by Michele Popiel, MBA '80
Organizational Development Overview
Organizational Development is the process of aligning human capital strategy with the mission, vision, values, and strategy of the organization. Organizational Development includes organizational structure, supporting systems and processes, leadership development, succession planning, talent acquisition, and talent engagement (including design of reward and recognition systems). The overall theory is that a unity of what the organization is and what it wishes to accomplish with that of the individual and his or her goals will propel the organization to greater levels of performance.
Given the lack of Organizational Development groundwork and dedicated implementation personnel in most nonprofits, it is critical to negotiate with your client the work product that will be most helpful within the typical six-month timeframe. A comprehensive, high-level strategy may not be the route to usability. Instead, the following suggests an in-depth start to alignment, including hands-on, tactical work with the client:
- Audit the organization.
- Design an organizational structure.
- Define talent acquisition needs for leadership, including "fit" requirements and skills.
- Design motivational levers to engage people at all levels in the organization.
- Develop a market strategy for talent acquisition.
- The purpose of the auditis to gain a comprehensive overview of the organization, its strengths and areas of challenge, and arrive at the "gaps" between the current organization and an organization designed to meet its goals.
- Overall elements of this review should include systems, processes, operations, communication, and people (job functions, skills, capabilities, and leadership).
- In-depth questions should be asked to learn the characteristics of people who succeed in the organization. This is a foundation for later work with "fit."
- Similarly, ask questions about what brought managers to the nonprofit and what motivates them to stay. Ask them what more the organization should do for them. This provides the background for engagement strategies.
- Build a profile of "stars" in this organization, including behavioral characteristics that make them fit and organizational levers that keep them engaged.
- Review managers for potential leadership paths and succession to the executive director.
- Arrive at a hypothetical organizational structure, with required supporting systems, that would more effectively accomplish the organization's work. Include as well new functions, skills, and leadership capacity indicated in this structure.
- In conjunction with the client and the organization, develop hypotheses about the attributes of a person who will successfully "fit" into the organization and hone them into guidance for talent acquisition and input into job descriptions. Draft rough job descriptions, including both fit and skills required for leadership positions.
- Include motivational levers that will increasingly engage people at all levels in the organization. These may include training, team building, opportunities to move within the organization, and rewards and recognition.
- Concurrently, look at the client's competitive environment for leadership and develop a market strategy for talent acquisition, including competitive positioning and potential new sources of talent.
A continual team/client interchange of findings, hypotheses, and hands-on work will ensure the most successful outcome for your project:
- Review the mission, vision, strategy, and goals of the organization with the client.
- Obtain a thorough understanding of the results the client desires from an organizational development effort.
- Obtain agreement with the client about range and content of interviews with management and staff. If possible, obtain agreement to gain additional perspective from customers, partners, suppliers, and board members.
- Develop and receive client approval on standardized interview formats to be used with management and staff and constituencies.
- Establish a subteam to begin a brief scan of the client's competitive landscape for later use in devising talent acquisition strategies.
- Review aggregated results of audit with client.
- Test organizational hypotheses with client about talent "fit," leadership/succession potential of current management, and engagement strategies.
- Complete data assimilation and design potential restructure, including new leadership positions.
- Negotiate and reach agreements with client (then board) on new structure and key positions.
- Help develop talent descriptions for key leadership.
- Suggest talent acquisition strategy.
- Comprehensive evaluation of the current organizational structure with recommendations for restructuring into an organization better aligned with mission, vision, values, and strategy
- Cost-benefit analysis of recommended new supporting systems, leadership and other talent acquisition, and programs (e.g., training) needed to complete the reorganization
- Additional recommendations on leadership requirements, management development, and succession
- Competitive talent acquisition strategies
- If time remains, strategic talent engagement overview or work as negotiated with client
- Stick to the workplan. Lack of overhead capacity in human resources makes "scope creep" even more threatening to an Organizational Development project than to the typical ACT Project. Don't get stalled on crafting mission, vision, and strategies, detailed competitor analyses, or other work not central to the workplan.
- Be prepared to incorporate a great deal of change. In a small organization, the departure of even one person can cause considerable fluctuation. Be constantly in communication and alert to external and internal change in the client's world.
- Walk softly, be sensitive, and protect information during the audit phase. Since it is an anxious time for the organization, it is critical that the client or a designate socialize and position the purpose of the audit as restructuring to perform work more effectively, not as an evaluation of individuals. The audit process also includes de facto a 360-degree feedback of your client. Be clear upfront with the client and all interviewees that information will be shared only in the aggregate.
