Archive for June, 2011

Perfect cultures and paired cultures

“There is no ‘perfect culture’ that all nonprofits should try to achieve. Each organization’s culture must be understood on its own terms, including its strengths and challenges. What is effective for each organization will be unique to its culture.”

This quote was pulled from our Page to Practice feature this month, The Nonprofit Organizational Culture Guide: Revealing Hidden Truths that Impact Performance by Paige Teegarden, Denice Hinden and Paul Sturm.

Here’s what the authors had to say when asked about “perfect cultures:”

CausePlanet: Most of us follow or model best practices when we want to improve something. If there is no “perfect culture,” how do managers go about improving it?

Authors: Every organization’s culture is unique, made from its own history and the groups of people who have been at the heart of the organization. Our research tells us this work is less about ‘improving’ culture than about honoring the culture that ‘is’ by revealing it, so that culture informs key decisions made by the organization’s leadership. Although there are likely to be elements of an organization’s culture that are unhealthy or unintentionally hinder the organization’s work, the culture in and of itself is not something that can be improved in the literal sense. However, understanding the unique elements of an organization’s culture – both positive and negative – can help leaders develop more effective strategies to improve systems, procedures, hiring practices, working environment, etc. in ways that enable the organization to more effectively make its intended difference.

When you consider that the U.S. nonprofit sector represents nearly two million organizations and employs nearly eleven million people, the social sector plays a critical role in America’s cultural fabric. Because nonprofits have such a large part to play in the economy, there has been a larger push from funders and community volunteers to better understand the impact nonprofits are making. Culture has become part of this sectorwide conversation.

Although culture is an ever-present term used throughout leadership and management literature and commonly identified as responsible for powerful outcomes, it’s rarely defined and specifically analyzed. The Nonprofit Organizational Culture Guide provides a simple process for gleaning organizational truths about culture that helps you define your culture and develop a summary statement with which you can guide all your important management decisions.

This week at CausePlanet, Vance Yoshida of La Piana Consulting wrote about why nonprofit should explore sharing administrative services, which in many cases can be the beginning of more formalized alliances or collaborations. Consequently, culture becomes a consideration. In our interview with the Culture Guide authors, we also asked:

CausePlanet: Talk to us about culture and merger considerations. How much are cultural differences a sticking point when examining two organizations as potential partners?

Authors: We think it’s critical for organizations to understand their unique cultures before consummating a merger. Remember AOL/Time Warner? Virtually every analysis written about the merger’s failure mentioned the merged organization’s inability to meld the two original organizational cultures. We believe this is no different for nonprofit organizations. Undertaking a merger is challenging under the best of circumstances. Attempting to merge two organizations with conscious knowledge of the different organizational cultures increases the potential for everyone involved to make better judgments about what will facilitate a successful merger and create a cohesive, integrated organization.

We also recommend that both organizations separately undertake the ROC process, and then come together to talk about areas where the cultures overlap or are complementary – as well as areas where there are likely to be problems. Then delve into areas of potential conflict, seeking to understand how deeply held these elements of culture are, and what aspects of organizational process and structure reinforce them. With this information, the merger team (representatives from both organizations) can have frank and open discussions about whether or not the two organizational cultures can be integrated over time or not. If the answer is ‘not,’ then depending on the circumstances and reason for merger discussions, one organization may simply agree to its programs being spun off, without it being a true merger.

Whether you are seeking “to perfect” your individual workplace culture or make two cultures compatible, the authors argue that defining it to begin with is a critical step in improving every aspect of your management decisions—be they hiring, board training, strategy development or alliances.

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Why nonprofits should explore shared administrative services

To some, sharing administrative services sounds like a great idea for streamlining operations and saving money. Others would ask whether it is really worth the effort, compared to just continuing with business as usual. What is needed is a clear-eyed exploration of the real benefits and challenges of shared administrative services.

Some of the most common shared services are bookkeeping/accounting, office space, human resources and benefits administration, and information technology. Most shared administrative services take on one of the following structures:

  • One organization provides services for one or more other organizations.
  • Two or more organizations share staff, a department, space and/or office equipment.
  • Two or more organizations trade administrative services (e.g. one organization trades IT services in exchange for HR services provided by another organization).

Here are the most common questions I am asked about sharing administrative services with one or more other organizations:

Will we reap substantial savings by sharing administrative services?

