Strategic planning and management of non-profit organizations

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1 Strategic planning and management of non-profit organizations Roxana TOPOR and Cristina BOROIU DRAGOMIR Spiru Haret University of Bucharest, Faculty of Law and Public Administration Constanta, Unirii St Constanţa, Romania, Tel.: , Fax: , Abstract Strategic planning is a management tool from which it results the strategy. It is used to determine the mission, vision, values, goals, objectives, roles, responsibilities, deadlines for some major actions of a non-profit organization. Strategic planning is used to help the organization focus its efforts to assure its members that they pursue common goals, assess and adjust the direction of the organization after the influence of factors determined by environmental changes. Keywords: manager, social responsibility, the managerial or organizational culture economic crisis, non-governmental organizations, social enterprise. Rezumat Planificarea strategică este un instrument managerial, procesul în urma căruia rezultă strategia. El este folosit pentru a determina misiunea, viziunea, valorile, scopurile, obiectivele, rolurile, responsabilităţile, termenele unor acţiuni majore ale unei organizaţii non-profit. Planificarea strategică este folosită pentru a ajuta organizaţia să îşi concentreze eforturile, pentru a îi asigura pe membrii organizaţiei că urmăresc scopuri comune, să evalueze şi să ajusteze direcţia organizaţiei în urma influenţei factorilor determinaţi de schimbările de mediu. Cuvinte cheie: manager, strategie, cultură managerială, performanţă, criză economică. 1. General view The managerial or organizational culture, often called also corporate culture, is a relatively new concept that required the attention of both theoreticians and practitioners in management, in the post-war period, due to its impact on the organization s socialization process and in particular, due to its performance. In a market economy, each organization designs its own policy through which it conceives its evolution directions and the practical ways of achievement. Obviously, organizations that want to survive and prosper or even survive the current economic crisis, should be able to respond proactively to changes of the current context. Without a strategic plan, even minimum, the organization will only be taken away by storms, without having the opportunity to take leadership and head the organization in the right direction. That is why the choice of an organization strategy marks an important milestone to complete a complex process that has defined the mission and purposes pursued, based on a careful and relevant analysis of its situation. In Romania, NGOs management in the non-profit field has been little approached by management theorists. A new trend in the development of nonprofit organizations came from other countries, particularly from Western Europe and the U.S., simultaneously with the society changes in the 90 s and the developing of the civil society concept. In the context of non-profit organizations, strategic planning is an area less studied than in commercial organizations, especially in organizations from countries of Eastern Europe. This fact is due to several factors. First, the awareness of the role and concept of civil society is crucial and the role of this concept is constantly widening. Secondly, the role of the civil society is less understood by the masses, and especially the role and specificity of non-profit organizations. 147

2 Papers of the Sibiu Alma Mater University Conference, Fifth Edition, March 2011, Sibiu Volume 1 Finally, there is a total lack of results obtained in an independent way, as well as of an independent thinking and action, as the conscience of society and people reflects the old lifestyle and the need for constant guidance. Leaders and managers of non-profit organizations make no exception. The lack of some own projects, which would help to generate a profit or to produce social change continues to be a dominant issue in the thinking and attitude of people. Planning and in particular the non-profit strategic planning process is characteristic not only for non-commercial organizations, but it is a concept and a common methodology also for the public non-profit sector. In such circumstances, the education and perspective of managers regarding the strategic planning process of social programs have a vital role in producing services oriented towards the community needs, in offering services in a most efficient and effective way, in producing stable changes through the provision of services and social messages that accompany them. Understanding the business methods of how to satisfy social needs allows the exact identification of needs and avoids the dissipation of precious resources in the process of satisfying those social needs. In non-profit organizations, it is noted the lack of concrete examples for implementing a strategic planning and a variety of commercial methods for planning activities that would help leaders and managers of these organizations to understand their value and role in achieving the objectives established. 2. The thinking and strategic management The business planning and the process of developing commercial strategies have been fully investigated and explained by scientists. Models and theoretical principles of this process have become the bedside book of corporate and business organizations managers. There are a lot of theoretical and practical studies demonstrating how these models and theoretical analysis could help companies develop and formulate marketing strategies in order to become more competitive and better in the field of services delivery to beneficiaries. Strategic planning is a management tool from which it results the strategy. It is used to determine the mission, vision, values, goals, objectives, roles, responsibilities, deadlines for some major actions of a non-profit organization. Strategic planning is used to help the organization focus its efforts to assure its members that they pursue common goals, assess and adjust the direction of the organization after the influence of factors determined by environmental changes. In short, strategic planning is a disciplined effort to produce fundamental decisions and actions that shape and guide what the organization is, what it does and why it does it, all these being directed to the future (Bryson, 1995). Strategic character represents for the organization several things: clear objectives, the fact that the organization must be aware of its available resources and, equally, that it must have a proactive attitude towards changes in the external environment. The process is planning because it involves intentionally setting goals (meaning the desired future state) and establishing how to achieve these states. The process is disciplined for its achievement involves compliance with some requirements, standard procedures whose purpose is to maintain its focus and efficiency. Strategic planning can be complex, challenging and even harmful, but it will always incorporate the basic ideas above mentioned; the management of any organization must implement these basic ideas in its strategic planning process. Strategic planning is useful only when it reflects a strategic mindset that leads to a strategic management as foundation of an effective organization. Developing and putting into practice the strategy of a firm is the result of a strategic management. That is why, the strategic management is a broad concept that highlights the organization s overall activity, is a form of leadership based on anticipating changes imposed by the business environment which aims at establishing a longterm direction, performance objectives and specific ways of realizing them through a concrete action plan. The management team makes decisions on objectives and on the manner of accomplishing them, in the strategic management process. Therefore, strategic management can be defined as the management process of formulating and implementing a strategy. Top managers of large companies consider that setting a strategy is their most valuable contribution to the success of the company. 148

