Financial Performance Scorecard: Doing Things Right

2/14/2019Financial Performance Scorecard:Doing Things RightJan M. Haas, Senior 267-278-465011Financial Performance Scorecard: Doing Things RightObjectivesRecognize measures in addition to just revenue andexpenses Expand upon CFI, DOE, and traditional scorecardmeasures Develop an institution-specific financialperformance scorecard Identify the benefits of embracing GAAP criteria Create leadership team “buy-in” 22Financial Performance Scorecard: Doing Things RightDoing Things Right“Perhaps the greatest mistake I’ve seen executives makeis to confuse expectations with inspection. . .But, alas, too often the executive does not understandthat people do what you inspect, not what you expect.Execution is all about translating strategies into actionprograms and measuring their results. It’s detailed, it’scomplicated and it requires deep understanding ofwhere the institution is today and how far away it isfrom where it needs to go. Proper execution involvesbuilding measurable targets and holding peopleaccountable to them.”Gerstner, Louis V. Who Says Elephants Can't Dance?: InsideIBM's Historic Turnaround. New York, NY: HarperBusiness,2002. Print.331

2/14/2019More Than JustRevenue & Expenses44Financial Performance Scorecard: Doing Things RightMore Than Just Revenue and Expenses Balanced ScorecardKaplan, R.S., Norton, D.P. (1996b). Using the Balanced Scorecardas a Strategic Management System. Harvard Business Review, 74(1),75-85.55Financial Performance Scorecard: Doing Things RightMore Than Just Revenue and ExpensesRuben, Brent, D. (1999, Fall). Toward A Balanced Scorecard for HigherEducation: Rethinking the College and University Excellence IndicatorsFramework. Center for Organizational Development and6Leadership, Rutgers University.62

2/14/2019Are resourcessufficient and flexibleenough to support mentAssets &ReservesHow well arewe managingour resources?Faculty &StaffGovernmentAidHow well arewe acquiring theresources needed?Are we deployingour resourceseffectively? Instructional Academic Student Services Institutional Tuition/Fees Endowment Gifts Are we attractingand keeping the typeof students we want?Based on KPMG’s A Closer Look at Ratio Analysis in Higher Education77Expand Upon CFI, DOE, &Traditional Scorecard Measures88Financial Performance Scorecard: Doing Things RightBeyond CFI and DOE Composite Financial Index (CFI)1.2.3.4.Primary ReserveNet IncomeReturn on Net AssetsViability993

2/14/2019Financial Performance Scorecard: Doing Things RightBeyond CFI and DOE Department of Education’s (DOE)Financial Composite Score1. Primary Reserve2. Equity3. Net Income1010Financial Performance Scorecard: Doing Things Right1111Financial Performance Scorecard: Doing Things RightBeyond CFI and DOE Benchmarking Measuring certain characteristicsEstablishing that which is worthy of emulationCreating a process to accomplish desired outcomesHigher education must seek new benchmarks12124

2/14/2019Financial Performance Scorecard: Doing Things RightBeyond CFI and DOE 30 Benchmarks for the Resource Constrained Commitment to healthy financial operations Commitment to employees Commitment to planningBenchmarks available ncial Performance Scorecard: Doing Things RightBeyond CFI and DOE“It doesn’t really matter whether you canquantify your results. What matters is thatyou rigorously assemble evidence quantitative or qualitative - to track yourprogress.”Collins, James C. Good to Great and the Social Sectors: Why Business Thinking Is Not theAnswer : A Monograph to Accompany Good to Great : Why Some Companies Make the Leap--andOthers Don't, New York, NY: Harper Business, 2005. Print.1414Develop an Institution-SpecificFinancial Performance Scorecard15155

2/14/2019Financial Performance Scorecard: Doing Things RightFinancial Performance Scorecard Why Select Dashboard Indicators Measure use of resources to achieve the institution’smission Quantify status, sources, and uses of resources Benchmark institutional performance Focus planning on institution’s financial profile inrelation to vision and mission1616Financial Performance Scorecard: Doing Things RightFinancial Performance Scorecard Dashboard Indicators Types of Performance Measures: Input – selectivity or enrollment statistics Output – graduation statistics, national exam Outcome – perceptions surveys, employment statistics Efficiency – cost per student Effectiveness – difference in entrance and exit scores1717Financial Performance Scorecard: Doing Things RightFinancial Performance Scorecard Dashboard Indicator Sources Professional organization comparative dataAccrediting organization’s institutional profilesIPEDS Data Feedback ReportBond ratings criteriaInternetProprietary products18186

2/14/2019Financial Performance Scorecard: Doing Things RightFinancial Performance Scorecard Bond Ratings Criteria (S&P, Moody’s, Fitch)Criteria Methodology: Industry RiskEconomic FundamentalsMarket Position and DemandManagement and GovernanceFinancial PoliciesFinancial PerformanceFinancial ResourcesDebt and Contingent Liabilities1919Financial Performance Scorecard: Doing Things RightFinancial Performance Scorecard Dashboard Indicators RecruitmentFinancial al Performance Scorecard: Doing Things RightFinancial Performance Scorecard Dashboard Indicators Student Body Admissions Finance Advancement Tuition Discount Physical Plant21217

2/14/2019Financial Performance Scorecard: Doing Things RightFinancial Performance Scorecard Reporting - Dashboard Indicators2222Identify the Benefits ofEmbracing GAAP Criteria2323Financial Performance Scorecard: Doing Things RightEmbracing GAAP24248

2/14/2019Financial Performance Scorecard: Doing Things RightEmbracing GAAP2525Financial Performance Scorecard: Doing Things RightEmbracing GAAP2626Financial Performance Scorecard: Doing Things RightEmbracing GAAP27279

2/14/2019Create LeadershipTeam “Buy-In”2828Financial Performance Scorecard: Doing Things RightCreate “Buy-In” Key Success Factors Provide clear mission, strategic and financial contextfor decision making Overall capacity communicated early in the process Allow adequate timeframes for completion of tasks Implement process for ongoing feedback topromote continuous improvement2929Financial Performance Scorecard: Doing Things RightCreate “Buy-In” Forecasting and Budgeting COMP4cast303010

2/14/2019Financial Performance Scorecard: Doing Things RightPresenting Data to BoardsUse graphicdisplay.Spotlightkeyinformation.Tell a story.DESIGNPRINCIPLESAvoidjargonand “budgetspeak.”Provide acomparativecontext.3131QuestionsJan M. Haas, Senior 267-278-4650323211

Balanced Scorecard 5 Kaplan, R.S., Norton, D.P. (1996b). Using the Balanced Scorecard as a Strategic Management System. Harvard Business Review, 74(1), 75-85. Financial Performance Scorecard: Doing Things Right More Than Just Revenue and Expenses 6 Ruben, Brent, D. (1999, Fall). Toward A Balanced Scorecard for Higher