Your Organization: What Is It For?

Challenging Traditional Organizational Aims

John Argenti

• Publisher: Taylor & Francis
• Year: 2018
• eBook ISBN: 9781351258586
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This book, first published in 1993, challenges the accepted and practised methods organizations use to set standards of performance and quantify their achievements. Using in-depth case studies, John Argenti compares the performance of companies with that of non-profit making organizations to reveal remarkable insights into corporate culture. He notes how companies meticulously evaluate their performance, yet behave poorly in society while, in stark contrast, these actions are reversed in non-profit making organizations.

Your Organization: What Is It For? is essential reading for everyone who exercises the role of governance and is responsible for the overall performance and conduct of their organization.

CHAPTER ONE The problem

In this chapter I shall explain why I believe that something has gone very seriously wrong with some of our organizations, why it matters so much and why we need a completely new approach.

The unanswered question

Imagine you are walking down the street and you bump into one of your friends who runs his own business—let us suppose he is your local builder. ‘How are you getting on?’ you ask. ‘Oh, fine, thanks’, he replies. ‘We have just had our latest annual accounts which confirm that we have almost doubled profits over the past five years.’ No doubt you congratulate him and wish him continued good fortune.

A few yards further on you meet another friend; this one is a very senior civil servant in the Department of Health. ‘How are you getting on?’ you ask. ‘Oh, fine, thanks. We have just had our latest annual report which confirms that we now employ 40 000 more nurses than five years ago, the bed/patient ratio has fallen to 0.54321 and I am delighted to tell you that 21 per cent more hip replacement operations were performed by 11 per cent fewer surgeons. Moreover’, she continues proudly, ‘breast cancer has fallen by 8.4 per cent—although, curiously, lung cancer has increased by the same amount—8.4 per cent. However, ‘Hold on, hold on’, you cry. ‘I did not ask for the medical case-history of the entire population! I only wanted to know how well your employer, the Department of Health, has performed over the past five years.’

‘Er, ... ’ she replies, and changes the subject.

Do you see the problem? It strikes me as absolutely extraordinary that your local builder, who probably employs ten men and whose business is not exactly the central pillar of the national economy, knows to the nearest penny how well it has performed, while the Department of Health (which, in Britain has a million employees—the largest civilian organization in Europe!), apparently has no idea.

What they do is not what they are for

If you exclaim, ‘But it does have an idea—dozens of them; look at all the figures my friend had at her fingertips’, then all I can say is that you have missed the point. The point is that your builder was able to give you a figure which described the achievements of his business as an organization, as a corporate whole, while by contrast none of the figures the civil servant gave you said anything at all about the Department of Health. They told you all about nurses, beds and hip replacements, but nothing about the overall performance for the past five years of that corporate entity known as the Department of Health of which your friend is a senior executive.

The builder could have given you a similar exuberance of figures; he could have recounted that, compared with five years ago, he now employs four extra bricklayers, that the ratio of ladders per employee is down to only 0.54321, and that 21 per cent more drain-pipes have been replaced by 11 per cent fewer labourers. Moreover dry rot has fallen by 8.4 per cent—although, curiously, wet rot has increased by the same amount— 8.4 per cent. However, ... ’ and on and on with the same infectious enthusiasm as the civil servant. But while the builder has also told you how well his organization has performed, as a corporate whole (it has doubled its profits), the civil servant has not. Her top figure is missing— the top one please note, the one that matters above all the others. Now do you see the problem?

We know what each of these organizations c/o—broadly, the building company repairs houses and the government department manages health services—that is what they do; and we have little difficulty in measuring any of the myriad activities, tasks and projects in either of them. We can easily see, for example, how long it took the builder to build a house and for a Department of Health hospital to perform a hysterectomy. We can easily measure what they do and how efficiently they do it. But can we measure what these organizations are for? We know what the company is for, it is to make a profit for the owner, and we can see quite clearly, in the annual report, whether it has done so. But what is the Department for? We do not know, and the civil servant has not been able to tell us either what that is, or how to measure it or whether it has done it.

Not very scientific

I will conjure up another friend for you; this one is a Fellow of the Royal Society—arguably Britain’s most prestigious scientific institution. Ask him how his Society is getting on and he will take you through their annual report from which you see that there have been a number of meetings of COPUS (Committee on the Public Understanding of Science), that advice has been given to the government on embryo research, how 200 people attended a conference on water acidification, and so on, including (even) how many pages its members had published in various learned journals during that year.

But all this is what they do; what I want to know is whether the public understands science any better today than, say, a decade ago—that, after all, is the principal aim of the Royal Society; that is what it is for. My impression is that the average Briton’s understanding of science remains utterly abysmal, but, because there are no figures for this in the report we are left in ignorance (not only no figures, it is not even mentioned!). It is a bit ironic that our leading scientific institution can show us no verifiable outcomes of any kind while it presumably demands confirmation to many places of decimals for the work of its illustrious members.

