Applying GQM Method in Balanced Scorecard System for Iranian

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www.ijmit.com International Journal of Management & Information Technology ISSN: 2278-5612 Volume 2, No 1, November, 2012 Applying GQM Method in Balanced Scorecard System for Iranian University Performance Appraisal Shaghayegh Bakhtiari1, Seyyed Mohsen Hashemi2, Mina Bakhtiari1 1Department of Computer, Abadan Branch, Islamic Azad University, Abadan, Iran 2Department of Computer, Science & research Branch, Islamic Azad University, Tehran, Iran

ABSTRACT in identifying the other strong and weak points and providing the chance of improvement. Rapid development in academic instruction sector In this article, one of the universities in Iran was has resulted in changes in the supply and demand selected to implement BSC and four perspectives of higher education graduates and influenced on related to it titled as financial, customer, internal the quality of education. Hence, if the process and growth and learning studied. In this performance assessment of a university is done in assessment, real data of this university was used an effective manner, the university may identify and questionnaire tools applied to collect data internal strong and weak points and provide the about the prospect of growth and learning. chance of improvement. The aim of this article is Moreover, to get appropriate metrics for to apply Balanced Scorecard Systems to access measuring in perspectives of BSC, GQM method the performance of a sample in Iran’s universities. was used. The results of survey showed that the On the other hand, this article describes how to performance of the studied university was in an apply GQM method to obtain the suitable metrics appropriate condition. Also, these results and the of measurement in Balanced Scorecard System manner of performance assessment may be useful assessment to improve the efficiency. for the university and academic departments that aim to implement BSC for evaluating the Keywords: Balance Scorecard System, GQM, performance of their organizations. For the future educational systems, Assessment purposes, it’s suggested to implement this system with fuzzy theory to evaluate quality indices 1. INTRODUCTION (developing motivation in staff, using novel The Balanced Scorecard (BSC) is one of the methods). performance measurement tools determines . WHAT IS A intangible assets of the organization. This system 2 RESEARCH METHOD is used more frequently in strategic planning than BALANCED SCORECARD? that in performance assessment. Balanced Score The Balanced Scorecard (BSC) is a performance Card System is, in fact, a factor for improving measurement tool originated in the business world. control that is regarded as a base for promoting Performance measurement is a method of tracking the university quality and preventing defect performance over time to assess if goals are being occurrence. met. The BSC was introduced by Robert Kaplan, Implementing Balanced Score Card System and David Norton, the founders of Balanced allows a university to interpret perspectives and Scorecard. In the early 1990s as a new way to strategies based on a special pattern and then measure business performance, Organizations evaluate them. Regarding the great role of the measured their performance to monitor how they universities in educational systems, accurate achieve their overall mission and goals. performance assessment of the universities results Traditionally, companies measured their performance by looking only at how they were

©Council for Innovative Research 46 | P a g e www.ijmit.com International Journal of Management & Information Technology ISSN: 2278-5612 Volume 2, No 1, November, 2012 doing financially, for example measuring only 2.1.1 Selecting a suitable profit increases or cost efficiency. Kaplan and Norton’s BSC concepts challenged this traditional, organizational unit: single focused approach to performance Criteria for selecting a suitable organizational measurement. unit: Before concluding that a balanced scorecard 2.1 Implementation of balance system is the best option at high level for you, some criteria need to be considered for an scorecard system in educational important decision. A variety of elements help us systems to select an appropriate organizational for the first Kaplan and Norton-the founders of Balanced Balanced Scorecard System. These criteria are Scorecard-have described this method simply not shown in figure1. simplification:

Existence clear management strategy Senior management Need for balanced score card

Balanced

score card The key manager Corporate method area

Information Resources

Figure 1: Seven Criteria for selecting an organizational unit to implement a Balance Scorecard System Answering to this question is needed that if the 2.1.2 Strategy desired unit has a specified objective for The most important criteria is that if the desired implementing the Balanced System. unit has a clear and coherent strategy. However, 2.1.4 The possibility of providing the method of a balanced system is a special method designed to help you to interpret your information strategies to the objectives and measures having This criteria refers to two subjects. First, does a the capacity of controlling. Without strategy, it desired unit have a culture of performance would be like as a set of financial and non- assessment? Although any group in a modern financial measures are collected so that they have organization should rely on the measures and no connection to each other. performance criteria, the assessment of this issue is relatively difficult. It is because some of the 2.1.3 Need of a balanced system measures of a Balance System are probably new

