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

New article about planning on NPManagement.org

There is a new article on NPManagement.org located here.  In this piece, we take a look at reasons sometimes given for not planning projects, and the reasons for having sound planning processes.

As more and more non-profits find project approaches being used outside of their IT departments (where they have probably been common for some time), managers are searching for information about when and how much to use Project Management tools and techniques.  This article provides some general guidance on that topic.

Hope you find it useful,

ejt
NPManagement.org

That's the problem with Project Management

Today an executive in a nonprofit again told me about "the problem with Project Management".  This time "the problem" was defined as the requirement to meet stated goals within budget and on time.

Huh?  Being required to bring things in within budget, on time, and up to spec is a problem?

Well, no.  Further discussion of the project in question revealed the biggest problem was the requirement to meet totally unrealistic budgets and irrational schedules.  That is not a problem with Project Management.  In fact, the problem arose because Project Managers were largely left out of the development of the schedule and budgetary baselines.  Even more importantly, basic Project Management approaches were ignored.  Stakeholder assessments were not performed.  Neither were risk assessments.  And estimations from previous projects that were shown to be inaccurate during their previous implementations were applied almost verbatim to the project being discussed today.  So when stakeholders engaged in sabotage of the project, risks came to fruition and there were no contingency plans, and the budget & schedule were shown to be unrealistic to the point of being irrelevant, people were surprised?!

Only well performed estimates can be utilized if one desires cost and schedule baselines that are anywhere near accurate.  This is not a problem with Project Management.  It is a problem for those who choose to mis-apply Project Management tools and techniques.

ejt
www.npmanagement.org

Cloud Computing: Yes or No, and if yes then How?

The cloud is an option that should not be ignored.  Rather, it needs evaluation for its ability to meet our organizations' needs.  For me, the primary sources of hesitance have both been about the internet:  privacy protection and reliability of connection.  I have since become inclined to use the cloud for processes and storage that are not mission critical, and am considering the possibility of using it more.

If you are interested in learning more about the cloud you might want to read an article here on NPManagement.org.  This brief but informative article was written by Sumac.com, which provides cloud-based services but gives its usual balanced advice. 

If you have decided to use the cloud but are not sure how or how much to do so, you might like an article by David Linthicum located here: http://t.co/fh14JUOv  It addresses the three surefire ways to screw up an attempt to implement cloud computing.

ejt
NPManagement.org