Considering Diversification?

Large for-profit conglomerates have used diversification as a means of flexing their capitalization muscle and hedging against risk for a long time. Over the past few years this has been seen in large to moderately sized nonprofits too, at least partially in response to seismic shifts in funding streams. Sometimes these stream shifts have been as earth shaking as those created in the New Madrid earthquake that made the Mississippi River flow backwards, and it became easy to find bargains available for acquisition. Other times it just seemed to be the best prospect for short term survival.

However, the risks of mergers and acquisitions can often outweigh the potential benefits, especially if they are being done in order to diversify. This is because diversification, while it does moderate risk by spreading & diluting it, also dilutes the potential for earnings even more. A brief but solid article about the issue can be found in a McKinsey Quarterly white paper here:
https://www.mckinseyquarterly.com/Corporate_Finance/M_A/Testing_the_limits_of_diversification_2924

NPManagement.org has an article in the pipeline that will expand on the implications of these factors in the not-for-profit arena, which will provide some examples. But for now, here are a few things to keep in mind:
Are we considering the merger/acquisition because we are the best people to run the new business?
Will we be able to integrate the businesses, or will they cause us to disintegrate?
Have we been creating synergy in our own business already? If not, what makes us think we’ll be able to do so in the new, combined business?

Although NPManagement.org is technically on its summer hiatus, stay tuned because the article on this topic should be delivered soon.

ejt
NPManagement.org

A good article about keeping employees engaged hit my inbox this morning. It was provided by Accenture and cites research showing (not surprisingly) that engaged workers tend to perform much better than their disengaged counterparts. The article makes the point that workers in nonprofits tend to stay with their organizations even if they are not well engaged with the nonprofit's leadership because they ARE engaged with the organization's stated mission.

So how, one might ask, do people who are engaged with the mission become disengaged from the entities' leadership? The article lists elements that are important in increasing engagement and the central theme is the creation of a culture of trust and respect. So if an organization's leaders belittle employees, treat them like things rather then human beings, or their actions do not routinely appear consistent with what is ostensibly the company's reason for existence, a chasm will form. The article is good reading and can be found here: http://www.accenture.com/us-en/Pages/insight-increasing-employee-engagement-nonprofit-sector-summary.aspx?c=glb_acnemalert_10000216&n=emc_0612

ejt
NPManagement.org

Ethics in Nonprofits

While in the Project Management Institute’s (PMI) web site the other day I decided to pump the term “nonprofit organizations” into its search box.  One of the articles listed in the results was from 1998.  Heck, I didn’t realize PMI was carrying articles about nonprofits way back then.

Specifically, the piece, entitled “The Ethics Audit for Nonprofit Organizations”, was written by Schaefer & Zaller and was in the April 1998 edition of PM Network – which is one of PMI’s publications.  Here’s a quote:

“…if its actions and motives seem to send a different message than its core values would suggest, it begins to sink into ethical chaos and lose its credibility.”

The article focuses on conducting ethics audits so divergence from stated core values can be detected quickly enough to do something about it.

However, as in many types of situations, the thing we need to do is hardest when we need to do it the most.  Or, stated another way, we tend to go back to old patterns under stress.  This is true whether you’re trying to quit smoking, to change the way you handle anger, or any of a million other things.

This was an issue I helped people deal with daily early in my career when I was a group therapist.  Folks who were trying to kick habits such as destructive thinking or behavior patterns were most likely to revert back to them when they were stressed.  Let’s face it – when pressure is high we go with what we know.

The interesting thing is this is true of organizations too.  They might try to improve themselves, but when the needle on the pressure gauge jumps they go back to the coziness of the familiar – whether it’s the right thing to do or not.

So if nonprofits had an issue with ethics in 1998 when the economy was a lot healthier than it has been since the crash of 2008, how likely are these organizations to be able to increase ethical behavior now?  In fact, the things I’ve seen would appear to indicate they are thinking only of survival – at any cost.  And yes, that means ethical behavior takes a back seat.

Here’s something to think about:  If you need to short-change your nonprofit organization’s core values in order for it to continue, should that organization still exist?

ejt
www.npmanagement.org

Introducing Lean. What could go wrong? Right?

An article went up on NPManagement.org today about implementing Lean, preventing employees' assumption it will cause layoffs, and doing this by getting rid of excess people before the roll-out of Lean approaches.

The problem?  How do we know who is "excess" until we're far enough into Lean to understand what our value streams are?  And how do we determine our value streams if we've laid off people who have the information we need in order to figure things out?

And what, pray tell, might internal corporate politics do to this whole process?

You can read about it here in the article "Lean Implementation + Politics = ?"

ejt
www.npmanagement.org