Enterprise Organizations - a new breed? The costs and benefits of this emerging organizational...
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Enterprise Organizations - a new breed?
The costs and benefits of this emerging organizational archetype in the
disability field.
Pamela Spall
A respondent to the research wrote -
“The trend towards marketisation is of major concern. Managerialism in the human services sector has introduced managerial practice such as strategic planning, performance indicators/appraisals, risk management, quality assurance etc which have had a major impact on community services and their capacity to respond to individual, family and community needs in a meaningful and flexible way. Increasing accountability and reporting obligations, the impact of funding reforms, complex legal and industrial matters, increasing pressure for formalization and professionalism, economic rationalism --- make these extremely challenging times!” (720)
Defining Marketisation
• Split between the role of purchasing of service through contracts and delivery of services
• introduction of managerial concepts such as strategic planning, performance systems
• equating the community services sector to a quasi-market that operates along competitive lines
Defining Marketisation (continued)
• Implementing quality systems which are customer focused and enable choice
• generating income through commercial activities
• engaging in market segmentation and other market positioning type behaviours.
Values and beliefs Systems
Structures
An Organizational Archetype
Table 1. Two types of archetypes or footprints
EnterpriseA new breed oforganization?
Non-enterprise
Two types of archetypes or footprints
Description of ideal archetypesNon-enterprise Archetype
Values and Beliefs• supports state role of
public good• opposes neo-liberal
contractualism• needs based• coercive role with the
state• linkages with ‘like’
nonprofit organizations
Enterprise Archetype
Values and Beliefs• supports state role of
public good• supports neo-liberal
contractualism• consumer choice• mixed role with state• linkages with wide
range of institutions
Description of ideal archetypesNon-enterprise Archetype
Systems
• limited flexibility in human resources
• limited technical and technological capacity
• cost management accounting
• mixed centralized and decentralized decision-making
• little strategic planning
• individual and group service delivery
• no formal quality system
Enterprise Archetype
Systems
• flexible human resources
• skilled in technical and technology
• accrual accounting
• mixed centralized and decentralized decision-making
• highly developed strategic planning
• managed care
• formal quality system
Description of ideal archetypes
Non-enterprise Archetype
Structure• hierarchical and
functional• limited structural
flexibility• participatory model of
governance - more rowing than steering
Enterprise Archetype
Structure• flatter more organic
structure• scope for flexibility,
dependent on context• executive model of
governance - more steering than rowing
Table 3. Sample Frame and Respondent Return Count.Sample Frame
CountSample Frame
%Respondent
ReturnCount
Respondents%
Queensland 240 42.6 114 44.2Victoria 324 57.4 144 55.8TOTAL N = 564 100.00 n = 258 100.00Source: Pamela Spall Unpublished Thesis 2001.
Primary CSDA disablity service offered
1.9%
12.0%
7.4%
5.0%
10.5%
18.6%
9.3%
14.3%
20.9%
Missing
Other
Respite
Recreation specific
Psychiatric disabili
Community Access
Employment
Community support
Accommodation suppor
This paper will:
• Establish whether an enterprise and non-enterprise organizational archetype exists in the disability sector
• examine some of the similarities and difference between enterprise and non-enterprise organizations around demographic profile, values and beliefs, systems and structures, and managerial demographics
This paper will:
• Discuss the implications for the sector in terms of costs and benefits of the enterprise organizational form.
Figure 3. Existence of Enterprise and Non-enterprise Organizations.
Source: Pamela Spall Unpublished Thesis 2001.
EnterpriseOrganizationalForm
87 organizations
Non-enterpriseOrganizational Form
87 organizations
Respondent sample of258 organizations
Existence of Enterprise and Non-enterprise Organizations
Agency demographics - no difference between enterprise and non-enterprise
• Whether they were religious/charitable or of non-government status
• number of service outlets operating
• primary disability group served
• presence of paid workers.
Number of years of operation
Co
un
t
30
20
10
0
Non-enterprise
Enterprise
Significant difference - enterprise and non-enterprise organizations
Values and beliefs - no difference between
enterprise and non-enterprise
• Social justice beliefs
• myth of pure virtue operative (i.e. nonprofits are more ethical, more caring)
• cost competitive tendering and competition does not improve efficiency or is beneficial to the sector.
