Tuesday, February 26, 2019

Performance Management in Non-Profit Organizations Essay

Non-Profit brass sections atomic number 18 certain(p) to address whatsoever the close challenging starts affecting cabaret ending delirium in inner-city communities, educating separate tikeren, diminishing health disparities and empowering disfranchised populations to bring close to change be just a few of these actually difficult tasks non- bring ins take on. Considering the enormousness of that work and the pivotal role these organizations take in alleviating the burden of those starts to order, it is neat to say that non-profits ar held against high expectations and consequently take in to show prima(predicate) cognitive process to live up to the magnitude of the scope of the work they were trusted upon. It is alike fair to say that their carrying out leave behind non merely when affect their bottom telephone circuits, exclusively also the welf atomic number 18 of the communities they serve.Public and noncommercial organizations signifi lavatorytl y affect, and wipe out great potential to improve, the lives of citizens and communities in much(prenominal) aras as public safety, transportation, parks and recreation, economic flummoxment, education, ho using, public health, environmental vigilance, quad exploration, affable operate, and much. In each of these argonas thither is interest, and some clips very great interest, in ensuring that public and noncommercial organization organization organizations perform exactably and economic aid society to strickle forward. (Berman, 2005)Looking at noncommercials from that view range and understanding the jounce their exploit has on society, one would think that these organizations arusually driven by results and perplex efficient movement solicitude systems in nates. The truth is that it is not the case, non-profits atomic number 18 kn deliver to be explosive charge-driven and the notion of writ of exe lowerion-establish be intimatement is somewhat overb old to intimately of those organizations. Non-profit organizations ar of increasing importance in modern economies, not sole(prenominal) as providers of goods and services but also as practiceers (Speckbecker, 2003). Moreover, there seems to be a growing awareness that nonprofits need direction just as for-profit organizations do.As Speckbecker says Twenty years ago, counsel was a dirty condition for those involved in nonprofit organizations (Speckbecker, 2003). It blottot trading, and nonprofits prided themselves on being free of the profane of commercialism and above such sordid considerations as the bottom line. now most(prenominal) of them nominate hold backed that nonprofits need focus level(p) much than than business does, precisely because they lack the discipline of the bottom line. (Speckbecker, 2003).In the business world, market forces serve as feedback mechanisms. Companies that perform surface are rewarded by customers and entrustors underperformers are penalized. Performance is comparatively easy to quantify done quarterly earnings, ROI, customer loyalty scores, and the like. Moreover, such metrics put forward be gradatory and compared, ensuring that the companies producing the lift out results will inveigle capital and talent. Managers are encourage to invest in the tribe, systems, and infrastructure needed to continue pull throughing superior mathematical operation.And internal feedback mechanisms, from current operating data to surgery reviews, keep everyone focused on censorious activities and polishs. In the nonprofit world, missions, not markets, are the primary magnets attracting essential visions, from donors enliven by organizations audacious goals from board members, who not only volunteer their time and expertise but also much serve as major(ip)(ip) funders and from employees, who accept modest paychecks to do work they care passionately about. (Bradach, 2005) there are galore(postnominal) opport unities for performance improvement in the Non-profit field and there are many a(prenominal) organizations that declare successfully used performance mensuration methods. This paper hears at some areas in which improvement has frequently been accept and sought in recent years in order to break in table service external stakeholders needs, amend organizational lastingness and using resources efficiently, improving project management, and increasing productivity through battalion. Modern performance improvements efforts often raise the bar in these areas, and managers are increasingly expected to be familiar with the strategies and receiveds that they involve. These areas offer important opportunities for increasing performance and productivity.When it comes to performance management in nonprofit, the first content that comes to play is how to designate performance. When dealing with a segment whose products are not tangible, how butt join forcest one qualify the effe ctiveness of that kind of work? At the said(prenominal) time, the expectations being placed on these organizations to show results by their round members, their boards, and public and private donors are rising. not-for-profit leaders are put in a difficult military position where they need to demonstrate accountability and quantify the goals they want to achieve. For that reason, most of them score resorted to a set of commonly used performance peckers to ensure they are being much more explicit about the results they intend to deliver and the strategies theyll apply to achieve them. This paper will discuss some of the performance measures used in the non-profit sector.Performance MeasurementPerformance bar is the activeness of documenting the activities and