Most organizations will not experience significant cost savings in the first year or two of sharing administrative services. Often, they can expect additional expenses associated with the transition to shared services, such as building or modifying systems to handle the transactions of multiple organizations. For example, let’s say three organizations decide to jointly share one department to do their bookkeeping. In the first year, there are costs for modifying an existing accounting system, migrating data from other sources into one system, transitioning staff and training the shared staff on the financial transactions of each organization. (In this particular case, it is also useful to note that typically organizations with budgets of less than $500,000 do not reap significant cost savings from sharing bookkeeping/accounting services, but can often outsource the function at a lower cost.)

Will it increase our capacity and provide us with expertise that we do not currently have access to?

The most immediate benefit of sharing administrative services is that organizations can gain access to expertise they do not have or could not easily obtain on their own. For example, three organizations might decide to hire an HR manager because each organization individually does not have the resources to hire a person with HR expertise. By sharing this service, they now have assistance in hiring new staff, retaining and building the capacity of current staff and more effectively handling personnel matters that might otherwise take up a significant amount of an executive director’s time.

How do we determine if an organization is a good partner for exploring shared administrative services?

The first question to ask is: Do our potential partners have operations and programs that require similar administrative functions? Organizations that have operations and programs that require different administrative functions are not good potential partners for sharing services. For example, if one organization services mortgages and the other organization processes a lot of insurance reimbursements, they would not be good potential partners for sharing accounting/finance services because they would require different accounting systems and staff with specific areas of expertise.

Next, you want to look at the following question: Is there a high level of trust between the organizations? Our experience with nonprofit partnerships tells us that organizations with close, trusting relationships have the greatest potential for successfully sharing administrative services. Organizations that share services will be making many decisions together, and if there is not a high level of trust it is often difficult to efficiently and effectively make those decisions. In most cases, when organizations terminate their partnership after a very short time together or decide not to launch a partnership with another organization, it is because there is not a high enough level of trust between the organizations.

Another key criterion is: Does one of the potential partners have existing systems with the capacity to handle providing services for multiple organizations, or are there resources available to build the systems or infrastructure to provide these services? Most of the time, sharing services requires modifying a current system or building a new system. For example, if two organizations share accounting staff but continue to run two different accounting systems, the outcome would not be cost effective.

Finally, there is the managerial question: Will it be difficult for the shared services staff to serve under more than one executive director and meet the needs of multiple organizations with different cultures? For example, if one organization has a highly centralized decision making culture and the other has a very decentralized decision making culture, it can present a challenge for the staff of the shared services department to get both organizations to make necessary decisions and develop common systems and procedures.

Here are some other key lessons that we have learned about shared services:

Sharing administrative services will often not help organizations that are in financial distress. These organizations need to develop new revenue strategies, find another organization to acquire them and/or begin planning an orderly shutdown of their organization and transfer of their clients to other organizations.

There are more and more for-profit organizations providing administrative services for nonprofits. Many small- to medium-sized companies already outsource many of their administrative functions, from accounting to human resources management. At our firm, we work with a great local financial services provider that handles all our accounting transactions, and all our staff is actually employed by a PEO (Professional Employer Organization) that provides a robust and affordable package of employee benefits including a variety of trainings on capacity building topics.

Sharing space can be a great starting point for organizations that wish to share services. Operating together in the same space provides the opportunity to share conference rooms, reception areas, front office staff and equipment. It also provides an environment for the staff of the different organizations to develop relationships that often lead to increased levels of trust. As trust builds, the organizations may feel more comfortable sharing services in various administrative areas like information technology, human resources or accounting/finance.

Sharing services can provide many significant benefits to your organization, but it is important to take the time to consider the factors above before jumping in with both feet.

See also:

The Cash Flow Solution

Cash Flow Strategies

image credits: jeffbullas.com, mikemerrill.com, influenceapp.com

 

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Publisher launches new app for nonprofit managers

As you may have noticed over the years, many of the books we feature at CausePlanet are published by Jossey-Bass/Wiley, which is why I’m really excited about their new mobile app, Nonprofit Manager’s FAQ. Released in May 2011, the new app is available in the App Store for the Apple iPhone and iPad, and in the Android Market for Droid smart phones and tablets.

Thanks to the availability and growth of mobile applications, nonprofit leaders now are looking to their mobile devices for tools that provide quick and easy access to the resources and information they need to do their jobs better and improve results.

