Performance Management in Non-Profit Sports Organizations using Balanced Scorecard
In this article, Vijay Krishnamurthy, a Sports Research Scholar (Ph.D.) from the University of Mysore, an Executive Coach (ICF-ACC) and an alumnus of the 2nd edition of the High Performance Leadership Program, proposes that the original framework of the Balanced Scorecard used by for-profit firms be tweaked and adapted to cater to the dynamics of non-profit sports organisations.
In the late 1990s, a Balanced Scorecard (BSC) performance management tool emerged, intending to ensure that organizations account for both financial and non-financial perspectives. Until that point in time, financial results remained the primary metric in evaluating how well an organization performed on an annual or quarterly basis. With the BSC method's arrival, three more dimensions, namely customer, internal process, learning, and growth, were added to the existing financial perspective. As the name suggests, BSC was designed to ensure people, process, product or service, and revenue are accounted for in a balanced manner to provide organizations with sustainable growth on a long-term basis.
While the for-profit organizations reaped the benefits of integrating BSC methodology, the story was vastly different for the non-profit firms. These organizations were dependent on donations and grants; therefore, bringing value to shareholders did not have such a linear quantitative philosophy. Additionally, the customer's definition had to be revisited for non-profit organizations since the donor and beneficiary were two different entities. The original design by Robert Kaplan and David Norton needed a variant for non-profit organizations. The modified version of BSC applicable for non-profits has its mission as the new dimension and prioritized it higher than the financial indicators.
In the past decade, since the Beijing Olympic Games and the inaugural Indian Premier League (IPL) in 2008, the sports sector has grown significantly. At the Asian and Olympic games, India's athlete contingent has consistently seen an uptick, endorsing the multi-sport status. With the advent of IPL, the private sector made a foray into the franchise-based cricket league structure. Furthermore, the model was subsequently replicated to other sporting disciplines such as Football, Badminton, Tennis, and Kabaddi. As a result of this growth, the sports sector has witnessed several new non-profit organizations emerge from the private sector to create impact at both grassroots and high-performance level. Given the burst of growth, the relevance of understanding the performance management of NPSOs becomes even more crucial.
Adaptation of the Balanced Scorecard
As illustrated in the diagrams below, the following emerge as key aspects for the modified Balanced Scorecard (BSC) for non-profit sports organizations as compared to the original BSC framework meant for for-profit firms.
For-profit and non-profit organizations are different; hence the performance management method applied needs to be adapted to cater for this difference.
In non-profit sports organizations, there is a need to redefine and address the financial indicators subjectively. The Government sports federations receive taxpayer's money as income, while private non-profit organizations deal with grants and donations via CSR (Corporate Social Responsibility) funds.
The dimension of ‘Customer’ in the BSC framework needs to be broken down further into (i) Donor and (ii) Beneficiary to measure the performance of non-profit sports organizations.
Unlike the Western non-profit organizations, additional dimensions of leadership style and social impact in developing economies such as India need contextual understanding.
New perspectives such as mission, social, environmental need to be evaluated as potential inclusions by non-profit organizations, especially while operating at the grassroots level.
The Balanced Scorecard (BSC) methodology is a widely accepted tool to manage performance in for-profit organizations. Although the BSC has been adapted for non-profit organizations, the relevance and applicability of the tool specific to India's sports sector remain an unexplored area. As a result, it is abundantly clear that the existing BSC framework needs to evolve by integrating a broader set of dimensions. Doing so can provide direction for future research on implementing the performance management framework in non-profit sports organizations.