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Chapter 1
Introduction
confident citizens, create, develop and improve transfer of knowledge to its constituents.
They provide a place where learners develop their full potential, continually expand their
capabilities, nurture their aspirations and learn how to interact with other learners. In turn,
administration, faculty and staff to increase their capacity to improve the quality of education
and to meet the needs of the learners and the external community (Anastacio, 2016).
There are different types of educational institution in the Philippines. The most
common are non-stock non-profit educational institution which are registered with the
Securities and Exchange Commission and government educational institutions which are
created by a legislative body. State Universities and Colleges (SUC) have not been faced
with the pressure of survival because their operation is subsidized by the government.
However, there is no established performance measure tool for these institutions that can
Kaplan and Norton for the business sector can be used as a tool in coordinating the
terms of handling the the appropriated budget. The objective of this study is to evaluate
Theoretical Framework
A Balanced Scorecard (BSC) was introduced by Kaplan and Norton in 1992. BSC is
a set of measures that gives the managers a fast but comprehensive view of the business.
The balanced scorecard is well suited to the kind of organization many companies are trying
to become (Kaplan and Norton, 1992). The BSC is centered on the strategy and vision of
the organization, not control. Traditionally, the performance measures are focused on
finances, but in BSC, it allows managers to look at the business from four important
perspectives – how the customers see us; internal business perspectives – what must we
excel at; learning and growth perspectives – can we continue to improve and create value
(Kaplan & Norton, 1992). Figure 1 is the General Framework of the Balanced Scorecard.
Figure 1. General Framework of the Balanced Scorecard (Kaplan & Norton, 1992)
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fall into four categories: time, quality, performance and service, and cost. Time for existing
products and services is measured by the time a customer make an order to actual delivery;
while time for new products and services is measured by how long it takes for a new product
or service to market. Quality is measured by the defect level of products and services
delivered to customers and its timely delivery. Performance and service is measured by the
effective distribution system of the products and services. The cost of product or service
includes ordering costs, carrying costs including obsolescence and scrap and rework, and
excel on measures that has the greatest impact on customer satisfaction. Examples of
which are technology, design and production, and employee skills to implement the
production system.
Learning and Growth Perspective: Can We Continue to Improve and Create Value?
The success of one organization depends on the ability of managers to innovate existing
products and services, or to introduce entirely new products or services, improvement of the
production process and have the capability to create more value to the customers and
shareholders.
measures for a business have to do with profitability, growth and sustainability, liquidity
After that article written by Kaplan and Norton in the Harvard Business Review in
1992, executives found that: "while executives appreciated a more comprehensive new
performance measurement system, they wanted to use their new system in a more powerful
application than we had originally envisioned. The executives wanted to apply the system to
solve the more important problem they faced -- how to implement new strategies" (Kaplan &
Norton, 2004). This later evolved into a broader strategic management system and has
been customized to meet the needs of a variety of environments and markets (Kaplan and
Norton, 1992 2001b). Its objective is to translate an organization’s mission and vision into
actual (operational) actions (strategic planning). In addition, it can help provide information
on the chosen strategy, manage feedback and learning processes and determine the target
figures. The operational actions are set up with measurable indicators that provide support
for understanding and adjusting the chosen strategy. The classical Kaplan and Norton BSC
organization under each perspective include: Financial Perspective: Financial results and
growth, key financial parameters like Return on Equity (ROE), Return on investment (ROI),
higher profit margin, improved cash flow, low bad loans and lower debt, reduced operating
costs, net interest margin, reduced overhead expenses, and net profit. Learning and
Growth perspective focuses on how the organization can continue to create value for the
firm (Kaplan & Norton, 1992). It concerns with developing and sharing new knowledge to the
company’s manpower, developing the skills and competencies of staffs through seminars,
conferences and other related activities, satisfaction and retention of staffs and employee
growth and turnover, and provide strategic information to all, align personnel goals with
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loyalty, retention of key customers, sales revenue per customer, competitive pricing and
product offering, high quality service, and customer service compared to customers. Kaplan
and Norton (2000) write that the BSC tells “the knowledge, skills, and systems that
employees will need (learning and growth) to innovate and build the right strategic
capabilities and efficiencies (internal processes) that deliver specific value to the market
(customer), will eventually lead to higher shareholder value (financial)” (p. 169). Internal
Business Processes: Continuous innovation of existing products and services, Cross sell
business decision and approvals, proper work culture, higher employee confidence,
minimization of problems to a tolerable level, sound decision for potential business venture,
BSC is initially developed for the business sector was soon extended to non-profit
and public sector enterprises (NPSEs) and educational institutions are non-profit
organizations. Financial success is not the main objective of NPSEs but it is focused on the
effectiveness of delivering the service and accountability to its constituents. Prior to the
development of the BSC, the performance reports of NPSEs focused only on financial
and operating expense ratios. Their success has to be measured by their effectiveness in
providing benefits to constituents. The Balanced Scorecard helps NPSEs select a coherent
use of nonfinancial measures to assess their performance with constituents (Kaplan, 2010).
