Synopsis
The Ivey Business school foundation is set to offer barrier-free accessibility for persons with disabilities. Its Institute on Aging, located in San Francisco, has served seniors for the longest time. They elected a new Chief Executive Officer, Tom Briody, who brought forth several measures to save the foundation from bankruptcy. The CEO, Briody, made several changes in the administration and the objectives to be attained over time. Even though it is their core responsibility and purpose to care for aging people, they decided to make considerations to generate revenue. They devised ways to raise money through the foundation as they care for older people’s well-being. All the new strategies employed were to help the foundation to reach its financial targets.
The first strategy Briody implemented was consolidating services offered and pursuing geographical expansion. Consolidating services involves merging two departments or units of the institution into one (Denhardt & Denhardt, 2015). It was done to cut costs and share resources instead of acquiring similar resources for two independent departments. This consolidation was important to make room for more development departments and save funds and personnel. They fortified business development, as many people were promoted to top management. This strategy did not exist in the previous system (Sathe & Pike, 2018).
Due to the financial crisis, they reviewed the company’s expenses, such as contracts, insurance, and legalizations. They reviewed the length of their relationships with their contractors, transactions, services exchanges, insurance agreements, and the legal fees paid in a particular time frame.
These were all internal ways of saving money and cutting costs. After reviewing and implementing all possible ways of generating revenue from inside the company, they improved their relationships with their partners to implement new strategies to help them attain their financial targets. After a consultancy engagement, the leadership’s first implementation was fundraising to increase the company’s capital reserve (Andersen et al., 2018). After giving their staff motivation incentives such as rewards and coming to an inclusive decision, the management could finally control the public reactions and the company’s reputation. In addition, they raised a significant amount of revenue, which increased from US$28.7 million in 2012 to US$45.2 million in 2017 (Sathe & Pike, 2018).
In the organization’s registration process, the management has to state to the registrar if it is a profit or a non-profit entry. As the company discloses the information, it dictates how it will be run and the basis of its operation (Svara, 2015). If it is a profit entity, all the plans and management will be based on its profitability. They aim to get revenue, increase capital, and have a stable profit margin. Their operations revolve around ethical considerations because profit entities operate on the sector’s competitiveness (Anantatmula & Rad, 2018). Every profiteering company has fellow players; therefore, rules and regulations are set. The desire to dominate and be on top brings a sense of competition. If a company is a non-profit entity, it enjoys several benefits, such as tax exceptions and employee benefits, which are not offered to profiteering companies.
Therefore, in an instance where non-profit converts to a profit entity, it causes many inconveniences, such as infringing the competitiveness of the former profit entities, ruling out the former organizational culture, which causes conflicts and dysfunctions, as well as upsetting the stakeholders due to the changes taking place in the organization. The external stakeholders are likely to cut their funding (Denhardt & Denhardt, 2015).
Therefore, the organization might need more revenue. Due to this uncertainty, the management should be motivated to smoothen the operations by making the necessary changes. The management should avoid overreliance on external funding due to uncertainty (Buckley, 2022). A non-profit entity converting to a profit one causes ethical, budget, human resource, political and public service conflict.
Information Bases
Adequate information on the internal and external environment is important for the management during the transition. To manage the changes successfully, the leadership must have a wide range of information on the number of people and businesses they will be dealing with. This might include customers, stakeholders, employees, contractors, and investors. Since the organization’s primary role is to take care of the elderly, it is wise for them to regulate the number of admissions into the institution over a projected time frame (Denhardt & Denhardt, 2015). Due to the consolidation of services to make room for the transition and bankruptcy on the horizon, it is wise to reduce the number of admissions until the company finds its footing again. The management would also be required to determine the projected number of senior citizens they will most likely deal with in the short and long run.
This information aids in allocating resources and determining which will be spent in the organization till the end of the financial year. It also helps the organization determine the number of employees who will be engaged to ensure the achievement of the goals and targets (Collings et al., 2022). The organization should also study how easy or difficult the business ventures they have chosen will be. This gets rid of the uncertainty of their new business path (Sathe & Pike, 2018). The study might involve allocating resources, personnel, strategic management, business environment, and legal requirements. They must determine the feasibility of achieving their goals and set targets at the end of the final year.
