This paper is currently under review at theManagement Accounting Research: Elsevier
INTRODUCTION AND BACKGROUND• Critical to the development of societies is the higher education institution; it is one of the most diverse industries in terms of organizational forms, missions, funding sources, missions, and stakeholders.• In 2006, the Spelling’s Commission on Higher Education recommended that higher education in the U. S. provides an environment whereby “traditionally underserved” students can leverage education in an effort to improve their lives, skills, knowledge, and the overall wellbeing of society• Continuing Higher Education (CHE) fosters the mission of the parent university, these divisions are a means of access and equity for nontraditional and adult students “off campus”, older than 18-24, adults learners, distance learners etc• CHE is important as higher education institution re-examine their overall strategic planning from the notions of profit making vs. an economic sustainability approach; they have unique challenges.
BACKGROUND CONTINUED• The complexities and challenges (kirp, 2003, Aschroft, 2006) underlying CHE divisions call for a management system that is derived from their strategies, and capabilities encased within their service mission story• Yet, historically, the measurement system for divisions within higher education institutions has focused primarily on the financial [fund] budgeting constructs—whether or not they are meeting their budget goals (Brimley and Garfield, 2008; Dorweiler and Yakhou, 2008).• In an effort to manage and measure performance, within such a complex enterprise, several CHE divisions have moved beyond their traditional focus of the „Fund Accounting and Budget model‟ (Edelson, 2006) to embrace the Balanced Scorecard Concept (BSC) (Kaplan and Norton, 1991, 1996, 2007) as part of their overall strategic goals.
PURPOSE OF THE STUDY Purpose is to build upon the Managerial Accounting research literature by highlighting the adoption/adaptation of the Balanced Scorecard (BSC) in four/eight CHE divisions of four influential universities (both public and private not-for profit) in the U. S.Questions informing the study: (1) why do these divisions need a balanced scorecard? (2) do CHE divisions have the ability to “balance” a set of performance measures and to link such performance to the effective use of resources and to their overarching mission story? (3) whether or not an adoption/adaptation of the BSC is appropriate for CHE division in an higher education context?The historic preoccupation with financial performance measures in the public sector has resulted in higher educational administrators and researchers pushing for quality improvement and refocusing performance measurement using corporate managerial concepts and strategic management tools like the BSC (Karpagam and Suganthi, 2010).
PURPOSE OF THE STUDY CONTINUEDThe historic preoccupation with These processes could allowfinancial performance the division to link long-termmeasures in the public sector strategy with short-termhas resulted in higher actions (Kaplan and Norton).educational administrators and Strategic thinking leads toresearchers pushing for quality actions, program planning, andimprovement and refocusing budget planning, and ultimatelyperformance measurement limited resource controls.using corporate managerial Therefore research about theconcepts and strategic explicit and implicit strategiesmanagement tools like the BSC and responses that CHE(Karpagam and implements in an effort to fulfillSuganthi, 2010). their mission within the context of traditional higher education should be ongoing.
A review of the extant literature shows no studies, which have explicitly shown CHE‟s adoption and adaption of the BSC in spite of the realization that strategic planning must be an ongoing process for these divisions (Ashcroft, 2006).The Balanced Scorecard (BSC) The BSC was developed by Drs. Robert Kaplan and David Norton from an original conceptual framework of a “Corporate Scorecard,” which primarily relied upon financial performance measures. The BSC concept expanded upon the financial measures and became a core management system and performance measurement framework (see figure 1). The BSC added strategic, non-financial, non-quantitative—but additional qualitative—performance measures to the traditional financial metrics to give managers and executives a more “balanced” view of overall organization (Kaplan and Norton, 1996). The BSC conceptualizes strategies using four perspectives: (a) financial goals, (b) customer satisfaction, (c) internal business practices, and (d) learning and growth opportunities and their relationship to stakeholder satisfaction. (Overarching: cause-and- effect relationship)
The BSC has received much recognition, but it has also receivedmuch criticism. For example an article entitled, The Promise andPerils of the Balanced Scorecard, by Gary Cokins (2010) notes thatthere is a lack of consensus about what the BSC really is, and addedthat there is “more confusion about its purpose”A major citric of the BSC, Hanne Norrelkit (2000, 2003), usedstylistic textual analysis and argument theory to conclude that theBSC is not convincing, as a strategic, innovative, or practical tool formeasuring performance. Rather it is simply persuasive managementgenre or rhetoric related to management theories. She analyzed theBSC‟s assumptions as well as its notion of cause-and-effect andwhether or not as a tool, it “can link strategy to operational metricswhich managers can understand and influence” (Norreklit, 2003, p.65).Regardless of the criticism received, the overarching theme of theBSC is the correlations between the outcome measures and theperformance drivers of the outcomes, linked together in a cause-and-effect relationship. This stems from — [a] if-then clause (Kaplanand Norton, 1992, 1996, 2000). The argument offered by Kaplanand Norton is that a well-constructed scorecard should tell the[mission] story of the organization‟s strategy through a sequence ofcause-and-effect relationships.
