Developing KPIs for the Papua New Guinea University of Technology
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1 7 th HUON SEMINAR ACHIEVING VISION 2050 THROUGH HIGHER EDUCATION, RESEARCH, SCIENCE & TECHNOLOGY November 13 th to 14 th 2013, Papua New Guinea University of Technology, Lae, Papua New Guinea HS Developing KPIs for the Papua New Guinea University of Technology Muhammed A Satter, Albert Schram, John Pumwa and Veronica Thomas PNG University of Technology LAE, Papua New Guinea masatter@admin.unitech.ac.pg ABSTRACT The Papua New Guinea University of Technology (also known as UNITECH) is one of the four State universities in Papua New Guinea. Its main focus is to education and research in engineering, natural and applied sciences, business and social sciences. An internal quality assurance system for academic programs is already in place. With the initiative of Office of Higher Education (OHE), the University has agreed to undergo institutional accreditation by an external agency. A comprehensive set of Key Performance Indicators (KPIs) is thus being developed to monitor performances across all sections of the University. KPIs serve many useful purposes: allow management to take informed decisions by comparing current performance with past ones, serve as important communication tools that unify efforts across the organization, lead to optimized performance in terms of operational cost, maintenance and continuous improvement activities. The process of developing KPIs takes into account various strategies formulated to tackle problems of the University. The paper presents the steps in the generic process for developing KPIs, which is based on the third generation Balanced Scorecard methodology that incorporates strategy mapping and destination statements. A comprehensive list of KPIs is presented in the paper. Key Words: KPIs, Balanced Scorecard, quality assurance, higher education 1. INTRODUCTION State grants to institutions of higher education are almost universally tied to performance. Institutions of higher education in PNG are not immune from this trend. The government is demanding accountability in areas such as finance expenses, quality of education and the value for money spent. Educational and research activities (Mission/Vision) are also to be aligned to government plans and programs for development associated with PNG Vision 2050 [1]. This is not surprising because any organization, whether for-profit or not-for-profit, needs to manage its performance well and within means for its continued existence. Thus, higher education institutions are increasingly adopting strategic performance management practices. There are a number of reasons for the trend to adopt performance management. Some of the reasons include accountability, both financial and non financial, the need to demonstrate value for the money spent, competition from both national and international universities, and public reputation. Good performance management requires well defined goals (objectives) and a set of appropriate strategies that are measurable, a good implementation plan with definitive milestones. Objectives, strategies and implementation plan must be communicated to all employees of the 280
2 organization at regular intervals, and monitor performance against set targets. Performance monitoring is done through a set of indicators, generally known as Key Performance Indicators (KPI) linked to various strategies [2]. In this paper KPIs are developed for the unique situation of the PNG University of Technology (Unitech). The current scenario of Unitech is analyzed from such tools as SWOT analysis, and input from staff and students on problems obtained from Suggestion Boxes. Strategies have been formulated and KPIs selected on the platform of Third Generation Balanced Scorecard. 2. THE CASE OF PNG UNITECH The Papua New Guinea University of Technology (also known as Unitech ) is one of the four State universities and the only technological university in Papua New Guinea. It is located in the industrial city of Lae and is the second largest in terms of student population. Unitech is internally accredited by the Commission for Higher Education. It is empowered to grant diploma and degrees at both undergraduate and postgraduate levels. Its Vision is to be a leading technological university in the Pacific. Unitech Vision is aligned to PNG Vision 2050[1]. The general Mission of the University is focused towards science and technology education and research of high standard with applications to Papua New Guinea and the Pacific. Its specific mission is to engender the critical evaluation and application of science and technology for PNG and the South Pacific. Currently, Unitech has 13 academic departments, 7 research centres, and 3 affiliated colleges. The 13 departments collectively offer more than 30 regular programs at degree and postgraduate level. There is also a department of Open and Distance Learning (ODL) which primarily offers 12 th Grade remedial programs through about 20 Study Centers located in various provinces of Papua New Guinea. Some diploma and degree programs offered on distance mode are also coordinated by the ODL department. The major source of revenue of the University comes from an annual grant from the PNG Government. Additional revenue comes from fees charged to students. The University is continually under financial