how the strategic situation affected the measures used.