Dilemmas, Discrepancies and Paradoxes of Nonprofit Management

Panel proposal - ISTR/EMES Research conference, CNAM, Paris, April 2005

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Panel Session: Dilemmas, Discrepancies and Paradoxes of Nonprofit Management

Convenor: Dr. Jill Mordaunt Lecturer in Social Enterprise

Open University Business School Walton Hall MILTON KEYNES MK7 6AAUK

Telephone: ++44 1908 654728/655987 Fax: ++44 1908 655898 E-mail:[email protected]

Other contributors: Dr. Oleg Koefoed, Philosophical leader, Kesera

E-mail:[email protected]

Dr Julia Burdett E-mail: [email protected]

Professor Rob Paton, The Open University Business School E-mail: [email protected]


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Panel Session: Dilemmas, Discrepancies and Paradoxes of Nonprofit Management

Overview This panel will consist of four papers addressing important, non-rational dimensions of non-profit management and leadership. They all concern the way in which dilemmas, discrepancies and paradoxes arise, are enacted and are perceived in voluntary and nonprofit organisations. The issues these papers raise are apparent in every part of the sector throughout the world.Hence they will interest the international audience that ISTR conferences have come to represent.

In the first paper, the author will examine the ways in which the operation of organisational defences makes identification of the underlying problems difficult. She will focus on the issue of accountability and the difference between the ways in which this is espoused and how it is deployed in practice. As these processes are generally unrecognised, they present paradoxes why dont managers and boards do what they say they believe they should do?

The second paper, by the leader of an organisation based in Denmark that seeks engage creatively with profound social change and all the risks that that entails. He explores how to stay loyal to values (whilst at the same time challenging the banal way this concept is generally used) and how to sustain the motivation of volunteers in the absence of the usual incentives.

In the third paper the author presents the findings from an empirical study on Community Law Centres (CLC) in the UK.These have community control as a core founding value. She finds, however, that whilst this has symbolic significance for them, in practice the CLCs adopt strategies that amount to community involvement.

The final paper will focus on how leaders construct the sorts of challenges discussed in the papers (and in other literature), and the tools for thought and capacities they need to develop in order to engage positively with those challenges.It uses well-founded theoretical ideas developed in other contexts, but illustrates them and demonstrates their relevance with data and examples from current research on third sector chief executives.The implications for nonprofit leadership development are discussed.

Abstracts for all the papers are attached.


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The Emperors New Clothes: why boards and managers find accountability relationships difficult.

In their book on corporate governance, Lorsch and McIver (1989) document that boards said they felt confident in their ability to question the CEO of their organisation about matters of concern. Yet in their observed performance, board members rarely did this and if they did problems would be first raised outside the board amongst themselves and in a rather covert way.There have been huge efforts to make both corporate boards more accountable yet, for example, Enron occurred after 10 years of reform in corporate governance in the USA. Similar issues may be observed in nonprofit organisations. Board performance rarely reflects the rhetoric implicit in regulatory and legislative requirements. This paper will explore some of the issues that may underlie this failure of boards to perform up to expectations, suggest some ways forward and identify the challenges that will require addressing.

Boards (and the organisations they govern) face paradoxical accountability expectations that stem from a number of sources. Firstly the meanings of accountability are slippery but rarely are the different meanings made explicit even when, eg,political accountability sits in tension with managerial or market based conceptions of accountability.Secondly, nonprofit organisations have a very diverse stakeholder environment with quite different sets of expectations of and demands that they make of the organisation (see, eg, Cornforth and Mordaunt, 2004). Third, the various stakeholders have differing abilities to hold the organisation to account.As Leat (1988) observes the obligation to offer account varies. Required accountability flows from the organisational environment: the legal, political and economic context in which the organisation operates. By contrast, proactive or voluntary accountability flows from organisational values: the belief that the organisation should in its actions and working methods consciously seek to align itself with certain groups and interests. This combined with the discretion (in theory at any rate) to choose between different policies or courses of action creates dilemmas for boards and managers. In voluntary organisations the cause of the end user is often the passion that drives the organisation. Yet, the differential powers of stakeholders to hold the organisation to account, means that some external stakeholders generally wield greater power than beneficiaries.

