Improving Quality and Performance in Your Non-Profit Organization--Chapter 1

Chapter 1

Introduction to Quality Improvement

Many of those who govern and manage non-profit organizations are increasingly finding their organizations subject to many of the same economic pressures as their for-profit counterparts. Their operations often resemble their for-profit competitors in both organizational structure and corporate culture. They are increasingly led by those trained in business rather than social work, and their mentality and style of administration often reflects this. Stereotypically, they often put the “bottom line” paramount above the needs of clients. One non-profit CEO I spoke with recognized the inconsistency of trying to run a human service organization and retaining his “humaneness,” while at the same time being forced to make rational business decisions, which meant the firing of “nice” people who were hurting the performance of his organization. He commented to me that his management credo was to be “ruthlessly altruistic.”

In many cases, the products and services once provided solely by non-profit, charitable organizations are now being provided by for-profits. One can often find health clubs, hospitals, schools, nursing homes, and day care centers—both for-profit and non-profit—competing for clients on an equal basis within communities. When there is this direct competition, particularly in the delivery of human and educational services, cost is just one factor in a customer’s decision. Quality of service is often even more important in a decision, and those non-profits that offer high-quality products and services obviously have a competitive edge. Those that can’t offer quality may find themselves out of business.

Many thousands of other non-profit organizations find themselves in a situation where they don’t have direct economic competition from those providing the same service. There is only one United Way affiliate in each community, one Arts Council, one Arthritis Foundation, one AARP affiliate, and one Special Olympics affiliate. Except under unusual circumstances, it is unlikely that another organization will sprout up to directly challenge one of these. It would be easy to jump to the conclusion that having a monopoly of this nature would mean that quality and performance are not as important as they are to those with direct, head-to-head competition for providing a particular product or service.

Nothing can be further from the truth. Quality is important to all non-profit organizations, and none is immune from the consequences of neglecting quality. Charities rely on loyal customer support. Even if a non-profit is not involved in direct economic competition, there is substantial competition for things that indirectly affect the viability of organizations. Among them are—

1. Competition for government and foundation grants. Most charitable non-profits depend on grants to supplement any client fees they receive. Foundations are acutely aware of organizations with poor reputations with respect to skimping on service quality. No one wants to be associated with such an organization. It is no wonder that first-class organizations often have little trouble attracting funding, because everyone wants to be associated with them.

2. Competition for private donations. Would you make a donation to a charity that had a reputation of treating its clients like animals? Unless that organization is the SPCA, you are more likely to look elsewhere for finding a charity worthy of your donation.

3. Competition for board members. Why would anyone want to serve on a board of a second-class non-profit and risk being condemned or otherwise embarrassed by the media, the political hierarchy, and clients? There are only so many skilled, committed civic leaders in each community who are willing to donate their time and expertise to serve on non-profit boards, and it is clearly not attractive to serve on the board of a charity with a reputation for having poor quality.

4. Competition for volunteers. What can be said for board members goes double for service delivery and other volunteers. No one wants to be associated with an organization with a reputation for poor quality. Many volunteers see their volunteer work as a springboard for a career, and volunteering for a pariah in the community does not serve their interests.

5. Competition for media. The media play an important role in helping a non-profit charity promote its fundraising, encourage clients to utilize its services, and improve employee morale. Poor quality can result in the media ignoring an organization or, worse, highlighting its shortcomings for the entire world to see.

6. Competition for legislative and other political support. Non-profit charities have benefited from the support of political leaders, directly through the provision of government grants, and indirectly through the provision of favors such as cutting government red tape and legislation solving the problems of the agency and those of its clients. Political leaders are certainly not going to be responsive to an organization if they receive letters of complaint about the organization’s poor quality.

7. Competition for qualified employees. Particularly during the current climate of low unemployment, quality non-profits find that they have less employee turnover and find it easier to attract employees to fill vacancies and for expansion.

