Peter Drucker in his book, Managing the Non-Profit Organization: Practices and Principles, mentions that the aim of the Salvation Army (SA) is to “make citizens out of rejected” (Drucker 2001, p. 3). Analyzing the internal environment of a nonprofit organization is essential to understand its external effectiveness (Courtney 2002). A nonprofit organization aims to bring about changes in society. Therefore, for this kind of organization, the mission must be clear. Courtney points out that for a nonprofit organization “good intentions” are all the mission an organization has and strategy acts as a “bulldozer” (2002, p. 45).
The case study showed that Salvation Army was doing good work and doing it well in its targeted area. However, the question that arose was how to do it better? This is the question, as suggested by Courtney, is faced by most organizations. In the case of the Salvation Army, the growth of the organization has been exceptionally good. The questions are four in number. First, with increasing size, the number of stakeholders has also increased for the organization. SA now faces the problem of incorporating them and maintaining their interests as well as attains its goals. The second issue that emerges is that of organizing its strategic vision to meet its goals. This third issue is related to the implementation of strategic management in the operations of SA and its implication upon its growth. And the fourth issue that arises is sustaining growth and ensuring future success.
The questions posed show that Salvation Army has grown too big for its management to control it properly. What is required is proper strategic operational management which would help the organization attain its goals. This essay is a case study analysis of the Salvation Army. The essay will aim to provide a strategic analysis of the present predicaments of the organization and provide recommendations for the future to solve the above-mentioned problems. The next section will provide a brief background of SA, after which the questions related to the case will be analyzed and solved and then recommendations will be provided.
Salvation Army is a Christian nonprofit organization founded in 1865 in London. The main aim of the organization is to provide support and help globally to people suffering from natural disasters or social conditions or war or terror struck areas. It is one of the most diverse social service providers. The other mission of the organization is to preach the teachings of the Bible and convert people to Christianity. However, the social welfare that it provides is for all irrespective of caste, race, color, sex, or age.
One of the main features of the structure is its quasi-military structure. Presently the organization operates in 111 countries and in 175 different languages. Even though the organization has grown steadily over the years, it is facing problems in the twenty-first century due to increasing demand for its services and fewer volunteers as many generation nexters do not believe in the mission of the organization.
Another predicament that has been faced by SA is its constant growth. It began in the UK and today it is a global organization. Initially, the growth of soldiers has been mostly in developed countries. The army works in countries where it receives legal recognition. Further, the organization has specific legislation which is not similar to other nonprofit organizations. The organization though has not always been welcomed by governmental bodies, usually works in countries where it receives legal sanction.
Salvation Army is a quasi-military organization, which has a hierarchical organizational structure. It has a top-down approach. However, internally all the regional operations are autonomous from the rule of the headquarters in the UK. This is a problem of the organization in order of governance of the whole organization.
The original focus of the Salvation Army was on poverty-related issues and to preach for the prohibition of alcohol and gambling. However, the mission of the organization today is too varied, which aims to provide social welfare to all who are in distress, poverty and homeless. It provides food and shelter for the homeless. Health facilities for the poor. It also serves and provides medical aid in disturbed areas.
Managing SA’s Stakeholders
Growth has made the scope and reach of the organization further than it should be. In doing an internal review, various methods are employed by nonprofit organizations. One of these is stakeholder theory. Stakeholder theory is one of the most powerful tools that can be applied in the case of internal analysis for nonprofit organizations is stakeholder theory (Courtney 2002).
Further, for initiation of the strategic planning process, it is essential to identify (1) the key decision-makers and (2) the individuals, groups, units, or organizations who are involved in the process of doing the planning. Therefore, according to Herman, a stakeholder analysis is essential in order to initiate a strategic planning process (Bryson 2005). Herman points out that the key success of a nonprofit organization is in the satisfaction of its stakeholders. Therefore, a stakeholder analysis is a process through which the organizational decision-makers can immerse themselves in the politics and networks surrounding the organization. Thus, by learning about the relations between the stakeholders, it is possible to learn about the strategic issues and plan accordingly. Therefore, before doing any further internal analysis, it is important to a stakeholder analysis, which will help us to identify the strategies required for the organization.
