Something amazing occurs when I talk with some leaders of nonprofit organizations about their financial management, particularly when their staff is unionized. They suddenly become quite proprietary about information, believing that since decisions about salaries, budgets and how to balance the books are the appropriate responsibilities of management, confidentiality demands that this information not be shared with staff. What is remarkable is that this belief co-exists with management styles in other areas of their organizational life that are far more open.
For example, these same leaders absolutely believe that their staff are committed to the mission of the organization no less than upper management. They trust that staff put client needs ahead of their own comfort. They recognize that virtually all of the people working for them could make more money in other jobs or in the private sector. Moreover, they are proud of these realities. When they talk at conferences, make pitches to foundations, and disseminate the organization’s written material they take pains to extol the collaborative working environment and the passion and compassion that staff at all levels of the organization have for clients.
Yet when it comes to talking about salaries and budgets these same leaders treat their staff as if, at best, they are incompetent to make financial decisions and, at worst, they would raid the treasury if given license to do so. Why does this happen so often, and how can we help change the mind-set that permits it? I have a few insights about the matter, derived from my own experiences leading a large nonprofit. I believe that in the end the solution to these issues lies in common-sense approaches to the world that are accessible to everyone.
In 1994 I became the executive director and attorney-in-chief of the Legal Aid Society in New York City. Legal Aid is the country’s oldest and largest private, nonprofit law firm. Nearly 800 lawyers and a similar number of support staff provide services to the indigent of New York in nearly 300,000 cases a year. The cases involve criminal, juvenile, family and criminal law. Our annual budget is over $130 million. The Society has two unions, one for the lawyers, and one for support staff.
Before I came on staff, the board of directors had always used a management-side lawyer from one of New York’s largest law firms to negotiate its contracts. I was hired just after the breakdown in negotiations with the lawyers’ union led to a disastrous strike that left management, the board and staff deeply divided. In addition, the Mayor used the strike as an excuse for rescinding all city contracts with the organization, reinstating them weeks later with a $16 million budget cut. Upon my taking the job, one friend remarked that it was as if I had run into a theater after someone yelled fire. What I did next was born of desperation, buttressed by the reality that I could not solve this crisis myself.
Working primarily with my chief of staff, an extraordinary woman with a law degree whose experience was in human resources, I gathered representatives of every part of the organization, including delegates from both unions, exempt employees and middle and upper management and put them into the largest room in our building. The things I said that day were simple, but they became a mantra for our subsequent meetings. I thanked them for coming to the meeting and told them that decisions about how to restructure and absorb the budget cuts had to be made quickly, for each day that we didn’t implement a plan meant double the cuts the next day. I said that I could make the decisions without them but that I believed that we would make better decisions if we made them together.
I proposed a deal. First, they could walk out of the process at any time, even leave in the middle of a meeting if they wished. Second, I would never say that we had agreed upon a course of action or reached a consensus except with their permission. This would reserve their right not to be seen as complicit in decisions with which they disagreed. Third, information to make such decisions would be widely shared, including all financial and budget information. Since cuts were inevitable, they should see where the money was going so we could then prioritize where it should remain. In exchange, I asked one thing: that although they brought different valuable perspectives to the table, they should struggle to reach conclusions that were acceptable to all parts of the organization, not only their own constituency. I reiterated the belief that we all cared about clients first and foremost, and if we used this as our touchstone and as a filter by which we evaluated proposals, we would reach a consensus.
Management opened the books for the first time in the organization’s history. The unions hired accountants to review the numbers. This revealed that while most of the resources were spent quite reasonably, cuts could be made in certain areas without great harm to the program, and everyone quickly agreed upon these cuts. Other accommodations were more difficult-but the details don’t really matter. What became clear over the next several weeks was that everyone was more reasonable than they were reputed to be when information was shared openly and honestly and when their opinions were treated with respect. Of course some members of the committee acted out on occasion-but more often than not, the group as a whole reined in their behavior. Genuine leadership emerged in astonishing places, not always correlated to hierarchical job titles. In the end we did achieve a consensus, one that led to further exercises in shared decision-making in other areas.
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The lessons are obvious, in part because leaders use the techniques of shared decision-making all the time when money is not involved. First, staff are the people who do the work; they are not your enemy. That they have formed a union or otherwise speak as a group does not change that truth. Indeed, from a management perspective there are even benefits that flow from a unionized workplace. You know with whom you have to consult on important issues. In my organization, this means I don’t have to guess the sentiments of hundreds of lawyers (many of whom are attracted to legal aid work because they are anti-authority). There is a recognized structure of union leadership that speaks for its members. In addition, the support of the parent unions in lobbying and other political activity is invaluable, and that support is more easily obtained when management is respected.
Second, better decisions are made when you involve smart people who understand the organization in different ways. Notice that this is not merely about process. It is not only that people feel better about decisions if they have a role in them, or that they will more readily buy into those decisions, although both are undoubtedly true. More important, the quality of the decisions that are made will be better because of the collaboration, and any leader should welcome that.
Third, good financial decisions made in a time of crisis have spillover effect later. Today, we no longer have outside counsel bargain with our unions. An in-house committee made up of human resource people and division leaders handles contract negotiations for management. Discussions are continuous, with open books showing how much money is available and committees evaluating what the priorities-including wages-really are. There have been four contracts signed since 1994, without strike talk. Little wonder. You don’t have to be a genius to realize that a lawyer who worked for one-third the pay she could get in a private law firm was not motivated by money in her job setting. And in contract negotiations, she was capable of doing the arithmetic to realize that a one or two percent difference in a contract offer would be eaten up the first day of a strike. Yet Legal Aid lawyers had struck several times over the past twenty years. Clearly, strikes were more about the demand for respect than about money.
Finally, keep your eye on clients. It is astonishing how many bad ideas are abandoned when tested against whether clients will benefit from them. That, in the end, is one of the great rewards of working in the nonprofit sector.
Make no mistake; I am not Mary Poppins. Problems don’t simply disappear and grievances about decisions continue to exist. I have no doubt, however, that these are fewer and less divisive because information is readily shared, including–maybe especially–financial data. The year 2001 marks the 125th anniversary of Legal Aid. Despite the difficult times the organization and our clients face, we know we will be here long after our political adversaries are asterisks in history. The fact that we are more united than ever before because all of the staff has a role in decision-making is essential to that belief.
Daniel Greenberg is president and attorney-in-chief of the Legal Aid Society of New York. Prior to that he was director of clinical programs at Harvard Law School. A long-time advocate of legal services for the poor, he spent 16 years as an attorney with MFY Legal Services on New York’s Lower East Side before going to Harvard in 1987.