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Description
Many business schools are good at preaching "best practices" but not so good at practicing them. Their methods and products (graduates) may be bureaucratic and nonmarketable, respectively. The balanced scorecard, which measures more than financial benchmarks, can "close the loop between strategic planning and business school practices" by first clarifying the then linking mission, vision, core values, and shared values and by helping to create a learning organization. One graduate business school that was going through the re-accreditation process implemented the balanced scorecard to strengthen the tie between its mission and programs, and between performance and goals. The revealing and sometimes surprising results offer valuable insights for other business schools seeking to improve their competitive positions.
Introduction
Business schools have often been criticized for not adopting the "best practices" they teach. Their managements, especially in public schools, are sometimes bureaucratic, following nonmarket directives. This article advocates the use of a well-established management system based on the balanced scorecard in the promotion of continuous quality improvement. While most Fortune 1000 companies use some form of the balanced scorecard method for managing performance (Kaplan and Norton, 1992), very few cases of such practices are documented for educational institutions (Cullen et al, 2003; Karathanos and Karathanos, 2005).
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Current standards of the Association to Advance Collegiate Schools of Business International (AACSB International) promote continuous quality improvement in management education (AACSB International, 2003). A significant thrust of the accreditation process depends on a clear tie between the mission statement and programmatic initiatives. The AACSB International now requires business schools to track performance against organizational goals (Serva and Fuller, 2004). It has recently implemented a series of standards designed to improve quality (AACSB International, 2003). Business schools are expected to establish practices to demonstrate they are meeting these challenges. For some, this represents a new way of thought, since the market is now dictating the need for timely and meaningful learning.
In the context of the re-accreditation process, this article shows how one graduate school of business has begun the balanced scorecard process by first examining the value congruence among stakeholders. The aim was to realize the vision and mission statements of the school, satisfy directives of the AACSB International, while also helping the school manage its strategic thrust. Shared values among university stakeholders is one of the leading indicators in the learning and growth dimension discussed later in the balanced scorecard.
The article is divided as follows. We first briefly introduce the balanced scorecard system and relate it to educational institutions; second, we discuss a case study of a graduate business school that has begun exploring the use of a balanced scorecard; third, we show the methodology used to assess value congruence among university stakeholders; and finally, we discuss the results and provide guidelines for other schools to follow. In this way, we make a singular contribution to the management of academic institutions in their application of "best practices" and common business methodologies.
The Balanced Scorecard and Educational Institutions
The seminal work of Johnson and Kaplan (1987) entitled Relevance Lost was an eye-opening moment for many managers, particularly in the area of finance and accounting. The first sentence of the book started a debate that continues today: "Today's management accounting information, driven by the procedures and cycle of the organization's financial reporting system, is too late, too aggregated, and too distorted to be relevant for managers' planning and control decisions" (Johnson and Kaplan, 1987:1). The essence of the debate is that financial measures are lagging indicators of actual organizational performance. What is needed is a managerial approach that retains financial measures but adds measures "on the drivers, the lead indicators, of future financial performance" (Kaplan and Norton, 2001:3). The authors' work is seen as a cornerstone in strategic management systems (Cullen et al., 2003), garnering much additional research on "the balanced scorecard" on for-profit (Kaplan, 1990; Kaplan and Norton, 1996, 2001; Landry et al., 2002) and not-for-profit organizations (Cullen et al, 2005; Karathanos and Karathanos, 2005; Kettunen, 2004; Chan, 2004).
At the heart of these works is the understanding of the need for a clear definition of the interplay between strategy and the perspectives of (1) learning and growth, (2) internal operations, (3) customer relations, and (4) financial performance (Kaplan, 1990). Learning and growth indicators are leading indicators of performance, whereas financial indicators are lagging. Internal operations and customer relations offer a mix of both types of indicators. Figure 1 depicts a generic balanced scorecard strategy map for an educational institution using the four perspectives just mentioned. For each of these, managers should carefully select a set of quantifiable measures, depending on their institutional needs. When analyzed and communicated to employees and... |
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