Balanced Scorecard Step-by-Step for Government and Nonprofit Agencies

By Paul R. Niven

John Wiley & Sons, Inc.; 305 pp; $45 (hardcover); ISBN: 0471423289

Reviewed by Gerald N. Tischfeld and the staff of The Alliance Group, LLC

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In Balanced Scorecard Step-by-Step for Government and Nonprofit Agencies, the author adapts his knowledge of and experience with balanced scorecard (BSC) in the for-profit sector to the not-for-profit and public sectors. This well-organized book walks the reader through the steps necessary to develop a BSC by providing useful definitions and templates, relevant anecdotes, and an insider’s view of a public-sector organization’s success with the BSC tool.

The book is written at an intermediate level for consultants that provide strategic and business planning to not-for-profit or public-sector entities. Although it might not benefit someone with no prior experience with these entities, when used in conjunction with other materials that consultants may already be familiar with, the book can serve as an excellent resource.

The book begins with an overview of BSC’s successful track record in the for-profit sector. Niven then provides a historical appreciation of BSC, a term first coined by Robert Kaplan, an accounting professor at Harvard University, and David Norton, a consultant in the Boston area. With great clarity, Niven describes how BSC can provide a framework to map and execute strategies by serving as a measurement system, strategic management system, and communication tool.

Before detailing the steps necessary to actually create a BSC and implement strategies, the book explains rudimentary but integral concepts necessary to establish a strong organizational foundation, which is an essential component for any not-for-profit or public-sector entity. In addition, the author thoughtfully emphasizes the importance of training and communication planning within the organization. The chapters that address these areas provide basic but useful definitions for the novice as well as consultants seeking a concise refresher, along with helpful exhibits for any organization wishing to create or revise its mission statement.

The chapter devoted to strategy provides a comprehensive summary of the 10 schools of strategic thoughts. Niven ultimately endorses this reviewer’s personal preference, the SWOT (Strength, Weakness, Opportunity, and Threat) analysis. In addition, the book appropriately emphasizes the necessity and complexity of conducting a stakeholder analysis in light of the “web of relationships” present in not-for-profit and public organizations as compared to the for-profit sector. Given the depth of this area, a prior understanding and execution of strategic planning is necessary for the consultant to fully take advantage of BSC.

The next part of the book addresses how to actually develop the BSC. The author includes a practical overview of the four standard perspectives used to develop performance objectives: customer; internal processes; employee learning and growth; and financial. In addition to these standard perspectives, the reader will find relevant anecdotes exemplifying how an organization can supplement or rename these perspectives in light of its particular objectives. The remainder of this chapter provides a detailed discussion and practical exhibits to assist in the development of the strategy map.

In the final part of the book, Niven addresses the necessity for an organization to communicate its objectives and measures to all levels of the organization by “cascading” the BSC. As a strong proponent of team building, this reviewer appreciates the inclusion of this process. The book provides a clear exhibit to illustrate how cascading can be accomplished by developing BSCs at the highest level to the lowest level within the organization in order to maximize the effectiveness of their implementation. Interestingly, the author’s inclusion of this exhibit, which was also incorporated in his first book, Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results (CPA Journal Book Review July 2002), demonstrates how successful tools in the for-profit world can be easily adapted to the not-for-profit and public sectors.

After Niven thoroughly guides the reader through the development of the BSC, he shares the success and challenges of employing it for a public-sector entity. In doing so, he provides a clear model for applying BSC within the public sector. The final discussion addresses the elements necessary to sustain success.

Overall, this book offers a complete roadmap for developing BSC in the not-for-profit and public sectors. Its templates, exhibits, definitions, anecdotes, and glossary provide practitioners with a useful resource and reference tool. Throughout, the author does an excellent job of incorporating real-life situations that strengthen the tutorial components of the book and illustrate the adaptability of BSC.

Although a valuable resource, the book is not a substitute for an on-site seminar. Only through practical experience and interplay among seminar participants can the consultant truly understand how to develop the BSC and the importance of team building. Along with hands-on experience such as that discussed above, Balanced Scorecard is highly recommended to the consultant as well as the not-for-profit or public organization interested in taking its strategic and business planning capability to a higher level.

Editor’s Note: For more about applying the balanced scorecard approach to public entities, see “Balanced Scorecard for Government Entities,” by Sandra Lang, on page 48 of this issue.
Gerald N. Tischfeld, CPA, of The Alliance Group, LLC, based in Jericho, N.Y., is a member of the NYSSCPA’s Not-for-Profit Organizations Committee.






















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