The consequences of having poor quality, or the reputation (public perception) of having poor quality, can result in the board of directors throwing up its hands and deciding to liquidate the organization. Or, in extreme cases, having the government step in and liquidate the organization. Imagine the aftermath of a child care agency that failed to perform a quality background check on an employee who later was found to be a child abuser. Or the hospital that failed to adequately verify that a staff member it hired was adequately board-certified.

As pointed out by Dr. John McNutt of Boston College’s Graduate School of Social Work, most, if not all, states look at the community benefit provided by a non-profit organization in considering whether it is eligible for non-profit status in the first place. Quality and community benefit are inextricably linked.

In 1998, a scandal affected international agencies that raise funds for child welfare. Who knows how many millions of dollars will not be contributed to these agencies because some agency official did not feel it was important to inform donor sponsors that their sponsored child had died several years ago? With a public already conditioned as a result of the 1992 United Way of America scandal and the 1995 New Era Foundation scandal to be wary about charities, non-profits need to be more vigilant about not only quality issues affecting the delivery of direct service, but about those that affect fiscal accountability as well.

The cost of quality, or the lack thereof, often exceeds what is perceived to be saved by neglecting quality. Read the newspapers and you can find many examples of the consequences of poor quality in non-profit organizations. Owners of personal care boarding homes have failed to see the value of installing sprinkler systems and, as a result, have seen the loss of life and of their properties. Doctors have mistakenly removed the wrong kidney from a patient. Hospital maternity ward staff have given the wrong newborn to the wrong parents. The ramifications far exceed the financial loss and loss of prestige to the organization—human suffering for the clients and potentially huge, successful lawsuits against the non-profit organization as a result of a preventable lapse in quality-related policies.

For the typical non-profit that doesn’t deliver client services, quality should mean much more than the ability to answer the telephone on the first ring. It means having a newsletter without typographical errors. It means having an attractive, periodically updated Web site. It means spelling the names of donors correctly in substantiation letters. It means delivering on promises made to legislators for follow-up materials. It means having conferences where participants feel that they get their money’s worth. It means assuring that each board member has the information necessary and appropriate to make governing decisions. It means that volunteers know in advance what is expected of them.

And for those that deliver direct human services, it means, among other things—

a. treating each client with the dignity he or she deserves

b. respecting confidentiality

c. providing on-time services

d. providing resolution to legitimate complaints

e. providing services in a safe and secure setting

f. providing services in a facility that is accessible, clean and functional

g. delivering services provided by competent, trained personnel

h. assuring that services provided meet high standards and respond to the clients’ needs

i. obtaining informed consent from clients before services are provided

j. seeking constant feedback from clients to improve the delivery of services

k. taking advantage of advances in technology to improve communication between the organization and its clients.

The quest for quality improvement in organizations has been the subject of intense research. Every few years or so, a potentially transformational way of improving management outcomes—either in government or business and industry—is touted in academic journals, professional publications, and, eventually, in the popular press. Total Quality Management (TQM), Planning and Program Budgeting System (PPBS), Zero-Based Budgeting (ZBB), Management By Objectives (MBO), and, more recently, Business Process Reengineering (BPR), and Large Group Intervention (LGI), have been, or are becoming, mantras for improving organizational performance. Each is accompanied with its own statistical and software tools, lingo, culture, and hype. With each new program, a myriad of organizational consultants appear from nowhere, each hawking expertise and promising Nirvana —selling workshops, workbooks and computer software, and definitely improving their own organizational outcomes, if not those of their deep-pocketed clients.

For many reasons that may not be completely known without further empirical research, some of these new concepts once extolled and ballyhooed as chemistry eventually become stale and are relegated to alchemy. Managers who once swore by these techniques come to swear at them. Perhaps each technique was grounded in valid theory, but when implemented over time, serious unintended consequences developed that could not be foreseen by their creators.

One such potentially revolutionary way of managing organizations, Total Quality Management (TQM), swept through private U.S. business organizations in the 1970s and 1980s, and was being adopted in some form by thousands of government organizations and non-profit organizations, principally those that are healthcare-related, in the 1990s. Chapter 2 provides an introduction to TQM.

