October 13, 2011
Is money the only thing a non-profit organization should think of when measuring success?
If businesses have embraced a “value based”approach to managing since it is imperative to make decisions that enhance and improve value for all stakeholders than why can’t nonprofits too?
1. Generating a return for investors is important but what about a return for supporters for nonprofits?
2. If employees need to be empowered in for-profit business for getting the job done, why not in the non-profit also?
3. If companies are trying to show their customers their corporate values that surpass their competition, than wouldn’t this apply to nonprofits also?
4. If companies build relationships with suppliers, vendors, partners, and others in the value chain, wouldn’t this be the same as the importance of donor stewardship for nonprofits?
5. Isn’t acting in a socially responsible manner for the benefit of external stakeholders the same as a non-profit keeping it’s administration costs low and acting in the best interest of the cause?
Value Based Management recognizes that each stakeholder group has its own unique set of values and we need to manage in such a way that we create value for one group without destroying value to another group; i.e. we want a win-win situation.
In order to accomplish this mandate, businesses often launch various initiatives, such as customer relation’s management, business intelligence, knowledge management, balanced scorecards, and a host of other activities for ensuring that we follow the principles of value-based management.
Additionally, we need a system of accountability to assess and measure how much value we are creating or destroying for various stakeholders. Up until now, little if any information has been available on how we can apply this framework to the non-profit sector.
However, as the nonprofit sector becomes more business-like, the need for value-based management grows. In order to ensure that nonprofits function within this value-based framework, we can do many things, such as making the organization more entrepreneurial in how it manages social programs, recognizing and measuring social value in the delivery of services and products, using logic models for assessment and measurement, and making the connection between emotional intelligence and effective leadership.
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