June 30, 2008
While economists on Wall Street and Washington, D.C., argue over whether the economy has slipped into recesssion, the majority of Americans have made up their minds. Last week, a key measure of consumer confidence calculated by the New York City-based Conference Board dropped to 50.4 from a revised reading of 58.1 in May -- its lowest level since February 1992 and the fifth-lowest reading ever recorded by the survey -- while on Friday the University of Michigan/Reuters index of consume sentiment fell to 56.4 -- the lowest reading since 1980 and the third-lowest in that survey's 56-year history. Indeed, according to the Michigan survey, nine out of ten Americans said the economy was in recession and two-thirds said they expected the downturn to last several years.
That's bad news for nonprofits, which, as the economy worsens, will have to figure out how to meet the growing demand for their services against a backdrop of falling revenues (both public and private). Seems like a good time, therefore, to revisit the recession-proofing recommendations for nonprofits outlined in this post from February.
Whatever we call it -- slowdown, downturn, recession -- the economic gloom won't last forever. But before it lifts, our sector is likely to experience a fair amount of turmoil. Many nonprofits will struggle, some will be forced to merge or cut back their operations, and more than a few will go out of business.
What can nonprofit leaders do to ensure that their organizations survive the tough times and have the stength and vigor to thrive in the years to come?
To build a sustainable organization capable of meeting the challenges and opportunities of the next ten years requires vision and lots of hard work, writes Frances Hesselbein, founding president and current chair of the Leader to Leader Institute, in Leader to Leader 2: Enduring Insights on Leadership. Her advice, offered in checklist form (below), is intended as a beginning, not as a be-all-and-end-all. As she writes: "Changing circumstances will require additions as new challenges arise and deletions where needs have been met. New customers must be welcomed as we move beyond the old walls both physically and psychologically. Tomorrow may be tenuous...but the message [for leaders of the future] is clear: Managing for mission, innovation, and diversity will sustain us and those we serve...."
-- Revisit the mission every three years, each time refining or amending it so that it reflects shifts in the environment and the changing needs of changing customers as part of a formal self-assessment process.
-- Mobilize the total organization around mission until everyone can tell you the mission of the enterprise -- why it does what it does, its reason for being, its purpose.
-- Develop no more than five powerful strategic goals that together are the board's vision of the desired future of the organization.
-- Focus on those new initiatives that will make a difference.
-- Deploy people and allocate resources where they will have an impact, that is, only where they can further the mission and achieve the few powerful goals.
-- Practice Peter Drucker's "planned abandonment": jettison current policies, practices, and assumptions as soon as it becomes clear that they will have little relevance in the future.
-- Expand the definition of communication from saying something to being heard.
-- Provide board members and the entire staff and workforce with careful planned and continuing learning opportunities designed to increase the capacity and unleash the creative energy of the people of the organization.
-- Develop the leadership mind-set that embraces innovation as a lifeforce, not as a technological improvement.
-- Structure the finances of the organization so that income streams are focused on the few great initiatives that will change lives, build community, and make a measurable difference.
-- Transform performance measurement into a management imperative that moves beyond old forms and assumptions and toward creative and inclusive approaches to measuring what we value and valuing what we measure.
-- Scan the environment and identify major trends and implications for the organization in preparation for riding the wave of rapidly changing demographics.
-- Build a mission-focused, values-based, demographic-driven organization.
-- Plan for leadership transition in a thoughtful way. Leaving well and at the right moment is one of the greatest gifts a leader can give an organization.
-- Groom successors -- not a chosen one but a poll of gifted potential leaders. This is part of the leader's daily challenges.
-- Make job rotation and job expansion into widespread organizational practices that are part of planning for the future.
-- Disperse the tasks of leadership across the organization until there are leaders at every level and dispersed leadership is the reality.
-- Lead from the front, with leaders the embodiment of the mission and values in thinking, action, and communication.
-- Recognize technology not as a driver but as a tool. Change the technology as needs change, don't change needs and style to match the tool. Shape the future, don't be shaped by it.
-- Infuse every job, every plan with a marketing mind-set. Marketing means being close to the customer and listening and responding to what the customer values.
-- Build on strengths instead of dwelling on weaknesses.
-- Throw out the old hierarchy and build flexible, fluid, circular management systems with inclusive leadership language to match.
-- Allocate funds for leadership development opportunities and resources for all the people of the enterprise.
-- Develop a richly diverse organization so that board, management team, staff, employees, faculty, administration, and all communications materials reflect the diversity of the community, and we can respond with a resounding yes to the critical question: "When they look at us, can they find themselves?"
Quite a list, but surely not exhaustive. What has Hesselbein overlooked? What would you add to it?
-- Mitch Nauffts