World Vision Australia: a not-for-profit organization
...r level. (Harris, 2000, p. 321) The questions as to who can perform services more effectively, and exactly what for-profit management practices are most effective in a non-profit sector remain unanswered (Rojas, 2000, p. 100). In addition, the desire to employ FPO managerial styles necessitates the need to attract a calibre of leaders who may not normally be attracted to NPOs, due to the limited career advancement and remuneration opportunities. Alexander (2000, p. 287) perceives these leaders to possess entrepreneurial skills and emphasise the values of efficiency, economy and effectiveness. Further Herman & Renz (1998, p. 23) contend that the effective NPOs have directors with higher social prestige, who use more practitioner-identified management procedures and use more change management strategies. Given the importance of management inclusion in an effective change process, a hindrance to WVA was the departure of their current CEO that occurred in late 1996 to early 1997 to an external applicant. This change of CEO during this phase in organisational transformation would have been an added contingency not factored for in the original change plan. The primary aim of the change program undertaken by WVA was to increase internal effectiveness, to enable WVA to remain at the forefront of aid and development work. Shoichet (1998, p. 72) contends that whilst FPOs can evaluate commercial success using parameters such as efficiency and effectiveness, NPOs must go beyond this two-dimensional paradigm in pursuit of an assessment of their own success. Whilst most organizations accept the paradigm of pursuing internal efficiencies, for the non-profit sector a commitment to the service of others renders this inappropriate. In an effort to emulate FPOs, NPOs measure effectiveness as growth in programming and client base, while at the same time monitoring efficiency in deficit reduction or the ratio of administrative to operating expenditure (Shoichet, 1998, p. 73). However, this paradigm does a disservice to these organizations because unlike commercial enterprises the growth in a NPOs client base often equates with growth in operating expenses and increased activity may not bring in increases in revenue (Alexander, 2000, p. 287). Moreover, Herman & Renz (1998, p. 24) argue that a more appropriate measure of an NPO’s effectiveness is the extent to which that organization’s mission is being achieved. Further there are often intangible goals for NPOs such as education, spiritual refinement or social welfare (Shoichet, 1998, p.73). Finally, in addition to the inherent difficulty in determining a measure of success there is argument whether there exists a single perspective of what constitutes success given the diverse pressures arising from multiple stakeholders- service consumers, revenue providers and even service providers (Fine, Thayer & Coghlan, 2000, p. 331). Research indicates that stakeholders often differ markedly in their judgements of the effectives of the same NPO, and may further differ from the ‘objective’ indicators defined by the CEO of the NPO (Herman & Renz, 1998, p. 25). With such difficulties facing the measurement of NPO success, any change intervention aimed at increasing the measurable outcomes of WVA should have been carefully evaluated to account for the multiple deficiencies which may be inherent within the evaluation technique used. The outcomes of such a measure may be utilised to refine the change process as a means of feedback, to better achieve the objectives for which the changes were implemented. One stakeholder group significantly affected by the changes sought at WVA were the employees. The effectiveness of the change interventions was largely contingent upon their understanding of the motives driving the change along with their support of the interventions chosen. Employee participation Managing the boundaries of employee participation is a complex issue that all organisations face during organisational change. Employee participation was possibly the most significant problem with the change management process at WVA. The problem went from one extreme to another, in that the boundaries were totally unrestricted and then were too restrictive. Senior management failed to find the right degree of employee participation that would maximize the potential of this involvement. The ‘Future Search’ program was a participatory, vision-forming process that looked for a picture of what World Vision needed to become to survive in the new century. The process basically sidestepped senior management and focused on the ideas of middle management and staff. While the idea of setting no boundaries appears appropriate for a vision-forming process in a NPO, the process met an early death. The senior management resumed a more directive position as they felt the ideas coming out of Future Search were unrealistic, inappropriate and the expectations of employees were too high. Even though it was necessary for senior management to become more involved in this process, their “taking over” approach led to further problems. The optimism, creative energy and momentum that Future Search had generated were shattered, and employees became skeptical. A directive