Building a dashboard for performance that your board wants to see
Wednesday, June 06, 2018
Wikipedia defines a performance measure as:
"…the process of collecting, analyzing and/or reporting information regarding the performance of an individual, group, organization, system or component. It can involve studying processes/strategies within organizations, or studying engineering processes/parameters/phenomena, to see whether output are in line with what was intended or should have been achieved."
"Directors should regularly ask at the board table, 'How will we measure success on this project or event?' By measuring progress there is accountability, continuous monitoring, and a way to sunset the program if it proves unsuccessful," says Bob Harris, CAE. Here are some performance measures that you might want to consider to measure success, and so you can make real-time decisions around your programs:
Utilization rates for programs, benefits and services
How many members and non-members are utilizing your programs, products and services? This is essential in making course corrections to increase utilization over time.
Membership trends year-over-year
These are very important measures, as membership is a key driver in consumption of your organization’s programs. The following are some important measures to review regularly:
- New members
- Total net membership
- % of total market captured (important to know your market share)
Fiscal responsibility is a core duty of the board of directors. Knowing the health of the organization is essential in good decision-making. The following are some important measures to understand as they related to the financial health of your organization:
- Revenue against budget
- Expense against budget
- Net assets against budget
- Net assets year over year
- Program revenue as a % of revenue
Reserves % year-over-year
The best practice is to maintain at least 50 percent of operating expenses in reserves. Tracking this maintains a focus on how reserves are growing and being utilized. You can compare spikes in reserves to major events and activities.
Net Promoter Score (NPS) tracking year-over-year
Wikipedia defines this as
"…a management tool that can be used to gauge the loyalty of a firm's customer relationships. It serves as an alternative to traditional customer satisfaction research and claims to be correlated with revenue growth. NPS has been widely adopted with more than two thirds of Fortune 1000 companies using the metric."
The NPS is slowly being adopted in nonprofit organizations and should be strongly considered as it dives deeper into customer (member) relationships. In every element of every performance measure, overall member or user satisfaction should be gauged.
Convention trends year-over-year
Conventions, conferences, large meetings and other events contribute a large share of revenue to most organizations. The following are some key areas of focus:
- Registration numbers
- Sponsorship dollars
- % of members attending convention
- Expense ratio
- Cost per attendee
- Overall satisfaction (members, nonmembers, sponsors, exhibitors, all key stakeholders)
- Convention trends YTD compared to prior YTD (Monthly registration snapshot)
New programs tracked from a financial perspective
New programs within your organization should not be treated like your established programs. They will consume more time, energy and dollars at the outset.
If due diligence was conducted and performance measures are being met, then your organization should feed this program but also understand when it might be time to cut the losses. Utilize the following:
- 3-year pro forma — Map out the projections for this program over three years including when it will make a profit. Monitor this pro forma and make course corrections
- Return on investment — ROI is important in that you need to know when your program will start providing a return on investment
- Return on mission — ROM is something a little different that we have been diving deeper into with nonprofit organization. Asking and assessing the program’s ROM is just as important as understanding its ROI.
- Project plan — Develop an overall project plan outlining key milestones, deliverables and accountabilities. Utilizing the fundamentals of project management will greatly increase the success and efficiency of any initiative.
Developing a list of performance measures is the first step in the process of performance excellence and the most important one. Tracking and utilizing the performance measures on a regular basis is the next step. The ultimate step is utilizing this data to make real-time changes to your programs, including sunsetting them.
Be careful of the trap to track everything as you will spend more time tracking programs than driving value to your programs. Make strategic decisions around what performance measures will help your organization make the best strategic decisions. Also, if you can’t assign a performance measure to a program, then you must ask, "Why are we doing this?"
As Albert Einstein once said, "Insanity is doing the same thing over and over again and expecting different results."
If we don’t measure, then we are allowing our programs to do the same thing over and over again without course correction. Start the process of developing performance measures today for a strong future.
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