2.2 Description of BSC
2.2.1 Financial Perspective
Financial perspective for non-profit organisation would most likely be placed as a resource, under the balanced scorecard in order to support their activities. It is important for MSFIN to have a strong financial understanding same as profit companies in order to understand the usage of their donations. Therefore, we need to monitor MSFIN’s turnover ratio, making sure their income covers for the expenses and keeps on growing. It is shown in their financial report that their revenue keeps on increasing, so this measure is important to ensure their revenue continues to increase each year. Management of donations are also needed for proper budgeting in order to estimate the funds that we spend and how efficient can we allocate those funds (Syalom, 2015).
Through cost variances we can understand whether the budget used are within the planning. If the actual is different from the budgeted plan, we can evaluate what went wrong as well as identifying the cost of projects that they undertake (Harnett & Matan, 2011). Another important aspect for the financial perspective is maintaining sustainable growth to be able to improve connections with stakeholder. If MSFIN can increase their donations, they would be able to provide more to the stakeholders. Through this they can engage more and expand their connections to more communities that need their help.
2.2.2 Stakeholders Perspective
Customer perspective measures the company’s success in achieving customer value (Langfield-Smith, 2018). According to MSFIN’s strategic plan, the following two objectives can be considered to ensure future viability and grow the organisation: increase struggling families’ satisfaction and expand the range of people who can get benefits from MSFIN.
Firstly, because a major purpose of MSFIN is to provide basic daily needs to struggling families, it is important to make them satisfied with the service provided to ensure future viability. MSFIN may conduct a survey to get people’s satisfaction toward their assists and services because measuring the level of satisfaction can be the most direct way to reflect it. At the meantime, The quality of services and items provided is an important aspect related to people’s satisfaction. MSFIN provides baby goods, food, clothing, and daily living essentials to struggling families. They need to ensure these items are in good conditions. Furthermore, on-time delivery of service is also important to measure the efficiency of their services. MSFIN could record the time taken for delivery of services after they receiving application from families who want to get help. If a family applies for assist but they wait the supporting items for a very long time, they must be unsatisfied with the organisation.
Secondly, for a not-for-profit organisation, providing sufficient services to struggling families is a core. If employees want to grow the organisation, they need to consider how to expand their service range. Thus the number of service variation available is an effective performance measure. Through gathering the varieties of services, the volunteers in MSFIN may find the lack of services and try to improve. Besides, recording number of new people getting helped can help volunteers to know how people respond to their services provided. If this number becomes larger, that could indicate MSFIN’s services meet more struggling families’ demand.
2.2.3 Internal business process perspective
NPOs establish internal processes critical to achieving the stakeholder and financial strategies the organization believes will fulfill its mission. Four key areas in considering the internal perspective are:
• internal operations excellence
• compliance (including transparency)
• innovation
• stakeholder management
The amount of time and energy the NPO dedicates to each key area depends on its value proposition(s). In this case, I argue that MSFIN should pay more emphasis on internal operations excellence.
In order to achieve its mission on a long-term basis, an NPO must comply with all regulatory guidelines. There is also a need for processes that motivate, identify, develop and launch innovative programs that bring cutting-edge ideas, designs or services to serve unfulfilled community needs. Thus, two of the main objectives are listed above. As a non-profit organization, high service efficiency means a lot to increase the number of regular and in-kind donations. Otherwise, people may not denote their money or goods because of the poor efficiency. This also results in a worse reputation which we should avoid. Both of the two measurements (time take to prepare goods and time take to distribute goods) are very directly related to the average time taken to respond to orders and easy to collect in daily management. Meanwhile, increasing the number of families we assist each month is our main objective listed in the strategic plan. Two measurements of this objective are very obverse to monitor daily performance.
2.2.4 Learning and Growth Perspective
Learning and growth perspective is a way to improve business process in MSIFN, which can lead to improve satisfaction and financial performance. (Iselin, Mia & Sands, 2008).
