The Requirement of Financial and Moral Stability forthe British Red Cross - Case Study Example

BUSINESS CONTINUITY MANAGEMENT BRITISH RED CROSS 1. Introduction Non-profit organizations have a much more difficult task balancing financial sustainability with mission that their private-sector counterparts because these dual objectives may conflict. Their primary stakeholders are the consumers of their services as well as the volunteers who contribute to their efforts. The Red Cross may depend on its donors for support, but its primary stakeholders are its volunteers and the people they provide services. Although not governed by Civil Contingencies Act (2004), the British Red Cross works very closely with Category 1 & 2 responders thus a BCM to ensure the continuity of its operations during crisis. 2. Stakeholder Analysis A stakeholder analysis provides information on key stakeholders to help manage relationships with them. The type of information included in a stakeholder analysis includes, names and organization of key stakeholders, their roles on the project, unique facts about each stakeholder, their level of interest in the project, their influence on the project, suggestion for managing relationships with each stakeholder. The concept of stakeholders acknowledges that no business is an island and that business interacts with society in a number of different ways. The objectives of an organization will be circumscribed by the extent to which relationships with stakeholders are successfully managed. Nowhere is this more important than in BCM since their response to the organization in the post-crisis phase will have an impact on the success of recovery efforts and, ultimate, survival of the company (Elliot et al., 2002, p.86). Fig. 2.1 KEY STAKEHOLDERS Employees Volunteers Donors Corporate Partners People Organization British Red Cross External External External External Role on project Project Support Project Support Project Support Project Support Project Beneficiary Unique facts Level of interests High High Very High Very High Very High Level of influence High Very High Very High Very High Very High Suggestions on managing relationships Keep them informed Let them see the project’s importance. Encourage them more. Encourage them more and let them know the value of their contribution to humanity Let them know you need them and how their support make things possible Let them see the organization’s dedication, honesty, and will to help Fig. 2.2 Fig. 2.3 3. Analysis of Stakeholders Relationship and their Importance Of all stakeholders’ relationships, those that non-profit organizations have with members or volunteers may be at the same time the most tenuous and the most necessary (Lamb et al. 2005, p.141). Stakeholders who enter into a relationship with a non-profit group, whether it is an alumni association, a professional group, or a social service agency, usually have some need or goal that motivates their joining, donating, serving, or attending. The relationships between such organization and their stakeholders are best maintained when they are founder on mutual trust built and maintained through meeting mutually recognized needs and interests. Thus, organization’s with a clear sense of their mission and an articulation of how the stakeholders are aligned with that mission are the most likely to succeed in building those types of relationships. 3.1 Donors For many organizations, donors, and other stakeholders play a very important role in providing stability and viability. They are important sources of support in terms of time (dedication of volunteer’s hours), talent (supplying professional services such as accounting, marketing and communications, management and technical advising) and money (financial donations). In return for their commitment, they must receive something from the organization that meets their needs and expectations. In this way, donors and other stakeholders need to be understood in much the same way that clients need to understand (Rogers et al. 2001, p.165). The expanding importance of stakeholders is the perhaps the single most important elements in the “Age of Accountability” (Savitz and Weber 2006, p.79). In fact, it is possible to examine most or all of the crucial sustainability issues an organization will face in terms of stakeholder relationships. Sustainability thus means embracing and collaborating with stakeholders rather than assuming that they are adversaries to be defeated, sceptics to be lectured to, or at best, temporary allies to be held at arm’s length. Only by making stakeholder engagement a systematic and permanent element of an organization’s management style can they hope to shepherd all the resources the organization depend on. These include environmental, social, and economic to achieve lasting success in today’s interdependent world (Savitz and Weber 2006, p.80). One issue in NGOs like the British Red Cross is the active role of different stakeholders. Some donors are arguing it that beneficiary-participation and representation on boards is crucial to ensure NGO accountability to their clientele. Some donor even asks for evidence of this at the time of approving a grant. A stakeholder by definition is any party, which has a stake in the outcomes of an NGO. In this sense, beneficiaries, donors, and regulators are all stakeholders, as are other NGOs and NGO staff. However, their stakes related to the performance of the institution, not to its governance directly. Donors to NGOs are supporters of desirable outcomes whose interest