1. Structuring for Organization Change Mergers and Partnerships IAJVS Spring 2005 David B. Saltman, LCSW

2. INTRODUCTION  Will focus on three approaches for combining forces to produce what one organization, itself, can’t do  Mergers, Management Services Organization and Joint Ventures  Presentation will offer a combination of didactic and experimental material: The JCS experience

3. Some Important Assumptions  Planning and program implementation are not effectively coordinated in most Jewish communities.  The motivation and capacity to work together is not an inherent capacity in Jewish communal workers, including planners and service providers.  The courtship and marriage of Jewish communal agencies is fraught with the same pitfalls, challenges and risks as in other relationships.

4. More Important Assumptions  An environmental motivator can insure success.  Major changes in economic conditions, an inability to control changes in the environment and a failure to meet the essential needs of the community can produce an environment for positive change in cooperative capacity.  POWER IS THE NAME OF THE GAME!

5. Still More Important Assumptions  A pursuit of equity, rather than equality is what can make partnerships work.  There is something about social service agencies which limits their partnership capacity.  A lack of attention to differences in culture can destroy the best merger/joint venture efforts.

6. On the Cutting Edge rather than on the Bleeding Edge… Important Issues  Change your perception to “Change is constant and imminent” rather than just change is “stressful” and it will be over, soon.  Therefore, restructuring must be viewed as a normal activity rather than one borne of crisis or panic.  Be very clear about the vision and outcomes that you are pursuing.

7. Cutting edge…  USE A CONSULTANT!!!

8. Cutting Edge…  Don’t minimize the importance of structure. Structure has a profound influence on the behavior of people who work within it.  Basic rules of organization development: Purpose defines structure; structure breeds behavior.

9. Cutting Edge…  Consolidation Continuum (lower risk-lower cost, autonomy maintained vs. higher risk–higher cost to create, reduced autonomy) (lower risk-lower cost, autonomy maintained vs. higher risk–higher cost to create, reduced autonomy) - Joint Venture/Partnership - Joint Venture/Partnership - Management Service Organization - Merger Consolidation - Management Service Organization - Merger Consolidation

10. Joint Ventures  Undertaking of two or more organizations for accomplishment of a specific purpose.  Often time limited.  Narrowly defined.

11. Joint Ventures  Allow very flexible approach to environment = best in turbulent environments. Comparatively easy to exit.  Best start for organizations with extremely different structures.

12. Management Service Organizations  Shared administrative functions for two or more non-profits.  Affect day-to-day operations – more intimate ties than joint ventures.

13. Management Service Organizations TWO BASIC MODELS:  Created within a single organization with excess administrative capacity to share.  Partnership-limited to administrative functions. MSO is freestanding providing services to its owners and sometimes others, as well, MSO can be non-profit, as well.  Highest risk option due to sharing of mission, vision and values.

14. MANAGEMENT SERVICE ORGANIZATIONS  Reduces unit costs of services by consolidating overhead.  Functions: –Personnel management –Facilities management –Fiscal services –Fundraising – Planning – Contracts Management – Marketing – Quality Assurance

15. MERGERS  The best merger partners have something major in common with you but complementary, not your twin.  Must have a vision – a picture of the future with an implicit or explicit explanation of why people should work to achieve that outcome. It clarifies the reason for and establishes the general direction of change.

16. The QUESTIONS to ask??  What is motivating your desire to merge?  What do you expect to gain?  Can you maintain a focus on mission?  Do you have a unity of strategic purpose?  Can your leaders speak with one voice?  How solid are board-management relationships?  Are you currently in a crisis?  Do you have a history of risk taking?  Are you growth oriented?  Is either executive position open?  Do you know of other successful mergers?

17. MERGER GUIDING STEPS  Select your partners carefully.  Choose partners with whom you share a fundamental level of respect, trust and confidence (trust, trust, trust).  Involve Board members in all but the very preliminary stages of discussion.

18. MERGER GUIDING STEPS  Don’t confuse making the correct decision (to merge) with having achieved the desired outcome (a merged organization).  Merger is about ego, economics and power – as well as mission.  Create a firm timetable but be patient.  Don’t hide the merger discussion from staff or funders.  Be confident, upbeat and have a sense of humor.  HIRE A GOOD CONSULTANT!  A wonderful business plan.

19. THE GOOD MERGER CONSULTANT  Flexible personality  Firm with assertive people  Teaches negotiating skills  No stake in outcome  Availability  Confidentiality  Loyalty