- Balance objectivity with usability. ACT teams in Organizational Development may recommend new structures and strategies that could affect long-established working relationships and loyalties. The team should be willing to consider any compromises that can be made while retaining the integrity of the organizational plan, and suggest socialization and timing strategies.
- Enjoy an ongoing sense of accomplishment. The majority of the team's work may be completed and incorporated by the client during the course of the project, rather than in a large final effort.
Model ACT Project
The following are highly valuable resources and it is recommended that they be read in their entirety:
Edward E. Lawler and Christopher G. Worley, "A Dynamic View of Organizational Effectiveness," in Built to Change, Foreword by Jerry Porras (Jossey-Bass, 2006), 23-53. Human capital alignment.
Charles A. O'Reilly and Jeffrey Pfeffer, "Unlocking the Hidden Value in All of your People," in Hidden Value (Harvard Business School Press, 2000), 231-261. Alignment of HR levers, including hiring for "fit" and engagement strategies.
David L. Bradford and Allan R. Cohen, Power Up (Wiley, 1998).
Thomas J. Tierney, "The Leadership Deficit," Stanford Social Innovation Review, Summer 2006, 26-35.
Edward E. Lawler, "Leading a Virtuous-Spiral Organization," online at
Related Questions and Answers
Where would I find the percentage of non-profits that have a mission to fight poverty?
Where would I find the percentage of non-profits that have a mission to fight poverty?
I recommend that you start with the National Center for Charitable Statistics (NCCS), a project of the Center on Nonprofits and Philanthropy at the Urban Institute. As "the national clearinghouse of data on the nonprofit sector in the United States," NCCS provides data that should help address your current question as well as serve as an excellent future resource. If you find the data categories used in the tables showing nonprofits by activity/type aren't a perfect fit, the NCCS website offers assistance through both email and a toll-free number.
How can I find social entrepreneurs to help me start and run a nonprofit?
I've developed a product that I believe serves a critical social need. Unfortunately, as an artist and activist, my lack of business acumen has prevented me from fully realizing this idea. Animal Exercise Fun combines research in child development and exercise science with an imaginative play format, and will introduce young children to lifelong healthy habits.
I'm searching for a social entrepreneur to help implement my business plan. I'd like someone who is passionate about starting and running a nonprofit company. Any suggestions on how I could find such a person?
I'm sure that you're currently working through your network of contacts for referrals. Given the trust you need that another person will have the commitment and business savvy to start up and manage the enterprise, the personal referral route is likely the best. To develop additional contacts, I suggest two sources; one is Social Venture Network a membership organization which "inspires a community of business and social leaders to build a just economy and sustainable planet." In addition to providing resources on social transformation, the website contains a list of member-led enterprises. The second is a recent Business Week article on America's most promising social entrepreneurs. Some of these individuals may have referrals as well as additional ideas for you.
As backup, you may want to browse some of the newer websites specializing in social entrepreneurship positions (for example, Social Edge); posting a job on them is generally free or relatively inexpensive. I would also recommend Craigslist for "shaking the bushes." It has a large and diversified readership, and, among the many resumes you generate, you may find a few really intriguing candidates for the position.
How do mergers affect nonprofit governance?
I am doing a research project regarding takeovers in the nonprofit sector. Do you know of any recent mergers or takeovers that involved nonprofit entities and caused a significant change in the governance of a nonprofit corporation, association or foundation?
I suggest two recent publications which address merger and acquisition activity in the nonprofit sector. An article by The Bridgespan Group evaulates nonprofit merger and aquisition as a strategic tool through case studies of nonprofit organization mergers. This publication will provide you with some strategic and legal implications of merging entities as well as names of organizations you may use for your research.
How should my organization transition into a primarily online presence?
Our small nonprofit publishes a poverty law journal six times a year. We plan to transition to a primarily online publication and need professional advice on the factors involved and training needed for editors. The journal is now published in print and articles are subscriber-protected pdfs posted on our website. Who should we consult? What other suggestions do you have? Thank you for your advice.
Thank you for your challenging question. While the transition that you're planning is fairly common these days, it seems to be quite a frontier in terms of written materials, particularly in organizational development. This article should give you a basic understanding of the potential human and other resource factors - including restructuring, movement and training of people, technology, leadership and hiring - you might confront in undertaking your initiative. The second step is to consult with analogous organizations that have undergone a similar transition from print to online publication to learn what to expect and how best to proceed. Ideally, you or your colleagues might have contacts within these organizations who would be willing to share their experiences. If not, as a starting point, research in your law library might yield listings of policy, advocacy and/or law organizations that already publish online journals. The American Bar Association might also be a source of referrals.
