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