Striking a New Balance Effective Collaboration within National Organizations
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1 Striking a New Balance Effective Collaboration within National Organizations NATIONAL ASSEMBLY OF HEALTH AND HUMAN SERVICE ORGANIZATIONS Leadership Retreat November 8, 2002
2 CONTENTS Review range of organizational models Results of survey Perspectives on surveys and organizational design literature and external forces at work 6 key challenges to striking a more effective balance 1
3 HOW DO WE DEFINE CAPACITY? Aspirations Culture Strategies Organizational skills Human Resources Systems and infrastructure Organizational structure 2
4 THERE IS A SPECTRUM OF ORGANIZATIONAL MODELS Autonomy (Degree of independence of members, chapters or key constituents) High Low Drivers of high autonomy Need to support local service delivery Need to build local profile for fundraising and recruiting and program delivery Organizational culture emphasizing grass roots values (i.e., members came first) Drivers of high affiliation Need for tangible support (technical assistance, infrastructure, economies of scale) Need for intangible support (brand, best practices) Organizational culture emphasizing cohesion (i.e., central office came first) Low Affiliation (Degree of dependence, connectedness and collaboration between national office and members, chapters or key constituents) High Source: Adapted from Grossman/Rangan 2000; McKinsey analysis 3
5 THERE IS A SPECTRUM OF ORGANIZATIONAL MODELS High Autonomy (Degree of independence of members, chapters or key constituents) Loose web Enabled network Loose Strong Franchise Subsidiary Low Low Affiliation (Degree of dependence, connectedness and collaboration between national office and members, chapters or key constituents) High 4
6 DISTINCT ORGANIZATIONAL NEEDS CALL FOR DIFFERENT MODELS High Loose web Autonomy Organizations who want to share principles or exchange knowledge Low Low... but... Do not have common goals or feel the need to share resources Affiliation High Source: Adapted from Grossman/Rangan 2000; McKinsey analysis 5
7 DISTINCT ORGANIZATIONAL NEEDS CALL FOR DIFFERENT MODELS High Network models Loose web Enabled network Autonomy Organizations who want... to collaborate to increase impact Low Low... but... Do not want to invest in common infrastructure and have no intent on of building a common brand Affiliation High Source: Adapted from Grossman/Rangan 2000; McKinsey analysis 6
8 DISTINCT ORGANIZATIONAL NEEDS CALL FOR DIFFERENT MODELS High Loose web Enabled network Loose Autonomy Low Organizations who want but... to align a missions and share information and resources, brand identity and ensure quality Do not want to sacrifice local autonomy, especially finances Low Affiliation High Source: Adapted from Grossman/Rangan 2000; McKinsey analysis 7
9 DISTINCT ORGANIZATIONAL NEEDS CALL FOR DIFFERENT MODELS High Loose web Enabled network Federation models Loose Strong Autonomy Low Organizations who want but... to share mission, to build a strong national brand, to exploit opportunities for national fund-raising and to engage in joint strategy setting Do not want to sacrifice local flexibility and ownership Low Affiliation High Source: Adapted from Grossman/Rangan 2000; McKinsey analysis 8
10 DISTINCT ORGANIZATIONAL NEEDS CALL FOR DIFFERENT MODELS High Loose web Enabled network Loose Strong Autonomy Low Organizations who want but... to replicate nationally and to retain control over operating standards and brand Still need localized approach in service delivery and financial support with distributed leadership Franchise Low Affiliation High Source: Adapted from Grossman/Rangan 2000; McKinsey analysis 9
11 DISTINCT ORGANIZATIONAL NEEDS CALL FOR DIFFERENT MODELS High Loose web Enabled network Loose Strong Corporate models Autonomy Organizations who want... to extend scope by rolling out a its programs with control over operating standards, brand, and service delivery Franchise Subsidiary Low... but... Do not want to allow for much local discretion Low Affiliation High Source: Adapted from Grossman/Rangan 2000; McKinsey analysis 10
12 CONTENTS Defining range of organizational models and external forces at work Results of survey Perspectives on surveys and organizational design literature 6 key challenges to striking a more effective balance 11
13 OVERVIEW OF SURVEY RESPONSES Who responded... Mailed 13 page survey to 65 member organizations 26% response rate Median national organization budget $50 million Median number of affiliates 280 (minimum of 6, maximum of 2,000) Median budget of affiliates $470 million Aggregate of local affiliates budgets $14 billion Source: Independent Sector; McKinsey analysis 12
14 OVERVIEW OF SURVEY RESULTS High Loose web Enabled network Loose Strong Most are hybrid models, with the most common choice Autonomy Franchise Subsidiary In general, loose s wanted to become strong s And strong s wanted greater affiliation, looking for some elements of the franchise model Low Low High Affiliation Source: Adapted from Grossman/Rangan 2000; McKinsey analysis 13
