Strategic responses to Performance Measurement in Nonprofit ...

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Requirement of {financing institutions, companies,
backer}
external accountability 96
Accordance with statutory obligations external accountability 73
Implementation of the organization‟s mission steering 72
Supervision of personnel diagnostic 68
Basis for an incentive system steering 37
Source: author‟s compilation
Table 2: Purposes of the implemented performance measurement systems (n = 301)
The results show a strong dominance of diagnostic performance measurement systems which
is in line with a classical use of performance measurement. The roots of diagnostic
performance measurements systems in the for-profit sector go back more than a century and
had a peak in the 1970s. Position one for the cost and revenue control can be interpreted as a
very traditional use. The potential the more advanced performance measurement systems have
for steering are not yet fully explored by the participating non-profits. The answers are in line
with the question of the implemented performance measurement systems.
Taking into account that funders often require detailed accountability statements (e.g. Hall et
al. 2003, LeRoux and Wright 2009, Moxham 2010, Murray 2010), the low scores for
externals accountability obligations came as a surprise. That performance measurement could
be used to react to external accountability obligations in a proactive way was not high on the
agenda. Considering that non-profits are not longer regarded quasi-automatically as
trustworthy and are nowadays confronted with stakeholders which question the legitimacy
this low ranking of external accountability obligations is risky in the current situation where
legitimacy might be the next challenge for non-profits. In the last two decades New Public
Management has put some pressure on non-profits to increase their efficiency and
effectiveness. As a, to some extent, new form entrepreneurial non-profits have emerged (e.g.
Mort and Weeranardena 2007, Zarah et al. 2009). Now signs are beginning to show that
legitimacy might be the next challenge service non-profits will face. In that context Hirsch
and Andrews (1984) distinguish value and performance challenges. According to these