accomplishments of syllabuss. (Thomas J. Tierney and granny knot Stone, 2005). The performance of a nonprofit can be mensurable by quantifying outcomes and outputs that have been achieved through the services they deliv er. For example, by showing how well students in a certain schoolhouse district are doing with standard testing scores, reduction in communicable disease rates and how many inmates were connected with housing and jobs after discharge. It is about measuring what classs are rattling achieving and letting tribe know how resources are being translated into results. Performance meter systems provide considerable detail about programs. It can be argued that performance measurement by itself does not constitute performance improvement it is an education-gathering strategy. However, the purposes to which this information is put are clearly associated with improving performance (Berry, 2003).Coming from the point of view that performance is in the eye of the beholder and again revisiting the issue that nonprofits deal with issues that whitethorn not be tangible and are life- terrorening to quantify, the first question one can ask is who is watching non-profits to absorb sure they are doing a good job? Moreover, what qualifies as a good job for an organization such as AIDS save? A cure for AIDS has not been found yet does it mean that organization failed? Understanding what performance for nonprofits is whitethorn not be as clear cut and straight forward as it is for for-profits.After all, we are not styleing at how many pairs of shoes have been exchange or how many juvenile branches of a bank have been closed. We are looking at quality of life indicators and those are much harder to measure. The most fundamental finale a nonprofit can get is to define the results it must deliver in order to be successful. That process entails translating the organizations mission into goals that are simultaneously compelling enough to attract ongoing support from stakeholders and particular(prenominal) enough to inform resource allocations. (Thomas J. Tierney and Nan Stone, 2005)Most traditional management accounting systems are establish on fiscal results and their prac tical relevance for performance management in for profit organizations is obvious. However, the concept of profit as defined as a bureau to measure results is not valid for nonprofit organizations. Clearly, this does not exclude that nonprofit organizations generate profits in the sense that they generate a notes surplus. For example, a hospital or a theater whitethorn enumerate the surplus of specific products (a specific operation or a play at the theater) or the surplus during a particular period. (Speckbacher, 2003). However, the main going away is that even though these non-profits had a surplus, their focus is still their mission. They didnt make decisions based on how they could make more money they made decisions based on what was better for their programs. The fundamental difference amongst profitable and non-profit organizations when it comes to financial decision making is that for the latter the mission is still the focus.The past some(prenominal) decades have seen unprecedented growth in the scope and complexity of relationships between organisation and nonprofit organizations. These relationships have been more fruitful than many critics had feared and more problematic than many advocates had hoped. In the recent years, presidential toll have increasingly relied on non-profits to address issues on a community- direct. Non-profits deal with a large coordinate of issues and for each of these topics these particular non-profits are experts on that subject.The governing has acknowledged that expertise and also the fact that those organizations are usually community-based and more in airwave with the particular needs of those communities or interest groups. As governments dependence on nonprofits for public services, usually through contracts and grants, has increased, government officials have steadily increased their accountability demands for nonprofits, especially through greater economy and performance-based spotting (Behn, 2001). Expectations for information and greater transparency in programmatic and financial operations are also on the rise at both the earth and federal levels. In addition, many leading associations representing nonprofit organizations have called for greater levels of self-regulation, including better disposal procedures (Maryland Association of Nonprofits, 2009 Panel on the Nonprofit Sector, 2007).A very common concept that derived from this relationship between government and nonprofits is performance based contracting. This paper will review that concept and outline a few additional approaches Non-Profits can use to measure performance.Performance contractPerformance Contracting became very popular in the mid-90s with the reinventing government movement. invigorated public management (NPM) practices generated a spike in the interest level from the government in doing business with non-profits. And repayable to this increased interest, all the ideas and concepts that pertain imp roving the performance of public services transcended to the non-profit arena. Moreover, this movement and the related NPM back up policy makers to adopt more market-based strategies for addressing public problems, such as contracting with private nonprofit and for-profit agencies (Lynn, 1998).In addition, the wel furthermoste reform legislation of 1996 created the transitional Assistance for Needy Families (TANF) program, replacing the long-standing Aid to Dependent Families and Children (AFDC) program (Berman, 2005). A central component of the new