Norreklit (2000) examined the extent to which the notion of a cause-and-effect relationship among the four areas of measurements suggested by the BSC exists, if it is realistic. In the analysis Norreklit uses scientific notions and logic of the X (cause) Y (effect) relationship to determine the relationships between strategy and to the performance measures indicated. Norreklit concluded that because accounting models are logical “serving the purpose of creating financial rationality in an organization” there is no such cause-and-effect relationship between some of the suggested areas of measurements; for example, “between customer satisfaction and loyalty, and loyalty and financial results” (p. 616). She observed that rather than a cause-and-effect relationship, what they espouse is a finality relationship based on human actions.
Several studies have shown how the adaptation of the BSC to education, and specifically higher education. They question—how it can be used along with other performance management/measurement tools to advance performance excellence and value to society For example, Karathanos and Karathanos (2005) outline the manner in which the Malcolm Baldridge National Quality Award Program (MBNQAP) supports adapting the concept of the BSC to K-12 education. A case study by Cullen, Joyce, Hassel, and Broadbent (2003) suggested that a BSC be used in educational institutions in an effort to reinforce the importance of managing, “streamlining and focusing strategy towards the objectives of the various stakeholders” (p. 8). McDevitt, Giapponi, and Solomon (2008) note in their case study that the BSC model can be used in many academic divisions. This finding resulted from the study based on “the experiences of faculty of a business school to describe the process and benefits of developing a custom balanced scorecard” (p. 32)
The managerial concepts of the BSC are philosophical as they essentially translate organizational mission and strategy into operational objectives Chang and Chow, (1999) used survey research accounting department heads to illustrate in their research how the BSC may be used by accounting educators to stimulate, guide, and sustain continuous improvement efforts in accounting programs Chen, Yang, and Shiau, (2006) note, in their study of the BSC implementation in performance evaluation in a Taiwanese university, “that in constructing a BSC, a non-profit organization must first ensure that the organization has an appropriate mission and vision to promote the reputation of the school” (p. 195). Papenhausen, and Einstein (2006) showed how the BSC approach to performance management could be implemented at a college of business. The authors show that the BSC “approach is well suited to a higher education situation and allows the alignment of a wide variety of measures with the unique mission and strategy of a college of business” (p. 15)
Accounting has an ever increasing significance in contemporary society and its practices are fundamental to the development and functioning of modern capitalist societies, like the U. S. In any organization, budgeting, investing, costing and performance measures rely on accounting practices. Matkins (1997) notes that the rapid changes in CHE require administrators have a sound understanding of financial concepts and employ a strong financial management system In the U. S. universities are really quasi-profit organizations; they rely on tuition and fees received in exchange for services and programs offered to students. Hence, every aspect of such organizations is driven by their ability to be accountable and to manage, control and report financial activity using accounting concepts Hopwood (2007) states, “accounting in other words, is part of a wider whole—a market in information on the enterprise and the economic and business contexts in which it operates” (p. 1367).
Based on a social constructionist epistemology, Interpretspeoples’ construction of reality and identify patterns intheir perspectives Sampling & Selection Strategies: Criterion and maximum variation sampling...purposeful selection Participating institutions from four of six (4/6) regions: South, Mid-America, Mid-Atlantic & Great Plains....by University Continuing Education Association 2006-2007 Membership Directory classification Also on the list of BSC Adopters (lalancedscorecard.org) Participants/ sampling: CE units (divisions) within n=8 private & public universities; N=17 participants. criterion: Provosts, Deans, VP’s, VC etc; > 3 years in leadership position, with responsibilities or connections to CHE.
