Roles of Executive Director & BOD

Inner-Workings of the HSOMoral entrepreneurship: maintaining viability HSO structure

HSO Innovation (Staying Fit case)

Executive director and board roles

HSO Structure

HSO Life Cycle: Stages Formation/Entrepreneurial-detect a need for service

Start up- initiate programs, run by sole mgr.

Growth Stage- build organization, refine service

Maturation- formal programs and mgt.

Stagnation/Renewal- perceptions change, organization

looses sight of mission

Entrepreneurship opportunity, or

Decline/Shut Down- if no renewal legitimacy lost, increasing

difficulty operating

“HSO succeed in their own way and fail in the same way. They run out of money.”

Moral Entrepreneurship: Preserving the HSO Viability

HSO form in response to something

Over time the public view of the situation changes, or

Means of addressing problem changes, or

Changes in environment make HSO obsolete

HSO must innovate and find new opportunities or lose legitimacy

Entrepreneurship & Innovation Process can be proactive or reactive

Applying existing capabilities in novel ways

A complete change of mission intended to serve new purpose

Adding additional services or technologies to meet same or new areas of need

Providing the same services, meeting same need in a new and different way

Involve novel way of providing service or a new service that satisfies a need not previously met

Moral Entrepreneurship involves Organizational ChangeDirected change is challenging

Organizations change is inevitable, managing the change is difficult

Effort will face resistance from within the organizationStructural impediments (ie policy procedures)Social impediments (ie political behavior)

Resistance from outside of the HSOGarner legitimacy for the changeEntering competitive space of others

HSO AdaptationDetect threat or opportunity in

environmentMost important activity, sooner detect easierGood HSO mgt. proactive and acts early

Analyze threat/opportunity

Consider HSO capability to react

Create sense of urgency

HSO Adaptation (cont)Develop plan of action

Execute plan: develop capabilities necessary to succeed

Evaluate progress, adjust

Revisit firm mission/strategy, adjust

Process can be lead by top of the organization or championed by an operational level employee

Note: this is simplistic and linear, truth is its hard and an iterative process

Enviro Change Effect Legitimacy: HSO DiesThe institutionalization of mental health patients is viewed as inhumane by some in mental healthcare community and civil libertarians

Policy makers are lobbied to change laws that allow for involuntary institutionalization; professionals frown on the practice

Policy changes and laws are enacted

Residential facilities lose legitimacy, cuts in funding

Care facilities change there means of service delivery or go out of business

Review

HSO Adaptation: ExampleHSO realizes managed care emerging as the preferred way

to administer healthcare services

HSO studies what it must do to operate in an environment dominated by managed care organizations (MCO)

MCOs purpose is cost control and therefore demand copious amounts of written record (paperwork) accurate accounts of services provided, documentation of work

done, and compliance with policies to receive payment

Healthcare providers adaptation means developing capability to meet the demands of managed care companies

Providers that choose not to enter or delay entry into managed care put firm survival at risk

Adapting to Serve Managed CareStaff must be trained or new staff hired that can

perform bureaucratic work

Technology (computers) and systems of operation must be in place to provide tools for workers to perform job

HSO may need to alter services or treatment programs that fit with MCO requirementsOnly prescribe or implement treatments approved by

MCOComplying with MCO influences who the HSO treats and

how the HSO treats them

Challenge of ChangeHSO can no longer make recipients their focal

customersMCO is the most important stakeholder

Climate of HSO will become more bureaucratic

Culture may become less client focused

Can be de-motivating for workers that derive satisfaction from providing service to others

HSO Change LessonsTendency to regress back to way organization

worked

Very challenging to make change a permanent part of the organization

Requires change at all levels of the organization

Systems formal and informal need to align with the demands to adaptation

Opportunity SeekingMeet a need

Assess and develop capability to meet need

Have buy-in from operational service providers and top management & BOD

Meet need in a way that is acceptable to outside stakeholders and institutional/task environment

A Way to Lead HSO ChangeIdentify need

Demonstrate capability to meet need

Demonstrate how meeting need helps HSO viability

Garner support at multiple levels

Secure support from important outside stakeholders

Staying Fit: Moral Entrepreneurism

Schumpter: The entrepreneur is the innovator that creates change throughout markets.

