Does Resource based Performance Analysis work as well in non-commercial sitautions?
Previous briefings explained how to understand and anticipate business performance by looking at the quantity of resources needed to drive sales and costs. Exactly equivalent thinking works just as well in non-commercial sitautions, such as voluntary groups, public services and nongovernmental organizations (NGOs).
The Motor-Neurone Disease Association (www.mndassociation.org) is a voluntary organization working to deliver the support needed by people living with MND (plwMND). MND, also known as Amyotrophic Lateral Sclerosis or ALS, is a degenerative affliction of the nervous system, that generally results in death within a few years of diagnosis. Similar support groups exist in other countries, such as the ALS Association (USA), www.alsa.org. There are over 3 000 sufferers in the United Kingdom. In addition to supporting medical research into MND, the association offers a range of services to people affected by MND, including a helpline, 14 care centers, equipment loan service, plus support, advice and information from 21 regional care advisors, and a befriending service from over 300 association visitors. Six regionally based volunteer development coordinators support additional volunteer and fundraising activity through a network of 95 branches.
MNDA’s primary objective is to achieve a high level and quality of support. A similarity with business cases is that “demand” for its support is driven by “customers”, i.e. the number of people living with MND who are registered with the organization. The principal resources that determine how much support MNDA can give are the care advisers and visitors, plus the staff and physical resources associated with the helpline (Figure 1).
Figure 1: Demand and supply drivers in MNDA
Although MNDA is not concerned with profit, it does have to work within its financial means, so costs must be covered by donations and legacies. Raising these funds requires some spending, even though volunteers raise considerable amounts of cash. The association’s financial surplus or deficit is therefore the difference between income raised and the costs of both raising those funds and providing support to its registered clients. Apart from fundraising expenditure, the association’s costs are largely determined by its staff and physical assets, plus financial grants to research projects. The association visitors are volunteers, so do not drive significant continuing costs, although there is a cost for training them.
MNDA’s income from donations is driven by the number of donors, most of whom are regular givers and therefore constitute another resource. Fundraisers – a further resource – also bring in income from the general public, and encourage giving from regular donors. Both sources of donations are boosted by money spent on promoting the association’s aims.
Just as the previous briefing explained for the case of airline Ryanair, the resource-based representation of the association’s operations can be used to lay out what needs to happen to bring about improvements. A number of challenges facing the association could change its future substantially, and thus alter the time path of both its resources and performance outcomes.
First, it is estimated that only half of the people registered with MNDA actually use its services. If the inactive cases were to become active cases quickly, the help- line could be overloaded, leading to long delays for callers’ needs to be resolved. If that bottleneck were removed, demands on the care assistants and visitors would escalate, and their ability to deliver quality care would be compromised. It takes time, however, to find and train these carers, and a further lead time as new staff learn processes, e.g. liaising with health service providers. All this requires a faster rate of fundraising, so more volunteers would be needed, and either the number of donors and/or their donation rate must increase. This would be challenging, since MND is something of an “orphan” affliction, and does not receive the public attention of high-profile diseases such as cancer.
Secondly, the association is facing a likely rapid increase in demand, since the number of people with MND is rising as life expectancy and medical treatments of other ailments improve. This, plus the untapped population of people served by MNDA, indicates that rapid growth is needed in all the organization’s supply-side resources.
Using the strategy dynamics approach allowed MNDA not only to identify where constraints were holding back its ability to deliver the quantity and quality of its service, but – crucially – what had to happen, by how much, and when in order to both deal with the short-term challenges and get the organization fit to cope with future demands.
Until next time…
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Public service, voluntary and other non-profit organizations raise some interesting challenges not often found in commercial cases. First, while businesses generally have some financial objective, such as sustained growth in cash flows, such a single dominant aim is not always clear in these other situations. MNDA, for example, wants both to increase its coverage of people who need its help, and improve the quality of that support. It also wants to back research that would potentially eliminate the disease – effectively putting itself out of business [though that is not an immediately likely prospect].
Non-commercial cases can also feature multiple types of stakeholder, often with different aims and roles that they play in the overall situation. Reducing the number of homeless people in a city, for example, involves the social services, voluntary housing groups, organizations helping reduce drug dependence, and police, as well as the many organizations who previously touched on the lives of people who risk going on to become homeless, such as parents and children’s care homes.
In all such cases, the strategy dynamics approach offers a single [if extensive!] picture of how the whole system fits together, enabling everyone involved to see their own role in that picture and to place their own aims in the context of what others are trying to do.
This briefing summarises discussion from chapter 2 of Strategic Management Dynamics, p82 to 85
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