15 DESIRE FOR MISSION ALIGNMENT AND STRONGER NATIONAL ROLE IN MEMBER SUSPENSION Current state Desired state Network models Federation models Corporate models Loose web Enabled network Loose Strong Franchise Subsidiaries Mission From Members adopt s mission statement plus have local mission and goals To One mission statement with collective goals plus strong individual or local goals Legal and membership Member/key constituent status approval Status quo Formal approval process and criteria on service delivery Membership or constituent suspension ( excusing ) From Very rare; expulsion from unpaid dues or gross violation of mission To Rare, based on noncompliance with membership criteria 14
16 GENERAL SATISFACTION WITH GOVERNANCE Current state Desired state Network models Federation models Corporate models Loose web Enabled network Loose Strong Franchise Subsidiaries Authority and governance Mechanism of national leadership Hiring and firing of member/ constituent chief executive Status quo But slight increase in leadership from national staff Status quo Slight increase in national office consultation on hiring/firing decisions National Board of Directors/ Governors 3.8 Status quo Includes member representatives with voting rights Sources: Industry literature; McKinsey 15
17 CLEAR DESIRE FOR LESS AUTONOMY IN FUNDRAISING, BRANDING, AND PERFORMANCE Current state Desired state Network models Federation models Corporate models Loose web Enabled network Loose Strong Franchise Subsidiaries Fundraising From National office fundraises for own activities; members raise own funds and contribute to national To National office raises own funds and supports members; same role for members Branding From Moderate to some control over brand use; national and member logos To Stronger control over brand 1 logo; exclusion for non-compliance Performance management From General standards and informal performance checks To Specific standard; more regular assessments and self-assessments 16
18 AND INTEREST IN SEEING LOCAL AFFILIATES OPERATE AS PART OF ONE ORGANIZATION Current state Desired state Network models Federation models Corporate models Loose web Enabled network Loose Strong Franchise Subsidiaries Key roles of national office Key roles of members/ constituents From Run local entities quasi independently To Run local entities as part of one organization Includes one local chapter who wanted to move from enabled network to strong 17
19 OVERALL, THERE WAS A NOTICEABLE TREND TOWARDS GREATER AFFILIATION AND LESS AUTONOMY Network models Federation models Corporate models Loose web Enabled network Loose Strong Franchise Subsidiaries Average overall organizational model Percent Loose web Enabled network Loose Strong Franchise Subsidiary Current state Desired state
20 CONTENTS Defining range of organizational models and external forces at work Results of survey Perspectives on surveys and organizational design literature 6 key challenges to striking a more effective balance 19
21 LOCAL AFFILIATE/CHAPTER AUTONOMY WORKS Local autonomy makes sense in the nonprofit sector Significant local autonomy or ownership attracts local capital and volunteers Local management autonomy provides a necessary incentive to local leadership/ entrepreneurship but poses some serious challenges and risks Possible competition between local affiliates/chapters for donors Significant reputational risk posed to all members by the behavior of a single affiliate/chapter Allows for greater geographic reach into areas in which monitoring/control would be difficult Typical control mechanisms Local affiliate/chapter fees Quality control/monitoring processes Marketing guidelines Sources: Sector literature 20
22 BUT OFTEN GENERATES TENSIONS Issues Fundraising/resource allocation Description Who owns the funds raised in local areas? Quality of service delivery How to ensure affiliate delivery of consistent, high quality services? Brand management Are affiliates adhering to the mission and performing in a way that is consistent with the organization s mission and standards? Role of national Is the national office providing services commensurate with payments from affiliates? Governance What is the role of the local board vs. the national board in directing the organization? Sources: Grossman, Rangan, Managing Multi-site Nonprofits 21
23 THE FOR-PROFIT WORLD IS DISCOVERING A NEW BALANCE BETWEEN CENTRALIZATION AND DECENTRALIZATION 1970s and before Centralization Key trends Economies of scale is key driver Structural advantages, e.g., exclusive supplier network Response Divisional organization focused on tasks, coordination Command and control exerted by corporate center on the field Headquarters knows best 22
24 THE FOR-PROFIT WORLD IS DISCOVERING A NEW BALANCE BETWEEN CENTRALIZATION AND DECENTRALIZATION 1970s and before Centralization Key trends Economies of scale is key driver Structural advantages, e.g., exclusive supplier network Response Divisional organization focused on tasks, coordination Command and control exerted by corporate center on the field Headquarters knows best 1990s De-centralization Key trends Technology, globalization, deregulation Customize global brands to local markets Response Foster entrepreneurship via disaggregation into lean, nimble business units Push decision making closer to customers, markets Give middle managers authority to deliver on performance targets 23
