Charity should begin at home

Voluntary organisations that employ private managers risk neglecting their own in-house talent. Paul Gosling reports
The new manager wearing a pinstripe suit strides through an office of horrified young men and women dressed in T-shirts and jeans. The culture clash between the private-sector manager and the not-for-profit staff begins there, but it is likely to continue for some time to come.

Voluntary organisations are increasingly looking to managers with business experience to make their organisations leaner and fitter. They want people who are able to meet the demands of the service-level agreements that are replacing grants, and who can lead aggressive fundraising campaigns. But groups may be ignoring the strengths of their own sector, and the managers may find the transfer more frustrating than they expect, according to a new study, Challenging Management, by Dr Diana Leat of the City University Business School.

Dr Leat interviewed 24 senior managers, plus eight trustees, who had been brought into voluntary bodies from the private sector and found them often highly critical of the organisations they joined, and the ethos they inherited. They were surprised at how different the management process was in the two sectors.

"It requires skills and time and a willingness to take longer to reach a decision in a voluntary organisation," says Dr Leat. "But if you have everyone on board, the implementation is probably quicker. If private- sector managers drew a line from decision to implementation, the decision may go fairly smoothly, but getting it to work may take longer. In the voluntary sector, you have to be flexible to see things from all sides and how it appears to other people."

Voluntary-sector staff are often poorly paid and work long hours. They believe they are stakeholders with extra rights. One interviewed manager explains: "They see themselves as having a voluntary commitment - giving a gift - to the organisation, for which the organisation should be grateful. They're paid, but because the pay is low the organisation is beholden to them. In return, they feel they sort of own the organisation, have the right to participate and can't be ordered around."

One solution would be to pay staff more, but there is a tendency in the sector to make false savings. Groups fail to invest in staff, equipment, analysis or planning. Management committees are so aware of the difficulties in raising money they become reluctant to approve any expenditure. It may be unacceptable to spend money to earn more, and groups often prefer to run on borrowings rather than accumulate reserves to be drawn on when necessary.

Another point of conflict between the cultures is over the marketing of an organisation. An interviewed manager said: "They just don't understand what marketing is. It's a dangerous word to use here. Marketing is a dirty capitalist ploy to sell people things they don't need, and is obviously taboo."

Performance targets may be resisted in not-for-profit bodies, which have instead often adopted meaningless mission statements. Management committees are often weak, offering little direction. It can be impossible to reach agreement on defining the organisation's goals and how to measure them. Where in business senior managers may be able to replace inadequate non- executive directors, there is no parallel in the voluntary sector. Committee members often represent distinct interest groups, and getting them replaced is likely to be time-consuming and involve conflict.

Managers from the profit sector also become irritated with the ethos of "niceness". This can make it more difficult to have straightforward working relations and cause problems if they want to get rid of under- performing staff. Although charities often hold large amounts of cash, the risk of theft can be ignored because it seems rude to recognise that people could be dishonest.

Being "nice" can also cause problems for staff, says Dr Leat. "If being nice means that people don't know where the boundaries are, it can be very uncomfortable. Being strict may be less comfortable in some ways, but more comfortable in others."

Nevertheless, Dr Leat adds, there are strengths in the management of the voluntary sector that should not be lost. "Voluntary organisations tend to adopt the trendiest management theories being told to private employers, yet they provide this wonderful laboratory that private-sector managers ought to be looking at. But the learning seems to be going the other way, looking at the private sector and applying it willy-nilly."

The irony is that just as voluntary groups are taking on board conventional private-sector management practices, so commerce is looking to the more inclusive and consultative style that has come naturally to the voluntary sector for generations. "Voluntary organisations are so busy finding out what the profit sector does that they forget to look in their own back yard for successes and failures," Dr Leat says.

Another risk is that voluntary groups may forget why they exist, Dr Leat says. Charities were brought about to meet needs rather than demand in the marketplace, and reshaping the groups into more commercial organisations could lead to a blurring of this distinction.

Despite Dr Leat's reservations, the infiltration of commercial attitudes seem bound to continue. A recent report, The Role of Voluntary Organisations, by the National Council for Voluntary Organisations, points to the blurring of boundaries between public, private and voluntary bodies in areas such as health. Voluntary groups are competing against each other and against businesses. A fundamental rethink of the voluntary sector is needed, argues the NCVO. This must question the use of volunteers and the role of users in decision-making. It could even lead to the re-examination of the usefulness of charity in the modern world.

'Challenging Management', by Dr Diana Leat, is published by the Centre for Voluntary Sector and Not-For-Profit Management at the City University Business School.