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Non Profits: From input to impacts
Pesh Framjee, Global Head of Non Profits
15/02/2015
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The reporting of outputs, outcomes and impacts currently has a great focus in the non profit world and many nonprofit organisations (NPOs) are looking at all of this very closely

The reporting of outputs, outcomes and impacts currently has a great focus in the non profit world and many nonprofit organisations (NPOs) are looking at all of this very closely. In many cases they find that they are not achieving the results they are seeking.

In others the results may be being achieved but at an unacceptable cost. Most NPOs are resource constrained and the link between the inputs being used and the outputs being delivered is important.

This means the performance has got to be managed. The reality is often that, despite acknowledging the desire to better manage performance, NPOs continue to struggle with issues that prevent them from achieving longterm strategic objectives in an effective and efficient way. The challenge for many non-profits is:

  • how do we identify what matters?
  • how do we record what matters?
  • how do we report on what matters?

This requires understanding of both financial and non-financial measures of what matters. As a result, the focus is inevitably on value creation and the answer to the question of ‘why are we not achieving what we set out to achieve in the most effective way?’ often lies in a lack of focus on how processes are being carried out and what is being measured. Many organisations that are competing for contracts – and indeed those that are just reassessing their effectiveness – have found that they need to go back to basics and understand how they do things. This means that the issue of inputs and activities can not be overlooked. In particular it is vital to really appreciate the links between inputs and activities with outputs and outcomes – some NPOs have difficulty with this and clarifying the concepts may be helpful (see definitions summary).

Much has been said in the sector about output measures and very little on process measures. In cases where I have been asked to help with understanding why the outcomes are not effective. I find that the issue usually lies with the way the processes and activities are being carried out (see case study).

Anatomy of a process

A process is a defined collection of activities which create an output that is of value. Process measures track and report the activities of a process and are useful when it comes to motivating people to control the process. These measures are important since they monitor progress and allow organisations to react rapidly to improve and check whether the process is still under control. They are different from output measures which track and report the results of a process and are particularly useful for controlling resources.

Process measures should focus on cost, quality and time paradigms to see if a process can be done more cheaply, better and more quickly. This means that all these aspects need to be understood and examined in a balanced way:

  • cost-based measures address the financial side of performance and ask is the cost acceptable and is there a way to reduce it
  • quality-based measures focus on ‘goodness’ and examine how well products or services meet stakeholder needs
  • time-based measures focus on speed and responsiveness.

All three need to be balanced; it may be possible to deliver excellent quality but the cost may be prohibitive. And it may be possible to deliver a service or response very swiftly but the quality may be compromised.

When an organisation is looking at process measures it is not measuring what the organisation is delivering as outputs and outcomes nor is it looking at the achievements of strategy, it is rather looking at the way the organisation is carrying out activities. As organisations get larger and as there is a greater focus on outputs and outcomes the more boring aspects of measuring and improving processes often falls by the wayside and the effectiveness becomes more of a challenge.

On the practical side it is important to avoid a piecemeal approach; the aim should be to focus on the horizontal links between processes and functions. For example, a charity that seeks grants to deliver services needs to undergo a process which will cross many different functions. For example the task may cover:

  • identifying the service that is needed
  • considering who might fund it;
  • the application for a grant or contract
  • negotiation and acceptance of terms
  • the provision of the service
  • the monitoring and evaluation
  • financial reporting and control
  • the follow up of grants to ensure it is paid and with no later clawback.

Understanding the relationship between processes and functions can help break down a silo mentality which is all too prevalent in our sector. Since the processes run across functions, performance measures must follow.

Process mapping

The best way to understand a process is to map it. A flowchart is the usual way of depicting and defining exactly what the organisation or entity actually does. The aim is also to link this to who is responsible for each function and to what the critical success factors and measures of success are. This requires understanding of what standard a process should be completed to and how the success of a process can be determined. If this is done properly there can be no uncertainty about the requirements of every internal business process.

  • When trying to map the process, it is advisable to: define the boundaries of what is being mapped
  • start at a high level first;  understand the core process and the sub-processes within it
  • involve the people closest to the process;  walk through the process yourself
  • think end to end and consider the horizontal connections between process and functions
  • keep it simple.

