«Comparing The Affects Of Management Practices On Organizational Performance Between For-Profit And Not-For-Profit Corporations In Southeast Wisconsin ...»
© 2011 The Clute Institute 35 Journal of Business & Economics Research – March, 2011 Volume 9, Number 3
ANALYSIS OF NOT-FOR-PROFITS’ RANKINGS
At first glance, the not-for-profit respondents’ ranking of the success factors was somewhat surprising considering the missions of NPO. One explanation for the curious ordering of materials being the most important success factor may reflect the diversity of organizations in the survey sample (from an adult literacy group to a municipal zoo) and a growing trend in NPO agencies, social entrepreneurship. Many NPOs are attempting to generate earned revenue via creation of products/services that provide a new revenue stream to diversify away from dependence on contributions, funding from United Way type funding agencies and fees for services which oftentimes do not fully recover the services’ costs. The ranking of management practices by respondents as the third most vital success factor is curious given the strongly significant correlation of management practices and organizational performance. One explanation for this ranking may be an increasing managerial skill level and sophistication of not-for-profit corporate leadership. This phenomenon may be a result of the inclusion of talented for-profit leaders serving on the boards of directors of NPOs and the growing trend of NPO executives securing management degrees and ongoing training.
This research study sought to determine if there are significant differences between the management practices and enterprise performance between for-profit firms and NPOs located in southeast Wisconsin. It was found that on the whole there was no statistically significant difference between the management practices and firm performance among the for-profit population, with the exception of one key ownership group (family and privately owned firms). Additionally, it was found that for-profit firms ranked management practices as the top corporate vital success factor.
A review of the data for not-for-profit organizations showed that management practices were correlated to organizational performance. Despite the strongly significant statistical correlation between management practices and organizational performance, NPO respondents did not rank management practices as the number one success factor for their agencies. As mentioned previously, this disparity may represent a growing trend in the evolution of the management practices of NPOs.
Both components of this study were conducted while the American economy was in the worst part of recession of 2008-2010. While some for-profit firms added employees, most were decreasing head counts. NPOs also reported mixed results in terms of significant declines in revenue derived from operations; however what greatly stabilized their operations was the increase in donations.
In the final analysis, this study needs to be repeated on a semi-annual basis to achieve two important results; generating a larger number of responses and creating a base line to compare and improve the robustness of the research design and the practical use of the results. As noted several times, the requirement to generate “numbers” that demonstrate the quality of an enterprise has taken a life onto itself in both the for-profit and not-forprofit sectors. Management practices are frequently considered “soft skills” and therefore not a reliable, countable and important “asset.” It is refreshing to discover that the NPO sector and family and privately held corporations in this study demonstrated that management practices have a “hard impact” on the bottom line.
Gary Keller earned his Ph.D. in Business with a specialty in Management from Northcentral University. Keller also possesses Masters degrees in History and Management. Keller is a tenured Associate Professor in the College of Business and Management (specializing in adult degree completion programs ASB – MBA) at Cardinal Stritch University in Milwaukee, Wisconsin.
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