How can businesses help the Third Sector?

Most people recognise that the Third Sector, i.e. charities and not-for-profit organisations, is an important part of our Society, meeting various needs that neither the Public Sector nor the Private Sector either cannot or in some instances should not provide.  Funding for such organisations comes from many sources, and when we think of contributing towards organisations in this Third Sector, giving money is usually the first thing we think of.  Of course money is needed and in many cases it can be the simplest way for us to help, whether as individuals or as businesses.  Please do not think that anything which comes later in this article is intended to be a reason to reduce your giving.  However, sometimes we can help in other ways too.

  • Many people of course do volunteer and give their time to help out in one charity or another, either directly or by taking part in fund-raising activities, depending on their abilities and personalities.
  • When businesses become involved, other than as donors of money, they usually think in terms of encouraging employees to take on a specific project, generally something of a physical nature, such as cleaning up an area or decorating a property.  These are often the things the charities themselves ask for.

However, there is another way in which many of us in the business world could contribute more effectively, which neither we nor those involved in running the charities are apt to think of.  We could provide our business skills and experience to assist in the management of the charity in question.

  • It may be that some help with routine book-keeping or other office work would be a help, in many cases, and where appropriate, let us try to help in that way.
  • What about management advice? From finance to health and safety, from human resources to insurance.

What this would mean is that:

  • We could help them to use whatever resources they have more efficiently and effectively.
  • We could help prevent foreseeable mishaps, whether physical, financial, or reputational.

Many small local charities will not be able to consider employing the appropriate professionals, but many of us could lend them someone, either as a one-off to get things set up on the right footing, or periodically to give advice and monitor progress.

I will be writing soon about the ways the Third Sector could help the rest of us!

Three Things I Hate To Hear.

Most of us have to listen to a lot of things we do not agree wit, and by the time you reach a certain age, you have probably got so used to it that you take it in your stride.  Well, there are still three things that really make me see red, because I just know they are not true, and they are strong indications of a bad manager.

1.  “It couldn’t happen here!” This is only rarely true.  It might just be that the speaker has got such good risk controls in place that the thing in question really could not happen in his company, but guess what, it usually means he has nothing in place and is relying on luck.  His business plan looks like a pair of dice!

2. “I can’t afford it!”  This obviously is often true in the domestic situation where a person’s budget is so stretched they cannot afford anything more.  But when you are talking to a businessman about something that would benefit his business, the question is whether the likely gains outweigh the expected costs.  There are often times when they clearly do, but the businessman does not want to try it.  This can be true where the thing he cannot afford would pay for itself in a short time, or would significantly reduce a big risk.

3. “There’s nothing I can do about it!”  This usually means the speaker cannot be bothered to do anything.  Such as a high level of industrial accidents, or bullying or discrimination in the workplace.  He might not have a magic wand, but there is always something you can do.

The thing these three statements have in common is that they show a lack of imagination on the part of the speaker.  That is not  a good thing in a manager.

How can businesses help the Third Sector?

Most people recognise that the Third Sector, i.e. charities and not-for-profit organisations, is an important part of our Society, meeting various needs that neither the Public Sector nor the Private Sector either cannot or in some instances should not provide.  Funding for such organisations comes from many sources, and when we think of contributing towards organisations in this Third Sector, giving money is usually the first thing we think of.  Of course money is needed and in many cases it can be the simplest way for us to help, whether as individuals or as businesses.  Please do not think that anything which comes later in this article is intended to be a reason to reduce your giving.  However, sometimes we can help in other ways too.

  • Many people of course do volunteer and give their time to help out in one charity or another, either directly or by taking part in fund-raising activities, depending on their abilities and personalities. 
  • When businesses become involved, other than as donors of money, they usually think in terms of encouraging employees to take on a specific project, generally something of a physical nature, such as cleaning up an area or decorating a property.  These are often the things the charities themselves ask for. 

