Strategic Planning and Decision-Making for Public and Non-Profit Organizations

Nicolas A. Valcik

• Publisher: Routledge
• Year: 2016
• Topic: Politics & International Relations
• eBook ISBN:
  9781317277743
• Subtopic: Business Strategy
• Index: Politics & International Relations

This book provides administrators in public and non-profit organizations with direction and a framework from which to lead their organizations effectively. Taking a global approach to the issues administrators need to examine when managing a group of employees at any level (including budgeting and expenditures, forecasting, policy creation and execution, communication and reporting), this book explores the driving forces in organizational decision making. Author Nick Valcik takes a holistic view on organizational management, beginning with the core aspects of public organizations and the leadership competencies necessary to manage an organization successfully. Designed to be used on undergraduate and graduate courses in public administration and in public affairs programs, the book discusses the basics of organizational structure, delves into risk management issues, and offers a set of tools that can be used by administrators to make informed decisions based on actual data or documented processes. Throughout the book, real world case studies provide students and practitioners with a clear understanding of how exactly the right decision tool may be applied when facing a particular decision in any organization.

1

Introduction to Strategic Planning

Purpose of this Book

The focus of this book is to discuss several different management theories and techniques that relate to a public organization, non-profit organization, and even private industry. Throughout this book, strategic planning in public and non-profit organizations will be the primary examples of practical management techniques, risk management issues, and decision tools to help the audience better understand and utilize the information. The book will address basic theories and concepts for practitioners and students alike, and will summarize this information at an advanced level.

The overall goal of the material is to connect academic theory to applied and practical use of those theories. The book will utilize actual case studies (some of the names and organizations have been changed) to demonstrate how these techniques have been used in real-world situations. Some of the case studies will demonstrate the failure of a particular organization to resolve the specific issues that the chapter addresses. The theories discussed throughout this book can be used as a framework, which can help guide the practitioner or student through the various aspects of strategic planning and decision-making and enable them to develop robust strategic plans for their own organizations.

This material is meant to assist administrators in public and non-profit organizations in understanding why a strategic plan is critical for any organization. An administrator should understand basic elements of their organization such as its goals, its mandates, and who the clients are that the organization serves. A strategic plan takes advantage of the organization’s strengths to drive the organization’s plan forward. The strategic plan can and should be used to identify weaknesses in the organization that need to be rectified.

Structure of this Book

This book begins by describing the components needed for an organization to be successful in strategic planning. The first part will provide an organizational framework to which administrators can refer when formulating a strategic plan for their organization. The framework will reference different types of theories and demonstrate how these theories can be used by a public or non-profit organization to achieve practical results. This theoretical framework is essential for understanding the decision-making process involved in creating a strategic or continuity plan. Organizations that become inefficient, unwieldy, or economically unviable may have to be re-evaluated and restarted or the organization could cease to exist. Administrators will need to account for all variables, whether they are starting a new organization or managing an existing one.

The second section of this book contends with how decision-making and risk management impacts the organization. Failure to understand the decision-making process and risk management can open the organization to liabilities that could seriously damage the organization’s ability to function. This section will also investigate organizational theory, how it is applied to organizations, and how administrators will, at times, face limitations with the organizational structure—issues that will require improvisation to resolve. Various organizational theories will be discussed as well as a new organizational theory that can be used to assist administrators with business process implementation in a public or non-profit environment.

The final section of the book will focus on decision tools and how administrators can use these tools to assist in strategic planning for their organization. While administrators are free to make decisions based on intangible reasons that may be sound, decisions based on emotion or instinct are difficult to defend if resistance and criticism arise. Decisions based on data, metrics, and proven decision tools at least have some foundational points which are easier to defend. The decision tools in the final section can be used by administrators in formulating decisions for their organization. This section will also touch upon research design, methodology, and potential threats to validity for the research projects that a public or non-profit organization may undertake.

Definition of a Strategic Plan

What exactly is a strategic plan and why is it important for organizations to have one? The definition of a strategic plan, as stated by John Bryson, is as follows:

Strategic planning … is based on the premise that leaders and managers of public and nonprofit organizations must be effective strategists if their organizations are to fulfill their missions, meet their mandates, and satisfy constituents in the years ahead.

(Bryson, 1995, p. ix)

Another way to look at strategic planning is to view the process as a framework from which the organization has to operate in order to accomplish a set of goals or mandates set forth by constituents, politicians or, in the case of non-profit organizations, board members. Fundamentally, a strategic plan is a set of documented guidelines that help an organization work toward a set of stated goals. The goals can be set by the administrators of an organization, elected officials of an organization (if applicable), or by certain stakeholders that are external to the organization.

