Innovative leadership

It may be tempting for funded non profit organisations to feel a tad complacent. Afterall, many will be in the middle of current funding rounds and service agreements. Their funding is in place. The economic downturn will likely have very little impact upon current operations. You might want to think again.

I would warn against complacency. Economic downturns impact in many different ways. Those non profits with business enterprise units may be subject to a drop in revenue as consumers feel the pinch - even those with second hand stores are not immune to consumers tightening the purse strings. Those entirely reliant upon Government funding have little options open to them should future Governments decide to maintain current levels of funding or worse still, cut back on funding.

In good times organisations can carry a little excess weight, they can indulge in activities that carry a cost without having to worry much about accounting for that cost. In times of economic downturn, it is imperative to identify and trim unneccesary costs - those that are not directly associated with service delivery aligned to the mission of the organisation - this requires innovative management.

When things begin to go wrong, continuing to do the same as has been done in the past is not an option - when the structure breaks down it is time to do something different.

It begins with effective governance - let me reword that - effective leadership. Boards need to be extra diligent. They must not assume anything. They must question everything. They must know what is happening now and what the impact of the emerging environment may be. Boards of governance need to be proactive in troubled times. Now is a good time to look at board composition. Does your board have the experience and skills to be effective when change is needed?

The key is sustainability. Governments worldwide are giving away their nation's savings in the name of 'economic stimulation'. Admirable as this policy may be in the short term, we will have to pay for it in the future. Those organisations dependent upon future government funding need to consider the risk of reduced funding. Philanthropic trusts, amongst others, have taken hits from investments in the markets. It will take many years to recover from this. In the meantime the level of philanthropy may drop. What impact might this have on your agency?

Interest rates are falling at present. That simply means they must rise again in the future. Will they rise quickly or slowly? How would you answer that if you were manager of a bank? Will consumers continue to give to charitable causes in 12 months or 18 months or will the level of giving actually reduce? If you don't know, try talking to some of the old hands around during the last economic downturn - see what they can recall.

And in case you are thinking, no worries we will get through this okay, have a look down the track a little. In Australia and NZ, 25% of the population is moving into retirement at present and will continue to do so for the next 20 years. There will be a global labour shortage for the next 20-30 years. Historically the not for profit sector is underfunded for paying salaries and wages - how will you compete for staff in the future? Where will the money come from to enable you to compete? You can talk about job satisfaction after someone starts work with you - getting them to work for you requires access to money.

These thoughts were part of a discussion I had with a not for profit manager yesterday during a coaching session. Are you a not for profit manager? Have you been thinking about these issues? If not, why not? In tough times you need to be thinking differently than you have in the past. Your organisation needs to be doing things differently than it has in the past. This requires innovative leadership.

Let The Journey Continue
John Coxon

John Coxon & Associates
Taking You from Frontline Manager to CEO
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