Directors need the right focus

28/05/2009 - 00:00

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A CENTRAL issue for the directors of not-for-profit organisations is overseeing a unique set of complex objectives in a sector where many lack experience.

Directors need the right focus

A CENTRAL issue for the directors of not-for-profit organisations is overseeing a unique set of complex objectives in a sector where many lack experience.

Chief executives at the WA Business News boardroom lunch agreed that achieving a balance between commerciality and delivering a needed product or service has proved difficult for some company directors making the transition to the not-for-profit sector.

Brightwater Care Group chief executive Penny Flett said a successful private sector business director could potentially derail the ambitions of a not-for-profit organisation.

"What's happened in many organisations like mine is that boards have worked very hard to get some business nous on the board, and at the end of the day those very good business people somehow never quite get it, what it is to be a not for profit," she said.

"They would drive the agendas and they'll drive the expectations beyond the point of why we're there.

"We're actually as tough as anybody else, and the quality and the calibre of what we do, and the things we can do, are just as good as the profit sector."

Good Samaritan Industries chief executive John Knowles has also found that some private sector directors fail to understand what is needed on the board of a not-for-profit business.

"I've certainly had the issue where some really bright people have left their corporate hat behind when they walk into the room because they think they're walking into a charity," he said.

"We have to pull those guys aside and let them know what's going on."

RAC chief executive Terry Agnew said board members and directors of not-for-profit groups must be able to apply unique skills to meet a complex set of objectives, while directors of a profit making enterprise tend to focus solely on the bottom line.

"When you're not for profit it's difficult to come up with a simple success measure, so then the next challenge around that is recording how you're going," he said.

"So you've got on one hand things like advocacy and doing good things for the community, while on the other [you're] running the businesses commercially while respecting the dream. There are different skill sets.

"It's not common to get people necessarily strong at both, so the frustration then, from a director's point of view, is how to get a governance model to govern that complexity.

"There are some great people who have come in and have just gone nuts because they can't handle it."

On the staffing front, there was a consensus at the boardroom lunch that the global financial crisis had assisted not-for-profit organisations to acquire and retain talent.

St John of God Healthcare chief executive Michael Stanford said the recession had resulted in a reduction in wages pressure, with a healthy percentage of casual staff and part-time staff now seeking full-time work within the industry.

Dr Flett agreed, saying the financial crisis had resulted in a greater number of qualified people applying for work at not for profits. But she cautioned this would only be temporary as the economy recovered and workers moved back into the for-profit sector.

"What's happening now is when we advertise a job, people actually apply," Dr Flett told the forum.

"That will be a welcome relief for about two years, and then we'll be right back where we started.

"It's very hard when I know that that workforce is probably going to go."

Mr Agnew said a priority for the RAC was to ensure the company was seen as a significant and worthwhile workplace.

"Our biggest challenge is that we remain differentiated in a sustainable way for our members, and the same applies to then being a relevant and attractive place for people to come and work," he said.

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