The culture of an international non-profit organisation - Essay Example

?Table of Contents Table of Contents 1.0.Introduction 2 2.0.Part one: using the cultural web to analyse the culture of a non-profit (referred to here as Company X) 2 2.1.Background of Company X 2 2.2.The Cultural Web of Company X 4 2.2.1.Paradigm 4 2.2.2.Rituals and routine 5 2.2.3.Organisational structure 6 2.2.4.Power structures 7 2.2.5.Control systems 7 2.2.6.Symbolic aspects 8 2.2.7.Stories 8 3.0.Part Two: Evaluating the extent to which ‘culture’ can make an important contribution to an organisation’s strategic success 9 3.1.Culture and strategy development process 9 3.2.Culture and managing strategic change 11 4.0.Conclusion 14 References 15 1.0. Introduction This paper is divided into two parts. The first part deploys the cultural web tool proposed by Johnson (1992) to undertake an analysis of the culture of the local chapter – based in Africa, of an international non-profit organisation. The part is sub divided into two sections. Section one commences with a background of the non-profit to place the research in context and section two analyses the non-profit’s culture using the seven elements of the organisational culture web. Part two of the paper raises arguments from various sources of literature to evaluate the extent to which ‘culture’ can make an important contribution to an organisation’s strategic success. The discussion is subdivided into culture and strategy development process and culture and managing strategic change. 2.0. Part one: using the cultural web to analyse the culture of a non-profit (referred to here as Company X) 2.1. Background of Company X Company X is a not-for-profit organisation founded in 1981 in the United States as a charity aimed at improving the lives of children and families. Over its 20 years the company’s mission has narrowed to or become more specific targeting early childhood care and education, children’s rights and grassroots community development. Company X is currently headquartered in California in the United States but has a presence in five continents as follows: Africa – Kenya, Zimbabwe and Ghana; Asia – India and Nepal; Europe – Norway, South America – Chile and North America – the U.S. Company X primarily obtains its operating resources from individual and corporate donations predominantly from within the US. To supplement this funding, Company X owns and runs two exclusive pre-schools in California that boast of an enviable waitlist as well as four other high cost pre-schools in the same state. Over and above this, the non-profit has offered and continues to offer consultancy services on early childhood care and education at very competitive rates to other non-profits, for-profit corporations and even governments such as the government of Singapore, Ecuador and even the state of California as another source of funding. The local chapters in Africa and Asia have wholly been dependent on obtaining slices of the US funding “pie” to sustain their programs. However, with the global recession of 2008 hitting the US funding base, Company X has been pushing for heads of its global chapters to source for local funding to sustain their programs. Company X has been implementing this slowly over the last three years through activities such as the following. First it has instituted greater controls, monitoring and reporting over all funds disbursed. Then it demanded that each chapter develop their own five year strategic plan which will show how they will increasingly source their own funding. Thirdly, from 2009 Company X reduced its funding by 10 to 15 per cent depending on their projections over which local chapters had better odds of fundraising depending on the economic condition of that host country. The problem though is that to date none has successfully fundraised. With the economies of Europe and America, poor for the former and sluggish for the latter, the typical donors that Company X relied on have tightened their purses as they cautiously weigh their own investments. This coupled with the rising economies of Asia and widening gap between the rich and poor in Africa implies that non-profits can find sources of funding locally more easily now than in the past. A good example is the Acumen Fund which started an East African Fellows program to run alongside its Global Fellows program. The East African Fellows program is funded by a large regional bank in East Africa (Acumen Fund, 2012). We believe that the organisational culture of Company X in general could be a major factor causing the lack of response to the strategic shift being pushed from the company’s headquarters in the US. We also believe that this situation is not unique to Company X and conjecture that many a donor-funded non-profits in Asia, Latin America and Africa that are dependent on the Western economies will increasingly or are already facing similar challenges. For this reason, we believe Company X provides a good case for our analysis. 2.2. The Cultural Web of Company X This paper shall look at the cultural web of Company X within the context of its flagship local chapter in Africa, where it has been in operation for the past seven years. An understanding of the cultural web here should enlighten us on why this local chapter has been unable to implement the strategy of local self-sustenance as the US Headquarters intends. 2.2.1. Paradigm Of the seven factors that make up the culture web, identifying the paradigm is often the most difficult given that it is easy to think of what the organisation should take for granted rather than what it does take for granted (Strategy Explorers, n.d.). Paradigm is the deeper level of basic assumptions and beliefs that are shared by members of an organization, that operate unconsciously and define in a basic “taken for granted” fashion an organization’s view of itself and its environment (Johnson & Scholes, 2006). The first belief that one finds when one joins the local chapter is the notion of “we are international” which appears to dictate their manner of working. This is depicted through the working hours which are similar to the American system of 9 – 5 pm and not the local system’s 8 – 5 pm. Though the US headquarters mission is to work to improve the lives of children globally, the local chapter predominantly trains trainers in early childhood