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not peculiar to profit seeking organizations only; it is necessary for every organization, no
matter what the nature and the purpose of the organization are and what the measurement
systems include (Dodor, et al). The general framework of BSC for Higher Educational
In HEIs, the “financial perspective” is replaced by the “teaching and research work
perspective” which refers to the highest possible quality of the supplied teaching and
research work. The “customer perspective” is replaced by the “students and partners
perspective” since they are considered as customers of the HEIs. The “internal processes
perspectives” remains the same, while the fourth perspective “learning perspective” is
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replaced by the “human and financial resources perspective”. This perspective refers to
input and infrastructure elements of the scientific process of the institution (Chalaris,
Michał Pietrzak (2014) claims that both public and non-profit sectors require
performance system that not only counts the inputs and outputs but also allows to assess
progress in reaching the organization's mission. According to him, both sectors can gain
from many potential benefits of using the BSC, for example: demonstrate accountability;
Improving performance against mission; Attract funding and employees; Create focus on
students involved in extension, research and training for continuing education, number of
alumni involved in public service or community service and average salaries offered to
facilities and resources for staffs, number of programs and curriculum changes, number of
syllabi developed, number of internship and companies available for students, number of
departments offering specialized programs, flexible course schedule for students, and
percent of students with job offer after graduation; Innovation and learning perspective:
faculty and staff, organizational effectiveness and social responsibility, number of faculty
attendance; number of applicant for entry exam; number of articles published and number
of articles delayed for publication. For staff motivation and development, the indicators are:
Percent of budget spent on staff development; staff satisfaction index in staff survey;
number of cross-trained or multi-skilled staff and number of employees formed based on the
specification of their tasks. For organization effectiveness, the indicators are: Number of
courses incorporating new technology, Number of specialized labs for each department;
Number of curriculum revisions in last five years; number of new courses offered in last five
years. For social responsibility, the indicators are: No. of articles or studies related to the
environment or a social cause, efficient use of energy; Financial Perspective: good Quality/
price combination, budget allocation to instructional and institutional support and tuition
revenue. For wise budget allocation, the indicators are: Budget allocation studies and
personnel; Variance of budget allocated each year. For increase research, and incentives,
the indicators are: Peso value awarded to scholarships, Instructor salary, Instructor
Yuksel and Coskun developed a strategy map for educational services. In this
strategy map, performance targets for each performance measures are indicated to
Implementation of the BSC in education can utilise existing tools such as strategy
map to enhance clarity. This is useful to guide the middle management and operational
staff of the institution, as well as other non-thecnical stakeholders. Using the strategy map,
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each one is able to visualize how their activities contribute to the institutional strategic goals
and final coutcomes (Al-Hosaini and Sofian). Figure 3 presents the strategy maps for
educational services.
performance indicator that is used to measure whether the objective is met or not. In
an attrative school image for the satisfaction of parents, students and alumni and to achieve
accessibility and partnership with other related institution. In internal process perspective,
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the objective is teaching excellence, students’ participation in sport and social activities and
improve academic performance. Under learning and growth, the focus is on the satisfaction
to improve learning. Under financial perspective, the focus is productivity and growth
Another researcher, Cindy Brown (2012) used the BSC to measure the
performance of the College of St. Scholastica of Duluth, Minnesota. The strategy maps
developed by cindy Brown include the following indicator oof performance by perspective:
Finance Perspective. The finance aspect show how do the institution intend to meet
its vission, mission, goals and objectives. To achieve financial stability, the enrollment
aspect show what do the community and students expect from the institution. Success
indicators for students under this aspect include improved student satisfaction, optimization
of student learning experience, advance student success and high graduate rates. For the
community, strong partnership with the community and develop community leaders are the
success indicators.
