NATIONAL ASSEMBLY OF HEALTH AND HUMAN SERVICE ORGANIZATIONS

1
Striking a New Balance Effective Collaboration
within National Organizations

• NATIONAL ASSEMBLY OF HEALTH AND HUMAN SERVICE
  ORGANIZATIONS

Leadership Retreat
November 8, 2002
2
CONTENTS

• Review range of organizational models
• Results of survey
• Perspectives on surveys and organizational design
  literature and external forces at work
• 6 key challenges to striking a more effective
  balance

3
HOW DO WE DEFINE CAPACITY?
4
THERE IS A SPECTRUM OF ORGANIZATIONAL MODELS

• Drivers of high autonomy
• Need to support local service delivery
• Need to build local profile for fundraising and
  recruiting and program delivery
• Organizational culture emphasizing grass roots
  values (i.e., members came first)

High
Autonomy (Degree of independence of members,
chapters or key constituents)

• Drivers of high affiliation
• Need for tangible support (technical assistance,
  infrastructure, economies of scale)
• Need for intangible support (brand, best
  practices)
• Organizational culture emphasizing cohesion
  (i.e., central office came first)

Low
Low
High
Affiliation (Degree of dependence, connectedness
and collaboration between national office and
members, chapters or key constituents)
Source Adapted from Grossman/Rangan 2000
McKinsey analysis
5
THERE IS A SPECTRUM OF ORGANIZATIONAL MODELS
High
Loose web
Enabled network
Loose federation
Autonomy (Degree of independence of members,
chapters or key constituents)
Strong federation
Franchise
Subsidiary
Low
Low
High
Affiliation (Degree of dependence, connectedness
and collaboration between national office and
members, chapters or key constituents)
6
DISTINCT ORGANIZATIONAL NEEDS CALL FOR DIFFERENT
MODELS
High
Loose web
Autonomy

• to share principles or exchange knowledge

Organizations who want

• Do not have common goals or feel the need to
  share resources

. . . but.. .
Low
Low
High
Affiliation
Source Adapted from Grossman/Rangan 2000
McKinsey analysis
7
DISTINCT ORGANIZATIONAL NEEDS CALL FOR DIFFERENT
MODELS
Network models
High
Loose web
Enabled network
Autonomy
Organizations who want. . .

• to collaborate to increase impact

. . . but. . .

• Do not want to invest in common infrastructure
  and have no intent on of building a common brand

Low
Low
High
Affiliation
Source Adapted from Grossman/Rangan 2000
McKinsey analysis
8
DISTINCT ORGANIZATIONAL NEEDS CALL FOR DIFFERENT
MODELS
High
Loose web
Enabled network
Loose federation
Autonomy
Organizations who want. . .

• to align a missions and share information and
  resources, brand identity and ensure quality

. . . but. . .

• Do not want to sacrifice local autonomy,
  especially finances

Low
Low
High
Affiliation
Source Adapted from Grossman/Rangan 2000
McKinsey analysis
9
DISTINCT ORGANIZATIONAL NEEDS CALL FOR DIFFERENT
MODELS
High
Loose web
Enabled network
Federation models
Loose federation
Strong federation
Autonomy
Organizations who want. . .

• to share mission, to build a strong national
  brand, to exploit opportunities for national
  fund-raising and to engage in joint strategy
  setting

. . . but. . .

• Do not want to sacrifice local flexibility and
  ownership

Low
Low
High
Affiliation
Source Adapted from Grossman/Rangan 2000
McKinsey analysis
10
DISTINCT ORGANIZATIONAL NEEDS CALL FOR DIFFERENT
MODELS
High
Loose web
Enabled network
Loose federation
Strong federation
Franchise
Autonomy
Organizations who want.. . .

• to replicate nationally and to retain control
  over operating standards and brand

. . . but. . .

