Dashboards and Scorecards

(1)

Dashboards and

Scorecards

–

The Best and Worst

Measuring Organizational Performance

(2)

Dashboards or Scorecards

• What should they do? • Why are they useful?

(3)

Measuring Nonprofit Performance

“Nonprofit” is an IRS Tax status,

not

a management style!!

(4)

What does your Nonprofit Measure?

• Financials • Services provided • _______________ • _______________ • _______________ • _______________

(5)

We need to Measure the

Important Stuff

Reid A. Zimmerman, PhD, CFRE 5

“I know how much…

just not what of!”

(6)

In the absence of measurement,

Management will assume the

problem is People…

…and People will assume the

problem is Management!!

Reid A. Zimmerman, PhD, CFRE 6 Zimmerman

(7)

What measures do you need

to fly a plane?

Altitude

Degree heel

Compass direction

Position

Engine performance/rpm

YAW

ROLL PITCH

(8)

And…it

depends on

WHAT

you

are flying….

A Cessna….

(9)

Or an F-16!

(10)

Process is Important

But…..the best

flying ultimately

has an

even

number

of

take-offs and

landings!!

(11)

Organizations

• Are a System

• Have myriad moving parts • Are Stubborn

• Often Siloed

• Mission Ebullient v. Rational

So let’s look at a Nonprofit System…

11 Reid A. Zimmerman, PhD, CFRE

(12)

12

Strategy

Meet - Delight Requirements

Leadership

Customers Motivated, Engaged People Effective Efficient Processes 1 2 3 4 5 6 7 Optimum Performance Get Results Be Valued $ #s

Measures and Dashboard to Monitor Progress

(13)

Dashboards and Scorecards Should …

• Look at whole Organization Performance • Not individual programs

• Provide Informative at a glance

• Discern Important Data v. Detail Data • Easily read and understood by anyone • Tied to Financials

• Tied to Strategy

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(15)

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(17)

(18)

The Balanced Scorecard

• Development • Definition

• Conceptual Framework • Nonprofit Modification • Potential for your use

(19)

Harvard Business Review

The Balanced Scorecard- Measures that Drive Performance - 1992 Putting the Balanced Scorecard to

Work - 1993

Using the Balanced Scorecard as a Strategic Management System

-1996

Having Trouble With Your Strategy? Then Map It. - 2000

• “The Balanced Scorecard” is

translated into 18 languages

• Selected by HBR as one of the “most important

management

practices of the past 75 years.”

(20)

The Balanced Scorecard (BSC)

A business management concept that transforms

both financial and non-financial data into a

detailed roadmap that

helps companies measure performance, develop long-term objectives and

communicate them to the entire organization.

(21)

The Balanced Scorecard

…is a management system that enables organizations to clarify their vision and strategy and translate them into action.

“...a comprehensive system that allows the monitoring of business performance in a

(22)

4 Quadrants

Business Perspective

• Financial Perspective • Customer Perspective

• Internal Business Processes

• Growth, Innovation & Learning Perspective

(23)

Like a Table….

all four legs need to be solid in order to hold up over the long-haul.

(24)

Customer

To achieve our vision, how should we appear to our customers?

Internal Process

To satisfy our customers, at what business processes must we excel?

Innovation and Learning

To achieve our vision, how will we sustain our ability to

change & improve?

Financial

To succeed financially, how should we appear to our stakeholders?

Strategy & Vision

(25)

Business Financial Perspective

How can the company position itself to be considered an attractive and exciting

investment to its owners?

(26)

Business Customer Perspective

How can the company’s products and services be positioned in order to bring

value (real or perceived) to its customers?

(27)

Internal Business Processes

What processes will the company need to excel at in order to meet the customer

objective of value?

(28)

Business Innovation and Learning

What are the infrastructure and human capital needs required to excel at the internal

processes?

(29)

Cause & Effect

“The chain of cause and effect should pervade all four perspectives of the BSC.”

Financial Customer Internal Innovation &Learning Increased Customer Revenue On Time Quality Delivery Loyalty Cycle Time Employee Skills Process Quality

(30)

(31)

Social Sector Scorecard

“In reality, however, (nonprofit)

performance is all about translating caring, believing, and compassion

into results.”

Letts, Ryan and Grossman, High Performance Nonprofit Organizations, Wiley, 1999

(32)

Cause & Effect

“The chain of cause and effect should pervade all four perspectives of the BSC.”