A stakeholder theory identifies those who affect the organization’s decision-making or are the ones affected by these decisions. Stakeholders may be anybody – individuals, groups, units, or organizations. Usually, the stakeholders have a stake in the decisions and actions of the organization or the actions, which affect the decisions of the organization (Freeman 1984). Using this basic idea of stakeholders, it has been highlighted that the environment of the organization – internal and external – is the multilateral agreement between the stakeholders and the organization (Freeman & Evan 1990). Others have divided the theory among stakeholders into three – normative, instrumental, and descriptive (Donaldson & Preston 1995).
One central axiom of stakeholder theory is that the stakeholders will try to influence the decisions of the organizations, and the other is organizations must understand and bring forth a balance between various stakeholder interests (Savage, Dunkin & Ford 2004). These axioms are based on the premise that an organization cannot survive in the end if it does not provide due attention to its stakeholders.
One issue in managing stakeholder relations is that a single decision made by the organization can provoke various responses from a set of stakeholders. This is so because each stakeholder has a different interest. In a way, each stakeholder has a different interest in the organization and therefore, has different expectations out of the strategic decision-making process. Therefore, it is essential to classify stakeholders according to their interests and relationships with the organization.
In the case of a nonprofit organization, the key accountability is related to fiduciary, legal, professional, and obligation to serve the public good (Chisolm 1995; Hammack 1995; Kearns 1996; Balser & McClusky 2005). Therefore, the task that is related to the management of stakeholders is to understand who the stakeholder is, and their expectations are regarding the organization, and weighing them against the organization’s mission and ethical values. Therefore, executives at nonprofit organizations have some discretion as to how stakeholder relations are to be maintained.
The question arises – who are the stakeholders of the Salvation Army? From figure 1, it can be seen that the stakeholders of the Salvation Army are those who are affected by the decisions of the organization. It must be noted, that here we are considering only those stakeholders who are directly associated with the decisions or the outcome of decisions of the organization. According to stakeholder theory, there are two kinds of stakeholders – internal stakeholders and external stakeholders.
According to the literature on the nonprofit organization, they have stakeholders varying from funders, referral agencies, government officials, volunteers, and clients or participants; for executive directors and staff, the board of directors is an additional stakeholder (Van Til 2005). In the case of the Salvation Army, the internal stakeholders of the organization are shown on the left-hand side of figure 1. They are the employees, volunteers, executive managers and trustees of the organization. These people have their stake in the organization as they are directly involved in the decision-making process or implementation process of the organization. For instance, the trustee and the executive management decide the workings and the planning of the organization. Further, they are instrumental in formulating the objective and mission of the organization. Again, employees and volunteers are responsible to implement the plan that has been devised by the authorities and put it into action.
The internal stakeholders benefit from the good performance of the organization. However, too much of the growth of the organization without proper support and employee strength makes growth plans a difficult affair.
External stakeholders of the Salvation Army are shown on the right side of figure 1. They include people, who give donations to the organization, society, government, the church, and the distress victims who required the help of the organization.
The donators are inclined to give money for the betterment of the operations of the organization. Their interest lies in seeing that their money is put to the right use. Sometimes they even insist on the terms on which their money will be used. For instance, Joan K. Broc, wife owner of the US fast-food chain McDonald’s, donated $1.6 billion to the Salvation Army’s unit in the US. This was the largest donated amount in the history of any nonprofit organization. However, this had restrictions on its use. However, this received a lot of criticism from the UK branch of the organization where an officer wrote in the Guardian in January 2004:
“In the UK, where we run a vast array of services for the vulnerable people, we rely on the support of the public and we would like to thank everyone who contributes. We don’t need $1.5bn to make a difference to people’s lives” (Murdoch 2007, p. 669)
This comment demonstrates the differences in opinion between internal and external stakeholders and their interest in the organization.
