THE McKINSEY QUARTERLY 2001 NUMBER 2
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E X H I B I T 2
(Exhibit 2), it can be used by any nonprofit organization ( see side- bar, “Link your metrics to your mission”). Every organization, no matter what its mission or scope, needs three kinds of performance metrics—to measure its success in mobilizing its resources, its staff’s effectiveness on the job, and its progress in ful- filling its mission. The specific metrics that each nonprofit group adopts to assess its performance in these categories will differ;
The family of measures
Metrics used by The Nature Conservancy
Mission
Impact measures Measure progress toward the mission and long-term objectives that drive organizational focus
• Biodiversity health • Threat abatement
Vision
Goals
Activity measures Measure progress toward the goals and program implementation that drive organizational behavior
• Projects launched • Sites protected
Strategies
Capacity measures Measure progress at all levels of the organization, thereby enabling it to get things done
Tactics/ activities
• Total membership • Public funding for conservation projects • Growth in private fund-raising • Market share
an environmental organization might rate the performance of its staff by whether clean-air or -water legislation was adopted, a museum by counting how many people visited an exhibition. But any comprehensive performance- management system must include all three types of metrics. Financial met- rics, such as the percentage of revenue spent on overhead and administration, are also important management tools, but since the law requires organiza- tions to report them, they are excluded from this framework. Two of the three necessary types of metrics are relatively easy to create: those that measure the mobilization of resources and those that track the activities of the staff. Indeed, these two sets of metrics are actually similar to The Nature Conservancy’s old bucks-and-acres system, and most nonprofit organizations already have a version of them. Metrics for the mobilization of a group’s resources could include fund-raising performance, membership growth, and market share; metrics for staff performance, the number of people served by a particular program and the number of projects that an organization completes. The third kind of metric—measuring the success of an organization in achieving its mission—is considerably more difficult to create, but, as The Nature Conservancy discovered, it is also the most crucial.
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