Values and beliefs - significant difference between enterprise and non-enterprise
• Beliefs around consumer choice and other quality concepts
Systems and structures - significant difference between enterprise and non-enterprise
Enterprise organizations had:
• greater flexibility in HRM systems
• enhanced information and performance systems through use of technology and benchmarks
• improved financial management systems including accrual accounting and financial delegation
Systems and structures - significant difference between enterprise and non-enterprise
• Development of marketing systems such as service differentiation and diversification into new markets and income sources
• highly developed strategic planning processes
• decentralization of decision-making systems
• implementation of quality systems
• reduced internal hierarchical organizational structures.
Structures and systems
Non-enterprise organizations had -
• “not implemented” or• “very little
implemented”
Enterprise organizations had -
• “mostly implemented”
Table 4. Comparison of organizational size between enterprise and non-enterpriseorganizationsi.
Components Enterprise Archetype Non-enterprise ArchetypeSize ofOrganization
Larger multi-service agency in termsof: Total number of permanent full-
time employees (9.84 employees) Number of temporary or contract
workers (1.95 workers) Total income of auspicing
organization ($1,078,085) Total number of unpaid volunteer
hours worked per week (110.1hours)
Smaller agency in terms of:
Total number of permanent full-time employees (5.35 employees)
Number of temporary or contractworkers (.37 workers)
Total income of auspicingorganization ($687,858)
Total number of unpaid volunteerhours worked per week (14.63hours)
Source: Pamela Spall Unpublished Thesis 2001.
i Significance testing for the number of employees across all categories and unpaid workers and financialdata was calculated using Chi-square and the Kruskal-Wallis test to take account of the large variation inresponses to this question. Outliers were removed if they were not valid for the sample. To do this, a filterwas applied for outliers. The filter for this data was $80,000 to $3m. Therefore these results represent aconservative interpretative of the analysis of variance. Not applying the filter resulted in a variancebetween enterprise and non-enterprise organizations in relation to employees and unpaid staff ofapproximately 6:1.
Approximate total income 1999-2000
Co
un
t20
10
0
Non-enterprise
Enterprise
Financial income of organizations
• 91.8% of all organizations were dependent on government as their largest source of funding
• on average, organizations were reliant on government for 72.4% of their total income
• 17.6% of income was obtained from sources other than government
Changes in funding from all government sources
In the last five years
IncreasedStayed the sameDecreased
Pe
rce
nt
60
50
40
30
20
10
0
Manager demographics - no difference between enterprise and non-enterprise
• Gender
• age
• political beliefs
• years working in current organization or the community services sector
• level of education
Manager demographics - significant difference between enterprise and non-enterprise
• Enterprise managers had a greater extent of influence on policy decision in the organization
• a greater number of enterprise managers had occupied a position in the public sector for either 6 - 10 years or 11 - 15 years
• a greater number of enterprise managers had occupied a position in the private sector
Benefits of enterprise organization
• More sustainable model• Larger resource base• Longer history and collective experience• High credibility and legitimacy in community
• Multi-service nature to spread risk• Better equipped in terms of skills and
resources to respond to change.
Benefits of enterprise organization
• More geared up in terms of system and structures for accountability and funding reform requirements
• Range of strategies to diversify income base
• Able to attract and retain skilled staff
• Externally recognized quality system
Benefits of non- enterprise organization
More responsive to local needs• As newer organization can be more innovative
and flexible
• Able to be more cause related
• Doesn’t have any historic legacy so can design new responses
• Less formal approach is often likened to an individualized approach
Cost of Enterprise Organization
• Due to size more difficult to be innovative
• Model might be better suited to less residual service delivery interventions
• Overlooked by government in terms of funding increases
• Due to its size can be likened to a bureaucracy
Cost of non-enterprise organization
• Less robust in day-to-day management
• no critical mass to endure change
• requires a greater commitment of management committee
• limited structures and systems to meet accountability and other funding reform requirements
Cost of non-enterprise organization
• Prone to be ‘permanently failing’
• no externally recognized quality system
• limited capacity for income generation
• few incentives to attract and retain skilled staff
• locked into a value base
Question
Whether either the enterprise or non-enterprise organization is a better model to survive in the changed
market environment?
If the Goal is to -
Accommodate, grow and sustain a diversity of organizational forms then it will be necessary to strengthen the organizational ‘do business’ capacity
of a range of organizations
Non-enterprise organizations require
Greater technical assistance - technology, financial management functions, performance and quality
systems
Enterprise organizations require
Support and ideas in social entrepreneur initiatives in income
generation
All organizations require
Increased skill building around change management and surviving
transformational change