3 3. Applying the concepts in the non-profit sector Increasingly more non-profit organizations (NGOs)* are recognized as a significant component of the civil society and as a factor contributing to the support of the democratic system of government, in particular; many organizations have the ability to reach the poorest and most disadvantaged people and to give those who are not being heard enough in other ways, the opportunity to express themselves, and their involvement in developing and implementing policies helps win public acceptance. Strategic planning for a non-profit organization determines the indication of the stage an organization should arrive at in a period of one or more years, how to get to that stage and how the organization knows that it has or has not arrived where it should have. By far, the most important element of this process is the process itself. The strategy development process has special features, as stated above, depending on the type of organization to which it applies. Fundamental differences in how an organization develops its strategy, through the steps and activities associated with this process are determined rather by the size of the organization and not by its character: profit or non-profit. The instruments used in the planning process differ: non-profit organizations talk about the development of committees and commissions, of the management board and its various forms, of fundraising and volunteer management while profit organizations relate to sales, marketing, product, distribution price, promotion and other activities that would determine capital gains. In addition, differences in the strategy planning process are determined rather by those who participate in this process than by its profit or non-profit character. For example, detail-oriented people prefer to deal with linear planning, bottom-up, from general to particular. On the other hand, individuals with a deep thinking or with artistic-creative orientations prefer the organic, divergent approaches. The incidence of the presence of such persons in decision-making bodies of organizations can be * In the context of this work, governmental or nonprofit organization (or nonprofit governmental organizations) is any legally constituted association, foundation or federation, founded under Law 21/1924, Ordinance 26/2000, supplemented and amended by Ordinance 37/2003 and Law 246 / 2005, operating in the general public interest or in the interest of some local communities or in their own non-patrimonial interest. equally regarded for the profit sector as well as for the non-profit sector. It is clear that non-profit organizations have taken the term from the profit sector. Managers of these organizations have realized that the concept of strategic planning serves several purposes within an organization. Planning is, by excellence, a managerial activity. All managers, one way or another, plan. However, the planning approach, the manner of reaching plans, the complexity and content of the plans vary from one managerial level to another and even from one organization to another. What remains the same is the management efficiency question; anywhere, at any level and in any economic organization, an effective and efficient management involves formalized planning actions. A more careful analysis made by U.S. experts revealed important management aspects of small non-profit organizations: The key to success: leadership and management: the CEO and management board must be efficient. These leaders must work as a team with vision, have skills and managerial experience and not least sufficient resources to fulfil the mission of the organization. If leadership must be a general feature, the executive director must have relevant management skills. It is considered that also board members should have those managerial skills which would enable them to evaluate the CEO and to assist him in making strategic decisions (Alexander, 2000, p ). The reason of being of a non-profit organization is to accomplish a social mission, and not profit. The non-profit staff is very diverse: this diversity is not necessarily reflected in different races or ethnic groups, but especially in values and perspectives. This great diversity is an important benefit to nonprofit organizations because they employ inputs from a variety of perspectives which normally provides a complete and accurate assessment of the situation and consideration of new ideas. However, the non-profit staff must be prepared to overcome differences, to know how to appreciate this diversity and to remain open-minded to different values and perspectives. These issues are too complex for small non-profit organizations. Most non-profit organizations have small budgets, which complicates matters, also because of the character and acuity of the community needs that the organization fulfills. Non-profit organizations tend to be small in size and therefore problems in their fields should be simple. Most organizations have 149

