Transforming Public and Nonprofit Organizations
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Transforming Public and Nonprofit Organizations

Stewardship for Leading Change

James E. Kee, Kathryn E. Newcomer

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eBook - ePub

Transforming Public and Nonprofit Organizations

Stewardship for Leading Change

James E. Kee, Kathryn E. Newcomer

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About This Book

In the public and nonprofit arenas, leaders face the unique challenge of protecting the public interest while implementing organizational change initiatives. To succeed, these leaders must build organizations that are "change-centric, " carefully weigh and prepare for the risks of change, and develop a change-oriented leadership style that authors Kee and Newcomer call transformational stewardship.A comprehensive approach to leading change, Transforming Public and Nonprofit Organizations: Stewardship for Leading Change provides public and nonprofit leaders and students of leadership, management, and organizational change with theoretical knowledge and practical tools for accomplishing change goals while protecting the broader public interest. This insightful and useful guide offers: An introduction to the change-oriented leadership concept, transformational stewardship
An easy-to-follow model for initiating change in the public interest
Case studies, practical tips, and resources for additional learning
An organizational assessment instrument to gauge readiness for major change
A 360-degree assessment instrument to identify individual leadership strengths and areas for improvement

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The Challenges for Leaders

The Change Imperative

Public and nonprofit sector leadership in the 21st century is challenging and risky. Rapidly evolving global conditions and shifting political and economic influences are changing our ideas not only about “what” the government, nonprofit, and private sectors should do, but about how they should work together. Advances in information technologies and methodologies, as well as rising expectations of leadership, are driving and supporting changes in how public and nonprofit agencies accomplish their missions.
Unfortunately, the tragedy of the September 11 terrorist attacks, the multiple National Aeronautics and Space Administration (NASA) disasters, the failed Federal Emergency Management Agency (FEMA) response to Hurricane Katrina, and the various scandals involving misuse of funds by the leadership of well-known public and nonprofit organizations (most recently the Smithsonian Institution) highlight the need for public and nonprofit leaders to anticipate and respond to many kinds of risk. Public and nonprofit leaders face new and still-emerging circumstances that require them to design and implement more effective ways of doing business, and to improve organizational performance in support of the public interest.
Public and nonprofit sector leaders need to be comfortable with change, while recognizing that change is risky business. Organizational change is inherently unsettling, requiring the modification of traditional structures and sometimes new ways of doing business altogether. Pay-for-performance, competitive sourcing, public-private partnerships, performance-based budgeting, an increased consumer orientation, and other initiatives often create a shifting environment in which public and nonprofit leaders must satisfy a variety of external constituencies while maintaining supportive internal organizational norms and values.
To meet the challenge of change in the public interest, we believe that public and nonprofit leaders in the 21st century must become transformational stewards. Transformation and stewardship are reciprocal and mutually reinforcing aspects of public service, and both are vital responsibilities of tomorrow’s public and nonprofit leaders. Transformational stewards are leaders who pursue organizational transformation effectively, while serving as stewards of their employees and protecting core public and nonprofit values. We contend that public and nonprofit leaders of the future require heightened creativity and initiative in anticipating and planning for risk, in addition to the skills and commitment to focus consistently on the public interest while implementing change.
The need for transformational leadership in the public and nonprofit sectors is most evident when we examine the pressures for change felt by today’s public and nonprofit managers. These pressures emanate from many sources: an aging and increasingly multisector workforce; resource constraints; new horizontal relationships among public, nonprofit, and private sector organizations; globalization; technology breakthroughs; and increasingly complex public problems. In many cases, demands for change conflict with one another, competing for the leader’s time and resources.
In this chapter, we begin by defining change in the public interest. We then identify some major changes underway that are affecting public and nonprofit organizations, particularly in terms of how public services are delivered in the United States.