• Still need localized approach in service delivery
  and financial support with distributed leadership

Low
Low
High
Affiliation
Source Adapted from Grossman/Rangan 2000
McKinsey analysis
11
DISTINCT ORGANIZATIONAL NEEDS CALL FOR DIFFERENT
MODELS
High
Loose web
Enabled network
Loose federation
Strong federation
Corporate models
Franchise
Autonomy
Organizations who want. . .

• to extend scope by rolling out a its programs
  with control over operating standards, brand, and
  service delivery

Subsidiary
. . . but. . .

• Do not want to allow for much local discretion

Low
Low
High
Affiliation
Source Adapted from Grossman/Rangan 2000
McKinsey analysis
12
CONTENTS

• Defining range of organizational models and
  external forces at work
• Results of survey
• Perspectives on surveys and organizational design
  literature
• 6 key challenges to striking a more effective
  balance

13
OVERVIEW OF SURVEY RESPONSES

• Who responded . . .
• Mailed 13 page survey to 65 member organizations
  26 response rate
• Median national organization budget 50 million
• Median number of affiliates 280 (minimum of 6,
  maximum of 2,000)
• Median budget of affiliates 470 million
• Aggregate of local affiliates budgets 14
  billion

Source Independent Sector McKinsey analysis
14
OVERVIEW OF SURVEY RESULTS
High
Loose web
Enabled network
Loose federation

• Most are hybrid models, with federation the most
  common choice

Strong federation

• In general, loose federations wanted to become
  strong federations

Franchise
Auto-nomy
Subsidiary

• And strong federations wanted greater
  affiliation, looking for some elements of the
  franchise model

Low
Low
High
Affiliation
Source Adapted from Grossman/Rangan 2000
McKinsey analysis
15
DESIRE FOR MISSION ALIGNMENT AND STRONGER
NATIONAL ROLE IN MEMBER SUSPENSION
Network models
Federation models
Corporate models
Loose web
Enabled network
Loose federation
Strong federation
Franchise
Subsidiaries
1
2
3
4
5
6
Mission
Legal and membership
Member/key constituent status approval
Membership or constituent suspension (excusing)
16
GENERAL SATISFACTION WITH GOVERNANCE
Network models
Federation models
Corporate models
Loose web
Enabled network
Loose federation
Strong federation
Franchise
Subsidiaries
1
2
3
4
5
6
Authority and governance
Mechanism of national leadership
Hiring and firing of member/ constituent chief
executive
National Board of Directors/ Governors
Sources Industry literature McKinsey
17
CLEAR DESIRE FOR LESS AUTONOMY IN FUNDRAISING,
BRANDING, AND PERFORMANCE
Network models
Federation models
Corporate models
Loose web
Enabled network
Loose federation
Strong federation
Franchise
Subsidiaries
1
2
3
4
5
6
Fundraising
Branding
Performance management
18
AND INTEREST IN SEEING LOCAL AFFILIATES OPERATE
AS PART OF ONE ORGANIZATION
Network models
Federation models
Corporate models
Loose web
Enabled network
Loose federation
Strong federation
Franchise
Subsidiaries
1
2
3
4
5
6
Key roles of national office
3.3
3.6
Includes one local chapter who wanted to move
from enabled network to strong federation
Key roles of members/ constituents
19
OVERALL, THERE WAS A NOTICEABLE TREND TOWARDS
GREATER AFFILIATION AND LESS AUTONOMY
Network models
Federation models
Corporate models
Loose web
Enabled network
Loose federation
Strong federation
Franchise
Subsidiaries
1
2
3
4
5
6
Average overall organizational modelPercent
Loose web
Enabled network
Loose federation
Strong federation
Franchise
Subsidiary
Current state
0
8
69
0
0
23
Desired state
0
8
23
8
15
20
CONTENTS

• Defining range of organizational models and
  external forces at work
• Results of survey
• Perspectives on surveys and organizational design
  literature
• 6 key challenges to striking a more effective
  balance