constraints since mid-nineties. As a result, academic and research activities have suffered due mainly to qualified staff shortage. Unitech wishes to adopt strategic management practice in order to improve its performance and enhance accountability. As mentioned earlier, Unitech will undergo institutional accreditation by an external agency against a set of Standards [3] 3. STRATEGIC MANAGEMENT Strategic Management deals with strategies derived from the organization s mission, goals and objectives. Goals are general statements of intentions while objectives are also intentions (aims) but more definitive in nature so that they can be measured. Strategies are a set of actions stretching over a specified period, and indicating required resources, timeline, and action responsibility. Indicators or Key Performance Indicators are needed to monitor progress of performance. Strategic management is a continuous process that evaluates various goals and objectives and sets new goals and a new set of strategies. It takes into account both internal and external business environments. It should be noted that strategic management has its limitation since it can get too complicated and resources needed for implementation of strategies may not be available. The platform of Balanced Scorecard is often used to get a concise picture of progress towards achieving various objectives. 4. BALANCED SCORECARD A Balanced Scorecard can be a convenient platform for performance management. The original Balanced Scorecard was designed by Kaplan & Norton [4] in early nineties. The 281
3 scorecard has four simple perspectives namely learning & development, internal business processes, customer and finance. The aim was to achieve strategic goals (objectives) by monitoring and measuring strategies (activities) across the four perspectives which will provide a concise picture of leading and lagging indicators of performance against set target values. People, policies and processes could be aligned with the strategic objectives and mission of the organization. The original balanced scorecard, known as the 1 st generation scorecard, has undergone several changes. The 2 nd generation scorecard incorporates strategy mapping [5-7], and the 3 rd generation scorecard includes a destination statement. In this paper we shall use 3 rd generation scorecard technique [8] to evaluate performance of the PNG University of Technology. Strategy mapping is important because it gives the causal relationship among the various strategies. Similarly, destination statements indicate the direction the University is heading to. Strategy mapping and destination statements are presented below. 4.1 Strategy Mapping Strategy Mapping is a simple diagram that shows a series of primary strategic objectives of an organization. Strategic mapping is used along with Balanced Scorecard perspectives. A diagram developed for the PNG University of Technology is shown in Figure 1. The strategy mapping shows directly the causal relationship between strategies themselves and the perspectives of the Balanced Scorecard. Financial REVENU POSITIVE CASH FLOW CREATE BALANCED BUDGET COMPLET E ACCOUNT AUDIT ING Customer ENHANCE REPUTATION & PUBLIC IMAGE Internal Business Processes SATISFACTIO N (STUDENTS) STUDENT SATISFACTIO N (STAFF) SATISFACTIO N (EMPLOYERS) ACCRE PROMOT DITE UG E ODL &PG PROGRAMS PROGRAMS Learning and Growth PROMOTE RESEARCH ENGAGE WITH INDUSTRY ENGAGE WITH COMMUNITY CREATE CONDUCIVE ENVIRONMENT RECRUIT QUALITY STAFF ADMIT SCHOLARLY STUDENTS Figure 1: Strategy Mapping DEVELOP QUALITY CURRICULUM TRAIN EMPLOYEES & INTRODUCE TQM 282
4 4.2 Destination Statement for Unitech Destination statement s for the University should be aligned with its vision and mission statements. Additionally, the statements should also address current problems of the University. The destination statements may include the following: Reduce financial debt of the university by 10% each year for the next three years and be debt-free by 2020 Increase revenue by 10% every year for the next three years Reduce student overall failure rate from current 8% to 5% by 2015 academic year Increase postgraduate intake by 10% a year for the next three years Increase research output by 20% for the next three years Become the University of Choice for science and technology education in the South Pacific outside Australia and New Zealand. Unitech graduates will be the well sought after by employers, 100% by appropriate functions Achieve at least three programs to be offered by distance learning during the next three years Encourage textbook/module writing for on-line delivery Improve workplace culture and develop core attributes for employees Improve internet connections by at least 40 kb/s by Use less paper The current scenario of Unitech has been analyzed from such tools as SWOT analysis conducted by senior management of the University, which is presented below. 