Signs of Organizations in Decline

We’ve all heard stories about frogs being dumped in boiling water, and jumping right out and saving themselves, while frogs dumped in lukewarm water that is turned up slowly don’t notice the change in temperature until it’s too late. By the time they realize they’re in boiling water, they are too weak to jump out, and they cook to death. Whether this is true or an urban legend, this is a great analogy for a number of organizations that started off strong, but somehow lost their footing, going headlong into a state of decline. The sad part is, if you talk to the organizational leaders, they may not even realize they are in a state of decline until significant damage is done.   They often mistake “busyness” and activity for momentum and impact. Sometimes they recover, and sometimes they don’t.

There are many reasons organizations lose momentum along the way, including lack of a shared vision, lack of capacity, and the list goes on. Regardless of the reasons, all roads lead to leadership challenges. Outlined below is a list of some common symptoms of organizations in decline.

Deviation from core values.

We’ve all been a part of organizations that have a set of core values on display in their offices, on their websites, etcetera. That is wonderful. However, core values are only as good as the willingness of the organization to adhere to them.

People in organizations in which leaders fail to adhere to their own stated core values soon become disillusioned, and lose motivation to contribute to the organization’s growth. They do the bare minimum to keep from being fired or asked to resign from a volunteer position. Rank and file members get a sense that the leaders lack sincerity, and begin to lose confidence. Once leaders lose confidence of rank and file members, it is very difficult to regain it. People who were attracted to the stated core values often leave organizations when they see that the organization’s culture is one of “do as I say”, but the leaders don’t “walk the walk.”

Lack of Transparency

Decision-making in organizations in decline is usually less transparent than in organizations with forward momentum. Generally speaking, leaders of organizations in decline do not engage in shared decision-making beyond a very small group. Leaders tend to report the decisions that have been made after the decisions have been made, without soliciting authentic input and engagement from the rank and file. Members on the periphery are left to wonder how the decisions have been made and why. Although the leaders may have the best of intentions for the organization, people who are left out of the decision loop tend to feel left out and de-valued. People who feel de-valued don’t stay with organizations very long.

Insular Thinking

Groups on the decline tend to have leaders who come from the same background, “circle” of friends and colleagues etc. Leadership groups that are homogeneous in nature tend to foster similar thinking, maintain the status quo, and engage in “group think.” Group members tend to go along with decisions they don’t agree with, just to get along, even when the decisions are less than optimal for the organization, unethical or unfair. When leaders are not open to new ideas or input from others, they repel innovative thinkers and the ideas and resources they bring. Organizations cannot evolve and go to the next level if the leadership is not open to change.

Failure to Attract New Resources

Declining organizations fail to attract new resources. This includes new blood in terms of new employees and volunteers; new funding sources and new in-kind donations. Sometimes having a constant flow of resources can give a false sense of security. As anyone in the nonprofit arena knows, funders can be fickle, and it is wise to diversify funding sources as well as income generation strategies. The inability to attract new volunteers, funding sources, highly skilled employees and board members is a very strong sign that the organization is in trouble. In fact, it is not unusual for organizations in decline to consistently run financial deficits and experience high turnover in employees, leadership and board members.

Failure to Change With the Environment

Declining organizations sometimes get so caught up in their missions that they confuse the mission with the strategies for achieving the mission. They continue to fulfill their missions using outdated programs and strategies that are no longer relevant. Or, they may continue with the same mission when it has become apparent that their current mission is obsolete, rendering their organizations irrelevant in the current environment.

Mission Creep

While it is dangerous to not adapt to the current environment, it is equally dangerous for organizations to “go any way the wind blows.” Declining organizations are tempted more than most, to “follow the money”, and adapt their programs and services to fit the funders’ priorities, rather than developing their own priorities and finding funders with whom they have shared values and goals. Over time, if the organizations are not careful, they will have drifted from their original mission and intent.

Declining Influence

Organizations in decline will also experience a decline in influence, as evidenced by reduction in attendance levels at community events, public meetings and fundraisers. They will probably be not be viewed as thought leaders or “go to” organizations when it comes to shaping public policy, developing news stories or championing new initiatives pushed by elected officials and foundations.

Declining Engagement of Board Members and Advisory Committee Members

Organizations on the decline experience lower engagement of board members and advisory committee members.  This includes erratic attendance at board meetings and committee meetings.  In the worst cases, attendance is so low that there is no quorum, and business can not be transacted.  This is particularly dangerous when the business at hand involves financial and/or legal matters.

Organizations on the decline often have board members who do not make donations to the organization or participate in fundraisers or other organizational activities and events.  Essentially, they are members in name only, which is a disservice to the organization and themselves. Dis-engaged board members repel funders.

Lack of Self-Determination

Organizations on the decline tend to be unduly influenced by outside forces, including funders, elected officials or other stakeholders with power. I call these “shadow board members.”  It is not unusual for shadow board members to exercise more power than the board members, who are ultimately legally responsible for the organization. A healthy organization will have engaged board members who understand their roles and responsibilities, and will make sure the organization remains focused. They will take advice from external stakeholders, but will not let them control the organization.

What Are Your Thoughts?

These are some of the signs of organizations on the decline that I have observed over the years. I’d be interested in hearing some of your experiences as well. Feel free to comment below.

About the Author

Valerie F. Leonard is an expert in community and organizational development with a mission of strengthening the capacity of organizations to make a positive impact on the communities they serve through technical assistance, specialized workshops, resource and organizational development and project management. She is the host of Nonprofit “U” blog radio talk show and teaches online courses in nonprofit management with the University of Illinois Certificate in Nonprofit Management Program. Valerie has a bachelor of arts degree in economics from Spelman College, and a master of management degree in finance and marketing from the Kellogg Graduate School of Management.

Leave a Reply

Your email address will not be published. Required fields are marked *