Performance Management Nonprofit

Minnesota Council of NonprofitsThe term performance management is used to describe the activities and methods of helping businesses, government agencies, and nonprofit organizations meet their goals in the most effective and efficient manner possible. But what does that actually mean? Performance management is simply a way to make an organization better. It is a holistic approach that combines an organization’s plans, activities, assessments and analyses with the goal of improving overall organizational effectiveness and efficiency.

Performance management can lead a nonprofit to improve its impact on the community, to share successes and to thrive both in times of scarcity and times of plenty. As Harry Hertz, director of the Baldrige Performance Excellence Program explains, performance management focuses on helping organizations to think about three deceptively simple questions:
  1. Is your organization any good?
  2. Is it getting better?
  3. How do you know?

By answering these questions, nonprofits ensure their programs are aligned with their missions; services are producing benefits for the community; and stakeholders understand the reason for the organization’s existence. Some hallmarks of performance management include the use of written plans/goals, identification of outcomes of service delivery, collection of data, and use of data to inform management decisions.

Effective nonprofits engage every stakeholder in performance management. For example, staff members become savvy evaluators of programs; clients become critical consumers of services; board members take advantage of opportunities for growth or change; and executive directors take time to consider strategic decisions.

Performance Management Cycle

Performance management image, adapted from The Rational Guide To Planning with Microsoft Office PerformancePoint Server 2007.

Organizations can envision performance management as a cycle of continuous improvement with no starting point and no ending point. The components of this cycle include the planning stage where organizations may engage in strategic planning processes, determine the objectives for their programs and create a vision of the future of their communities. During the executing stage, organizations carry out programs and services that align with the strategic plan and help the organization to accomplish its objectives and mission. For many nonprofits, the monitoring stage is often rutted in the track of simply measuring outputs (i.e., “How many meals did we serve?” or “How many youth attended our classes?”). Instead, more useful monitoring would measure positive changes in skills, attitudes or behaviors. The analyzing and sharing stage helps nonprofit organizations to make sense of the data that they are collecting. This stage allows nonprofits to learn what is going well, how they are/are not meeting their objectives, and what other impacts are occurring in the community. By sharing this data publicly, nonprofits demonstrate transparency and accountability to their funders and their community stakeholders. Finally, the adapting stage occurs when nonprofits learn from the data and use it to build stronger and better programs that meet the organizational mission.


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