4.3 SWOT Analysis* STRENGTH Sufficient land on campus Long standing reputation in science and engineering High demand for engineering and science courses Policies, processes and committees well established Quality assurance in teaching and learning Willingness to embrace change and learn Multicultural community Convenient location of the university Study centres in whole country OPPORTUNITY Access to more resources from cooperation with other universities Access to more resources from cooperation with industries Stable funding through alignment with Vision 2050, MTDS, DSP Broadband internet on all campuses Increasing resources through contract teaching More resources from consulting WEAKNESS Lack of capacity attracting and retaining quality staff Academic leadership and management department Weak management in support function Lack of motivation and commitment Insufficient learning resources and physical infrastructures No professional staff appraisal Insufficient student and staff amenities, including counseling No management information system Low education level of staff Weak governance and confusion over Council s role THREAT Inconsistent and untimely government funding Inadequate preparatory knowledge of incoming students Difficulty addressing negative attitude of staff and students Lack of capacity to accommodate more students High cost of utilities Security problems on campus 283
5 Introduce more Postgraduate programs Lack of health care for staff and students *SWOT analysis was developed by Senior Management under the leadership of Dr Albert Schram at a workshop held on 11 July Suggestion Box Perception of staff and students on problems of the University were obtained from Suggestion Boxes placed at various locations such as academic departments, library, students mess, etc. The main perceived problems relate to security situation on campus, medical service at the university clinic, information technology services (principally Internet service), housing and accommodation, transport service, maintenance service, services provided by resource departments. There were also a few issues on academic curriculum. 5. DEVELOPMENT OF KPIS Performance must be measured and monitored as a good management practice. Management must make informed decision based on factual information in running the University. Thus, a set of Key performance indicators (KPIs) is needed about the input, processes and output. KPIs can have a variety of uses. They allow the management to monitor and track progress against various employees on goals and objectives thus aligning the efforts of everyone in the organization in the right direction of development and progress. KPIs can be used to identify strengths and weaknesses, and establish good practice in management. KPIs also serve as a means of comparison between products and processes, and other similar institutions through benchmarking. KPIs need to be understandable, meaningful and measurable. Vaguely defined KPIs do not serve useful purpose. In developing KPIs one can follow SMART criteria. SMART stands for Specific purpose, Measurable to some quantity, Achievable, Relevant for the purpose and Time bound. KPIs are linked to target values. Financial Perspective Table 1a Goal, Objectives, Strategies for Financial Perspective Goal Objectives Strategies Financial solvency Improve Revenue Request enhanced Govt grants Increase general tuition fees Increase ODL fees Improve UDC income Control Expenses Reduce Admin overhead Reduce catering expenses Control Estate and Services Expenses Financial Auditing Complete financial audit Table 1b KPIs, Measurements and Targets for Financial Perspective Control Library operation cost Engage internal auditor Engage reputable firm for auditing Unitech accounts by 31 st March KPIs Measurements /Tools Targets Level of Govt. grant Tuition fee ODL course fee UDC income % increase in Govt. grant % increase tuition fee % increase course fee % increase UDC income 10% increase/yr for 3 years 10% increase/yr for next 2 years 10% increase/yr for next 3 years 284
6 Admin overhead expenses Catering expenses Estate & Services expenses Library operations including review of Establishment Accurately compute admin expenses 5% increase/yr for next 2 years Customer Perspective Table 2a Goal, Objectives, Strategies for Customer Perspective Goal Objectives Strategies Customer Care (student) Develop necessary attributes Improve students performance (Minimize failure rate) Students and teachers awareness of necessary program outcomes Design curriculum and implementation methodology to attain the attributes Continuous monitoring of teaching and learning Institute continuous assessment Give 3 to alerts weak performing students per semester External Customer Employer Engage with industry Table 2b KPIs, Measurements and Targets for Customer Perspective KPIs Measurements /Tools Targets Number of students who are aware of attributes % of students that have acquired of the necessary attributes 90% increase/yr for 3 years Pass rate % of students that pass 95% pass rate Employers satisfaction Survey questionnaires 80% satisfied Internal Processes Perspective Table 3a Goal, Objectives, Strategies for Internal Processes Perspective Goal Objectives Strategies Academic excellence Accreditation of academic programs High scores ODL delivery of programs Regular review of curriculum and teaching methodology Evaluation of teaching performance and Improve teaching resources Institute self-assessment program Postgraduate Programs Promote PG programs in all departments Introduce kaizen continuous improvement program in teaching and learning Increase intake of students in PG programs 285
