Performance metrics are a key component in growing and evolving a nonprofit organization. As a former ecologist, I was endlessly captivated by the inherent perfection and dynamism of the evolutionary process. Ecosystems have a remarkable capacity for constantly adapting to changes in the environment by refining existing adaptations or even making leaps to entirely new solutions for meeting the challenges of ever-changing life conditions. An essential component of this ability to adapt and change are the many feedback loops that are found in every ecosystem. Put simply, ecosystems are constantly “collecting data” to evaluate what’s working and not working and then tweaking the system to respond to this information.
Nonprofit organizations are no different. In a dynamic organizational ecosystem, your team culture and business models need to be constantly evolving and adapting to achieve intended outcomes and to respond to changing conditions. And, as with natural ecosystems, you need to design and implement feedback loops to provide you with the information needed to evaluate team and business model performance.
Measuring and collecting performance metrics is not enough. Creating effective feedback loops to help guide the development of your organization involves:
- Deciding what to measure to be able to evaluate team and business model performance.
- Implementing protocols and procedures to ensure that the performance metrics are consistently collected.
- Assigning accountability for gathering, organizing and analyzing these data.
- Using the data for evaluating team and business model performance and taking specific actions in response.
It is essential to tie the performance metrics you decide to track to team behaviors or business strategies you intend to evaluate and develop in response to the information the metrics provide. In a conversation with the senior team of a nonprofit organization I worked with, the CEO stated that “We have lots of things we can measure, but we need to know what’s key.” The CFO followed by saying “We have lots of measures; what we do with that data is another matter.” There is no point in collecting metrics that 1) aren’t measuring the right key activities (team or business model); and 2) that are not being used to evaluate and change how and what you do.
There are many resources for helping nonprofits measure performance and develop data-driven processes for continually evolving their organizations. As a start, Bridgespan.org has some excellent resources on their Performance Measurement page (and see links to articles at the end of this blog).
I'll close with a quote from renowned management guru Peter Drucker:
The only things that evolve by themselves in an organization are disorder, friction, and malperformance.