Lipe and Salterio (2000) found that superiors disregarded half of the information when using a Balanced Scorecard to evaluate the performance of two divisional managers. Only common measures affected the superiors' holistic evaluations, defeating the purpose of the Balanced Scorecard. Our study examines whether disaggregating the Balanced Scorecard results in evaluations consistent with the intent of the Balanced Scorecard approach. Results indicate the disaggregated strategy allows superiors to utilize unique as well as common measures, thus overcoming the common-measures bias. In addition, we find Balanced Scorecard performance evaluations explain more than half the variation in subsequent compensation decisions.

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Processing complex, unstructured information can be difficult. Since balanced scorecards can include as many as 24 or more measures, this article presents a methodology to help managers manage the complexity. The four‐step process explained here can lead to accurate and consistent evaluations using both quantitative and qualitative performance measures. © 2010 Wiley Periodicals, Inc.

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