Those reading this book are highly likely to have an identification with a non-profit organization, either as a manager or board member, and are searching for ways to make it perform better. Unfortunately, there are no magic potions or magic bullets to accomplish this, regardless of how much time and money you are willing to invest. But I can say with some confidence that organizations must change or die. There are few organizations we know of today that existed a hundred years ago. What happened to those that are no longer here? And what can you do to make yours serve the public longer than it otherwise would have? The answers to these questions are elusive.
As we enter the new millennium, the non-profit sector appears to be thriving in the United States. Despite highly publicized scandals involving some of the best-known organizations in the sector, public confidence in the ability of charities to respond to the ever burgeoning needs for human services remains high. The “halo effect,” a public perception that charities are intrinsically better to do business with than their for-profit counterparts, is still intact.
Obviously, challenges lie ahead. At the global level, many economists warn of a world-wide depression, Other problems, such as the population explosion, global warming and other climate changes, natural disasters, famine, outbreaks of epidemics, armed conflicts, the destruction of fragile ecosystems, the depletion of natural resources, nuclear proliferation, terrorism, and the threatened resurgence of totalitarianism are among issues that will command our attention. Non-profit organizations, with their government partners, are on the front lines of solving, or at least mitigating, these problems. Environmental degradation, structural unemployment, racism, poverty, cancer, and homelessness are among the problems that government at the federal, state, and local levels, work with the voluntary sector to ameliorate.
Improving the efficiency and effectiveness of our non-profit organizations establishes and maintains their credibility when they speak out in the political debate on public-policy issues. Elements within the United States Congress have been skeptical about the need for charities to engage in advocacy, and constraints on lobbying activities continue to be proposed and debated. To this point, those who understand why charities need to be strong advocates on behalf of their clients and society at large have been successful in thwarting draconian measures to stifle and gag the non-profit sector.
One important field of action for the non-profit sector continues to be advocacy—government often provides the financial resources and the non-profit sector provides the muscle, creativity, energy, and elbow grease to accomplish what government, by itself, might otherwise be unable to do. The non-profit sector has expertise on virtually every public-policy issue and also serves as a public-policy conscience. I believe one way to stave off this legislative threat is for quality to pervade the consciousness of every non-profit manager, and for all legislators to be exposed in their districts to non-profit organizational programs that are exemplars. Political power of the non-profit sector can be expanded if the sector enhances its perception as a provider of quality goods and services.
Those who manage non-profits today demonstrate a high degree of professionalism, experience, intelligence, and commitment to serve the public good while often sacrificing their own material wants. To an increasing degree, non-profit managers come to the table with advanced degrees and technical management training. Colleges and universities have recognized the demand for continuing education courses and full-degree programs catering to non-profit managers and those who seek to enter the field. Many who graduate from these programs sustain an unquenchable desire for more education in order to improve their personal performance and achievement and that of their organizations.
For most of us, running a non-profit organization is not just a “job.” We talk about our organization’s problems at the dinner table, at the ball game, and at parties. It permeates our dreams at night. It is ingrained in our culture to focus on our work, and most of those employed by non-profit organizations are quite satisfied, if not proud, with being a part of a sector that is committed to placing human needs first rather than making a profit for stockholders. The apparently intractable global and national problems mentioned earlier in this chapter must be, and will be, on the public-policy agenda, and non-profit organizations will play a key role in developing creative solutions for them. If we can be successful in improving the general quality and performance of non-profits, then solving these problems will likely be quicker and accomplished with fewer resources.
We must make this a goal.
Some of the management strategies described in this book are designed to help in this effort. It is not just our organizations and ourselves that benefit from improved quality and performance of the organizations we manage. Our clients and the public are the ultimate beneficiaries.
Management of organizations is part art, part craft, and part science. Organizational theorists have written volumes, and engaged in hundreds, if not thousands, of empirical studies to get to the core of how to increase organizational effectiveness. Organizational science is still in its infancy, and it may be too soon to tell, but I suspect that science will not come up with much to say that will revolutionize the way organizational leaders improve their organizations. Many established figures in the field express their frustration with how very little we know about what makes organizations tick.
Just as “art” has its schools, often reflecting the dominant social paradigms of the time (Baroque, classical, impressionist, modern, post-modern, among others) organizational theory can boast of distinct schools. Herbert Simon, in the latest edition of his classic work Administrative Behavior, describes some of them—classical, neoclassical, human resources, “modern” structural, systems, contingency, and population ecology.
Organizational theory encompasses a panoply of wide-ranging ideas, some of which are empirically based, and others that are highly theoretical. Among some of the best-known organization theories are the following:
1. Organizations are like machines.
Max Weber’s writings, not published in the United States until 1947, nearly three decades after his death, were influential in providing a framework for the nature of bureaucratic hierarchies and the efficiency of decisions made rationally from the perspective of the organization rather than emanating from the personal needs of the organization’s leader. Non-profit organizations differ minimally from their government or their for-profit counterparts in the extent to which they form bureaucratic hierarchies. There are principles, some of them contradictory, as Herbert Simon has pointed out, that govern grouping of bureaus (such as by function, geography, process, or clientele). Each employee has one boss to report to, with a chain of command. Work is divided by specialization. Each manager has a “span of control” restricted to 5-8 workers.