How can we attract and retain volunteers for low-key, but essential roles?
I recently read "The New Volunteer Workforce" in the Winter 2009 edition of SSIR.The article has good suggestions on creating volunteer positions with broader and more challenging roles, but it does not address the fact that there is still a need for volunteers to fill traditional roles.
Our small museum needs 1-2 volunteers seven days each week to staff the admission desk and gift shop. Many potential volunteers do not consider this type of work "fulfilling", but it is essential to our mission. How do we attract and keep volunteers for this low-key role?
I have some key concerns for your organization. First, you have a group of volunteers who are not finding the experience at your organization fulfilling. This creates constant dissatisfaction, turnover and increased difficulty in recruiting new volunteers; and this steady exodus may eventually create a negative public perception of your organization. Also, you have discontented volunteers in two public-interfacing roles, the admissions area and the gift shop. The admissions area, which sets the tone for the whole museum experience, concerns me the most.
Since you can't continue in this cycle of volunteer dissatisfaction and turnover, I believe you face two choices: you can either make the volunteer experience rewarding or you can turn the public-interfacing jobs into paid employment and suspend your volunteer program until a time when you can invest resources into inspiring your volunteers. Because I promise you, that if you continue to place people into routine jobs, with no pay and no hope of change, they will quit.
I hope you will decide to invest in your volunteers, because they represent an incredible opportunity to create long-term help and advocacy for your organization and considerably realize and enrich your mission and goals.
Presumably your volunteers had initial expectations upon joining your organization. Since most volunteers are willing to perform routine work if some other goal is being met or will be met within a specified time-frame, I would suggest using the following general approach with modification to your own circumstances:
- As a first step, review with each volunteer what he or she expects to gain from the experience. (for some it's a learning opportunity, others want exciting projects, some want to add resume credibility, etc).
- Attempt to initiate volunteer goals within a specified time frame, say 6 months.
- Cut admissions and gift shop shifts to no more than four hours and rotate volunteers out to other areas after a specified time frame.
- Include and recognize volunteers as an integral part of your team.
- Solicit from your volunteers leadership in making both jobs more meaningful to the organization. How can the admissions area become a better initial place for sales, fund raising, community relations? How can the gift shop increase its revenue?
- Make a wish list with your colleagues of mission-related projects that need champions. Ask your volunteers to come up with their own list and meet to solicit volunteer leadership of projects in such areas as fund raising events, community development and potential new museum exhibits. Let them fly with their own ideas and credit them in print.
- Consider exposing them to prestigious jobs at the museum. Can they train to become docents? Can they intern with finance, public relations or curators. Don't these areas need help?
I think you'll be surprised not only at how volunteers change when they have significant responsibility and time frames for meeting their goals but at the vast contribution they can make to the organization.
I understand that turning volunteers into team members and advocates takes time, but in the long term, your efforts will produce not only involved volunteers, but a fuller realization of the mission, more community interest, a more successful and profitable museum and, needless to say, plenty of potential new volunteers.
How can we find "Encore Career" candidates for our organization?
We are a self-financed NGO/LLC hybrid. We think an "encore career" development person would be an ideal addition to our organization, helping us locate funding. Any ideas on how to find just the right person willing to accept deferred income in exchange for great impact in the world? We are doing pioneering work at the intersection of the microfinance and environmental sectors.
I thank you for your interesting question. I agree that Encore Career candidates are a logical place to start your search. I'm quite sure that there is a pool of qualified "encore" candidates who have achieved the financial stability to accept a deferred compensation plan for the right challenge. The trick is to locate them.
As a first step, I suggest you develop a working job description/talk sheet, including position description and responsibilities, required qualifications and experience and desired personal attributes of the candidate. Also, be prepared to address other benefits your organization can offer - tangible or otherwise&mdin lieu of immediate compensation.
For purposes of cost efficiency in recruitment and increased control of the process, I suggest that you begin the search in your own "backyard". One of the best sources for finding people in career transition is outplacement/career transition firms. If you haven't already done so, you should contact (calling is best) small outplacement firms in your area as well as the regional offices of large global firms. For example, Right Management and Lee Hecht Harrison have regional offices in your metropolitan area. Ask them if they can send candidates, whether they can post your job onsite and what else they may be able to do for you. In the case of smaller firms, you may find yourself talking to the owner/professional who works directly with your potential candidates, many of whom placed themselves into career transition. I would also recommend contacting alumni career centers of local universities to see how to reach their "encore" alumni.
