Dashboards: Measuring the organisations performance

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DashboardsMeasuring the organisations
performance

• Alan Hough
• Research Student
• Australian Centre of Philanthropy and Nonprofit
  Studies, QUT
• Building Better Boards 2008

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We will cover

• Why understanding your organisations performance
  is important
• Mechanisms for understanding
• The Nonprofit Dashboard
• How a Dashboard might be developed
• How a Dashboard might be used
• Why all performance measurement and management
  systems have their limitations
• Builds on my presentation to BBB 2006

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Why understanding your organisations performance
is important
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Conformance

• ASIC v Adler Ors
• Familiar with fundamentals
• Keep informed about activities
• Monitor orgs affairs and policies, by attending
  meetings, and
• Familiar with the orgs financial status

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Performance

• Good information can help the board to influence
  the organisation in a positive way

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The importance of board routines

• We have routines for financial information
• But not for the explicit and systematic
  assessment of non-financial performance

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2. Mechanisms for understanding
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How do we find out whats going on inside our
organisations

• Organisational newsletters and documents
• Regulators
• Personal experience and informal conversations
• External networks
• Risk assessments
• Media

• Operational reports
• Financial reports
• Client/member experience
• Potential and former client/members experience
• Staff experience (paid or volunteer)
• Funders
• Accreditation/standards

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Good information systems are

• Concise
• Clear
• Timely
• Relevant to organisational strategy and the
  boards work
• The best available

• Based on past performance, but forward-looking
• Contextualized, with interpretation and analysis
• Comparative
• Integrate internal and external reporting
• Graphically depicted

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We will never know everything because

• The sheer quantity of potential information
• The cost of potential information

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3. The Nonprofit Dashboard
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Butlers The Nonprofit Dashboard

• 47, with CD of Excel tools and Word surveys
• Just one of many alternatives e.g. for larger
  organisations, Pentaho freeware

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Why a Dashboard

• A useful summary and addition to your Governance
  Information System
• Focused on key issues
• Routine format
• Omissions more likely to be noticed
• Can assist in
• Organisational learning
• Internal and external accountability
• Improving performance

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The Nonprofit Dashboard

• Visual display
• Can be linked to your mission /or plan
• Based on key measures of performance
• Can include lagging and leading indicators

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4. How a Dashboard might be developed
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Two methods of development

• A quick and dirty process where the CEO puts
  together a Dashboard for the board to play with
• But the board still needs to learn about the
  socialization strategies

• A considered process
• Examine info currently provided
• Interview key staff
• Ask board members what they need to know
• Review data systems and integrity (e.g.
  definitions)
• Review Scorecard formats and frequency
• Learn how to use the information
• Maintain the system GIGO

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5. How a Dashboard might be used
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• Dean Spitzer, Transforming performance
  measurement
• One of the major reasons why performance
  measurement is seldom able to deliver on its
  positive potential is because it is almost never
  properly socialized, that is, built in a
  positive way into the social fabric of the
  organisation.

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How we can use the Dashboard

• To create a routine for monitoring performance
• Rule of thumb Takes 6 occasions of use before
  groups really understand how to use the
  information
• Think out loud about our orgs performance
• Ask What does this mean for my knowledge of the
  organisation?
• Ask What does this mean for stakeholders?
• Comparisons historical performance, planned
  performance, standards, ratios, other
  organisations

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What we know about the use of performance
information

• Information used punitively will result in
  gaming
• Financial rewards will result in a concentration
  on the measures
• Organisations often measure what is easy to
  measure, not what is important
• People often demand more information than they
  use in practice
• Watch for measurement churn

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6. Why all performance measurement and management
systems are both a solution and a problems
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Universe of concerns
No measures available
Imperfect measures
Concerns sought to be measured
Good measures
Source Bevan and Hood (2006)
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Behavioural responses

• Saints Honest about any deficits
• Honest Triers Will not volunteer deficits, but
  will acknowledge if asked
• Reactive Gamers Will meet the monitored target,
  even at the cost of dysfunctional consequences
• Rational Maniacs Will knowingly conceal
  performance
• (Bevan and Hood 2006)

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For performance measurement to be productive

• 1. (a) Saints Honest Triers gt Reactive Gamers
  Rational Maniacs, and
• (b) Targets dont result in a shift from
  former to latter, or
• 2. Good measures are sufficient proportion to
  ensure adequate information
• (Bevan and Hood 2006)

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Limitations of data on nonprofit performance

• Technical issues of management can be challenging
• Availability v- cost
• Distinguishing contribution to outcomes
• Factors beyond the organisations control
• Data generalizability
• Absence data

• Difficult constructs
• Interpretability given absence of comparisons
• Paradoxical effects and unintended consequences

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In conclusion

• Dashboards are one means for improved monitoring
  of performance
• Successful implementation requires attention to
  the technical and the human elements