Using Balanced Scorecards (BSC) for Universities

MANAGEMENT ACCOUNTING FOR MULTINATIONAL COMPANIES

PROFESSOR: IGOR N. BARANOV STUDENTS: IRINA PUTKOVA SERGEY KOZLOV

Content
BSC concept
basics 4 principles

BSC for non-profit organizations

differences & obstacles why use BSC for universities?

Examples of BSC map for University

USC Rossier School of Education hierarchy of relations in Vladivostok University

Basic BSC premise is:

FINANCIAL

RESULTS

ALONE

CAN NOT
CAPTURE

VALUE ADDING
ACTIVITIES!!!

BSC is like the dials in an airplane cockpit: it gives managers complex information at a glance.
R. S. Kaplan and D. P. Norton

BSC basics
Idea of BSC evolved in 1990-th, when rising dependence on non-material resources asked for new management instruments which used non-financial indicators. o Brand identification, competence, processes flow = intangibles o BSC is a mechanism of giving every particular employee a view of company strategic goals allowing to control implementation through Key Performance Indicators (KPI) o If measures are successful and truly adopted credibility for internal and external shareholders rises ability to satisfy externally driven

demands for accountability (especially important for non-profit org.).

BSC: 4 perspectives
Measures addressed to: 1 The FINANCIAL perspective 2 The CUSTOMER perspective 3 INTERNAL business PROCESSES perspective 4 LEARNING and GROWTH perspective Answer the question: How should we appear to our shareholders? How should we appear to our customers? What processes must we excel at? How can we sustain our ability to change and improve?

NB: A critical factor for an effective BSC is the alignment of the 4 perspectives with the company `s vision and strategic objectives. BSC shows how results are achieved. Because even best objective can be achieved badly (one area improved at the expense of another) .

BSC for non-profit organizations

Obstacles: o Poor Oversight o Strategy

o Transparency
o Incentive cooperation o Causal linkages

o Integrated themes
Nevertheless: Those public sector groups that have started working on BSC report- the process of defining a strategy and building BSC is far more valuable than particular measures used.

Why apply the BSC to Education?

o Unlike good old times, universities today face growing expectations and must provide increased accountability for the outcomes they produce. o Central administration: academic scorecard makes easier for University to

accomplish strategic goals though assigning metrics to every academic unit. Is

very important for decentralized (to the deans level without provost involvement into budget decisions) institution to see that unit is increasing or declining. o It offers a format within which to establish common measures across academic units, that have shared characteristics (ex.: cluster of schools within University of Southern California)

o Simplicity of system enables to explain budget decisions by showing

relationship to academic scorecard indicator.

University Stakeholders
o Prospective students o Current students o Organizations and Individuals seeking for new knowledge

o Families
o Alumni o Employers o Colleagues at other Institutions o Governing boards o Local community o Friends, Donors, Legislators, the General Public

o Faculty
o Staff

Common University mission

Fundamental mission of research universities excellence in creation, sharing and application of knowledge.
o o o o o o o o o distinguished faculties high-level research facilities innovative teaching process support technologies capable students competent staff legislative and public support excellent communication and service-oriented culture sense of community

Higher education dashboard indicators

TEACHING AND LEARNING SCOLARSHIPS AND RESEARCH Productivity Programes / Courses SERVICE / OUTREACH Student outcomes University / Professions / Alums State / Pros Students / Families Employers WORKPLACE / SATISFACTION FINANCIAL Revenues Expenditures Stuff Impact

Faculty

Observations
o 5 dashboard indicators - not prescriptive:
Depending on mission and goals University needs different components of the board. o Individual units might have their own set of indicators: administrative vs academic units. o Traditional indicators can`t reflect comprehensive image of current status of a university and the scope of areas for control (market position especially)

o Can`t reflect key success factors and don`t offer strategic view of
development:
Ex. In most colleges little attention is paid at measuring students expectations and satisfaction, thus attracting the brightest people is considered a critical success factor.

Ex.: USC Rossier School of Education

Map contains 4 classical BSC perspectives

Ex. OSU

Ex. Vladivostok

Summary
2 main differentiating features of BSC: 1. Simple format of strategic map describes with limited set of indicators for every perspective.

2. Focus on mutual relationship of perspectives and indicators. Well articulated

map reflects strategic logics of causality between current activities and longterm success.

The whole process of dialogue focuses, energizes and informs faculty and staff
thus broadening responsibility for leadership within the unit.

Thank you for the attention!

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