Salvation Army is an organization, which has an evangelical association, and its association with the church is undisputed. It is a part of the universal Christian Church. One of its main objectives is to spread “good news about Jesus Christ” and “persuade people to become his followers” (Murdoch 2007, p. 667). The organization’s lifestyle and workings are based on the teachings of the Bible. Therefore, the church is a major stakeholder in the organization, as the teachings of the Bible and preaching are associated with the organization. Consequently, the church will want their control over matters of the kind of preaching by the organization. Further, it may want to regulate the matters of decision-making and operations of the organization. This might become a source of the problem in maintaining a relationship with other stakeholders and in the basic operations of the army. One conflict arises between the military structure of the organization and the evangelical mission of the organization. In this case, it has been mentioned that the Salvation Army’s picture as a quasi-military organization with its ranks, uniforms, and War Cry assumes a picture of religious warfare. However, with time the organization needs to change its image as a solely evangelical organization, thus, altering its image. This would bring forth a conflict between its evangelical aim, organizational structure, and its social welfare programs.
The other stakeholders are the beneficiaries of the services provided by the organization. They are on the receivers’ end of the organization. They are the ones for whom the organization works to provide social programs, disaster management programs, health-oriented, programs, etc. to help them relieve their distress. For instance, in case of the hurricane Katrina in the US, Salvation Army undertook the largest disaster management program in the Gulf Coast providing relief work to almost all hurricane-hit states. The other relief program was launched after the 9/11 attack on WTC, which was the organization’s second-largest relief program after Katrina.
The other stakeholders who are concerned with the operations of the organization are the government of the countries where the Salvation Army operates. Salvation Army operates in 118 different countries globally. Therefore, the countries where they operate, and the governments of the countries they operate are the stakeholders of the aim and objective of the organization. Usually, Salvation Army does not operate in countries where they do not receive government sanctions. However, they do not share a cordial relation with all governments. For instance, the Salvation Army was engaged in a dispute with the UK government in a labor issue where they were charged with “sweating” the laborers in their workshops at a wage rate 500 percent lower than the trade union rate (Telegraph 1907). The Salvation also faced a ban from the Russian government, which was later on lifted (Murdoch 2007). This is indicative of the disputes between the two stakeholders the government, employees, and the organization’s goals.
Another stakeholder of the organization is society. The preaching, the charitable, and welfare works of the organization ultimately trickle down for the benefit of society. However, the organization has faced problems in coping with changing societal constructs. The army serves society through its welfare work. However, there has been a decline in donations, which has increased the possibility of reducing welfare activities. This may conflict with the interest of the society in the organization.
The question that now arises is that the number of stakeholders is increasing every day with the growing nature, the strength of the organization. There is more than 19000 staff of the organization and not enough officers to manage them. Then there is the problem of increased globalization, which has exposed the organization to different kinds of culture, society, political situation, and environment. These problems create problems for the organization largely.
Governance and Strategic Vision
The above recommendations provided will help Salvation Army to solve the conflict arising out of its increasing stakeholders. Now the question that needs to be answered is how Salvation Army can manage its growth. The army has been growing constantly with the number of volunteers, employees, geographically, as well as in scope. The problem that is faced is to sustain this growth as well as not to lose organizational effectiveness. In this respect, literature on nonprofit organizations provides threefold solutions: goal alignment, system resources, and reputational. Goal alignment implies they must align their goal with that of the stakeholders. Historically, the mission of the Salvation Army was to preach the word of God and help all irrespective of religion, caste, creed, class, color, sex, or age. Further, its organizational structure has been hierarchical, based on a quasi-military structure. This made the organization less aligned to the new generation when we reached the twenty-first century. The operational values of the organization were still those made in the nineteenth century, and there was little change in its values. This lessened its appeal to the new generation (Murdoch 2007).
From the case, it was apparent that the operation of the organization in different countries was independent of each other’s decisions making processes. This increased internal problems within branches of the Salvation Army. It would be better if the organization could align these operations in the form of a transnational organization. The operations of the organization would become easier.
Further, the relation with governments in each country must be weighed before specific planning is undertaken. In hostile environments, the usage of limited resources and augmenting of resources are recommended.
The structure of the organization must be changed in order to prevent the staff to be overburdened due to the hierarchical military structure. Today most nonprofit organizations have a flat structure. Though the military feel of the Salvation Army provides a different image of the organization, it has been creating problems in attracting new staff.
The organization is well known for the reasonable salaries that the organization pays to its executive directors. It is much lower than the salaries paid in other nonprofit organizations is much higher. Thus, it is facing difficulty in attracting talent in order to remain in managerial positions. That is one reason for the increasing shortage of officers in the organization. According to the Salvation Army authorities, the low salary goes with the value of the originations. However, an organization, which fails to learn will, not be able to sustain itself in the end.
