Turning the Organizational Retirement Mindset on its Head

Posted by Matthew Thomas

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Turning the Organizational Retirement Mindset on Its Head

In a previous article, I wrote about the Organizational Retirement Mindset and defined it as organizations that spend assets (and not just income off of assets) to maintain current programs due to revenue deficits. This reinforces the mindsets that an organization’s best days are behind it and that people’s involvement and commitment to the cause (as lived out and defined by the organization) is less than it was. In many cases, this further creates a passive martyr stance and organizational depression. In the end, the lack of vision and innovation that led to the decline in income and involvement reinforce themselves.

organizational retirement mindset, matthew thomasSo what to do?

Overcoming this mindset is difficult, but leaders can take hold of several handles to climb out of the trouble:

  1. Engage the adaptive change you are facing. An adaptive change is a change that does not require a technical solution (a fix), but requires the organization to adapt and evolve to survive, thrive and grow. If you have been doing the same things (or different verses of the same song) for a while and nothing really is getting measurably better, you are probably experiencing an adaptive problem that will require an adaptive change.
  2. There are no such things as fixed costs, just difficult decisions. Programs, staffing and buildings all change with time. Changing those things intentionally is always a painful process, not to be taken lightly. Nevertheless, sometimes those decisions are necessary to make the necessary changes.
  3. Use your assets for innovation rather than maintenance of current programs. Emergencies are one thing, but long-term fiscal declines are not really emergencies in the proper sense of the word. If you see assets are required to do what you’ve always been doing, try to engage them for innovation instead. Use the asset funds to develop new stakeholders, constituencies and approaches. Do this in a long-term budgeting cycle rather than just in one fiscal year – because typically it can’t happen in that short a period of time.

There are other things that can be done, but this can get you started.

-Matthew Thomas

matthew thomas, design group international

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Topics: organizational development consulting, Matthew Thomas, organizational retirement mindset, stewardship education, Design Group International

The organizational retirement mindset and its implications

Posted by Matthew Thomas

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The Organizational Retirement Mindset and Its Implications

Since 2008, many non-profit and faith-based sector organizations have run deficits that require them to spend down their reserve funds. Even before that, many endowed organizations depended largely on funds that were donated in a previous time by a previous generation. In both cases, along the way both types of organizations became dependent on spending assets to meet their obligations (not just the income off of their invested assets). Habitually spending down assets to maintain current programs and services creates or reinforces a “retirement mindset” in these organizations.

organizational retirement mindset, matthew thomasThe retirement mindset is that the organization has worked hard to get where it is today, with great effort, sacrifice and glory. Its peak earning years are behind it, and now it has to spend its assets to maintain its daily life – its programs and services. It knows that this situation cannot last forever, but often has sufficient funds that it can last long enough for the current board not to have to deal with it immediately. This creates crisis around budget-time, but then allows a relaxed fiscal attitude the rest of the year.

This retirement mindset is fine if the organization believes that its purpose is winding down and its goals are fulfilled, and the slow “fade to black” is the best for the organization’s purpose and organizing principles. However, most organizations don’t actually believe that, even though their behaviors will lead them directly to that point.

Spending assets in order to maintain current programs often locks organizations into the mindset that their glory days are behind them, nobody is listening to them and that nobody needs them like they once did – even though they still want to be relevant and feel they should be. And in their current state, that all may be true. Nevertheless, it also reinforces the lack of vision and innovation that led to what is most likely declining income as the primary cause of the fiscal crisis, and will not prolong institutional longevity more than a few years. Much of the time, then, the people involved will re-state their purpose as being the martyrs making their last stand for the cause that no one seems to care about anymore – when, in fact, it is their own responsibility to invite, persuade and inspire people to care.

Does your organization have a retirement mindset?

-Matthew Thomas

matthew thomas, design group international

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Topics: organizational development consulting, Matthew Thomas, sustainable vision, organizational retirement mindset, Design Group International