Sustainable Microfinance - Balanced Scorecard's added value for ...

3.3.2 Performance Management Beyond the Private Sector
According to Kaplan and Norton (2001), the BSC needs some adjustments in order
to fit to the modus operandi of not-for-profit organizations, because their main
objectives are not finance-related. They suggest putting the customer at the top of
the strategic map. However, even this small modification could be a complicated one.
Kaplan and Norton (2001, p. 98), argue that ‘in a non-profit organization, donors
provide the financial resources; they pay for the service, while another group, the
constituents, receives the service. Who is the customer, the one paying or the one
receiving?’ In order to address this strategic problem, they suggest that:
‘Rather than have to make such a Solomonic decision, organizations place
both the donor perspective and the recipient perspective, in parallel, at the top
of their Balanced Scorecards. They develop objectives for both donors and
recipients, and then identify the internal processes that deliver desired value
propositions for both groups of ‘customers’’ (Kaplan & Norton, 2001, p. 98).
According to Meadows and Pike (2009) examples of PMSs such as BSC in the third
sector are still relatively rare in the literature; several studies however have been
identified of the use of the BSC in the public sector. These different studies identify
many different elements that need to be taken into account when developing a new
BSC model (see table 3.2).
Authors Main findings
Wisniewski and
Dickson (2001)
Wisniewski and
Olafsson (2004)
McAdam, et al.
(2005)
• Illustrate the use of the BSC by Dumfries and Galloway Constabulary
in Scotland as part of a strategic policing initiative
• Discuss the experience of local authorities in using the BSC to
improve performance
• Demonstrate such improvement through effective performance
measurement
• Explored issues involved in developing and applying performance
management approaches within a large UK public sector department
• Found that staff at all levels had an understanding of the new system
and perceived it as being beneficial
• There were concerns that the approach was not continuously
managed throughout the year and was in danger of becoming an
annual event, rather than an on-going process
• The change process seemed to have advanced without corresponding
changes to appraisal and reward and recognition systems
Elmar Hoogendoorn 37
Sustainable Microfinance