I have often found that once the process is mapped, there is great value in discussing the completed map with the individuals involved. They should be asked to look at the key tasks and ask themselves the following questions:

  • what they think they are doing?
  • why they do it?
  • who they do it for?
  • how long it takes?
  • how often it is done?
  • should someone else be doing it?
  • should it be done at all? 
  • can the task be improved?

Why bother with process mapping?

Many see the exercise as a waste of time and prefer to work in an intuitive manner. In my experience they are missing out on the opportunity of making real value gains. The benefits of really understanding processes are numerous. The type of analysis offered is extremely valuable because it can identify improvements in a number of aspects in the workplace, including:

Understanding of the work process

It helps everyone to understand the work processes being performed in the organisation. They can see what each individual’s job entails. A good grasp of specific activities and their relationship to other groups helps management make effective decisions and leads to better relations between departments.

Utilisation of resources

It can help management make the most effective use of resources and encourages those who are most closely involved in a work process to participate in determining how to use resources efficiently. For example, process mapping information might indicate that certain employee’s skills are wasted on checking work rather than producing their own work. A shift in task assignments might result in a better use of that individual’s skills.

Training procedures

The documentation produced resulting from process mapping provides a basis for excellent training packages. It describes the tasks involved in each job and in what order each task needs to be completed. Process mapping documentation is particularly useful for a new manager because it describes the functions of the organisation and shows how these functions are accomplished.

Workflow

An analysis of process mapping documentation can determine ways to improve work flow.

I have seen cases where a process map has instantly highlighted that certain tasks are repeated for no real reason. In other cases, it becomes clear that using automated equipment would make some tasks more efficient.

However, there is a danger of becoming obsessed with processes without considering how they add value to the organisation and what you are trying to achieve. The aim is to link them with outcomes and impact and then how you can improve your processes to add value.

Best in class organisations are using performance measures to quantify how well the activities within a process work towards achieving a specified goal. This can provide early warnings of operational problems, identify areas for improvement and present a clear indication of what action needs to be taken to ensure the organisation stays on track. Bear in mind the need to monitor both processes and outputs. In essence, process measures can drive the organisation to improve whereas output measures keep the score. A balance between both is vital.

Case study

    Some years ago I worked with an NGO with a mission to deliver education in SubSaharan Africa. It planned to do this by building schools. Donors were surprised to find that the organisation had used their contributions to dig wells. The answer to this explains the issue.

    The strategy was to provide schools and teachers but the children they were trying to educate were spending most of the day going to the nearest water source to collect water. The schools were empty. The inputs (the contributions from the donors) were not delivering the outcomes or the impacts. The activities and outputs had to be changed and wells were needed before the schools. It had to carefully consider whether digging wells was the most efficient and effective way to achieve the outcomes it was seeking.

    The organisation has achieved outcomes with some of them are additional to those originally envisaged in the strategic plan. However, it still has to monitor the impact.

Definitions summary

  • Inputs are the resources that contribute to a programme or activity, including income, staff, volunteers and equipment. Many of these may be reflected in accounting records but many, such as volunteer time, are not.
  • Activities are what an organisation does with its inputs in order to achieve its mission.
  • Outputs are countable units, and are the direct products of programmes or organisations’ activities. They could be children immunised, animals relocated, classes taught, training courses delivered or people attending workshops. In themselves they are not the objectives of the organisation but some reporting appears to be confusing these with objectives. The outputs are often quantifiable and lend themselves to tables and charts.
  • Outcomes are the benefits or changes for intended beneficiaries. They tend to be less tangible and therefore less countable than outputs. Outcomes are usually planned and are therefore set out in an organisation’s objectives. The trustees’ report should highlight outcomes. It is sometimes difficult to properly define outcomes and to be able to claim them as a result of a charity’s activities. However, this should not prevent the reporting of outcomes.
  • Impact is all the changes resulting from an activity, project or organisation. It includes intended as well as unintended, negative as well as positive, and long-term as well as short-term effects. Impact reporting is difficult and many of the impact reports are in fact reporting on outcomes but most make commendable efforts in identifying, recording and reporting on what matters.

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Pesh Framjee
Pesh Framjee
Partner, Global Head of Non Profits
London