and concerns must be matched by the performance of the NGO in order for resources to continue to flow (Edwards & Hulme 1995, p.47). Donors are very influential and they expect the funds to be spent on what they gave it for. For instance, public confidence in the charitable organizations plummeted when questions arose as to how the Red Cross and other prominent non-profit groups administered the more than $2 billion that poured in for the victims of the September 11, 2001, terrorist attacks. While many of the donations had no legal restrictions attached to them, most donors believed that their donations were specifically for 9/11 relief. Red Cross admittedly used funds designated by donors for 9/11 relief to fund other projects. The controversy prompted calls for oversight that have reverberated at every level of the non-profit community. It is also resulted in leadership change at the Red Cross (Welytok et al., 2007, p.36). A heavy reliance on donors for continued survival, often places NGOs in a position where they are more accountable to their donors than they are to their own constituency and participants, raising not only questions about sustainability but also ownership issues (Nelson & Neack 2002, p.20). 3.2 Employees Perhaps the leading internal stakeholders of an organization are its employees, whose fortunes depend on those of the organization in the most direct way. The organization may be the only source of income for each of its employees, and the income may be used to support many others (Craig 1998, p.151). Increasingly, most organizations recognize that organization strategies that depend on total quality, innovation and customer service cannot be met unless employees are willing to strive for the same goals on the organization’s behalf. Employees are legitimate stakeholders whose concerns must be addressed (Schuler & Jackson 2007, p.220). Thus, employees feelings about the organization are being recognized as relevant indicators of effectiveness that are worthy of top management’s attention. “Happy employees are productive employees” (Botha & Botha 2007, p.209) and employees who know where the organisation is going and why are more likely to help it get there”. Employee or internal stakeholder group is important because it is the heart of an organization. Without people to make the product or deliver the service, there would not be an organization. 3.3 Volunteers With more than 115 million volunteers, the Red Cross is the largest volunteer organization in the world (McLuskey 2002, p.4) and 97 percent of their staff is volunteers (Human Kinetics 2006, p.158). Volunteers are individuals who reach out beyond the confines of their paid employment and of their normal responsibilities to contribute time and service to Red Cross in the belief that their activity is beneficial to others as well as satisfying to themselves. Volunteers serve at all levels of the Red Cross, including governance, management, direct service, support services, and advisory (Landskroner 2002, p.596). Thus, one can imagine how important are the volunteers to Red Cross and how it can affect its existence in the future. 3.4 Corporate Partners The British Red Cross have several corporate partners. AstraZeneca supports their work in combating TB/HIV co-infection in the developing world. Barclay supports their disaster response work. Glaxo SmithKline supports their work for young people in Scotland with physical disabilities. These and a number of others support the British Red Cross in the form of donations, fund raising, and volunteer works. According to Sargeant & Jay (2004, p.231), non-profit organization should assess the quality of any relationships from their perspective and consider factors such the value of monetary and other support received, the exposure and media coverage generated, the public response to the partnership and the increased public awareness of the cause. Some study suggests that for the non-profit, an association with a corporate can be a highly lucrative venture. Having selected and approached an appropriate corporate supported, the Red Cross is then faced with the task of managing the relationship and where possible, ensuring that the pattern of support becomes ongoing. However, some non-profit organization will find that the corporate dictates in fine details the nature of the relationship the two organizations will have. Others, by contrast, may find that they can exert more influence and thus being to tie in the corporate partner to the cause. While there are clear benefits that may accrue from this approach, some critics have expressed concern about the loss of a distinctive non-profit identity that might result from an excess of corporate influence on an organization. When a relationship is initiated, it is important to determine from the outset how the relationship will be assessed and measured by both parties. This not only serves to reduce the capacity for conflict later, but it can act as an aid to the retention of corporate support (Sargeant & Jay 2004, p.231). 