©Council for Innovative Research 47 | P a g e www.ijmit.com International Journal of Management & Information Technology ISSN: 2278-5612 Volume 2, No 1, November, 2012 and their required data resources are probably decrease its power. Because of the defects in the undefined. However if the desired unit has some present methods of performance appraisal, the problems in collecting the data related to the performance may not be evaluated accurately, so current performance measures, it will certainly the managers won’t be able to make decision have some problems in providing the data related accurately with respect to the evaluation. to the Balanced Scorecard System. In order to remove this problem, the Balanced 2.1.5 Resources Scorecard System allows a university to interpret To implement, a unit should be selected to have the and evaluate the strategies and views based on a possibility of providing information. For this special pattern. Regarding the available resources reason and considering this point that if the and adequate information and precise strategies performance appraisal of a university is done (second stage of implementation) and the through the method of effectiveness, the university requirement to the method of balanced evaluation may use the internal strength points and make mentioned above and the great share of university benefit from the internal opportunities, identify the and academies (including the students, professor threats and defend against them and finally before and staff) a suitable balanced Scorecard approach becoming harmful of internal weakness point, was identified.

Table1: Worksheet of university’s selection to implement a Balance Scorecard System Selection criteria Rating Weight Total Justification reasons Unit score Existence of clear strategy 10 30% 3 Universities generally have a clear strategy Senior management 10 30% 3 With the establishment of a management support meetings university issued a work order. Need for Balanced System 8 15% 1.2 According to lake of suitable system for performing evaluation, It is felt the need to maintain and expand the unit and status in the future. The key managers support 5 10% 0.5 A little work might be done due to the business. Corporate area 9 5% 0.45 The activities of unit are determined clearly. Possible to obtain 9 5% 0.45 It is possible to provide information easily information according to the clear objectives, strategies and customer of the university Resources 4 5% 0.2 The department is facing shortage of manpower. So, it’s in trouble for Providing manpower for the project General evaluation of table1: This unit has attained a very high score (8.8 from 10) and therefore it’s a good candidate for implementing the method of balanced Scorecard. 2.2 Collecting required background have full access to necessary data and information in field of Missions, views, strategies, competitive information to determine the position and capabilities of a central organization strategies, views and mission s of an (Bakhtiari, 2007). organization Balance Scorecard System is a tool for analyzing the strategy. To accomplish, this hypothesis should

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2.3 Conducting an interview to provides a framework for balance assessment system. In fact, in this stage, the strategy is clarify the vision, mission and converted to the goals (Kaplan and Norton, 2004). finally to achieve strategic objectives 2.5.1 financial perspective According to the study and group meetings vision,  Financial perspective is vital for mission and goals are as following: organizations, because it will obligate us to  Creating a dynamic and creative learning identify and set financial goals that an environment for nurturing the teachers and organization need to achieve them. researchers. Financial perspective mentioned some  Providing permanent financial resources. cases which are very important:  Preparing upgrade software and hardware  The main objective of business is to create equipments. wealth creation that is determined by  Achieving, maintaining, and developing achieving to the goals. research situation for increasing scientific  The purpose of the quantitative-financial productions at national, regional, and goals is to prepare the operational units for international levels. performance management and to achieve  Improving and developing the quality of the competencies for the future success. services for the students.  Financial perspective is a related  Continuous improvement of scientific and performance index because it registers the administrative management. success after its occurrence. 2.4 Integrating the results of Therefore, we may explain the goals of an organization as follow: interviews and determining the 1. Reducing the cost of manpower. strategic objectives and goals 2. The increased use of assets (Kaplan and After clarifying universities’ strategies and goals, Norton, 2004). any of these goals should be assigned to four 3. Developing the income opportunities perspectives of the balanced scorecard system. (Kaplan and Norton, 2004). Balanced scorecard is changed to a framework for 4. Improving the cost structure. implementing and strategic managing at all levels 5. Growing the income from investments of organization and it does this work by linking to 2.5.2 Customer perspective the ultimate goals, innovations and standards Who are our target customers and what we offer related to the overall strategy and provides this by them through evaluating the service? Customer‘s maintaining financial measures with the other key perspective goals and purposes describe the indicators around customer perspectives, internal strategic goal and the presentable value of an business processes, organizational growth, learning organization. Some of the goals considered by the and innovation and offers a view of organizational organizations are as the following: performance to the company (Bakhtiari, 2007). 1. Effective and accountable operations. 2.5 Assigned objectives to each of 2. Offering competitive prices. four perspectives of the Balanced 3. Attracting, developing and retaining the Scorecard System best customers. Balanced Scorecard System completes financial 4. Increasing customer satisfaction. indicators from the past performance with the 5. Improving the perceived view of the future performance. The goals and indicators of university. Balance Scorecard System have been determined 6. Delivering the innovations that make through strategy and perspectives of organization. business and career value. This goals and indicators refer to the performance Clients of educational organizations are of organization in four aspects: Finance, customer, employees, students, parents, government and internal processes, learning and growth. It also labor market (Bakhtiari, 2007). In general, teachers