25 THE FOR-PROFIT WORLD IS DISCOVERING A NEW BALANCE BETWEEN CENTRALIZATION AND DECENTRALIZATION 1970s and before Centralization Key trends Economies of scale is key driver Structural advantages, e.g., exclusive supplier network Response Divisional organization focused on tasks, coordination Command and control exerted by corporate center on the field Headquarters knows best 1990s De-centralization Key trends Technology, globalization, deregulation Customize global brands to local markets Response Foster entrepreneurship via disaggregation into lean, nimble business units Push decision making closer to customers, markets Give middle managers authority to deliver on performance targets Now A new balance Key trends Collapse of the e-economy Focus on performance, cost cutting Intense shareholder, media scrutiny Response Reduce duplication of support services in business units Consolidate non-core activities into shared services units, outsourcing Protect reputation, brand by beefing up risk management by the corporate center Make business units earn the right to disaggregate 24
26 FORCES ARE DRIVING TO INCREASED AFFILIATION Increasing demand for transparency on performance, financials, ethics Growing donor demand for consistent service within same brand Pressures to increase affiliation Mounting pressure on nonprofits to operate more efficiently, reduce costs Increasing sense of the potential for national networks to have nationwide impact 25
27 CONTENTS Defining range of organizational models and external forces at work Results of survey Perspectives on surveys and organizational design literature 6 key challenges to striking a more effective balance 26
28 OVERALL SATISFACTION WITH CURRENT STRUCTURE, WITH EXCEPTION OF ENSURING QUALITY SERVICE DELIVERY Statement/criteria 1 Overall model Satisfaction (1 = Disagree strongly; 5 = Agree strongly) Collaboration Brand management Knowledge sharing Fundraising Quality of service delivery Value-add of central office
29 A NUMBER OF COMMON ISSUES EMERGED FROM THE OPEN ENDED QUESTION Issue Specific comments Collaboration Brand management Working on big picture collectively while delivering local services Alignment so we face 21st century issues together Degree of autonomy vs. integration of our local affiliates Building national brand awareness Setting and enforcing brand use standards Maintaining overall brand integrity Knowledge sharing Sharing best practices among affiliates Improving communication among key constituents without depending on national to drive the discussion Fundraising Sharing responsibility for raising and distributing funds Funding national services State of the economy and impact on fundraising Quality of service delivery Performance criteria for members More control over local organizations adherence to standards Providing resources to improve local program quality Value-add of national office Improving the responsiveness of national organization to the needs of the field Providing service from national to regional to field Measuring how we add value and whether and how our services should be paid for 28
30 A NUMBER OF COMMON ISSUES EMERGED FROM THE OPEN ENDED QUESTION Issue Representative comments Collaboration Working on big picture collectively while delivering local services Alignment so we face 21st century issues together Degree of autonomy vs. integration of our local affiliates Brand management Knowledge sharing Building national brand awareness Setting and enforcing brand use standards Maintaining overall brand integrity Sharing best practices among affiliates Improving communication among key constituents without depending on national to drive the discussion Fundraising Sharing responsibility for raising and distributing funds Funding national services State of the economy and impact on fundraising Quality of service delivery Performance criteria for members More control over local organizations adherence to standards Providing resources to improve local program quality Value-add of national office Improving the responsiveness of national organization to the needs of the field Providing service from national to regional to field Measuring how we add value and whether and how our services should be paid for 29
31 A NUMBER OF COMMON ISSUES EMERGED FROM THE OPEN ENDED QUESTION Issue Representative comments Collaboration Working on big picture collectively while delivering local services Alignment so we face 21st century issues together Degree of autonomy vs. integration of our local affiliates Brand management Building national brand awareness Setting and enforcing brand use standards Maintaining overall brand integrity Knowledge sharing Fundraising Sharing best practices among affiliates Improving communication among key constituents without depending on national to drive the discussion Sharing responsibility for raising and distributing funds Funding national services State of the economy and impact on fundraising Quality of service delivery Performance criteria for members More control over local organizations adherence to standards Providing resources to improve local program quality Value-add of national office Improving the responsiveness of national organization to the needs of the field Providing service from national to regional to field Measuring how we add value and whether and how our services should be paid for 30