TANF program was performance-based contracts to encourage service providers to place singulars in permanent employment quickly (Berman, 2005). These contracts were also part of a immenseer strategy embodied by TANF to reduce the role of cash tending in helping low-income individuals kindly services delivered extensively by nonprofit and for-profit agencies through performance contracts were designed to help individuals who might ha ve antecedently relied on cash assistance to obtain employment and/or learn new skills to prepare themselves for the labor market (Berman, 2005).Non-profit organizations greatly realizeed from these new trends in invigorated Public Management which allowed them to conquer a bigger space in the public arena, as they had increased visibility and more access code to resources. Under the core principles of that movement, communities had to be empowered to address their own problems and the federal government trusted non-profits to implement high-level projects, as pointed out before. Consequently, governments live on increasingly dependent on such organizations to tackle some of the more critical issues in society.And due to the fact these issues, such as welfare, violence prevention and land preservation are of high interest to the government officials constituents accountability came in to play. These performance-based contracts are being executed with tax dollars and the governme nt officials need to be responsible to their voters on how these resources are being allocated and what results those programs are bringing. What it comes down to is that Non-Profits are in charge of executing what elected officials forestall their constituents. in that respectfore, the need to enter contracts with a clear expectation of how the budget will support programs and goals and how those monies will translate into improvements to that community or segment.Non-Profits greatly benefit from this relationship with government. From both the point of view of business development, since their contract revenue enhancement has significantly increased with the grants and contracts received from the federal government. And from the point of view of implementing performance management activities, since this new way of conducting business paved the way for the entranceway of valuable concepts related to performance management in non-profits. In Summary, new public management broug ht a new set of ideas and principles that were embraced by nonprofits and changed some of their paradigm with regards to their own definition of success and they relationship with their mission. Performance started to be evaluated by directly connecting program budget to goals and outcomes to understand the impact of those contracts had on addressing the issues at hand.Over time, performance contracting spread to a wide variety of service fields in the United States and elsewhere. New York City, for instance, has restructured hundreds of millions of dollars of contracts with loving and health agencies as performance contracts. Some state governments have privatized at least some of their child welfare services by sack public services provided by state or county ply to performance-based contracts with nonprofits, with the goal of improving the efficiency and effectiveness of child welfare services (Courtney, 2000).The same has been done by the Health Resource Service Administratio n (HRSA) and plaza Abuse Mental Health Administration (SMAHSA), in the past v years when they increased squarely the funding available to communities to address major public health epidemics, such as human immunodeficiency virus and Heroine/Crack use, that the government alone wouldnt be able to tackle. Due to the magnitude of these contracts and the threat these issues pose to society, the issue of performance has been addressed tirelessly and governments pressured nonprofits to come up with a set of measures to account for their performance and their ability to fulfill the terms of those contracts.The benefits and disadvantages of performance contracts have been extensively discussed in recent years. Within the performance management strategy movement, otherwise strategies have been employed that contact to be more nonprofit-centric. These strategies include benchmarking, logic models, balance cards, and affectionate return on investment (SROI). in all of these strategies have been used to measure performance in non-profit organizations in recent years and can illustrate examples of how organizations are applying management concepts to their operations. (Heinrich and Marschke, 2008). The Performance management contracts introduced nonprofits to these concepts and in result they became better able to manage their own performance as a whole, and not only when it relates to these contracts. (Heinrich and Marschke, 2008). All these concepts will be discussed in this paper.BenchmarkingBenchmarking involves identifying excellence and using it as a standard by which to measure performance. Benchmarking entails an effort to compare a specific nonprofit organization (or set of agencies) with other comparable organizations. It has its roots in the for-profit management world where companies are often compared on various measures, including profitability. The haulage of benchmarking is that it offers nonprofits a mechanism for them to assay their organization s, including administrative costs, the efficiency of their fund-raising operations, and number of members in comparison with other organizations with similar missions and profiles. Outcome evaluation is also very complicated, so benchmarking offers a strategy for program improvement and greater accountability, even in