Tuesday, September 27, 2011

BIG's Blog: Performance Indicators

Nonprofit directors rely on metrics to determine the success of fundraising efforts. Some measure success as the number of new donors or growth of revenue. Others review cost-income ratios to determine the health of their programs. This data is helpful in driving fundraising/marketing efforts, but these metrics do not measure a nonprofit’s health.

One way to review the organization’s success is to establish key performance indicators (KPI) to assess the performance of the business units, departments and employees. It is critical that large nonprofits establish KPI to rate the efficiency, productivity and profitability of services they own such as: caging, data entry, creative, printing, mail shop and fulfillment centers.

Executive leaders should define clear, meaningful and measurable indicators that will be used to determine the health of the organization.

“Once a company has redesigned its regular strategic, budgeting, and planning processes to inject a strong dose of “healthy” thinking—and appropriate metrics are in place—executives must embed health in formal people-management mechanisms, including performance contracts, incentives, career path planning, and staffing decisions. Managers at all levels should know the expectations set for them. Companies should use the metrics discussed earlier to structure evaluations ensuring that employees reap rewards as much for doing health-building work as for enhancing performance.”

This statement may be a tough “pill to swallow,” but if the organization’s goal is to be healthy today and in the future, this action must be taken.


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