Sunday, November 20, 2005

Managing the Nonprofit Organization (Part Three)

1. What is the bottom line when there is no bottom line?

Businesses as a default can rely on profit as an effectiveness measure. Nonprofits cannot use this concrete measure meaningfully. There are many different ways of looking at measurements that can serve as bottom lines of sorts, but the trick is to pick the right measurement to look at. And that can change over time, so it needs to be incorporated into the strategic planning (or whatever you want to call it) process.

Nonprofits have many different customers which all need to be pleased to differing degrees.

Drucker talks about the difficulty nonprofits have abandoning lost causes.


Nonprofits have to distinguish between moral causes and economic causes. A moral cause is an absolute good. Preachers have been thundering against fornication for five thousand years. Results, alas, have been nil, but that only proves how deeply entrenched evil is. The absence of results indicates only that efforts have to be increased. This is the essence of a moral cause.


Of course, you have to get out of this mindset and focus on putting your resources where the results can be found.

2. Dos and Don'ts: the basic rules

Don't become inward-looking. If you serve a community, get out into it. Feuding and bickering should not be tolerated. Personally, I see a terrible problem with this in an organization I work with. The culture is totally poisonous to anything remotely resembling innovation and the queen bees will either a) try to get the heretic fired, with some degree of success, or; b) make the heretic's life so miserable that they quit. So what happens is you get this self-selecting group of nincompoops who are so wholly and totally incompetent that they are slowing steering the organization off course, an inch at a time. Management is unprepared to make the difficult personnel decisions required therefore the situation shows no sign of improving. An interesting observation from the chapter: "most people think feuding and bickering bespeak 'personality conflicts.' They rarely do. They are usually symptoms of the need to change the organization."

It's important to build the organization around information and not around hierarchy. Everyone should take information responsibility. "Everyone needs to learn to ask two questions: What information do I owe others so that they can do their job, in what form, and when?"

This can be called an information-based environment. "People must take responsibility for informing their bosses and their colleagues and above all, educating them." I say preach it, brother. However, who hasn't worked in an environment where bosses refuse to 'be educated.' These individuals think that if they don't know something and admit it, that is a sign of failure. So in those cases a therapist needs to do an intervention and talk about how we are all unique and special. Drucker says all is okay because this can happen in an "environment of mutal trust."

"It is more important in the nonprofit institution than it is in a business to insist on the clarity of commitments and relationships, and on the responsibility, for making yourself understood."

Delegation needs clear rules to become productive. It also needs follow up.

Drucker says if the organization has sub-units like chapters that are only semi-independent, it's important that the top people visit them personally and not do this through staff. My guess is that this is a relationship thing that needs to come from the top down. I can say as a staff person (not at the top) that my visits to the field have been appreciated, but that it is true that these people crave attention from the organization.

Standards should be high, goals should be ambitious, but all should be attainable.

"People need to know how they do. Achievement [for volunteers] is the sole reward." This is a tip I have actually learned through experience, but I am glad to see it in print over Drucker's signature. Working in chapter relations, I was always sort of amazed to hear staff talk about how thus and such was unacceptable, and how our volunteers were not dedicated, or what have you. My deal was always: it's up to us to make the job doable. If they are having problems with x or y, then maybe we should look at our process and see what we can streamline. I mean, you always have to deal with the bell curve, but you can make some strategic improvements. For Drucker, in order to motivate volunteers, you should "feature them," show them off.

3. The effective decision

Ask 'what is this decision really about?' Very rarely is a decision about what it seems to be about. That's usually a symptom."

Find the targets of opportunity and concentrate on them.

There should be dissent, according to P.D. This fact should be intuitive given that he states earlier it's everyone's job to educate their boss. The process of educating is rarely going to give the person being educated everything they want to hear, I would think. Tells the story of FDR who said if there was concensus on an important issue, it shouldn't be made right then, but should be thought about more fully.

"Disagreements must be brought out into the open and taken seriously." You can start by saying, "let's see what we can agree on."

4. How to make the schools accountable: interview with Albert Shanker

5. Summary: action implications

Don't downplay results. Results are outside the organization, not inside. "Only when a nonprofit's key performance areas are defined can it really set its goals."


By Peter Drucker
ISBN # 0887306012