the absence of specific outcome data that are often lacking for many nonprofit programs (Kara D. Rutowski, Jeffery K. Guiler and Kurt E. Schimmel, 2007).Looking again at the issue that the product delivered by nonprofits may not be so good measured and quantifiable as services and products in the for-profit charge, it is harder for nonprofits to assess their own performance looking at standard reports. For instance, lets look at an HIV Testing Program whose goals are to promote HIV testing and raise awareness of risk factors. Hypothetically, lets consider that such program tested 1000 people during a tending(p) year and only 4 were positive. How will they measure t heir performance based on those numbers? That can be quite a difficult to encounter if a 4% seropositivity rate is an indicator for success or failure. However, using the benchmarking approach this program can compare itself to how it did as it relates to other programs serving similar populations and obtaining similar results.According to HIVqual (HIVqual.org), an organization that specializes in providing benchmarking for dissimilar clinical indicators for HIV treatment, despite seeming low that 4% rate is well above the national average. The National average according to the HIVQual Project is about 1%. In this case an apparent low performance indicator, 4%, turned out to be an excellent outcome. Without access to that kind of information that program manager would not know how well he was doing and whether or not his program was being successful.Undeniably benchmarking tends to be most reformatory with easy to obtain information, such as number of administrators, membership levels, and the heart and soul of donations. However, the health care industry utilizes it a niggling more comprehensively, especially when looking at health outcomes of a particular community and health disparities data. The field of Public Health has also embraced that strategy for community-wide data evaluation, such as rates of violence and STD transmission, and used it to compare how in effect neighborhoods have addressed such problems. Also, the Boston Public Health Commission compares individual program data with city-wide data to determine how well a program is performing in comparison to others. Benchmarking is an attainable way to measure performance, as non-profits are comparing their outcomes to national and local averages they can have a clear idea of where they rank and where they need to improve. However, that approach can only be utilized if such data exists.As mentioned before, in the health care industry this method is widely used and there are plenty of data ava ilable on clinical outcomes. Different types of benchmarking may be undertaken, depending upon what the organization hopes to achieve (Rutowski, Guiler & Schimmel, 2007). Industry benchmarking, or functional benchmarking, is the measurement of several aspects of the companys operations and a comparison of these crossways an industry. Competitive benchmarking is used to compare an organization with its competitors. Process or generic benchmarking is used to compare similar procedures at different companies. There has been relatively little research exploring benchmarking in nonprofit organizations outside of the healthcare industry (Rutowski, Guiler & Schimmel, 2007). Hopefully, nonprofits will follow the trend set by healthcare and employ this strategy as a performance measurement technique more efficiently in the upcoming years. Balanced ScorecardsAnother performance management strategy commonly utilized by nonprofits is the balance batting order develop by Robert Kaplan in 2002 . The balanced scorecard is think to counter the criticism from within the nonprofit sector that the application of certain types of performance management strategies borrowed from the for-profit sector do not sufficiently account for the companionable mission and levers of many nonprofits (Berman, 2005).Kaplan describes the innovation of the balanced scorecard as follows The balanced scorecard retains traditional financial measures. But financial measures tell the narrative of past events, an adequate story for industrial age companies for which investments in semipermanent capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the transit that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation. (Kaplan, 2002)The balanced scorecard is a strategic-planning beam that seeks to integrate financial, programmatic, operational, and mission-related objectives, so a nonprofit agency can strive to create a more efficient and effective organization age at the same time remaining faithful to its mission. (Berman, 2005). The balanced scorecard does involve a significant investment by a nonprofit organization because of its substantial data requirements and the need for extensive consultation among the different stakeholders of a nonprofit, including the board, faculty, clients, community members, and funders. As a result, the balanced scorecard tends to be embraced by larger nonprofit and public organizations eager to drive substantial change in their operations.The balanced scorecard is also particularly worthy for organizations that seek to rethink or improve their relationship with their users, such as parents in a family-service agency or patients in the case of a hospital. In this sense, the balanced scorecard reflects the enhanced primacy placed on reactivity to cu stomers in all types of organizations (Berman, 2005). However, despite its holistic approach to organizational strategy, the balanced scorecard tends to focus on measurable indicators of costs and program employ and thus is not widely used to consider the citizenship and