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How are you organized? Decide whether your style is by consumer or by function.

Here's an operations management question that rarely gets explicit attention: how are your programs and services organized? How do services actually get delivered in the trenches? The answer to this deceptively simple question will tell a lot about many aspects of your organization, from its philosophy and finances to its underlying economics and consumer satisfaction.

To illustrate the power of this question let's consider two common ways to organize one's services: consumer and fuction.

There really is no accepted terminology for organizational choices in this field, so here are a few ideas. The first way to organize services is by consumer. In the social service field this is often called a case manager model, but whatever the term the characteristics are similar.

By consumer

When a service is organized by consumer it usually implies a few defining elements. The first is that the consumer moves through all phases of the service experience with a consistent relationship to an individual supplied by the nonprofit. A museum tour guide is a good example of organization by consumer. The guide and the museum-goer connect at the beginning of the tour and stay together throughout. College academic counselors are another example of this choice of organization. Perhaps the best known illustration of this model in this sector is the social services case manager.

The consumer orientation, or case manager model, provides a number of benefits. Prime among them is a consistent relationship that is designed to endure over time and through all aspects of the service process. It allows the consumer to develop a sense of a deep bond both with the individual and the service provider. It imparts a high sense of accountability, since there is a built-in "point-person" to turn to if some part of the service isn't working properly, and the consumer can easily feel a built-in advocate. For some consumers, the most important characteristic is that it puts a "human face" on what otherwise might be the mysterious workings of the organization. For the staff person, a consumer orientation means being good at a number of different functions.

By function

An alternative to the consumer orientation is to organize by function. Most health care providers are organized by function--reception, radiology, laboratory, internal medicine, etc. Higher education is organized by function (whereas in elementary schools the teachers provide a consistent "consumer" presence). Community economic development organizations are organized by function, as are orchestras and theater companies.

Functional organizational structures require the entity to get good at handing off the consumer to the next function. They allow the staff to develop deep and often highly specialized skills. Training can be very focused, and under some circumstances the best training is done by the other functional specialists. This is the embryonic stage of what some call a "learning organization."

Which one is best?

Some organizations have no choice about how to organize their operations. The elementary school teacher has to be a consistent, case-manager-like presence, while the symphony orchestra plays pieces that are written for very specific functions known as woodwinds, brass, percussion, and so forth. But for other nonprofits the choice is open. Here are some ways to ponder this fundamental question.

At its best, the consumer orientation is very satisfying for the consumer and the case manager. The intimate person-to-person relationship is often what drew the staff person into the field in the first place, and even if the consumer accomplishes little or nothing, the enduring relationship with the staff person can be equally satisfying. The inherent autonomy of the case manager is also often an attractive part of the job. But a consumer orientation is expensive. All those one-to-one workers cost money. Supervisors can't really supervise individual relationships so they have no way of shaping the way the case managers spend their time. It is difficult and expensive to mount a sustained training program, so the consumer's service experience will vary tremendously, and so will the quality of the individual workers.

Functional organizational structures are almost always less expensive than the consumer model, and they tend to create fewer prima donnas. On the other hand, they almost automatically create service silos and a potentially disjointed consumer experience. Without good, creative supervision, functional workers can get bored with their jobs and distanced from the consumer.

How to choose

Looking strictly at the level of programs and services the choice might seem difficult. In truth, it is fairly simple when one considers the same question from a strategic perspective. Most of the things that make the choice easier arise from a single factor: the functional style of organizing is scalable, while the consumer orientation is not. So the larger amount of services that are provided, the more likely they will be provided through a functional approach.

Here are some implications of that trend. When one grows from a five-person, consumer-oriented service model to a 50-person, consumer-oriented model, what one has at the end is 50 people doing more or less the same thing. What one has with a 50-person, functionally-oriented service model is a small number of people who are highly skilled at the most complex part of the process, a larger number who are good at the least complex part of the job, and another small number who know how to supervise both groups.

The highly skilled people will be paid more than the average case manager, while the rest will be paid according to their function and skill level. Chances are good that the functional orientation will cost less.

Two distinct trends in human resources will also push more organizations in the functional direction. One trend is the labor shortage which has been going on now for 10 years and promises to continue indefinitely.

Expanding a modest-sized consumer-oriented program means having to find many more staff of the same type. In the event that more staff can't be found, the only alternative is to increase the number of consumers assigned to a single staff person, thereby (presumably) decreasing the quality.

In a functionally-oriented program, the alternatives can include restructuring the way the work is being done, which is virtually impossible in the consumer orientation. Restructuring the work can include introducing cost-saving automation to parts of the process that no longer require direct human intervention.

A second trend pushing in the direction of functional orientation is more subtle but every bit as powerful. People older than 40 today were educated by a philosophy that relentlessly emphasized individual achievement. The rugged individualism of that philosophy helped predispose some of them to a case manager approach.

By contrast, people now in their 30's or younger were exposed to more formalized group learning (think open classrooms, group projects, multiplayer online gaming, and college study teams). Individual staff in a case management model have no incentive to be part of a team, whereas functionally-oriented programs need teams to share knowledge, do cross-training, and defeat the isolating tendencies of the functional silos. Younger workers are more likely to expect that experience and to be comfortable with it.

Finally, it should be noted that different programs and services within the same organization can be organized along different lines. The consumer versus functional orientation is a product of specific circumstances and can change. For instance, it is likely that a consumer orientation in the future will be associated with either a higher charge (a private museum guide, for example) or technology (Podcasts downloaded at the museum door instead of a guide). In any event, explicit attention to the consumer-versus-function orientation will pay dividends.

Thomas A. McLaughlin is a national nonprofit management consultant with Grant Thornton in Boston. He is the author of the new book Nonprofit Strategic Positioning (John Wiley and Sons, 2006). His email address is thomas.mclaughlin@gt.com
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Title Annotation:Streetmart Nonprofit Manager
Author:McLaughlin, Thomas A.
Publication:The Non-profit Times
Geographic Code:1USA
Date:Sep 1, 2006
Words:1293
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