development within marginalised communities. The pictures on display are thus mainly of children in slum areas, schools or such like dire situations. The organisations inclination to work within the marginalised communities is further supported by the staff’s enthusiasm for field work and dislike for office work. Employees generally look down on those who predominantly work within the office workers such as the receptionist, office administrator and finance officer, whom they consider out of touch with what the organisation does. Also, upon enquiry about how the non-profit selects centres to work with or train we uncovered that the organisation only goes where it has been invited. The program officers do not actively seek out the communities to help rather community members, such as head teachers, teachers, church leaders, youth and others approach the organisation during any of their field activities and invite them to their communities. It could be presumed that this organisation operates on a pull strategy within the community. 2.2.2. Rituals and routine Every month end, a comprehensive report that included a rundown of each department’s activities and budgets for the coming month was sent to the parent non-profit in the US. This was the official communication between the local African chapter and the US headquarters and as such each program officer had to ensure that the report contained as accurate information as was possible. The operations manager and executive director also had to sign off on the document before it was sent via e-mail to the US. Apparently, this tended to be among the tense periods for the organisation as the top management kept seeking clarification of different aspects of the report from the program officers who headed the three different programs that the non-profit operated. Most of this back and forth communication was largely done through e-mail and the company’s internal telephone network. Here, too is where one could witness strong interdepartmental competition as the programs were run as separate departments. Early childcare development (ECD) and Grassroots Advocacy Program (GAP) competed against the recently established Social Microenterprise Program (SMP). ECD and GAP programs received their funding from the US parent non-profit, but SMP was funded by a separate non-profit in the US that had opted to use Company X as its entry strategy into Africa. The SMP was only a year old and so was the program officer who headed it. The older staff felt as if the company was giving too much attention to the new program at their expense. Matters were only made worse with SMP getting allocated a more spacious office, new equipment and a brand new Mitsubishi Pajero SUV. Additionally, Company X had the ritualised half-day long weekly meeting held on Mondays. The meetings were for staff to share ideas or air grievances. However, the meetings tended to be sessions for program officers to update the entire team on their individual programs after which the operations manager and executive director carried out long monologues on a variety of topics dependent on issues raised during the meeting. 2.2.3. Organisational structure The local chapter of Company X was divided into three programs each headed by a program officer. Finance, human resource and administration were run a single department under the operations manager who also supervised the program officers. At the top of the pyramid were the executive director and a non-active board made of seven persons, including the executive director. The board was primarily put in place to conform to local regulations that demanded one considering that Company X had registered locally as a non-governmental organisation (NGO). The non-profit had low formalisation, informal communication but highly centralised in terms of power and control. Teams were largely organised around the programs but it was not strange for the executive director (ED) to modify the teams either through hiring of consultants, volunteers or redeploying other staff members to beat donor deadlines. It is only the ED who could do this because it had an impact on the budget that only she could modify after the budget was submitted. However, in as much as formality was low and formations of matrix teams common, the older programs ECD and GAP “silo-ed” their information from the newer SMP. 2.2.4. Power structures As seen above the executive director held the most power not only because she was the only one who could adjust the budget after it had been sent to the US, but also because only her and the operations manager directly communicated with the US office. The finance officer and program officers often got copied matters that were relevant to their departments. Communication with the parent non-profit in the US was a big deal considering that funding and strategy still trickled down from there. However, the fact that the newer program, the Social Microenterprise Program, was funded and generally got its directions from a different US charity, its program officer seemed more powerful than the other program officers. This different charity communicated simultaneously with him as they did with the executive director and operations manager. This was another reason why the other programs isolated SMP and its program officer. Oddly though there was no rivalry among the lower level staff across the programs. 2.2.5. Control systems Company X control systems were focused on finance and accounting. Both the parent non-profit in the US and the local chapter’s executive director and operations manager emphasised on targeting and budgeting. With all the finances coming from donors, the company sought to achieve as low cost operations as possible. For example on the 24th of each, each program / department had to release its monthly projected budget for the coming month. This budget would then be forwarded to the operations manager, who typically whittled it down, before it went to the executive director who made more cuts before it was forwarded to the United States. The parent company in the US sent money monthly to the local chapter after receipt of the budget. This essentially prevented the likelihood of overspending at the local chapter. Moreover, this way the parent company was able to implement its plan of reducing what it sent to encourage the local chapter to fundraise locally. Other than on the financial perspective, there were very few other controls. 