4 Papers of the Sibiu Alma Mater University Conference, Fifth Edition, March 2011, Sibiu Volume 1 the same kind of problems: they face with difficulty the challenges of planning, organization, motivation and development of programs and projects. There are not enough resources to pay the leaders, so this is why it is hard to attract and retain the best people. The difficulty of work, low salaries coupled with small chances of career development encourage the staff turnover rather than its stability, being a strong brake on the organization s activity. The managerial experience and expertise paid by the organization may be lost when managers leave. The lack of management training is another important issue in non-profit organizations. Most managers of non-profit organizations do not come from the leadership area, and therefore have no previous managerial experience. They do not have the necessary managerial skills to manage nonprofit organizations. Training and consultancy can be a remedy for this shortcoming, and may assist non-profit managers to acquire new skills and meet the requirements of this position. Non-profit organizations generally have no time or money, but need a less expensive management and technical assistance. Non-profit organizations are, indeed, sets of social values that need to be managed professionally. The need of non-profit organizations for professional management and technical assistance is very obvious, as argued above: the complexity of tasks, the lack of a management board and of internal expertise, the scarcity of resources: time and money, changing organizational needs, the learning curve and especially the importance of the organization s results for the community. It is clear that managers need to be professionals. The specific nature of planning for non-profit organizations: many of them do not have the necessary resources for a sophisticated and comprehensive strategic planning. Another problem of planning is how to measure effectiveness and boost the organization members to contribute to the achievement of strategies and implementation plans. 4. Strategy and issues of the non-profit organization Nongovernmental organizations are characterized by a great mobility regarding their ways and directions of action. This mobility represents the condition of their survival, as long as their functioning is dependent on an accurate identification of community needs and on attracting the necessary resources to approach these needs. Each organization has a mission which justifies its existence. Obviously, the strategies of a non-profit organization are meant not only to prospect and forecast a market place, but also to determine funders to acknowledge the importance of the product offered by the organization to the community, to make of a product a value which from abstract would become concrete, real. The marketing strategy also approaches the gather of financial resources necessary for the functioning of the organization. The fundraising is subject to a more comprehensive strategy for increasing funds, which also includes the continuous innovation of the relationship: needs of beneficiaries - services offered by the organization. The increase of funds also means the multiplication of financing sources for programs. Depending on the origin of sources, we distinguish the organization s own sources and the donations. In the donations category, we include funds received from both private donors and from institutional, state donors. Non-profit organizations often gather funds from financing and therefore the emphasis is on those development strategies that lead to the proliferation of funds. The major difficulty of a non-profit organization in increasing the funds is related both to the increased competition and to the needs of the applicant. To cope with such situations, the organization must make a distinction with respect to its permanent fixtures and to the relatively constant area of consistent donors. The funds are most often targeted or dependent on a specific project or program of the organization, and only sometimes they are simply offered to the organization in the name of trust in the public image and for previous benefits. 5. Conclusions Adapting concepts and managerial modelling techniques to the specificity of organizations in Romania has to be done naturally, by respecting their particularities. Strategic planning makes no exception, and models used should be specific to organizations that intend to apply them. As a result, strategic planning can have a wider utility in a new economic environment through positive influences exerted by various types of 150

5 environmental factors exogenous of the organization. In exchange, for an atypical organization (public, non-profit or entrepreneurial), the usefulness of strategic planning could be more restricted, due to procedural and structural features of these organizations. In Romania, the successful use of strategic planning models have positive results only if the user, i.e. the management of the organization concerned to develop a strategic planning, defines and properly understands the economic, political and social context, chooses the appropriate tool, identifies and realizes the advantages of modelling, knows and avoids limitations of the excessive or inappropriate use of new management tools. The existence of atypical organizations, other than the large ones, requires, for their management, the need to adjust strategic planning tools to their particularity. In Romania, the strategic planning process in social services is at the beginning and is not sufficiently inclusive and transparent. Most times, it is a consultative process, only on paper because views expressed by NGOs and other participant actors are not taken into consideration in the final decision. Strategic planning is not done on a real identification of the need for social services. References Alexander J Adaptive Strategies of Non-profit Human Service Organizations in an Era of Devolution and New Public Management, Nonprofit Management & Leadership, 10(3), Spring. Bryson J. M Strategic Planning for Public and Non-profit Organizations, San Francisco, Jossey- Bass. Hulten van Michael NGO-Centers and National Governments, a Comparative Desk Research, (second edition) 151