The first objective is setting the standard of training volunteers. Training could improve volunteers’ skills and help them to learning the core of MSIFN, as well as developing the awareness of charity-orientation for them. The standard of training could identify whether the volunteers have qualification to work or not, it can be measured by providing the tasks and setting targets for each tasks. Meanwhile, the organisation should record the number of volunteers to attend and meet the standard of training tasks. Therefore, these volunteers know how to allocate resources and save costs for transaction or waiting times in order to provide maximum benefits to struggling families. Besides that, MSIFN should have enough time to balance the training and volunteers’ activities, because the leader of MSIFN liable to ensure the organisation can support struggle families.
Attracting more volunteers can grow MSFIN scale, we also can provide higher satisfaction to volunteers to achieve the development of organisation. The organisation also should have a target rate for satisfaction, for example, if more than 90% of volunteer is satisfied, the leader should consider to reduce the rest percent of non-satisfaction. The first one is the volunteers’ survey, MSFIN can provide online survey to invest the degree of satisfaction of volunteers and review their feedbacks in order to improve the services among volunteers. Besides that, the organisation can promote the meaning of donation and volunteering to public. The second way is to improve the facilities. While the establishment developed, it can attract more volunteers to participate. Moreover, motivation is essential to volunteers, which also can enhance their satisfaction. The organisation should encourage volunteers to participate in donation or other activities and provide sense of achievement to them. For instance, let the volunteers know how many goods and contribution they have donate.
2.2.5 Sustainability Perspective
The goal of Sustainability is that contribute to global efforts to reduce landfill by recycling and repurposing unwanted goods and distribute excess stock to other not-for-profit organisations rather than destroying or disposing of suitable items. In light of this, the rate of using recycling and repurposing unwanted goods and the number of cooperation organisation may be the vital point for the organisation. Furthermore, the risks of financial sustainability through limited self-generated funds was identified by MSFIN. It means that the fund’s source of MSFIN is limited, it needs to develop self-generated funds. Therefore, sustainable industries may be a source. For instance, MSFIN may open their own green farm to produce organic vegetables. Selling or allocating organic vegetables may become the new source of funds.
Every year, MSFIN allocate item to support struggling families such as Baby bath, Baby toiletries, Bassinet or Bed. Most of this item could be made by recycling material or collect from donated people. Therefore, the rate of recycling and repurposing unwanted goods for the annual item shows may be used as the performance measures. A higher rate revelation the organisation make great efforts to achieve their goal. Similar, the number of buying for recycling goods and the number of people donates unwanted goods also disclosure the efforts of the organisation for protecting the environment.
Distributing excess stock to other not-for-profit organisations is one goal of MSFIN. The is of doubt organisation is vital issue a for the point. There is no doubt that more and more cooperation organisation MSFIN connect, the ability of distributor to other Similar, the number of times that distribute excess stock measure the performance immediately. MSFIN need spend more time to communicate with others for achieving the goal. By this way, MSFIN and other not-for-profits The organisations may know the demand of each other and make the quick response for the requesting of each other. In light of this, we recommend the number of current cooperation organisation, the number of times that distribute excess stock to other not-for-profit organisation and Time spreading with cooperation organisation as the performance measures.
The number of self-generated funds from the industries help the management of MSFIN to summary the current situation of the organisation. If MSFIN wants to improve their financial performance and contribute to the global efforts of the sustainable efforts, the number of self-generated funds could With the higher result of this measure, the better performance of the organisation is it. In light of this, time spent developing self-generated funds from sustainable industries is the way to help MSFIN achieving their goal. Management of MSFIN spends more time on developing new self-generated funds from sustainable industries, their performance probably will be better in the future period.
2.3 Effectiveness and Efficiency Improvements
The example of learning and growth is allocating training time to improving the volunteers skills and the awareness of respect. With training, the organisation can reduce cost in inefficient operating, while the effectiveness of operation will increase, more people would willing to be supported by respectful volunteers and organisation as well. That means, we can support more families in a fixed period. In addition, the organization have more choices to put money in new facilities to increase the satisfaction and efficiency.
