Leadership crisis and organizational decline in a nonprofit community service organization

Consulting

The situation facing this organization is that it has experienced a lack of leadership and a lack of strategic direction. The problem is not just with the Executive Director. The ED has avoided taking direction from the Board for around ten years, but the Board has not yet fired the ED. So this is a huge problem with leadership at all levels of the organization. Clearly, there is also no strategic direction with the organization. Its programs are deteriorating, and losing donors as well. The entire organization is in slow decline. One has to imagine this affects the morale of all involved as well. It is worth considering that this is a long-term problem, and if leadership does not change -- and after ten years why would they? -- the likelihood of meaningful change is slim to none. This report will outline some of the strategic options, but we have to be blunt -- it starts with an overhauled Board and a new Executive Director.

Four different decision-making tools will be used. The first will be a pro/con analysis that will evaluate some of the strategic options. The next will be a Pareto analysis, then the Six Thinking Hats analysis and the 5 Whys, before a conclusion is drawn.

Pro/Con

Pro & Con Argument: The organization needs a new board, a new ED, and needs to evaluate each of its programs for relevance, effectiveness and efficiency. A new strategy and vision needs to be developed from the top.

Pro

This approach solves the problems of stagnation and lack of direction (5)

The approach will revitalize the workforce and the donors (4)

This approach leverages the established brand within the community, for future good works (4)

This approach breathes new life into the organization (5)

Con

This approach is risky (3)

It requires organizational buy-in (3)

It will be difficult to convince board members to step down (4)

It will be difficult to convince the board to fire the ED (2)

The Pro/Con weighting is simple, with 18 points on the Pro-side and 12 points on the Con side. The organization has nothing to gain from the current course of action, so while there will be some resistance that will challenge the organization to overcome.

Pareto

The key to Pareto logic is the 80/20 rule, which states that 80% of problems are caused by 20% of causes. This is not rocket science and it was already identified right off the top that the problems lie with the ED and the Board. Also, in a one-paragraph case no other possible causes of problems were presented. So we will run with replacing the leadership of the organization.

5 Why's

The problem is defined as "The organization has no strategic direction and is failing at all levels. The five why's are that there is no leadership, there is no vision, there is no plan, the workers have no sense of direction and the donors no longer have faith in the organization. So all of these need to be solved, and the problem also needs to be solved. It comes down to leadership, and the fact that for ten years there has not been any. The ED is useless, and the Board has simply accepted that there is a useless ED who doesn't take direction from them. Step number one here is that the Board needs to do its job and fire the ED. Then some Board members need to resign and let some more proactive people join the Board to begin the search for a new ED. Then, a vision, mission and strategy can be developed, and this will restore the faith of the workers, the donors and the community.

Conclusion

Bazerman and Moore (2009) note that there is such a thing as change blindness. That is probably what has happened here. The new ED was useless and since he came on board the organization has gone downhill. Its programs have deteriorated, it has lost donors, and the organization has lost prestige in the community. The ED lies at the heart of the problem, but the Board has made a significant contribution to the problem as well. When the ED stopped taking direction from the Board, the Board allowed this. When the organization gradually went downhill, the Board members did not see that this was occurring until now when it is too late to salvage the situation without a dramatic organizational change program. When it comes to strategy, the Board is responsible, whether the ED is listening to them or not. If not, then they need to terminate the ED. So that is the first place to start here.

But the second place to start is to begin to remove some of the complacency from the boardroom. There needs to be responsibility at that level that the organization cannot be blind to subtle changes in the environment, but must instead constantly work to evaluate the environment and make strategic adjustments accordingly. Complacency is dangerous, and this situation illustrates the dangers of complacency.

Bazerman, M. & Moore, D. (2009). Judgment in Managerial Decision Making. John Wiley & Sons.