3.5 The People It is a common knowledge that non-profit organization like the British Red Cross relies on the generosity of the public to fulfil its mission. However, accountability is so critical to the structure of their work and in fact, non-profit organizations have layers of accountability – to government regulations, donors and funders, investors, board of directors, stakeholders and partners, and also the constituents, the people to whom their services are directed (Esau et al. 2005, p.46). People expect and check the legitimacy of almost everything. When people detect poor performance and anomalies they tend to criticise and direct their support somewhere else. 4. Processes Critical to the Survival of NGO 4.1 Fund Raising Fundamentally, increased government funding of NGO work entails a lessening of the independence of the NGOs. This is very like when an NGO becomes heavily dependent on a single government source. The marked increase in partnership between state and the NGO sector has been a source of survival and renewed influence for struggling NGOs (Shepard 2006, p.72). Part of the capital of NGO is its record of achievement, which is essential for publicity and fund raising pitches. However, the demands of fundraising and institutional survival make it imperative not to admit to failures. The competition is for funds and methods of fund-raising, how incompatible they may be with the stated goals of for instance, ‘addressing the poor’ are rarely abandoned. For instance, child sponsorship is generally felt by aid workers to be undignified and misleading, but it remains a major fund-raising tool. The most common tension in NGOs lies between, on the one hand, the imperatives of the advocacy and campaigning departments to maintain a consistent and credible reputation for independent, value-based criticism of government and business policy and, on the other hand, the obligation of the marketing or fundraising staff to raise sufficient income for the organization to continue to function. Fundraisers are often under pressure to look for new methods and new sources of funds, including from governmental and business sources. They have to compete with a myriad of other NGOs for funds coming from donor agencies. Fundraisers have the weakest authority in terms of organization values and principles, but a great deal of legitimacy in practical terms of organizational survival (Rugendyke 2007, p.179). 4.2 Responsiveness, Relevance, and Quality of the NGO’s Activities Institutional sustainability depends upon maintaining responsive output flows such as high quality and valued goods and services, cost-effective goods and services delivery mechanism, and resource flows. In other words, NGO sustainability becomes a composite of the responsiveness, relevance and quality of an NGO’s activities. The efficiency and cost-effectiveness of an NGO’s organization and management structures and the security of an NGO’s resource base. This conception of NGO sustainability goes beyond the financial one, which is so often dominant in the field (Michael 2004, p.133). The significance of sustainability to these kinds of high quality NGOs is that performance is important for sustainability. This is because good performance can be the main sales pitch for gaining support and marketing the output of institution-building efforts. However, failure to fulfil a function can have exactly the opposite effect, especially if expectations are high among stakeholders. 4.3 Data Processing As computer systems became integral to the operation of almost all organizations, providing security for such systems is necessary. In a non-governmental organization like the Red Cross, data processing is as important as getting the funds. Transparency or openness improved trustworthiness (Manson & O’Neil 2007, p.178) and NGO collection and disbursement data may enhance transparency. The funds collect by an NGO came from concerned donors and partners and therefore must be accounted for future reference and reporting. A critical contributor to the success of NGOs is the timely disbursement of funds thus; an effective and efficient disbursement mechanism is required. Data processing make timely disbursement possible as it could deliver required information for a particular project immediately. NGOs have enormous funds and this has resulted in tightened standards for transparency on them regarding the real cost of their business. Donors require evidence that shows that the funds they give actually reach the poor and have an impact on their lives. The major challenge for NGOSs in this situation is to achieve professional performance while maintaining administrative costs low, sot that the value for money is reflected. In this context, accountability implies that NGOs have to reconcile their data and present a report (Tembo 2003, p.32). 4.4 Communication Where close relationship with stakeholder are sought, there are a variety of issues that must be managed to facilitate growth and sustainability. Among these, the issue of effective communication is paramount. Study shows that open and regular communication among partners or stakeholders is highly important because it acts to build trust and can be an enable for effective problem solving. It is therefore necessary to develop multiple communication channels, formal or informal, at different organizational levels to ensure effective stakeholders relationship. Joint planning is a form of communication that involves various levels of the organization in face-to-face interactions deciding jointly the nature of relationship and how it will develop. Another is establishing ‘ongoing communication’, which is regular, candid, and balance, facilitating two-way flow of ideas and information. While relationship with internal stakeholders is very important, it is also crucial to recognize the necessity or value of communicating with internal constituencies- employees, volunteers, etc., about the relationship and its benefits. According to Eversole (2003, p.19), NGOs must find commonalities and forge communication between themselves, the communities where they work, external funders, governments, markers, and other key players. 