The Implementation of Performance Management Systems in Universities - Coursework Example

Running header: PMS Student’s name: Instructor’s name Subject code: Date of submission: The implementation of performance management systems in universities Introduction In their bid to ensure academic excellence while at the same time maximizing on their revenue collection and application of the available resources in the ever increasingly competitive environment of the higher education sector, universities ought to apply an appropriate performance management system which would give them the opportunity of improving in all its aspects be they internal or external. These would include such areas as teaching, research quality, staff as well as quality of its facilities while also including the perspectives of all their stakeholders. University’s performance ought to be evaluated using appropriate methods and hence adopting a robust performance management system is key to improving their performance both at the local and international front (Otley , 2001). This paper looks at how universities ought to implement sound performance management systems geared towards improving their performance (Malmi, and Brown, 2008). In this regard, a number of case studies have been analyzed in a bid to establish the best performance management tool to use for universities. In this regard, balanced score card has been found to be a good performance management tool for universities. Furthermore a number of scholarly journals have been consulted as can be seen in the references. First, the paper introduced the concept of balanced scorecard and the aspects of performance that ought to be covered in the performance management system of a university (Ferreira and Otley, 2009). The paper then explains the process which ought to be followed in the implementation of the balanced score card by the university. The paper then concludes by recommending that universities ought to implement balanced score card as a performance management tool in their bid to better their performance in the aspects identified above. The aspects of performance that should be covered in the performance management system of a university In business, the tradition in measuring of excellence primarily emphasizes on financial measures. However, higher education institutions such as the universities primarily emphasize on academic excellence. Due to their motivation by issues of comparability and external accountability, measurement in higher education has traditionally emphasized on academic related objectives that are mostly quantifiable (Kasurinen, 2002). Such variables include student and faculty demographics, retention rates, faculty teaching load, grants, library resources etc. However, such measures do not represent a comprehensive image of the universities current status. Some key performance and hence success factors for the university while not capturing many of the university’s strategic directions, mission or vision objectives (Otley, 2001). Furthermore, these performance measures which are primarily historical are limited in predictive power and hence incapable of alerting the universities to changes in time and hence respond while failing to give adequate considerations to important though difficult to quantify dimensions. The limitations of the traditional performance management systems makes it necessary for universities to adopt balanced score card as a performance management tool. According to Kaplan and Norton (1995), the balanced score card will translate the universities mission and strategy into a comprehensive set of performance measures which would provide a framework for a strategic measurement and management system. The balanced score card unlike the traditional performance management systems outlined above would help the organization in a number of ways including; i) Clarification and building of consensus about vision and strategic direction. In this regard, everyone in the organization will be brought on board and own the university’s vision and hence move in the institution’s strategic direction. ii) Communication and linkage of strategic objectives and measures throughout the universities with an aim of making every stakeholder aware of the role they have to play in meeting the objectives in the balanced score card. iii) Alignment of departmental and personal goals to the organizational vision and strategy. This aimed at ensuring that departmental goals and those of individual stakeholders do not conflict with those of the university as a whole (Fitzgerald and Moon, 1996) iv) Planning, setting targets and alignment of strategic initiatives to enable every stakeholders take bold steps towards achieving the university’s objectives. v) Conducting periodic and systematic strategic reviews so as to gauge the university’s progress towards meeting the university’s strategic goals. vi) Obtaining feedback to learn about and improving strategy. In this regard, challenges and areas of improvement are identified and necessary steps undertaken to address them. As such, the balanced scorecard looks at the institution from a number of perspectives including the financial perspective that attempts to ask how the organization looks at its shareholders, internal business processes which defines what the organization must excel at, innovation and learning perspective which should determine whether the organization should continue to improve and create value and the customer perspective which looks at how customers view the organizations (Kasurinen, 2002). Though the balanced score card was developed for profit making organizations, it could be very helpful to institutions of higher learning such as the university if they modified it to suit their organizational objectives. It is possible to use the universities mission and vision to develop a balanced score card for a university depending on its future objectives or what it has set as its strategic goals. The university can depend its vision, goals and objectives identify its critical areas within which to base its balanced score card. For instance, suppose the university has set its vision as that of becoming an internationally recognized university in research, service and teaching (Karathanos and Karathanos, 2005). The university can develop its balanced score card around the five key areas that are deemed necessary for achieving its vision within the stipulated time. These areas may include the following; i) Academic excellence – in this regard, the university ought to measure its contribution towards creation of knowledge ii) Student learning experience – in this regard, the aspect should measure the effectiveness of the university in transferring knowledge to its students iii) Diversity – the aspect regards how well the university broadens and strengthens its community iv) Outreach and management – This looks at how effectively the university transfers knowledge to local, national as well as the international community v) Resource management – the aspect looks at how well the universities are in developing and managing resources. Note that the above areas have been chosen due to the fact that they affect both internal and external stakeholders. If