Many not-for-profits today are torn between the things they value – such as consumer outcomes, a great working environment and sticking to their purpose – and corporate drivers including profitability, earnings, revenue streams, productivity and efficiency. This is a by-product of the changing climate, as funding certainty diminishes and there is a greater focus on a not-for-profit provider’s need to deliver services at a sustainable cost.
To complicate things further, consumers are gradually changing their mindset from social service recipients to expectant, influential consumers. Now that government funding is attached to the consumer and consumers are expected to contribute to their care costs, there is a greater anticipation of value-for-money, higher quality standards and customer service outcomes. The notion of deep gratitude is progressively being replaced by a sense of expectation about what their package is delivering. As a result, there is a much larger propensity for consumers to inquire, complain and exercise their rights as a buyer of aged care services. You will need to find a new way of looking at your business, balancing social purpose, changing consumer behaviour and commercial imperatives.
NFPs don’t want to end up modelling themselves completely on the corporate sector, and the good news is you don’t have to look like your corporate counterparts, but you will need to evolve. It’s about understanding that you’re never actually balanced – you’re always going to be balancing across all three of these drivers. It’s time to take confident steps towards a sustainable future where your growth can be justified and balanced against your purpose, consumer expectations and their outcomes. These steps below will help you combine mission with commercial goals in this new world of consumer choice and market competition.
STEP 1: RECOGNISE THE NEED TO CHANGE
The operating environment has changed – gone is the financial certainty and surety of packages. The first step is to raise consciousness and ensure you’re aware of the need to change at an organisation-wide level. Too many organisations assume staff know what’s happening across the sector. Employees know there’s “change” coming, they don’t like it, suspecting it’s organisation-driven.
As the sector’s mindset progressively becomes more ‘corporate’ ask yourself these questions:
1. How aware are your team of their gaps and weaknesses in terms of training, skills, processes and systems to fulfil the organisation’s commercial imperatives and meet changing consumer expectations?
2. How well do your key people have an understanding of sales and financial principles?
You need to accept the new operating environment, and set yourself up for change, or set up an exit plan. Balancing tip: Recognise the changing environment and raise the consciousness of your people so they can easily see the need to adapt.
STEP 2: BUILD ON YOUR STRENGTHS
NFPs are people-focused and good at organising people, social leadership, networking and service delivery. Build on that. Identify your staff’s strengths, harness them and use the information to address weaknesses and skill gaps. Upskill existing staff with basic finance knowledge. Hire new people with finance skills to supplement operations, bearing in mind that in today’s market it pays to embed skilled finance operators at all levels of your organisation: staff, management, and the board. Balancing tip: Build on your strengths and supplement these with the best balance of skills for long-term sustainability.
STEP 3: DEVELOP A BALANCED APPROACH TO MEASURING YOUR PERFORMANCE
You can’t focus solely on profit or consumer outcomes. You need to focus on both, in a balanced way. Think about your entire service offering, learning and skills development and your internal processes. Some of the specific things you could measure include:
• Consumer experience and fulfilment to align your service offering to higher customer expectations
• Workflow and business activities and how well your teams work together
• Alignment of culture and behaviours to business goals
• Growth in skills and learning.
Your operational goals should be specific, measurable, achievable, realistic and time-bound (SMART). You might need to look outside your organisation for guidance, specifically on what should be measured and how. You may also need to invest in technology or tools to help you easily measure and monitor performance. Balancing tip: Balance your performance measurements on a number of different levels – financials is just one of them.
STEP 4: ESTABLISH A SUPPORT PLAN FOR CHANGE
You can leverage on employees’ strengths but they will need to adjust their mindset to delivering services in a sustainable way. This won’t be easy for some, even if they are willing to change. Set up a support plan, and make sure it’s implemented not just talked about. The plan might include coaching/mentoring, training, education, peer support or self-study. Balancing tip: Keep behaving like an NFP always does, while offering rich and meaningful support right across the organisation.
STEP 5: REVIEW AND ADJUST
Periodically review your organisation’s progress towards balancing your purpose and financial sustainability:
• Evaluate your progress towards your goals using Key Performance Indicators (KPIs)
• Review the appropriateness of any KPIs and adjust goals when necessary
• Reward staff for positive evolution
Check the outcome: Have you become sustainable with a clear social purpose? Balancing tip: Continually adapt to be the best organisation possible built on a firm foundation of your purpose and mission.
COMING OF AGE FOR NFPS
Following this five-step process will help your organisation evolve so it can survive and thrive in the current environment. Remember: recognise the need to change, build on your strengths, balance your performance measures across several dimensions, set up a support plan where needed, and review and adjust as you go. The goal is to become sustainable with a clear social purpose so that you can deliver more services, more often, to more people.
Download this article here.