Organizational Leadership: Considerations for a Nonprofit Merger ~ Part 4

“No nonprofit organization can survive and succeed in advancing its mission while living independently of other nonprofits. Organizations gain information, political power, and personal and professional support from and in concert with other nonprofits. Thus, close working relationships, partnerships and even joint ventures between nonprofit organizations are a fairly natural occurrence.” ~ David La Piana

Organizational Leadership: Considerations for a Nonprofit Merger ~ © by James K. Lewis

Organizational Reluctance

A reluctance to act is often due to complacency based on many fruitful years of funding and stable compensation. Many larger nonprofits began to model for-profit corporations, and nonprofits became attractive destinations for the corporate executive. The reluctance of the government to provide oversight of the nonprofit sector also played into this contentment, until issues began to crop up in larger, national nonprofits. Revelations of high compensation and benefits invited investigation, and the Sarbanes-Oxley Act of 2002 began to be increasingly enforced upon the nonprofit public benefit corporations on a larger scale. Recently, the U.S. Congress started holding extensive hearings about nonprofits. Until these troubles began to manifest themselves, there were few market forces to compel additional governance, consolidation, or restructuring of nonprofit organizations.

This lack of discipline led to inadequate regular and rational methodologies of measuring services and outcomes. Some business-savvy nonprofit leaders do not necessarily differentiate between sectors, and similarly fail to recognize that one does not measure nonprofit performance in the same manner as for-profit businesses. Equally detrimental, many nonprofits lack discipline in developing consistent and rational methods of assessing output and tracking. Jim Collins, in Good to Great and the Social Sectors gets direct in this matter when he admonishes the leader that “It doesn’t matter whether you can quantify your results. What matters is that you rigorously assemble evidence—quantitative or qualitative—to track your progress.” (Collins 2005, 7) Many nonprofits merely lack the know-how or resources to measure their program results. However, this information can be critical for improving their activities and reporting to funders. While nonprofits were formed with the best of intentions, merely “doing good” is not sufficient in light of economic downturns.

With wise foresight Peter Drucker, in Managing for the Future: 1990s and Beyond, warned of the temptation of resting on the “goodness of our cause.” There needs to be a shift from the “good cause” mentality to one of accountability and results [with a view of ROI]. Unfortunately, nonprofit organizations develop a strong emotional attachment to [services they provide] and a resistance to facing reality. Drucker provides an illustration of this resistance to change from an old medical saying: “‘As long as the patient eliminates there is a chance. But once the bowels and the bladder stop, death does not take long.’ If organizations cannot get rid of their waste products, they poison themselves. They must organize abandonment.” (Drucker 1993, 206, 229, 340 brackets mine).

Facing Reality & Awareness

Henry Cloud, in Integrity: The Courage to Meet the Demands of Reality discusses the need to face up to new realities and question what the world is really like – rather than rest on assertions and assumptions that made sense a few years ago. Many nonprofit leaders do not desire quantitative feedback, but it is only by looking at reality will we see our true strengths and weaknesses. Once a leader accepts reality he or she can examine how to best develop assimilation and accommodation . . . to change and adapt the organizational culture and context (Cloud 2006, 116-117, 133-138).

There needs to be both awareness that something has changed, and someone in a “strategic position” to effect change. Some conditional awareness that can motivate this process for change is a:
• Need to change managerial strategy
• Need to make the organizational climate consistent with individual and environmental changes
• Need to change cultural norms
• Need to change structure and roles
• Need to improve (or introduce) intergroup collaboration
• Need to open up the communications system
• Need for better planning
• Need for coping with problems of merger
• Need for change in motivation of the workforce
• Need for adaptation to a new environment

Any one, or a combination of conditions, too long ignored may bring about the decline of an organization and the need for examination of reorganization and/or restructuring, including consolidation or merging with another entity or if needed, acquisition. Glenn Parker, writing in Organizational Development, discusses conflict and denial as conditions that call for assessing the organization (Parker 2006, 664).

In this scenario, there has likely been an ongoing ignoring or denying of dysfunction that begged to be addressed, but the hesitancy to recognize a shift in reality, or new paradigms, leads to a weakness in the organization. Whether it is prior to, or subsequent to a merger, the failure to address the human problems is inevitably destructive to the health of the organization (Beckhard 2006, 10). This dysfunction has the most likelihood of affecting staff cohesiveness and organizational synergy; thus furthering the demise of the organization. Before such injurious effect is realized, a leader should begin to investigate options for the survival of the organization.