7 Pivotal Points When Nonprofits Must Make Fundamental Changes
Resource
Seven Turning Points: Leading Through Pivotal Transitions in Organizational Life
Contents
What Are Turning Points?
The Seven Points Defined
Turning Point 1: Do we need to get organized?
Turning Point 2: Do we need infrastructure?
Turning Point 3: Do we need to let go?
Turning Point 4: Do we need to focus?
Turning Point 5: Do we need to decentralize power?
Turning Point 6: Do we need to recapture our core?
Turning Point 7: How do we move on?
The Importance of Focus and Setting Priorities
Tips for Adjusting to a Tight Funding Environment
From Rebecca Post, Managing Editor, Fieldstone Alliance
THE FLOUNDERING ECONOMY is forcing nonprofit organizations to trim budgets, cut staff, or make plans to do so. "Because economic prospects for next year are even worse, nonprofits can't view these as temporary measures. Instead, they have to think about basic adjustments that will allow them to operate in a leaner, tighter, more disciplined manner for the foreseeable future," says Susan Gross, author and co-founder of Management Assistance Group (MAG).
Gross’ new book, Seven Turning Points: Leading through Pivotal Transitions in Organizational Life, addresses critical junctures at which nonprofits must reassess the way they operate and make fundamental changes or risk decline.
This issue of Tools looks at scaling back operations through the turning points lens. First, we'll describe what the turning points are and then we'll focus on the point that Gross says is especially important when navigating through tough economic times.
What Are Turning Points?
As nonprofit organizations mature or grow—as their staffs and programs expand, as their operations and dynamics become more complex, and as the climate they operate in changes and presents new challenges—the leadership, structure, management, and operating norms that worked at one point no longer work. In fact, the management solutions for one phase often turn into the management problems of another.
To remain strong and effective, nonprofit organizations cannot remain static. If they are to move to a new level of effectiveness, they must periodically adjust their leadership, management, structure, governance, and operating style to fit their changed circumstances. Gross calls the junctures at which organizations must make these systemic changes "turning points."
At each one of these turning points, a distinct pattern or characteristic combination of problems typically emerges. Board members, executive directors, and staff tend to personalize these problems and blame themselves or each other. Being able to recognize these patterns and understand that they’re symptoms flagging the need for change helps stop the blame game. Instead, board, executive, and staff can see the problems as normal growing pains. Even more important, discerning these patterns allows an organization to make the necessary adjustments before tensions intensify and escalate into full-blown crises.
The Seven Points Defined
Gross' forty years of work with nonprofit organizations has shown that turning points are most likely to arise at seven predictable times in a group's life:
Turning Point 1: Do we need to get organized?
A loose, family style of operating leads to disorganization and a lack of professionalism or accountability. The organization needs to develop tighter, more formal structures and systems.Turning Point 2: Do we need infrastructure?
The management needs of an organization outstrip its executive director’s management skills. The organization needs to build infrastructure and strengthen management.Turning Point 3: Do we need to let go?
A founding volunteer board hires its first executive director but finds it hard to delegate and adjust to a less involved role. The organization’s board needs to detach itself from day-to-day management and hand over authority to the chief executive.Turning Point 4: Do we need to focus?
Opportunistic, unplanned growth results in an absence of focus and priorities and spreads an organization too thin. The organization needs to acquire discipline and focus on a few key areas.Turning Point 5: Do we need to decentralize power?
Strong central direction becomes micromanagement, top-down control, and over-dependency on the leader. The organization needs to decentralize management and distribute power widely among staff.Turning Point 6: Do we need to recapture our core?
Decentralization goes too far, splitting the organization into autonomous units that have little or no connection, coherence, or coordination. The organization needs to rediscover its center, its core purpose, and consolidate its activities and structure accordingly.Turning Point 7: How do we move on?
A longtime, cherished executive director must prepare to step down. Meanwhile, the organization must figure out how to move on without losing momentum.
Seven Turning Points describes the characteristic problems that arise flagging the need for change, the main adjustments that need to be made, and the typical counter-tensions that need to be managed at each turning point.
Nonprofit organizations do not necessarily go through every one of these seven turning points, nor do they always reach these points in the order in which they’re listed. While the first three turning points most often occur when organizations are relatively young and small, they sometimes show up in more mature groups. The remaining four turning points usually occur in larger groups that have been around for some time, but can arise earlier. In some cases, organizations must grapple with two or three transitions at the same time.
Regardless of which of these turning point organizations may now be going through, the economy is forcing many of them to go through an additional and unexpected major transition—cutting back budget and staff. Gross suggests that the fourth turning point, "Do we need focus?" is especially relevant now.