However, there is another way in which many of us in the business world could contribute more effectively, which neither we nor those involved in running the charities are apt to think of.  We could provide our business skills and experience to assist in the management of the charity in question. 

  • It may be that some help with routine book-keeping or other office work would be a help, in many cases, and where appropriate, let us try to help in that way.
  • What about management advice? From finance to health and safety, from human resources to insurance. 

What this would mean is that:

  • We could help them to use whatever resources they have more efficiently and effectively. 
  • We could help prevent foreseeable mishaps, whether physical, financial, or reputational.

Many small local charities will not be able to consider employing the appropriate professionals, but many of us could lend them someone, either as a one-off to get things set up on the right footing, or periodically to give advice and monitor progress.

I will be writing soon about the ways the Third Sector could help the rest of us!

Three Things I Hate To Hear.

Most of us have to listen to a lot of things we do not agree wit, and by the time you reach a certain age, you have probably got so used to it that you take it in your stride.  Well, there are still three things that really make me see red, because I just know they are not true, and they are strong indications of a bad manager.

1.  “It couldn’t happen here!” This is only rarely true.  It might just be that the speaker has got such good risk controls in place that the thing in question really could not happen in his company, but guess what, it usually means he has nothing in place and is relying on luck.  His business plan looks like a pair of dice!

2. “I can’t afford it!”  This obviously is often true in the domestic situation where a person’s budget is so stretched they cannot afford anything more.  But when you are talking to a businessman about something that would benefit his business, the question is whether the likely gains outweigh the expected costs.  There are often times when they clearly do, but the businessman does not want to try it.  This can be true where the thing he cannot afford would pay for itself in a short time, or would significantly reduce a big risk.

3. “There’s nothing I can do about it!”  This usually means the speaker cannot be bothered to do anything.  Such as a high level of industrial accidents, or bullying or discrimination in the workplace.  He might not have a magic wand, but there is always something you can do.

The thing these three statements have in common is that they show a lack of imagination on the part of the speaker.  That is not  a good thing in a manager.

Are you using the 3 E’s of Management to measure your performance?

We all know it is important to measure how we are doing, not just to give ourselves a pat on the back or a kick up the… backside, as appropriate.  We need to learn what are our strengths and weaknesses, what works and what does not, so we can do better in future.  That is one reason for compiling statistics from within our business, as opposed to looking at other people’s.  (They are important too.  We need to know about national and local trends in our sectors, for instance.)  This article looks at the three ways of measuring success and considers the importance of balancing all three.

What we can all too easily overlook is that there are three measures we can use, so we have to decide which one is most relevant to our situation, or whether we could learn more by looking at all three.

The three measures are: Efficiency, Economy, and Effectiveness.  Let us look at each in turn.

Efficiency is the one we tend to be most familiar with, especially if we come from a technical background.  It measures the relationship between inputs and output.  We might measure inputs in terms of cost or by some physical measure, such as materials or man-hours.  Similarly we might measure outputs in terms of sales income or numbers of items produced.  It obviously better to achieve a higher output for less cost so we always want to keep an eye on this relationship to see if it is changing, and in which direction.  However, when we look at the other two E’s we may see why we need to avoid becoming too obsessed with efficiency.  There is the risk of failing to see wood for trees.

Economy is about overall costs and revenues.  It takes into account the way a change in one cost or benefit can have effects on others, so that an improvement in efficiency in one area might lead to higher costs elsewhere.   You could improve efficiency in a way which put too much pressure on employees leading to higher absenteeism and faster staff turnover and therefore higher total costs.

Effectiveness is about achieving your objectives.  It is especially important in the Public Sector and the Third Sector, where the aim is to provide a service rather than to make a profit.  An efficient and economical system which failed to achieve your principal objective would not be a success.  Even if you are in the Private Sector, you might find it worthwhile looking at Effectiveness as well as the other E’s as annual profits may need to be balanced against long term growth or market share.  In many industries, such as electricity or health services, you might be providing a service to the public even if you are in the Private Sector, and you might not be in business long if it becomes apparent that you are making profits without providing a satisfactory service. 