Another good example is that using number of service variation available to measure the number of people MSFIN asist. When people who need help could get variables of services, they will feel warm hearted and more likely to recommend MSFIN to others who need help. Thus, the number of people MSFIN asist will increase. In volunteers’ view, the more services they can provide, the more people who need help will come to MSFIN. If this number keep increasing, that means MSFIN’s services meet more families’ demand.
2.4 Why and How the BSC can Help MSFIN
Balanced scorecard “identifies and reports on performance measures for each key strategic area of the business” (Langfield-Smith, 2018). As Sliwczynski (2011) states, it helps to achieve the strategic plan through supporting operational decisions and making a strategic plan be in the process of operationalization instead of just a document.
To improve the organisation, volunteers in MSFIN first identify their strategic plan, which includes two main goals they want to achieve from 2018 to 2020. Then the balanced scorecard being made is based on the strategic areas, focusing not only on financial measures but also non-financial measures. The whole strategic plan is divided into five perspectives to analyse and volunteers develop short-term objectives for each perspective. Furthermore, balanced scorecard also provides performance measures for each perspective. Through the lag indicators, volunteers can decide whether to keep the objectives or not, while the lead indicators allow them to decide how to improve their processes and achieve the goals. Volunteers can assess the value of services provided to their customer groups (struggling families) by analysing performance measures in balanced scorecard so that they can determine whether to develop or improve their services (Recardo, 2017).
Therefore, the balanced scorecard of MSFIN provides a much more specific and clear guide for volunteers to think about how to ensure future viability and grow the organisation. When they reach each short-term objective in the balanced scorecard, the long-term strategic plan can be achieved.
2.5 Strategy Map
3. Social Impact Measurement and Application
Impact for the society–
Impact for the organization–
In the section, all the sustainable measurements have mentioned at BSC will be discuss the social report and the ways this information can be used by MSFIN.
To begin with, increasing rate of recycling and repurposing unwanted goods and the number of self-generated funds from sustainable industries may improve the financial situation of organization. As Huang & Rust (2011) believe that green technology may be profit-maximizing compatible in the long term. As they (2011) cited the research of Ottman et al. (2006) green product has the variety of desirable benefits such as efficiency and cost-effectiveness, health and safety, performance and convenience. Similarly, Huang & Rust (2011) also cited the Norcia and Tigner (1996) that the firm’s environmental decisions are relevance to profit-maximizing and ethical values. They mention that the operational efficiencies could be improved by new environmental technologies. In light of this, if MSFIN could allocate more recycling goods to struggling families, it may be bring more positive effect for these families because it has more desirable benefits than normal goods. That should be a social effect of using recycling goods. Moreover, with the increasing number of self-generated funds from sustainable industries, MSFIN may expected to gain profits, because most sustainable industries use new environmental technology and suffer low pollution tax.
Furthermore, MSFIN may create the relationship between their sustainability strategies and their brand name. A study (Strahle & Koksal, 2015) provides useful information about the relationship between consumer sustainability knowledge and brand image power. They claim that sustainability has become very important in companies because people are increasingly aware of the social and environmental issues of consumers. As they cited the study (Beard, 2008; Fraj & Martinez, 2006; G. Birtwistle & C. M. Moore, 2007; Joergens, 2006), the information about their sustainable practices should be released because consumer are willing to purchase eco-products. It may explain by the research of Aytekin & Buyukahraz (2013) as cited by Strahle & Koksal (2015) that increasingly aware of the Sustainability issue, consumer are willing to contribute their time, money and attention to buy and support green industries. In light of this, MSFIN may set their sustainability strategies as the core of propaganda poster. It may increase the amount of donation that is received by MSFIN if people realise that MSFIN is not only a philanthropic organisation but also support environment.
4. Conclusion
In conclusion, we analysed the five perspectives of BSC, as well as provided some reasons and examples to illustrate how they can improve the MSFIN’s internal services and effectiveness. For MSFIN, if volunteers want to ensure future viability and grow the organisation, they need to consider both financial measures and non-financial measures. Besides, it is also important to consider the sustainability for the long-term development of an organisation.