Non Profit Balance Scorecard Adoption

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MGT 697

Non Profit Balance Scorecard Adoption

The concept of the Balanced Scorecard was created for for-profit organizations during the late 1980s. Executives wanted to take a different look at the organization’s performance based on factors other than financial statements and balance sheets. The success of this framework worked its way into the non-profit sector after a few short years. Research suggest that non-profit executives “concluded that a balanced view of performance might also help them to better manage their organizations’ performance (Can I apply Balanced Scorecard in a non-profit organization, 2008).” The adoption and implementation of a balanced scorecard idea for nonprofit organizations is not as easy as it may seem. One author suggests “the basic concepts behind creating a balanced scorecard are as suitable for nonprofits as they are for corporate businesses, but the execution needs to be modified in order to make it work effectively (Zimmerman, 2004).” Traditional for- profit balanced scorecards provide a balanced view of organizational performance, however, the non-profit balanced scorecards need to reflect success for the organization. Research suggest that “while the people, process and to some extent the customer perspectives of for-profit Balanced Scorecards translate well into non-profits, the top-level financial perspective does not by definition, non-profits do not have financial performance as a primary goal. Non-profits have to assure external stakeholders which are the complement of shareholders in the for-profit world. Understanding these opportunities and reflecting them in the non-profit Balanced Scorecard is necessary (Can I apply Balanced Scorecard in a non-profit organization, 2008).” Non-profits exist in a world where political agendas are often driven by what board members consider to deem successful. Based on this this understanding, non-profit managers...
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