32 A NUMBER OF COMMON ISSUES EMERGED FROM THE OPEN ENDED QUESTION Issue Representative comments Collaboration Working on big picture collectively while delivering local services Alignment so we face 21st century issues together Degree of autonomy vs. integration of our local affiliates Brand management Building national brand awareness Setting and enforcing brand use standards Maintaining overall brand integrity Knowledge sharing Sharing best practices among affiliates Improving communication among key constituents without depending on national to drive the discussion Fundraising Quality of service delivery Sharing responsibility for raising and distributing funds Funding national services State of the economy and impact on fundraising Performance criteria for members More control over local organizations adherence to standards Providing resources to improve local program quality Value-add of national office Improving the responsiveness of national organization to the needs of the field Providing service from national to regional to field Measuring how we add value and whether and how our services should be paid for 31
33 A NUMBER OF COMMON ISSUES EMERGED FROM THE OPEN ENDED QUESTION Issue Representative comments Collaboration Working on big picture collectively while delivering local services Alignment so we face 21st century issues together Degree of autonomy vs. integration of our local affiliates Brand management Building national brand awareness Setting and enforcing brand use standards Maintaining overall brand integrity Knowledge sharing Sharing best practices among affiliates Improving communication among key constituents without depending on national to drive the discussion Fundraising Sharing responsibility for raising and distributing funds Funding national services State of the economy and impact on fundraising Quality of service delivery Value-add of national office Performance criteria for members More control over local organizations adherence to standards Providing resources to improve local program quality Improving the responsiveness of national organization to the needs of the field Providing service from national to regional to field Measuring how we add value and whether and how our services should be paid for 32
34 A NUMBER OF COMMON ISSUES EMERGED FROM THE OPEN ENDED QUESTION Issue Representative comments Collaboration Brand management Working on big picture collectively while delivering local services Alignment so we face 21st century issues together Degree of autonomy vs. integration of our local affiliates Building national brand awareness Setting and enforcing brand use standards Maintaining overall brand integrity Knowledge sharing Fundraising Sharing best practices among affiliates Improving communication among key constituents without depending on national to drive the discussion Sharing responsibility for raising and distributing funds Funding national services State of the economy and impact on fundraising Quality of service delivery Performance criteria for members More control over local organizations adherence to standards Providing resources to improve local program quality Value-add of national office Improving the responsiveness of national organization to the needs of the field Providing service from national to regional to field Measuring how we add value and whether and how our services should be paid for 33
35 LESSONS LEARNED FROM WORKING WITH MULTI-SITE NONPROFITS Collaboration The need for collective action and a common message increases the need for stronger central leadership and governance; organizations moving in this direction often need to reinvent their board The degree of autonomy versus affiliation is hard to change once it s set; history and culture are the strongest barriers to change Brand management Knowledge management A shared national brand is one of the most visible and tangible benefits of affiliation, but it is often under-leveraged due to lack of national investment or insufficient direct marketing support/materials to local members The poor performance of a single affiliate/chapter can undermine the brand, making quality control critical Most multi-site nonprofits fail to capture the tremendous potential of the knowledge resident within their organizations Most organizations rely on informal, peer-to-peer knowledge sharing and do not adequately invest in codifying their expertise, lessons learned The first step to effective knowledge management is defining what knowledge you want to capture, how you will use it and how this links to your overall mission 34
36 LESSONS LEARNED FROM WORKING WITH MULTI-SITE NONPROFITS (continued) Fundraising Quality of service delivery Value-add of national office As multi-sites expand to cover more geographies, the need to collaborate on donor relationship management becomes more critical; donors expect consistency and collaboration National offices funded largely by member/affiliate dues are often under fire from affiliates about value of national services National offices should push for more transparency and customer focus in designing and communicating the value of services/products offered Many nonprofits have strict membership criteria on paper, but don t enforce them Revocation of the brand is too nuclear a solution to be effective, and other mechanisms are often viewed as intrusive Self-assessment combined with some form of national or peer evaluation has been successful in some organizations Many national offices play a more limited role of providing support services and some knowledge sharing, rather than a true national leadership role in terms of national goals, standards and/or programs and policy Many multi-sites see knowledge/skill development, talent management and quality control as priority roles for the national office going forward 35
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