This differential power between stakeholders to demand accountability and to apply sanctions if it is not offered, poses serious dilemmas for nonprofit managers. Too much attention to the powerful stakeholders means that the interests of beneficiaries can be overlooked or ignored: the organisations purposes may drift from serving beneficiaries (as in the stories) to ensuring that external accountability demands are met. But equally insufficient attention to these stakeholders can lead to the organisation losing legitimacy and therefore also losing resources. Both the external demands for accountability and the sense of obligation on the part of manager and trustees to offer account to members and service users are real. But they often sit in tension with one another and external stakeholders increasingly want evidence of performance that may interfere with work with beneficiaries or may direct organisational energies elsewhere. The problem facing managers and boards is how to take the demands of external agencies and their beneficiaries seriously without getting


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taken over by them.Drawing on the work of Hampden Turner (1990), this may be as in Figure 2:

Figure 2 Dilemmas of accountability

However, this paper will suggest that moving towards this creative integration is not a straightforward negotiation based on identifying the problems and agreeing solutions. There are deep-seated and powerful organisational defences (Argyris, 1990) in play that involve appearing to ignore obvious serious problems as the courtiers did withthe naked emperor in the Hans Christian Andersen fairy story. These stem from the interplay between personal, organisational and societal values and the ways in which these are addressed and communicated within nonprofit organisations (Keegan and Lahey, 2003). Unless these issues are recognised and better ways forward are developed, achieving creative integration will be impossible to achieve.

Bibliography Argyris, C. (1990) Overcoming Organisational Defenses, Needham Heights MA, Allyn and Bacon. Cornforth, C.J. and Mordaunt, J. (2004) 'The governance of the voluntary and community sector - the starting point'. In: Developing an Integrated Governance Strategy for the Voluntary and Community Sector: volume of evidence, Newcastle upon Tyne: The Foundation for Good Governance, pp. 7-14. Hampden-Turner, C. (1990) Charting the corporate mind: from dilemma to strategy. Oxford: Basil Blackwell. Kegan, R. and Lahey, L.L. (2001) How the Way We Talk Can Change the Way We Work, San Francisco, Jossey-Bass Leat, D. (1988) Voluntary organisations and accountability, London, NCVO.

Low

High

High

Commitment to local community and/or beneficiaries

Commitment to Funders

Decoupled reporting: wasteful and risky

Nepotism, corruption

Creative integration

Conformance inhibits responsiveness


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Revolution from within? - non-profit management in a philosophical organisation

How do you stay loyal to your values, given that one of the challenges of your organisation is to break through the empty phrases of most value-based management? How do you keep up motivation and devotion, when you have no access to traditional levers such as power and money? This paper deals with two themes that, all while being blatantly banal, remain central and paramount in their challenge of everyday life in a small, not very wealthy, organisation. Rather than presenting ready-made answers, the author will present reflections over problems that are best viewed from a seriously playful inconsequentialism. And present them through the optics of a genealogy for revolutions, that is central to the organisation itself and its potentiality. Kesera is an organisation based in Copenhagen, Denmark. Its declared aim is to work for pan-creation. This slightly hermetic phrase covers a less hermetic, but not less difficult attempt to initiate processes leading from suspension, over expansion and reflection, and on to what the leaders boldly name revolution. It works on a financially unstable ground, in a climate where the shift of governing power in 2001 meant a drastic reduction in support to autonomous non-profit organisations. It also works in a network-like organisation, with two leaders being mostly on the road, and one staying mostly in London. Like many other non-profits, it works through volunteers, interns, and occasional salaried part-timers, when times are good. This condition means that the survival of the organisation would seem to depend on finances. However, the organisation has managed to stay afloat during periods of financial draught, indicating that the survival may actually depend on other factors. The author claims that the central aim to keep in mind in this organisation is to stay ahead of its own value frame. Therefore a brief explanation must be given. The philosophical composition of this explanation is a controversial recombination of the philosophies of Gilles Deleuze and Felix Guattari, Jacques Derrida, Giorgio Agamben, Bruno Latour, and Bernard Stiegler. Beginning with revolution, this will be defined as the abrupt, discontinuous leap from one rhythm of development to another one. Revolutions are discontinuous, and they are always the product of collectivities. For this leap to be made possible, a potentialisation of the collectivity must take place, enabling it to leap, collectively. For such a potentialisation to take place, a process of reflection and empowering is needed. In this process, elements constituting the collectivity must be made to react upon a possible line of flight building from a process, initiated from within itself, rather than drawn in from a known horizon. But in order to make this probable, an event must be instantiated, giving the way to a suspension of known truth, and recognizable horizons. This suspension opens up for attention towards a virtuality that bridges


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between proto-subjects and super-subjectivations. This is, in short, what the organisation attempts to create in its environment. The twist here is that such processes are highly risky to work with. All the steps are improbable and need great amounts of attention, timing and decisiveness to take place at all. And given these inputs, they still remain improbable taking place only rarely. This is to a certain extent when you deal with the world around the organisation. Their attention can, to a certain extent, be turned towards you when you need it. But within the organisation, people set their lives at stake, even if for a short while. They themselves give up their subjectivities, hoping for suspensions to take place. This means that no other levers truly count within the organisation. There is less tolerance for slips, for dead periods, for lack of inspiration, from the people working within. There is a high risk of breeding unsatisfied volunteers, hoping in vain for constant renewal of horizons as they go though not necessarily able to grasp the suspensions offering themselves. The answer, as far as this author is concerned (and being one of the three leaders of the organisation), is to give up on most levers of control far more than we would normally accept in any organisation. A very high amount of unpredictability must be built into the very behaviour of the organisation, constantly challenging everybody to go a bit further, building almost exclusively on trust. The organisation survives and develops from a combination of an extreme focus on process, a very high loyalty towards the ideas of the organisation (not its structure), and a readiness to follow the potential whenever it appears. This is, admittedly, slightly off from your average organisation management (business first, safety first, structures first), and there is no guarantee that it works. However, if an organisation offering the option of revolution is to survive, nothing less offers an acceptable path or the devotion of nomadic volunteers.