Mission

Customer & Quality

Future

Stewardship

Outcomes for Clients & Community

Efficient Process & Positive Outputs Satisfaction Learning Culture Financial & Human Resources Innovation

(33)

INPUTS

LEADERSHIP

(Governance and Executive) STEWARDSHIP

(Financial, HR, Space & Artistic) If we are to be successful, how will we lead and care for the resources we have?

OUTPUTS

CUSTOMER SATISFACTION & PROGRAM QUALITY How will we know that what we have done

is of value?

ACTIVITIES

PROGRAM &

OPERATIONAL PROCESSES To be successful,

at what endeavors and

business processes must we excel?

OUTCOMES

LEARNING ADAPTATION & INNOVATION COMMUNITY IMPACT If we are successful,

what will we be like in the future?

MISSION & VISION

(34)

Benefits to Scorecarding:

• Measure the Important Stuff • Translate Strategy to Action • Manage Intangible Assets

• Leverage Organizational Matrix Potential • Create close-in management ability

(35)

Measure the Important Stuff

• Measure the critical few and meaningful aspects of your business

• Allow the many important measures to inform the few

• 20 measures is maximum capacity for most people

(36)

Translate Strategy to Action

• Define where you want to go and be, when

• Utilize measures that inform about progress toward strategic direction • Point employees in the direction you

need to go

(37)

Manage Intangible Assets

• Customer Retention or Loyalty • Brand Identity

• Employee Capabilities • Innovation

(38)

Leverage Organizational

Matrix Potential

• Cross functionality opportunities enhanced • Purposeful and directional utilization of

inter departmental teams

(39)

Create Close-in Management Ability

• Monthly, daily or real-time measurement potential

• Assists with day-to-day business decisions • Ties management practices to leadership

direction

• Communicates direction to all employees

(40)

Software can be helpful

• Affords real-time measurement

• Drill down or roll up as management requires

• Available across the organization at individual stations

• Aids in day-to-day decision making • Can create problems with staff

understanding

(41)

Scorecards Fail Because They

ARE NOT:

• Balanced

• Institutionalized

• Linked to Strategic Direction • Leader Driven

• Use understandable and available

measures

(42)

A Balanced Scorecard

Customer 24% Internal Process 37% Learning & Growth 18% Financial 20%

(43)

An Institutionalized Scorecard

• A Communication Tool

• Easily understood by all employees • Updated and Utilized frequently

• Tied to incentives

• Tied to employee performance reviews

(44)

A Scorecard

Linked to Strategic Direction

• Only 5 % of the workforce understand the corporate strategy

• Only 15 % of executive leaders spend more than an hour a month discussing strategy

• Only 25 % of management have incentives linked to strategy

• Only 40 % of organizations link budgets to strategy

HBR stats

(45)

Leader Driven

• Culture of accomplishment responsibility and learning

• Board Encouragement

• Middle management driven • CEO / ED supported

(46)

Understandable and Available Data

• Not software driven

• Don’t reinvent the data, but gather what is already there

• Get staff buy-in on the important measures

(47)

Suggestions

• Watch a variety of metrics • Connect metrics to strategy • Develop a Strategic budget

• Get everyone involved in tracking metrics

(48)

At a minimum, look at:

• Your Mission • Your Margin

• Your Internal processes • Your Future

(49)

What Strategy or Performance do

you want to drive?

• Financial?

• Outcome for Clients?

• Growth?

• Innovation?

• Internal Processes? • Stewardship?

(50)

KEEP IN MIND…

• If it’s worth doing…it’s worth measuring. • …you often get what you measure.

• No system is perfect.

• You need to start somewhere.

(51)

Resources

Balanced Scorecard Institute www.balancedscorecard.org

Brown, M.G. (1996). Keeping Score

Few, S. (2006) Information Dashboard Design: The Effective Visual Communication of Data

Harvard Business Review on *Measuring Corporate Performance

and *Implementing the BSC

Kaplan, R.S., & Norton, D.P. (1992, 1996, 2001, 2004) Balanced Scorecard (& Strategy…several titles, Harvard Business Review

MAP resource library www.managementhelp.org

Zelazny, G. (2006) The Say It With Charts Complete Toolkit McGraw Hill Professional

Zimmerman, R.A. (2006) Issues of development and

implementation of a nonprofit balanced scorecard. Doctoral Dissertation

(52)

Reid A. Zimmerman, PhD, CFRE

Pine City, MN 55063

O: 320-358-3583 C: 651-295-7892

[email protected]

Lecturer: Masters of Nonprofit Management Hamline University

[email protected]

http://charitychannel.com/bookstore/nonprofit-boards-and-

governance/seven-deadly-sayings-of-nonprofit-leaders?recommend=3295c76acbf4caaed33c36b1b5fc2cb1