organisational-development

Organisational Development

I’m Late, I’m Late, for a Very Important Date!


Published: April 14, 2014

Read Time: 8 minutes

680 white rabbit

I’m late, I’m late, for a very important date! No time to say hello, goodbye

“It must be awfully important, like a party or something”, said Alice.

“No, no, no, I’m overdue, I’m really in a stew, not time to say goodbye, hello, I’m really, really late!”, said the White Rabbit to Alice as he read his pocket watch and ran along the woodland path and entered his burrow.1

As chief executive officers of NFPs scurry about looking for potential amalgamation or merger partners, consider their organisation’s future fate or wonder what all the fuss is about, it is timely to reflect on the current state of the NFP world.

Consolidation of the various industries and sectors in which Not-for-Profit (NFP) operate is unrelenting, spanning from the 1980s to today and heading toward 2020. Privatisation, commercialisation and corporatisation processes are powerful forces. The desire for customers/clients to have choice and individually customised services will dominate. State and Commonwealth Government reports and policy reforms are reshaping directors’ chief executive officers’ and senior managers’ thinking, philosophies and organisations’ business/service models and services.

Reflecting on this situation, directors and chief executive officers may find the following six key observations and associated learnings useful as they consider their organisation’s strategic options, including an amalgamation or merger.

One: The Rush to Amalgamate or Merge

Never in the history of Australia has there been such a rush to amalgamate or merge NFP organisations, whether they are small, medium or large. An estimated 50–100 NFP organisations have amalgamated or merged each year for the last five years.

In every state of Australia, chief executive officers are, with or without their board’s knowledge, initiating confidential meetings and discussions with other chief executive officers. The ultimate aim of these meetings and discussions is to secure their organisation’s future before the commencement dates of stated State and Commonwealth Government reforms and policies are reached.

Two: Board Mandates or CEO Manoeuvres

Many successful amalgamations and mergers have arisen from solid leadership team discussions, wherein the board, chief executive officer and senior managers have undertaken robust strategic thinking, discussion and decision processes. These process are clearly evidenced in their organisation’s strategic plan, as a strategic relationship strategy, amalgamation or merger strategy or organisational growth strategy.

In reality, one’s strategic plan is neither here nor there, what is important is the set of strategies that has been agreed to by the board, representing a common view on the strategic direction and ultimate destiny of the organisation.

Practically, as “hunters and gatherers”, chief executive officers have brought, or will bring, amalgamation and merger opportunities to their board for discussion and decision as they arise. When a chief executive officer has an amalgamation or merger mandate, via a board’s sign off of the strategic plan, there are many benefits, including:

  • they can easily enter initial discussions.
  • there are no surprises or misunderstandings.
  • directors are already on board.
  • the signing of a Memorandum of Understanding and Confidentiality Agreement can be undertaken in a timely and efficient manner.

Alternatively, if there is no board mandate, manoeuvres of all shapes and sizes will typically ensue, often causing the chief executive officer to operate in what can be a challenging triangle of power, politics and personalities.

Three: Fail to Plan, Plan to Fail

It is interesting to note that a significant number of chief executive officers cannot clearly and sequentially explain or discuss in detail:

  • an amalgamation or merger process.
  • the various activities and steps within this process.
  • how to deal with the many challenges, hurdles and risks that an amalgamation or merger can present.

In defence of chief executive officers, this situation is quite understandable, as the majority of chief executive officers have not studied amalgamations or mergers and/or have not undertaken one or more amalgamations or mergers.

A note of caution:

Directors and chief executive officers should ensure they are not seduced by corporate/public company amalgamation and merger processes, more commonly known as acquisitions, takeovers, transfers or buyouts or other similar terminology. Corporate/public company amalgamation and merger processes have their place, but not in the world of NFPs; they are driven by power and politics, desires of market domination and aim to deliver shareholder value, major profits for key individuals or organisations and a reward for the risk of investing.</p> 

NFP amalgamations and mergers, on the other hand, should be driven by a strategic rationale and strategic intent, within an agreed people process, including legal and financial due diligence, with the aim of delivering a social dividend rather than a financial dividend.

NFP amalgamation and merger processes are people processes that engage, connect and strengthen people’s aspirations or dream for direct benefit and value to customers, be they clients, residents, patients or the like and the success and sustainability of the organisation.

Exemplary amalgamations and merger projects typically bring together the best of facilitation and communication, strategic and business assessment and planning, leadership and governance and project management principles, processes, documentation and tools.