the university was to achieve excellence in all the five areas, it will definitely achieve its goal of becoming internationally recognized in the various areas outlined above. Based on the above five areas, the university can then develop its balanced score card based on the above aspects of performance (Klassen etal, 2010). Such a balanced score card is discussed below; University’s balanced score card Objective Indicator Diversity: How well the universities broaden and strengthen their community i) Increasing in the university ii) Providing better access by the disabled. i) The percentage of students, staff and faculty by ethnicity and gender. ii) Inventory program needs as baseline: Improvement over time. Student learning experience : how effectively the university transfers knowledge to its students i) To improve student progress ii) To increase student satisfaction iii) To improve graduate program quality i) The retention and graduation rates. ii) The higher education research institute student survey data iii) Graduate student placement Academic excellence: the university’s contribution to the creation of knowledge i) Increasing research productivity ii) Heightening national reputation i) Number of publications, grants, citations as well as awards ii) The number of departments in the top quartile of national research council rankings Outreach and engagement : How effective the university is in transferring knowledge to the local , national and international communities i) Increasing technology transfer ii) Increasing outreach to communities i) The number of licenses, invention disclosures and patent as well as the amount of royalty income ii) The number of programs as well as services as well as the number of people we served Resource management: how well we develop and manage resources i) Increasing and diversifying revenue sources ii) Providing incentives for entrepreneurial initiatives i) The percentage of revenue by category over time ii) The number of science and technology campus partnerships The balanced score card explained a) Diversity – to become internationally recognized, we have to be a diversified institution especially as regards to students and staff. We should also increase the opportunities we accord to the disabled. In this regard, the key performance indicators will be the composition of staff and students in terms of gender and ethnicity. This will be measured at the end of every year and it is expected that at the end of three years, no gender will compose more than 55% of the entire population. Furthermore, the minority groups representation should have improved by 20%. b) Students learning experience- this will be a great determiner of whether or not we achieve our goal. In this regard, the university should aim at improving students satisfaction as well as the quality of the graduate programs we offer. The key performance indicators in this regard will include the retention and graduation rates as well as the higher education research and survey data. The measurement of data in this regard will be done through surveys while students will be required to fill in form detailing their experience at school and the quality of the graduate programs that we offer. Consequently, the retention and graduation rate should be at least 95% every year. c) Academic excellence – to become internationally recognized, the university would need to improve on our academic excellence. In this regard, we should aim at increasing research productivity while heightening our national reputation as an institution of research and excellence. The key performance indicators in this regard should include number of publications, grants, citations as well as awards as well as the number of departments in the top quartile of national research council rankings. In this regard, the number of publications, grants, citations and awards should improve by 20% annually while the number of departments in the top quartile of national research council ranking should improve from the current three to six within the current year. d) Outreach and engagement – in our bid to become internationally recognized, we realize the need to be more effective in transferring knowledge to the local , national and international communities. In this regard, we will increase technology transfer by partnering with various organizations while developing more outreach programs to the society. The key performance indicators in this regard will include the number of licenses, invention disclosures and patent as well as the amount of royalty income as well as the number of programs as well as services as well as the number of people we served . These indicators are expected to improve by ten percent annually failure to which corrective measures should be undertaken. e) Resource management – in a bid to become internationally recognized, we will excel in resources management. This will be done by diversifying our revenue sources while providing resources for entrepreneurial initiatives. The key performance indicators in this regard include the percentage of revenue by category over time as well as the number of science and technology campus partnerships. In this regard, the revenue from various sources should increase by 10% annually. We also plan to introduce at least one more source of revenue in the name of an industrial pack. The university’s balanced score card could also be based on the four areas that Kaplan suggested in his balanced score card for the private sector. However, these should be modified in accordance to the university’s needs. The areas have been outlined below; a) The customer perspective In this regard, the objectives should include: i) Improving the quality of graduates ii) Improving the quality of research iii) Improving the quality of academic services to the community b) Internal business process perspective (Nørreklit 200) In this regard, the objective should include: i) Improving the quality of learning support ii) Improving the quality of academic staff (Nørreklit, 2003) iii) Improving the quality of learning process c) Learning and growth In this regard, the objectives should include: i) Improving the quality of the university’s quality assurance systems ii) To improve the quality of planning iii) To improve the quality of staff development within the university d) Financial perspectives In this regard, the objectives should be; i) Reduction of the operating costs and prudent management of financial resources ii) To increase the percentage of total income as a percentage of total operating expenses (Birinci and Eren, 2013). iii) To increase training and development resources The processes (or steps) that should be followed when implementing the performance management As stated above, universities should adopt the use of balanced score card as their performance management tool since they are useful in evaluating performance while assessing the opportunities and challenges that they need to address when outlining their goals and objectives for strategic reasons (John etal, 2003). Kaplan and Norton suggested a number of steps that organizations should use in implementing performance management systems such as the balanced scorecard. The steps