Marketisation and Mission

Wilma Gallet, University of Melbourne

MARKETISATION AND MISSION: Challenges confronting NFP organisations delivering

human services

Traditionally three distinct sectors

Government

Power/legislation

Business

Voluntary/NFPs

Wealth/markets

Values/social

mission

Boundaries blurring -hybrid spectrum

Traditional

non-profit

Non-profit

with

income-

generating

activities

Social

enterprise

Socially

responsible

business

Corporation

practicing

social

responsibility

Traditional

for-profit

Mission Motive

Stakeholder accountability

Income reinvested in social

Programmes or operational costs

Profit-making Motive

Shareholder accountability

Profit redistributed to

shareholders

Source: Adapted from Alter, 2007

Emergence of competition policy

• Keating – Hilmer early 1990s

• New public management - privatisation

• Competition

• Payment by results - outcomes based funding

Competitive Tendering

For-profit companies enter the world of social service

provision

‘To Nonprofit observers, Lockheed Martin’s crossover proved that for-profits would do anything for a buck, including reinvent themselves as providers of social services’ (Ryan 1995).

Competition Policy Review Final Report 2015

Priority Policy Reforms • Greater choice & competition in human

services

• Greater focus on competition in government

procurement and privatisation

Competition Policy Review The Panel is satisfied that deepening and extending

competition policy in human services is a priority reform.

Lowering barriers to entry can stimulate a diversity of

providers, which expands user choice. Small gains in

productivity (driven by competition) in these large and

growing sectors of the Australian economy have the

potential to deliver large gains across the community (page

35).

Harper Principles

• User choice should be placed at the heart of service

delivery;

• Governments should retain a stewardship function,

separating the interests of policy (including funding),

regulation and service delivery;

• Governments commissioning human services should do so

carefully, with a clear focus on outcomes;

• A diversity of providers should be encouraged, while

taking care not to crowd out community and volunteer

services;

• Innovation in service provision should be stimulated,

while ensuring minimum standards of quality and access in

human services

Rhetoric versus reality – agency approach to contracting

Economic theory: A tension exists where

there is asymmetrical information held

between a principal (purchaser) and the

agent (contractor) – Moral Hazard Problem

Assumption: The agent is driven

by self interest and will endeavour to

maximise his/her utility

Agency Theory Stewardship Theory

Model of Man Economic man Self-actualising man

Behaviour Self-serving Collective-serving

PSYCHOLOGICAL MECHANISMS

Motivation Extrinsic Intrinsic

Power Institutional (coercive,

reward)

Personal (expert,

referent)

SITUATIONAL MECHANISMS

Management philosophy Control oriented Involvement oriented

Risk orientation Control mechanisms Trust

Time frame Short term Long term

Objective Cost control Performance

enhancement

Cultural differences Individualism Collectivism

Comparison – Agency and Stewardship

Source: Davis et al 1997

Minimize Potential

Costs

Mutual Agency

Relationship

1

Provider Acts

Opportunistically

Purchaser is Angry

Purchaser is Betrayed

2

3

Purchaser Acts

Opportunistically

Provider Is Frustrated

Provider Is Betrayed

4

Maximize Potential

Performance

Mutual Stewardship

Relationship

Agent

Steward

Steward

Agent

Provider’s

Choice

Purchaser’s Choice

PRINCIPAL-PROVIDER MODEL

Areas for reform identified by Productivity

Commission – September 2016

1. Social housing

2. Public hospital services

3. Specialist palliative care

4. Public dental services

5. Human services in remote Indigenous communities

6. Grant-based family and community services (Includes alcohol and other drugs services, community-based mental health services, family support services and out of home care, and homelessness services).

Marketisation appears to be gathering pace

Evident in vocational education, aged care, child care, NDIS, justice,

The marketisation trend represents the encroachment of a corporate

ideology that may threaten the nonprofit sector’s unique role in society

How do NFP organisations

maintain their unique and valued

position while competing with

large for-profit corporations?

Factors in maintaining a unique identity

1. Leadership

2. Mission clarity

3. Culture and Language

4. Integrity framework

5. Advocacy position

6. Funding diversification

7. Distinctive proposition -value add

8. Civic engagement

1. Leadership

• Part of the leadership role is to consider the effect of strategy on mission

• Leaders have a key role in influencing the organisations culture

• Leaders need to model the values of the organisation – walk the talk

2. Mission clarity

Your mission reflects your identity

It is the raison d’etre for the organisation

In times of uncertainty clarify your mission

3. Language and culture

4. Integrity Framework

Avoids mission compromise

Upholds reputation

Strengthens community trust

5. Advocacy Position

• Promoting your social mission

• Championing a specific group or cause

• Being a voice for the voiceless

6. Funding Diversification

Government

Philanthropy

Income generating activities

7. Distinctive proposition

• Cultivate a distinctive contribution, something that is unique to your organisation

• Become known as the expert in a sub-field

• Connect with international experts in this sub-field, explore world’s best practice

8. Civic engagement

Embedded within the local community

Create opportunities for volunteers

Build social capital

Role Characteristics/Contribution Measurement Tools

Service provider

Core values that reflect: Commitment to social justice; Community development principles; Inclusive participation; Lifelong learning.

Standard reporting under the funding agreement/contract; active membership

Community capacity builder

Early intervention to minimise the effect of damaging social conditions; co-design and coproduction of community interventions;

Input/output evaluation; data from ABS, HILDA and SEIFA; data from local government; indicators of community strengthening;

Incubator for social capital

Strengthens community Community empowerment, Finding local solutions to local problems

Reference from peer groups, local government, business, service groups.

Source of information (trusted advisor/key influencer)

Intermediary between citizens and government.

Consumer engagement frameworks Client Charter, Client feedback

Navigator (guide through maze of service provision)

Citizen centred approach; Local connection and genuine collaboration with other providers

Peer review Mapping networks and referrals

Employer in thin markets Supportive employer; Commitment to diversity & equity Creating supported work opportunities for vulnerable clients

Organisational report, workforce recruitment and retention data

Laboratory of democracy

Encourages civic participation and creates opportunities for active citizenship through volunteering.

Organisational annual report

Advocacy/Influence

Mobilising the community via advocacy campaigns to raise awareness about important social issues e.g. poverty, inequality.

Evidence of strategy and impact.

Drivers of distinctiveness

Mission

Leadership

Culture

Strategy