©Council for Innovative Research 49 | P a g e www.ijmit.com International Journal of Management & Information Technology ISSN: 2278-5612 Volume 2, No 1, November, 2012 of educational organizations, managers, and 2.5.4 Learning and growth learners are internal clients, but governments, perspective public sector, and parents are foreign clients. If Learning and growth perspective is the basic in the both internal and external customers are satisfied Balanced Scorecard System (Kaplan and Norton, with the performance of educational organizations, 2004). This perspective may be regarded as a University will not lose their learners and will driving force for the three previous approaches in sustain a client perspective. achieving high performance. 2.5.3 Internal processes perspective The function of this perspective is to create a In order to determine the strategic goals what the complete set of core technical capabilities and to internal processes perspectives of organization improve the previous three perspectives. Upon should do? rapid advances in information technology, One of the various benefits resulted from using the competition in educational market has increased as balanced Scorecard, is identified as the results of widespread (Chen et al, 2006). actions in this perspective. Most performance Intangible assets in educational organizations, systems in current processes are focused on including universities, are classified in three gradual improvements, while the balanced groups: scorecard method maybe led to the formation of 1. Institutional Capital entirely new processes for realizing the desired 2. Investment information values of the clients. 3. Human Capital The internal processes may generally be classified Some conceivable goals in this perspective are: in four groups: 1. Developing the diverse and effective 1) Operational (a key goal in this strategy is a workforce low lasted cost): It produces the product 2. promoting and developing the spirit of and service and supply them, such as partnership production, supply, providing the 3. Appropriate access to information and an opportunities for students and preparing attractive and healthy working educational and research facilities. environment. 2) Customer management (a key goal in Universities should provide opportunities for customer-oriented strategy): It enhances the members to learn and grow. Human Capitals at the customer‘s value, such as selecting Universities are professors, researchers and staff. students, employing, retaining and Using the balanced scorecard in the performance developing the instruction corresponding evaluation system will result in improving the with them so that are related to the ultimate assessment, saving cost and time. The use of verbs quality assurance. such as increase or decrease, start, create, reduce, 3) Innovation (a key goal of output leadership improve, becoming and the other verbs like these strategy): A process that will create new may be the facilitator when setting goals. Specified products and services such as: Identifying goals should create necessary motivation for opportunity, research and development of performing the desired actions in people. But these projects, designing / developing and goals should not necessary be quantitative in their implementing. nature. 4) Legal and Social: Emphasis on 2.6 Using indicator to achieve the effectiveness of the management, success criteria for any goal improvements in education quality, As shown in Figure3, performance measures form management process, real-time appraisal the basic core of the balanced scorecard. For and services to increase effectiveness and selecting measures is to remain in combination of reduce the time proposed to attract performance evaluation system may be examined satisfaction (Neon, 2002). through some of these criteria. Collecting necessary data to calculate the measures is also one

©Council for Innovative Research 50 | P a g e www.ijmit.com International Journal of Management & Information Technology ISSN: 2278-5612 Volume 2, No 1, November, 2012 of the important aspects and challenges in the establishment of a balanced assessment system. 2.6.1 Some criteria for selecting performance measures Designing and implementing the balanced scorecard as an organization management system orientation, requires the selection of goals, Figure2. The GQM method provides direct quantitative goals and executive initiatives to alignment between metrics and goals achieve them. Difficult decision making process appears at the stage of measures selection. These 3.1 GQM Basics (Lance Hayden, 2010) measures are as a main core in the balanced In one of his most professional development assessment system and it’s considered as a seminars, Basili defines the GQM process as reference and a focus point for all organizations. follows: 2.6.2 Relationship with strategy 3.1.1 Develop a set of corporate, Relationship with strategy is considered as the most obvious and significant criterion to assess the division and project business goals measures but its importance is not necessary to be and associated measurement goals emphasized significantly. In many businesses, a for productivity and quality balanced appraisal system includes number of The GQM method includes a basic template measures play an important role in daily concept for articulating the goals of a performance. But it does not seem to be directly measurement or improvement project quickly and associated to the strategy. succinctly. Specific information is captured 3. GOAL-QUESTION-METRIC regarding the goal, including explicitly defining (GQM) FOR BETTER METRICS the basic attributes and criteria for success. The resulting information is incorporated into the The GQM method traces its roots back through template and used to create a basic statement of software engineering practices into the 1970s, the goal. These components are shown in Table 2. primarily through the academic and industry research conducted by Victor Basili of the Table2: Goal Template for the GQM Method University of Maryland.GQM is a simple, three- Goal Description Example Component step process for developing better metrics. The outcome The purpose of the Improving, first step in the process involves defining specific project, assessment, goals that the organization hopes to achieve. What will be understanding These goals are not measurement goals, but achieved objectives that measurement is supposed to help elements The boundaries and Satisfaction, achieve. The goals are then translated into even objects(systems, rate of more specific questions that must be answered processes, revenues, costs before assessing whether the organization has characteristics) achieved or is achieving the goals. Finally, these involved in or impacted by the goal questions are answered by identifying and perspective The point of view Managers, developing appropriate metrics and collecting taken to understand students empirical data associated with the measurements. the goal ,financial The method ensures that the resulting metrics data remains explicitly aligned with the higher level 3.1.2 Generate questions (based on goals and objectives of the measurement sponsors. models) that define those goals as Figure2 illustrates the basic GQM method. completely as possible in a

