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Enterprise Organizations - a new breed?
The costs and benefits of this emerging organizational archetype in the
disability field.
Pamela Spall
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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)
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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
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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.
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Values and beliefs Systems
Structures
An Organizational Archetype
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Table 1. Two types of archetypes or footprints
EnterpriseA new breed oforganization?
Non-enterprise
Two types of archetypes or footprints
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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
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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
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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
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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.
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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
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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
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This paper will:
• Discuss the implications for the sector in terms of costs and benefits of the enterprise organizational form.
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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
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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.
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Number of years of operation
Co
un
t
30
20
10
0
Non-enterprise
Enterprise
Significant difference - enterprise and non-enterprise organizations
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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.
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Values and beliefs - significant difference between enterprise and non-enterprise
• Beliefs around consumer choice and other quality concepts
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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
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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.
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Structures and systems
Non-enterprise organizations had -
• “not implemented” or• “very little
implemented”
Enterprise organizations had -
• “mostly implemented”
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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.
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Approximate total income 1999-2000
Co
un
t20
10
0
Non-enterprise
Enterprise
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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
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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
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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
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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
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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.
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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
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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
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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
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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
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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
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Question
Whether either the enterprise or non-enterprise organization is a better model to survive in the changed
market environment?
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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
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Non-enterprise organizations require
Greater technical assistance - technology, financial management functions, performance and quality
systems
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Enterprise organizations require
Support and ideas in social entrepreneur initiatives in income
generation
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All organizations require
Increased skill building around change management and surviving
transformational change