Up Close—Joe Geiger

“ Quality improvement is critical to an organization’s credibility. It takes energy and commitment and resources but the payback warrants the investment,” asserts Joe Geiger. He is in a position to know. Geiger is on the front lines of defending the interests of the non-profit sector, having served as the executive director of the Pennsylvania Association of Non-Profit Organizations (PANO) since 1995.

The purpose of PANO is to monitor the opportunities and threats to the charitable non-profit sector in Pennsylvania arising through government. The organization provides coalition-building leadership to address such issues and serves as a resource to elected officials. PANO also provides technical assistance and education to Pennsylvania’s charitable non-profit community as well as develops and promotes useful publications and educational workshops.

As the principal spokesperson for charitable interests in Pennsylvania, Geiger has weathered the storms created by non-profit scandals at the state and national levels (the now-defunct New Era Foundation was headquartered in Radnor, Pennsylvania), and he believes that the sector is primed for changes in how it views its role in society. He has witnessed firsthand the quality improvement revolution, and thinks that non-profits have a lot to learn from their for-profit counterparts.

“ The non-profit sector has been less attuned overall to quality issues than the for-profit sector, although there are some shining examples of very sophisticated non-profit organizations,” he points out. “Generally, many non-profit organizations lack the skills, vision, and resources to get involved in formal change management interventions. Some do quality improvement instinctively. Some are more formal in the approach as witnessed through agendas for board retreats and ongoing training. But it is hard to do formal training when you are driven by organizational survival issues (as most are),” he laments.

Geiger maintains that quality issues are important largely because non-profit organizations need efficiency, they need to treat people correctly, and they have to be accountable to their funding streams.

“ Funders do not want their names attached to shabby work,” he says. “All people possess a dignity and should be treated as such, and sloppy work can exhaust limited resources more rapidly and completely than high-quality work.”

According to Geiger, PANO has engaged in an ongoing effort for quality.

“ We are motivated to stand as a role model for Pennsylvania,” he says with pride. “The PANO Board and staff hold quality as a high value and want to be perceived as such. High quality is imperative for PANO to attract the funding necessary to flourish and attract additional members.”

One manifestation of PANO’s drive for quality is its quarterly surveys in its newsletter, Keynotes. “We always attach 5-10 questions so our members have an easy forum to let us know what they are thinking and needing,” he says. “We do an annual phone survey of all of our members to explore customer satisfaction and complete missing information for our database. We send out feelers to collect opinions on public policy issues, what types of speakers members want for the annual conference, and other miscellaneous requests.”

The organization staff also participates in formal training to improve its business processes and to assure that PANO membership needs remain its principal focus. PANO conducts weekly staff meetings with ongoing computer software training and program training. An organizational consultant comes in monthly to assist staff with projects. The consultant reviews what staff is doing and assesses how it is consistent with retreat goals. The same consultant facilitates the annual board and staff retreat.

Geiger asserts that quality improvement should be high on the agenda of every non-profit organization.

“ Any organization not doing quality improvement will not survive the scrutiny, funding challenges, and competition with for-profit businesses into the next millennium,” he relates. “It can take less time to do something correctly the first time versus going back to fix a mistake. It also gives an opportunity to fix inevitable mistakes. We are often more critically evaluated on how we repair a problem or mistake than how we operate through routine periods,” he points out. The PANO Board is fairly active in tracking issues involving the quality of PANO programs and activities, Geiger says.

“ It is challenging to have a lot of involvement when you are a statewide organization in a state the size of Pennsylvania. The annual retreat has gone a long way in making sure the board plays a healthy role in the quality of services we deliver,” reports Geiger. “The evolution of functioning standing committees is expanding the volunteer role in attaching quality to what we do. I believe the attention paid to hiring an executive director with a strong experiential background has also made a difference. The resulting hiring of quality staff ensures quality in operations and programming.”

Despite the obvious benefits to the organization of running quality programs, resistance to change still comes about. “Sometimes resistance will come from staff when they get into overload,” Geiger says. “However, we found that the break in routine to keep never-ending improvement on the radar screen helps staff continue to be highly functional.”