But perhaps you would prefer to have a friend on the Arts Council. I am sure she can recount for us many fascinating stories of how a few thousand pounds of government subsidy rescued a splendid troupe of ethnic players or delivered a magnificent opera to the good people of Northtown. These are some of the things it did last year and there are masses of figures, all carefully audited, to tell us how much they have spent; but that is what it did; what is it for? Well, their charter says it is to ‘develop and improve the understanding and practice of the arts and to increase their accessibility to the British public’.

Now, I am sure you already know the question I want to ask her: ‘How is the Arts Council, as a corporate whole, getting on?’ by which I mean do we in Britain understand the arts better today and are they more accessible to us than, say, a decade ago—and so it is us, the British public, not those ethnic players and opera singers, who are the true intended beneficiaries of this organization, and it is an estimate of the benefit to us that I really want to hear—and I want the answer as sharp and as meaningful as the one we got from your builder friend. Will we get it? I do not think so.

Not good enough

What on earth is the point of organizations like these? It is not just the Royal Society and the Arts Council whose performance we cannot judge. We cannot assess Oxford University, the Trades Union Congress, the Salvation Army, the Football Association, the Commonwealth, the Milk Marketing Board, and on and on endlessly. There must be a couple of thousand of these socially significant organizations in every country of the world—the New York Police Department, the Arab League, the Paris Chamber of Commerce, the Singapore Institute of Management, NATO, the World Health Organization, the Indonesian Farmers Union ....

All I want from them is an answer to the query ‘how are you getting on?’. It would be very difficult to think of a question of greater simplicity or gravity, but neither you, nor I, nor they, can answer it—certainly not with anything approaching the assurance of your little builder. No one, not even the managers themselves, know which figures would answer the question and indeed the answer is literally unknowable for most of them.

But surely we ought to be able to ascertain, with considerable confidence, what these organizations are supposed to be doing, for whom, and whether they are doing it or not. After all, we can usually tell whether something works, even quite complex things: which was the most effective economic system over the past four decades, the one in East Germany, or the one in the West? It is unarguable. Does aspirin alleviate headaches? Incontrovertible. Did ICI have a good year? No, its profits are down 12 per cent. You can actually analyse, inspect, examine, investigate—and measure, with figures—all these artefacts, some simple, others unbelievably complex, and see for yourself. But ‘did the Legal Aid Board have a good year?’; we have no idea. How is the Southtown Women’s Institute getting on these days? Don’t know. Where are the performance figures for Christian Aid? Er, how do you mean? What is the score for the Commission for Racial Equality since it began work in 1977? What score?

Futile annual reports

Scan through any annual report, what does it tell you? Absolutely nothing! Take a children’s charity, such as Bamardo’s, whose annual report tells us about Tom who kept stealing cars; but after attending one of their centres is now a normal youth happily working in a garage. They show a picture of this bustling, smiling young man to prove it. They tell us about Tracey, who kept absconding from school; but after they took her in hand she is now a contented hairdresser in Croydon. Fine. Marvellous. But a charity like Bamardo’s helps 20 000 children every year. What happened to all the others? How many are homeless, roaming the streets of London? Or did they all become astronauts? We have no idea.

Where is the evidence that these charities have the slightest effect on their clients’ lives? If there is any evidence why is it not in their report? Even if we knew that, we still cannot say if Bamardo’s is more worth while than, say, the National Trust (which preserves Britain’s historic houses). All we can say is that they both spend about the same volume of cash each year; whether they do equal ‘good’—or any good at all—we have no idea.

By contrast, consider the trouble and expense companies go to to learn how their products are doing in the market-place. A manufacturer of mint jelly can now tell, from computerized supermarket print-outs, how many shoppers bought the product immediately after buying a leg of lamb at the meat counter. How many schools, for example (or children’s charities), take such trouble to follow the careers of their ex-students? I suppose students are more important than mint jelly?

Or take arms agreements: the one thing that matters, above everything else, is that they must be verifiable. To sign an arms agreement without an on-site verification process is utterly useless—difficult, expensive, time- consuming though it inevitably is, without this the agreement is void, barren, hollow, worthless; the system of verification is the agreement. Or the law: you cannot just accuse someone of theft and he goes directly to jail. You have to get some evidence. It is sometimes rather a nuisance to get it, and it costs a lot of money, but without it And on and on, through the whole vast gamut of human experience; if you cannot verify, if you cannot authenticate, corroborate, substantiate, confirm, ratify, prove, ascertain, establish, determine, demonstrate, certify, test, and do so empirically, realistically, pragmatically, practically, in the real, physical, material, solid, tangible, substantial, actual, palpable world—then you might as well not bother.

Yet here are all these organizations, beavering busily away, and we have not the slightest idea what effect they are having. Some of them have plainly become self-perpetuating and self-serving and have long since given up beavering. Many of them survive only by consuming the reserves of finance they have built up over past decades. Some do not seem to have any measurable output or any discernible effect on anything at all, or so little that we have to get a Royal Commission to study them for four years to tell us what it is.