The organization can get information from various sources where research is conducted. The information is further analyzed to conclude. Research can be done on the premises to analyze the internal environment and the neighboring communities to analyze the external environment. Information about demographics and related matters can be obtained through Gallup, an opinion poll that aids in predicting the feasibility of operations in the area (Hagiu & Wright, 2020).
It can also be gained from Statista, a government agency specializing in market and consumer data (Svara, 2015). The organization can gain information from Nation Master, a data source that allows one to compare nations’ demographics, including international markets. Other government sources might include NumberOf.net, Census Bureau, and Data Market.
By observing the market trends, the feasibility of the business operations is drawn from its statistics and the sector’s profitability to weigh the best preferences. The organization can also involve business experts, who might provide valuable information and critical analysis of the business via a contract of permanent company employees. They give advice and propositions which might help the management to work in the right direction, corresponding to financial aims (Denhardt & Denhardt, 2015). They might also predict market trends and culture to help the organization adjust accordingly through forecasting. They also act as counsel to any legal matters, as they advise the leadership on the right steps to take.
First-hand information can be gained through interviews, questionnaires, or surveys passed to participants to understand what people expect from the company. The informational bases can only be complete with the opinion of human resources, both the external and internal environment. It is wise to find out the community’s expectations of the company and understand its culture and demographic to adjust accordingly (Svara, 2015). It also helps maintain a proper relationship for the prosperity of the business.
Ethical Concerns
The main ethical concern is that the Institute on Aging is a non-profit company transitioning to a for-profit. Since many benefits are offered to non-profit organizations, turning them into for-profit entities will deny them these privileges (Zor, 2019). Non-profit organizations get benefits such as tax exemptions, access to grants, limited liability protection, perpetual existence, and a separate entity status (Svara, 2015). Employees get privileges like student pay loans, free housing, and other incentives that profit organizations cannot offer. Many undergraduates are more interested in working in non-profit organizations than for-profit. For-profit organizations have many obstacles and rules which discourage many employees from working there.
If the non-profit company transits to profiteering, it denies the employees these privileges and benefits, which might cause a conflict. The benefits help attract skilled graduates to work in the organization. This transition demoralizes them from working there, as it gives the organization a disadvantage in attracting skilled labor, for it officially engages in competitive exploits (Svara, 2015). The organization loses the tax relief advantage, which the authorities offer due to the nature and nobility of their work, to relieve them from the problems they go through to raise the finances to run the business (Menzel, 2019). They are forced to contend with tax obstacles, like any other profit-leaning companies.
The organization deals with aged people, who increase in number yearly due to the increasing number of senior citizens. Therefore, the amount of people who need the organization’s services is very high. As it transits to a profit-leaning company, it must allocate finances and resources to cater to them. The company has to find a way to get additional finances, which increases the number of ethical issues.
Therefore, a legal team should deal with the ethical crisis first-hand to avoid procrastination. The company has to increase or stretch the resources it uses due to the escalating number of senior citizens. The organization should expect at least 100 million aged people in the next five decades (Denhardt & Denhardt, 2015). This prediction assists the company in preparing itself enough in matters of resource allocation, human resources, profitability margin, and crisis management.
If the organization puts the necessary measures to increase finance, it can avoid bankruptcy due to using the entire profit. If the main income reserve is depleted, they shall be forced to rely on external sources of income, such as bank loans and donations, which are not consistent. This means it would be difficult to keep the company running due to a lack of resources or consistent income overflow. This means that resources will be depleted, and staff will look for employment elsewhere because the company’s output is more than the input (Sathe & Pike, 2018). Due to this financial crisis, the management might be tempted to find ways to go around the ethical rules and regulations to keep their company running. This leads to more ethical issues.
After the company becomes a profit-leaning entity, it becomes a separate entity with clear boundaries, which helps the government to handle their businesses in case of an ethical issue. The government is free to go through its books of audit exclusively. They risk prosecution in case of any misdemeanors. Therefore, the company has much to lose due to government restrictions. It handles the company as any other profit-leaning enterprise (Sathe & Pike, 2018). Another ethical issue is that individuals working in the organization might not enjoy the profits because it is directed back to the company to facilitate its operations.
