Proposal of a balanced scorecard approach and a model based on fuzzy decision making for strategic management in higher education institutions

Pursuant to the Law no 5018 on Public Financial Control and Management enacted for alignment to trends in the New Public Management approach rapidly propagating on globe scale, all higher education institutions in Turkey are required to periodically develop their strategic plans, submit them to the Council of Higher Education, and implement the strategic management model. Furthermore, to ensure proper implementation of the strategic management model, supporting modern management approaches such as Balanced Scorecard (BSC) and corporate performance management are recommended. Since 2006, higher education institutions are legally required to implement two separate regulations, one enacted by CHE (Council of Higher Education), and the other by the Ministry of Finance. It appears to be a significant requirement to fill the regulatory gap, with respect to strategy building, in the strategic planning manuals published by CHE and the Ministry of Development through scientific methods such as quantitative decision-making instead of classical management applications. Observing proven efficiency of BSC in the management processes of businesses, higher education institutions started to implement BSC as a strategic management tool. While the BSC approach illustrates a conceptual framework for systematic definition and implementation of the strategy, it provides no description on how to set strategic goals and objectives. However, managers may efficiently harness BSC only after they have properly set the business strategy as well as their strategic goals/objectives. Legal, political, sociocultural and economic trends directly affecting higher education institutions lend the company a destabilized circumference, leading to the need to implement analysis methods addressing the existing uncertainty during the decision-making phase. First introduced by Lotfi A. Zadeh in 1965, fuzzy logic is a scientific method with a proven efficiency in incorporating such uncertainties into the model. Based on these facts, a Balanced Scorecard (BSC) model integrated with Fuzzy Multi-Criteria Decision-Making (MCDM) methods is proposed in this study for use by higher education institutions of Turkey in their strategic management processes. For this purpose, an algorithmic numerical model is proposed to establish the dimensions of BSC, and further to select, weight, prioritize and reveal interrelations between strategic goals under these dimensions. In the model proposed, the fuzzy logic methodology has been integrated with Decision Making Trial and Evaluation Laboratory (DEMATEL) Method and Analytic Network Process (ANP), each being an MCDM method, in an aim to capitalize on the capability of fuzzy logic to represent uncertain and indefinite facts of people (decision maker) most appropriately at real life conditions. To overcome uncertainty, vagueness and ambiguity inherent in linguistic terms, the fuzzy sets theory has been employed instead of using net numerical values in these methods. BSC dimensions as well as strategic goals covered by these dimensions have been established by implementation of the Delphi method after reviewing the national and international literature and also the strategic plans of 87 universities in Turkey. DEMATEL method has been employed to quantitatively reveal the relationships between BSC dimensions and strategies. Results obtained from the implementation of the fuzzy DEMATEL method have been used to build the network structure in the fuzzy ANP method that was then used to establish BSC dimensions as well as the weight or priority of strategies covered by these dimensions. Based on the results yielded by the Delphi method, a total of 36 strategic goals have been grouped into 6 BSC dimensions. The results from the implementation of the proposed method reveal that the learning and development is the most significant BSC dimension (36.86%) followed by the dimensions of training and research (24.87%) and corporate image (18.76%). It has been found that these three dimensions of BSC have a significance level and performance share of more than 80%. Results further show that seven strategies covered by these three dimensions have a total weight and significance level higher than 60%. It may generally be argued that main decisive factors for Turkish universities to realize their missions and attain their visions are the abovementioned dimensions and strategies referred in BSC. A major conclusion of the study, based on weighted results of the dimensions and strategies, is that the weight and significance level of the 'finance' dimension as well as its constituent strategies is zero. Higher education institutions in Turkey are classified as non-profit public institutions by law, and the outcome obtained is consistent with the arguments of Kaplan and Norton, the founder of the theory. Another major conclusion of the study is that the 'corporate image' dimension, even though not addressed in other BSC studies on higher education institutions, stands out as a significant dimension in describing total performance. The results reveal that the 'corporate image' dimension is ranked 3rd at a significance and weight of 18.76% among other dimensions. The model proposed has the flexibility of allowing BSCs, developed by universities in their strategic management processes, to add or remove different dimensions and strategies to and from their own corporate structures in line with the specific goals, and may be employed by any higher education institution or a researcher. It is believed that results to be yielded by the implementation of the model would help university managers focus on specific fields, monitor their corporate strategies, observe and control performances in favour of improved managerial effectiveness and efficiency, and hence guide them in building a better corporate organization for the future.