Posts Tagged ‘Tom McLaughlin’

Mergers and alliances: Check your culture at the door

So often, you find yourself asking why things transpire they way they do in your organization and 9 times out of ten, you can point to culture. No, we’re not discussing pop culture or arts and culture. This culture is the underlying and invisible fabric of how your nonprofit behaves, what the underlying assumptions are and what the organization values. Thankfully, we all are given a free pass on striving for a perfect culture because the truth is, there is no perfect culture. With perfectionism out the way, we can go about factoring organizational culture into one of the more important roles it has to play, which is in an alliance or merger.

With our Page to Practice feature of The Nonprofit Organizational Culture Guide this summer, we learned about the importance of organizational culture and how pervasive it is with everything you do as a nonprofit leader—from hiring decisions and board training to marketing and strategic planning, organizational culture, as the authors Teegarden, Hinden and Sturm say, “reveals hidden truths that impact performance.”

That’s why it comes as no surprise that our currently featured author, Tom McLaughlin, spends some time in his book, Nonprofit Mergers & Alliances, on the importance of taking a “culture check” as one of the preliminary steps for considering collaboration. “Culture is stronger than strategy, so it is crucial to understand and be comfortable with a potential partner’s organizational culture,” says McLaughlin.

He further adds that since people take action and demonstrate behavior every day using underlying values, blended cultures translates into blended value systems that don’t always complement one another. In fact, 75 percent of hospital mergers fail if cultural issues are not taken into consideration, according to McLaughlin.

Ultimately, “one of the most reliable rules of thumb for post merger implementation is that the tighter culture always prevails,” says Tom, and the larger organization doesn’t automatically dominate, nor will the loudest or flashiest. So, how do we go about identifying one another’s culture before engaging formally in an alliance? McLaughlin has provided a list of good places to look for evidence of nonprofit culture that we reviewed at the beginning of the month:

  • Composition of board and management team
  • Degree of centralization versus decentralization
  • Demographics of clients
  • Demographics of staff
  • Financial investment policies
  • Financial performance
  • Geographic location
  • Management compensation policies
  • Marketing materials
  • Number and type of management meetings
  • Number of board meetings per year
  • Philosophy regarding staff turnover
  • Process for recruiting and selecting new board members
  • Requirements of major funding sources
  • Size of board
  • Size of management team (especially versus comparable nonprofits)
  • Unwritten/unspoken hiring preferences

Not every item on the list will yield insight and some will produce contradicting impressions. However, if taken together, these areas can help you create a composite of your potential partner’s culture.

See also:

Do More Than Give: The Six Practices of Donors Who Change the World

The Necessary Revolution: Working Together to Create a Sustainable World

Leveraging Good Will: Strengthening Nonprofits by Leveraging Businesses

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Mergers and alliances: Are your cultures compatible?

We recently spent some time focusing on organizational culture in June with the Page to Practice feature of The Nonprofit Organizational Culture Guide: Revealing the Hidden Truths that Impact Performance by Teegarden, Hinden and Sturm. 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 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, cultural awareness increases your effectiveness in almost every leadership choice you make.

The importance of culture couldn’t be more evident when considering compatibility during a merger or alliance. “There are many good places to look for evidence of a nonprofit’s culture. The key is to look in as many as possible and to assemble what you find into a coherent portrait of the organization,” says Nonprofit Mergers & Alliances author Thomas McLaughlin. McLaughlin further says that not everything listed below will yield insight, and some will contradict others, but overall the list represents a usable roadmap to the nature of culture.

Where to see culture at work, according to McLaughlin:

•         Composition of board and management team

•         Degree of centralization versus decentralization

•         Demographics of clients

•         Demographics of staff

•         Financial investment policies

•         Financial performance

•         Geographic location

•         Management compensation policies

•         Marketing materials

•         Number and type of management meetings

•         Number of board meetings per year

•         Philosophy regarding staff turnover

•         Process for recruiting and selecting new board members

•         Requirements of major funding sources

•         Size of board

•         Size of management team (especially vs. comparable nonprofits)

•         Unwritten/unspoken hiring preferences

Our upcoming feature this month, the second edition of Nonprofit Mergers & Alliances by Thomas McLaughlin was completed when the nonprofit sector witnessed the largest and most spontaneous burst of collaboration interest in our social sector history, according to McLaughlin. This focus on collaboration is the result of the nonprofit sector’s typical two-year lag on economic downturns, pointing upstream to the recession in 2007 and the fall of the subprime mortgage market in 2008.

McLaughlin notes that the more specific reason collaborations are in the spotlight is that the recession was the means for revealing which nonprofits had a weak financial or programmatic structure. Systemic results of the economy coupled with the explosive growth of the number of nonprofits in the last decade have compelled nonprofit leaders to examine the benefits of collaborating. No longer will strategic planning sessions be focused on programs and services; rather mergers and alliances will be the strategic planning of the 21st century.

Email us at Mail@CausePlanet.org for a free article by author Thomas McLaughlin, “Merger Myths: 6 Reason the Package Really Is On the Truck”

For more information about Nonprofit Mergers & Alliances, visit www.JosseyBass.com or our Page to Practice™ book summary library.

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