financial performance scorecard: doing things right...financial performance scorecard: doing things...

2/14/2019

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Financial Performance Scorecard:Doing Things Right

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Jan M. Haas, Senior [email protected]

267-278-4650

Financial Performance Scorecard: Doing Things Right

Objectives

Recognize measures in addition to just revenue and expenses

Expand upon CFI, DOE, and traditional scorecard measures

Develop an institution-specific financial performance scorecard

Identify the benefits of embracing GAAP criteria Create leadership team “buy-in”

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Doing Things Right

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“Perhaps the greatest mistake I’ve seen executives make is to confuse expectations with inspection. ..……….. But, alas, too often the executive does not understand that people do what you inspect, not what you expect. Execution is all about translating strategies into action programs and measuring their results. It’s detailed, it’s complicated and it requires deep understanding of where the institution is today and how far away it is from where it needs to go. Proper execution involves building measurable targets and holding people accountable to them.”

Gerstner, Louis V. Who Says Elephants Can't Dance?: Inside IBM's Historic Turnaround. New York, NY: HarperBusiness, 2002. Print.

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More Than Just Revenue & Expenses

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More Than Just Revenue and Expenses

Balanced Scorecard

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Kaplan, R.S., Norton, D.P. (1996b). Using the Balanced Scorecard as a Strategic Management System. Harvard Business Review, 74(1), 75-85.


More Than Just Revenue and Expenses

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Ruben, Brent, D. (1999, Fall). Toward A Balanced Scorecard for Higher Education: Rethinking the College and University Excellence Indicators Framework. Center for Organizational Development and Leadership, Rutgers University.

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Revenue Expense

•Tuition/Fees•Endowment•Gifts•Auxiliary

•Instructional•Academic•Student Services•Institutional

Resource Acquisition

Tuition

GovernmentAid

Development

Resource Allocation

Faculty &Staff

Assets &Reserves

PhysicalPlant

Students

RetentionStudentProfileEnrollment

Are resources sufficient and flexible enough to support the mission?

Are we deployingour resourceseffectively?

How well arewe acquiring the resources needed?

How well are we managing our resources?

Are we attracting and keeping the typeof students we want?

Based on KPMG’s A Closer Look at Ratio Analysis in Higher Education 7

Institution

Expand Upon CFI, DOE, & Traditional Scorecard Measures

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Beyond CFI and DOE

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Composite Financial Index (CFI)1. Primary Reserve2. Net Income3. Return on Net Assets4. Viability

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Beyond CFI and DOE

Department of Education’s (DOE) Financial Composite Score1. Primary Reserve2. Equity3. Net Income

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Beyond CFI and DOE

Benchmarking• Measuring certain characteristics• Establishing that which is worthy of emulation• Creating a process to accomplish desired outcomes• Higher education must seek new benchmarks

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Beyond CFI and DOE

30 Benchmarks for the Resource Constrained• Commitment to healthy financial operations• Commitment to employees• Commitment to planning

Benchmarks available at:http://cfocolleague.com/free-downloads/

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Beyond CFI and DOE

“It doesn’t really matter whether you can quantify your results. What matters is that you rigorously assemble evidence -quantitative or qualitative - to track your progress.”

Collins, James C. Good to Great and the Social Sectors: Why Business Thinking Is Not the Answer : A Monograph to Accompany Good to Great : Why Some Companies Make the Leap--and Others Don't, New York, NY: Harper Business, 2005. Print.

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Develop an Institution-Specific Financial Performance Scorecard

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Financial Performance Scorecard

Why Select Dashboard Indicators• Measure use of resources to achieve the institution’s

mission• Quantify status, sources, and uses of resources• Benchmark institutional performance• Focus planning on institution’s financial profile in

relation to vision and mission

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Dashboard Indicators• Types of Performance Measures:Input – selectivity or enrollment statisticsOutput – graduation statistics, national examOutcome – perceptions surveys, employment statisticsEfficiency – cost per studentEffectiveness – difference in entrance and exit scores

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Dashboard Indicator Sources• Professional organization comparative data• Accrediting organization’s institutional profiles• IPEDS Data Feedback Report• Bond ratings criteria• Internet• Proprietary products

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Bond Ratings Criteria (S&P, Moody’s, Fitch) Criteria Methodology:

• Industry Risk • Economic Fundamentals • Market Position and Demand • Management and Governance • Financial Policies • Financial Performance • Financial Resources • Debt and Contingent Liabilities

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• Recruitment• Financial Aid• Retention• Organizational

Effectiveness

Dashboard Indicators



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•• Student Body • Admissions• Finance• Advancement• Tuition Discount• Physical Plant

Dashboard Indicators

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Reporting - Dashboard Indicators

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Identify the Benefits of Embracing GAAP Criteria

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Embracing GAAP

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Embracing GAAP

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Embracing GAAP

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Embracing GAAP

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Create Leadership Team “Buy-In”

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Create “Buy-In”

Key Success Factors• Provide clear mission, strategic and financial context

for decision making• Overall capacity communicated early in the process• Allow adequate timeframes for completion of tasks• Implement process for ongoing feedback to

promote continuous improvement

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Create “Buy-In”

Forecasting and Budgeting• COMP4cast

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DESIGN PRINCIPLES

Use graphic display.

Tell a story.

Provide acomparative

context.

Avoid jargon

and “budgetspeak.”

Spotlight key

information.

Presenting Data to Boards

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Questions

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Jan M. Haas, Senior [email protected]

267-278-4650

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financial performance scorecard: doing things right...financial performance scorecard: doing things...

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