Balanced Scorecard in a University - Literature review Example

Balanced scorecard in a Introduction Niven (2006) d that a balanced scorecard (BSC) is a means of organizations reassessing their performance in order to improve. BSC is a strategic planning and management system that is used extensively in businesses and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization. This helps to improve internal and external communications and monitor organization performance against strategic goals (Niven, 2008). The balanced scorecard is used in universities to ensure academic excellence in times of increasing competition among other higher education sectors. The University therefore has to apply appropriate performance measurement systems that reflect and give the opportunity to improve on its research and teaching quality and on the quality of its facilities and staff. The adoption of a strong performance measurement system is the key to improving the competitive status of a university and enabling it to maintain its academic excellence both locally and internationally. Robert Kaplan and David Norton developed the balanced scorecard in 1992, which is a comprehensive approach that analyses an organisation’s overall performance from four perspectives: customer, internal business processes, financial and learning and growth. Brown (2007) stated that the balanced scorecard leads to organisation’s mission and strategies into objectives, targets, measure, and initiatives within each perspective. The paper is going to discuss the perspectives including the objectives, performance measures, targets and initiatives that should be covered in the balanced scorecard of a university and also explain the processes that should be followed when implementing the balanced scorecard. Perspectives There are four perspectives of balanced scorecards, which include the financial perspective, the customer perspective, internal business processes perspective and the learning and growth perspective. The perspectives are linked so that they represent casual relationships in the balanced scorecard. For instance, improvement in learning and growth may lead to better internal business processes, resulting in customer satisfaction, which in turn leads to good financial performance (Kaplan and Norton, 2013). Customer perspective In the customer perspective, the objective of the University is to ensure that the library meets the needs of the users. The university should therefore develop a high quality of collections and updated books that reflect the needs of the Library’s users and support the University’s mission. The good indicators such as better performance of the students in the university and better teaching skills by the teachers show that the university is doing well. The university should circulate new monographs to present primary research on what facilities they require to make the students and staffs improve their performance (Chapman, 2010). The measures of the customer perspective are viewed inform of the quality of research done by lecturers in terms of their number of publications and the internal and external research grants per full time lecturer. The quality of graduates is measured in terms of their performance and quality of academic service done to the community according to the number of activities that the university has done for the society. Internal processes perspective The internal business processes perspective answers the question on the processes that must take place in the University to make it excel in its performances. The university must therefore strive to operate in the most efficient, innovative, and effective ways possible to ensure they produce the best results (Reddy and Posa, 2007). To ensure good performance, the University should take initiative to improve their communication by doing staff survey rating of internal communication where the university will be aware on the areas to improve. The internal process perspective in the BSC is measured by viewing the quality of learning support in terms of the number of computers per full time student and the number of computer network connections. The quality of the academic staff in the university is also determined by the percentage of lecturers holding doctoral degrees and the student opinions on the lecturer’s teaching efficiency (Reddy and Posa, 2007). Finance perspective The objective of the finance perspective is to provide resources and services that have a high ratio of value to cost (Schniederjans et al, 2005). The university creates a good name to the shareholders by ensuring they have goods and services of high value. The university targets to use facilities that are improved in technology and ensure that their employees are paid well. The financial perspective is measured by observing the training and development focus of the university by viewing the operating expense for teaching and learning development per total operating expense (Schniederjans et al, 2005). The lecturers that are well paid teach the students well since they are motivated with the good income. Learning and growth perspective Drury (2005) stated that the objective of learning and growth perspective is to recruit, develop, and retain productive, highly qualified staff. The goal is to ensure that teaching and learning is of high quality and faculty development. To ensure this, the university has to take measures such as introduction of new courses and initiatives for example introducing foreign languages. The students and staff members should be encouraged to attend conferences and seminars to improve their skills and organize their own activities. Another goal on the BSC should be specific strategic decision implementation on decentralization of campuses; this will ensure evaluation of strategic planning results (Drury, 2005). According to the writings of Drury (2005) the learning and growth perspective is the foundation