2.2.6. Symbolic aspects The executive director (ED) was the epicentre of power at Company X’s local chapter. Her office was at the very end of the corridor which guaranteed its exclusivity since one would only venture that direction if one was going to see her. The office was the large and boasted of costly mahogany furniture. According to the other staff members, that was the only room at the organisation where phone conversations could not be overhead and as such was it was also the best place for taking conference calls. This privacy fuelled the mystique of the ED’s office. The second symbol that employees mentioned was the inclusion of both the executive director’s and the operations manager’s profiles in Company X’s US website. This was a clear mark of approval and confidence bestowed on them by the team in the United States. In addition to this, only the two of them who made the annual all-expenses paid overseas trips to meet the heads of other regional chapters of non-profit at exclusive resorts to brainstorm on the company’s future. Once there was a program officer who was included in this trip because she had won a global award, which bestowed on her the title of Global Leader at the World Forum on Early Care and Education. 2.2.7. Stories The program officer’s travel to the US office and to the World Forum on Early Care and Education achieved legend status within the local chapter. On her return, the program officer narrated to other staff members how the organisation is highly regarded in international circles. Everyone she met wanted to learn more about the great work of Company X. The program officer’s experience gave impetus to other staff, giving them first-hand evidence that they were truly an international brand. 3.0. Part Two: Evaluating the extent to which ‘culture’ can make an important contribution to an organisation’s strategic success Culture’s impact on an organisation’s strategic success can be viewed under three broad categories: strategy development, change and leadership. Johnson (1992) argues that culture plays a big role, albeit not obviously, in the development of strategy, the management of the resulting strategic change and also on the choices made by the organisations leadership in that lead up to both strategic development and change. With this in mind we could therefore broadly group our arguments into two: (1) culture and strategy development process and (2) culture and managing strategic change. 3.1. Culture and strategy development process There are four approaches to strategy: the classical approach, the evolutionary perspective, the processual approach and the systemic approach. These approaches differ fundamentally along two dimensions: the outcomes of strategy and the processes by which is it made. This discussion is concerned with the how is strategy done and the role of organisational culture in that process. On the one hand, the evolutionary and processualists see strategy as emerging from processes governed by chance, confusion and conservatism. On the other hand, classical and systemic theorists are of the opinion that that strategy can be deliberate (Whittington, 2001). From the evolutionary perspective organisations are like the species of biological evolution that are weeded of as a result of competitive processes ruthlessly selecting out the fittest for survival (Whittington, 2001). Given Johnson (1992) definition of an organisation’s culture as the set of core beliefs and assumptions which are specific and relevant to it, which are learned over time and that underlie the social and political norm of the organisation, culture can arguable be compared to the DNA of a species. Like DNA, Johnson (1992) argued that culture permeates all activities of the company and as such it has to undergo a paradigm shift (evolution) for the organisation to survive in a new competitive environment. Thus for an organisation that views its strategy development process in the same way as the evolutionists, an understanding of their organisational culture should enable them find ways to better adapt to their environment and as such increase their hopes for survival. According to the processual theory strategic behaviour is entrenched in the ‘routines’ and ‘standard operating procedures’ imposed by political exigency and cognitive limits (Whittington, 2001). This implies that the company would need to take a deeper look at how its activities interact and reinforce one another to support its strategy. The processualists are, in this regard, supported by Porter (1996) who stated that strategy requires creating “fit” among an organisation’s activities. These theorists therefore advocate for managers / strategists to follow the established routines and heuristics of the organization when developing their strategies. This assertion is supported by Mintzberg (1994) who argued that strategy emerges more from a pragmatic process of bodging, learning and compromise during the routine running of the organisation rather than from senior management seated somewhere abstracted from the daily details and analysing hard data that lead to implementation of rational series of grand leaps forward. Finally, the strongest theoretical perspective to strategy that openly declares the importance of organisational culture is the systemic approach. The systemic view first begins by acknowledging that the decision-makers who are behind the strategy development process are people rooted deeply in densely interwoven social systems (Whittington, 2001). According to the systemic theorists therefore, strategic goals and processes reflect the social systems in which strategy is being made. This means that even multinational organisations are deeply influenced by the industrial cultures, class structures, politics and professional biases of their home nations (Whittington, 2001). That said, for organisations that are based within the same social system, their unique identities emerge from their different internal sets of beliefs, assumptions that operate unconsciously and are learned over time and shared among the individual company’s staff. The organisational culture is the social sub-system that differentiates companies operating within the same external social system. 