Adapted from the myriad of Jossey-Bass/Wiley nonprofit resources, the Nonprofit Manager’s FAQ mobile app brings together tips, advice and practical guidance on how to work more effectively in the nonprofit field. This tool offers up to date insight on every aspect of nonprofit work, including: Boards, Management, Marketing, Finance, Fundraising and Nonprofit Law. New content is continually added, keeping it current with the latest nonprofit trends.

With the Nonprofit Manager’s FAQ mobile app users can:
Search and browse all content
Pick favorite answers and save them
Share discoveries with friends through social networks and email
Adjust text size

Users will also be able to access contributions from top nonprofit organizations like BoardSource, AFP, NTEN, Alliance for Nonprofit Management and CompassPoint. Key authors featured include Peter Drucker, Beth Kanter, Leslie Crutchfield, Kim Klein, and Heather Grant, among others.

The Nonprofit Manager’s FAQ mobile app is free for a limited time. Click here to download from iTunes or here to download from the Android Market. For more information, you can contact Meredith Stanton at mstanton@wiley.com or 415-782-3242.

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Can you change your culture?

The value of knowing your organizational culture cannot be overstated when you realize the impact it has on everyday management decisions, as well as important benchmarks such as executive transitions, restructuring, organizational alignment and mergers. By choosing to reveal your organization’s culture, the authors of our current feature, The Nonprofit Organizational Culture Guide, say you will be better able to orient new staff and board members, find better leadership matches, better understand and define your theory of change, develop more effective strategies, market and communicate more effectively and make successful choices about restructuring or mergers. In other words, culture awareness increases your effectiveness in almost every leadership choice you make.

The following is an excerpt from our Page to Practice feature of The Nonprofit Organizational Culture Guide: Revealing the Hidden Truths that Impact Performance by Paige Hull Teegarden, Denice Rothman Hinden and Paul Sturm. In this excerpt, the authors explain how you can reveal hidden truths about your nonprofit by exploring its stories. These stories in return will shed important light on how your organization operates, what its norms are and how to mobilize change. We also asked about the biggest mistake nonprofits make when trying to change culture.

Learning through stories

Three kinds of stories are critical sources of information about organizational culture, according to the authors: the creation story, the survival stories and the heroic or successful staff stories. The authors report that these stories are usually filled with images, values and assumptions, and characters who acted on these values and assumptions. They found analyzing these stories to be the most powerful way to surface the “hidden truths” about organizational culture.

 

The “creation story” is a “thick” or richly described telling of who formed the organization and why, say the authors. The creation story includes information about what the founders hoped to accomplish, who founded it, how they founded it and information about the broader environment. The story reveals evidence of important solutions to problems and uncertainties, which becomes the core belief system and assumptions surrounding the organization.

Survival stories are also thick narratives that focus on life-threatening challenges that the organization has successfully conquered. These are not stories about securing a grant. When you hear a survival story, you should be able to identify the seriousness of the threat and what the organization did to navigate the threat. Because the story is about “life and death,” the story should endure.

Hero or heroine stories have magical and mythical qualities where the central figure becomes larger than life. In this case, you are looking for stories about an uber successful staff person that inspires retelling. Sometimes these stories are

portrayed in the setting of “the way things used to be,” which conveys norms about the organization. These are often internal stories.

CausePlanet: What is the biggest mistake that organizations make when trying to change their culture?

Authors: The mistake is believing that organizational culture can be changed in a wholesale way. Culture is an organization’s DNA. It’s always present – seen or unseen, spoken or silent, explicit or implicit. An organization’s culture can certainly evolve or shift as its internal or external environment shifts. However, attempting to ‘change’ organizational culture is less likely to succeed. This is why we stress the importance of revealing and understanding organizational culture so that it becomes an ally in structuring shifts that enhance organizational effectiveness. Swimming with the current is always easier.

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Workplace culture: Just breathe

Positive workplace culture is to success what oxygen is to breathing. You can’t see it but it’s vitally important, and though it’s hard to describe, it makes everything else you do easier. Authors, Paige Hull Teegarden, Denice Rothman Hinden and Paul Sturm, demystify the highly mentioned but rarely discussed notion of organizational culture in their new book, The Nonprofit Organizational Culture Guide.