The Scientific Management approach of Frederick Taylor, which came to prominence early in the 20th century, is based on this perspective. It is still a major influence on organizations such as those in the fast-food industry. In this model, managers do the thinking and planning, and the workers do the work. Workers are not paid to think, but to follow management’s prescription for doing a job, which is often described in excruciatingly explicit detail. In non-profit settings, one can find this management perspective less and less. Of course, you can find it in a sheltered workshop, and perhaps in a hospital cafeteria.
There are few non-profits that don’t have a structure that is based on the bureaucratic model of organization. Non-profits of the future may adopt various alternatives. Among such alternatives are virtual organizations (where management and coordination may be performed online among workers who may not have a formal work relationship with the organization) and matrix management models (where groups form to solve problems with minimal relationship to an established organization hierarchy).
2. Organizations are open systems.
Daniel Katz and Robert Kahn in their 1966 book, The Social Psychology of Organizations, and James Thompson in Organizations in Action, are among the leading proponents of this descriptive theory. Its basic tenet is that organizations are open systems. This model of organization is based on the work of Ludwig von Bertalanffy, a German biologist who, along with several others working independently on several continents, developed the concepts of General Systems Theory. This theory sees organizations as dynamic systems with inputs (personnel, supplies, information), throughputs (work processes that are performed on the inputs), and outputs (the finished product, services, and information transported to the environment), which are influenced by positive and negative feedback. Under this frame of reference, the bureaucratic model of Weber described above assumes organizations are closed systems, only minimally influenced by factors emanating from outside the organization.
3. Organizations are part of an ecology.
A corollary to the systems approach is that organizations are similar to biological systems. They have a life cycle, grow, become more complex, seek homeostasis (a process in which their internal controls are maintained despite pressures from outside forces to upset these controls), import “energy” to combat the effects of entropy, do what is necessary to survive, and potentially enter a state of equifinality, a final state resulting from the effects of increased entropy where there is minimal change going on inside and “death” is quite possible.
This theory took hold in the 1970s, about the same time as the environmental movement in the United States, and focuses on why there are so many types of organizations. The history and research associated with this theory is described by Joel A. C. Baum in Organizational Ecology (Handbook of Organization Studies, p. 77).
4. Organizations are crucibles of human behavior.
This theory (supported by the work of M. P. Follet, H. Minzberg, D. McGregor, A. Maslow, R. Likert, and others) maintains that organizations consist of thinking humans who act nothing like cogs in a machine perfunctorily performing the jobs the way management tells them to do (such as would be the case in the Weberian ideal bureaucracy or Frederick Taylor’s “one best way” to perform a job). Organizations consist of individuals with needs (organizational needs, personal needs, career needs, and so on), and they act to meet those needs. The informal organization may be as influential as the formal organization in affecting behavior in organizations. Human relations theory predicts that one cannot expect to obtain efficiency and effectiveness by treating people like machines, as Frederick Taylor’s theory suggests, and that managers who pay attention to those needs get better results.
5. Organizations act to maximize their utility.
This perspective looks at individuals as acting in their own self-interest and motivated by maximizing their utility. It encompasses the theory of Incrementalism (Charles Lindblom, 1959). Herbert Simon’s theory on decision-making asserts that managers do not make decisions “rationally” by choosing the best among all available alternatives but rather “satisfice”—choose from among a few choices, and selecting the one that is satisfactorily solving a problem. Dr. Lindblom took this theory one step further by suggesting that decisions tend to be incremental, contending that organizations act to ameliorate the worst effects of problems rather than solve them. This is because solving them is too complicated and requires too much political capital to be expended. Thus, an organization’s budget often provides for an incremental increase for each program, and the Manhattan Project and the Apollo Program are anomalies in a public-policy process that seeks to generate political acceptance and consensus by not taking too many giant steps toward dealing with a problem. The market approach also includes Transaction Cost Theory, which asserts that organizations rationally choose between “making” a product or service in-house or “buying” the product or service in the marketplace. The decision is based on which has the most transaction costs, including finding a vendor, negotiating a contract, enforcing the contract, and assuring quality of the product or service when delivery by the contractor occurs.
6. Organizations have a unique culture.
This culture comprises values, norms, behavioral regularities, and unwritten rules which capture the organization’s view of itself and its place in the environment, and affect both the organization and its task environment (defined as those outside of the organization who directly influence the ability of the organization to achieve its goals, such as suppliers, customers, and regulators). Theory suggests that organizational members must learn and accept this culture to succeed, and that the organization’s culture must be consonant with its task environment.
7. Efficiency is contingent upon conditions and circumstances.
This theory maintains that the most-efficient structure for an organization is determined by its goals and social and technical circumstances. This theory emphasizes the complex nature of organizations and attempts to understand which is the most-efficient structure based on varying conditions and in specific circumstances. The research conducted by Burns and Stalker, Joan Woodward, Charles Perrow, Lawrence and Lorsch, and James D. Thompson on organizational structure efficiency is consistent with contingency theory.
