Heritage Mississauga

Heritage Mississauga

Executive Summary:

Heritage Mississauga is a non-profit organization which is devoted to safeguarding the heritage in the city of Mississauga. Over the span of 40 years, Heritage Mississauga assisted the community with services such as Heritage Research Publications, Heritage Art Exhibits & Events, Quarterly “Heritage New” newsletters, etc. (More on their website). The funding streams are club memberships and other non-profit organization’s financial support. Books are sold on the website for funding purposes as well.

Although, they have been receiving funding, there is no indication of a periodic budget. A budget would be beneficial to the company, to determine the areas where funding will be allocated to.  In doing so, they are would ensure that resources are used effectively when providing services offered by the company. The other benefit for budget is, it is first step to composing a compensation plan. Both the budget and compensation plan will allow the management to evaluate the progress towards their long-term goal.

Introduction & Background:

At the moment, the organization does not have a budget in place or have any financial statement. Although they are not required to provide any statement but it will be in their best interest to create a budget. Without a budget, they are unable to evaluate their long-term strategy on how effect their operations are. Heritage Mississauga’s goal is to maintain and promote various heritage sites; the underline reason for this is for their visitors to appreciate the history and culture of the city.  Such preservation of history will provide information for future generations as well as current generations. In order make sure that their goal to preserve this history, a budget would assist in accomplishing this goal. They would need a budget to successfully manage their resources on continuous basis. Especially, if they intend to continually issue quarterly newsletters, Free Art Exhibits & Events and Research Publications.  However, at the moment, there is no budget or statement available to report these different operations. A non-profit organization like themselves; developing a measurable scorecard would be the first step in achieving the organization’s overall objective.

While developing budget would benefit in evaluating the organization’s strategic goal. The other benefit would be evaluating the employees’ performances. Since, Heritage Mississauga is small organization, having performance incentive plan for their long-term employee will ensure there is continuity in their operations and would not risk any employee turnover. Keep in mind, the compensation plan will also detail how employees are compensated when they meet their performance target, which in return increase motivation companywide. The later section will discuss the development of a budget as well as a compensation plan.

Alternatives:

Cash Budget

Financial budget would be the very least an organization can do in terms evaluating their operation’s efficiency. A company’s scorecard would create accountability within organization by recognizing where the funds are spend on.  The scorecard would include the projected funding streams and expenses for the year. By reviewing the scorecard, the organization would know which services provide the most return on investment. As a result, they would devote their resources on those activities. Without a budget, it would be difficult for an organization to manage these limited financial resources effectively when they don’t have scorecard to follow.

Advantages:

• The tool identify if there is sufficient cash balance to cover their obligations.
• Easier to create.
• It will determine if there any excessive cash felt after the expenses are paid off.
• Promotes optimal utilization of cash.
• Assist in determining if the organization needs to finance capital expenditures such as government loans or private loans.

Disadvantages:

• The budget is relied on estimate which is derived from the previous year.
• Non-financial factors are not taken into consideration.

Balanced Scorecard:

Balanced scorecard is way to assess how coherently organization strategy has been implemented in day to day operations. It provides a reliable and multidimensional measure of how effectively and efficiently managers have utilized resources.  The scorecard considers both financial and non-financial perspectives. Financial, Customer, Internal Business-process and Learning and growth perspectives are variables that the scoreboard is built upon.  Analyzing the organization’s strategy through these perspective, we are not only motivated to improve financial but also the other non-financial areas of the business. For example, assess the internal business process will reveal operations that would create most value for our customers. Learning and growth perspective would identify the capabilities the organization must excel at to achieve superior internal process such as employee capabilities, motivation measured by employee satisfaction.

 Advantages:

• Presents organizational goals in single report.
• Allows companies to bridge the gap between mission statement and day to day activities.
• Raises process improvement, it naturally falls under the “learn and innovate” section.
• Straightforward enough to be used by many managers after gaining familiarity with the concept.

Disadvantages:

• Some of measurement is subjective; it be cannot be quantified except by surveys or management opinion.
• Scorecard can add a new type of reporting without necessarily improving quality or financial numbers, it seems to be an additional set of non-value-added reporting.
• When a company is failing to meet its Balanced Scorecard goals, the goals may be re-interpreted to the current state of affairs to meet success or avoid failure.
• Overly abstract Balanced scorecard goals are easy to reach but hard to quantify.

Compensation Plan:

The compensation would be highly concentrated on the non-financial objectives of the budget. Objective would be to develop a plan where manager is measure by customer satisfaction, number attendees to Art shows/ Exhibits/ Events. For instance, the managers will be measured how many memberships are brought. The manager would also be rewarded if they deliver any speakers to their event for a lesser cost. These are some of the performance goals that would come under when composing the new budget.