The concept of “the public interest” (or whether it can even be defined) is frequently debated in the literature (see, e.g., Sorauf 1957; Schubert 1960; Downs 1962; Goodsell 1990). In practice, the term is often synonymous with the notion of “general welfare,” the “common good,” or actions benefiting the “general public.” While difficult to define precisely, the public interest “has a day-to-day commonsensical, practical salience for the behavior of hundreds of thousands of Public Administrators” (Catron, cited in Wamsley et al. 1990). The concept is somewhat analogous to the legal term “due process,” which, while vague, becomes clearer in the discussion of particular cases and provides a unifying symbol of correct action (Sorauf 1957).
Former Irish Information Commissioner, Kevin Murphy, defined the public interest in the following way:
In very general terms, I take it that the public interest is that which supports and promotes the good of society as a whole (as opposed to what serves the interests of individual members of society or of sectional interest groups). In this sense I take it that the term “public interest” broadly equates with the term “the common good.” (Freedom of Information [Scotland] Act 2002)
The public interest is often contrasted with the concept of “private interest,” recognizing that what is good for general society may not be beneficial to particular individuals and vice versa. The “Tragedy of the Commons” is a classic representation of this concept: While individuals may gain from grazing their cattle on the commons, at some point (absent regulation in the public interest) overgrazing is detrimental to the entire society, destroying the pasture and the livelihood of all (Hardin 1968). Current examples of this conflict include overfishing in the oceans and global warming. Individuals may gain from inexpensive fish or cheap power, but the long-term cost to society in general may be significant and contrary to the broader public interest.
Sometimes it is easier to determine what the public interest is not. For example, it is not corruption or injustice, racism, authoritarianism, arbitrary actions, unethical decision-making, or antisocial behavior.
Faculty members at Virginia Tech University, in their “Blacksburg Manifesto,” noted that while it may be impossible to define the public interest in a given policy situation, the concept is still useful as an “ideal” and a “process.” The manifesto states:
In this vein, the “public interest” refers to a combination of several habits of mind in making decisions and making polity: attempting to deal with the multiple ramifications of an issue rather than a select few; seeking to incorporate the long-range view into deliberations, to balance a natural tendency toward excessive concern with short-term results; considering competing demands and requirements of affected individuals and groups, not one position; proceeding equipped with more knowledge and information rather than less; and recognizing that to say that the “public interest” is problematic is not to say it is meaningless. (Wamsley et al. 1990)
Simone argues that the term “public interest” encompasses “processes, principles and policies” (2006). In applying the concept of the public interest to media policy, Simone recommends “a participatory process as the preferred method for identifying and applying public interest principles. The ultimate goal of the examination is to discover ways to increase public participation in the ongoing dialogue” regarding the public interest. As an illustration of Simone’s approach, ensuring equal access to certain government services might involve all three facets: the policy to make the services available, the principle of equality, and the processes by which that access is ensured. An agency responsible for a particular government service will have to consider all three as it undergoes any change or transformation.
Accepting the notion of the public interest as a useful perspective to guide actions may further suggest an approach to the change process. Wamsley et al. (1990) suggests the following approach:
1. Tentative steps and experimental action, rather than a final “solution”
2. Curiosity and dialogue about ends as well as means
3. Individuals and institutions that “learn” as well as respond
4. Humility and skepticism about “grand designs”
5. Greater awareness of the potential of each individual to contribute to the dialogue about the public interest
6. Greater attentiveness to the words of public discourse.
Goodsell illustrates this approach to the public interest in discussing a National Park Service decision to limit visitors in certain national parks (1990). In its announcement the Park Service emphasized that the park ecosystem must be preserved over the “long run” and that visitors must be given a “quality experience.” Further, the Park Service noted that closing the parks when full respects their “carrying capacity” and indicated that indirect controls tried in the past had failed. Finally, the Park Service said that in an experimental park closing it had received only one complaint. This example demonstrates the importance of the process of determining the public interest.
The point of discussing these approaches and illustrations is not to argue for a specific set of public interest imperatives; rather, it is to suggest that the concept of the “public interest” is a multifaceted concern that leaders of public and nonprofit organizations must keep in mind as they work to change or transform their organizations. This concern for the public interest must capture existing policy and “official” expressions of the public interest; any fundamental principles at stake; the processes by which citizens and stakeholders are able to engage in dialogue about maintaining the public interest during the transformation; and the special trusteeship responsibilities that leaders have for their organizations and the public (both current and future generations).
While nonprofit leaders may not have exactly the same trusteeship responsibilities as public leaders, nonprofit organizations enjoy a special status in most countries: They are created for certain public purposes, generally have public purposes as part of their charter, and often are based on certain shared values or principles—all of which have to be considered in any change or transformation.
The concept of “change in the public interest” argues that the notion of acting for the good of the general members of society must be at the center of all public and nonprofit change and transformation initiatives. Thus, as public and nonprofit leaders contemplate and initiate change and transformation, their diagnosis of the problem, their strategizing about solutions, and their implementation and reinforcement of the resulting changes must all occur within the context of the public interest.