©Council for Innovative Research 51 | P a g e www.ijmit.com International Journal of Management & Information Technology ISSN: 2278-5612 Volume 2, No 1, November, 2012 quantifiable way (Lance Hayden, quantitative or qualitative measurement and analysis techniques in a way that is driven by the 2010): goal and not subject to arbitrary judgments about To develop that information, individual goals are the metrics themselves. translated into a series of questions that enable the components of the goal to be achieved or 4. APPLYING GQM TO BSC FOR evaluated for success. These questions articulate the goal and the measurement project in terms of IRANIAN UNIVERSITY what objects or activities must be observed and PERFORMANCE APPRAISAL what data must be collected to address the (RESULTS AND DISCUSSION): individual components of the goal statement. Several questions are already implied by Applying GQM method in BSC may be used as an examining the goal components: appropriate tool to rank the universities from the  How much is the rate of students’ view of their performance assessment and this empowerment from the view of knowledge action may have a significant role in promoting the quality and improving the education level of and science acquisition in the universities. the universities. GQM pattern for financial  What is the rate of the university revenues perspective of BSC is shown in table 3. during the last four years? Table3: GQM pattern for financial perspective  How has the proportion of masters to the of BSC students been during the last four years? Outcome: Increase 3.1.3 Specify the measures needed to Goal Element: Income(revenues) Components Element: Cost(expenditures) be collected to answer those Perspective: Financial questions and track process and The goal of this project is to increase the income and to Goal product conformance to the goals decrease the university Statement Step3 is about examining how the questions could expenditures from the financial be answered, moving from the qualitative (or view. operational level) to a quantitative level. Once What is the level of the university goals are refined into a list of questions (GQM Question revenues during the last four process step 2), metrics need to be defined that years? Revenues derived from student provide all the quantitative information to answer Metrics tuition during the last four years. the questions in a satisfactory way. In other hand, How much is the university costs Question after questions have been developed to define the during the last four years? goal operationally, the goal can begin to be The salary costs of the staff characterized at a data level, and metrics can be during four years assigned that will provide answers. A key strength Administrative, educational, of GQM is that, by this point, designing metrics Metrics survey and capital costs of the becomes much more intuitive, because only university during four years. certain measurements will produce the data The wage costs of the faculty necessary to answer the very specific questions members during four years. that the goal has produced. Many metrics are After collecting data using metrics, they were potentially able to answer these questions, and analyzed using statistical descriptive and more emphasis can be placed on evaluating the inferential methods. For example; table 4 shows feasibility of adopting certain metrics based on frequency description based on the real incomes how difficult data may be to collect or how and its comparison with the tuition index in detailed the data needs to be. The questions also relation to last year. help the project stakeholders choose appropriate

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Table4: frequency description based on the real incomes and its comparison with the tuition index in relation for four

Rate of Available Tuition Year Rate of Tuition Standard

16% 2007 %8-%01 9% 2008 %5-%01 72% 2009 % 5-%01 22% 2010 % 01 As the statistical data of the table shows the For example, table 5 shows frequency distribution increase rate of tuition standard in 2007 was %8- based on the rate of costs or continuous staff’s %10 while in 2008-2009, 5%-%10 and in 2009, salary. As shown in this table, the standard 10%. In addition, the rate of available tuition in increase rate of the staff’s salary in 2007, 2008 different years was %16, %9, %72 and %22, and 2009 has been between %14 - %16 while in respectively. 2010 this standard increase reached to %12. Table5: frequency distribution based on the rate of costs or continuous staff’s