community-building role of nonprofits although it potentially could be used to address these issues. (Berman, 2005) Also, the measurement of program impact through the balanced scorecard approach remains challenging overtaken the worry of obtaining relevant outcome data because of the expense and the long-term effects of many nonprofit programs. (Berman, 2005)Balance score cards are a viable alternative for nonprofit organizations. In this system, one takes a look at various elements affecting performance and not a single detached measure. Due to the fact that non-profits are very in tune with their mission, and are constantly focusing on trying to allocate their limited resources efficiently in order to achiev e their goals, this system works very effectively as it provides these organizations with this bigger-picture view they much need. The balanced scorecard system has a multiple focus on several perspectives, including financial performance, and that will give nonprofits the tools they need to make decisions regarding where moneys will be invested in comparison with performance analysis of different programs. For a nonprofit organization, profit is not a determining goal of strategy but no margin, no mission. Therefore, they need to be able to put their money where they can see results.The other issue to be considered with this approach is stakeholder involvement. In this case, the balanced scorecard provides a comprehensive framework that will help association directors and managers better define strategies, track performance, and provide data to show their various stakeholder groups how well they are performing in terms of mission value and outcomes. It helps as far as celebrating t heir successes and selling their message to others. Well-rounded and well-presented results will make those organizations look more appealing and that could potentially attract endowments, additional contracts and positive publicity.logical system ModelsAnother performance management approach that is widely used by nonprofits is a logic model. As a matter of fact, many public and private funders now require nonprofit grant and contract applicants to develop a logic model as part of their grant application. system of logic Models have operate a standard performance measure for contracts due to the fact that they focus on process and outcomes. Logic models force nonprofits to map out the entire production process for their programs, from the initial inputs such as staff and resources to the long term outcomes.For funders, logic models offer an opportunity to hold nonprofits accountable for the implementation of their programs. Thus, funders could sanction a nonprofit that fell shor t of its intended service deliver model after a contract or grant was awarded (Berman, 2005). For Nonprofits, logic models allow them to select which outcomes they want to achieve, so they can focus their efforts on achieving these particular goals. These goals are not chosen randomly, this consists of a logic process, from a cause-consequence frame of reference therefore, these goals are very realizable and these organizations are very likely to succeed.Logic models have certainly caught the attention of nonprofits nationwide. Arguably their greatest value is on the front-end of service implementation. Ideally, the process of creating a logic model should engage a broad spectrum of a nonprofit agencys staff and volunteers in thinking about impact and outcomes (Berman, 2005). This level of involvement helps them refine their strategies and win the support of agency stakeholders. By having everyone on board, these agencies will be more likely to achieve program goals. Logic models a s a strategy to drive better outcomes and help funders select the most effective agencies for funding remains quite problematic. Furthermore, logic models tend to focus on programmatic performance and generally do not engage the agency in thinking about governance or citizenagency relationships. (Berman, 2005)SROI Social Return on InvestmentAnother performance strategy designed for nonprofits that also take into account their difficulties in evaluating programs and delimitate success is the Social Return on Investment (SROI). This strategy was pioneered by JedEmerson and colleagues at the Roberts Foundation in San Francisco who envisioned SROI as a fomite for assessing the social value of nonprofit programs. Too often, nonprofit programs, especially social service programs, are evaluated quite narrowly and thus may not appear to demonstrate significant value for the community (Berman, 2005). Topics, such as quality of life, positive decision making, civic pride and affinity for di versity, for instance, are very hard to measure. One can measure how many people attended a benefit to raise autism awareness, but how can we measure how the lives of those who attended were impacted by their participation?Bearing that challenge in mind, SROI is designed to overcome this problem through a more inclusive approach to thinking about costs and benefits that consider the savings to society of nonprofit services. For example, a persons employment because of job gentility and placement by a nonprofit would produce long-term benefits for society that should be considered when evaluating the impact of a nonprofit program (Tuan, 2008). This type of account may be a hard one to make. There is the counter-argument whether or not current citizens are paying for current services. There is also the counter-argument that tax dollars should be directly benefiting tax payers, and projects such as school renovations may sound more appealing than investing on something that people wi ll see results in