senior management carried out the radical transformation that followed. The participative structures put in place involved a summary of the recommendations of the review process that was circulated. Employees were invited to make comments and feedback. However, this was fairly unsuccessful as employees felt they had no influence over the final decisions. Senior management justified their actions by saying that the organisation was ‘sick’ of change, and it was necessary that the change be carried out in a quick, decisive fashion. By implementing a participatory transformation, the process would become more drawn out. To a certain extent, management was correct in taking a directive stance, as difficult decisions had to be made that could not be made collaboratively. Furthermore, employees acknowledged this point and simply wanted a part in the process, not necessarily have the final word. Therefore, a directive senior management could have carried out this change process, but there needed to be a greater degree of employee involvement. As World Vision is a non-profit organisation, the participation dilemma is compounded further. Most employees work in such a company as they identify with the values of the organisation. The major organisational transformation was a process that shifted the values of World Vision to a point where they were not in line with the values of the employees. This has major, negative implications in a non-profit organisation. If employees were more involved in the process, it is less likely that this would have been the outcome. It is apparent from Dunphy & Stace’s (1990, p. 82) change matrix that the scale of change and the style of leadership at World Vision was in contrast with what is recommended by Organisational Development (OD) practitioners. Dunphy & Stace (1990, p. 78) explain that the scale of change is a continuum ranging from fine-tuning to incremental adjustment to modular transformation to corporate transformation. In OD related literature, the incremental viewpoint is advocated (Dunphy & Stace, 1990, p. 83). The argument states that the organisation should move forward in small, developmental steps that allows the relevant environmental information to be gathered, shared, assimilated and internalized along the way (Dunphy & Stace, 1990, p. 85). This type of change favours order over disorder, and evolution over revolution (Dunphy & Stace, 1990, p. 88). World Vision had characteristics of both modular transformation and corporate transformation. It was partly a modular transformation as there was major restructuring of the marketing department and the senior management team, a new CEO was appointed and new technology was introduced, as some activities were automated (Dunphy & Stace, 1990, p. 90). The change at World Vision showed characteristics of a corporate transformation as the core values of the company changed, as it became more commercialised (Dunphy & Stace, 1990, p. 90). Some writers argue the case for transformational change, rather than incremental change. They believe in turbulent, unpredictable environmental conditions, radical changes of mission, structure, management processes and culture are sometimes needed (Dunphy & Stace, 1990, p. 90). World Vision is exposed to an unpredictable environment in terms of its funding and also the projects it gives its support to. International crises can arise without notice and this will impact on World Vision’s activities. Furthermore, research conducted by Dunphy & Stace (1990, p. 90) on Australian organisations found that transformational change is becoming the norm. Therefore, World Vision cannot be overly criticised for the scale of their changes, as they faced a turbulent environment and it is the type of change that most Australian organisations experience (Dunphy and Stace, 1990, p. 91) However, their style of change leadership can be criticised. OD writers are strong advocates of participative leadership, as it “develops commitment to an organisational vision based on shared values”, (Dunphy & Stace, 1990, p. 87). As mentioned, this is especially important in a non-profit organisation. It is not possible to transfer practices that may be commonplace in a profit organisation to a not-for-profit organisation. The other end of the continuum is coercive change leadership and this involves explicit or implicit force between managers and employees, as well as an autocratic decision making process (Dunphy & Stace, 1990, p. 87). This type of change leadership is effective when there is resistance to change (Dunphy & Stace, 1990, p. 88). The type of leadership that World Vision embraced was one kind of non-participative leadership and is classified as directive (Dunphy & Stace, 1990, p. 88). This leadership can be effective when subordinates respect authority. However, the type of leadership that would have been most effective at World Vision is one of the participative styles, that is either collaborative, or at the very least, consultative. In collaborative leadership, employees have significant formal or informal power to influence the goals and methods of change (Dunphy & Stace, 1990, p. 81). Consultative leadership gives managers more power, but employees are still consulted and have a degree of influence over the