Get Familiar with the Balanced Scorecard in Nonprofit Organizations
Historically, organizations have started to measure their performance and thus this is considered a part of establishing business. However, they generally relate to financial data. Later, they discovered that even if they performed well in the financial area, they still failed. That is why the balanced scorecard has been introduced. The BSC does not have a narrow focus; in fact, it provides information on the company’s performance in several areas, namely customers or stakeholders, employee productivity and internal processes. These three along with financial records are the most important factors affecting the success of the business. In this case, you really have to measure them successfully. Although today the BSC is being used by most of the for-profit organizations, there are no profits that are really familiar with it. For you to adopt balanced scorecard in nonprofits, you need to really know what the BSC is all about and how to implement it strategically.
The Balanced Scorecard is a great tool, but you may find that not all companies that have used this methodology are doing well in the industry. This is because they don’t really know the processes involved here. For-profits have had a hard time using the BSC effectively, and you’re right to assume that this is not an easy framework to use for your nonprofit. You will need a team or expert to handle the process, plus there needs to be time and money dedicated to the BSC system. Senior management support is also required for more people to commit to doing the entire performance appraisal using the BSC for NPOs.
The first step is to create organizational metrics, which must be well thought out and selected based on research. The trick here is to figure out what you’d really like to measure, and then figure out how you can measure them. Apart from that, you should also think about the fact that it is a requirement for you to make sure that the measures are connected with the main objective of the company. Otherwise, you’ll end up searching or jumping to measures that you only want to use but don’t really contribute to the success of the company.
For you to know the correct measures for the balanced scorecard in nonprofit organizations, you should consult the strategic plan of the company. This plan contains the essential details that will give you an idea of what to measure and how to do it. Now, there are different categories of BSC and they are revenue and funding, donors and board members, internal operations, product and service recipients, resource allocation, and staff development. The categories indicate which area you should focus on based on the organization’s goal.
The BSC is definitely an excellent management tool for both for-profit and non-profit organizations. However, you should be aware that this should not be viewed as a means to an end and certainly not an end in itself. For the balanced scorecard in nonprofits, it’s about the information you’ve collected and how you can use it to your advantage.
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