Balanced Scorecard Model Adapted for Nonprofit Organizations

Introduction to the Balanced Scorecard

The Balanced Scorecard is a useful strategic tool for designing plans that encompass multiple organizational perspectives, each tied to distinct types of important objectives. Robert Kaplan and David Norton were the primary advocates who popularized the Balanced Scorecard approach after identifying shortcomings in traditional management systems — specifically, those systems' inability to view an organization from a truly comprehensive perspective.

The Balanced Scorecard was designed to help management translate vision and strategy into objectives and measures across four balanced perspectives: the financial perspective, the customer perspective, the internal process perspective, and the learning and growth perspective. Each perspective is important on its own; however, when the four are balanced together, a form of synergy can emerge that propels an organization toward success. Because of the model's popularity in the private sector, it has since been adapted for use in nonprofit organizations as well. This analysis applies the Balanced Scorecard method to the ReHabilitation Center, whose vision is to be "a leader in providing and assessing desired services to people with disabilities."

Applying the Balanced Scorecard to a Nonprofit

Although a nonprofit organization does not have customers in the traditional sense, it does serve a population in a comparable way. For example, a nurse in a nonprofit clinic will most likely provide care along the same lines as a nurse in a for-profit health institution. There may be subtle differences in the way these organizations operate, but at their core both are service providers working to maximize the quality of services delivered to their clients. The ReHabilitation Center has identified two categories of metrics it considers most relevant to the population it serves.

Customer Perspective: Satisfaction and Quality of Life

The first category is built largely on customer satisfaction — a consumer-facing perspective that is also central to private-sector strategy. For the ReHabilitation Center, however, customer satisfaction is tied to specialized services. The center focuses on filling gaps in services that individuals with disabilities cannot find elsewhere in the community. This strategy can add significant value to a disabled individual's daily life.

The second category of customer-focused metrics addresses the quality of life of the population the center serves. There are many different strategies the organization can pursue toward this end, and these opportunities will undoubtedly need to be prioritized based on the value they bring to the local population with disabilities. Together, these two categories form the foundation of the center's customer perspective within the Balanced Scorecard framework.

Conclusion

Despite the fact that the operational and learning strategies need considerable additional development to be effectively implemented, the Balanced Scorecard framework itself proves valuable precisely because it surfaces these organizational challenges. Without the Balanced Scorecard approach, the organization might never have questioned where training could benefit its objectives or how and where technology could support its operations. In this way, even an imperfectly completed scorecard serves a diagnostic function — revealing gaps in strategic thinking that the organization can then work to address.