Setting Balanced Performance Measures
Performance measurement and management are hot topics for nonprofits, with an increasing amount of scrutiny becoming an important factor.
In his book Balanced Scorecard: Step by Step for Government and Nonprofit Agencies, Paul R. Niven offers suggestions for improving performance.
Nevin describes the Balanced Scorecard as a selected set of quantifiable measures derived from an organization's strategy. It retains financial measures but complements them with three other perspectives:
Customer perspective. Two critical questions must be answered here: Who are our target customers? And what is our value proposition in serving them? Rather than trying to focus on many values, a more practical approach may be to choose one discipline in which the organization possesses particularly strong attributes.
Internal process perspective. This is used to identify key processes at which the organization must excel in order to continue adding value for customers. To satisfy customers, an organization may have to identify new processes rather than focusing on improvement of existing activities.
Learning and growth perspective. These are really the enablers of the other perspectives. The measures designed in this perspective will help the organization close the gap between organizational infrastructure and employee skills, information systems and organizational climate. In addition, closing that gap will help ensure sustainable performance for the future.
Courtesy of The NonProfit Times Weekly. Tuesday, April 6, 2004.
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