21
LOCAL AFFILIATE/CHAPTER AUTONOMY WORKS

• Local autonomy makes sense in the nonprofit
  sector
• Significant local autonomy or ownership
  attracts local capital and volunteers
• Local management autonomy provides a necessary
  incentive to local leadership/ entrepreneurship
• Allows for greater geographic reach into areas in
  which monitoring/control would be difficult

• but poses some serious challenges and risks
• Possible competition between local
  affiliates/chapters for donors
• Significant reputational risk posed to all
  members by the behavior of a single
  affiliate/chapter

• Typical control mechanisms
• Local affiliate/chapter fees
• Quality control/monitoring processes
• Marketing guidelines

Sources Sector literature
22
BUT OFTEN GENERATES TENSIONS

• Issues

• Description

Sources Grossman, Rangan, Managing Multi-site
Nonprofits
23
THE FOR-PROFIT WORLD IS DISCOVERING A NEW
BALANCE BETWEEN CENTRALIZATION AND
DECENTRALIZATION

• 1970s and before Centralization
• Key trends
• Economies of scale is key driver
• Structural advantages, e.g., exclusive supplier
  network
• Response
• Divisional organization focused on tasks,
  coordination
• Command and control exerted by corporate center
  on the field
• Headquarters knows best

24
THE FOR-PROFIT WORLD IS DISCOVERING A NEW
BALANCE BETWEEN CENTRALIZATION AND
DECENTRALIZATION

• 1970s and before Centralization
• Key trends
• Economies of scale is key driver
• Structural advantages, e.g., exclusive supplier
  network
• Response
• Divisional organization focused on tasks,
  coordination
• Command and control exerted by corporate center
  on the field
• Headquarters knows best

• 1990s De-centralization
• Key trends
• Technology, globalization, deregulation
• Customize global brands to local markets
• Response
• Foster entrepreneurship via disaggregation into
  lean, nimble business units
• Push decision making closer to customers, markets
• Give middle managers authority to deliver on
  performance targets

25
THE FOR-PROFIT WORLD IS DISCOVERING A NEW
BALANCE BETWEEN CENTRALIZATION AND
DECENTRALIZATION

• 1970s and before Centralization
• Key trends
• Economies of scale is key driver
• Structural advantages, e.g., exclusive supplier
  network
• Response
• Divisional organization focused on tasks,
  coordination
• Command and control exerted by corporate center
  on the field
• Headquarters knows best

• 1990s De-centralization
• Key trends
• Technology, globalization, deregulation
• Customize global brands to local markets
• Response
• Foster entrepreneurship via disaggregation into
  lean, nimble business units
• Push decision making closer to customers, markets
• Give middle managers authority to deliver on
  performance targets

• Now A new balance
• Key trends
• Collapse of the e-economy
• Focus on performance, cost cutting
• Intense shareholder, media scrutiny
• Response
• Reduce duplication of support services in
  business units
• Consolidate non-core activities into shared
  services units, outsourcing
• Protect reputation, brand by beefing up risk
  management by the corporate center
• Make business units earn the right to
  disaggregate

26
FORCES ARE DRIVING TO INCREASED AFFILIATION
Increasing demand for transparency on
performance, financials, ethics
Growing donor demand for consistent service
within same brand
Mounting pressure on nonprofits to operate more
efficiently, reduce costs
Pressures to increase affiliation
Increasing sense of the potential for national
networks to have nationwide impact
27
CONTENTS

• Defining range of organizational models and
  external forces at work
• Results of survey
• Perspectives on surveys and organizational design
  literature
• 6 key challenges to striking a more effective
  balance

28
OVERALL SATISFACTION WITH CURRENT STRUCTURE, WITH
EXCEPTION OF ENSURING QUALITY SERVICE DELIVERY
Satisfaction(1 Disagree strongly 5 Agree
strongly)
Statement/criteria
Overall model
1
Collaboration
2
Brand management
3
Knowledge sharing
4
Fundraising
5
Quality of service delivery
6
Value-add of central office
7
29
A NUMBER OF COMMON ISSUES EMERGED FROM THE OPEN
ENDED QUESTION
Issue
Specific comments

