MANAGEMENT ACCOUNTING FOR MULTINATIONAL COMPANIES PROFESSOR: IGOR N. BARANOV STUDENTS: IRINA PUTKOVA SERGEY KOZLOV Using Balanced Scorecards (BSC) for Universities

USC Rossier School of Education hierarchy of relations in Vladivostok University Content basics 4 principles BSC concept differences & obstacles why use BSC for universities? BSC for non-profit organizations Examples of BSC map for University

“BSC is like the dials in an airplane cockpit: it gives managers complex information at a glance.” R. S. Kaplan and D. P. Norton Basic BSC premise is: FINANCIAL RESULTS ALONE CAN NOT CAPTURE VALUE ADDING ACTIVITIES!!!

BSC basics Idea of BSC evolved in 1990-th, when rising dependence on non-material resources asked for new management instruments which used non-financial indicators. o Brand identification, competence, processes flow = intangibles o BSC is a mechanism of giving every particular employee a view of company strategic goals allowing to control implementation through Key Performance Indicators (KPI) o If measures are successful and truly adopted – credibility for internal and external shareholders rises ability to satisfy externally driven demands for accountability (especially important for non-profit org.).

BSC: 4 perspectives Measures addressed to:Answer the question: 1The FINANCIAL perspectiveHow should we appear to our shareholders? 2The CUSTOMER perspectiveHow should we appear to our customers? 3INTERNAL business PROCESSES perspectiveWhat processes must we excel at? 4LEARNING and GROWTH perspectiveHow can we sustain our ability to change and improve? NB: A critical factor for an effective BSC is the alignment of the 4 perspectives with the company `s vision and strategic objectives. BSC shows how results are achieved. Because even best objective can be achieved badly (one area improved at the expense of another).

BSC for non-profit organizations Obstacles: o Poor Oversight o Strategy o Transparency o Incentive cooperation o Causal linkages o Integrated themes Nevertheless: Those public sector groups that have started working on BSC report- the process of defining a strategy and building BSC is far more valuable than particular measures used.

Why apply the BSC to Education? o Unlike “good old times”, universities today face growing expectations and must provide increased accountability for the outcomes they produce. o Central administration: academic scorecard makes easier for University to accomplish strategic goals though assigning metrics to every academic unit. Is very important for decentralized (to the deans level without provost involvement into budget decisions) institution to see that unit is increasing or declining. o It offers a format within which to establish common measures across academic units, that have shared characteristics (ex.: cluster of schools within University of Southern California) o Simplicity of system enables to explain budget decisions by showing relationship to academic scorecard indicator.

University Stakeholders o Prospective students o Current students o Organizations and Individuals seeking for new knowledge o Families o Alumni o Employers o Colleagues at other Institutions o Governing boards o Local community o Friends, Donors, Legislators, the General Public o Faculty o Staff

Common University mission mission Fundamental mission of research universities – excellence in creation, sharing and application of knowledge. o distinguished faculties o high-level research facilities o innovative teaching process o support technologies o capable students o competent staff o legislative and public support o excellent communication and service-oriented culture o sense of community…

Higher education dashboard indicators Programes / Courses Student outcomes TEACHING AND LEARNING SCOLARSHIPS AND RESEARCH Productivity Impact University / Professions / Alums State / Pros Students / Families Employers SERVICE / OUTREACH Faculty Stuff WORKPLACE / SATISFACTION Revenues Expenditures FINANCIAL

Observations o 5 dashboard indicators - not prescriptive: Depending on mission and goals University needs different components of the board. o Individual units might have their own set of indicators: administrative vs academic units. o Traditional indicators can`t reflect comprehensive image of current status of a university and the scope of areas for control (market position especially) o Can`t reflect key success factors and don`t offer strategic view of development: Ex. In most colleges little attention is paid at measuring students expectations and satisfaction, thus attracting the brightest people is considered a critical success factor.

Ex.: USC Rossier School of Education Map contains 4 classical BSC perspectives

Ex. OSU

Ex. Vladivostok

Summary 2 main differentiating features of BSC: 1.Simple format of strategic map describes with limited set of indicators for every perspective. 2.Focus on mutual relationship of perspectives and indicators. Well articulated map reflects strategic logics of causality between current activities and long- term success. The whole process of dialogue focuses, energizes and informs faculty and staff thus broadening responsibility for leadership within the unit.

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