Balanced Scorecard to the American University in the UAE - Essay Example

A balance scorecard proposal to the American in the UAE Introduction Universities and colleges are integral parts of educational systems (Bakhtiari et al., 2012). Gobalisation and development of online education have increased competition among the Universities in global scales, forcing leaders of educational institutions to develop different strategic approaches. However, it is not always easy to choose an effective model for strategic positioning of the University. One of the models proposed for this purpose is a balanced scorecard model. While this model is mainly applied to commercial and business entities, it also can be used in educational sector. 2. Statement of a problem An American University aims to open an affiliate in the United Arab Emirates. However, in order to ensure effective establishment and development of this University, the management needs to develop a comprehensive strategic framework such as Balanced Scorecard. However, there is limited knowledge and understanding of how to apply this framework to educational sector as Balanced scorecard model is mainly applied in commercial sector (Karathanos & Karathanos, 2005). 3. Objective of study The objective of this paper is to provide an overview of how the framework of a balanced scorecard can be applied to the education sector. Based on the research findings it will be possible to design a balanced scorecard for educational institutions at University level. Furthermore, this paper aims to develop some recommendations in relation to the American University in the United Arab Emirates. 4. Theory and Previous study 4.1. The Balanced Scorecard – brief explanation The Balanced Scorecard (BSC) is a framework used for tracking and measuring performance. Robert Kaplan and David Norton have introduced the BSC in the early 1990s as a new way for organisations to measure their performance in a comprehensive and integral way. Before, organisations relied only on financial indicators in order to monitor their achievements (Bakhtiari, et al. 2012). However, Kaplan and Norton have expanded this approach, offering a more balanced system. This system is comprised of four major perspectives: financial perspective, customer perspective, internal processes perspective, and learning and growth perspective (Bakhtiari, et al. 2014). All these perspectives have causal relationship among performance indicators and performance measures should be linked to the results (Sudirmann, 2012). The financial perspective is viewed to be the primary perspective of any commercial activity. The primary goal of any commercial activity is to generate revenue and create wealth for its shareholders. The companies set financial goals and develop strategies how to achieve these goals. These goals are usually quantitative by nature and are specific and measurable (Bakhtiari, et al. 2014). The customer perspective refers to the organisations’ target audience and their needs. While determining customer’s perspective goals the company needs to consider the ways of attracting, retaining and developing customers, the ways of improving operations, the ways of increasing customer satisfaction, etc. (Bakhtiari, et al. 2014). Customer perspective focuses on stakeholder satisfaction and the value that an organisation offers to each group of stakeholders (Papenhausen and Einstein, 2006). The internal process perspective is a perspective, which addresses the major question – at what an organisation must excel (Papenhausen and Einstein, 2006). The company needs to review its internal processes and to consider how these processes can be improved in order to conform to organisation’s strategy and mission statement. The learning and growth perspective focuses on the ways in which an organisation can imprve its ability to grow and develop. An organisation needs to consider how it can increase employee knowledge and expertise. By encouraging learning and growth the company will increase the employee and customer satisfaction. This will undoubtedly contribute to increased customer satisfaction and positive financial results (Papenhausen and Einstein, 2006). Balanced Scorecard framework for educational institution While developing a balanced scorecard for educational institution it is important to consider some important aspects. One of the most important aspects is mission and strategy (Papenhausen and Einstein, 2006). Without a clearly defined mission the University can hardly develop a path for its future direction and prioritise its goals )Papenhausen and Einstein, 2006). Without a strategy, financial and other non-financial perspectives will not be integrated and connected to each other, and therefore, the University will more likely fail to take a right course of action (Bakhtiari, et al. 2014). It is proposed that the University’s mission will be the following: “to offer high quality graduate and undergraduate programs for UAE students”. Based on this mission statement, the University needs to develop a strategy. It is also important to assess whether an educational institution has access to information. It is critical to understand whether an institution has a historical practice of measuring its performance. It might be quite difficult at the beginning, as the university might not have required data resources (Bakhtiari, et al. 2014). Also, it is important to assess whether an educational institution has access to