Further, there has been an initiative of joining the evangelical section of the organization with that of the social service arm (Murdoch 2007). This has increase apprehension among many professionals. This move would create a problem for the future of the organization. This is so because, the organization, then, will be viewed solely as a religious entity as this would gain prominence in the perception of the stakeholders.
Thus, the governance structure of the organization and the strategic planning process must ensure that Salvation Army maintains its image of a nonprofit, social reform organization with Christian values.
The strategic planning process of the Salvation Army will be based on its internationalization process. The growth it receives due to increased operations in African and Asian countries will help it to expand. However, in this respect, the organization must plan for the following:
- consistent flow of adequate donations,
- volunteers, staff, and managers who can help in implementing the plan of actions.
The problem that Salvation Army usually faces is to maintain a balance in keeping its staff satisfied and not overworked and serving its clients. Thus, the organization should be able to recruit more employees in order to reduce their staffing problem.
Further, it is primarily a Christian organization, which may induce problems for its global existence. For their mission may conflict with the interests and religious customs of other countries. The governmental intervention has also posed certain problems, which conflicted with the organizational values. Further, its values have stopped the organization to accept the donation from sources from alcohol or gambling. But new sources of donation must be identified.
As the organization entered the twenty-first century, the problems it faces became more apparent. These were mainly to face their increasing growth and internationalization, increasing demand of service, and aging membership, the problem of associating with the new generation of youths, and attracting them to join the organization’s cause. In the future, the organization must try to do the following:
- Increase its membership strength through attracting younger people and solve their problem of graying members. For this, they have to shed their missionary image and put forth the image of a nonprofit social welfare organization with Christian values.
- Their core values must be aligned with that of the government, which will help their operations in many countries. This is even more essential in face of internationalization.
- Salvation Army must identify its key stakeholders and balance their interests with those of the organization. Further, managing the interests of the stakeholders, in order to avoid stakeholder conflict is essential to maintain future growth.
Responsiveness becomes a problem when there are too many stakeholders to take care of. This creates conflicting expectations and the objectives of nonprofit organizations. Further, the stakeholders may desire things, which are beyond the scope or culture of the organization. In this respect what should be done? The recommendation that is put forth is to manage stakeholders’ expectations.
Strategic management of stakeholders is not only related to responding to the stakeholders but also to guide them and their expectations and their evaluation of the organization (Kearns 1996; Oliver 1991; Romzek 1996). This process will help in aligning their expectations with the vision, values, and mission of the organization. Further, this will also help the organization in making it appear more responsive to the stakeholder and less conflict in their expectation.
Another method that can be employed to manage stakeholders’ expectations is to use a consistent rational approach towards stakeholders. Consistency increases the organization’s predictability and reduces the uncertainly of the stakeholders. When the actions of the organization are considered consistent in relation to their external environment, stakeholders are in a better position to analyze the dynamics of interaction with the organization. This will increase the perception of organizational efficiency in the minds of the stakeholders. Here consistency many are defined as a public trust, which is defined by Kearns as “being able to account for the organization’s implied promises to its constituencies by pursuing its stated mission in good faith and with defensible management and governance practices.” (1996, p. 40) This does not imply that the organization will manipulate stakeholder perception at the stake of social welfare. Rather, in the words of Balser & McClusky that the organizations will be “evaluated as effective when stakeholders interpret that they are serving the public interest, using behaviors that entail a consistent approach with them.” (2005, p. 298)
Salvation Army was formed in order to help people in need and preach the word of Jesus Christ. The army has a history of extensive work it has done in order to help people and in social service it has provided in the health sector, social programs, disaster management, etc. It has also grown consistently. However, in recent years the organization has faced problems in managing its stakeholder expectations and the process of expansion internationally. This case study analysis has provided a vivid account of the problems faced by the organization, and what it should do in order to sustain growth.
Therefore, to be more sustainable in the future, Salvation Army must become more responsive to its environment and most essential to its stakeholders. In the case of nonprofit organizations where the vision is social welfare, managing stakeholder issues attains paramount importance in order to keep them satisfied. Thus, Salvation Army must have proper control over the number of donations and be more transparent in its usage.
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