Dilemmas and challenges in managing community involvement: the case of Community Law Centres (CLCs) in England

Based on empirical doctoral research, this paper explores the means employed by CLCs in England to underpin and encourage community involvement in their organizations. This research used a case study strategy to undertake a qualitative study of four CLCs in which semi-structured interviews were undertaken with key organizational participants and an analysis made of key organizational documents. The CLCs which took part in this study were complex organizations in that not only were professional staff employed by lay management committees (governing bodies) but they were also membership organizations providing services beyond their


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membership and receiving income both through contracts and grant aid, thereby acquiring multiple accountabilities and stakeholders.

The study on which this paper is based was located within the field of social policy and drew on three bodies of literature: organization theory, voluntary sector organization and specialist literature focused on CLCs. These bodies of literature came together to suggest organizational dilemmas arising in the operation of management committees and problematic relationships between management committees and staff. They also suggested that environmental factors, specifically funding, might affect organizational behaviour.

The study used the concepts of community control and professional accountability to investigate the organization and operation of CLCs in England. A founding principle of CLCs has been community control mainly by representation on their management committees and by the recruitment of volunteers from client communities to assist in service delivery. The study found that while the concept of community control retained a strong symbolic value for organizational participants, in practice community involvement was a more achievable aim and also identified six tiers of community involvement.Part of this study examined the strategies employed by practitioners to operationalize community involvement and explored the challenges associated with this operationalization.

This paper explores different strategies used by CLCs to achieve community involvement. It concludes that the aspirations of founders expressed in governing instruments were enduring influences on these organizations ability to achieve their manifest aim of community involvement; that certain environmental factors intervened more decisively than others to undermine the achievement of this aim and threaten organizational survival; that staffs commitment to successful organizational processes for managing community involvement were dependent on the acknowledgement by all organizational participants of the equality of the partnership between management committee and staff in managing the organization; and that service delivery volunteering, although allowing the physical presence of communities within the organization, was not a means by which communities influencedorganizational decision making.

The management of community involvement is of contemporary interest to both policy makers and practitioners in the third sector. A number of social policy initiatives in the UK use the rhetoric of community involvement as a means of extending democratic and consumer participation and addressing social disadvantage, and seek to harness voluntary and community organizations in the implementation of these policies. In the study of CLCs on which this paper is based, the concept of community involvement was also found to be critical in embedding CLCs in their client communities and contributing to their sustainability and survival. This paper would also be of interest to an international audience because it extends knowledge about the management of organizational processes in voluntary and community organizations.


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How leaders construct dilemmas (and dilemmas construct leaders)

This paper offers a social-constructivist perspective on the way the intense challenges of leadership in social enterprises (broadly understood) are experienced and addressed.In doing so, these challenges - of accommodating incompatible expectations, of making workable sense of ambiguities, inconsistencies and uncertainties - are located in the broader context of (post-) modern society, and the mental demands of modern life (Kegan, 1994).One aim is to explore the application in social enterprises of models and theory developed in other contexts, and to show their value and relevance in such contexts.To this end, the paper uses data drawn either from the literature or from the authors current research with Chief Executives of a range of nonprofit organizations and it starts by briefly illustrating a range of such tensions and challenges.

Next, two lines of theory are introduced.The first concerns the nature of the tools for thought that help in making workable sense of the perplexities of management, and what it is that they help leaders to do namely, to achieve some distance or perspective, to dis-embed themselves, so they can see the wood and not just lots of trees. Hampden-Turners dilemma theory is used as an illustration.The second is the adult, constructivist-developmental psychology of Kegan and others (Wilber, Torbert, etc). Their research concerns the psychological capacities that are required to handle such tensions, ambiguities, inconsistencies and dilemmas and that are gradually induced by facing them.

This leads to the final section of the paper, and the underlying purpose of the analysis. To the extent that these theories resonate and capture important aspects of the experience of social enterprise management, they have important implications for leadership development.These are discussed in the final section of the paper, along with some comments on the sorts of development activities that are likely to be effective, and how they may be provided.

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Dilemmas, Discrepancies and Paradoxes of Nonprofit Management