Fernbrook Veterinary Group (Fernbrook) runs 12 small-animal veterinary practices in the market towns of a large rural region. Its mission is "to give every animal in our care the treatment we would want for our own, and to be the practice a family trusts for the whole of its pets' lives". Its strategic aims for the five years to September 2029 are to grow revenue by at least 8% a year, to keep at least 85% of its clients from one year to the next, to be the employer that vets in the region choose, and to restore its operating profit margin to 15%. Fernbrook has been owned since 2023 by Pellam Capital, a private equity fund that plans to sell the group by 2030. You are a performance management adviser engaged by the board, which has asked you for a report evaluating Fernbrook's performance in the year ended 30 September 2026 and the chief executive's proposal for a balanced scorecard. Tables 1 to 3 give the data.

Background. Each Fernbrook practice is led by a practice manager, who is responsible for the practice's staff rota, opening hours, local marketing and day-to-day spending, and by a senior vet, who is responsible for clinical standards. Fees, drug prices and the vets' pay scales are set centrally. Most clients are families with one or two dogs or cats, and a typical client stays with the same practice for many years once they are settled: the board estimates that a client kept for a further year brings in about $750 of revenue. Clients increasingly compare practices online, through review sites and social media, before they register. Recruiting vets is difficult across the whole region, and the nearest veterinary school is more than 200 kilometres away. Exhibit 1: The current performance report. Each month the board receives one page for each practice showing its revenue, costs and operating profit against budget, with a group total. No other measure is reported to the board. Practice managers are paid a bonus of 5% of salary for each full 1% by which their practice's revenue exceeds its budget for the year. The budget is set by the finance director and is not discussed with the practice managers. Exhibit 2: Definitions. Fernbrook counts a client as active if one of its animals has had a consultation in the previous 15 months. The client retention rate is the number of clients active at the start of the year who are still active at its end, as a percentage of the clients active at the start. Vet turnover is the number of vets who left in the year as a percentage of the average of the number employed at the start and at the end of the year. The operating profit margin is operating profit as a percentage of revenue. The cost of acquiring a new client is the year's marketing and free first consultation costs divided by the number of new clients registered in the year. Every free first consultation is counted in the consultations figure. Exhibit 3: Events in 2026. In October 2025 Fernbrook began offering every new client a free first consultation, advertised on local radio and online across the region. Practice records show that 5,400 of the 13,500 new clients registered in 2026 have not returned since their free consultation. Fernbrook raised its consultation fee by 4% in January 2026, the first rise for three years. A staff survey in June 2026 found that 61% of vets felt their workload was unmanageable, against 34% in the June 2025 survey, and several vets who resigned said in their exit interviews that they had too little time with each animal. Practices short of vets filled the gaps with locum vets, who are paid more per day than employed vets and who rarely see the same animal twice. In August 2026 a local newspaper compared Fernbrook's waiting times with those of two independent practices that opened in the region in 2025 and which offer a routine appointment within two days. Exhibit 4: The proposed balanced scorecard. The chief executive, Dana Okoro, proposes the scorecard in Table 3 for every practice from October 2026, with the targets shown for the year to 30 September 2027. The scorecard would be added to the monthly board pack. She plans to keep the practice managers' revenue bonus unchanged "so that managers stay focused on what pays the bills". The measures for the learning and growth perspective have not yet been chosen. No practice currently records client satisfaction, and Fernbrook has never surveyed its clients. Exhibit 5: Board comments. The operations director, Sam Whitlow, says: "Once every practice is measured on new clients, client loyalty will rise, because managers will be focused on the customer." The finance director, Ivo Brandt, says: "Pellam Capital will judge us, and price the group when it sells, on profit alone. Anything that is not financial is a distraction."