Two different worlds

I expect you noticed that all of these were ‘non-profitmaking organizations’ (NPOs, as I will call them), both governmental and non-governmental. By contrast, virtually every company knows how well it is performing almost continuously; most of them know what their profits are every month compared with the same month for the past many years and compared to every one of their significant competitors. Some know this daily, for every single product in every single theatre of operations anywhere in the world! In general, then, companies know what they are doing and how well they are doing it. Non-profitmaking organizations do not.

Companies have a speedometer on the dashboard which you can read whenever you like; you cannot read the speedometer in most NPOs. They do not have one.

I find this dichotomy perfectly outrageous and profoundly disturbing. We have two quite discrete standards of organization here: the profitmaking and the non-profitmaking. We all accept this as a perfectly normal phenomenon; we refer to the notable disparity in ‘culture’ between the two types, implying that NPOs are not in the same league as companies. Of course it is not quite as clear-cut and black and white as this—some companies do wallow uselessly for years, living off their fat; some non-profitmaking organizations, on the other hand, know exactly what they are doing and can provide a stack of evidence for the superb results they are achieving (I give some sparkling examples later)—but it is not a bad generalization; few people, on reflection, will quarrel with it.

Indeed, a view accepted all round the globe today is that if you want to learn how to run an organization, you should go and study a business; and if you want to get things done, you had best ask a company to do them. The last thing you should study—and the last thing you need if you want results—is an NPO. If you wish to shake it up, privatize it! If you want it properly managed, recruit your executive team from business, not from an NPO. If you want service with a smile, avoid government offices and council houses like the plague.

It is incredible to think that all this used to be the other way round! A century ago the Foreign Office, Birmingham City Council and the Church of England would surely have been voted ‘Most Effective Organizations of the 1890s’ and any young person who wanted to get on in the world would have sought a career in them; the one thing an ambitious Victorian gentleman would not have thought of going into was a company! But today, when managers move from the private sector to the public, they suffer a culture shock; they find that they must abandon tight, goal-directed decisionmaking and systematic, methodical project appraisal, and adapt instead to personal prejudice, huge bumbling committees, great rambling management hierarchies, and tonnes of warm fudge. A vice versa shock is suffered when managers move in the other direction.

Bleak expectations

The modem world is full of NPOs letting us down: 16 per cent more police officers over the past decade, 65 per cent increase in the police budget, the number of patrol cars up by 38 per cent and so on and so on. Meanwhile, year after year, for as far back as most of us can remember, the crime rate rises relentlessly every year and the clear-up rate falls. And then we hear the police telling us that the crime rate is not a valid indicator of their performance (see page 164). Really? If protecting you and me from crime is not what the police are for, what are they for; and who is supposed to be doing it if they are not?

School budgets up by this, the number of teachers per pupil up by that, cost per student up by something else. Meanwhile what has happened to the standard of education? It has gone down. Homelessness in Britain has apparently doubled in the past decade; what have the government, and those many dozens of charities devoted to housing the homeless, been doing? Cruelty to children and animals has gone up; what have all the children and animal charities been doing for the past few decades?

Our system of justice, once the finest in the world, has descended into dismal, Dickensian, disrepute. What have all those organizations devoted to upholding this system—dozens of them, governmental and non-governmental alike—been doing for the past few decades? Was pay any better in unionized firms than in non-union ones over the past five years? No, it was not, so what have the unions been doing all this time? The population of our prisons rises relentlessly every year, decade by decade; what a ghastly indictment of all those organizations who strive to bring it down (including supposedly the Home Office, which actually runs the prisons!). Women’s pay is 10 per cent lower here, compared to men’s, than on the continent; what has the Equal Opportunities Commission been up to for the past couple of decades?

The examples are endlessly repeated through every aspect of our lives. If anything like any of this had happened in the private sector the chief executive would have been sacked long ago, the company just a bitter memory in the shareholders’ cheque-books.

The huge importance of this

I believe all this matters enormously. Something like half of all the activiti...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Contents
• Preface
• Chapter One The problem
• Chapter Two The solution
• Chapter Three Organizations: what are they for?
• Chapter Four The purpose sequence
• Chapter Five Performance indicators
• Chapter Six The target sequence
• Chapter Seven The purpose sequence for companies
• Chapter Eight The spoilers
• Chapter Nine The purpose sequence for NPOs
• Chapter Ten A college and the Girl Guides
• Chapter Eleven The prisons. Local and national government
• Chapter Twelve The police. Architects
• Chapter Thirteen The stakeholder theory
• Chapter Fourteen The principle of engagement
• Chapter Fifteen Defective systems of governance
• Chapter Sixteen The governing directors
• Chapter Seventeen The management of organizations
• Chapter Eighteen The consequences of the beneficiary doctrine
• Chapter Nineteen The governance of nations
• Glossary
• References
• Index