The aforementioned perspectives do however highlight how vital it is for chief executive officers to:

  • read NFP amalgamation and merger articles and presentations.
  • speak with consultants who have extensive experience and knowledge of amalgamations or mergers, e.g. legal due diligence.
  • gather information from other chief executive officers who have undertaken or have been involved with amalgamations and mergers.
  • develop or obtain the necessary amalgamation or merger documents and tools prior to commencing an amalgamation or merger project.
  • be able to speak with some authority and knowledge on the matter to their boards and senior managers.

Four: DIY or Engage a Specialist

As readers will recall, Alice not only encountered the White Rabbit again when she entered his burrow, but also the Mad Hatter… he was sentenced to death for “murdering time” by the Queen of Hearts.

As one Mad Hatter, an accountant/director of a medium-sized community care organisation, recently said:

“It is a complete waste of time and money to engage consultants or undertake financial and legal due diligence, we can get both boards together, amalgamate and do it all ourselves.”

The question of DIY, Do it Yourself, or engaging amalgamation or merger specialist consultants besets many chief executive officers and/or boards. However, one cannot escape the fact that directors and officers must:

  • firstly act in the best interests of the organisations, its members and stakeholders, in providing them with reports and a recommendation regarding an amalgamation or merger.
  • secondly meet both legislative and contractual requirements as well as morally and ethically be seen to have sought independent, third party objective advice.
  • the obligations and requirements of the organisation’s constitution and relevant State and Commonwealth legislation, e.g. Corporations Act
  • provide to State and/or Commonwealth Government departments not only the required bureaucratic documentation, but supporting legal and financial due diligence reports and an amalgamation or merger plan, assuming they are able to gain approval for the transfer of contracts, funding, licenses or similar such documents or mechanisms.

DIY may at first seem attractive, but one cannot deny the significant amount of time, human resources and expertise required to successfully deliver an amalgamation or merger on time, within budget and to required project specifications.

Five: There’s a Place in the Forest for All

There is a place in the New World Order for all NFP organisations if they can successfully transition from an open woodland to the new, deep and dark forest environment; remembering that as huge trees grow, big trees, medium trees, shrubs, bushes and even fungi have a place, it’s a case of succeed by adaption or die.

There is much questioning and debate by chief executives and boards on two fronts. One: “how big is big, and what size do we need to be in order to ensure we have enough economies of scale and critical mass to survive?” Two: “should we become a niche specialist or a multi-regional, or multi-state organisation?”

To answer these questions thoroughly, they should really be the subject of another article, both questions are best answered in the following summary.

In short, no matter what industry or sector your NFP organisation belongs to, in the New World Order, there are in existence and emerging, very large international/national and multi-state organisations and specialist niche organisations, be they private, public or community businesses. In order for these types of organisations to not just survive, but truly succeed and be sustainable they must:

  • successfully transition from the government funded/welfare paradigm to the customer driver/market paradigm.
  • adopt and put into practice community business principles and practices, if they are an NFP.
  • become a preferred provider, thereby not just meeting legislative, contractual, market or customer requests and expectations, but exceeding them.

Whether your board recommends to its member to stay on your own, with or without partnerships, amalgamate, merge, or close, be under no illusion from “Mad Hatters”, be they a director, chief executive officer or senior manager, the New World Order of NFPs will be a dramatically different place by 2020 and onwards.

Six: Check Your Pocket Watch

Easter is upon us, and as the White Rabbit stated… “I’m late, I’m late, for a very important date!”

Chief executive officers are checking their pocket watches, or in other words, they are aligning and prioritising their strategies and projects contained in their strategic plan against the specific industry or sector requirements and timelines of State and/or Commonwealth government reforms.

In each industry or sector in which NFPs operate there are some fifteen to thirty NFP organisations who have already emerged, or are shaping up to emerge as preferred providers. Discipline, focus, action and destiny are their mantra. There is much to learn from these chief executive officers and directors, be it by tour, telephone call, email or conference, one just has to be careful not to listen to Mad Hatters or attend Mad Hatter Tea Parties!

To you, the reader, have a relaxing and safe Easter break… and be on the lookout for a White Rabbit with a pocket watch.


  1. Lewis Carroll, the author of Alice’s Adventures in Wonderland and to Walt Disney. ↩︎

Author

Principal Consultant
Australian Strategic Services
About

As Chairman of Better Boards and Managing Director of Australian Strategic Services, Michael Goldsworthy’s passion for community businesses (NFPs) cannot be underestimated. For thirty years he has advanced their cause, strengthened their governance and delivered pragmatic solutions; ensuring community businesses remain a vital part of Australian communities and the economy.

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