Does good decision making in a recession require a culture change?

We would probably all agree that leading an organisation through the current recession presents significant challenges. But do these challenges require a similar method and culture of decision-making, or is a change required?

This interesting article from the US Nonprofit Quarterly argues that boards do indeed need to rethink their skills and culture in order to steer organisations effectively through financial crisis.

The article begins with a case study of an organisation that, although previously successful and with a sound reputation, found itself with no cash and needing to urgently close programmes down. What went wrong? According to the article’s author ‘delay and indecision’ were the culprits:

In a different economic environment, an organization such as Youth Horizons might have been lucky and continued to attract support based on its reputation. But with today’s downturn, an organization’s luck can run out, especially when decision making isn’t quick, responsive, and sound. Youth Horizons’ story illustrates the con­sequences of delay and indecision.

‘Delay and indecision’ in this case were judged to be a result of

  • A lack of clarity about who had authority to make touch decisions.
  • A board that didn’t challenge enough, perhaps because of a culture of trust and consensus that had in fact evolved into conflict avoidance and ambivalence
  • An assumption that the ability to get out of previous problems meant that the organisation could do so again

The author concludes that what is required could be both new skills and a change of culture:

When your organization has faced serious and urgent questions in the past, how has it responded? Do these practices serve you in the new economic environment? Right now your leadership may require a combination of learning new skills and approaches and also unlearning previous behavior. Nonprofits may well come through this downturn with changes not only to their budgets and programs but also to organizational culture.

A sense of urgency (but not panic!) is required, as is better information about the true financial picture of the organisation and shared and clear priorities about which elements of the organisation’s work are non-negotiable, and which could be sacrificed if absolutely necessary.

Do you agree? Or do you think that good strategic leadership and financial decision-making are essentially the same, whether in a crisis or not?

Last updated at 15:08 Mon 18/May/09.
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How will this affect your organisation? Have you considered it during your strategic planning? Can you share any interesting relevant links?

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