In terms of advertising, most nonprofit/related career sites offer free or minimal cost posting to nonprofit organizations. Bridgestar would be a great place to start, and they may have other suggestions for you.
How can we best assess the effectiveness of our current executive director?
I'm a trustee for a small nonprofit that provides prosthetic limbs in Vietnam, Sierra Leone, and Bangladesh. The organization is successfully raising funds and growing, but I'm concerned that the executive director is both overpaid and under-qualified to manage the growth. What's the best way to assess the situation and figure out next steps in staff development? (The organization is based in Seattle, has a budget of under $1 million, and fewer than five local employees. An ambitious strategic plan has recently been written.)
It is possible that your organization has reached that plateau which demands a new senior executive to achieve the next level of success. This is a natural occurrence in the evolution of organizations. Without sufficient information about the organization, the contents of your strategic plan or the performance or capabilities of your executive director, I am unable to determine whether you are at that stage. I am also wondering how the board operates as a group and whether you have shared your concerns with other trustees.
I would presume that your executive director has had a significant role in bringing the organization to its current success in growth and fundraising and creating the new strategic plan. As you and your colleagues interact with your executive director to discuss the plan's implementation, you have a prime opportunity to evaluate whether your ED has in fact the vision and ability to manage the next level of growth.
The information in this article should provide guidance to you in assessing what you will require in organizational resources to achieve an ambitious new strategic plan in comparison to what exists in your present organization. While you may find that the supplemental skills and capabilities exist in your current resources with some reorganization and training, you may just as likely find that you need to hire outside managers and a new executive to lead the growth.
As you carve out a potential new organization and the requirements for its leadership, you will be creating a rough job description for the senior executive and gaining a better sense of whether your current leader fits that role. I suggest that at some point you peruse current job offerings in the marketplace to gain awareness of the job responsibilities, skills, and capabilities required of leaders of organizations similar to your own and the corresponding salary ranges. A good place to start would be the position listings at Bridgestar. This research will help you confirm whether your executive director is in fact overpaid and under-qualified in the marketplace as well as view the market price commanded by a candidate with a higher level of skills.
How can we use our organization's resources most efficiently?
Our Communications and Advocacy Division is one of six in the organization and responsible for setting the overall tone for our humanitarian work. We are very keen to know if there are existing models/best practices that will help us better understand if we are employing our resources in the most efficient manner possible. Thank you for your consideration.
The question you raise tells me that you are at the beginning of a substantial and challenging process for your division.
The information above will help you understand how to align your division's structure and resources with the overall mission, vision, values and strategy for your organization. By selecting your most critical initiatives and restructuring and migrating capable human and support resources to them, you are empowering your organization to succeed in its key work. If in the course of reviewing your current organizational capabilities, you discover that your current organization lacks all the necessary resources to attain your goals, you may have to look elsewhere; these outside resources may include training/development programs to prepare current employees for new roles, new outside leadership/talent and enhanced systems capability. Initiating change in an organization creates considerable uncertainty and anxiety among its individuals. I recommend that at the very start of the process, you engage your people and inspire their commitment to developing a division that can more effectively achieve its goals; you may assure them that this change process is not about individuals, but how, as a group, they can make a stronger impact on achieving their humanitarian work. Also, as you create and review optimum models for achieving your initiatives, you may consider tempering them with considerations of feasibility and relative merit within your organization. There may be values, both published and unpublished, which drive the commitment and success of your organization that don't fit easily into a new model. You may choose to continue to support those values in your new organization, weaving them into any optimum model you consider.
What is the concept of CCIC framework in an organization?
Can you please elaborate on the concept of CCIC (competence, competition, innovation and culture) framework in an organization?
Fundamentally, competence, competition, innovation and culture is about the alignment of the strategy for the organization's human resources with its overall business strategy. For an in-depth understanding of how this works, I suggest you read my Expert piece on organizational development and the suggested recommended reading.
Put simply, to succeed, a company needs to stay ahead of its competition. For an organization to be a forceful competitor, the organization's people must be constantly innovative and receptive to change. The best first step in developing this culture is to deem innovation a core competence, which, along with the traditional competencies, will be evaluated, recognized and rewarded (and sometimes tolerated - failures included). Culturally, adding innovation as an evaluated dimension of performance will move the organization as a whole to increased change; enhanced awareness of the competitive environment, receptivity to and support of change, initiation of smaller changes within business units and ground-shaking innovations in some technology areas. The overall cultural impact is unclear, particularly in cutting-edge technology companies, where those who pioneer new technologies and those who provide the organizational wheels to make them succeed, often receive vastly differing rewards.
