Posted July 19, 2010 2:17 PM by Ted Jackson
For many of us it is budget season and time to decide how and where we will spend our money next year. Sadly, too many places, especially resource strapped organizations simply take last year's budget and modify it by a percent or two. But there is no excuse for just letting it ride. If you want to achieve your mission you need to take the time to periodically review the effectiveness of your programs. Do you programs support your strategy? Does your Balanced Scorecard or strategy management system reveal the impact of the programs? Or are there corrective actions that are required?
It is hot outside! What about in your organization?
Posted July 6, 2010 8:24 AM by Ted Jackson
While we swelter this week in 90+ degree temperatures, many organizations are also sweltering under the heat of their stakeholders to demonstrate that they are making an impact. Nonprofit executives are usually trying to show their boards and funders that the work they are doing is having an impact. Federal government organizations have been told to demonstrate their performance, starting in 1996 under the Government Performance and Results act, and continuing today in some new legislation introduced this year (not passed yet) called the Government Efficiency, Effectiveness, and Performance Act. For profit organizations of course have to report to their stakeholders as well, and the demands are increasingly more than just financial.
Let's start with nonprofits. Tactical Philanthropy, a popular nonprofit blog, written by Sean Stannard-Stockton, wrote on June 29, 2010 about the difference between outputs, outcomes, and impact. Outputs are the typical measure of nonprofits. These are the equivalent of the number of people served. Outcomes show the effect of the outputs. This is a stretch for most nonprofits. If you are a homeless shelter, you output might be the number of beds filled. The outcome would be a reduction in the homeless population in the area where you serve. Impact is the overall societal benefit that comes from the outcome. So a homeless shelter would want to say that quality of life in the city is improved by having fewer homeless people. The economy would grow while crime would decrease. The link from having a productive homeless shelter to a decrease in crime is the holy grail, argues Stannard-Stockton. This is a great start to the nonprofit measurement challenge, and in my experience, most nonprofits struggle in this way. The Balanced Scorecard helps an organization think about the drivers and activities that produce the outputs and outcomes an organization is trying to achieve. Few have been able to clearly demonstrate the impact of their efforts.
In the federal government, Congressmen Moore and Cuellar have introduced a new bill that requires performance improvement officers across government agencies. Imagine if each government program were reviewed once every five years to assess their performance and improve operations. I think every administration in recent memory (but maybe EVER) has claimed that they want to cut wasteful spending from the federal government. This proposed act would require assessments, comprehensive reports, and improvement plans for each program. A good idea, yes, but it will require quite a bit of effort. The nice thing is that each agency would need a performance improvement officer. This role is already being created, as I know several people interviewing for or currently in these jobs. Now they just need a common framework from which to manage and be able to share best practices. This would be a great way to initiate the idea of the "performance improvement council" that is in the proposed bill. Imagine choosing a proven framework like the Balanced Scorecard, with hundreds of cases in the public, nonprofit, and private sector. Then you would see a sustainable system across the government where politicians could come and go, but performance management would be here to stay.
Finally, and it hardly needs mentioning, but the private sector is also sweating out performance results this summer. As the economy threatens to double dip, economists and industry leaders are searching for those leading indicators that the country is stabilizing and companies invest in the future. The Washington Post today reported that companies are holding $1.8 trillion in cash, the most by any comparable measure in the last 50 years. Each company should have their set of strategic measures: inputs, processes, outcomes, and risk measures that will allow them to position themselves to deliver great results in these challenging times. Those organizations that use a balance of measures are beating the odds and executing their strategy.
Yes it is hot outside today, but hopefully in your organization, you have a framework that allows you to execute on your strategy. Hopefully you can confidently report back to your stakeholders about your strategy and the progress you are making this summer and through these difficult times. You owe it to your organization to have the strategy management system (both measures, meetings, and a decision making process) to give you the confidence to report on your results.