Balanced Scorecard

Contents
Executive Summary.........................................................................................................................2
Balanced Scorecard: An Introduction..............................................................................................3
Vision:..........................................................................................................................................4
SBE Core Values.........................................................................................................................4
SBE Mission Statement...............................................................................................................4
SBE Strategic Objectives:............................................................................................................4
SBE Balanced Scorecard.................................................................................................................6
Mission........................................................................................................................................6
1- Customer Perspective..............................................................................................................6
I. Decrease student turnover rate..........................................................................................7
II. Improve student performance........................................................................................7
III. Attract high Quality Students........................................................................................7
IV. Increase employer Satisfaction......................................................................................7
V. Faculty Satisfaction.......................................................................................................7
2- Internal Process Perspective....................................................................................................8
I. Improve learning Environment.........................................................................................8
II. Increase student satisfaction..........................................................................................9
III. Standardize Degree Cycle time.....................................................................................9
IV. Achieve Program Standardization.................................................................................9
3- Innovation & Learning Perspective.........................................................................................9
I. Retain Key People...........................................................................................................10
II. Improving Competence...............................................................................................10
III. Increase Research Output............................................................................................10
IV. Course Development...................................................................................................11
4- Financial Perspective.............................................................................................................11
I- Maintain Positive Cash flows.........................................................................................11
II- Profitability..................................................................................................................12
III- Increase Research Revenue.........................................................................................12
IV- Research Funds............................................................................................................12
Conclusion.....................................................................................................................................13
BIBLIOGRAPHY..........................................................................................................................14
BIBLIOGRAPHY

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Executive Summary
School of Business and Economics, University of Management and Technology is home for over
twelve hundred students. The future of these students relies on the ability of the school (and the
university) to effectively manage its brand in the market; market being the corporate world as
well as academia. The customers of the organization as identified in the mission of the school are
“students; their parents; the faculty; corporate employers; (school) employees and the society at
large”. Although the customers are numerous but they can all be satisfied by effectively
providing the services so that our product i.e. our students can get better opportunities in the
society and make the best of these opportunities.

In order to satisfy the customers, there needs to be a strategy in place to align the capabilities of
the organization with opportunities and requirements existing in the society in form of unmet
customer needs. Balanced scorecard is a strategic performance management and control tool that
can be used by all types of organizations in the process of strategy formulation and management.

During the current study we prepared the BSC for the School of Business and Economics on the
basis of vision, mission, values and strategic objectives of the school provided by the dean office.
The process started with the development of the strategy map (appended in Appendix-1) which
was then used to prepare the balanced scorecard (appended in Appendix-2). In preparation of this
document two studies proved especially useful which need to be acknowledged in the beginning.
The first and most useful study was conducted by Charles J. Pineno (Pineno, 2007) and the
second one was the commentary by Dr Kaplan and Norton (Kaplan & Norton, 2001b). Besides
these studies support for the measures presented in the BSC of SBE was gained through our
experience of working at SBE as well as wealth of literature available on this topic.

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Balanced Scorecard: An Introduction

Traditionally; performance measurement was done on the basis of financial measures where as
these measures do indicate the success or failure of the organizations strategy, they are lagging in
nature i.e. they give information about the success or failure at the point when nothing can be
done about it. In order to solve this problem studies were conducted during 1980’s and the
Balanced Scorecard emerged as a solution to this problem in 1990’s. It added some non financial
measures to the key performance indicators of the organizations success which provided
information about the measures of basic customer needs (customer perspective), the ability of the
organization to fulfill those needs (Internal process perspective) and ability of the organization to
keep fulfilling those needs (Learning/innovation and growth perspective).

Balanced scorecard approach is useful for the profit oriented organizations as they want to
maximize the profit and evaluate the performance of their employees. Promotions and incentives
are also given to the employees on the basis of their performance evaluation and balanced
scorecard makes it easy for both the management and the employees to perform their jobs.

Now the question arises, “do the non-profit or government organizations need to use the
balanced scorecard approach for achieving their goals?” The problem that is very common with
non-profit organizations is that they are given the funds by the governments and by their donors
but they fail to produce results as they don’t have a mechanism to judge the performance
(Kaplan, 2001). A further question arises, whether the non-profit organizations monitor their
performance on the basis of their financial returns or it should be more based on the customer
satisfaction? It has been suggested in different studies that role of customer becomes more
important in case of nonprofit organizations [(Kaplan, 2001; Kaplan & Norton, 2001b, 2004;
Niven & Consulting, 2003)]. Another benefit of using BSC for nonprofit organizations is that if
the nonprofit organizations start to evaluate the performance of their employees and link the
incentives and promotions on the performance of their employees or the performance of
organization then the performance of employees as well as the organization is likely to improve
and ultimately it will improve the customer satisfaction.