What are the general rules for salaries paid to executive directors of nonprofits?
What are the general rules and/or guidelines for salaries paid to executive directors of a nonprofit organization? I am considering starting and operating a nonprofit as my next career but would need to better understand what my salary could be in such a role, assuming there are ample retained earnings (from fundraising and revenues) after overhead, growth capital expenditures, and other employees' salaries.
I would suggest that you contact Bridgestar. Bridgestar offers advisory and executive recruiting services to help talented nonprofit leaders build their careers and their executive teams. The consultants there should be able to advise you on your compensation questions.
How can my board better manage from a supervision and leadership perspective?
My organization has grown rather rapidly over the past 10 years, having served 139 children and families in 1995 to serving more than 11,000 in 2007. My Board and Leadership Team are looking for an organizational structure that helps better manage our growth from a supervision and leadership perspective, but does not encourage the building of a cold bureaucracy. Any suggestions on how and where we might look for resources to address this organizational need and concern?
You raise a dilemma faced by many successful organizations. Attempting to manage organizational growth and still preserve the founding spirit of an organization is quite a challenge. I hope you will check the suggested resources listed above. This will help you understand how to align human resources structure and strategy with the overall mission, vision, values and stategy for your organization. It should give you insight about how best to restructure to manage growth initiatives yet preserve your unique mission, vision, values and original, relatively informal culture.
Have the funds for nonprofit capacity-building and leadership development increased?
Have the funds committed to, and granted for, nonprofit capacity-building and leadership development increased since 2003? If so, do you have any idea by how much and/or the number of grants made?
According to the Foundation Center, foundation grants as a whole have increased by approximately $10 billion since 2003. Since 2003, the allocation of that total funding committed to general/operating support has remained at 20 percent, while 30-50 percent of the funding continues to support programs. Therefore, despite the funding growth, there is still a lack of senior leadership and other resources to maximize program effectiveness and manage the organization's future success. (Highlights of Foundation Yearbook, 2007 Edition; Foundation Giving Trends Preview, December 2007.)
How can I design an effective performance management system?
I am part of a start-up company that is majority-owned by a Japanese trading house and set up in joint venture with a leading Indian private sector bank. I am on deputation from the Indian bank and handling the setting up of the new company, which will deal in financial services (i.e., extending loans for two-wheeler finance). We want to design an effective performance management system. I have a concern here, as my Japanese counterparts are insisting on using the competency model only for the promotions, and performance criteria for the paying of the performance bonus; whereas I want to use both the competency and performance criteria for the promotion as well as for the performance incentive. This is leading to tension between two promoters. Kindly advise on the solution to this.
While it is efficient to combine the related areas of performance and competency into one dialogue, it is becoming a common practice to separate the two discussions. In fact, they are quite distinct in tone, time frame, and purpose. The performance session, with its evaluative and monetary component, is often a bit uneasy, deals with a short-term time frame, and is meant to assess and reward recent achievement. In contrast, the competency area focuses on long-term career pathing and the skills and developmental movements required for promotional success. In a combined discussion, the former often eclipses the latter.
As businesses increasingly value the role of human capital in a rapidly changing and competitive future, they are realizing the need for a separate career pathing dialogue as input into human capital resource planning. With the performance session and monetary concerns in the past, the stand-alone competency session provides an opportunity for the employee and manager to more freely discuss career plans, promotional steps and the acquisition of necessary skills for success. Thus, the competency session provides a long-range planning tool for senior management, supplying, in aggregate, an inventory of all current and future skills resident in its human capital, and the resulting development, training, and outside hiring programs needed to deliver the total skills required to meet future goals.
How should nonprofits position themselves in a world of growing corporate social responsibility?
I see that there is a blur happening with nonprofits being more businesslike and for-profits doing a lot of corporate social responsibility. How do you see this playing out, and more specifically, how does a nonprofit react to its space being encroached upon?
Big companies add "social good" business units and are marketing that they are green. Even as a major donor, I wonder if big companies can do a better job and/or be more efficient in doing good.
Can you give examples of where you see nonprofits positioning themselves in the future and how to communicate the differences in their strategic planning?
