Fire the Entire Management Team? Sometimes It’s Necessary
Sometimes, a nonprofit’s fundraising seems to go into a death spiral. Revenue isn’t just flat, it’s declining. The interventions attempted don’t work, and “big change” ideas won’t fly. Losses keep piling up no matter what senior management does to stem the bleeding. Firing the entire management team might be the only answer. Understanding why that is true could save your job.
What Nonprofits Can Learn From Sports Teams
Sports teams go through these same cycles. In the sports world, there is a clear solution. Change management; get a new coach.
My father, Jack Fulton, grew up a poor kid in Iowa during the Great Depression. His best friend was a guy named Bill Fitch. Bill lived on his block and was in the same class in school with Dad since starting kindergarten. Sports was the ticket out of poverty for both of them.
They played baseball and basketball together in Cedar Rapids, Iowa through high school and college. Dad was the pitcher; Bill was the catcher. Dad was the center; Bill was the point guard. They were both inducted into the Coe College Athletics Hall of Fame—Dad in 1991; Bill in 1998.
Bill went on to coach in the NBA. He was known as a “turnaround artist,” a guy who struggling franchises brought in when times were tough. He coached five teams during his NBA career, including the 1981 NBA Champion Boston Celtics with Larry Bird. He was twice named NBA Coach of the Year. His typical tenure with a team was four years; he would do what he could to make them better, then move on to another needy NBA city.
Nonprofits can learn from the sports world. There are times when a management team can’t seem to find its way out of a ditch. What is it that keeps seasoned executives from finding solutions? Why is it tough for people to be “turnaround artists” for their own organizations?
When you are in a job for a while, you tend to become conservative; you avoid taking too many risks. If you were playing basketball, it would be called “playing to keep from losing.” Behavioral economists would say you are suffering from “loss aversion.” Loss aversion was first identified by the renowned psychologists Amos Tversky and Daniel Kahneman.
Loss aversion is a simple idea, which has profound consequences. It turns out that people prefer avoiding losses to acquiring gains. For example, it’s better not to lose $5 than it is to find $5. How much better? The pain of losing $5 is about twice the pleasure of gaining $5. Said another way, losses are twice as powerful, psychologically, as gains. That tends to make people really, really cautious. Not what you need when you are struggling to break out of a slump. Not what you need when you have to innovate your way out of a crisis.
Status Quo Bias
There is one other cognitive bias that psychologists know makes change difficult, the “status quo bias.” The status quo bias is just what it sounds like, the tendency to resist change and prefer the current state of affairs. It happens all the time, with all kinds of decisions.
Remember “New Coke”? In the mid 1980s, Coca-Cola introduced a “new” Coke recipe that had a sweeter taste. People doing blind taste tests of the old and new recipes preferred New Coke to Coke Classic. However, even though people preferred the taste of the new recipe, Coke Classic continued to outsell New Coke—three to one. The status quo bias led people to stick with what they were accustomed to.
We regularly see national organizations struggle with declining revenue from their programs. Money is spent on consultants for recommendations. Staff is brought in for Task Forces. Brainstorm sessions abound. But nothing substantive changes. Simply put, the team (unconsciously) would rather lose more revenue than risk a big change. The old team is reluctant to change unless they believe that the gain will produce much more—like, 200 percent more—than what they might lose.
Starting to see why a turnaround specialist needs to come from the outside? Someone brought in from the outside isn’t going to suffer from these biases. They are less concerned with the potential for losses, because they aren’t the one who built up the bank. They aren’t affected by the need to preserve the status quo, because they haven’t been around to experience the status quo. They’ve never tasted the Coke Classic served up at your organization.
We’ve all heard the expression “change for change’s sake doesn’t always equal progress.” But there are times when calling in a Bill Fitch is the smartest thing to do. Sometimes changing the coach is the best way to turn around the team.
Katrina VanHuss and Otis Fulton have written a new book, Dollar Dash, on the psychology of peer-to-peer fundraising. Click here to download the first chapter, courtesy of NonProfit PRO!
Otis Fulton, Ph.D., spent most of his career in the education industry, working at the psychometric research and development firm MetaMetrics Inc., Pearson Education and others. Since 2013, he has focused on the nonprofit sector, applying psychology to fundraising and donor behavior at Turnkey. He is the co-author of the 2017 book, ”Dollar Dash: The Behavioral Economics of Peer-to-Peer Fundraising” and is a frequent speaker at national nonprofit conferences. With Katrina VanHuss, he co-authors a blog at NonProfit PRO, “Peeling the Onion,” on the intersection of psychology and philanthropy.
Otis is a much-sought-after copywriter for nonprofit fundraising messages. He has written campaigns for UNICEF, St. Jude’s Children’s Research Hospital, March of Dimes, Susan G. Komen, the USO and dozens of other organizations. He has a Ph.D. in social psychology from Virginia Commonwealth University and a Bachelor of Arts from the University of Virginia, where he also played on UVA’s first ACC champion basketball team.
Katrina VanHuss has helped national nonprofits raise funds and friends since 1989 when she founded Turnkey. Her client’s successes and her dedication to research have made her a sought-after speaker, presenting at national conferences for Blackbaud, Peer to Peer Professional Forum, Nonprofit PRO, The Need Help Foundation and her clients’ national meetings. The firm’s work is underpinned by the study and application of behavioral economics and social psychology. Turnkey provides project engagements, coaching, counsel and staffing to nonprofits seeking to improve revenue or create new revenue. Her work extends into organizational alignment efforts and executive coaching.
Katrina also regularly shares her wit and business experiences on her and Otis Fulton's NonProfit PRO blog “Peeling the Onion.” When not writing or researching, Katrina likes to make things — furniture from reclaimed wood, new gardens, food with no recipe. Katrina’s favorite Saturday is spent cleaning out the garage, mowing the grass, making something new, all while listening to loud music by now-deceased black women, throwing in a few sets on the weight bench off and on, then collapsing on the couch with her husband Otis to gang-watch new Netflix series whilst drinking sauvignon blanc.
Katrina grew up on a Virginia beef cattle and tobacco farm with her three brothers. She is accordingly skilled in hand to hand combat and witty repartee — skills gained at the expense of her brothers. Katrina’s claim to fame is having made it to the “American Gladiator” Richmond competition as a finalist in her late 20s, progressing in the competition until a strangely large blonde woman knocked her off a pedestal with an oversized pain-inducing Q-tip. Katrina’s mantra for life is “Be nice. Do good. Embrace embarrassment.” Clearly she’s got No. 3 down.