Balanced Scorecard in Higher Education - Literature review Example

? Literature review of Balanced Scorecard in Higher Education Table of Contents Balanced Scorecard (BSC) - Definition 3 2.Characteristics of Balanced Scorecard 4 3.BSC in Higher education 5 3.1Current status and application of Balanced Scorecard 5 3.2Implication of BSC in Higher Education 7 3.3Benefit of BSC implementation 8 Reference 10 Bibliography 11 1. Balanced Scorecard (BSC) - Definition Balanced score card is strategic performance management system which is extensively used in businesses and industries, non profit organizations and government organizations across the world for aligning business activities to the strategic vision and mission of the organizations. Also instrumental in improving the internal and external communications in the organization and monitoring performance of organizations against strategic goals and objectives, the balanced score card has extensive usage and gained acceptance in almost all sectors of the market. Originated by Doctor Kaplan and Doctor David Norton as a framework for performance measurement adding to the strategic non-financial performance measures to the conventional financial metrics, they have provided this framework for executives and managers for assessing the overall and balanced view of the performance of organizations (Schmeisser, 2011, p.194). The balanced score card presents an integrated result oriented collection of key performance measures including financial and non financial measures which comprises both the present performance of the firm and also its future performance drivers. The main premise of the score card is based on the fact that financial evaluations alone are not enough for capturing the value-adding activities. Kaplan and Norton (1992), suggests that apart from using financial measures firms must also develop a comprehensive framework of other measures as indicators or predictors of financial performance too (Beard, 2009, p.1). The four important perspectives that the balanced score card allows managers to look at their businesses are customer perspective or the way customers see them; internal perspective or the area in which need to excel; innovation and learning perspective or the ways to continue improving and creating value; and finally financial perspective or the way they appear to their shareholders in businesses. The following diagram would highlight on the different performance measures and their linkages in the balanced score card. Figure 1: The Balanced Scorecard links Performance Measures (Source: Kaplan & Norton, 1992, p.72) 2. Characteristics of Balanced Scorecard Characteristics of the scorecard is the presentation of the combination of financial and non financial measures each of which is compared with a target value within a concise and single report. The most unique characteristic of this scorecard is that it determines the most relevant and crucial information by capturing information which is most relevant for the business. Based on the vision of an enterprise, strategies are formulated and derived from its goals. For measuring the achievement of the objectives, relevant characteristic numbers can be assigned to these goals. This translates the enterprise strategy into figures which can then be communicated towards all divisions in the company and therefore can communicate the strategy to all workers in the company (Welz, 2007, p.7). In this way every worker adept to which goals need to be attained first in order to attain the desired objectives of the business. Link between the strategic level and the operational level can be reached by the derivative by further sub goals and relevant figures from the strategy for each department. Because of the fact that the balanced scorecard considers goals which are directly linked with the success of the organization it remains succinct and concise (Niven, 2006, p.xxi). The concept of the balanced score card is to include information and data from all divisions of the organization under the controlling of entrepreneurial success. This is the reason why it is perceived from the four perspectives such as financial perspective, customer perspective, internal business process perspective and learning and growth perspective (Noreen, p.365-370). 3. BSC in Higher education 3.1 Current status and application of Balanced Scorecard Even though the application of business scorecard is well documented in the business sector there has been little research on their application or adaptation in the education sector. Papenhausen and Einstein (2006) have revealed how the scorecard can be implemented in the college of business. Karathanos and Karathanos (2005) have emphasized on the importance of having clear alignment of measures with the core values, missions and strategic goals of the organization. NACUBO or the National Association of College and university Business Officers have presented the fact that the senior management in the University of California had launched the planning and performance management system of BSC in thirty institutional functions using three data sources, namely, UCSD’s internal financial report; NACUBO benchmarks and finally customer satisfaction surveys on faculty, staffs and student. After implementing the scorecard the UCSD has reported several benefits and favourable outcomes resulting from the initiatives. The Baldrige Criteria for Performance Excellence in both the education as well as the business sector shows requires that being part of their self assessments organizations are able to report and develop a comprehensive collection of measures comprising of both the lagging as well as the leading performance indicators. These sets of measures are harmonizing with the concept of balanced score card proposed by Kaplan and Norton (1992). The most crucial requirement is that the measures are completely aligned with the strategic objectives of the organization. This requirement allows the organization to keep track of student learning along with the monitoring of their progress in building their capabilities and attaining resources which affects their capacity to improve performance and development of students in the organization (Karathanos & Karathanos, 2005, p.229). Scorecards representing three of the 2001 recipients of Malcolm Baldrige National Quality Award in Education showed that even though they cover similar perspectives they vary substantially in their individual measures demonstrating the unique missions of the three different organizations (Karathanos & Karathanos, 2005, p.229). The University of Vermont Division of Finance and Enterprise Services recently completed development of the balanced scorecard. This has been implemented with the view to ensure the unit’s strategies contribute to the overall success of the university. The strategies are particularly adopted to ensure that the unit attains its goal towards supporting the academic objectives of the university (BSC Designer, n.d., p.4). 