Anurag Nigam, Serial Entrepreneur, Angel Investor and Non-Profit Board
Your questions are really intriguing. All of the sectors of the economy - nonprofit, corporate, venture capital - are now engaged in the nonprofit sector, raising interest in how all the activity will "play out," what can best be performed by which sectors, and how nonprofits, in particular, will fare in this heightened arena.
The following data should help provide a context for predicting the future of nonprofits. According to the National Center for Charitable Statistics, there are currently approximately 1.4 million registered nonprofit organizations, representing a 13 percent growth rate during the last five years and, on average, 30,000 new nonprofit organizations per year. Approximately 81 percent of the total nonprofits fall into the below $100,000 revenue category. At first glance, a 1-5 percent yearly growth rate in nonprofit organizations doesn't seem significant. Yet, in view of a somewhat limited donor and leadership pool, 30,000 additional nonprofits yearly is staggering.
While increased funding may open up to nonprofits in key areas such as energy and other global efforts, corporations could just as easily shift donations inward to their own projects. On balance the average nonprofit within a growing nonprofit population is unlikely to see much additional funding. Furthermore, nonprofit growth will cause a leadership deficit. According to an extensive study by Bridgespan, nonprofits with $250,000 plus in revenue will require 640,000 new senior managers over the next decade; this is 2.4 times the number currently employed and will require the opening of alternate sources for leaders. (Stanford Social Innovation Review, Summer 2006.) Overall, as nonprofits compete with each other and socially responsible business for funding and leadership, a shakeup is inevitable.
To address your specific questions, how will this growth in both arenas "play out"? While it is difficult to discern an order within the current activity, the end result should be a more efficent, improved and socially responsible economy.
In the interim:
The Nonprofit Sector. Nonprofits have indeed become more businesslike. They've become much more adept at crystallizing their missions and marketing and finance strategies, and many have taken on self-sustaining initiatives. To date, they have reaped benefits from reciprocal relationships with socially responsible corporations that have ample resources to take on some portion of "good."
Corporate Social Responsiblity. There is going to be a range of growth in this arena. Some of these corporate responsiblity areas will continue as they are, and the reciprocal relationships with nonprofits will remain similar. At the other end of the range, businesses will establish and fund comprehensive nonprofit units. While most of these current corporate efforts seem different from those of the typical nonprofit, it is less certain what the relationship will be in the future. Also uncertain is the longevity of these areas, given corporate shareholder responsibility, including the need to see immediate results.
Over the next decade, we should also see the following:
- Because of the increasing competition among nonprofits for limited resources, many traditional nonprofits will fail. Only the strongest, those with the clearest mission, the most well-defined niche in the marketplace, the best messaging and delivery to customers and other constituencies will continue to attract the money and talent to survive.
- These winning nonprofits and their clients will be beneficiaries of the considerable information technology and other large-scale efforts currenty undertaken by socially responsible corporations(e.g. Google.org).
- Many new joint working structures will emerge, both ad hoc and formal, as nonprofit and business goals intersect.
- Some nonprofit organizations will become acquisitions of for-profit organizations; this is already in process in consumer products and related industries.
- The upcoming nonprofit leadership deficit will play out in part with increased hiring from the corporate sector, and overall, there will be more fluid movement of people between the two sectors.
- Over time, as competition continues to accelerate in all sectors of the economy and corporations become increasingly worried about the bottom line, some of the large corporate efforts will either scale down or fold back into the organization.
To answer your question on reacting to "encroachment," there is going to be some "encroachment" of the corporate sector into nonprofit organization territory. Rather than react to it, nonprofits should expect and prepare for competition by positioning themselves as the single source of trust and credibility with their marketplaces, through zealously adhering to their missions, guarding their unique value propositions, going to the next level to attract talent, and delivering on their promises. They also need to become increasingly agile in preserving competitive advantage against constant change in the marketplace.
You've asked whether big companies do a better job and/or are more efficient in doing good? Who does the best job at "doing good"? In general, nonprofit organizations, who don't have shareholder responsiblity, can do the most good. Their clear passion for the mission and their zeal can establish authority and trust in the marketplace, build an unbeatable value proposition, and accomplish extraordinary social progress. However, when the effort mandates large-scale development, technology, and/or production processes, business is most likely to be more efficient. So, in general, greening and other large-scale global efforts require partnerships of development and production by business, and advocacy, enforcement, messaging, "selling," and delivery of services by nonprofits. Overall, the involvement of business in greening efforts is positive; the synergy of business and nonprofit work will produce far more than previously possible. It is just hard to predict how it will all play out. With $3.95 billion in 2007 venture capital going to North American companies that create eco-friendly products and the Internet giants taking on established energy leaders, all the sectors will be in play.