17 Semi-structured 1+hr interviews, taped and transcribed Questions in the protocol specifically addressed issues of decision-making, administration, financial reporting, budget and cost allocations, strategic elements, and positioning of continuing education. Documents: financial statements, budgeting, MVV statements, strategic planning documents, performance reviews—5-8 years. Data Analysis: interpreting data meaning making, essentially finding the “story” constant comparative analysis: Naturalistic inquiry, thematic analysis, and interpretative description; being inductive. Qualitative documents analysis Finally using open and axial coding: summaries, using a Majority Response Category (MRCP) processing system.**
Scorecard reports of four of the eight divisions in this study, how they implement the four perspectives of the BSC, using various objectives and related performance measures to pursue and fulfill their “service mission stories” Penn State University‟s “O&CE Strategic Plan focuses on enhancing engagement.” It notes that Goal # 3 ◦ O&CE will continue to use and refine the balanced scorecard approach as a management tool and identify and monitor benchmarks with selected institutions and programs to refine performance measures. We are also looking at ways to enhance organizational competencies in program evaluation to promote the effective use of resources and improve reporting to stakeholders.
Defining CE‟s role and mission is crucial to the effectiveness of the organization Example1: Great-Plains Public: ◦ “So, I believe that it is our role and mission, well, we are frequently the group that manages that interface with the community”….Dean of CE ◦ The mission of the Division of Continuing Education and Professional Studies is to provide quality, innovative, lifelong learning opportunities to a diverse student population by extending the educational resources of the University of [Great Plains.]
Participants agreed that the overarching role and mission of CHE is to serve the educational needs of adults and nontraditional learners and society at large. Example 2: Mid-Atlantic Private: ◦ “Well, our stated mission statement is to „enrich lives and careers.‟ Our broader mission is to serve the larger community, and specifically the working adult population; that‟s really our focus”…. Dean of CSC ◦ The mission of the school is to enrich lives and careers....And is based on the provision of exceptional programs by passionate faculty and staff with world class student support services and programs.
Adapting the “balanced score card”
Findings: Mid-Atlantic Public University: Continuing andDistance Education Demonstration of the BSC Process.Mission: Continuing and Distance Education (C& DE) uses a variety of program delivery technologies and methods to connect learner needs with Mid- Atlantic State resources to help individuals transform their lives through education.Vision: Continue to refine the organizational structure, culture, and services of (C & DE) to ensure increased integration and innovation for seamless access and service to the public, served by the program units.Objective: Build an organizational culture in which all staff feel empowered to innovate based on a common sense of purpose and balance among achieving excellence in core competencies, serving students, and generating revenue.Strategies: Build an organization with a common sense of purpose that shares resources across delivery platforms and establishes productive and collegial relationships with other Outreach units and with the academic community.Measurable Outcome:1. Participation by each unit in one collaborative, cross unit program per year, 2. Development of a plan for a more coherent C &DE approach to budgeting and costing and staff development by 2006, 3. Full integration of instructional design and student service functions by spring 2006, 4. Identification and elimination of duplicated functions.
Mid-Atlantic Public BSC perspectives emphasizing the vision outlined Customer: Serving students. PM: integration of students’ services L &G: Staff feel IOP: Build an empowered. organizational culture. PM: Coherent staff PM: Participation in development collaborative efforts. Vision Financial: Generating revenue. PM: Coherent approach to budgeting
Findings: Mid-Atlantic Private University: School of Continuing Studies BSCProcess Mission: The mission of the school is to enrich lives and careers. Vision: Support excellence in teaching and learning environment. Increase enrollment in graduate degrees. Increase fund raising. Objectives: Assess student outcomes. Increase number if students from two-year colleges in bachelors programs. Explore delivery modalities to increase flexibility and enhance student learning. Faculty recruitment and development. Encourage an environment of innovation. Fund raising. Strategies: Implement learning outcomes assessment for SACS. Understand demographics of non-traditional students at current prospective new locations. Review new and alternate modes of delivery, including online. Hire and develop additional faculty qualified to teach graduate programs and on line. Dean should be freed routine administration to focus on fund raising. Extend range of programming and maintain growth. Compare pricing to competitors. Performance Measures: Target 25% increase in admits from two year colleges. Graduate 70% of bachelors’ students, within 5 years and 70% of graduate students and within 3 years. Complete reassessment of course modalities for all off-campus programs. 100% of faculty with terminal degrees at the graduate, 10% increase at undergraduate level. Make money by raising fees.
