MANAGEMENT ACCOUNTING FOR MULTINATIONAL COMPANIES

PROFESSOR: IGOR N. BARANOV

STUDENTS: IRINA PUTKOVASERGEY KOZLOV

Using Balanced Scorecards (BSC)

forUniversities

• USC Rossier School of Education• hierarchy of relations in Vladivostok University

Content

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.

oBrand identification, competence, processes flow =

intangibles

oBSC is a mechanism of giving every particular employee a

view of company strategic goals allowing to control

implementation through Key Performance Indicators (KPI)

oIf 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:

1 The FINANCIAL perspective How should we appear to our shareholders?

2 The CUSTOMER perspective How should we appear to our customers?

3 INTERNAL business PROCESSES perspective

What processes must we excel at?

4 LEARNING and GROWTH perspective How 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:

oPoor Oversight

oStrategy

oTransparency

oIncentive cooperation

oCausal linkages

oIntegrated 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?

oUnlike “good old times”, universities today face growing

expectations and must provide increased accountability for the

outcomes they produce.

oCentral 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.

oIt 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)

oSimplicity of system enables to explain budget decisions by

showing relationship to academic scorecard indicator.

University Stakeholders

oProspective students

oCurrent students

oOrganizations and Individuals seeking for new

knowledge

oFamilies

oAlumni

oEmployers

oColleagues at other Institutions

oGoverning boards

oLocal community

oFriends, Donors, Legislators, the General Public

oFaculty

oStaff

Common University mission

Fundamental missionmission of research universities – excellence in creation, sharing and application of knowledge.

odistinguished facultiesohigh-level research facilitiesoinnovative teaching processosupport technologiesocapable studentsocompetent staffolegislative and public supportoexcellent communication and service-oriented cultureosense of community…

Higher education dashboard indicators

Programes / Courses

Student outcomes

TEACHING AND LEARNINGTEACHING AND LEARNING SCOLARSHIPS AND RESEARCHSCOLARSHIPS AND RESEARCH

Productivity

Impact

University / Professions / Alums

State / Pros Students / Families

Employers

SERVICE / OUTREACHSERVICE / OUTREACH

Faculty

Stuff

WORKPLACE / SATISFACTIONWORKPLACE / SATISFACTION Revenues

Expenditures

FINANCIALFINANCIAL

Observations

o5 dashboard indicators - not prescriptive:

Depending on mission and goals University needs different

components of the board.

oIndividual units might have their own set of indicators:

administrative vs academic units.

oTraditional indicators can`t reflect comprehensive image of

current status of a university and the scope of areas for control

(market position especially)

oCan`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 The whole process of dialogue focuses, energizes and informs

faculty and staff thus broadening responsibility for leadership within faculty and staff thus broadening responsibility for leadership within

the unit.the unit.

YOUR QUESTIONS

Thank you for the attention!