Joe’s Journal: When Good Intentions Are Not Enough

Posted on Jan 24, 2012 | 2 Comments

“Nonbusiness institutions flock in increasing numbers to business management to learn from it how to manage themselves. The hospital, the armed service, the Catholic diocese, the civil service—all want to go to school for business management. This does not mean that business management can be transferred to other, nonbusiness institutions. On the contrary, the first thing these institutions have to learn from business management is that management begins with the setting of objectives and that, therefore, noneconomic institutions, such as a university or a hospital, will also need very different management from that of a business. . . . Noneconomic institutions need a yardstick that does for them what profitability does for the business.”

– Peter F. Drucker

Nonbusiness institutions are right to study the practices of business management because most of these practices can be used to their benefit. But as Peter Drucker notes, here are some major qualifications when it comes to the management of these social-sector institutions.

First, there is a tendency among some social-sector organizations to believe that good intentions are enough. After all, they are the purveyors of virtue! But that is never true because resources are limited. A clear sense of mission is necessary to avoid this temptation. Once a crisp mission statement has been prepared, it is imperative to translate the mission statement into specific goals. And performance against these goals must be measureable. 

Because social-sector institutions don’t have a bottom line in the same sense as a private corporation, one must be careful how goals are set and measurements or qualitative assessments are taken. Why? Because participants are motivated—and often pick up on the organization’s sense of values—in these performance measures. Participants want to perform well against these measures, so they become the focus of organizational efforts.

Finally, social sector institutions need money—badly. The best way to attain fundraising objectives is to produce results and then let the relevant donors know about it. This helps explain why Americans have had a torrid love affair with certain social-sector organizations. They produce results!

Within these parameters, public service organizations can and must take advantage of what we have learned since perhaps the 1800s about the effective management of business organizations. And on the performance of these nonbusiness organizations, the welfare of American society rests.

– Joe Maciariello 

2 Comments

  1. Bryan
    January 27, 2012

    Reading Joe’s column reminds me why I respected his viewpoint and enjoying learning in his class. He explains Drucker so clearly and ties his ideas in a relevant way to today’s society which is in stark contrast to the recent comments by the University of California Berkeley professor quoted in the last Drucker forum who tried to tie Drucker to his own far left agenda. I especially agree with Joe when he explains that good intentions are not enough.

    Reply
  2. Brad Zehner, PhD
    January 28, 2012

    From time to time, I teach a course on Social Entrepreneurship. Dr. Maciariello is right on target re: the management and metrics of not for profit organizations. The good news is many of the nonprofit organizations are beginning to use quantitative / business type metrics to measure and allocate their scarce resources to determine which social programs have the greatest / least impact on society. My guess is this trend will accelerate as needs increase and as resources become increasingly dear.

    Reply

Leave a Reply