A Distinction Without A Difference

People who know of my background on Wall Street ask me all the time what I've learned about the differences between managing in the nonprofit and for profit sectors in these past several years.

Excluding board governance differences (on which I could write for the next year and have barely scratched the surface), I always respond that there are very few differences between managing a high quality nonprofit organization and a high quality for profit corporation.

A recent article in the June 2008 edition of Harvard Business Review about keys to strategy execution makes my point.

In The Secrets to Successful Strategy Execution, authors Gary L. Neilson, Karla L. Martin and Elizabeth Powers summarize research drawn from more than 26,000 people in 31 companies about traits that make organizations effective at implementing strategy.

Their "17 Fundamental Traits of Organizational Effectiveness" are as fundamental to managing nonprofits as they are to the for-profit corporations that inspired them.

Here are the top ten, in order of importance as measured by their "strength index" out of a possible 100:

1. Everyone has a good idea of the decisions and actions for which he or she is responsible (81)
2. Important information about the competitive environment gets to headquarters quickly (68)
3. Once made, decisions are rarely second-guessed (58)
4. Information flows freely across organizational boundaries (58)
5. Field and line employees usually have the information they need to understand the bottom-line impact of their day-to-day choices (55)
6. Line managers have access to the metrics they need to measure the key drivers of their business (48)
7. Managers up the line get involved in operating decisions (32)
8. Conflicting messages are rarely sent to the market (32)
9. The individual performance-appraisal process differentiates among high, adequate, and low performers (32)
10. The ability to deliver on performance commitments strongly influences career advancement and compensation (32)

Whether applied to nonprofit or for-profit organizations, this is the profile of an information-empowered, client-oriented team of workers being led by decisive management in my book. We'd welcome comments about how fundamental these traits are to nonprofit management in our readers' experience.

Carla E. Dearing