Raised the bar of expectations of clients which will effect competition.

HSO Survival Requires ChangeThe HSO must evolve with changes in the environment

To survive HSO changes what it does and how it does it to survive Change is ongoing and inevitable, challenge is to manage it

Stagnation (failure to assess threats and opportunities) is a path to death

Management needs to study its operating environment and plan change.

“Staying Fit” management was proactive and met a need (social exercise and opportunity) of its core constituents.

Case Study: Staying Fit, inside and outRetirement community in Santa Barbara is part of

the largest nonprofit retirement living services company in So. Cal

Santa Barbara location decides to invest in a Fitness and Aquatic center to be used by residents and seniors living nearby

Center provides exercise pool, strength training and a conditioning room. Physical therapy is provided on site

Off hours rents the facility to community at largeHelps to keep cost of services lower for seniors

Staying Fit: Meeting an unmet needCenter develops a lifestyle model of

services designed to meet both social and physical needs of its clientSocialization for seniors is a stubborn challenge.

The center promotes more independence, socialization and availability to community at largeProvides volunteer and back to work

opportunities for seniors

Staying Fit: DiscussionEnlarged services to meet a serious need of

seniors.Not just a typical senior living facility

Able to deliver the services at a lower cost

Attracted more clients. “Oh my gosh I could live here.”

Case: Entrepreneurship & ChangeThinking about the “iceberg” analogy of

organizations:

Can you think of any circumstances/ threats that could cause Vista Del Monte to abandon the new program?

What should Del Monte do ensure the “Vitality” program remains permanent part of Vista Del Monte?

Organization is like an icebergOn surface formal aspects: Constructed and visible

• Policies & Procedures • Technology• Structure• Chain of command• Stated objectives

More than Meets the EyeBeneath the surface organic, dynamic,

evolvingSocial processes & aspects of the organization

Embedded knowledge/skills Attitudes Assumptions Unhealthy conflict Underlying skills Informal interaction Political behavior Group norms

Strong Culture: Vista Del MonteVision

Preserving the not-for-profit heritage of “Doing Good . . . And Doing It Well” through a human services delivery system that makes a difference in the quality of life of those served.

Mission

Meeting needs through excellence in human services.

Parent Company Values: Set the Stage for Sustained ChangeCustomer Satisfaction

Integrity in relationships

Individual initiative, expression and creativity

Teamwork and trust

Fiscal responsibility

Innovative services and products

Evidence of a strong culture

Protect the Mission

REVIEW: case study Metropolitan Area Neighborhood Nutrition Alliance

Tension between mission and HSO viability

Tendency compromise mission for financial needs

Mission of the HSODefines the HSO reason for being.

Usually captured in a succinct statement. “The Minneapolis Heart Institute Foundation seeks to improve

cardiovascular health through education and clinical research”

Mission change can be deliberate or realized after the change has occurred.

Revisiting the mission can lead to revitalization of the HSO.

Protecting the Mission: AA “to stay sober and help other alcoholics to achieve sobriety.”

Concise scope of service: mission has not changed over decades.

Leaderless: “Big book and 12 traditions act as guides and rules of behavior.”

Road blocks against outside interference or dependence. Limits on donation amounts. Will not lend its name in any form of sponsorship. No promotion. Limits on donations amount.

Flat structure/Loosely coupled. Each meeting operates separately from all others. If one gets corrupted it

will not effect any other members or part of the organization.

“The only constant is change (Heraclitus)”

The driver of change comes from the environment, but occurs within the firm.

To meet needs of environment the HSO makes changes (often incremental) to how it operates and the services it provides.

Often these changes are reactive and not realized until long after the mission has changed.

