Performance measurement and improvement are systematic processes by which an organization continuously and consistently tracks and applies important program and operations data for the purpose of optimizing its ability to efficiently and effectively advance its desired social impact. The most powerful performance measurement systems are typically a core responsibility of an organization's own staff, who integrate program, financial and organizational data to measure an organization's progress and success.
Note: Performance measurement is an ongoing organizational process, as opposed to program evaluations, which are discrete assessments or studies to answer critical questions.
How it's used
Performance measurement enables an organization to continuously learn and improve, which helps it to achieve better results. The metrics (data points) tracked should be derived from an organization's intended impact and theory of change—what the organization is holding itself accountable for achieving and how to get there. By measuring performance, nonprofits can:
- Track progress towards and be held accountable for their intended impact and theory of change
- Ensure programs or initiatives are implemented as designed
- Learn about ways to achieve even better results by analyzing insights
- Communicate progress and successes internally and externally to staff, beneficiaries, funders, peer organizations, and the broader community
- Over time, gain insights about program effectiveness and what works and, if appropriate, prepare for rigorous program evaluations
There are five key steps to a strong performance measurement and improvement process:
- Define: Clarify your definition of success and the critical questions or decisions that performance measurement will help inform.
- Crystallize your intended impact and theory of change. Where possible, supplement these with a formal logic model detailing critical implementation steps and inputs as well as expected outputs and outcomes.
- Derive clear, prioritized metrics from these that cover program, financial, and organizational data. For example, if you seek to economically empower women entrepreneurs, then appropriate metrics could include growth in revenue and employees.
- Design and develop a data system and data-collection process to systematically gather and analyze this data at appropriate intervals.
- Measure: Collect information, verify and validate it, and track it in the data system.
- Learn: Analyze data and generate reports to identify insights and propose ways to improve.
- Improve: Decide which improvements will strengthen the organization's success and begin implementing them.
- Share: Decide how what you have learned may help others in your organization and in the greater field, and share your metrics and results.
Building Capacity to Measure and Manage Performance
Nonprofits that want to have a great impact on the world also need the capacity to use measurement to improve their performance. Interviews with a wide range of nonprofit leaders and our own work with Bridgespan clients suggest five key elements to measurement success.
Measurement as Learning: What Nonprofit CEOs, Board Members, and Philanthropists Need to Know to Keep Improving
Measurement has become an increasingly hot topic as more funders want to know how their money is being used and as nonprofits undertake evaluations to prove that their programs work. But one of the most important uses of measurement is to improve performance.
Building a Performance Measurement System: A How-To Guide
This practical guide developed by Root Cause provides detailed guidance on developing a customized performance-measurement system, including developing internal dashboards and external report cards, analyzing performance data, creating a culture of learning and continuous improvement, and using data-based evidence to build funder confidence.
Working Hard and Working Well: A Practical Guide to Performance Measurement
In this book, Dr. David Hunter provides history, context, guidance, exercises, and tools for those who wish to move their organizations toward performance measurement.
Examples and case studies
Our Piece of the Pie: From Data to Decision-Making Data should be a source of strategic value for nonprofit managers. Too often, though, it provides incomplete or misleading information, as was the situation at Our Piece of the Pie (OPP), a Hartford, Connecticut-based youth-services organization. Here's how its leaders tackled the challenge.
Ten Thousand Strong
This case study from Business Strategy Review shares five key lessons from the Goldman Sachs 10,000 Women initiative to create an effective performance-measurement approach and shows why signature philanthropic initiatives should build measurement into their programs from day one.
Portland Public Schools: From Data and Decisions to Implementation and Results on Dropout Prevention
Many school-district leaders in urban areas struggle to reduce dropout rates but find themselves overwhelmed by the problem. There are, however, a few districts making notable progress toward reducing their number of dropouts, including Portland, Oregon, Public Schools. This case study shares strategies for addressing dropout rates.
Great Valley Center: A Case Study in Measuring for Mission Great Valley Center worked to develop a system that would allow the organization to assess performance and share results easily with key stakeholders. The process of putting measures in place helped the group's leaders clarify their strategy and also tested the logic that linked each of their programs to the results they hoped to deliver.
Breakthroughs in Shared Measurement
This report covers 20 social enterprises that developed innovative and coordinated web-based approaches to evaluate their impact across multiple grants and stakeholders.