The increase rate of the staff’s salary year The standard growth

27.8% 2007 %01-%01 24% 2008 %01-%01 29.3% 2009 %01-%01 9.8% 2010 % 01 In table 6, frequency distribution is shows based %20, respectively. The rate of the salary and wage on the costs rate of the faculty board wages. As cost increase of the faculty members in proportion shown in this table, the standard increase rate of to the previous years has been extensively these wage costs of the faculty members in 2007, increased due to changing the university unit from 2008, 2009 and 2010 has been between %15 - big to very big requiring the employment of %20, while the existing rate of the cost increase faculty members for the new courses. for the faculty members in the above years %12 - Table6: frequency distribution based on the costs rate of the faculty member’s wages

The cost increase rate of the year The standard growth faculty’s wage

12% 2007 %05-%11

16.4% 2008 %05-%11 23.3% 2009 %05-%11

19.5% 2010 %05-%11

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Table7: GQM pattern for growth and learning Table9: GQM pattern for customer perspective perspective of BSC of BSC Outcome: Increase Outcome: increase Goal Goal Element: average Element: student’s satisfaction Components Components Element: survey activities Perspective: student(customer) Perspective: growth and learning The goal of this project is to The goal of this project is to study the student’s satisfaction Goal Statement increase the rate of growth and of the master proportion to the Goal learning of the university students student. Statement from the viewpoint of growth and Is the proportion of the master learning. Question to the student suitable in the How much is the rate of students’ university? empowerment from the view of The proportion of masters to Question knowledge and science Metrics the students has been during acquisition in the universities. the last four years? Obtaining the students’ average Metrics Obtaining the number of articles 5. STRUCTURE CONSTRUCTIONAL and their survey activities. EQUATIONS, GROWTH AND Table8: GQM pattern for internal processes LEARNING IN IRAN’S UNIVERSITY perspective of BSC The results of structural equations analysis have Outcome: Assessment been reflected in figure3. As it seen, growth and Element: Entertainment places learning are as dependent structures. Goal Element: Exercise places As the diagram shows, empowerment has the most Components Element: service places influence on the structure of growth and learning Element: Teaching places so that it has the highest correlation coefficient. Job Perspective: internal processes satisfaction has the least influence on the structure The goal of this project is the of growth and learning. facilities and equipment sector of Goal the university from the view of Statement suitable place with respect to 6. CONCLUSION internal processes. In this article, one of the universities in Iran was Are the facilities and equipment selected to implement BSC and four perspectives necessary for providing a high Question related to it titled as financial, customer, internal quality of education available in process and growth and learning studied. In this the universities? assessment, real data of this university was used Comparing administrative and and questionnaire tools applied to collect data educational places with its about the prospect of growth and learning. standards. Moreover, to get appropriate metrics for Comparing the service sectors Metrics measuring in perspectives of BSC, GQM method places of the universities with its was used. The results of survey showed that the standards. performance of the studied university was in an Comparing the Exercise places appropriate condition. Also, these results and the with its standards. manner of performance assessment may be useful for the university and academic departments that

aim to implement BSC for evaluating the performance of their organizations.

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0.23 General quality Job satisfaction and employment

0.48 0.57 0.83 0.55

0.73 0.85 Improvement Growth and learning Empowerment instruction

0.48 0.81 0.66

Success and

promotion

Figure3: Structure constructional equations, growth and learning in Iran’s university

REFRENCE [5] Bakhtiari p (2007). Strategy-Focused Ordanization.Translated.4: 3-11. [1] Chen, H. Duh, R. and J. Lin (2006). [6] Lance Hayden (2010).”IT Security “The Determinants of Implementation Metrics A Practical Framework for Stages of Balanced Scorecard”. Measuring Security & Protecting Data”, International Journal of Management & McGraw-Hill press. Decision Making, Vol. 7, Issue 4, pp. 1- 11. [2] Kaplan, R. S. and D. P. Norton, (2004).The Balanced Scorecard: Translating Strategy into Action. Boston: Harvard Business School Press, pp. 130-136. [3] Namazi, M. (2006). “Revisiting the Balanced Scorecard: Judgmental Effects of Performance Measures Linked to Strategy”. Working paper, pp. 467-476. [4] Neon, P.R (2002). Balanced Scorecard Step-by-step. New York: John Wiley & Sons, Inc.