finance for non finance managers

Strategic Management in Non-Profit Organisations Non-Profit or not-for profit organizations differ from profit-oriented business organizations. There are diverse types of non-profit organizations globally, including research institutions, hospitals, and educational, social, cultural, political organizations and trade unions. Inspite of this diversity, certain common characteristics are noticeable in such organizations that distinguish them from business firms. The influence of their clients or customers is often limited. These organizations are funded by way of grants and donations from government and public trusts. Discretionary powers of internal management team are thus subject to the overall regulation of the funding bodies. The personnel of some organizations like research institutions, social and cultural organizations, often are committed more to their profession. Partly, because of their diversity interest, and since strategic planning techniques have developed out of the experiences of large business enterprises, top management of non-profit organizations are said to less likely to engage in strategic planning. Wortman in his study in the American context found that such organizations tended to be managed much more in a short-term operational sense than in a strategic sense. Some of the factors might prompt non-profit organizations to engage in strategic planning as a formal exercise. Reduction in government funding due to all-round resource constraints in recent years, and the involvement of industrial houses in public and private trusts, are two important factors. Over the past Ten years or so, there has been the major re-organization,rnrestructuring and rationalization of many issues in the non-profit organizations. Eventsrnthat occur everywhere in the world have significant impact to the national sectors eitherrndirectly or indirectly. Change, though traumatic for some quarters, is indispensable andrnunavoidable. In most non-profit organizations, the change even if it is carried out on arnsmall scale normally are viewed unfavorably by the civil servants who for years have been comfortable’ in their positions. However, a review of traditional modes of management justifies the idea of organization transformation. Organization transformation is meant to intentionally and fundamentally change the organization. It is radical in nature and usually done when a company is in crisis—when systemic change is warranted. Strategic management is still considered a new introduction in the non-rnprofit organizations. Many intangible values such as the trade-off between efficiency or productivity versus due process and legality cannot be quantified. As there has been continuing interest on the part of governments around the worldrnin promulgating a policy for market-oriented approaches, many of the managerialrnand organizational practices have been taken from the private sector. Among otherrnpopular prescriptions adopted for improving the management of public organizationsrnare Planning, Programming, Budgeting System (PPBS), re-engineering, Cost-BenefitrnAnalysis (CBA), Management by Objectives (MBO) and Total Quality Managementrn(TQM). These also include planning techniques such as PERT analysis, industry analysis,rnmarket research, and economic forecasting. Strategic management became a popular phenomenon and was applied within a broad framework. The nature of non-profit organization as a service provider demands the managerrnof the organization to act significantly differently from their counterparts in the privaternsectors. The leaders of non-profit organizations must always have the conscience asrnan individual who acts as a social architect. If non-profit organizations are to thrive and be more professional in theirrnmanagement, the element of trust must be given a new meaning while retaining itsrnposition at the core of the organization’s activities. Leaders must engineer the wayrnrelationships are constructed. This is because high levels of trust reduce friction amongrnemployees, bind people together, increase productivity, and stimulate growth. On thernother hand, low levels of trust adversely affect relationships, stifle innovation, and hamper the decision-making process. The emergence of strategy into the lexicon of non-profit organizations reflects both the increasing complexity and adaptability of the organization in responding to the demand of a volatile environment. Strategic management, without doubt, can become a dynamic yet challenging tool to complement the efforts towards new non-profit management, particularly in the area of managing non-profit sector development projects and programs. In the final analysis it is the leadership styles and behavior that determine thernsuccess of the re-engineering process through the use of strategic management tools.rnStrategic management concepts whether borrowed or home grown can only be goodrnif the critical leadership factor is present to initiate and guide changes towards betterrnoutcomes. ©Vijay Mistri http://www.rentadirector.com **************