The authors begin with a helpful synopsis of what is published about culture and build on this foundation with the many factors that influence our deep assumptions about the nonprofit workplace. Historical, economical, political and contemporary business practices are discussed and how they impact the cultures we form. The authors explain how revealing hidden truths through stories provide us with the critical information we need to characterize nonprofit culture. By undergoing this ROC (Revealing Organization Culture) process, managers can leverage their cultural awareness to improve every aspect of their decision making, from marketing to mergers.

We are pleased to feature this helpful guide during June after having read how much culture can affect a nonprofit leader’s role with their staff and board. We hope you enjoy the book as well. In the meantime, here is the first Q and A we shared with the authors in our Page to Practice summary:

CausePlanet: Why should nonprofit leaders care about understanding and improving their organizational culture?

Authors: The work of nonprofit organizations has never been more important than it is right now. Nonprofit organizations are the heart and soul of our society and impact the quality of human and community life in profound ways. Many nonprofit organizations have become the new safety net for countless numbers of individuals and families in communities throughout the United States.

Surfacing the deepest unique elements of their organizational cultures can help nonprofits strengthen themselves as they advance their missions. Once revealed, the elements of organizational culture provide new information for developing more effective organization capacity building and service delivery strategies. The potential for success increases when strategies are designed to take advantage of an organization’s strengths or respond to its limitations. From hiring key staff to recruiting board members to identifying new program partners, understanding organizational culture can help leaders make better strategic decisions and strengthen alignment among key stakeholders.

For more information about The Nonprofit Organizational Culture Guide visit http://www.revealorganizationalculture.com/ or follow us on Twitter and Facebook to learn more about this month’s book and future highlights.

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Model statement versus mission statement: Do you have both?

When engaged in decision making, nonprofit leaders typically look at financial sustainability and programmatic sustainability in isolation from one another. Because a blended approach is seldom used by boards and leaders, important decisions are made out of context, leaving the organization at greater risk for future viability.

In Nonprofit Sustainability, the authors demonstrate how to use an adaptable tool called the “Matrix Map,” which is extremely helpful in visualizing what programs merit nurturing, require dissolving or compel us to maximize them based on their profitability and impact. Matrix mapping can be used for simple decisions, complex collaborations, mergers, planning and fundraising feasibility. The authors claim that Matrix Maps foster discussion, facilitate strategic options and ensure that decision makers keep both aspects of sustainability front and center.

Nonprofit Sustainability uses three fictitious organizations to illustrate how to use the Matrix Mapping tool and introduce the concepts of business models, sustainability and financial viability in the nonprofit setting. According to the authors, financial sustainability is not only a legitimate goal, it is a necessary and intrinsic goal. Furthermore, most nonprofits are now employing hybrid revenue strategies where they combine donations, earned income, contracts, grants and other income types. Consequently, financial goals must be set and managed differently for each revenue stream.

Whether it is purposeful or not, every nonprofit has a business model, say the authors. Even though every program is managed individually, each must operate within an overall strategy. The authors assert that leadership’s role is to develop and communicate that strategy so all the activities operate within one vision, which makes the business model viable.

CausePlanet: One of the most intriguing imperatives I read in this book was the importance behind describing what success will look like. So I asked Bell, Masaoka and Zimmerman “What is the best use of a business model statement as it relates to the mission statement?”

Zimmerman: “Mission statements discuss what the organization wants to accomplish typically in broad, inspirational terms. Business model statements are more specific and provide details not only on how the organization carries out its mission but also how it pays for it. So, for example, an early childhood education center’s mission statement might be:

“To support the intellectual, physical, spiritual and emotional development of children so they become self sufficient, contributing members of the community,”

but their business model statement might read:

“We provide early childhood education and daycare services for children ages three to five supported by government funding and subsidized through the generosity of individuals.”

The statement acts as a guide for the board in explaining the business model and helps focus them on the programs and revenue strategies that create a successful organization.

For more discussion about Nonprofit Sustainability, you can follow the authors: Jan Masaoka at Blue Avocado (www.blueavocado.org), which is an online magazine for nonprofits where the discussion on this topic and many others is continuing. Both Jeanne Bell and Steve Zimmerman contribute there and can also be reached via their respective organizations: Compasspoint (www.compasspoint.org) and Spectrum Nonprofit Services (www.spectrumnonprofit.com).

 

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