Background
The paper focuses on the analysis of central issues that Samaritans, a charity organization in the UK and Ireland, face. Samaritans is the only 24/7 suicide prevention charity in the region that works in over 200 locations (Samaritans, 2022a). Three models were used to analyze the organization, including SWOT analysis, PEST analysis, and McKinsey 7-S framework.
Additionally, the labour process theory was used to achieve the purpose of the study. While the utilized models have their drawbacks, using them together helped to mitigate their limitations. This paper demonstrates the two central issues the organization faces, including growing demand due to the COVID-19 pandemic, the cost-of-life crisis, and insufficient diversification of income streams.
Presentation of Data
Samaritans is a third-sector organization (TSO) working across the UK and Ireland (Samaritans, 2022a). It is the only 24/7 regional suicide prevention organization operating across more than 200 sites (Samaritans, 2022a). The organization provides services with the help of more than 300 employees and around 22,000 volunteers all over the UK and Ireland who work together to reduce suicide (Samaritans, 2022a). The organization maintains a suicide prevention helpline, provides support through emails and messengers, provides tools and training to help people cope with their problems, and provides face-to-face support to the communities, prisons, festivals, and events (Samaritans, 2022b).
The organization has a complicated governing structure that ensures effective decision-making and strategy implementation. The central governing body is the Board of Trustees, which consists of 15 members who are also directors (Samaritans, 2022b). The Board meets four times a year and is advised by the regional councils on key policy issues affecting the 14 regional branches of the organization (Samaritans, 2022b).
The Regional Councils also meet once a year as the Council of Samaritans, and the Board of Trustees reports to this council (Samaritans, 2022b). The Board is responsible for developing and implementing the overall strategy (Samaritans, 2022b). The CEO, with an executive leadership team and the staff team, helps the Board implement the strategy (Samaritans, 2022b). The governing scheme is summarised in Figure 1 below.
The company reported a significant growth in the number of full-time employees after the COVID-19 pandemic. During the first year of the pandemic, the suicide rates did not increase significantly, and Samaritans decreased the number of employees due to the restrictions (John et al., 2020; Samaritans, 2022a). At the same time, the number of lengthy support calls to the Samaritans hotline increased due to the absence of face-to-face services (Turkington et al.,2021). After the restrictions were lifted in 2021, face-to-face support could restart, and the company started to expand its operations (Samaritans, 2022a). As a result, the number of employees increased by 25% in just one year, the largest growth during the past 11 years, as demonstrated in Figure 2 below.
Samaritans faced a significant problem of the unprecedented demand for services due to COVID-19 and the growing cost of living crisis (Tabassum, 2022). As a result, many charities found it challenging to stay sustainable financially (Tabassum, 2022). Samaritans managed to improve its financial position despite low diversification of the revenue streams, which is one of the crucial factors for TSOs to remain financially sustainable (Green et al., 2021). The trends in revenues during the past 11 years are presented in Figure 3.
The organization’s income streams in 2022 were diversified as follows. The largest portion of 44% of all income was associated with donations, while 22% of all income was attributed to grants from the government (Samaritans, 2022b). A total of 29% were acquired from legacies, partnerships, and other income (Samaritans, 2022b). The charity sector relied less on donations, with only 30% of income attributed to donations and 40% attributed to diverse charitable activities (Charity Commission of England and Wales, 2023). Thus, income diversification may be a significant issue for the organization in the future.
The organization has demonstrated outstanding performance in terms of net profit margin, which is a crucial indicator of governance efficiency (Delen, Kuzey, and Uyar, 2013). Samaritans use the aggregated profits as reserves, according to the organization’s reserve rule (Samaritans, 2022b). According to the organization’s policy, the organization needs to hold reserves of four to twelve months of general expenditures (Samaritans, 2022b). This implies the organization is expected to have between £7.3 million and £21.8 million, respectively, to support its operations in case of disruptions of income inflow (Samaritans, 2022b). The trend in net profit margins is provided in Figure 5.
High reserves allow the organization to have high liquidity, which is of extreme importance for its financial sustainability. For instance, Bhunia (2013) stated that liquidity has a significant positive impact on profitability. Additionally, Ryan and Irvine (2012) stated that liquidity is a crucial measure of a company’s financial sustainability and resilience. The fluctuations in the company’s liquidity are captured in Figure 6 below.
Presentation of Models and Theories
SWOT Analysis
SWOT analysis is a widely used methodology for strategic and situational analysis in numerous contexts that assesses four types of factors affecting the business, including strengths, weaknesses, opportunities, and threats (Gurl, 2017). Recent studies demonstrate that SWOT analysis is successfully being used in numerous industries, such as general management, education, marketing, social media, healthcare, and agriculture (Benzaghta et al., 2021).
Gurl (2017) states that SWOT analysis can be used in other industries, such as IT, transport, manufacturing, oil and gas, and fertilizer business. In other words, it may be stated that the framework can be used in almost any industry. However, it may have limited efficiency as it requires significant experience of managers to be used effectively (Benzaghta et al., 2021).
The SWOT framework is beneficial for making strategic and situational decisions based on qualitative and quantitative data. SWOT analysis helps to identify the crucial resources and capabilities of a company and juxtapose them with the current external environment (Gurl, 2017). Leigh (2009) states that SWOT analysis is an easy-to-use method that can be used for both strategic and situational analysis that enhances decision-making.
