Observations from the Field…

by Paul Starsoneck

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The Experiment

I’ve spent 30 years working in various industries, both large and small organizations, in leadership and consulting, in I/T, program, and financial management.  More recently I began working with the Armstrong McGuire team focusing on the Non-Profit sector with the hope of using my tools and experience to bring some insight to Non-Profit leaders.  Here are some of my early observations.

Mission versus Financial Performance

In the For-Profit world it seems like a minor formality to change or ignore the organization’s mission in pursuit of an opportunity for large financial gains.  In a Non-Profit, there can also be a temptation to allow mission drift when facing the opportunity of a major grant or large gift.  Most Non-Profit organizations tend to be more mission centered which helps in making a balanced decision.  

Culture

Have you ever worked in a small organization where the founder dominates the culture and the decision making process?  I find it just as common in Non-Profits as in For-Profit start-ups.  I’ve worked in organizations where this is beneficial and others where it is truly detrimental.

Overhead

I observe a tendency in Non-Profits to starve the operation.  Salaries, benefits, staff development, and operational assets are minimized to divert every available budget dollar to programs and services.  The effect can result in staff turnover and a general degradation in the quality of programs and services offered.

In For-Profit enterprises operations are well funded, but are the first place leaders look to cut costs to meet short term financial objectives.  Lay-offs, off-shoring and outsourcing, seem to be the first levers pulled in an effort meet financial expectations.  The long term effect can be the same, a fall-off in the quality of products and services offered.

So is there a common thread here?  My conclusion centers on the importance of board oversight.  A strong and diverse board will steer the organization around temptations to veer from their mission.  They will challenge an autocratic founder who doesn’t value the input of others.  They will advise a balanced use of funds between the organization’s operations and the customers and communities it serves.  A strong board member should not only be valued by the amount they invest or give, but on their ability to focus on the long term health of the organization.  That long range view is a rare and prized commodity in both the For-Profit and Non-Profit sectors.  It would be on my first slide of the board member orientation session.

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