In the following we present the vision, mission, values and strategic objectives of School of
business and Economics which provided the basis for the document.

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Vision:
The School of Business and Economics endeavors to assimilate, create, disseminate knowledge,
which will reflect in the contributions that SBE graduates will make to create, sustain and project
our nation through economic, ethical, caring and work oriented behaviors without prejudice to
gender, social class, religion and caste using merit, equity and justice as their grounding
principles.

SBE Core Values

Integrity is our standard. We demonstrate ethical conduct, moral and professional behavior in all
our interactions. We are loyal and accountable to the trust reposed in us by our stakeholders.

Fairness: we assure that our judgments are free from bias and discrimination. We believe in
being just to all in all our dealings.

Respect: We value the diversity of ideas, thoughts and people. We encourage creativity through
improvement.

Professionalism is our core value consisting of knowledge, competent skills, and behaviors.

Social Responsibility we are professional, academicians who seek responsibility, accept

accountability, and are committed to the successful achievement of our organizational goals
keeping in mind the social impact of all our actions.

SBE Mission Statement

We as a business education institute aim to become one of the leading institutes in the South
Asian region. We will achieve our goals by actualizing strategic partnership with stakeholders
including students; their parents; the faculty; corporate employers as well as our employees and
the society at large. We will create value for both business and academia by engaging in useful
research and consultancy project. We aim to foster enduring values and project sustainable
practices.

SBE Strategic Objectives:

 To achieve academic quality reflected in global accreditation.

 To achieve regional prominence as a center for academic excellence.

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 To develop and sustain a unique and distinguished identity reflected of the school’s core
values.

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SBE Balanced Scorecard

The strategy map and the balanced scorecard for SBE are appended in the appendices 1 & 2. In
the following sections we explain the different measures that we have chosen for different
perspectives for school of business and economics and the rationale behind them.

Mission
As suggested by Kaplan (Kaplan, 2001)

“A non-profit agency’s mission represents the accountability between it and society—

the rationale for its existence. The mission should therefore be featured and measured
at the highest level of its scorecard”

So Mission of School of business and economics is at the top of its strategy map.

1- Customer Perspective
Customer perspective measures how organization creates value for its customer (Kaplan, 2001).
It means taking the customer’s view of cost, quality of service, timeliness etc (Hafner &
Director, 1998). Here organization will identify how it is fulfilling the needs of its customers
(Pienaar & Penzhorn, 2000). If an organization is unable to meet its customer’s requirements
then it is indicator of the future failure.

In creation of the balanced scorecard for School of Business and Economics we have considered
the fact the University Management and Technology is a nonprofit organization and growth in
revenue, positive cash flows and other financial measures are means to ends and not the means
itself. Putting financial perspective on the top in this case is not justified (Kaplan & Norton,
2001b). Due to this reason we have put customer perspective on the top of SBE balanced
scorecard.

The basic customers of SBE are students, parents, employers and faculty. Following objectives
were identified for this perspective.

 Decrease student turnover rate

 Improve student performance

 Attract high Quality Students

 Increase employer Satisfaction

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 Faculty Satisfaction

In the following we explain the measures in detail.

I. Decrease student turnover rate

In the context of this BSC student turnover rate is defined as students that take the admission but
due to some reason do not complete the degree. We have suggested two measures for it.

 No of students leaving before completing the first year

 No of student leaving before completing the degree.

II. Improve student performance

Improving the performance of the current students is at the heart of satisfying the parents as well
as the employers which are the key stake holders for the organization. In SBE balanced scorecard
following performance indicators shall measure the student performance.

 Percentage of students completing degree on time.

 Percentage of students having CGPA above the minimum degree rewarding requirement.

 Average CGPA of graduating students.

III. Attract high Quality Students

In order to standardize the output of the organization input has to be standardized. For this
reason we suggest quality of the current students should be measured by the percentage of marks
scored in their last degree. The average percentage marks of the last batch admitted in any
program would be a good indicator of quality of input.

IV. Increase employer Satisfaction

In order to find out about the requirements of the employers and whether SBE students are able
to satisfy their requirements or not we suggest that a detailed survey should be considered once a
year to find out about the employer satisfaction level from SBE graduates.