In simple words, the framework helps to understand and use a company’s strengths, capitalize on opportunities, deter threats, and address weaknesses. However, the analysis does not directly provide strategies for mitigating risks; instead, it acknowledges them without further recommendations (Leigh, 2009). Additionally, the method can generate too much unstructured information, which may lead to confusion (Leigh, 2009).
Even though the approach can generate valuable insights, it does not prioritize issues or quantify their impact, which makes the approach partially worthwhile (Leigh, 2009). Nevertheless, despite its distinct drawbacks, numerous organizations around the globe use the framework to improve the decision-making process.
PEST Analysis
PEST analysis is a widely appreciated tool used in a wide variety of industries, including biofuels, energy markets, the agricultural sector, and retailing (Achinas et al., 2019). The method helps to gain a macro view of an industry by assessing its political, economic, social, and technological factors (Rastogi & Trivedi, 2016). The advantages of the method include simplicity, facilitation of understanding of the environment, encouragement of strategic thinking, and helping to spot strategic opportunities (Rastogi & Trivedi, 2016).
However, the method is highly dependent on the accuracy of input data, which may be difficult to acquire (Nandonde, 2019). Additionally, the actions should follow the analysis immediately, as the charity sector is highly uncertain (Tabassum, 2022). Thus, PEST analysis of an organization should be conducted frequently to ensure its relevancy.
McKinsey 7-S Framework
McKinsey 7-S model (see Figure 7 below) helps to determine if the seven key internal elements of an organization align to be successful. The seven elements include three complex components that are easy to influence, including strategy, structure, and systems, and four soft elements, which are difficult to influence, including shared values, skills, styles, and staff (Cox, Pinfield, and Rutter, 2019).
The model is known to help identify internal issues within the organization and find strategies for improving the current situation (Mind Tools, no date). The model helps analyze opportunities for change initiatives, as it supplies the directors with opportunities to plan how different elements should be aligned (Mind Tools, no date).
Change managers use the model to create a seven-by-seven matrix of the elements of the current situation and a seven-by-seven matrix of the desired situation and plan the change from the current to the desired state (Mind Tools, no date). However, the major limitation of the model is that it does not show the connection of the internal elements to the external aspects (Cox, Pinfield, and Rutter, 2019). Thus, it is best to use the model in tandem with PEST or SWOT analysis.
Labor Process Theory
The labor process theory (LPT) is a theory inspired by Marx that describes how labor is objectified into the value of use (Adler, 2007). The theory demonstrates that in a capitalist society, the employees maximize profits by increasing the surplus between the labor cost and the selling value through the reduction of wages and strict control over the process (Adler, 2007). Workers who want to improve their material condition will generate a surplus in value (Adler, 2007).
The critics of the model state that LPT is an overly simplistic way to explain value creation (Gandini, 2019). However, despite the criticism, there is evidence that LPT can be used to explore the digital revolution and the transformations of the workplace (Gandini, 2019). Thus, LPT can be applied to the analysis of Samaritans as well.
Discussion
The purpose of this section is to determine the key issues Samaritans face using the provided data combined with the model and theories discussed above. It is beneficial to focus on SWOT analysis, as it describes both internal and external environments (Leigh, 2009). A summary of the SWOT analysis is provided in the Table below.
Table 1. Brief SWOT analysis
Table 2 below provides a brief PEST analysis.
Table 2. Brief PEST analysis
First, it is beneficial to look at the possible threats Samaritans may face in the near future. According to Tabassum (2022), the rapidly growing cost of living and the pandemic increased the demand for charity services. During the COVID-19 pandemic, the number of helpline calls increased significantly (Turkington, 2021). Since Samaritans is the only 24-hour suicide prevention helpline in the UK and Ireland, it may be unable to fulfill the growing need for services.
Even though Samaritans (2022b) sees the growing demand for services as an opportunity for growth, it is also a threat to the company’s sustainability. However, increased demand may be an opportunity for growth only if the company manages to stay financially sustainable and attract enough volunteers to provide services. In 2021, the company faced almost a 200% increase in the number of complaints about the quality of services (Samaritans, 2022b). Thus, both PEST and SWOT analyses demonstrate that one of the central strategic issues Samaritans are facing is the growth of demand for different reasons.
Second, it is crucial to look at the internal weaknesses of the organization. The first identified weakness was poorly diversified income streams. Indeed, Samaritans reported to be dependent on income from donations by 44% (Samaritans, 2022b). According to Green et al. (2021), charity organizations can remain sustainable only if they have diversified revenue streams.
Without diversification in the revenue streams, organizations may find it challenging to withstand the difficulties associated with the external environment (Green et al., 2021). One may argue that the company demonstrated a significant rise in revenues in 2021, even without highly diversified revenue streams, as demonstrated in Figure 3. However, in 2022, the profits were negative, which indicates that the organization may still experience financial instability (Samaritans, 2022b).
The second identified weakness was increased reliance on volunteers. Samaritans rely on around 22,000 volunteers, while there are only around 300 full-time and part-time employees (Samaritans, 2022a). According to LPT, this may be a significant threat as the workers are unable to improve their financial position by working for Samaritans (Adler, 2007).
The growing cost-of-living crisis may cause volunteers to stop their association with Samaritans and seek jobs that can pay their expenses. However, according to the McKinsey 7-S model, increased reliance on volunteers is in accord with shared values (Samaritans, 2022a). Moreover, vulnerability is addressed through a strong governing system that promotes shared values, which glue the organization together. Thus, increased reliance on volunteers is not a significant issue that should be addressed.
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