7 Excellence in research Community engagement Promote research activities by staff and students Lend help to surrounding settlements Offer PG programs on ODL mode of delivery Improve funding Networking with other universities and research institutes home and abroad Encourage research seminar and publications Engage ATCDI to train personnel in food tech program, water supply/sanitation, brick making, etc. Table 3b KPIs, Measurements and Targets for Internal Processes Perspective KPIs Measurements /Tools Targets Annual curriculum review Industry Advisory Committee meeting Once a year Teaching evaluation & feedback to lecturers Teaching Evaluation Form Once a semester Accreditation of programs Annual report by academic department 3-yearly university self-study report % increase of PG students No. of PG programs by ODL delivery No. of research seminar Self-assessment report Annual report by academic department Self-assessment Report PG admission statistics ODL programs Seminar presentation Accreditation visit by 2016 One annual report One self-assessment report in 3 years Increase by 10% 1PG-ODL program/year One seminar/week TLMU course on research methodology and research proposal writing Training programs by ATCDI and ADOC TLMU training program 2 programs/year Training programs 5 programs each in 2014 Learning & Growth Perspective Table 4a Goal, Objectives, Strategies for Learning & Growth Perspective Goal Objectives Strategies Highly knowledgeable Highly qualified academics Recruit highly qualified academic and skilled organization staff Highly skilled technical & professional staff Recruit highly skilled staff 286
8 Improved Campus Environment Benchmark curriculum Scholarly students Training programs Campus Environment for learning and holistic development Conduct curriculum review Admit scholarly students through entrance examination Provide training to academic, technical, and professional staff Promote campus beautification Promote digital communication Improve counseling services Table 4b KPIs, Measurements and Targets for Learning & Growth Perspective KPIs Measurements /Tools Targets #Ph Ds per academic department #of academics trained in % of Establishment % of academics trained 80% of Establishment 50-70% of academics teaching and learning # of qualified technical & professional staff % of Establishment 90% of Establishment & heads of section Curriculum advisory # of meetings At least 1 meeting per year committee # of students admitted with A&B grades Admission records 100% of students with A&B grades # training programs # of staff trained annually 80% of staff to be trained annually Meeting of medical & campus beautification committee 2 meetings per year Broadband internet Students receiving counseling # of meetings of medical services and campus beautification committee Install broadband internet service Academics & Counselors 40kbp/s All students needing counseling 6. DISCUSSIONS ON GENERIC STRATEGY MAPPING AND KPIS Figure 1 shows the generic strategy mapping over the four perspectives of the Balanced Scorecard. The strategies are generic in the sense that corresponding to each strategy there will be a portfolio of actions both at corporate and academic unit/section levels. Goals have been developed from the Mission statement of the University. Objectives are the sub-set of goals meaning that each goal statement may have one or multiple objectives. Strategies are derived from the objectives. Again, each objective may have multiple strategies. Each strategy will have at least one KPI that should be monitored. Each KPI will have a set target as a reference that may be compared with the actual result (achievement) to identify gap, if any. The gap will form the basis for continuous improvement through modifying the current strategy or formulating new ones. The KPI's will be validated through a series of workshops with Unitech stakeholders, so that they are widely known, well understood and supported. 7. CONCLUSIONS For the first time the PNG University of Technology proposes to adopt strategic performance management practice to manage its affairs. The strategies are aimed at addressing the current known problems perceived by employers, the wider university community (which were obtained through suggestion box located at various points across the University) and through SWOT 287
9 analysis conducted by senior management. The strategies are developed in relation to goals and objectives derived from the Vision and Mission statements of the University. The strategies have been mapped over the Balanced Scorecard platform with four perspectives, and tagged with a set of destination statements. KPIs for monitoring performance have been proposed. 8. REFERENCES 1. Govt of Papua New guinea, Papua New Guinea Vision Rizk Shaker, Utilizing KPIs in Evaluating Academic Programs Higher Education International Conference, 2011 heic.info/assets/templates/heic2011/papers/28- Shaker_Rizk.pdf 3. Commission for Higher Education Guidelines for Institutional Accreditation 4. Kaplan R.S & Norton D.P Linking the Balanced Scorecard to Strategy California Management Review 39, Fall, Butler A, Letza S.R., Neale B. Linking the Balanced Scorecard to Strategy International Journal of Strategic Management 30 (2), Kaplan R.S & Norton D.P Strategy Maps: Converting Intangible Assets into Tangible Outcomes Harvard Business School Press (p7), Boston, Massachusetts, ISBN , Generic Strategy Mapping 8. Third-generation balanced scorecard en.wikipedia.org/wiki/thirdgeneration_balanced_scorecard 288
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