Applying the Balanced Scorecard to Education
DEMETRIUS KARATHANOS PATRICIA KARATHANOS Southeast Missouri State University Cape Girardeau, Missouri
he concept of the balanced scorecard (BSC) was first introduced by Robert S. Kaplan and David P. Norton (1992) in their now widely cited Harvard Business Review article, “The Balanced Scorecard—Measures that Drive Performance.” The widespread adoption and use of the BSC is well documented. For example, Kaplan and Norton (2001) reported that by 2001 about 50% of the Fortune 1000 companies in North America and 40% to 45% of companies in Europe were using the BSC. The basic premise of the BSC is that financial results alone cannot capture value-creating activities (Kaplan & Norton, 2001). In other words, financial measures are lagging indicators and, as such, are not effective in identifying the drivers or activities that affect financial results. Kaplan and Norton (1992) suggested that organizations, while using financial measures, should develop a comprehensive set of additional measures to use as leading indicators, or predictors, of financial performance. They suggested that measures should be developed that address four perspectives: 1. The financial perspective. Measures in this perspective should answer the question, “How should we appear to our shareholders?” 2. The customer perspective. These measures should answer the question,
ABSTRACT. Although the application of the balanced scorecard (BSC) in the business sector is well documented, very little research has been reported regarding the adaptation or application of the BSC in the education sector. In this article, the authors (a) describe how the Baldrige Education Criteria for Performance Excellence has adapted the concept of the BSC to education and (b) discuss significant differences as well as similarities between the BSC for business and the BSC for education. The authors also present examples of the BSCs of three Baldrige Education Award recipients.
financial performance (Kaplan & Norton, 1996). Thus, the BSC enables managers to monitor and adjust the implementation of their strategies and to make fundamental changes in them. The Baldrige National Quality Program: An Overview The Baldrige National Quality Program is the vehicle of implementation of The Malcolm Baldrige National Quality Improvement Act of 1987–Public Law 100–107. This law was enacted on the basis of a set of “Findings,” one of which was that [T]he leadership of the United States in product and process quality has been challenged strongly (and sometimes successfully) by foreign competition, and our Nation’s productivity growth has improved less than our competitors’ over the last two decades. (Baldrige National Quality Program, 2003a, p. 61)
“How should we appear to our customers?” 3. Internal business processes perspective. Measures in this perspective should answer the question, “What processes must we excel at?” 4. Learning and growth perspective. These measures should answer the question, “How can we sustain our ability to change and improve?” A critical factor for an effective BSC is the alignment of all the measures in the four perspectives with the company’s vision and strategic objectives. The BSC allows managers to track short-term financial results while simultaneously monitoring their progress in building the capabilities and acquiring the intangible assets that generate growth for future
The primary objective of the Baldrige Program is to help American businesses improve their competitiveness in the global market. Businesses can improve their competitiveness by identifying role-model organizations, recognizing them, and disseminating their best practices throughout the United States. The Baldrige Program is widely recognized as a very significant factor in strengthening U.S. competitiveness in the
Journal of Education for Business
global market. In its 1995 report Building on Baldrige: American Quality...
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