The Importance of Focus and Setting Priorities
"Organizations must find a way to cut back that does the least damage to achieving their goals and that leaves their staff feeling that the cuts were well-reasoned, fair, and transparent," Gross says, "The best way to do this is by defining what the organization's most essential, core goals are, reshaping its work to focus on those priorities, and using this as the rationale for making cuts in the budget or staff."
The problem is, as Seven Turing Points explains, many organizations have a hard time setting priorities because of the tough choices it entails. To help organizations that find it hard to make cuts, the book offers a way of setting priorities that makes the process a bit easier. First, the organization must define its core goals—the major outcomes it intends to produce, each one of which will significantly contribute to the fulfillment of its mission. Then the organization needs to sort its activities into three levels of priority: highest, second-tier, and lowest.
Highest priority: At the top level are activities that meet all three of the following criteria. The activity (1) is vital to the achievement of at least one of the group’s core goals, (2) would make a special contribution or play an important role that no other organization could make or play as well, and (3) has a realistic chance of making progress toward the goal.
Second-tier priority: At the next level of priority are activities that (1) are important to the achievement of one of its core goals but aren’t absolutely essential, (2) progress is possible, and (3) no other organization can do the activity as well.
Lowest priority: At the lowest level of priority are those activities that would be helpful to the achievement of the group’s goals, but (1) some other organization is already doing them well or (2) the chances of making progress or having significant impact are slight.
In all probability, the tight financial climate will force the organization to focus its budget and resources almost entirely on the highest-level priorities. It may be able to do some things at the next level if it can raise the necessary funds, but it will almost certainly need to drop all the lowest-level priorities and cut its staff and budget accordingly. Gross says, "Some organizations will have to retain low-level priorities because of restricted funding obligations. These organizations should, over time, work toward phasing out these activities and concentrate on convincing funders that allowing the organization to focus on its core work will enable it to be most effective and have the greatest impact."
Tips for Adjusting to a Tight Funding Environment
Seven Turning Points has some other pointers for adjusting to a tight funding environment.
Remove poor performers
Because of their humanitarian values, nonprofits are often reluctant to fire anyone. But when an organization has to operate with fewer resources, it can't afford any substandard performance. Now is the time to ask anyone who is not carrying their weight to move on. Although letting them go is painful, it’s usually a better option than keeping them in a job that they can’t do well and that other staffers may resent because they're not doing their fair share.Manage using a reality-based operating budget
It's more important than ever to upgrade financial accounting, controls, and management—establishing more sophisticated budget development, cash-flow management, income projections, and budget monitoring systems. The organization must produce, at least quarterly, balance sheets and financial reports comparing actual to budgeted income and expenses; then make whatever budget corrections or management adjustments the numbers indicate are necessary.Pay attention to the way changes are made
How changes are made is often as significant as what changes are made. The change process must ease people along, emphasizing lots of communication, dialog, explanation, and opportunities for input. The entire staff does not have to be thrilled, but a critical mass needs to buy in. Expect some inevitable resistance and discomfort. If the organization tries to wait for unanimous support before making changes, it’s liable to wait forever.
Navigating turning points always entails some loss, but it also opens up new opportunities. It's hard to see any opportunity in this economic crisis, but if there is one, it's for nonprofits to emerge as leaner, more disciplined operations that are tightly focused on what is most essential.
Where to Learn More
Management Assistance Group (MAG)
www.ManagementAssistance.org
MAG provides individualized, in-depth support to nonprofit groups that are grappling with organizational problems, challenged by change or growth, or striving to become stronger. For more than twenty-seven years, the Management Assistance Group has helped social justice organizations develop strong leadership, effective management, robust governance, sound structures, and potent strategies. Providing one-on-one consulting, workshops, management training, and capacity-building programs for groups of related organizations, MAG is proud to play a part in building a vital social justice community, and, in turn, a better future.
Free Publications
MAG produces several easy-to-use tools for nonprofits, including Advancing Your Cause Through the People You Manage, Boards Matter, and Strategic Planning That Makes a Difference. These publications can be downloaded from their site.
Consulting
The Management Assistance Group provides a variety of consulting services to nonprofits and funders. They're also currently looking for a Senior Consultant. See their web site for details.
Susan Gross, author of Seven Turning Points: Leading Through Pivotal Transitions in Organizational Life and cofounder of the Management Assistance Group, is a noted organizational development consultant who has spent more than forty years strengthening nonprofit organizations so that their people and programs succeed.
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Consulting services
Fieldstone Alliance consultants help funders and nonprofits plan and navigate changes. We can help you understand your organization's core capabilities and business model, gain greater understanding of your market and competition, develop criteria to guide strategy decisions, and help you formulate and test strategies. For more information, please contact Sandy Jacobsen at 651.556.4510 or sjacobsen@FieldstoneAlliance.org.
Best Regards,
Rebecca Post
March 4, 2009
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