V. Faculty Satisfaction

Faculty is one of the main stake holders of the organization. In order to increase the satisfaction
level of the faculty we suggest following measures

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 Financial Assistance for further studies.

 Financial assistance for international travelling for conferences.

The funds invested on these two activities would not only be a source of satisfaction for the
faculty but go a long way in improving the quality of the faculty which in turn would have a
positive impact on other measures of customer satisfaction.

2- Internal Process Perspective

This is most important perspective for the success of the organization (Pandey, 2005). After
capturing the customer perspective, the organization is better equipped to identify the processes
needed to satisfy customers (Kaplan, 2001). The internal process perspective measures the
internal working of the organization (Hafner & Director, 1998). Kaplan and Norton (1996a)
suggested that “these measures should be focused on internal processes that have the greatest
impact on customer satisfaction”.

In case of SBE balanced scorecard following goals were identified regarding the internal process
perspective.

 Improve learning environment

 Standardize degree Cycle time
 Increase student satisfaction
 Getting international recognition
 Achieving program standardization with international universities
In the following we discuss the key performance indicators regarding these measures.

I. Improve learning Environment

In order to achieve goal of academic excellence following measures are key performance
indicators in terms of internal processes.

 Student faculty ratio

 Evaluation by external reviewers
 Student to computer ratio
 Ratio of books published in the last five years to the total No of books
 No of digital resources subscribed

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II. Increase student satisfaction

Student satisfaction is not only important from the marketing point of view but also an indicator
of the smoothness of organizations operations. Following factors are identified in measurement
of this aspect;

 Average faculty feedback score

 Student feedback about enrollment in further degree program with SBE
In order to measure the second aspect it is suggested that a question may be included in the
survey questionnaire of the student feedback conducted in the end of every semester or a
separate student satisfaction survey could be conducted every year. The question can be “Would
you like to join SBE for a further degree even if you had other choices?”

III. Standardize Degree Cycle time

Average time taken by a student to complete a degree is an important measure of quality of
conformance in terms of service delivery. Standard time for a BBA program is four years where
as for an MBA program it is two years. Any variations due to low CGPA’s, withdrawals,
semester freeze etc create administrative problems which also mean higher cost for delivering
the service which could be delivered in a better way with much lesser cost. In order to measure
this we suggest that organization should measure average time taken by a student to complete the
degree. Significant variation from the standard times would suggest higher costs than normal.

IV. Achieve Program Standardization

Making SBE degrees comparable to international standards is at the heart of SBE strategy for
achieving the academic excellence. It is suggested that this measure should be a part of balanced
scorecard to show its importance. This can be measured as the degree to which SBE curriculum
is up to date with the curriculum of benchmarked universities. This rating could be done by the
chairmen of different departments for each course.

3- Innovation & Learning Perspective

Innovation and learning perspective defines core competencies that organization needs to
develop in order to provide support to organizations strategy (Kaplan & Norton, 2000). “This
perspective focuses on innovation, creativity, competence and capability (Pandey, 2005). It
addresses the capability of the organization to create value over a period of time (Hafner &

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Director, 1998). According to Kaplan and Norton (1996a) “organizational learning and growth
come from three sources; people, systems and organizational procedures”.

Following goals were identified for this perspective;

 Retain key people

 Improve competence
 Increase research output
 Course development
Since faculty is the key to success in the achievement of the goals of SBE, most of these goals
deal with improving and retaining SBE faculty.

In the following we discuss the key performance indicators regarding these measures.

I. Retain Key People

Key people can be identified as the members of the faculty who have spent three years or more
in positions which have significant part of their job as administrative work. Administrative work
in the school is mostly related to academics. We suggest that organization should keep track of
turnover of such employees who have spent three years or more with the organization at such
positions (usually Assistant Professors and above).

II. Improving Competence

Competence in an academic organization is improved in two ways either through improving

qualification or by research. This measure deals with average qualification of SBE faculty
members. Two measures are suggested in this respect

 Percentage of PHD faculty members.

 Percentage of NON-PHD faculty members enrolled in PHD programs.
III. Increase Research Output

As suggested above research is one of the two ways an academic organization can continuously
improve its capability. Key performance indicators for this goal are

 No of conference papers by SBE faculty accepted in a year

 No of journal papers by SBE faculty accepted in a year

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IV. Course Development

Updating the content of the courses is a very important aspect in today’s dynamic world. This is
especially true for business studies. It measures the percentage of new content added each
semester to the existing courses.

