Question

Describe likely differences in a Balanced Scorecard between a for-profit company and a not-for-profit (or governmental) organization. Which perspective is likely to be the most different? (DQ 14-9)

Answer 1

The balanced scorecard (BSC) enables business to transform its overall organizational strategy into effective management and is a performance measurement system, a strategic management system and a communication tool. It has already been widely used in manufacturing, service, and in non-profit and government organizations etc. with excellent effects. Previous literature also pointed out that balanced scorecard of profit and non-profit organizations has a different framework. They can be adjusted or decreased according to individual case studies or industry culture characteristics. Therefore, the study establishes balanced scorecard framework for profit and non-profit organizations to evaluate the organizations operation performance. The balanced scorecard introduced in this study emphasizes on mission and vision first, followed by the financial and customer perspectives, and lastly, the internal process perspective, which is a combination of the innovation and learning perspectives. Non-profit organizations should learn from profit organizations to under-emphasize missions and visions and pay more attention to operation costs and benefits. This will help them implement performance management that can increase product/service quality and create organizational competitiveness advantages.