In the United States, public services are increasingly delivered through networks of public, nonprofit, and private agencies. Approximately 88,000 government units (U.S. Census Bureau 2002) and 1.4 million nonprofit organizations (Urban Institute 2006) are currently operating in the United States. Federal, state, and local governments account for about 30 percent of the nation’s economy, and nonprofits account for about 8 percent. Nonprofit organizations are not only growing in size as a percentage of the economy, but they are also increasingly working with government agencies to deliver a variety of public services.
The nonprofit sector encompasses a diverse set of organizations, from small neighborhood associations and local arts organizations to multibillion-dollar hospitals and universities. Of the 1.4 million nonprofits, about 300,000 are registered with the Internal Revenue Service as 501(c)(3) “public charities,” a category that includes most arts, education, health care, and human services organizations; many of these are actively involved in providing public goods and services. The major charities reported raising about $1 trillion in 2004, about 25 percent from charitable contributions. More than 65 million individuals volunteered for nonprofit organizations in 2004 (Urban Institute 2006).
Apart from religious institutions, the largest number of nonprofit organizations provide human services (including relief organizations like the Red Cross and humanitarian organizations like Habitat for Humanity). Many nonprofits produce complex goods or services—health care, education, performing arts—that are difficult to judge in terms of quality. Further, many of the goods and services provided by nonprofits are paid for by persons other than the recipients. A donor to “Save the Children” might be an affluent North American, for example, while the recipient might be a child from a less developed nation. Because there is no profit motivation, nonprofits are not governed by the same contractual discipline of the private market and are valued most for their trust and reputation rather than for price or profit.
Nonprofit production of goods and services often serves as a “complement” to public production, supplementing or replacing government efforts to redistribute goods and services. Nonprofits also have lower labor costs (because they rely on lower paid personnel and volunteers) than government agencies and thus, arguably, might be more efficient in providing certain goods and services than government. They may have more flexibility and be able to make use of service charges and fees to partially cover costs—something government may not politically be able to do. For these reasons, government agencies are increasingly relying on nonprofits to share public duties and responsibilities.

Public-Private Partnerships

Public services in the United States are increasingly delivered through multiagent and multisectoral networks, via the creation of public-private partnerships (PPPs) that require new types of governance structures and new methods to ensure transparency and accountability. E. S. Savas defines a public-private partnership as “any arrangement between government and the private sector in which partially or traditionally public activities are performed by the private sector” (Savas 2000, 4). This is a broad definition that could accommodate a variety of arrangements, from contracting-out to the use of vouchers. The types of relationships that pose the greatest challenge are public-private partnerships that are ongoing relationships between the government and the private sector in which the private organization produces a public good or performs a public service that has traditionally been provided by the public sector organization.
Public-private partnerships have existed in the United States since its founding. During the revolutionary war, the Continent...

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