With regard to future nonprofit strategy and positioning, I believe I've covered most of this above. The more adept nonprofits are at nonprofit functions as well as disciplined business functions, the more successful they will be. For compelling reading on nonprofits and socially responsible business, I highly recommend The Social Venture Network Series of books, written by high-profile business owners, investors and nonprofit leaders (for example, Ben Cohen, Chip Conley), who are advancing the movement for social responsibility in business.
What constitutes sound managerial and leadership skills in a large organizational structure?
What constitutes sound managerial and leadership skills in a large organizational structure (public or private sector)?
Bledar, Senior Expert, Free Lance, Tirana/Albania
In general, all managers and leaders should have integrity and commitment to the organization's mission, vision and values and the experience and ability to achieve the organization's success through building, managing and motivating a team and working effectively with "bosses," colleagues and relevant outside constituencies.
Specifically, the definition of sound managerial and leadership skills is often dependent upon the organization, its mission, vision, values and culture, whether it is private or not for profit, and the level of leadership in question.
- Functional Skills. The skills required of a manager, ranging from direct expertise in one functional area, to multi-functional expertise/management and general management skills, depend upon how large a share of the responsibility the leader has for the organization's mission, vision, values and strategy: At the more basic levels of management, expertise in the direct area to be managed plus interdisciplinary collaborative business ability are mandatory. Managers of accounting teams, for example, need accounting backgrounds as well as the ability to work with interdisciplinary organizational members to understand their needs. In many areas of basic management, managers need customer and other outward-facing skills as well. Senior leaders, responsible for all or a large part of mission, vision, values and strategy require strong multi-functional management expertise as well as comprehensive generalist capability(for example, financial and strategic command) with specific functional work backgrounds, dependent upon the type of organization.
The functional orientation of the organization and/or industry often drive the functional focus of expertise demanded of its senior leadership . For example,the concentration of functional leadership skills required in a consumer-oriented entity (Gap, Disney) is likely to differ from that of oil or pharmaceutical companies or other industries, where production, manufacturing, or research may drive the company.
- While dedication to the mission is key to all managers, a nonprofit organization or a business with a significant orientation toward social responsibility, may require demonstrated passion for the mission as opposed to a strictly for-profit organization, where the ability to meet the bottom line is key.
- Adaptability, flexibility and cross-functionality. At the rate of change in all of today's organizations, whether from market-imposed or other outside forces or internal change, managers at all levels must be equipped skillwise to assume new responsibility. Personally, they must be adaptable and willing to embrace new ideas and larger roles.
- Accountability. Managers at all levels must define goals, clarify them to their teams and successfully meet them. Additionally, they must take responsibility for their initiatives to their team, managers, colleagues, customers and the enterprise as a whole.
- Hiring the right talent, team building, and motivating people. In general, managers should hire people who will fit into and engage with the organization's culture and feel rewarded by the organization's reward system. Managers should provide the enthusiasm, inspiration, trustworthiness and intangible reward systems to garner respect, loyalty and hard work from their teams.
- CEOship. At whatever level, a leader should be a CEO of his/her area. Even within more formal organizational cultures, there is room to set new standards, develop new ideas and find new ways to motivate people. All managers should be advocates for the organization.
- Collaborative interpersonal skills. At any managerial level of any complex and sophisticated organization, the willingness and ability to collaborate effectively with bosses, colleagues, and subordinates is essential. The extent of collaboration encouraged depends upon the organization and its culture.
- Communications and interpersonal skills. Effective communications are key at all management levels, and critical in customer interfacing areas. At the senior levels, where the individual is the "face" of the organization to shareholders, board, partners, other outside constituencies and the public at large, polished and articulate communication and adept interpersonal skills are synonymous with the position.
How would I go about developing an organizational structure?
How would I go about developing an organizational structure?
Wilfred Pasile, Student
To provide background and context to my response, I'd like to suggest that you read three articles on the Best Practices page: Mission/Vision/Values, Strategic Planning, and Organizational Development.
Above all, the structure of an organization is a direct derivation of the organization's mission, vision, values and strategy. In other words, who are we as an organization and what do we want to accomplish, both near and long-term? As a result, an organization's strategic initiatives may reflect both business and non-business objectives. For example, "we want membership revenues to increase 15 percent in 2007," or "we want to become an integral part of the community which focuses on childhood education," or "we want to become employers of choice."
