Are not-for-profit organisations more difficult to manage?

On Friday, August 27th an article appeared in the Irish Times under the headline: Red Cross blogger reveals identity. It was a story about an employee of the Red Cross, Noel Wardick, who posted details about the charity on line. The purpose, according to Noel, was to “…generate debate within the organization, something that was sadly lacking and most definitely not encouraged”.

Now, I’ve no connection with Noel Wardick and have never worked for the Red Cross – so can’t make any comment on the veracity of that particular story. But I have significant experience of working in the not–for-profit sector and want to propose a new organization law as follows (with apologies to those brilliantly run not-for-profits who shatter the stereotype).

Organization Law # 1: Not for profit organizations are 146.37% more difficult to manage than commercial organizations.

Here’s Why: Three reasons underpin the difficulty of managing not-for-profit organizations. Firstly, the sector suffers from low economic literacy. Secondly, there is a disdain for management practices, most potently demonstrated in an acceptance of underperformance. Finally, the sector enjoys a level of politics and in-house conflict, which is sometimes elevated to an art form. These points combine to make managing a not-for-profit organization exactly 146.37% more difficult to manage (OK, I made that bit up to underscore the point).

Low Economic Literacy. A central difficulty in the not-for-profit sector is communicating the need for commercial viability. The message: ‘Just because we are not-for-profit does not mean that we are for losses’ is difficult to drive home. Those who raise the specter of efficiency, productivity or smarter ways of working are often accused of having capitalist values – as if poverty and social deprivation demanded organizational inefficiency as a response. It’s usually framed in the following terms: “How can (our manager) keep banging on and on about money, when every night in Dublin, more than 2,000 people remain homeless”.

Proponents of this viewpoint completely miss (or conveniently ignore) the point that the only way you can make an inroad into homelessness ¬- or any other area of social need – is by operating a high-performance organization to tackle this. An inefficient, loss-making organization diverts focus from the core social issues being tackled. It reinforces a bias in the commercial sector (‘they haven’t a clue what they are up to)’. More importantly, it places an enormous burden on the fundraising arm to subsidize operations rather than putting resources directly into client services. In my experience, potential donors are well clued into measures of organization efficiency; running a loss-making organization makes raising money much more difficult.

Disdain for Management: Upwards of 25,000 people work in the not-for-profit sector across Ireland. With apologies to George Orwell, we can posit that many of these believe the following mantra: ‘All things social good; all things managerial, bad’. One employee captured this colorfully when she remarked: “This isn’t Intel”.

Some of this is explained by a genuine clash of values. There is a belief that standards of performance which apply in the commercial world cannot be transplanted into the not-for-profit sector which has a different remit. Arguably, personal values are also in the mix. Few people are attracted to the not-for-profit sector on the basis of becoming wealthy, so are not driven by monetary considerations to begin with. But the debate around performance cannot be fully explained by a clash of values. In some cases it’s obfuscation, the deliberate clouding of standards to shield underperformance.

Shielding Underperformance: Consider for a moment the education sector. Academics have a dual remit- to teach and to research. Some academics carry out both roles brilliantly. But it can be very difficult to quantify outputs. Is that because teaching and research are impossible to measure? Not at all. Arguments against measurement are often a thinly disguised exercise in personal control, masquerading as academic freedom. Academic freedom, originally designed to ensure that political interference would not disallow the teaching of various ‘ologies’, has been re-interpreted as freedom from management – an entirely different concept.

A similar disdain for management applies across many parts of the not-for-profit sector. To introduce a very technical term, this is nuts. Peter Drucker, perhaps the world’s foremost management thinker, proffered that: ‘managers are the engine of the business’. Every organization, regardless of whether it’s a church, prison, hospital, crèche or a bank needs to be well managed. The argument that the science of management is some foreign concept, which doesn’t have applicability in the not-for-profit sector, is absurd.

Politics above Performance: The final point is that not-for-profit organizations are often more political. When you remove money, politics typically becomes the coin of the realm. And there is a lot of political coinage spent in the sector. This is often demonstrated through toxic interpersonal relations. Where I have confronted this in the past, the mission defense is often deployed to justify poor behaviour. It runs as follows. ‘We are doing incredibly important work’ (medicine, education, welfare – whatever). ‘I am 120% committed to this. In fact, I’ve devoted my whole life to it. If a couple of people within the organization are bent out of shape because of my style, well that’s a price that has to be paid for the good work we do’.

Translation = ‘I’m saving the world. If torturing my co-workers, is the price that has to be paid for this, so be it’.

While the commercial sector is certainly not immune to strained interpersonal relations, generally this is not tolerated to the same extent (typically, there are more sanctions available to deal with the worst excesses).

Employees First: In deploying the mission defense, a central point is overlooked. Providing brilliant client service presupposes that you manage your staff effectively. A current best-selling business book ‘Employees First-Customers Second’ makes this core point. Written by Vineet Nayar, the central thesis is that staff motivation leads to better client outcomes i.e. internal customers have an enormous impact in the final delivery of products and services. It’s a rudimentary point but an important one that’s often overlooked.

Not-for-profit organizations play a hugely important role in Irish society. Among other services, they educate our children, comfort the sick and tackle many aspects of social disadvantage. People are often attracted to the sector based on a genuine interest in contributing to society, rather than personal gain. But, in some not-for-profit organizations, these outcomes are achieved at too high a personal cost to the people who work there. Some organizations are poorly managed, barely earning a pass mark. Others have become breeding grounds for mental illness, delivering services to clients directly at the expense of internal staff.

In contrast, when staff are managed well (led by actions rather than words, with efforts made to communicate underlying economics, when the only acceptable ‘P’ is performance rather than politics), not-for-profit organizations can be inspiring places to work. Perhaps the need to make a difference is hardwired into most of us. The best-managed not-for-profit organizations allow this need to be fulfilled. A great place to work and excellent client services are not mutually exclusive. Managers in the sector owe their staff, and ultimately the clients, nothing less.

Bottom Line: Leading an organization, which has a noble mission, does not grant you a license to ignore the rights of the people who work there. Dignity and respect, a fundamental expectation within the employment contract, cannot be over-ridden by a noble mission.

Paul Mooney

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About Tandem Consulting

Paul Mooney holds a Ph.D. and a Post-Graduate Diploma in Industrial Sociology from Trinity College, along with a National Diploma in Industrial Relations (NCI). He has a post-Graduate Diploma and a Masters in Coaching from UCD. Paul, a Fellow of the Chartered Institute of Personnel and Development, is widely recognised as an expert on organisation and individual change. He began his working life as a butcher in Dublin before moving into production management. He subsequently held a number of human resource positions in Ireland and Asia - with General Electric and Sterling Drug. Between 2007 and 2010, Paul held the position of President, National College of Ireland. Paul is currently Managing Partner of Tandem Consulting, a team of senior OD and change specialists. He has run consulting assignments in 20+ countries and is the author of 12 books. Areas of expertise include: • Organisational Development/Change & conflict resolution • Leadership Development/Executive Coaching • Human Resource Management/employee engagement
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