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economy continues to struggle, many areas of the nation continue to struggle as well. Non-profit and governmental organizations are faced with cutbacks, fewer donations and general lack of assistance that they may have been accustomed to in the past.
Add to this the globalization process and the increasing need for assistance by these organizations and it is easy to understand why it has become critical to manage them as efficiently as possible. The strategic management of non-profit organizations as well as governmental organizations must be as efficient and capable as possible for the organization to be able to continue operating.
Several elements are needed for the strategic management of such organization including team work, financial planning and goals. This paper will discuss and detail the importance of strategic management in these areas as well as suggest future paths for success.
Strategic Management in a Nonprofit and Governmental Organization.
One of the most important elements in a non-profit organization is the volunteer base. The volunteers provide manpower and ideas to organizations that otherwise would not be able to afford them (Crittenden, 2000).
Approximately 90 million Americans volunteer services to the nearly one million organizations which comprise the nonprofit sector (Crittenden, 2000). With charitable contributions totaling around $143 billion, the nonprofit sector contributes an estimated $250 billion to the United States economy and has evolved as an increasingly important influence on contemporary America.
Two decades ago, Hofer (1976) and Wortman (1979), foreseeing that major environmental shifts would impact the continued success of many nonprofit organizations, lamented the lack of strategic management studies in such organizations (Crittenden, 2000)."
As was predicted there have been many changes in the non-profit sector during the past few decades and those trends have caused leaders and experts to re-evaluate their methods.
Strategic management planning for non-profit organizations is a process enabling the organization to move toward its objectives and accomplish the goals that it has set forth.
There are five general steps in the strategic planning process:
goal/objective setting, situation analysis, alternative consideration and selection, implementation, evaluation (Crittenden, 2000)."
In the development of planning strategic management of non-profit organizations there are several questions that should be asked. These questions will allow the decision makers to work toward defining the needs of the non-profit organization and then address those needs with solutions. They include:
What organizational characteristics contribute to the distinctiveness of the nonprofit organization?
What are the elements of strategic planning as they relate specifically to nonprofit organizations?
Is there a relationship between the distinctive organizational characteristics of a nonprofit organization and elements of its strategic planning process (Crittenden, 2000)? "
One previous study examined more than 11,000 non-profit organizations to determine the successes and failures of strategic management planning. The study used a survey as well as telephone interviews to produce data for analysis.
The results extracted thirteen important features of non-profit organizations for the purpose of strategic management that included (Crittenden, 2000):
Organizational Membership -- may indicate an important relationship between membership size and organizational structure (e.g., a greater reliance on committees and voluntary administrators with increases in the number of female members, volunteer members, and/or members) (Crittenden, 2000)."
This is important because it underscores the importance of creating an organizational management plan that matches the size of the organization. Throughout the years many non-profit and governmental organizations have struggled because they had a management plan that was to small for the size of the organization itself.
Gender-indicates a positive relationship between the number of active female volunteers and the likelihood of a female top administrator, and a negative relationship between each of these factors and administrative experience in profit-seeking firms. (These two relationships are not surprising given that women comprise 70-80% of the nonprofit workforce in the United States, while only comprising around 50% of the for-profit U.S. workforce (Mirvis, 1992; Preston, 1990) (Crittenden, 2000)."
This is an important factor when it comes to the strategic planning of non-profit and governmental organizations because it provides proof of the importance of the female gender in the organization. The use of females in top management positions is important because of the size of the women workforce within these groups.
Member Age -- suggests that the age of an organization's membership may be reflected in the age of its administrator, as well as a relative incompatibility between members of the two represented age groups (2 0-39 years and [greater than] 60 years) (Crittenden, 2000)."
The importance of understanding the value of administrator age in relation to the organization cannot be underscored enough. It has a bearing on the interaction between the workers and the administrators. This is important because of the number of volunteers who work with non-profit or governmental organizations and their satisfaction can make or break the organization itself.
Organizational Maturity -- suggests that older organizations (both local and parent) are prone to be more familiar to donation-minded individuals and this familiarity could, in turn, lead to greater funding (Crittenden, 2000)."
In the planning of strategic management of non-profits and governmental organizations this is an important element. When choosing who will head up the organizations it is vital to choose someone who has connections or relationships with the movers and shakers of the area so that they have a better chance of gaining much needed funding or support.
Board of Directors -- "horizontal segmentation" by gender does appear to exist in nonprofit organizations (Onyx and Maclean, 1996), as the analysis shows a relationship among larger boards, more voluntary board members, and more female board members (Crittenden, 2000)."
Expressive Youth -- a positive relationship exists between an organization's expressive tendencies (i.e., activities and goals directed toward member satisfaction) and the proportion of younger organization members (e.g., more expressive organizations are associated with larger proportions of members under 20 years) (Crittenden, 2000)."
Just as it is important to strategic management to be sure to place older administrators in key positions it is also vital to incorporate youth as well. The youth will have many years to contribute to the agency or organization.
Dues Funded -- implies that individuals in the 40-50-year age bracket are either more inclined to support organizations they belong to through dues or are more inclined to join organizations that are primarily funded through dues (Crittenden, 2000)."
Strategic management efforts must concentrate on targeting the groups that are going to contribute the most money or the most support to the agency or organization. This has been shown by research to be the age bracket of 40-50 years old. While it is important to target younger and older groups as well the main focus for success should lean toward targeting this age group.
Bureaucratic Size -- indicates that large administrative staffs are associated with large organizational net worth and that the inverse (i.e., small staffs -- small net worth) is true as well (Crittenden, 2000). "
This is an important factor when it comes to strategic management of non-profit and governmental organizations because it guides the planner to develop a size that will mean the desired amount will be realized.
The factor analysis identified 10 key elements of strategic planning in nonprofit organizations: (1) scope of planning, (2) formality of planning, (3) administrative style, (4) membership involvement, (5) external environment, (6) implementation responsiveness, (7) strategic planning routinism, (8) constraint identification, (9) subjective planning, and (10) resource misallocation (Crittenden, 2000)."
Strategic management in non-profit and governmental organizations calls for the use of past experience when it comes to future decisions. This method allows the planning phases to use the mistakes and the profits of the past to color the goals for the future.
Further study has concluded that one of the most important factors in the success of non-profit or governmental organizations was about team work (Fred, 2003). It has been determined in the past that the acceptance of being part of that team is crucial to the successful implementation of any non-profit or governmental organizations. Non-profits and government organizations are an important part of society. The proper and successful strategic management planning ensures the continued success of such organizations.
A network of around one million organizations, the third-sector has evolved as an increasingly important influence on contemporary America. The nonprofit organizations comprising this sector contribute an estimated $228.2 billion to the national economy, with charitable contributions in the United States totaling around $130 billion. Yet these organizations are experiencing fundamental shifts in their environmental condition - shifts which could threaten the future well-being of such organizations. With such environmental concerns, there appears to be a pressing need for more and better strategic planning in third-sector organizations (Fred, 2003)."
The use of strictly financial concerns in the strategic management of non-profit and can impede the development planning and success of a non-profit or governmental organization. In for profit businesses the concerns and use of financial aspects is understandable because the end result of such a venture is to be financial gain (Kaplan, 2001). In the case of a non-profit or governmental organization however…[continue]
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