Whether starting a new company or restructuring to meet ambitious new goals, the initial process is similar. You need to align the organization with what it wants to accomplish. This means you need to list each strategic initiative and map out what is required to meet it--the necessary functions, systems, processes, inter-relationships, people and leadership to get from here to there. You need to audit the capabilities that you have in these areas, and determine the "gap" between what you have and what you need. When you overlay the gap onto the organizaion, structure and leadership questions emerge. In terms of a new organization, you can start with compiling hiring requirements for a few key people who might spearhead each initiative, either individually or as part of a cross-functional team.
In structuring to meet initiatives, you may consider the following: How may peope/functions should report directly to the executive director/CEO? What constituency does this initiative serve? Internal or External? Customers? Community? All or part? What are the inter-relationships that it takes to succeed with the initiative? For example, an initiative involving customer sales may require the grouping of all functions related to sales--production, operations, marketing and sales. An initiative requiring highly visible community involvement may require one community relations person reporting to the executive director and collaborating with the organization. An initiative to improve internal IT may stay within an administrative area.
Where does the accountability reside for these "clusters" and how senior must the leadership be to achieve the results? Does the organization have the leadership within to lead a large multifunctional organization? If not, can it afford to hire new senior people? Shoud the organization implement the re-structuring in phases, so that it can be changed later? Will the new leadership have sufficient cross-functionality to assume leadership of larger or other areas if needed later on? Is this particular personnel movement sufficiently important to disturb a working / reporting relationship that has worked for many years? How will all of this change effect employee morale? What is the best way to socialize this change through the organization? Is this structure the right foundation for a future organization with broader, more ambitious initiatives.
In the case of a startup organization starting with little structure or leadership, the key question is the relationship between cost of salaries and seniority of leadership. The advantage of hiring senior people to lead organizations is that they can work as a cross-functional team, as well as lead their own areas, and later build larger organizations under them. Hiring below the senior level, while less expensive, can cause considerable displacement later as the organization becomes more complex, requiring new leadership capability.
Cost. Cost of new functions to support initatives is an over-arching factor in any initial structuring or re-structuring effort. Alternatives to developing inside capacity include outsourcing, joint ventures, alliances and partnerships.
Change Management. Any organizational change should be carefully "socialized" through the organization so that employees understand that the pending change is intended to help the organization as a whole best meet its goals.
As a hybrid organization, should we raise salaries to match our for-profit competitors?
Our organization is growing rapidly, and while our core business activity - riparian restoration - remains the same, our funding is shifting from government grants to private for-profit contracts (40/60). Recent employee departures and difficulty in meeting recruit goals have forced us to reevaluate our compensation strategy. As a hybrid organization, should we continue to base our salaries on nonprofit surveys, or should we raise employee salaries to match our for-profit competitors? The organization has the financial resources to increase salaries, but we are unable to locate wage surveys that combine data on organizations that conduct both nonprofit and for-profit activities.
John Carlon, President, River Partners, Chico, Calif.
I'm familiar with your problem because I've consulted hybrid organizations. To date, I haven't located any compensation studies that address these kinds of entities. I do suggest that you focus on private sector salaries, since your employees will work with those clients, competing with private sector employees in their work product; and you want them to be competitive in skills. However, you may not be able to meet private sector compensation and have to reach some kind of compromise. The balancing factor in attracting people with somewhat lower compensation is recruitment strategy. You might position your organization as highly desirable because it has certain traits that for-profit entities don't.
How can we build an effective leadership team?
We are an all-volunteer, foster-based animal rescue organization. One of our key challenges is recruiting leadership talent with some knowledge of animal welfare. Do you have any recommendations on how to build an effective leadership team?
Marilou Chanrasmi, Pet Haven Inc., Director of Human Resources, Minneapolis, Minn.
First of all, congratulations on the work you are doing. Animal welfare is a very personal issue for me, and I believe I've read about your organization. In recruiting an effective leadership team, there are several key factors:
1) Recruitment sources. If you're looking for someone that can mobilize around animal welfare, you need to define appropriate backgrounds and sources for those people and target them accordingly.
2) Behavioral traits. You need to identify the behavioral traits that are mandatory in your organization (they differ from organization to organization). Examples may be compassion, public advocacy, collaborative skills, etc. You need to include among these traits inspiration, commitment, and other qualities you define as uniquely necessary for leading volunteers.
3) Leadership skills. Of course, you need to define required background and skills for the leadership job itself, as well as the skills necessary to contribute to the organization at large.