Is Association Governance and Management Ready for Balanced
Scorecards?
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Running an association is a lot like juggling.
Imagine that each ball represents an essential aspect to the operation
of your association. For the act to be successful, you must juggle
four balls. One ball represents your finances, another is your
investment in organizational learning and innovation, the next
represents internal processes, and the last represents your association's
members.
Each ball is carefully managed as it is tossed through the air.
As long as each ball is thrown and caught properly, the show is
a success. Problems begin when one of those balls is ignored and
dropped. Drop one ball, and the show starts to fall apart unless
the dropped ball is quickly put back in place and improvements
in juggling occur. The balanced scorecard (BSC) concept is designed
to improve juggling.
Do we really need another tool to join the 15 or so others we
have been exposed to in the last decade? Apparently so. You are
no doubt wondering what makes this tool special and why it demands
your attention. In the first place, this tool will allow various
stakeholders to focus on what the association needs to survive
and thrive. As well, it will help take strategy and drill it down
to specific action, outcomes and accountabilities.
What is a Balanced Scorecard?
In their book, The Balanced Scorecard – Translating Strategy
into Action, Robert S. Kaplan and David P. Norton outline an approach
for a business report card called the balanced scorecard. The
premise behind the BSC is that management must have a balanced
set of measures that describe the critical aspects of the organization.
This balance is achieved by developing measures from four different
perspectives linked to strategy and vision:
- Financial perspective
- Customer perspective
- Internal Business process perspective
- Learning and Growth perspective
From the association perspective, the above could be more simply
defined as people, processes, re-sources and service. Within these
four perspectives, vision and strategy are expressed as a number
of more specific objectives. Measures and targets are set and
the organization then puts in place action plans or initiatives
to meet the set targets.
For Each Perspective
- Vision and Strategy
- Objectives
- Measures
- Targets
- Initiatives
This multidimensional management framework helps organizations
link long-term strategy with short-term actions as it deals not
only with internal and external factors, but current and future
perspectives as well. It is a "continuous cyclical process"
which aligns measures or performance indicators with strategies
in order to track progress, reinforce accountability, and prioritize
improvement opportunities.
Since the introduction of the concept in 1992, the BSC has been
introduced in hundreds of private and public sector organizations
worldwide. Many Fortune 500 companies have made it their guiding
principle. At this point in time. not for profit organizations
are becoming curious about the BSC, and some are likely to embrace
the approach in the near future. After all, it was selected by
the Harvard Business Review as one of the most important management
practices of the past 75 years. The concept supports the adage,
"If you can't measure it, you can't manage it." So what
benefits make this tool different from the rest?
BSC Benefits:
- promotes strategic planning activities;
- provides a common methodology and _language for performance
measurement;
- integrates all aspects of the organization _and eliminates
non-value added effort;
- increases benchmarking and cross func-_tional improvement
opportunities;
- provides sound information on which to_track progress, base
decisions and reduce_risks; and
- provides enhanced accountability.
Implementation Considerations
The balanced scorecard can be implemented across an organization.
Ideally, it should start at the top and cascade down to different
levels or individuals so those involved have direction and understanding
about the total organization's strategic direction and desired
results.
To successfully implement the BSC it is important to obtain a
commitment at all levels, but especially at the top level as a
perceived lack of commitment will doom the project to fail. Next,
update the strategic plan. Selected goals and strategies need
to demonstrate a real need for improvement, be measurable, apply
to realistic timetables and an evaluation method. Provide adequate
training so those involved will understand and carry out their
role. Link a reward and recognition system to encourage integrated
and cross-functional activity. Involve as many people as possible
in a review of the objectives, setting of measures, and supportive
initiatives. It is important to be realistic with implementation.
Begin with a pilot approach.
Implementation has proven to be a challenge. Part of this difficulty
is the BSC's reliance on having fully articulated strategic objectives,
identifying critical success factors, general cultural change
resistance, developing appropriate measures/indicators, and uneasiness
with increased accountability. Also, human resource development
processes are not aligned with the BSC. Most importantly, shortcuts
do not work and a proper foundation is necessary. This is critical
and a big challenge for those organizations looking for a quick
fix.
The BSC needs to be integrated with other tools and activities
such as strategic management (strategic plans, business plans,
evaluation), performance management, communications, benchmarking
and continuous quality improvement. The BSC has caused organizations
to totally revise the way they present and use planning and management
information.
The BSC is a framework that can be easily explained and understood
by association boards, staff and members. Association boards are
always looking for increased focus and accountability. Association
staff are looking for ways to improve financial performance, member
satisfaction, internal business processes and organizational learning
and growth. A review of the discussion about the BSC by students
in CSAE's Association Management Education program indicates governance
and management are ready for the BSC as it will meet organizational
needs.
Perhaps it is time to dust off the strategic plan and use the
BSC to develop an alignment between your association's strategic
vision and its tactical execution. While the BSC is not perfect,
it should be explored further. There is no shortage of information.
Start your search for some great links at csae.com and search
balanced scorecard.
This column features innovation and practical solutions applied
to challenges, trends, issue and opportunities for the association
community. Column editor Jim Pealow, MBA, CMA, CAE is a consultant
and the Association Management Education Program Lead Instructor/Coach
for CSAE. He can be reached at jim@amces.com.
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