Transforming Public and Nonprofit Organizations
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TABLE 3.3: External Environment Checklist

Assessing the Sociopolitical Environment

To what extent:

Does the organization enjoy a positive image among policymakers, the general public, and the media?

Do government policies and procedures support the proposed change?

Is the organization likely to receive any additional resources needed to accomplish the change?

Have changes in legislation that are necessary for the change initiative been identified?

Do policymakers and citizens support the proposed change?

Structures that Monitor and Interact with the External Environment

To what extent:

Does the organization have in place mechanisms to scan the external environment for potential threats or opportunities?

Are conflict resolution procedures in place for the organization to use when facing opposition from key external stakeholders?

Has the organization prepared options if the resources requested to implement the change are not forthcoming?

Does the organization have an effective liaison with the legislature?

Does the organization have structures in place to generate support from the public?

Change leaders and agents who continually and effectively monitor their external environment and understand how that environment affects their organization are more likely to find methods to mitigate obstacles or constraints imposed from outside as they plan and implement change initiatives.

Organizational CapacityThe terms “organizational capacity” and “organizational capability” often are used interchangeably, although sometimes there are nuanced differences. Thus, when considering whether an organization is capable of performing certain tasks, the critical factors are often employee skills, processes, and resources. In contrast, we view organizational capacity in a broader sense to include organizational culture and infrastructure. Capacity also is the term most used when assessing nonprofit organizations, and thus the term organizational capacity seems the more accurate in terms of our discussion.

An organization’s internal capacity or capability to initiate and sustain a major change effort involves a number of aspects and is affected by both human and material resources.

Kaplan and Norton (2005), for example, argue for the importance of “organizational capital,” consisting of leadership, culture, alignment, and teamwork in change efforts. McKinsey’s Capacity Assessment Grid for nonprofit organizations includes aspiration (vision and mission), strategy, organizational skills, human resources, systems and infrastructure, organizational structure, and culture (McKinsey 2007).

In our analysis of organizational capacity, we have identified and defined the following key elements as necessary to facilitate major change and transformation:

1. Organizational leadership, both at the top and throughout the organization (discussed in Chapter 2, Transformational Stewardship in the Public Interest)

2. An organizational culture that values and supports change initiatives, reinforcing change-centric behavior (discussed in Chapter 6, Creating a Change-Centric Culture)

3. Change implementation mechanisms—strategies, policies, procedures, structures, and systems that support and are aligned with a change initiative (discussed in Chapter 7, Building Change Implementation Mechanisms)

4. Performance measurement—the use of performance data to inform key stakeholders about why and where change is needed, to focus on aspects of programmatic performance likely to be affected by the change, and to reinforce and reward desired outcomes of change efforts (discussed in Chapter 8, Measuring Change Performance).

Within each of these areas, our model suggests that change leaders should go through the four-step process of diagnosis, strategy, implementation, and reinforcement to (1) better understand and mitigate the risks of the proposed change and (2) develop approaches to enhance the long-term change capacity of the organization.

Organizational Leadership

Effective leadership throughout the organization is essential to successful change initiatives. Transformational stewards, or change-centric leaders, create a strong sense of ownership and responsibility for change outcomes at all levels of the organization. Organizational leadership is critical in the processes of making the case for change, assessing risk and initiating change, implementing and sustaining change, and continuing to encourage employees throughout the organization to become change-centric. Each of these areas is important and should be considered when analyzing the leadership aspect of organizational capacity.

One of the major implementation challenges for leaders is communicating with and gaining the support of program leaders within the organization. Sometimes support from senior leadership and middle management is taken for granted; failure to adequately address this important group can derail a change effort. Middle managers often provide the key link between the leadership vision and the actions of the rank-and-file in the organization.

Continually strengthening organizational leadership is important to enhance an organization’s overall change capacity. However, strategic leadership development is not widespread in all public agencies, and the lack of funding and a plan to continually renew organizational leadership constitutes a major challenge, especially as public organizations face the expected retirement of senior leaders in the coming years (Newcomer et al. 2006).

One of the most important tasks for leaders of change is to examine whether their organization has the requisite change leadership. The questions in Table 3.4 may assist in assessing organizational leadership in the context of implementing change initiatives. (Chapter 10 provides leaders and human resource managers with approaches to strengthen change leadership development within the organization.)

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