3.2 Implication of BSC in Higher Education Formulation of a performance management system for university institutes require taking into account the supporting management processes for delivering multidisciplinary research agenda. This can be augmented through analysis of the various activities within the institutions as well as the institutional stakeholders’ needs. The measurement of financial performance of the institutions accounts for a major implication for their sustainable progress and growth towards prosperity. Institutes undertake extensive research coordination across a wide variety of areas for demonstrating the achievement of the industrial requirements. The balanced scorecard implies a vivid reflection of the effectiveness of these institutes towards delivering quality resources in the industries (Rahman, 2007, p.167). This gets articulated also through intellectual capital which also includes human capital, structural capital and relational capital. It follows that an effective system of performance measurement in the university institutes incorporates appropriate metrics for intellectual capital. Regarding the development of intellectual capital within the institutes, the capacity for developing an effective system of performance measurement can provide the institute’s management and the industrial stakeholders with reliable and regular information on the crucial and key areas of intellectual capital and this can potentially contribute towards reducing a considerable amount of uncertainty in the process of decision making within the organization. Performance measurement systems for university collaborations can be used for providing the basic measures of collaboration success which ca consequently reflect the potential scope of interaction between universities and firms (Philbin, 2011, p.36). 3.3 Benefit of BSC implementation Institutions availing of continuous improvement strategies such as balanced scorecard have been finding them proven methodologies to be used for enhancing effectiveness and creating institutional agility. The broad community of higher education enjoys the benefit from opportunities to have greater learning about best practices and concepts of institutional effectiveness strategies (Rice & Taylor, 2003, p.10). It offers the main benefit of acting as a key performance indicator and acting as a measure for sustaining strategic planning and continuous enhancement and improvement in such areas like academic performance of students, student enrolment, staff and faculty satisfaction, and financial resilience. These performance indicators are regularly reviewed for enabling educational institutions for undertaking corrective actions and improving performances. The continuous usage and monitoring of the performance indicators assists educational institutions to rightly deploy quality concepts within the organization (Rice & Taylor, 2003, p.8). Implementing the balanced scorecard has been particularly facilitated through the use of standard software and this approach has been especially effective in ensuring that the master databases can be accessed easily by the administration and management staffs in the educational institutions. Aspects like export facilities within such databases also allow reports to be accessible through a common platform which can be easily evaluated and assessed by the university stakeholders. Considering the durability of the scorecards, the reports are inclusive of such information and data which allow measurement of the institute’s performance and development. The simplicity and operational use of the scorecard can be used by the management board of the institute for reporting processes. These factors can be widely used as a valuable management tool for contributing towards its durability (Philbin, 2011, p.43). Reference Beard, D. F. (2009). Successful Applications of the Balanced Scorecard in Higher Education. Southeast Missouri state university Cape Girardeau, Missouri. Heldref Publications. BSC Designer. (No Date). Balanced Scorecard in Education. AKS-Labs. Karathanos, D. & Karathanos, P. (2005). Applying the Balanced Scorecard to Education. Southeast Missouri State University. Journal of Education for Business. [Pdf]. Available at: http://www.dixie.edu/business/File/Applying%20Balanced%20Scorecard%20to%20Education.pdf. [Accessed on February 23, 2012]. Niven, P. R. (2006). Balanced scorecard step-by-step: maximizing performance and maintaining results. John Wiley and Sons. Noreen. (2011). Managerial Accounting For Managers. Tata McGraw-Hill Education. Philbin, S. P. (2011). Design and implementation of the Balanced Scorecard at a university institute. Measuring business excellence. VOL. 15 NO. 3 2011, pp. 34-45, Q Emerald Group Publishing Limited, ISSN 1368-3047. Rahman, H. (2007). Developing successful ICT strategies: competitive advantages in a global knowledge-driven society. Idea Group Inc (IGI). Rice, G. K. & Taylor, D. C. (2003). Continuous-Improvement Strategies in Higher Education: A Progress Report. Centre for Applied Research. Volume 2003, Issue 20 September 30, 2003. [Pdf]. Available at: http://net.educause.edu/ir/library/pdf/ERB0320.pdf. [Accessed on February 23, 2012]. Schmeisser, W., Clausen, L., Popp, R. (2011). Controlling and Berlin Balanced Scorecard Approach. Oldenbourg Wissenschaftsverlag. Welz, S. (2007). Balanced Scorecard and Sales Organisation - Chances and Risks. GRIN Verlag. Bibliography Armstrong, M. (2008). Armstrong's Handbook of Strategic Human Resource Management. Kogan Page Publishers. Blokdijk, G. (2008). Balanced Scorecard 100 Success Secrets, 100 Most Asked Questions on Approach, Development, Management, Measures, Performance and Strategy. Lulu.com. Dymski, G. (1999). The bank merger wave: the economic causes and social consequences of financial consolidation. M.E. Sharpe. Fisher, C. D., Schoenfeldt, L. F. & Shaw, J. B. (2008). Human Resource Management, 2008 Ed. Dreamtech Press. Hao. L. (2006). Assessing equitable postsecondary educational outcomes for Hispanics in California and Texas. ProQuest. Read More