Obviously, there are many cases where all three measures point in the same direction.  A badly managed business will fail by all three measures, and any sensible improvement to working methods is likely to result in a better performance no matter which one you look at.  There are, however, many cases where the three measures give contradictory results.  This is where common sense or management ability becomes important.  Relying on the wrong measure can seriously damage your business.

I have certainly come across some bad examples of organisations becoming too focussed on any one of these three measures to the exclusion of the others. 

  • We all know of instances where Public Sector organisations have obsessed about targets with little thought about cost or efficiency. 
  • During the 1983 coal miners’ strike, one of the big issues was the definition on an “uneconomic” pit, because the cost to the taxpayer of closing some pits would have been more than the cost of keeping them running at a loss, given the dependence of many local businesses on the mine and the miners.
  • I have heard of the success of a claims-handling unit being measured by the average cost of processing a claim, or the average time taken.  This thinking failed to take into account whether the claims-handler was making correct decisions.  It is always quicker and cheaper to pay a claim rather than defend it, or even investigate it thoroughly.  Such a measure would be likely to result in an unnecessarily high cost in the payment of unjustified claims.  

When you have collected the relevant statistics about your business, do look at them in the light of all the three E’s so as to get an all-round picture of how you are doing, but in the end, the priority or emphasis of each E over the others is a matter only you can decide.

 

Supplies! Supplies!

Most people tend to assume that wars are won and lost by the soldiers on the battlefield.  Of course, the numbers, training, discipline and morale of those men do count for quite a lot.  Some might give some of the credit or blame to the generals.  There is plenty of evidence that the right tactics and strategy can make all the difference.  Far fewer people stop and think about the importance of supplies, or logistics to use a more technical word.  Yet many great generals would agree that looking after the apparently mundane aspects of warfare can be far more important than is often imagined.  Malborough and Wellington both said so. 

In the First World War getting the right supplies to the Front became a crucial issue and was probably one of the decisive factors in the final allied victory.    For a long time British Industry struggled to produce and deliver all the bullets, shells and replacement parts for the various guns and tanks in use.  It was even difficult to get enough uniforms and everyday items to where they were needed.  About half-way through the War, the Ministry of Supply came under the control of David Lloyd George for just long enough for him to appreciate the problems before he became Prime Minister.

 At the point he ensured that he was replaced at Supply by someone who would be sufficiently determined and energetic to get things moving, someone who would not be afraid to ruffle a few feathers if necessary (and it was).  The man he chose was his old friend Winston Churchill, newly rehabilitated after a period out of office.   They got the supply issues sorted out just in time to ensure no British soldiers were inadequately equipped when they had to resist the final big German push of 1918.

In Our Time the same is true. I once heard Norman Schwartzcopf, who commanded the American forces in the First Gulf War in the 1990’s, speaking on TV of how big a part logistics played in that campaign.  He said that it was useless to have a brilliant plan for defeating your enemy if you had no idea how to get your army to where it needed to be, or if most of your men died of hunger, thirst or disease, before they came anywhere near the enemy.

In Your Business the same is probably also true. Yet many business managers concentrate so much on improving or maintaining the efficiency of their own organisations that they do not have the time to look at their supply chain.  This is an increasing problem, as has been reported by the Institute of Risk Management.  The most apparent cause is the increased reliance on outsourcing and partnering, which are often desirable practices as long as the inherent risks are properly managed.

  •          How much impact would an interruption in supply have on your business?
  •          Do you know how vulnerable your suppliers are to any particular risks?
  •          How many days’ supplies do they carry?
  •          What measures do they have for dealing with threats to their production or distribution?
  •          What alternative sources of supply do you have?  How available are they?

If you do not have current, satisfactory answers to these questions, it is time for you to review your supply chain and its risks.  That could put you ahead of the competition.