various programs that are globally recognized, strenghten the various programs offered by
considering enhancement factors that add value to the outcome, improvement of learning
environment and delivery formats that will result to high retention and graduation of the best
Learning and Growth. This shows the type of culture, skills, training and technology
the institution should develop to support the processess. This include retention of the most
qualified faculty and staff, support faculty & staffs professional practices and research
productivity, high level of satisfaction and low turnover of employees through system of
information technology infrastructure and build service learning awareness and training.
retention of best students, high graduation rates and high employability rates. Many
changes have been made to the design of BSC. According to Nayeri, et. al. Organizations
use this BSC model, customize it with their own processess and environment, therefore
there is no necessity in applying the four perspective of BSC or they could affix another
The researcher also adopted the framework used by Farid in measuring the
performance of Yazd University School of Humanities, the BSC framework together with
institution that depends on student tuition fees as source of funding. The performance
Financial. The performance indicators in this perspective are: Annual revenue from
tuition compared to annual budget, increase usage of assets and facilities due to increase
in programs offered, average cost of academic and administrative staff (human resource
Customer. The indicator in this aspect is improved school image and increased in
satisfaction of customers,
Internal Processes. The performance indicators are: offering high quality services,
considering the average cycle for improving educational facilities and equipment and
school and ratio of using computer in processing and keeping documents), availability of
Conceptual Framework
The Conceptual Framework used in this study is the systems approach. The
framework consists of three frames composed of input that includes the profile of
respondents and the factors used by respondents in measuring the performance of selected
state universities and colleges, the 2nd frame includes the materials and methods used in
analyzing the results and the 3rd frame is output of this research.
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Feedback
The input contains the independent variables and dependent variables. The
independent variables are the institutional and respondents’ profile, assessment of the
respondents on the financial performance of the colleges and universities in Metro Manila as
to financial, learning and growth, and internal business processes. On the other hand, the
The second frame consists of materials which permits the researcher to gather
previous related literature and studies. It also contains the methods and procedures used in
analyzing the variables through survey questionnaires, interviews and statistical tools. The
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financial performance of government colleges and universities in Metro Manila through the
balanced scorecard approach adopting only three perspective, namely, financial, learning
The third frame consists of the output. It encompasses the outcome of the study
which includes the identification of the institutional and respondents’ profile and the
financial, learning and growth and internal business processes is identified. The conclusion
institutions in Metro Manila in terms of financial, learning and growth and internal business
processes perspectives of the BSC. Specifically, it seeks to answer the following questions:
1.2.1 Age;
1.2.7 Average number of annual training/seminars attended for the last three
years?
2.1 Financial;
according to profile?
according to profile.
Learning and Growth and Internal Business Processes perspectives of the BSC because
business processes.
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Future researchers. This study may be used as a reference for future researchers
and may serve as a source of information and a conceptual and research literature in
conducting their studies that are related to the topic of the present study.
Government. This study would help the government to know if the allotted budget is
sufficiently and efficiently allocated. Also, it would help them to know if the universities are
Students. This study would benefit the students in a way that will enrich their
understanding regarding on how effective the institution in allocating budget for learning and
growth and for internal business processes. The results can be used as a basis in order for
them to strive and improve their services, teaching styles and strategies for the benefit of the
students.
Teaching Staffs. The findings of this study will help the teaching staffs be aware of
the performance of the institution in handling finances related to learning and growth and
Academic Staffs. This study will help the academic staffs in coming up with
strategies to improve the learning environment for the benefits of the stakeholders.
Non-teaching staffs. This study will aid the accounting department head and those
in charge with governance to strengthen, enhance and update, if necessary, the measures
affecting the financial performance of the institution with respect to financial, learning and
Universities and Colleges. This study will help Universities and Colleges in
identifying the strength and weak areas of their performance in terms of learning and
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growth, internal process, customers or stakeholders, and financial perspective, thus, helping
Definition of Terms
Academic Staffs. These are the deans and chairpersons of the different colleges.
business processes, and learning and growth. In this study, the Balance Scorecard is
adopted but limits its perspective to three areas only, namely, Financial, learning and growth
tight budget.
processes that will enable the institution to improve learning and delivery of instruction to the
Learning and Growth Perspective. This shows how well the institution is doing to
promote high productivity and high level of satisfaction of teaching and non-teaching staffs.
Non-Academic Staffs – Supervisory level. These are the heads, chief of office or
Teaching Staffs. Teaching staffs are the regular and part time faculty members of
the institution.