Historically, organizations have started to measure their performance and therefore 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 is not narrow in focus; in fact, it gives information about the company’s performance in various areas, namely customers or stakeholders, employee productivity, and internal processes. These three along with the 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. In order for you to adopt Balanced Scorecard in nonprofits, you need to really know what 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-profit organizations have had a hard time using the BSC effectively, and you are correct in assuming that this is not an easy framework that you can use for your nonprofit. You will need a team or an expert to handle the process, plus there must be time and money dedicated to the BSC system. Senior management support is also required to get more people committed to doing all 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 the things you would 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 skipping to measures that you just want to use but don’t really contribute to the success of the business.
In order for you to know the right measures for the balanced scorecard in non-profit organizations, you should refer to the company’s strategic plan. Such a 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, recipients of products and services, 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 considered as a means to an end and certainly not as 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.