• Working on big picture collectively while
  delivering local services
• Alignment so we face 21st century issues
  together
• Degree of autonomy vs. integration of our local
  affiliates

Collaboration

• Building national brand awareness
• Setting and enforcing brand use standards
• Maintaining overall brand integrity

Brand management

• Sharing best practices among affiliates
• Improving communication among key constituents
  without depending on national to drive the
  discussion

Knowledge sharing

• Sharing responsibility for raising and
  distributing funds
• Funding national services
• State of the economy and impact on fundraising

Fundraising

• Performance criteria for members
• More control over local organizations adherence
  to standards
• Providing resources to improve local program
  quality

Quality of service delivery

• Improving the responsiveness of national
  organization to the needs of the field
• Providing service from national to regional to
  field
• Measuring how we add value and whether and how
  our services should be paid for

Value-add of national office
30
A NUMBER OF COMMON ISSUES EMERGED FROM THE OPEN
ENDED QUESTION
Issue
Representative comments

• Working on big picture collectively while
  delivering local services
• Alignment so we face 21st century issues
  together
• Degree of autonomy vs. integration of our local
  affiliates

Collaboration

• Building national brand awareness
• Setting and enforcing brand use standards
• Maintaining overall brand integrity

Brand management

• Sharing best practices among affiliates
• Improving communication among key constituents
  without depending on national to drive the
  discussion

Knowledge sharing

• Sharing responsibility for raising and
  distributing funds
• Funding national services
• State of the economy and impact on fundraising

Fundraising

• Performance criteria for members
• More control over local organizations adherence
  to standards
• Providing resources to improve local program
  quality

Quality of service delivery

• Improving the responsiveness of national
  organization to the needs of the field
• Providing service from national to regional to
  field
• Measuring how we add value and whether and how
  our services should be paid for

Value-add of national office
31
A NUMBER OF COMMON ISSUES EMERGED FROM THE OPEN
ENDED QUESTION
Issue
Representative comments

• Working on big picture collectively while
  delivering local services
• Alignment so we face 21st century issues
  together
• Degree of autonomy vs. integration of our local
  affiliates

Collaboration

• Building national brand awareness
• Setting and enforcing brand use standards
• Maintaining overall brand integrity

Brand management

• Sharing best practices among affiliates
• Improving communication among key constituents
  without depending on national to drive the
  discussion

Knowledge sharing

• Sharing responsibility for raising and
  distributing funds
• Funding national services
• State of the economy and impact on fundraising

Fundraising

• Performance criteria for members
• More control over local organizations adherence
  to standards
• Providing resources to improve local program
  quality

Quality of service delivery

• Improving the responsiveness of national
  organization to the needs of the field
• Providing service from national to regional to
  field
• Measuring how we add value and whether and how
  our services should be paid for

Value-add of national office
32
A NUMBER OF COMMON ISSUES EMERGED FROM THE OPEN
ENDED QUESTION
Issue
Representative comments

• Working on big picture collectively while
  delivering local services
• Alignment so we face 21st century issues
  together
• Degree of autonomy vs. integration of our local
  affiliates

Collaboration

• Building national brand awareness
• Setting and enforcing brand use standards
• Maintaining overall brand integrity

Brand management

• Sharing best practices among affiliates
• Improving communication among key constituents
  without depending on national to drive the
  discussion

Knowledge sharing

• Sharing responsibility for raising and
  distributing funds
• Funding national services
• State of the economy and impact on fundraising

Fundraising

• Performance criteria for members
• More control over local organizations adherence
  to standards
• Providing resources to improve local program
  quality

Quality of service delivery

• Improving the responsiveness of national
  organization to the needs of the field
• Providing service from national to regional to
  field
• Measuring how we add value and whether and how
  our services should be paid for

Value-add of national office
33
A NUMBER OF COMMON ISSUES EMERGED FROM THE OPEN
ENDED QUESTION
Issue
Representative comments

