Measuring Effectiveness

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Your organization deals with many challenges presented by internal and external accountability demands. You are always looking for ways to improve operations, to anticipate and be more responsive to competitive pressures, and to define meaningful performance goals that render your work concrete in stakeholders’ eyes. Creating a dashboard or scorecard can help. A dashboard can be an excellent tool for focusing board and CEO attention on what matters most. It can help overcome asymmetry between the precision of financial and mission measures. This lesson, developed by National Arts Strategies in partnership with Peter Frumkin, Ph.D., can be used to help you build a scorecard or dashboard for your organization.

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Measuring Effectiveness

  1. 1. Your organization deals with many challenges presentedby internal and external accountability demands. You arealways looking for ways to improve operations, toanticipate and be more responsive to competitivepressures, and to define meaningful performance goalsthat render your work concrete in stakeholders’ eyes.Creating a dashboard or scorecard can help. A dashboardcan be an excellent tool for focusing board and CEOattention on what matters most. It can help overcomeasymmetry between the precision of financial and missionmeasures.
  2. 2. This tool can be used to help Depending on your organization’s size and shape,you build a scorecard or you may wish to build a dashboard by:dashboard for your  using ideas from all levels of the organizationorganization. Indicators and then choosing among the ideas to createshould be a mix of internal the most meaningful set of measurements, orand external measurements.  assigning a select team representingSelection of the indicators is artistic/program, finance, operations points ofguided by what your views to create a prototype for review,organization seeks to discussion and adoptionaccomplish. And, measurescan be grouped such asfinancial, mission This is an iterative process so allow time for theachievement, operational indicators to be identified and vetted beforeexcellence, and customer building version 1.0 of your dashboard. After yousatisfaction to map onto the use the dashboard for a time, it is quite possiblegoals of the organization. that you will want to adjust or change some of the indicators.
  3. 3. The following slide contains a short video by PeterFrumkin in which he discusses the importance ofmeasuring multiple dimensions of organizationalperformance.Watch the video with your team and then work throughthis exercise together.
  4. 4. 1. Start with clear understanding of what your organization wants to accomplish. If you have a working logic model, use selected outputs and outcomes to define critical impact indicators2. Choose a small number of significant financial indicators and ratios3. Define a limited group of metrics related to governance, staff professional development, and volunteer engagement4. Define key indicators of quality5. Create a visual representation of the organization’s performance measures – your dashboard
  5. 5. If you have a clear description of what your organizationseeks to accomplish, use this information to guide yourdiscussion and selection of measures you will track foryour dash board.Alternatively, you can use a logic model focusing on theoutputs and outcomes. For more information on logicmodels, watch this video.
  6. 6. Which financial indicators are most meaningful and howwill you represent those? Examples include:  Profitability measures  Artistic or programmatic reserves  Liquidity  Financial vulnerability  Efficiency  Resource diversification
  7. 7. Stakeholder Group What matters that you can measureClients and customers Satisfaction; frequency of attendance; use of materials…Volunteers Level of engagement, numbers, retentionIndividual donors Number by giving category and trend over timeFoundations Impact on communityCorporations Size of audiencePartner organizations Accomplishments to dateStaff Professional development, retentionBoard members Level of engagementComplete your own chart.
  8. 8. Think about program and operations and what qualitymeans. Some examples:  What metrics tell the quality story?  How good are the operational systems?  What is the error rate?  What operationally is the organization’s strong suit?  Where does it need to improve?
  9. 9. Using your chosen indicators, create a snapshot of theorganization. For examples, see:  http://www.blueavocado.org/content/nonprofit- dashboard-and-signal-light-boards  http://www.compasspoint.org/dashboard
  10. 10. Thank you for taking the time to work through thisexercise with your team. These online lessons are a bitof an experiment for us. As we learn more, we willcontinue to adapt and refine them.Your feedback is vitally important. Please let us knowhow you used this tool. What was unclear? Whatwould you add?We look forward to hearing from you.Thanks,The NAS Team

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