Action Planning - Building Resilience by Tim Waldron

Build Resilience by Tim Waldron, Director of Management Consultancy at Action Planning

Knowledge is power, wisdom is more precious than rubies and hindsight is a wonderful thing! I’ve spoken to many wise and knowledgeable people responsible for leading and advising charities and not-for-profit organisations over the last few months – chairs, treasurers, CEOs, accountants, investment bankers and lawyers - and without exception they’ve all been shaken by their inability to see what was lurking around the corner. Not one of them predicted the impact that the collapse of an Icelandic bank (that most of us had never heard of) would have on the sector. If anyone tells you they did, ask to see their balance sheet.

The reality is that we are now sailing unchartered economic waters. During Prime Minister’s Questions in the Commons Gordon Brown took our contemplation beyond recession to depression – a slip of the tongue perhaps, but a fair indication that even the most farsighted don’t really know where we’re heading. However, in the midst of all the turmoil, some predictable trends are emerging. This week the Charity Commission released the results of its research into the relationship between charities and their beneficiaries. The study, entitled A Balancing Act: new perspectives on the charity/beneficiary relationship, identifies that demand for charities’ services is increasing. As reported in Third Sector magazine, the survey of more than 2,000 organisations found that demand from beneficiaries exceeds supply for 35 per cent of all charities and 60 per cent of large charities.

The ability of many charities to respond to this rise in demand is hampered by the fall in income receipts from investments. Many trustees feel helpless as they watch share prices tumble and high street names disappear, resigned to dramatically lower returns for the time being in the hope that the value of investments and dividends will bounce back at some indefinable point in the future.

Whilst the outlook may look as bleak as a snowbound M25 just now, I strongly believe that the third sector will emerge from recession stronger than when we went into it. I say this on the basis of precedent. Cast your mind back to previous crises resulting from corporate excesses. The collapse of Enron, Parmalat and WorldCom and the consequent evaporation of jobs and pensions across the US caused worldwide alarm about corporate governance, which prompted cross-sector regulatory responses - the effects of which are now becoming apparent in strengthened charity governance. Last week Baker Tilly, the country’s largest charity auditor, released the findings of its Voluntary Sector Governance Survey 2008. The survey indicates that "governance within the voluntary sector has undoubtedly improved since this research was first carried out in 2000". it also highlights continuing failings:

The demand for strong financial management has never been stronger in the sector than it is today. This is the first of ten fundamental priorities set down in a guide written by CFDG, the Institute of Fundraising and PriceWaterhouseCoopers – Managing in a Downturn. Instructing trustees to "take a closer look", we are urged to:

The second fundamental priority challenges us to "act decisively" with a clear call for strong leadership:

'With increased uncertainty and volatility it is important to take tough decisions early. Don’t sit back and wait; the winners will be those who position themselves to take advantage of the upturn'.

If we are to emerge stronger, now is the time for strong leadership. John F. Kennedy observed that "leadership and learning are indispensible to each other". Coaching is now part of the modus operandi of corporate leadership, and it is fast becoming recognised as being essential to the development of strong third sector leaders. Executive coaching helps charity executives and non-executives to build on their strengths and bring fresh thinking to difficult challenges and circumstances. It can also accelerate the development of intangible qualities that distinguish true leaders – the capacity to develop and express vision, to think strategically, to inspire others and to build support within and outside their organisation.

As we headed into recession the Chinese curse - may you live in interesting times – was quoted by many commentators. The origins of the curse probably lie in the Chinese proverb, which is more accurately translated as the times produce their heroes. This proverb leads us back to a final fundamental principle of managing in a downturn: 'identify key talent and develop appropriate incentives for them – retaining and motivating the best people is critical to your future'. That’s how these times will produce our sector’s heroes.

For more information please go to http://www.actionplanning.co.uk/buildingresilience/