3.2. Culture and managing strategic change Johnson (1992) argued that when it comes to implementing major strategic change, the socio-political and cultural realities of management are of great importance. This is because the culture and politics of many organisations constrain their degree of change and transformation even where such a change is necessary to meet the challenges and demands of the business environment (Morgan, 1989). Therefore to change an organisation in any significant or lasting way, management will have to change the: values and beliefs that lie at the core (Hofstede et al., 2010). In a comprehensive study of 12 large companies where top management was attempting to revitalize their corporations, Beer et al. (1990) found that for change to occur the primary target for change effort should be behaviour. According to them, employees knowledge, attitude and beliefs – all of which are affected by any change effort – were shaped by recurring patterns of behavioural interactions. Additionally, Beer et al. (1990) argued that the effects of the organisational system on the individual surpassed those of the individual on the system. These findings demonstrate the strength of organisational system on the individual and the importance of behavioural interactions within a company. The organisational system and the behavioural interactions are manifestations of organisational culture which are passed on through power structures, organisational structure and rituals and routines that are experienced every day within the organisation. This implies that culture lies at the heart of managing strategic change because, as Beer et al. (1990) argued, the most effective way requires one to first change employee behaviour through imposition of new roles, responsibilities and relationships on staff. This forces them to adopt new routines and rituals. Another author who has analysed the importance of culture to the anatomy of organisational change is Kotter (2007) who delineated tackling organisational culture as one of the eight critical success factors that managers have to get right if they are to successfully lead their company’s change efforts. Kotter (2007) argued that change could only last if it seeped into the bloodstream of the corporate body which means that the new behaviours that arise out of change efforts have to be rooted in the social norms and shared values of that organisation. Stories for instance play a big part in making change efforts stick if management make sure the right story goes around. Kotter (2007) gives the example of results improving during a change effort under the leadership of a charismatic boss. The tendency is for staff to link the improved results to the leadership style of the charismatic boss which then becomes a one of a kind story whereas the reality is that it was the overall result of the change process. This way the organisation loses the credibility of its change process. To curb the spread of such misinterpretations, Kotter (2007) states the need to show people how the new approaches, behaviours, and attitudes due to strategic change have helped improve performance. This ensures that the right message gets captures by the organisations stories which would be very important when there is need to implement change in future. Lastly, a more direct analysis of the importance of organizational culture to managing the strategic change process in organisations is highlighted by Heracleous and Langham (1996) study on a major international human resources consulting firm. There are different ways to manage change, depending on the extent of potential change, the time and information available and the power distribution in the organization (Kotter & Schlesinger, 2008). Heracleous and Langham (1996) outline four important issues that organisations need to focus on when managing strategic change. First of all, leadership of the change process has to be visible, active and credible because other employees will largely derive what the new values or rituals required by the new culture will be based on how there leader(s) act or behave for example through rewards and/or punishment. The second issue is relatively well known that is, to reduce resistance to change; employees who will be affected by changes need to be involved right from the planning stage. Thirdly, management need to use personal means of communication as often as possible and seek employees' views and concerns during the change process. Finally, the organisation needs to adequately invest in the development of new skills for the new roles, responsibilities and relationships that shall come about as a result of the change process. A deep understanding of the organisation’s culture enables the company to identify the beliefs and assumptions which have, and continue to guide – subconsciously or otherwise – the interpretations, decisions and actions of the policy and strategy-making bodies. Having identified the organisation’s paradigm, management are better placed to know which beliefs, values or symbols need to change in line with the new strategy. They are also better placed to predict likely areas of resistance to change. As Heracleous and Langham (1996) stated, “there cannot be a transformational (as opposed to incremental) change without major cultural repercussions (488)”. 4.0. Conclusion In this paper we have illustrated how the cultural web can be used as a diagnostic tool for surfacing the beliefs, assumptions and internal characteristics of an organisation. However, the second part has provided us with increased understanding of the importance of organisational culture to firstly strategy development and then to change management. We have seen that organisational culture plays a big role in the theories behind three out of the four generic approaches to strategy. References Acumen Fund (2012). East Africa Fellows Program. [Online]. 22 January 2012. Acumen Fund. Available from: http://www.acumenfund.org/fellows/east-africa-fellows-program.html. [Accessed: 22 January 2012]. Beer, M., Eisenstat, R.A. & Spector, B. (1990). Why Change Programs Don’t Produce Change. Harvard Business Review. (November - December). p.pp. 4-12. Heracleous, L. & Langham, B. (1996). Strategic Change and Organizational Culture at Hay Management Consultants. 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