It’s time for the tough conversations: How to right-size your organisation to build back better
16 July 2020 at 7:00 am
Essential considerations for board members and executive not for profit leaders in times of social distancing. In particular, the need to be thinking through operating model changes to match strategic shifts.
There is no denying that 2020 has been hard for the social sector. There’s also no denying that it’s been harder for some than others. Organisations that rely on face-to-face contact have had their worlds turned upside down in the COVID-19 context. While some states have been able to relax social distancing measures, we are still seeing empty sports stadiums, libraries and art galleries across the nation. Youth programs are on hold and face-to-face mental health and family violence consultations are limited. The conversation dominating the sector at the moment is how we can “build back better”. This conversation is critical to our future, and we must transition to the next economy, where we consider all stakeholder outcomes, not just shareholder return. But much of this conversation has focused on government policy and business practice. Where are not-for-profit organisations, particularly those who have had their fundamental value proposition decimated, meant to start with this rebuilding?
Government stimulus initiatives such as JobKeeper may have borrowed some time for sporting clubs, arts centres and youth initiatives, but the future of such schemes is uncertain, and they definitely won’t last forever. Leaders need to be proactively embarking on the journey of change. Ideally, everyone’s job is protected. The unfortunate reality is that many organisations won’t survive this pandemic if changes aren’t made. We have seen many boards come to this realisation, and, in line with their fiduciary responsibilities, are now asking executive teams to consider restructuring options. This is an uncomfortable exercise, but if done right, can be an opportunity to build a new model that sets your organisation up with agility to respond to the unpredictable climate we find ourselves in.
By now, most leaders have already worked their way through many of the “strategic refresh” considerations that aim to respond to redundant value propositions, broken business models and excess staff capacity, but let’s recap a few of the key lines of enquiry, in case it sparks new thinking.
- Can you reimagine your service delivery model or unlock new value for your stakeholder? E.g. moving your physical gallery tours online, delivering consultations through telehealth, or (one of my favourites) creating high-end cook at home kits in lieu of a restaurant experience.
- Are there options for new revenue streams that diversify your income model and don’t rely on face-to-face? E.g. is there IP that can be digitised and licensed? Or other assets that lend themselves to commercialisation? Can you align your offers to social procurement frameworks and explore new market opportunities in this domain?
- With your excess staff capacity, can you leverage this time to finally do those projects on your roadmap that never seem to get ticked off, and set yourself up for the future? E.g. revamp your website, design new products.
- Is now the time to seriously consider partnerships? If we end up heading towards sector consolidation, how do we do so without losing our rich tapestry of specialisation so that no beneficiary group gets left behind?
- Can you reframe your cross-sector partnerships? Consider what value you can offer, and ask for a non-cash return. E.g. can they take on some of your staff and offer them different roles until this pandemic is over?
- Is your engagement with government strong, and can you clearly demonstrate your impact to your funders and allies through an evidence-based impact narrative?
These strategic considerations will likely alter your strategy, at least over the short-term (we’ve been using the framework of “now, next and after” in terms of horizons for the pandemic period – see our recent whitepaper series for more). With your revised plans in mind, it’s vital that the capability and capacity of your team match this direction. Structure follows strategy, and it’s this reconsideration of structure that can be particularly difficult. You want to be respectful and mindful of staff wellbeing, and you don’t want to get yourself into a situation where you’ve let too many people go, then circumstances change, and you do not have the capacity to ramp back up.
In helping many of our clients through this process, we’ve found three key design principles can guide you towards the best outcome: prudence, flexibility and respectfulness. In terms of the technical process to undertake, it’s essential to examine all components of your operating model, that is, your people, process and systems (rather than jumping straight to your organisational structure and flying blind with changes).
Start with process. The best way to do that is to create a simple map of the core outcomes that you need to deliver now, and the functions that do so. Here you’ll be able to identify interdependencies and any duplication. You may wish to create multiple maps for your different horizons (now, next and after), so you can see what needs to be scaled and when, according to external conditions.
With your processes now mapped, move to systems, and see whether by optimising or changing any of your infrastructure, you can achieve greater efficiencies across and between processes. We’ve found many organisations have decided to rationalise the number of technology solutions they are using in these times and take processes back to basics. Others are implementing new programs that integrate with their systems through APIs that are enhancing functionality.
Finally, it’s time to decide what capabilities and level of capacity you need to deliver each of the models, and from there, what roles are needed. If you require less capacity than is in your current team, you may decide to adopt a uniform reduction in percentage of EFT, to allow for great flexibility in scaling back up. Or, you may vary reduced rates based on skills. With face-to-face roles, it might be time to bite the bullet and furlough, stand down or let people go. This is the task that most leaders dread, but it’s also an essential part of leadership accountability.
Communication is key if there are tough calls to be made. Good change management practice is to be transparent, caring and remember that one significant reduction is often kinder than lots of small announcements that create anxiety across teams.
This is an uncomfortable exercise, but one that is essential for a sustainable business model. Hopefully, with everyone doing their bit, we’ll soon be able to put these times of social distancing behind us, and the bumps in the road will smooth out a little more.
This article is part of a body of work in our Build Back Better series. For industry-specific analysis, please feel free to contact firstname.lastname@example.org
About the author: Felicity Green is the co-founder and associate director of impact-led advisory firm, Spark Strategy. Felicity has recognised expertise in not for profit business models, social innovation and cross-sector partnerships.