Legal ramifications for changing mission- nonprofit status is approved based on mission stated in application

Mission Change Bloat or shrink.

Mission change can be for the Good or Bad.

Can occur when the original need the HSO serve changes.

Begin to serve other needs/markets.

HSO looses focus (Red Cross Case Study).

Mission ChangeHow we think we change should occur:

Rational process: examine the question, collect data and make a decision that is based on the data collected.

How change does occur: Real WorldIterative, undetected and hopefully realized at

some point. Political Process: Different versions of the

perceived change.Usually takes a shocking event (threat to firm

viability) to make us realize the change or be OPEN to change.

CEO Enigma: Different Type of LeaderThe HSO manager has to be proficient in the art

of management and in public policy.

The HSO leader must be knowledgeable about the technology the firm provides.

This situation creates a potential source of difficulty and problems in running the organization.

Balancing fiscal and service needs presents employee management challenges.

HSO: Management ChallengesHSO are typically “lean” at the management level,

therefore the ED or CEO plays a complex role.

Pay is much less than FPO counterpart ($30k-$200k)If paid too much HSO may loose legitimacy and is

scrutinized.

2 primary responsibilities that fall into HSO management. 1) operational manager-things running smoothly,

efficiently, resources being properly used 2) fund raiser-Securing funds necessary for the HSO to

continue operation.

Not easy to find both skill sets in one person. ENIGMA

Role of the CEO (Ex. Dir)Chief role model: Strive for Excellence

Changing from caretaker of the firm to professional manager.

Moving away from focusing on internal operations.

The future ED/CEO role more strategic and requiring skills associated with professional managers. Delegating authority, managing the firms relationships

with other organizations, developing strategic focus.

The CEO JobImplement board policyPlan & coordinate policies for governing

program of servicesGuide staff in formulating strategies to

achieve HSO objectivesManage personnel according to HSO policyAttend all board and ad-hoc committee

meetingsKeep Board informed about finances,

operations and HSO programs

What Makes a Good CEOStaff Perspective:AccessibilityAvailabilitySense of humorEmpathy and concernCandid forthrightGood listenerResponsiveHard workingRole model

Board Perspective:CompetitivenessVisionLeadershipAbility to work with

diverse groupsFinancial acuity

Most from service provider ranks do not have training in financial management

Changes in CEO RoleCaretaker Professional Mgr.

Central/Delegation Authority Centralized Authority Delegate

Internal/External orientation Internal focus Mgmnt of external environment

Organizational goals Operational Efficiency Organizational effectiveness

Management style Superficial, ad hoc Long term strategic

Operations focus Production/Maintenance Adaptation/Development

Openness to new options Little Considerable

ED/CEO Decision MakingIn an FPO management have a fiduciary

responsibility to shareholders to maximize return on investment.

Decision making is contained to this responsibility which by association aligns the financial survival of the firm with the actions of the CEO.

HSO management decisions are indirectly aligned with firm viability.Decisions are primarily focused on serving the firm

mission & fund raising.Enigma: primary goal of all organizations is survival

Output of hso does not garner $ directly.

Board of Directors/Trustees: RolesSimilar role as in FPO-governance.

A group of volunteers.

Determine the organization's mission and purpose

Select the executive staff through an appropriate process

Roles of BOD (cont.)

Provide ongoing support and guidance for the executive; review his or her performance

Ensure effective organizational planning

Legally responsible for making sure the organization remains true to its mission.

Safeguards assets

Operates in the public interest

Informal Role/Behavior of the BODBOD can be a source of legitimacy-high profile

folks.

BOD can provide status to its members.

BOD members can be active or not involved (giving their name to the cause).

BOD can be symbolic.RLA had 33 members ’92-’94 & 72 ’94-’97

Balance of Power between CEO and BOD.Boards can be weak or strong, personalities determine

Typical HSO Structure: Do More with Less

Flatter, Less layers of management.Opposed to a for profit large diversified firm.

# Mid-level Managers driven by how many programs offered by HSO.

Lean organization: few paid employees.