are explained below (Kaplan and Norton, 2001); i) The first step involves assessing the mission and the culture of the university. This should also include the consideration of the challenges, visions and partners of the university. Furthermore, the components of the change management plan that ought to be communicated with the university as well as other stakeholders should be identified. ii) While focusing on customer needs, the universities ought to develop a strategy around how they can best meet the needs and expectations of customers or clients (Nistor, 2008). At the same time, determine the values that the university will bring to its customers as well as the greater community. iii) Use the university’s mission statement to define the university’s intent. This should enable the university write specific objectives which correspond to their strategy themes for what the university intends to accomplish. iv) Using strategic mapping, determine how the university intends to achieve the objectives that have been defined within the strategic themes. In this regard, they should include specific values that the university intends to bring to their customers as well as other stakeholders (Beard, 2009). v) The university should then develop performance measures. This entails identifying how they will measure and evaluate performance including the standards that must be met and the benchmarks established. The results should then be measured and expectations communicated. vi) The university should then assign initiatives hence making the team members aware of their responsibilities as well as how they would be held accountable for the kind of results they produce (Nayeri, Mashhadi and Mohajeri, 2008). Getting team members on board with the strategic plan and the direction of the university by showing them the role they ought to play for the sake of the university’s success is important. vii) The next step involves implementing the process. In this regard, the university should use a standardized system tin inputting and tracking the objectives and initiatives as well as communicating the results. In this regard, the universities could use custom software. However, the system should be understood by all the stakeholders so that they can support the implementation. viii) Next, the university should cascade the scorecard. This implies that the balanced scorecard used at the university level and college level ought to be replicated to specific departmental level with small groups being tasked with meeting specific objectives (Yakhou and Ulshafer, 2012). In this case, it is important to keep the measurement tools as well as the evaluation procedures consistent for each objective. ix) The university then needs to evaluate the scorecard and the process and evaluate whether the objectives in the score card have been met and whether the process for meeting the objectives is a working one. x) The university should then adjust the balanced scorecard as needed while keeping the process flexible so that changes can be effected since strengths and weaknesses will be identified (Suganthi, 2012). It is worth noting that university decision making ought to be strategic and the strategy ought to be directed towards the university’s overarching objective. A university usually has a vision or vision statement which details out in broad terms its goals (Papenhausen and Einstein, 2006). Within the context, the university should decide what to benchmark and the performance it will measure. According to Kaplan and Norton, this is translating the vision which enables stakeholders to act on the words of the vision statement when the statements are expressed as an integrated set of objectives and measures agreed upon by management describing the long-term success drivers (Kaplan and Norton, 2001). In the example above, the university’s vision of becoming internationally recognized in research, service and teaching could be translated into five specific organizational areas as described above. The areas include academic excellence, student learning experience, diversity, outreach and engagement and resource management (Rompho, 2004). Using these areas, it is possible to develop a score card for the university through identification of long-term strategic objectives associated with the above areas. The objectives will then have specific performance measures which indicate progress towards the attainment of improvement in the designated area. After the vision has been translated; communication and linking of the scorecard should be done. In this regard, academic departments as well as the support departments ought to fully understand the macro level goals in a bid to link their objectives and measures to those of the entire university. The next step would be academic planning an equivalent of Kaplan and Norton’s business planning step. In this regard, administrators ought to focus resources and set priorities. The unit goals must be linked to macro goals in all scorecard areas, strategies for achieving the goals set and allocate resources to the strategies. Furthermore, credible measures of progress towards the goals should be developed (Ruben, 1999). The last step should be the feedback and learning where universities would evaluate their performance based on updated indicators and revising strategies as deemed appropriate. Conclusion This paper has described the application of the balanced score card in the universities in their bid to better their performances as institutions of excellence. The balanced score card is deemed important since it would allow the universities strategic planners connect the various levels of the larger combined institution with the efforts of individual faculty members, staff and other important stakeholders. In this regard, a number of objectives as well as measures of determining excellence in the universities have been discussed. In addition, the process of designing the balanced score card for the universities has been discussed at length. An example of a balanced score card for a university that aims to become internationally recognized in various areas has been given together with the steps that would be followed in designing it (Umashankar and Dutta, 2007). The balanced score card application to the universities as a performance management tool has thus been seen as instrumental in showing the progress that the institution is making towards achieving its strategic objectives. However, for such a performance management system to effectively work, it should be designed in such a way that there is alignment of individuals and resources within the institutional units so as to create synergy. Once the objectives are aligned, new areas of excellence are likely to emerge and can be incorporated to the basic organizational strategy maps thus creating an augmented value to the institutional stakeholders at all organizational levels within the university with the balanced score card facilitating the process. This way, the universities can make great strides in all areas of excellence as a result of applying properly designed performance management system tools such as the balanced score card. 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