Managing The Nonprofit Tension Cycle
Organization Design is a practice of tension management. Organization Design helps nonprofits manage competing tensions by creating structures, processes, and systems that enable productive balance rather than destructive conflict. When designed effectively, organizations can transform potentially negative tensions into sources of leverage for accomplishing their mission.
The Nonprofit Tension Cycle
Most broadly, nonprofit organizations are constantly managing the tension of mission fulfillment and operational realities. However, this could be said about many organizations across sectors, and while nonprofits share some organizational tensions with their corporate counterparts (e.g., centralization vs. decentralization or local implementation vs. global standardization), nonprofits have a unique situation.
Nonprofits face a tension cycle that pairs mission with funding, funding with staff, staff with results, and results with mission (Image 1). In a tension cycle, interconnected tensions affect one another, causing either a downward spiral or a virtuous circle [1]. How these tensions are managed through Organization Design makes the difference between mission fulfillment and closing down.
Mission and Funding
In this tension cycle, Mission and Funding are an interdependent pair.[2] An organization’s ability to realize its mission is reliant on sufficient funding, and funders usually want to give to organizations that show clear mission fulfillment.
Design Remedy
All design starts with a clear strategy. Usually this assessment and design process starts with boards as they align mission to funding targets. But including staff alignment is necessary because staff will be responsible for executing the strategy. And those organizations that include staff help the board to see deeper into the organization, thus rightsizing ambition and funding goals. At the core of this process sits the President / CEO / Executive Director, who, as the leader, translates board strategy into staff execution.
Funding and Staff
The second interdependent pair is Funding and Staff. Nonprofits often operate on limited budgets, which does not always allow them to hire, train, and retain the necessary staff. Simultaneously, suboptimal staffing levels can lead to further funding constraints, as Development, Marketing, and revenue-generating functions remain under-resourced.
Design Remedy
A clear organization structure that reflects the strategy and funding constraints is necessary to manage the organization. Further, detailed role design for each staff member helps the organization to effectively execute on the mission. Organization structures are about allocating and balancing large groupings of work, while clear role design helps staff execute these.
Staff and Results
The third interdependent pair is Staff and Results. The better skilled your staff, the higher quality your results, and the more engaged the staff. However, poor results can drive away potential good hires, even if there is sufficient funding for their salaries.
Design Remedy
Rigorous process design helps staff at varying skill levels to deliver on their role descriptions, even in the face of staff turnover. Further, building in a strong onboarding process, with ongoing mentoring and cross-training will allow for a breadth of skills and improve employee satisfaction. Finally, designing “interaction models” — how two or more groups work together — contributes to program quality by reducing unnecessary interdepartmental tensions.
Results and Mission
The final interdependent pair is Results and Mission. If the organization’s results, particularly in program quality, are not strong enough, the organization won’t be able to deliver on its mission. And if the organization’s mission is too ambitious, it will set program delivery and other functions up for poor results.
Design Remedy
A complete set of metrics that are uniquely designed for the organization’s programs and other functions, and are consistently monitored, will drive quality results. As the axiom says, what we measure is what we focus on. It is important that the organization’s metrics balance immediate results with the long-term goals of the mission and strategy. Make sure that the results are communicated to staff and the board as a way of driving behavior toward shared goals and allowing for the collective development of any necessary action plans for addressing failing metrics.
Conclusion
The fundamental framework of organization design – the contingent link between strategy, structure, processes, talent, and metrics – allows for the managing of organizational tensions. The Design Remedies offered here allow nonprofits to create virtuous cycles where mission clarity attracts funding, funding enables quality staffing, quality staff deliver excellent results, and excellent results advance the mission.
Notes:
[1] [1] For more on cycles check out Michael Kaiser and Brett Egan’s book https://www.amazon.com/Cycle-Practical-Approach-Managing-Organizations/dp/1611684005
[2] To learn more about interdependent pairs, see: https://www.hsdglobalservices.org/resources/interdependent-pairs.html.