the long discharge.Similar to other performance management initiatives, SROI focuses on programmatic impact rather than governance (Tuan, 2008). SROI is also quite complicated in practice so its adoption within the nonprofit sector has been quite limited, although the conceptual framework employed in SROI has encouraged funders and nonprofits to approach social impact more inclusively and to be rigorous and data-driven in thinking about costs and benefits. SROI has also spawned other efforts to think by and large about the social value of nonprofits (Tuan, 2008).In times where government and the boorish in general faces a dreadful budget crises making decisions from where to cut from such an abstract idea may be not the best way to measure performance as it relates to results from financial investments. This approach is plausibly the one that makes moresense from a long-term perspective. However, many non-profits can not afford that kind of thinking and need to have more tangible data to account for their performance. The idea of social impact can and should be used for lobbying and for getting buy-in from constituents however, resting on that strategy to justify resource allocation and to measure results may be a risky decision to make.ConclusionOverall, the varied performance management strategies commonly used by nonprofit organizations tend to minimize attention to internal management and governance as well as the external relations in party favour of a focus on impact and the relevant costs and benefits (Berman, 2005). As previously discussed, the biggest issue faced by non-profits is the fact that their product may not be as easily defined as the services and goods are in the for profit world. The issue of the market inclination and how people are responding to their services is also another important one to be kept in mind. Non-profits are not dictated by their consumers behaviors, but by the environment as a whole. The definition of success in the nonprofit world is very complex and can be looked at from different angles as explained through the strategies above.Non-profits have increasingly tried to hold in performance management strategies to its practices. And although the management of these organizations may be a little more in tune with those principles, we can not forget that those concepts may not be as evident to their staff. For many of the direct line staff, it is very hard to evidence the impact of performance management on management decisions and service improvements. Managers may be aware of the value of performance measurement in influencing decisions and improving services, but sometimes the communication with staff tend to be broad and disappointingly vague. As non-profits utilize these concepts to run their operations, they need to understand that front line staff needs to be equally aware of how the organization is performing and how that affects them. There is a presumed linkage to bu dget decisions, although promised in theory, is often difficult to detect in practice. many an(prenominal)non-profits have been good about disseminating those ideas among their managers, but that may not have been equally successful in getting their staff on board.In conclusion, performance management in nonprofit is a very broad topic that can be viewed from many different perspectives. The need to become more accountable to results has forced many of these organizations to adopt performance management systems. There are a few commonly used systems as explained in this paper, they each have their strengths and their weakness and it is up to each nonprofit manager to decide which one suits them best. This is a very new field, however, that has emerged with New Public Management and become more prominent in the 90s.There is a lot of room for new theories and approaches to be developed, and I am sure in the near future we will be auditory sense more innovative concepts coming into p lay. Regardless from which angle you look at predominance for nonprofit organizations, there will always be the issue of hard-to-define products and goals. And there will always be the cultural issues within those organizations where staff may not be as in tune as managers are of the needs to define success and measure performance. People join non-profits because they have affinity with their missions and the idea that they have to achieve goals and quotas may not be as tangible to them as their desire to help others.BIBLIOGRAPHY1. Bradach, Jeffrey (2005). Non-Profit Effectiveness. Washington, DC Brookings Institution Press. 2. L., Thomas, J. Tierney, and Nan Stone (2006). 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Tuan, M.T. (2008). Measuring and/or estimating social value creation Insights into octonary integrated cost approaches. Seattle, WA Bill & Melinda Gates Foundation. Retrieved December 11, 2009. 16. Speckbacher, Gerhard. The economic science of Performance Management in Nonprofit Organizations. Nonprofit Management & lead Spring2003, Vol. 13 Issue 3, p26 7, 15p 17. Ammons, David N., and William C. Rivenbark. Factors influencing the use of performance data to improve municipal services Evidence from the North Carolina benchmarking project. Public Administration Review 68.2 (2008) 304+.General Reference Center Gold. Web. 3 May 2010 18. Kara D. Rutowski, Jeffery K. Guiler and Kurt E. Schimmel. Benchmarking organizational commitment crossways nonprofit human services organizations in Pennsylvania. School of Business, Robert Morris University, Pittsburgh, Pennsylvania, USA, 2007. 19. Courtney, M.E. (2000). Managed care and child welfare services What are the issues? 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