Terms such as competitive advantage, markets and business, are usually associated with companies in the for-profit sector. Yet operations management is also relevant to organizations whose purpose is not primarily to earn profits. Managing the operations in an animal welfare charity, hospital, research organization or government department is essentially the same as in commercial organizations. Operations have to take the same decisions – how to produce products and services, invest in technology, contract out some of their activities, devise performance measures, and improve their operations performance and so on.
However, the strategic objectives of not-for-profit organizations may be more complex and involve a mixture of political, economic, social and environmental objectives. Because of this there may be a greater chance of operations decisions being made under conditions of conflicting objectives. So, for example, it is the operations staff in a children’s welfare department who have to face the conflict between the cost of providing extra social workers and the risk of a child not receiving adequate protection.
Need for Management Structures
The first and foremost requirement for a nonprofit is to have a board of directors who provide the high level monitoring and control. The board members can be drawn from all walks of life and must have enough experience in the social sector. Further, the members of the nonprofits should be on the board as executive members. Apart from this, the nonprofits must have internal financial controls through auditing and monitoring of the inflows and outflows of funds. This is needed both from an internal Processual perspective as well as to satisfy the requirements from the government regarding compliance with all regulatory requirements. For instance, in India, the government monitors the inflow of foreign funds into the nonprofits and hence, appropriate permissions must be taken according to the laws for nonprofits to receive money from abroad.
Management of Nonprofits
By definition, the nonprofit sector operates in the humanitarian goals and objectives space. This means that many nonprofits are loosely structured and are often volunteer driven without formal hierarchies and patterns of management. However, this does not mean that nonprofits need not have formal boards, management structures, and financial control. The point here is that though non profits are made ofcommitted individuals working for a cause,there is still a need for a corporate structure and management.
This is especially the case with those nonprofits that receive large amounts of money and handle multiple projects across the breadth of the country. Further, the fact that the government monitors the performance of the nonprofits means that there needs to be accountability and financial due diligence done periodically. Hence, there is a need for proper management and structure of the nonprofits and means of control and process driven internal environment as well.
Finally, the nonprofits need to have management structures that can be advertised to the external world as the single point of contact between the nonprofits and society lends itself to easy access to the nonprofits and helps in recruiting more volunteers for the cause.