Ever wonder whether your organization’s activities are in sync with your mission and vision? It is common for organizations to know where they want to be without knowing how to get there. Ever get push back from staff, who question the strategy behind their action items? If you answer “yes” to any of these questions, then you might consider creating and using a balanced scorecard.
Carrie Dahlquist, Director of Strategic Information Services, for Campbell & Company takes a moment to discuss the benefits of developing scorecards. But first, let’s take a look at the roots of the concept and its purpose.
What is Balanced Scorecard?
The term “balanced scorecard” grew out of performance measurement work at General Electric in the 1950s and was refined in the 1990s by Drs. Robert Kaplan and David Norton as a performance measurement tool that included strategic non-financial performance measures and traditional financial metrics.
In addition to being a strategic planning and management process, the balanced scorecard is used to streamline the vision of the organization with its business activities.
A balanced scorecard can be used as a management tool to evaluate performance and motivate staff. It can ensure that you are spending manpower and financial resources in a way that can yield the most impact. In essence, the scorecard allows you develop razor-like clarity for prioritizing activities and transforming them into outcomes.
So, How Do you Develop Balanced Scorecard?
Start with Perspectives. The key to developing the balanced scorecard is to identify activities that support the organization’s mission and vision and can be tracked and measured. These activities fall into four perspectives: financial, stakeholders, operations and learning/growth and are based on the mission and vision of the organization. To help develop a scorecard that is most effective, the organization begins the process by asking questions like:
- What financial steps are necessary to execute strategy?
- Who are the constituents, and how can they be engaged?
- What technology can improve and streamline processes?
- What learning and growth tools will help our staff complete their initiatives?
The balanced scorecard process involves a series of steps to help an organization come up with its own unique approach to answering these questions. It empowers an organization to align its daily operations with its mission and vision and develop measurable goals to move forward deliberately.
The outcome of the exercise is a laser-focused “roadmap”, with objectives, targets, and metrics, which help an organization communicate where it wants to go and how it wants to get there. Some examples could include:
- Grow financial diversity by targeting 20 new planned gifts each year through a new planned giving partner program.
- Maximize stakeholder participation by targeting 100 peer-to-peer solicitations through an outreach and engagement committee.
- Reduce the number of sick days taken by 20% through a new flex work policy.
Specific metrics should be measurable and repeatable, with a mix of leading (relates to inputs) and lagging (relates to outputs) indicators.
Implementing the Balanced Scorecard
Because the balanced scorecard process is comprehensive, organizations considering the approach should make sure they have the resources needed to be successful. In addition to a dedicated project manager who can move the process forward there needs to be a project champion who has strong organization-wide influence.
And while the organization’s leadership should provide direction and support, Ms. Dahlquist stresses that different roles and vantage points are critical, so it is important to be thoughtful in selection of the project team, which should include both management and staff.
Goals should “cascade down”, starting at the organizational level, then by department, team and the individual. Staff performance reviews should reflect completion of specific scoreboard action items.
Implementing a balanced scorecard requires organizational commitment and can involve significant time to develop. To ensure that the scorecard doesn’t reside (and stagnate) in management’s office, the project must be relevant and accessible. Metrics and results should be collected, analyzed, reported and archived regularly. Stakeholders should have ready access to data and use analytics to make continual adjustments and improvements monthly or quarterly. This helps foster the dialogue and establish a higher level of transparency.
Putting this process in place encourages stakeholders to consider how individual roles help drive the success of the organization as a whole—a crucial component for all organizations in achieving their vision, and fulfilling their mission.
About Campbell & Company
Campbell & Company is a national consulting firm offering advancement planning, fundraising, communications and executive search services for nonprofit organizations in the education, health and medicine, arts and culture, environment, social service, and professional society fields.
Through thirty-plus years and thousands of engagements, we have helped nonprofit organizations anticipate and manage the challenges of the philanthropic marketplace. With offices around the country, Campbell & Company brings you the benefits of local knowledge, and national best practices.