The Nonprofit
Dashboard: A Tool for Tracking Progress
In your oversight, board members,
don't overlook these dials
It's been said that "if you don't know where you're going,
any road will take you there." But knowing the destination—even having a
road map—while essential, is not enough. What if there were no road signs,
speed or fuel gauges, or warning light indicators? No external signals to
indicate progress along a chosen path and internal signals to keep the driver
aware of the vehicle's speed, condition, and performance?
Like the
instrument panel on the dashboard of an automobile, dashboard reports present a
quick, comprehensible overview of an organization's status and overall
direction. Instead of speed, RPM, and engine temperature, the dashboard
typically displays pre-selected, critical measures of organizational
performance and mission effectiveness. With dashboard reports that present key
indicators in consistent formats, board members can readily spot changes and
trends in these measurements.
The
dashboard report helps nonprofit leaders focus their attention on what matters
most in their organizations and, in doing so, gain greater insight and ascribe
greater meaning to other available data. The learning opportunities gained from
defining key performance indicators and tracking, reviewing, and evaluating
them allow nonprofit leaders to improve and further fulfill the mission of
their organizations.
Maintaining focus and simplicity
Flashy
graphic displays in a dashboard format that highlight measurements of tactical
or secondary consequence would only succeed in focusing the board's attention
on the wrong things. The goal is focusing the board's attention on the right
things. Each board must chose what's best in regard to its current
circumstances, and refrain from making it overly complicated.
Principles of design
Once the
board and staff have defined what it is the dashboard should measure, it is
time to choose a format for the report. By using a combination of graphic
charts, numbers, and descriptive text, the report takes shape and conveys a
story.
The
dashboard report helps the board and staff focus and prioritize. Even though a
dashboard report presents overall results, it may be necessary to break down
some of the components. The key, of course, is not to go so far as to bury the
board in excessive detail. Major service categories or business units, client
populations, or geographical areas are the types of categories into which
operating results might be broken down.
A social
service agency, for example, created a financial dashboard that not only
portrays actual versus budgeted year-to-date revenues, but breaks down the resulting
total variance from budget by business units to better indicate which ones
contributed positively or negatively to the total variance.
What the
full board receives on a routine basis should be selective in the sense that it
is the tip of an information iceberg that extends down to include board
committees and task forces. While the full board may wish to see these data on
a selective basis, greater levels of detail might be available on a routine
basis to these committees and the staff supporting them. Coordinating committee
and full board meeting agendas for the year makes it possible for certain
topics to work their way up an agenda ladder to the full board at specific
points during the year.
Starting a dashboard program
Boards
interested in embarking on a dashboard development program, or a broader
examination of governance information, should initiate the process of the
dashboard report's design and implementation. The governance committee may be
asked to guide the development of a board-staff task force or working group
that may include the board chair, the chief executive, a few board members, and
one key staff person who will have the ongoing responsibility of accessing
needed data and maintaining the system over time. The active involvement of the
chief executive is an important signal to the staff that this work is of high
priority and a truly collaborative effort. It is up to the staff to lead the
process and communicate with the board on what it needs and wants.
Conclusion
Board
oversight involves more than just reading financial statements, and nonprofit
boards don't always know how nor have the opportunity to provide adequate
programmatic oversight.
Dashboards
have the ability to improve the present way of doing things—resulting in more
effective meetings, more thoughtful and informed decision making, and better
use of board members' time. They serve as a way of monitoring progress against
a strategic plan and annual operating goals. They support evaluation efforts by
gathering key performance data on programs and services in the context of a
theory of change in real-world outcomes. Ultimately they give board members
needed information that speaks to their governance responsibilities in a
compelling and readily understood way.
Here's One of Many Ways to Work With
Dashboards
The real
test of whether dashboards have value is whether they create enough meaning for
individual board members and the board as a whole to engender thought, insight,
and, perhaps above all, good questions. There are probably as many ways to work
with dashboards to realize these benefits of critical thinking and board
engagement as there are board members. Here is one of 10 common ways that have
been proven in practice:
Bring all board members up to speed
around a shared knowledge base.
The more
board members are conversant with multiple aspects of the organization's
operations, the more effective the board can be as a governing team and, hence,
the more valuable the board can be to the organization. Dashboards by themselves
will not supply the shared knowledge base the board needs, but they can serve
as a recurring reminder or standing of what makes the place tick. Incorporating
the most recent set of dashboards in each new board member's orientation
packet, coupled with an opportunity to review the dashboards under the guidance
of a fellow board member serving as mentor, would be an excellent way to begin
the process of sharing this knowledge base.
Reprinted with permission from The Nonprofit Dashboard:
A Tool for Tracking Progress by Lawrence M. Butler a publication of
BoardSource, formerly the National Center for Nonprofit Boards. For more
information about BoardSource, call 800-883-6262 or visit www.boardsource.org.
BoardSource © 2007. Text may not be reproduced without written permission from
BoardSource.