• Working on big picture collectively while
  delivering local services
• Alignment so we face 21st century issues
  together
• Degree of autonomy vs. integration of our local
  affiliates

Collaboration

• Building national brand awareness
• Setting and enforcing brand use standards
• Maintaining overall brand integrity

Brand management

• Sharing best practices among affiliates
• Improving communication among key constituents
  without depending on national to drive the
  discussion

Knowledge sharing

• Sharing responsibility for raising and
  distributing funds
• Funding national services
• State of the economy and impact on fundraising

Fundraising

• Performance criteria for members
• More control over local organizations adherence
  to standards
• Providing resources to improve local program
  quality

Quality of service delivery

• Improving the responsiveness of national
  organization to the needs of the field
• Providing service from national to regional to
  field
• Measuring how we add value and whether and how
  our services should be paid for

Value-add of national office
34
A NUMBER OF COMMON ISSUES EMERGED FROM THE OPEN
ENDED QUESTION
Issue
Representative comments

• Working on big picture collectively while
  delivering local services
• Alignment so we face 21st century issues
  together
• Degree of autonomy vs. integration of our local
  affiliates

Collaboration

• Building national brand awareness
• Setting and enforcing brand use standards
• Maintaining overall brand integrity

Brand management

• Sharing best practices among affiliates
• Improving communication among key constituents
  without depending on national to drive the
  discussion

Knowledge sharing

• Sharing responsibility for raising and
  distributing funds
• Funding national services
• State of the economy and impact on fundraising

Fundraising

• Performance criteria for members
• More control over local organizations adherence
  to standards
• Providing resources to improve local program
  quality

Quality of service delivery

• Improving the responsiveness of national
  organization to the needs of the field
• Providing service from national to regional to
  field
• Measuring how we add value and whether and how
  our services should be paid for

Value-add of national office
35
LESSONS LEARNED FROM WORKING WITH MULTI-SITE
NONPROFITS

• The need for collective action and a common
  message increases the need for stronger central
  leadership and governance organizations moving
  in this direction often need to reinvent their
  board
• The degree of autonomy versus affiliation is hard
  to change once its set history and culture are
  the strongest barriers to change

Collaboration

• A shared national brand is one of the most
  visible and tangible benefits of affiliation, but
  it is often under-leveraged due to lack of
  national investment or insufficient direct
  marketing support/materials to local members
• The poor performance of a single
  affiliate/chapter can undermine the brand, making
  quality control critical

Brand management

• Most multi-site nonprofits fail to capture the
  tremendous potential of the knowledge resident
  within their organizations
• Most organizations rely on informal, peer-to-peer
  knowledge sharing and do not adequately invest in
  codifying their expertise, lessons learned
• The first step to effective knowledge management
  is defining what knowledge you want to capture,
  how you will use it and how this links to your
  overall mission

Knowledge management
36
LESSONS LEARNED FROM WORKING WITH MULTI-SITE
NONPROFITS (continued)

• As multi-sites expand to cover more geographies,
  the need to collaborate on donor relationship
  management becomes more critical donors expect
  consistency and collaboration
• National offices funded largely by
  member/affiliate dues are often under fire from
  affiliates about value of national services
• National offices should push for more
  transparency and customer focus in designing
  and communicating the value of services/products
  offered

Fundraising

• Many nonprofits have strict membership criteria
  on paper, but dont enforce them
• Revocation of the brand is too nuclear a
  solution to be effective, and other mechanisms
  are often viewed as intrusive
• Self-assessment combined with some form of
  national or peer evaluation has been successful
  in some organizations

Quality of service delivery

• Many national offices play a more limited role of
  providing support services and some knowledge
  sharing, rather than a true national leadership
  role in terms of national goals, standards and/or
  programs and policy
• Many multi-sites see knowledge/skill development,
  talent management and quality control as priority
  roles for the national office going forward

Value-add of national office