5. Ten Generic Questions for the Four Critical Processes 1. What is the name of your department, unit, or function? Please describe its function. Include an overview of what your department or team must do to recover from crisis? 2. Is your function directly involved billing, collection, or the processing of revenue? If yes, please describe. 3. How long can your department, unit or function be out of service without adversely affecting the overall operation of the organization? 4. What tasks would be necessary to recover these functions? 5. What other business activities would be impacted by the inability to deliver or perform your function? 6. What other areas or functions of the organization are you dependent upon to operate effectively, and how would their inability to deliver service or products affect your operations? How would an area wide disaster affect the physical delivery of this service? 7. Do you have any arrangements or agreements been made with your vendors for emergency delivery of critical resources? 8. What other needed services, products, or raw materials would be available if access to your present supplier ceased. 9. What computer or communication support systems are necessary for the continued operation of your unit? 10. Do your critical vendors have tested recovery plans in place, and is their recovery time consistent with your needs? 6. Conclusion Non-profit organization like the British Red Cross requires financial and moral stability to sustain their existence. The Red Cross in general usually relies on relies on their stakeholder for support since without them, none of its mission will be possible. The stakeholder analysis conducted reveals the important roles played by various stakeholders in fulfilling the Red Cross mission. The Red Cross’s level of success depends on how it manages its relationship with its primary stakeholders since their response to the organization during and after crisis will have an impact on the survival of the organization. Critical processes for its survival were identified that include fundraising, responsive and quality of activities, data processing, and communication. Ensuring the continuity of such important activity like fundraising is of great significance since funds are central to NGOs operation. Their responsiveness, relevance, and quality of activities also play a very important role in keeping their legitimacy as champion of the people. This critical process should be maintained at all cost since disruption of quality of service means lost of trust and legitimacy. Accurate and effective data processing help enhance transparency, integrity, and speed in delivery of services thus it must not break off or disrupted. Communication is always at the heart of a strong relationship because it facilitates two-way flow of information that is necessary to maintain a good and effective relationship. Without an effective communication and continuity of critical processes, an organization may not survive. 7. Bibliography Botha D., M. & Botha C. D. 2007. Public Relations: Fresh Perspectives. Pearson, South Africa Craig E.1998. Routledge Encyclopedia of Philosophy. Taylor & Francis, U.K. Edwards M. & Hulme D. 1995. Non-governmental Organisations: Performance and Accountability Beyond the Magic Bullet. Earthscan, UK Elliott D., Swartz E. & Herbane B. 2002. Business Continuity Management: A Crisis Management Approach. Routledge, U.K. Esau J. C., & Stanley W. 2005. Start and Grow Your Faith-based Nonprofit: Answering Your Call in the Service of Others. John Wiley and Sons, U.S. Eversole R. 2003. Here to Help: Ngos Combating Poverty in Latin America. M.E. Sharpe, U.S. Human Kinetics. 2006. Introduction to Recreation and Leisure. Human Kinetics, U.S. Lamb L.F., Lamb Lawrence F., & McKee K. B. 2005.Applied public relations: cases in stakeholder management. Routledge, U.S. Landskroner R. A. 2002. The Nonprofit Manager's Resource Directory. John Wiley and Sons, U.S. Manson N. C., & O'Neill O. 2007. Rethinking informed consent in bioethics. Cambridge University Press, U.S. McLuskey K. 2002. The Red Cross. Weigl Publishers Inc., Canada Michael S. 2004. Undermining development: the absence of power among local NGOs in Africa. James Currey Publishers, U.K. Nelson D. N. & Neack L. 2002. Global Society in Transition: An International Politics Reader. Kluwer Law International, U.K. Rogers G., Finley D. S., Galloway J. R. 2002. Strategic planning in social service organizations: a practical guide. Canadian Scholars' Press, Canada Rugendyke B. 2007. NGOs as Advocates for Development in a Globalising World. Routledge, U.K. Sargeant A. & Jay E. 2004. Fundraising Management: Analysis, Planning and Practice. Routledge, U.K. Savitz A. W. & Weber K. 2006. The Triple Bottom Line: How Today's Best-run Companies are Achieving Economic, Social, and Environmental Success-and how You Can Too. John Wiley and Sons, U.S. Schuler R. S. & Jackson S. E. 2007. Strategic human resource management. Blackwell Publishing, Singapore Shepard B. 2006. Running the Obstacle Course to Sexual and Reproductive Health: Lessons from Latin America. Greenwood Publishing Group, U.S. Tembo F. 2003. Participation, Negotiation, and Poverty: Encountering the Power of Images : Designing Pro-poor Development Programmes. Ashgate Publishing, Ltd., U.K. Welytok J. G., Welytok D. S. & Grassley C. 2007. Nonprofit Law & Governance For Dummies. For Dummies, U.S. Read More