required resources. Once all these aspects are taken into consideration, the University’s management may focus on the following four perspectives of the BSC. Financial perspective Financial perspective for a University or College should focus on financial indicators. There can be developed a huge variety of quantity targets such as: increase of revenue, reduction of human resources costs, improved cost structure, and increased assets utilisation, expanded revenue opportunities, etc. (Bakhtiari, et al. 2014; Papenhausen and Einstein, 2006). While setting up quantity financial targets it is also important to develop clear financial indicators. These indicators will more likely include the following: educational unit, library, accounting unit, student/faculty ratio, number of annual admissions, market share growth, etc. (Bakhtiari, et al. 2014; Papenhausen and Einstein, 2006). Customer/ Stakeholder perspective Educational organisations have several major aspects associated with customer’s perspective. Customers of educational organisations represent different categories of stakeholders including the following: students and their parents, employees, labor market and government (Bakhtiari, et al. 2014). Some of the major targets may include the following: increase of customer satisfaction, reduction of the number of customer complaints, etc. (Karathanos & Karathanos, 2005). The University’s management may focus on the five major areas that contribute to stakeholder Value proposition: price, quality, community service, partnerships, and development (Papenhausen and Einstein, 2006). For the category of students, the aim will be to attract high-quality students (Papenhausen and Einstein, 2006). In order to measure its performance, the University will measure it with such indicators, number and quality of students and percentage of admitted students (Papenhausen and Einstein, 2006; Schobel & Scholey, 2012). Also, it will be important to measure the quality of graduate students by monitoring such indicators as quality and timeliness of placements, internship programs and starting salaries (Papenhausen and Einstein, 2006). Employers, parents, and alumni also are important in customer perspective. For measuring this perspective, there can be used the following indicators: employer’s rating of graduate’s effectiveness and ability of graduates to find a good job. Internal processes perspective Internal processes perspective in educational organisations may be categorised into four major sections, including the following: (1) operational (for instance, production, opportunities for students, preparation of classes, employment of teachers and professors); (2) customer management; (3) innovation; and (4) legal and social emphasis (for instance, emphasis on effectiveness of management, real-time appraisal, etc.) (Bakhtiari, et al. 2014). More specifically for an educational facility, the University might focus on such aspects as teaching excellence, curriculum excellence, quality of faculty and efficiency and effectiveness of service (Papenhausen and Einstein, 2006). Teaching excellence will contribute to quality aspect, curriculum aspect will contribute to partnerships. Such indicators can be used for measuring teaching excellence as student and employer satisfaction. Quality of faculty will contribute to community service, and can be measured via indicators such as faculty credentials and faculty appraisals. Efficient and effective processes will enable an organisation to develop and stat competitive on the market (Papenhausen and Einstein, 2006). Learning and growth perspective Leaning and growth perspective is an integral element of the balanced scorecard especially in educational sector. It is a driving force for the other three dimensions and an opportunity to improve the performance of an organisation based on these three perspectives (Karathanos & Karathanos, 2005). For educational organisations, learning and growth perspective will more likely include the following: development of a diverse and effective workforce; creating an attractive and healthy environment; training and development of staff (Bakhtiari, et al. 2014). In other words, the American University should concentrate on three major areas: human capital (skills, training, knowledge; faculty and staff retention); information capital (networks, databases, and systems); quality of facilities and organisational capital (leadership, teamwork, and culture) (Papenhausen and Einstein, 2006; Schobel & Scholey, 2012). References: Bakhtiari, M., Bakhtiari, S., Jamei, R. and Jamshidi, B. (2012), ‘Designing and implementing of balanced scorecard system of educational systems: Results obtained from a case study in Iranian universities’, African Journal of Business Management, 6 (25), pp. 7439-7445. Karathanos, P., & Karathanos, D. (2005). Applying the balanced scorecard to education. Journal of Education for Business, 80(4), 222-230. Papenhausen, C. and Einstein, W. (2006), ‘Insights from the Balanced Scorecard Implementing the balanced scorecard at a college of business’, Measuring Business Excellences, 10 (3), pp. 15-22. Schobel, K., & Scholey, C. (2012). Balanced scorecards in education: Focusing on financial strategies. Measuring Business Excellence, 16(3), 17-28. doi:10.1108/13683041211257385 Sudirman, I. (2012), ‘Implementing Balanced Scorecard in Higher Education Management’, International Journal of Business and Social Science, 3 (18), pp. 199-204. Read More