Mid-Atlantic Private BSC perspectives emphasizing the vision outlined Customer: Assess student outcomes. PM: Graduate 70% of L &G: Faculty bachelors’ students. IOP: environment of recruitment and innovation. development. PM: reassessment of PM: 100% faculty with course modalities. terminal degrees. Vision Financial: Fund raising. PM: Make money by raising fees.
1. Continue to increase A coherent approach to revenue budgeting 2. Programs meet Meet goal of $16.6 M budget projections in tuition revenues 3. Increase total Manage income to revenues expenditure ratio Increase revenues by 4. More effective with raising tuition and fees tuition and feesObjectives: Performance measures:
1. Serving Students Full integration of 2. Help students meet instructional design educational goals and student‟s 3. Offer students a services quality education Enhance the quality of educational programs 4. Increase flexibility Design programs to and enhance student meet students‟ needs learning Annual reassessment of courses and programsObjectives: Performance measures:
1. Staff feels A coherent approach to empowered staff development, by 2. Increase faculty 2006 involvement in Faculty are reviewed program development and preapproved 3. Faculty Faculty to attend CE improves on activities knowledge and skills 100% faculty with 4. Faculty recruitment terminal degrees to teach graduates and developmentObjectives: Performance measures:
1. Innovate based on a Participates in one common sense of purpose collaborative unit program 2. Provide each year quality, innovative, lifelong Program benchmark with learning opportunities peer aspirant Increase credit programs 3. Serve and develop the for public officials community New and alternate modes of 4. Extend range of delivery including online programming and maintain growthObjectives: Performance measures:
Discussion: Cause-and-effect relationship• The scorecard objectives and measures are different for each division, but they all express the cause-and-effect relationship within each perspective of the BSC rather than among a linkage of all four perspective of the BSC. This observation differs from the suggestions outlined by Bible, Kerr, and Zanini, (2006).• The if-then consequence observed here defines a well thought-out strategy, based on each division’s mission and vision; these are not scientific as argued by Norreklit (2000, 2003)• results of this study show an agreement with Kaplan and Norton’s view of the cause-and-effect relationship. They offer examples of various causes that could be placed in more than one perspective that would have an effect on performance in another perspective• strategy determines whether or not the performance measures used will be historical— lag measures or predictive—lead measures, they drive future performance.
This study illustrate how CHE divisions employ an adaptation of the BSC in their strategic process, defining there mission statements and subsequently translating the related vision into specific objectives and performance measures. The BSC provides a comprehensive framework that will help CHE administrators innovate, define objectives, track performance, and provide data to show their various stakeholders groups how well they are performing in terms of mission pursuit and vision outcomes.
IMPLICATIONS AND FUTURE RESEARCH• Implications of this study are important from a societal context. According to Schejbal and Wilson (2008) “Higher education, and continuing education as one arm of that enterprise, is not just an economic engine, it contributes directly in a multifaceted fashion to the common good. It generates and makes accessible a great deal of the knowledge that drives our economy; it develops an understanding of our society and the world for millions of students; and it helps develop the personal, social and human competencies” (p. 32).• The main „argument‟ of the paper is that CHE divisions can be re- conceptualized from its use of a traditional fund accounting operating model to using more sophisticated managerial approaches like the BSC to tell their “service mission story”.
IMPLICATIONS• Consequently, it is imperative for higher education administrators to fully understand, implement, and support CHE‟s managerial efforts, especially the adaptation of the BSC.• A key benefit to using such a disciplined framework is the way in which the institution can connect the various components of strategic planning and management.• There will be a visible connection between programs offered, the measurements being used to track success, the strategic objectives and the mission and vision of the institution.• This study shows the value of the dual role that accounting research should play in the academy. Hopwood (2007) notes that “rather than being a discipline in its own right, accounting needs to draw on a variety of sources of illumination and understanding” (p. 1371).
Discuss how your CHE division implement the BSC Further information contact: Sandria S. Stephenson, PhD, CPA Assistant Professor, Texas State Univ. 678-480-1059 (c) email@example.comThank You for attending!