The Adapted Balanced Scorecard

1. The Adapted Balanced Scorecard

2. Kaplan’s Adaptation of the Balanced Scorecard Framework to Nonprofit Organizations The Mission rather than the financial shareholders objectives drive the organization’s strategy. Financial Perspective If we succeed, how will we look to our financial donors? Customer Perspective To achieve our vision, how must we look to our customers/recipients? Internal Perspective To satisfy our customers, financial donors, and mission, at which business processes must we excel? Learning and Growth To achieve our vision, how must our people learn and work together? Source : Robert Kaplan. Strategic Performance Management in Non profit Organizations.

3. Definition • The balanced scorecard is a management system and measurement system that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results.

4. The Balanced Scorecard :What Should be Measured? • Although measures should be tailored at various levels of an organization, measurement categories should be consistent across an organization. Key categories may include: • Financial Sustainability • Operational Efficiency • External/Market Impact • Mission Accomplishment • Additionally, organizations should establish, track, and coordinate benchmarks within each category.

5. The Balanced Scorecard :The Benefits • Sets clear goals, objectives, and measures across four critical areas • Creates interdependency and interrelationship of all four quadrants; balance is key • Provides leadership with the ability to build organizational consensus around its priorities; creates organizational clarity • Provides a vehicle that can hold staff and management accountable for their results in a clear and consistent manner • Can complement any existing strategic planning effort by clearly identifying and prioritizing performance benchmarks and targets

6. A Sample Social Enterprise Balanced Scorecard Financial Sustainability External Market Impact • Revenue growth • Diversification targets • fundraising targets • Profitability/Margins • Budget Adherence • Cost Reduction Goals • Cost efficiency • Earned Income Targets • Customer Satisfaction • Contract Retention • Market Share • Clients • Funders • Brand Equity • Return on Development Investment • Community impact Operational Performance Mission Accomplishment • Improved Rehab Results • # of jobs created; new contracts • Long term job sustainability/retention • Reduced welfare dependency • New skills/tools developed • # of GEDs • Cycle Time • Labor Productivity • Product/Service Cost • Quality Targets • Employee Satisfaction • Employee Turnover Rate

7. Balanced Scorecard Brainstorming • An effective way to structure the Balanced Scorecard brainstorming process is to focus on one quadrant at a time. • Within each quadrant, we use a four step approach to clarify measures: • Brainstorm organizational issues • Prioritize the most pressing or important issues • Determine organizational objectives that will effectively address the issues • Develop measures to track organizational performance against each objective

8. Balanced Scorecard Brainstorming The first place to begin thinking about measurement is at the macro or enterprise level. How would the President/CEO measure the success of his/her organization?

9. Integrating The Balanced Scorecard(Senior Management Level) The next step would be to focus on Senior Leadership’s ability to support the President/CEO.

10. Integrating the Balanced Scorecard(Management Level) The selection of categories and measures should be compatible with the organizational culture and strategic objectives Financial External Market Factors • Cost Reduction Goals Internal/Operational Mission

11. Integrating the Balanced Scorecard(Staff Level) Please note: It can sometimes take up to 3 years to take the scorecard concept to this level within an organization.