4- Financial Perspective
The financial measures are the typical and traditional indicators of success for businesses. Since
the inception of balanced scorecard these measures have been the indicators of success and
failure of the strategy and hence were at the top of a typical balanced scorecard of a for profit
organization. However these measures are not the indicator of success and it has been suggested
that for nonprofit and public organizations customer perspective needs to be elevated [(Kaplan,
2001; Kaplan & Norton, 2001b, 2004; Niven & Consulting, 2003)].

As mentioned before for the balanced scorecard of SBE we have used customer perspective at
the top of strategy map below the mission showing that in order to achieve the organization’s
mission the highest objective in hierarchy of the objectives is to satisfy the organization’s
customers. However financial measures are a good indicator of operational efficiency and also
are means to see whether enough finances are available for the achievement of key objectives in
the other areas. Following goals have been identified for this perspective;

 Maintain positive cash flows

 Maintain profitability
 Increase research revenue
 Make funds available for research
These measures and their key performance indicators are discussed in greater detail in the next
section.

I- Maintain Positive Cash flows

In case of Pakistan and private sector universities it is very important for the organizations to
maintain the financial independence even if they are working in the nonprofit sector and are
supposed to be funded by the society. Due to the social set up organizations need to fund most
of their expenses through tuition fees and other sources of revenue. In such cases it becomes

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necessary to maintain positive cash flows in order to survive. This measure can be taken from the
monthly cash flow statement of the organization.

II- Profitability

Profitability is not a goal in nonprofit organizations. However in case of UMT most of the
investments on the infrastructure are supposed to be generated from the internal sources of
revenue. In such cases it becomes important for the organization to achieve profitability in
operations. It is also important for School of Business and Economics to know how much it is
contributing to the profitability of the university so that future allocation of university resources
can be based on the contribution (and potential of contribution) of each school towards the
revenues. In order to measure the profitability following measures have been suggested;

 Cost per student

 Revenue per student
 On time degree completion rate
Cost per student is required in order for the organization to know how much expense
organization is bearing against the fees students are paying.

Revenue per student is required to calculate the profitability.

On time degree completion is also a financial measure in case of UMT since the students submit
the fees on the program basis and due to slow completion of the program if they do not complete
their program on time and spend longer than the standard time; costs are incurred by the
organization against which no revenue is generated.

III- Increase Research Revenue

Faculty involved in paid research is also an indicator of the quality of research being conducted
in the organization. That is why we suggest that the organization needs to keep a track of the
revenue generated from paid research. This would be measured by amount generated each year
through research by faculty members of the organization.

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IV- Research Funds

In line with the goal of increasing quality research output it is also necessary to keep the track of
how much organizational funds are allocated towards research. This can be measured in two
ways.

We suggest that this measure on SBE scorecard should show the amount spent in funding
research projects undertaken by the faculty members in the individual capacity or from the
platform of the research centers during last year.

Another way of measuring this would be the budgeted amount to be spent in the next year.

Conclusion
Balanced scorecard for School of Business and Economics is presented in the appendix 2. The
objective of preparing this tool has been to link strategy formulation with measurement. To the
best of our knowledge in line with the mission, vision and the strategic objectives of the
organization we have included the measures in SBE balanced scorecard that can present a clear
picture to the school management as to where the school stands in terms of measures that are its
key performance indicators. In the favor of parsimony we have excluded a lot of measures that
could be relevant to the performance measurement of the school. Since strategy formulation is an
ongoing process so is the process of aligning the BSC with the strategy. As suggested by the
founders of the BSC idea; the strategy map of the organization, acts as a tool for the organization
to manage the changes in its strategy. No tool can be implemented without the support of
relevant personnel in the organization. If this BSC is implemented in SBE as a tool for strategic
management than support of administrative offices like office of registrar, examination and
accounts on continual basis would be required. In order to benefit from BSC a committee
comprising of the members of faculty holding key administrative posts would be required to
meet preferably every month to keep track of changes and make strategic decisions on the basis
of KPI’s. The usefulness of an electronic BSC cannot be overstated in which all the relevant
departments could enter the relevant data regarding the performance indicators after the intervals
agreed upon by the management committee. This initiative could increase the ease of use as well
as the availability of relevant information to stakeholders.

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Irwin, D. (2002). Strategy mapping in the public sector. Long Range Planning, 35(6), 637-647.

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Niven, P. (2006). Balanced scorecard step-by-step: maximizing performance and maintaining results:
John Wiley & Sons Inc.

Niven, P., & Consulting, P. (2003). Adapting the Balanced Scorecard to fit the Public and Non-Profit
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Balanced Scorecard. Research in Higher Education Journal, 1, 68-77.

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