1. The Adapted Balanced Scorecard

2. Kaplan’s Adaptation of the Balanced Scorecard Framework to Nonprofit Organizations Financial Perspective If we succeed, how will we look to our financial donors? 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? 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? 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? Learning and Growth To achieve our vision, how must our people learn and work together? The Mission rather than the financial shareholders objectives drive the organization’s strategy. The Mission rather than the financial shareholders objectives drive the organization’s strategy. 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. 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. The Balanced Scorecard : What Should be Measured?

5. 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 The Balanced Scorecard : The Benefits

6. A Sample Social Enterprise Balanced Scorecard Financial Sustainability Mission Accomplishment Operational Performance External Market Impact Revenue growth Diversification targets fundraising targets Profitability/Margins Budget Adherence Cost Reduction Goals Cost efficiency Earned Income Targets Revenue growth Diversification targets fundraising targets Profitability/Margins Budget Adherence Cost Reduction Goals Cost efficiency Earned Income Targets Improved Rehab Results # of jobs created; new contracts Long term job sustainability/retention Reduced welfare dependency New skills/tools developed # of GEDs Improved Rehab Results # of jobs created; new contracts Long term job sustainability/retention Reduced welfare dependency New skills/tools developed # of GEDs Customer Satisfaction Contract Retention Market Share Clients Funders Brand Equity Return on Development Investment Community impact Customer Satisfaction Contract Retention Market Share Clients Funders Brand Equity Return on Development Investment Community impact Cycle Time Labor Productivity Product/Service Cost Quality Targets Employee Satisfaction Employee Turnover Rate 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: 1.Brainstorm organizational issues 2.Prioritize the most pressing or important issues 3.Determine organizational objectives that will effectively address the issues 4.Develop measures to track organizational performance against each objective 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: 1.Brainstorm organizational issues 2.Prioritize the most pressing or important issues 3.Determine organizational objectives that will effectively address the issues 4.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) Financial Mission Internal/Operational External Market Factors Cost Reduction Goals Cost Reduction Goals The selection of categories and measures should be compatible with the organizational culture and strategic objectives The selection of categories and measures should be compatible with the organizational culture and strategic objectives

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. Please note: It can sometimes take up to 3 years to take the scorecard concept to this level within an organization.