Public Service Values
Public service values are precepts that assist the employees in offering services and communicating effectively with the customers who seek the company’s services. A public servant must be guided by accountability to the community, cornerstones of democracy such as freedom, equality, and citizenship, as well as humble leadership, where a leader does not serve those above them but those below (Svara, 2015).
Taking care of the aged in the Institute on Aging is public servantry, which applies and applies in many ways. First, public servants should be mindful of the underprivileged in the community. They should prioritize their well-being, which is likely a conflict of interest during the transition to a profit-leaning company. Public servants should display awareness, empathy, and responsibility toward people who look up to them.
Given the role and the duties of the servants in the foundation, the staff should understand their it is their calling since their behavior in the workplace directly or indirectly affects the well-being of the elderly in the foundation. (Sathe & Pike, 2015) In addition, principles that guide the employees in the Institute are built on proficiency, transparency, equity, accountability and responsibility, and other tenets of public interest.
Human Resource Problems
Most of the staff were not pleased with the leadership, as evidenced in the case study, which explains why they chose another Chief Executive Officer. After the election of Briody, the organization began to thrive because the employees were given a chance to grow. For instance, they were given moral incentives, as many were raised to top management in the organization. Even though choosing new management entailed changing their organizational culture, they embraced it (Denhardt & Denhardt, 2015).
The change from non-profit to for-profit disorients the former organizational culture, which forces the employee to start building another. However, the employees felt valued due to inclusivity in decision-making and management positions. This led to the improvement of the employee’s attitudes toward the new management and trust them during the transition. Human resource results are maintaining consistent communication with the employees, informing them of their goals, objectives, and targets, maintaining their trust, and listening to their insights. Another human resource problem is conflict among the employees. During the transitions, employees might have conflicting ideas about implementing various ideas. It is Upon human resource management to solve the conflict most remarkably.
Policy
The main policy in the case study is to determine whether the organization shall remain for-profit or non-profit. The main solution to this dilemma is to keep the business a separate entity to observe the privileges and responsibilities of the organization compared to others in the sector. This would help determine if the business survived in the profit-leaning sector while protecting other operations and its reputation (Svara, 2015).
Determining whether the business will continue in the profit sector will help to establish the organization’s relationship with external sectors such as government agencies, the community, and its competitors. With this method, the company will maintain its reputation, with an advantage to expansive revenue sources (O’Neill, 2019). The organization also has to figure out the amount of money that should go to the government as required from a business. All licenses should be updated on time so the organization can carry out operations without government interference.
Budget
Several factors might drive the company to bankruptcy, such as the increasing number of senior citizens. Many would need the organization’s services, which would strain the resources. Without a capital reserve of 8 million, the company might be bankrupt before the end of a financial year. Borrowing loans from institutions would only help if it led to many debts, which the organization would be forced to pay eventually. Despite large loans from lending institutions, the organization must survive by cutting costs and consolidating services. There must be another source of income (Svara, 2015). During the high season, the company must have full capital reserves to sustain all the elderly admitted to the foundation. If the organization’s financial crisis goes unsolved, it will be forced to cease its operations due to financial strain.
The main recommendations for this case, is to maintain their primary role, which is to take care of the elderly. The generation of revenue should be in another different entity, in order to keep the businesses in the right order. To avoid controversies, the management should maintain the ethical standards (Olivera et al., 2019). A business might be tempted to use unethical ways in order to be competitive, but the Institute on the Aging should observe all the rules and regulations, and use the right business strategies to maintain the competitive power.
The period between the transition from a non-profit to a for-profit is the most tempting. People have to undergo intense changes which pose well for the organization. There are reasons why a company chooses to transition to profit-leaning. Due to the Institute on Aging state of bankruptcy, the management put on strategic plans to control it. They transited to profit-leaning, which meant that they were in the competitive sector. An evaluation evidenced progress after years, which showed that the implemented plans worked, which rewarded the company with a huge profit. However, some factors cause the company to be bankrupt such as a lack of capital and an increasing amount of elderly. Regardless, the company has to find ways towards a financial solution, failure to which they shall cease to operate.
References
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