Adapting the Balanced Scorecard to Fit the Public and Nonprofit Sectors

Abstract

This chapter explores the nature and history of public and nonprofit performance measurement, and discovers how the Balanced Scorecard can fill voids in their measurement efforts. The performance measurement initiatives in both the public and nonprofit sectors are reviewed, which shows that both sectors have a long history of measuring performance using various techniques, and some of the struggles encountered in the pursuit of meaningful performance measurement are discussed. The issue of adapting the geography of the Balanced Scorecard to fit the public and nonprofit sectors is discussed and then the model is dissected and both the subtle and not-so-subtle changes in application are detailed. One factor that separates the Balanced Scorecard from other performance measurement systems is the notion of cause and effect—how the measures link together to tell a strategic story. The chapter explains this concept and presents an example to illustrate how it may be utilized in practice. Finally, a sample of the various benefits that can be derived from employing a Balanced Scorecard system is presented.