The Science of Organizations
The academic literature reflects an ambivalence about the validity and practicality of organizational theory. It purports to provide scientific answers to how large and small organizations behave. But it suffers from the delusion that it can actually do so. The reason is it often uses the same methods and frames of reference which are used to measure inanimate objects. Organizations consist of people who interact in unpredictable ways, reacting not to each other like atoms and molecules, but rather through exchanges of values, needs, experiences, goals, and randomly conveyed thoughts.
The inability for science to come up with a single, useful theory of organizations is anticipated by chaos theory (see Chapter 7). Clearly, organizations are dynamic, non-linear systems. They are sensitively dependent on initial conditions. Even under hypothetical conditions in which there are only two members of an organization, the two members are genetically identical, and the entire environment is totally controlled by the experimenter, chaos theory suggests that this organization will grow, require inputs, produce outputs, develop work processes, develop an organizational culture, develop a culture and socio-technical system, in a manner that is different each time the experiment is conducted.
This is not to say that one can’t perform experiments and make useful generalizations about organizations. But this is analogous to a baseball manager’s dilemma in deciding whether to avoid a double-play by sending the runner on first with less than two out and a 1-2 count on the batter. The manager may have the benefit of a computer printout on this issue with more than 100 years of statistical data. But generally, the manager makes a decision based on too many variables that can’t be factored into the statistical data, such as whether the sun is shining brightly, the confidence of the batter, the speed of the runners, the characteristics of the pitcher, and perhaps a thousand other factors, which blend into a blur of a decision based on Herbert Simon’s concept of “bounded rationality” or, as is more likely to be the case, “gut reaction” rather than rationality.
Baseball, in some respects, has some of the same limitations with respect to theory as organizations. There are scientific principles to apply if one were to act scientifically and methodically capture and operationalize variables, make measurements, and analyze data. And it should be much easier to come up with scientific baseball principles than organizational principles because many of the parameters involved in baseball are defined and standardized—the ball weighs the same, the bases are always 90 feet away, the rules are immutable, the teams consist of the same players, and many other factors are controlled.
Yet baseball managers tend not to be Ph.D.s calculating every move they make on a computer. And since millions of dollars ride on whether a game is won or lost, one can assume that if Ph.D.s could do a better job of managing, then they would be running the teams rather than the Casey Stengels, Don Zimmers, and Jim Lelands, who may not have much of a formal education to boast about but are certainly good “baseball men.”
For cultural reasons, the advancement of science and technology is the predominant social paradigm of Western civilization. We see it in sports, although not to as great an extent as organization theory, because the stakes are much higher in the latter. Most of us could live without baseball (after all, we have football, basketball, hockey, soccer, and lacrosse). Our entire civilization, however, is built upon, and fueled by, organizations.
It doesn’t necessarily follow that science will be able to come up with hard-and-fast rules describing organizations and predicting their behavior with accuracy. As mentioned before, what we know from chaos theory suggests that will not be the case. We can, however, conduct empirical studies, and come up with theories on some aspects of organizations that will yield the same outcome when repeated. But to expect that it is only a matter of time, and a matter of will, to find the grand theory that predicts the behavior of organizations is not likely to be true.
For those of us who have spent our careers working for, working with, and even creating new organizations, this conclusion is not surprising. As I previously pointed out, we watch baseball games because even after thousands of games, we see something new and interesting each time. And the same is true for organizations, infinitely more complex dynamic systems. In organizations, the “field” changes its dimensions every day, and the “ball” gets bigger or smaller both constantly and randomly. That’s one of the attributes that make them so much fun!
While organization research will fish around the edges and find a nugget of truth in empirical research, the frustration of searching for the organizational equivalent of physics’ Unified Field Theory is likely to continue. This is not because researchers in organizational theory are stupid, lazy, or incompetent. If they wanted their experiments to come out clean and repeatable, they should have concentrated on linear, dynamic systems rather than non-linear, dynamic systems.
What this most likely means is that we are on our own. We cannot count on some organizational theorist with the genius of Einstein to point us to the Promised Land where every employee works hard, every client’s needs can be satisfied, we are granted all of the resources we need (and at just the right time) to accomplish our objectives, every board member governs appropriately, and we never find a problem that is not solvable.
So, with all that in mind, what can a manager do to steer the organization on a course of improvement? Techniques such as TQM, BPR, benchmarking, Outcome-Based Management, and LGI are packaged ways to change an organization and make it more cognizant of the purposes for which it was formed and what it needs to do to stay competitive.
The non-profit sector is at a crossroads. The advance of technology has given non-profit organizations productivity improvement tools that only a few years ago would have been considered science fiction. And imagine the possibilities of how we will be using the Internet a few years from now!
A sector-wide commitment to improving quality has swept the manufacturing sector, and each of us has benefited as a consumer. I contend that we will benefit as well from adopting and successfully implementing a quality improvement philosophy in our non-profit organizations.