A strategic plan provides a framework, which defines the required resources (current and future), business processes, and organizational policy guidelines. These resources must be aligned with vision and mission statements established by the organization. The framework of a strategic plan can vary in length or detail depending upon the breadth and scope of the mission and vision statement for the organization.

A strategic plan will vary greatly due to the type of organization formulating the strategic plan and whether the organization is a public, non-profit, or private organization. For a public organization, the main focus will be to serve their constituents (e.g. the public) who fund their activities through various public funding mechanisms (e.g. taxes and fees). Non-profit organizations will craft their strategic plans to serve their constituents, which can include customers, members, or donors upon whom their mission and funding are dependent. Private industry organizations will optimize their strategic plans to make a profit for their stakeholders, which can include the shareholders, chief executive officer, and the owners of the organization. Public and non-profit organizations will be the focus of the subject matter discussed in the following pages.

History of Strategic Planning

Strategic plans have been developed and used by organizations for hundreds of years. Strategic planning is most often associated with military campaigns that employ tactics for taking territories, destroying armies, or breaking their opponent’s will. Such strategic planning can even be seen in regards to taxation, infrastructure, and social services of ancient empires. A good example is the Roman Empire’s construction of roads and aqueducts, which were originally built to move soldiers and supplies from one part of the empire to another as efficiently and effectively as possible. Securing clean water for their communities and maintaining roadways became integral to their military logistics during times of crisis as well as for peaceful trade with strategic partners.

While initial strategic plans may have been rudimentary during their initial development, modern strategic plans tend to be more refined and varied in the manner they are developed and implemented. As discussed by Young:

With regard to public planning itself, municipal governments were the first to engage in putting together formal written documents to identify objectives and ways in which to achieve them … Strategic planning’s origins per se, as used in the public sector can be traced to the late 1950s and early 1960s. The U.S. Department of Defense began to look for better and more useful ways to plan for its long-term needs while at the same time achieving cost savings. The advent of the Planning-Programming-Budgeting-System (PPBS) began what was to blossom into a series of varying strategic planning and budgeting systems.

(Young, 2003, p. 2)

For public and non-profit organizations, it has become imperative to tie the budget (or in many cases a budget projection) to a strategic plan. By developing a strategic plan, an organization can forecast what revenues will be generated and what expenditures can be incurred, which in turn can impact the organization’s ability to generate revenue and satisfy its financial obligations. Many public organizations are heavily dependent on various taxes (e.g. property tax, sales tax, and/or income tax) to supply revenues for their yearly budgets. Any impacts on tax revenues will in turn dictate how much the public organization can allot for operational expenses, capital improvement, and services.

There are several metrics that public organizations can use to forecast revenue generation. A basic, simple model for municipalities is a longitudinal analysis of residential and business population growth. Population change can be assessed over a ten-year period to create a forecast for one-year, three-year, and five-year trend lines. This base calculation should approximate how much revenue is generated by each resident and business. The same methodology can be used to calculate a wide variety of revenue-generating fees and taxes such as property taxes, utility rates, and a vast array of collected municipal fees (e.g. pet permits, garage sale permits).

An organization can contain many moving parts, which, if they operate in unison, can accomplish many of its goals. However, an organization that is missing certain aspects or qualities runs the risk of not attaining its goals and ultimately imploding due to internal or external forces. Every organization is unique and will therefore have different objectives and requirements, which should be addressed in an organization’s strategic plan. Once an organization has a strategic plan, it is important for the organization to follow the strategic plan or re-evaluate and re-formulate the strategic plan if goals are not being met or the organization becomes unstable. A solid, well-composed strategic plan can provide an organization with a strong foundation for resource planning and allocation and, if there are issues with the strategic plan, enable the organization to make minimal adjustments to optimize performance. Throughout this book, the reader will be taken through high-level organizational challenges requiring solutions that intertwine theoretical and practical aspects of strategic planning.

The Importance of a Strategic Plan for a Public or Non-Profit Organization

Organizations that operate without a strategic plan or have a very limited strategic plan can potentially face severe consequences if resources are squandered or if goals are not attained. In the era of accountability, public and non-profit organizations alike will have to contend with meeting the expectations and oversight of the public at large. Increased accountability can be expected during federal and/or state economic crises and when certain political entities are elected into public offices. As stated by Ankita Gandhi:

There is a growing movement these days in the non-profit sector—a movement toward increased accountability and transparency. Nonprofit organizations are looking to prove themselves and validate their work by focusing on social impact data and program performance measurement. Funders and donors are seeking to be more open and engaging about their philanthropic decisions and grant making processes. And government entities are moving toward funding highly effective programs and organizations as opposed to those they have traditionally funded.