of any strategy as managers define the employee capabilities and skills, corporate climate and technology needed to support other strategies. These objectives enable an organization to align its information technology and its human resources with the strategic requirements from its critical internal business processes, differentiated value proposition, and customer relationship (Niven, 2008). Importance Perspectives should be covered in the BSC because they lead to improvised organizational performance through measurements and increase the focus on the business and its outcomes. The employees of the organization are encouraged to work hard in order to meet their objectives by targeting the key determinants of future performance. Bennett and Schaltegger (2003) stated that there is need for implementing a BSC as it helps to prioritize projects according to the timeframe and improves the level of communication in relation to the organization’s strategy and vision. Processes followed Kaplan and Norton (2013) stated that before an organisation can start implementing a balanced scorecard it needs a clear understanding of its vision and strategy. The implementation of a BSC is organized as a separate project, where the goal of the BSC project is defined, and the problems that the project is going to solve. The people who will participate in the project are also assigned roles to ensure that everybody understands what is expected to ensure good performance. Kaplan and Norton (2013) stated that implementation of a balanced scorecard can be divided into five phases: The model synthesis, technical implementation, organizational integration, technical integration, and operation. Model synthesis The organisation seeks an agreement about the vision and strategy and derives the needed measures during the model synthesis phase. Keyes (2010) stated that the model synthesis consists of two major tasks: Strategy synthesis and measure synthesis. In the strategy synthesis, the objective is to form a consensus view about the organizations vision and strategies. Consent is achieved by conducting interviews and filling questionnaires to ensure a common goal. In the measure synthesis phase the strategy of the organization is quantified into key performance indicators. The attributes that need to be defined are; measure name, unit, responsible measure owner, time scale, target, and alarm levels (Keyes, 2010). Technical implementation At this stage the visions, strategies, critical success factors and measures are entered into the system as they are already processed (Brown, 2007). The following steps are done at this phase: building scorecards, installation of the software, basic training for the persons building the scorecards and setting target and alarm levels. Organizational integration The BSC should be tightly integrated to the processes of the organization and communicated to all the members of the organization (Chapman, 2010). At this stage, the objectives of BSC are explained to the employees and implementation is done. Persons who are responsible for measurement of data are defined and re-engineering of the management and strategy process takes place. Technical integration At the technical integration phase, the following steps are followed: Identification of the imported measures and the source systems, defining the procedure to get measure data from data sources including data identification, modification, scheduling, and analysis of the database structure and exporting capabilities of the operative systems (Keyes, 2010). Operation of the BSC system The benefits of a balanced are experienced when the operations are incorporated in the day-to-day running of a business. At operation stage, the organization receives deeper understanding of what drives its business and the cause and effect relationships between the drivers (Reddy and Posa, 2007). At this stage, the following tasks are performed regularly: update of measure values, analyzing the balanced scorecard results, reporting of the balanced scorecard results and refining the balanced scorecard model. Conclusion A balanced scorecard is important as it creates a right balance between the components of the business objectives and visions. It provides an overview of the goals and objectives and does not limit itself only on financial values. A balanced scorecard makes the employees of the organization determined to do their best to produce the best performances in the future. It is therefore important for universities to develop a balanced scorecard to enable them to know how they are performing both locally and internationally. References Bennett, M., and Schaltegger, S. (2003). Environmental management accounting: purpose and progress ; [5th EMAN-Europe annual conference at the University of Gloucestershire, United Kingdom, on 11-12 February 2002]. Dordrecht [u.a.], Kluwer Acad. Publ. Brown, G. (2007). Beyond the balanced scorecard: improving business intelligence with analytics. New York, NY, Productivity Press. Chapman, L. (2010). Integrated experiential coaching: becoming an executive coach. London, Karnac Books. Drury, C. (2005). Management Accounting for Business. London, Thomson Learning. Kaplan, S., and Norton, P. (2013). The Balanced Scorecard. Boston, MA, Harvard Business School Press. Keyes, J. (2010). Implementing the project management balanced scorecard. Boca Raton, Fla, CRC. Niven,R. (2008). Balanced scorecard step-by-step for government and nonprofit agencies. Hoboken, N.J., J. Wiley & Sons. Niven,R. (2006). Balanced scorecard step-by-step maximizing performance and maintaining results. Hoboken, N.J., Wiley. Reddy, S., and Posa, N. (2007). Balanced scorecard: multi sector perspectives. Hyderabad, India, Icfai University Press. Schniederjans, M. J., Hamaker, J. L., and Schniederjans, A. M. (2005). Information technology investment: decision-making methodology. Singapore [u.a.], World Scientific. Read More