Strategic planning has been used for years to revitalize and transform nonprofit organizations, government agencies, and corporations. However, most nonprofit organizations have failed to implement strategic plans successfully. Challenges that hinder strategy development may include management and governing issues, or financial constraints. After selecting a research article, it is critical to provide its summary, explore its significance to nonprofit management, and identify important concepts that apply to strategic planning.
The article’s main purpose is to explore the details of the balanced scorecard, and the guidelines for its implementation in nonprofit organizations. The selected article is “An Integrated Balanced Scorecard Strategic Planning Model for Nonprofit Organizations” by Jan Ronchetti. The author wrote the article because most nonprofit entities have failed in strategic planning due to the little information that is available on the implementation of the balanced scorecard to achieve exceptional business results (Ronchetti, 2006). Most nonprofits face a heavy workload, confusion, and thin operating budgets, which limit strategic planning efforts.
Key Question and Important Information
The key question of the article is answering how to effectively implement the balanced scorecard in organizations. The most important information in the article is understanding the steps of balanced scorecard implementation, which includes the formulation of mission and vision, conducting a situational analysis, building a strategy map, defining strategic themes, and identifying strategic objectives. The balanced scorecard identifies and improves the internal functions of the business. Since the balanced scorecard is not entirely perfect, it can be integrated with the purpose-driven church model to enhance communication and information in religious organizations (Ronchetti, 2006). The author concludes by acknowledging that the integration of the two models improves an organization’s effectiveness, actualizing the mission of nonprofits.
The two concepts that are discussed in the article are the balanced scorecard and the purpose-driven church model. The most important idea that the author explores is the implementation of the balanced scorecard. The integration has several processes that nonprofit managers need to understand if they want to achieve effective strategic planning. The balanced scorecard is comprised of various perspectives: learning and growth, customers, internal processes, and financial.
The financial perspective highlights the measures and strategic objectives that capture how an organization looks to its customers. Internal processes represent the impact of service or product quality on consumers. The customer perspective is important in nonprofits since it provides constituent satisfaction (Ronchetti, 2006). The learning and growth aspect identifies gaps in employee culture and skill levels.
The author assumes that there are six steps of implementing the balanced scorecard in nonprofit organizations. The model is implemented by formulating the purpose and vision of an organization. The mission must be brief and specific, whereas the vision provides direction to where a company wants to go. Mission and vision enable managers to know what an organization requires to succeed. Next, an analysis of threats, opportunities, strengths, and weaknesses is conducted. Afterward, a strategy map is built based on the four perspectives of the balanced scorecard. Firms can then identify strategic themes and evaluate why they are important to their success.
Finally, determining performance indicators and strategic objectives helps to gauge the progress of the plan (Ronchetti, 2006). The author assumes that managers can successfully apply the balanced scorecard model; yet, strategic plan success is dependent on multiple factors. However, if firms use the balanced scorecard, they can easily succeed. Nevertheless, if they do not effectively apply the model, their strategic plans can fail.
Ronchetti’s article provides a framework that can be used by managers to implement strategic plans successfully. The balanced scorecard was developed to enable clients in the private sector to execute strategic objectives in their daily operations. Private sector firms are guided by financial performance but nonprofits consider cost containment and constituent satisfaction as their main goal (Ronchetti, 2006). The balanced scorecard provides managers with a practical model that defines strategic objectives and themes, facilitates strategy implementation at all organizational levels, and measures performance.
The balanced scorecard is relevant due to its advantages to public management. For instance, it minimizes information overload by summarizing crucial data required for decision-making. Additionally, the balanced scorecard model meets the needs of managers through the distillation of various unrelated measures within organizations. The model further ensures that managers have access to all possible measures in organizational operations. The balanced scorecard reduces the subjectivity of participants since they partake in the setting of the strategy (Ronchetti, 2006). In addition, managers can assess every program for strategic impact with no bias.
The balanced scorecard provides a comprehensive and realistic assessment of the limitations and strengths of an organization. Strategic plans need to be established after the capabilities, limitations, and strengths of an organization are evaluated. Conducting an internal and external analysis in an organization can identify other problems that managers were not aware of (Ronchetti, 2006). As a result, nonprofit organizations can be prepared to utilize the opportunities and minimize the impacts of external threats.
It is critical to discuss the summary and key concepts of the selected article and its relevance to public management. Multiple approaches to the development of strategic plans exist but the uniqueness of each organization must be considered. Ronchetti’s article explores the balanced scorecard which offers an innovative framework to implement strategic plans effectively in organizations. Ronchetti concludes that leaders should have a good understanding of the balanced scorecard. Additionally, organizations should be prepared to change as new strategies emerge. The balanced scorecard can be integrated with the purpose-driven church model for firms that want to achieve effective and precise business outcomes.
Ronchetti, J. L. (2006). An integrated balanced scorecard strategic planning model for nonprofit organizations. Journal of Practical Consulting, 1(1), 25-35.