(Gandhi, 2011)

Over the past few years, the country has experienced budget contractions, which in turn have increased demands for accountability for how a public or non-profit organization manages its resources. For public organizations in particular, new efforts have been undertaken to determine exactly where the funds that are allocated are being expended. One example of this effort is the Texas Public University Cost Study. In 2004, the Texas Higher Education Coordinating Board formulated and adopted the Texas Public University Cost Study in response to the legislature’s request to determine how much formula funding (e.g. state funds) should be allocated to each institution for each fiscal year (Texas Higher Education Coordinating Board, 2009). The study is just one of many efforts that have been initiated over the past few years to better diagnose how the public organization expends funds that it receives from the taxpayer. By understanding and analyzing how public organizations spend their funds, the legislature and executive are in a better position to evaluate future requests from the public organization administrators. For example, a public official appointed to a regulatory agency may decide that those public organizations under their auspices should be more forthcoming with data, which will better inform a public official’s position on funding public organizations or certain aspects of a public organization’s mission. Failure to provide justification or supporting data can prompt the public official to cut an organization’s budget or recommend that the organization be disbanded altogether in the name of being responsive to the public. As seen in Figure 1.1, public and non-profit organizations are accountable to either the public or stakeholders in the organization (e.g. board members).

Figure 1.1 Accountability to Stakeholders

Non-profit organizations face similar accountability to their members and constituents. Executive boards, presidents, and CEOs must be responsive to their stakeholders if revenue is to be generated to fund the organization’s mission. A non-profit organization’s administrators may also be required to be responsive to public interests if public funds are used to support the non-profit’s mission. Loss of funding from private donors, corporate sponsors, and public entities could negatively impact a non-profit organization’s capabilities, and it could cease to exist.

Conflicts can occur if the executive board and top administrator of the organization have different viewpoints on the focus or mission of the organization or how the organization is operated. An example of this conflict would be the resignation of President Marsha J. Evans from the American Red Cross after Evans disagreed with the board of governors on her management style and abilities (Fox News, 2005). If differences between the top administrator and the executive board exist, it is imperative that the organization maintain a strategic plan and a continuity plan to use as a guideline for setting and accomplishing goals. Administrators should be aware that short-term political gains could very well lead to long-term political and strategic problems for the organization. An administrator would be well served to build up a coalition of allies for a long-term vision of the strategic plan. As stated by Brzezinski:

Yet any seriously pursued strategic realignment, if it is to be more than just a temporary tactical accommodation, must be based on wider, more enduring common goals and shared value. Tactical expediency in politics is sometimes necessary, but—derived from momentary preoccupations—it is also inimical to a long-term commitment … To be viewed as legitimate, that leadership has to reflect comprehensive global interests; to be effective, it must be backed by allies with similar popular convictions and societal values.

(Brzezinski, 2004, p. 87)

When new administrators join an organization, they should work hard to discover what forces are allied with any existing strategic plan so that the administrator has an understanding of where potential obstacles may exist. Transitions in leadership in public and non-profit organizations require a detailed and workable strategic plan if the organization hopes to experience a smooth transition with little or no negative impact on its operations.

Figure 1.2 illustrates how top-level administrators and executive public officials (or board members) can pull the organization in different directions, which can effectively disrupt an organization’s productivity and ultimately the viability of an organization. The wider the gap between what the executive public officials and the administrators perceive the organization’s strategic vision, mission, and goals to be, the less overlap will be observed in the diagram between the two triangles. This can cause organizational drift to occur between the executives and the rank-and-file of the organization.

As explained in Case Study 1, there can be significant differences between the goals of high-level administrators of a public ad...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of Figures
• List of Tables
• Foreword by Elizabeth Reynolds
• Foreword by Teodoro J. Benavides
• Preface
• Acknowledgments
• About the Author
• 1. Introduction to Strategic Planning
• 2. Strategic Planning at an Organizational Level
• 3. Leadership
• 4. Resources and Personnel
• 5. Implementing and Integrating Strategy with the Organization
• 6. Organizational Theoretical Models and Usage
• 7. Risk Management
• 8. Decision Tools Available to Administrators
• 9. Research Design, Methodology, and Bias
• 10. Conclusion
• Appendix A
• Appendix B
• Appendix C
• Appendix D
• Appendix E
• Appendix F
• Index