change process (Dunphy & Stace, 1990, p. 82). Even though the leadership style at World Vision was primarily directive, there were aspects of collaborative leadership with the Future Search program, however this was abandoned. There were also aspects of consultative leadership when management presented employees with their recommendations and invited feedback. Dunphy and Stace (1990, p. 82) place the scale and style of change on separate dimensions to form the change matrix. World Vision underwent a dictatorial transformation, whereas it would have been more suitable for them to experience a charismatic transformation (Dunphy & Stace, 1990, p. 82). Charismatic transformation is suitable when an organisation is out of fit with its environment and when there is support for radical change (Dunphy & Stace, 1990, p. 83). This type of leadership will engage the intellectual, emotional and behavioural commitment of employees to the changes (Dunphy & Stace, 1994, p. 70). More recent advancements in the OD literature have acknowledge that this model of change may be more appropriate than incremental, participative change in the current organisational environment (Dunphy & Stace, 1994, p. 70). In an organisation such as World Vision, this model would be particularly effective as it embraces the vision and values of the employees. This will lead to the commitment of employees to the changes, which began to dissipate as the process dragged out. Dictatorial transformation is appropriate when there is no organisational support and this was not the case with World Vision. Restructuring WVA described their past organisational structure as disparate and unbalanced, thus requiring significant restructuring to remain at the forefront of effective aid and development work. In early years, the organisation claimed to possess an internal drive for greater effectiveness. Additionally, WVA believed its staff recognised the need for change and were willing to actively participate. However, the demise of WVA's 'Future Search' program resulted in decreased enthusiasm, and fearful employee reaction toward large scale restructuring. Employees’ negativity and uncertainty were further fuelled by the WVA's inappropriate execution of downsizing and reengineering interventions. Downsizing The main aim of WVA's downsizing was to streamline the organization’s processes through staff reduction. Downsizing was accepted purely under the condition that the established targets would be reached through 'natural attrition', with redundancies being an absolute last resort. Although many staff attribute this condition as the main reason for WVA's downsizing failure, natural attrition can in fact be effective. That is, if carried out correctly and associated with a well-managed career development program. To remain effective and efficient, downsizing was not optional for WVA, it was vital. Yet the nature, with which the organisation approached staff reductions, implied no urgency in achieving the large cutback of 45 employees. Their strategy was unclear and communication to staff was poor, leading to confusion and anxiety across the organisation. At the time of the case study, the target was not yet reached, and WVA did not appear to be actively addressing the issue. An organisation faces numerous challenges following the implementation of a downsizing intervention. For instance, ensuring that remaining staff are equipped with the necessary skills and knowledge to carry on operations effectively. Also, realising the potential loss of institutional memory and decreased morale of the remaining staff (Hornstay, 2000, p. 106). It is perhaps these fears, which encouraged WVA's eluding of more aggressive tactics. The nature of the organisation, where the mind-set against change was firmly set, may have also added to management's inability to openly communicate the situation to its employees. For WVA, the concept of natural attrition was utilised as a somewhat devious method to avoid the inevitable, yet temporary, disturbance caused by organisational change. Given that restructuring was necessary for WVA to increase efficiency and effectiveness, Moses (2000, p. 136) argues that rather than protecting their employees from the inevitable, organizations should instead prepare them, thus reducing the anxiety of an uncertain future. This preparation is supported through career development. Career development involves assisting employees to build confidence and self-esteem, and also, to realise that they are still a marketable resource to external organizations (Moses, 2000, p. 135). Although, WVA did in fact implement their 'Motivate and Move' program, its principles were not communicated to staff in an effective manner. Consequently, as this program was used to assist the natural attrition process, it added to the explanation of WVA's inability to meet the proposed reduction in staffing levels. Career development is a useful tool in preparing staff for the disruptive restructuring of an organisation (Moses, 2000, p. 136). Despite the failure of the participative 'Future Search', the directive, actions-before-communication approach, was similarly ineffective. Hornstay (2000, p. 106) argues that individuals respond better to change when trusted, challenged and em...