The Need to Improve Administration in Ethical Organisations

Claire Martin & Emmett Murphy

Claire Martin is the founder of Crucial, providers of effective administration for ethical organisations. Claire has worked with NGOs in the field and in head offices. Her experiences have taught her the importance of a solid administrative foundation in all successful operations.

Emmett Murphy recently graduated from University College Cork with a First Class Honours Master's Degree in International Relations. Emmett has since worked as a freelance research consultant for the not-for-profit sector.

Crucial has facilitated the set-up of administration systems for Valid Nutrition's local production of 'Ready-to-Use Therapeutic Food' in Malawi

A central goal for every ethical organisation is to focus on maximising the impact of its programmes. However, very few have acknowledged the relationship between this goal and the quality of the organisation's administration systems and procedures. Administration has traditionally been given a low profile in the formulation of an ethical organisation's programmes. Inefficiencies in administration are rarely seriously challenged, even when they serve to disempower the organisation's employees. This is often due to demands from the public and the media for minimal investment in administration. There is a need for a new perspective that recognises that maximising administrative efficiency is essential for maximising programme impact and ensuring the long-term sustainability of the organisation.

A programme's impact must be seen as a dynamic interaction between external and internal factors.¹ There is no universal strategy for dealing with external influences beyond the organisation's control. However, every ethical organisation can empower itself by affording a higher priority to internal influences, such as administration. An organisation that commits to improving the efficiency and effectiveness of its administrative capacity will unlock a series of benefits that will improve its potential for creating a sustained expansion of impact.

Enhancing cost-effectiveness

Funded organisations face a 'burdensome level of bureaucratisation'² that adds complexity to administration and reduces the time available for working on programme implementation issues. The cost-effectiveness of the organisation and its programmes can be negated by an inability to efficiently administer its daily activities. A careful evaluation of this deficiency in ethical organisations should lead to recognition that administration is the backbone of the organisation, with its own requirement for specialised systems and staff. A considered investment in improving administrative efficiency will improve overall cost-effectiveness by introducing a leaner cost structure. Staff will find more time and money available for focusing on their core competencies, and daily operations will be instilled with more coherency, fluidity and prudence.

Cost-effectiveness is particularly vulnerable to the complexities of coordination. The costs of coordination are most severe for organisations that rely on funding from multiple donors or operate a variety of programmes in different regions. They face an endless accumulation of regular internal and external reports, negotiations and evaluations, which can cause bottlenecks and delays. This represents an arduous transaction cost for these funded organisations. Therefore, an organisation that becomes more cost-effective by investing in streamlining the coordination of all of its commitments will gain competitive advantage over other funded organisations.

Improving donor relations

This competitive advantage becomes even more pronounced when considering how donors decide in which organisations to invest. Donors always have a preference for working with organisations that demonstrate an ability to be efficient in their operations and in their dealings with donors. Donor organisations, especially those in the private sector, donate money where it will make the most on-theground impact, not where it will be consumed by defraying inefficient support costs.³ It is important for donors to be able to easily inspect a programme and review its progress. Ethical organisations must be sensitive to the need to manage programmes as rigorously and professionally as possible. Consequently, efficient administrative practices make an organisation far more appealing to potential donors.

Funded organisations may be resentful of overwrought reporting obligations, while donors can be frustrated with a funded organisation's inefficiencies and delays in responding to queries. An investment in administration can reward the organisation with improved donor relations through the introduction of greater clarity into the relationship and the freeing up of more staff time for focusing on core programme activities. Information flows will be improved, thereby bringing better understanding to both sides. This will reduce tensions and increase trust in the relationship.

Demonstrating impact

The ability to demonstrate programme impact is often lacking.⁴ Performance information is especially difficult to manage in larger organisations that operate in a complex hierarchy of associated partners and internal divisions, with multifarious targets and objectives. One of the main limitations on the ability to demonstrate impact is a deficient administrative capacity that restricts the timely flow of information amongst stakeholders. An improvement in this capacity will improve information exchange and access to knowledge, provide new instruments that make it easier to substantiate achievements and communicate them effectively, and help to instil a culture of organisational learning by providing the resources necessary for reflection and improving future performance.

Scaling-Up

Ethical organisations need this new knowledge to be able to demonstrate to donors the need for institutional development. The long-term success of an ethical organisation is dependent on its capacity for growth, an inherent instinct of any organisation that wants to expand its impact.⁵ The sustainability of the organisation depends on robust administration when scaling- up, making new partnerships or taking on new activities. The internal implications involved in such organisational change cannot be overlooked. Shortcomings in administration can cripple an organisation that attempts to adapt to these added organisational pressures and commitments.

Overcoming uncertainty

Predictability is a crucial determinant of organisational growth and sustainability for any organisation. This is even more pertinent for organisations facing extreme time pressures and erratic flows of income. Many ethical organisations work in volatile environments, where speed of response is paramount, but rely on short-term funding cycles for their income. Efficiency in administration can help to remove some of the uncertainty they face by improving the flexibility of their organisation. Rather than be hampered by deadlines and laborious paperwork, they can be more responsive to evolving situations and fluctuations in the disbursements of funding. The long-term success of a programme depends on an organisation's ability to provide predictable, flexible and responsive administrative support.

Empowering employees

Uncertainty can also negatively impact on staff morale. Employees can suffer from increased stress and anxiety due to short funding horizons for their programmes, but also from administrative ineptitude. The more time an employee works on administration for a programme, rather than their area of expertise, the more that employee's job satisfaction decreases. Ethical organisations recognise that the skill, dedication and expertise of their employees is their most important resource. Therefore, it is crucial for the long-term success of these organisations that this resource is safeguarded and nurtured. An investment in administration that emphasises the need for specialist administrative staff, systems and procedures, will result in a happier and more productive workforce. Furthermore, the organisation's ability to recruit high quality employees in the future will be enhanced.

Conclusion

Administration is the backbone of any wellfunctioning organisation. Its proficiency should be of concern to, and emphasised by, every stakeholder in an ethical programme. An enhancement of administrative capacity will induce many benefits throughout the organisation and help to establish efficiency as a precept for all internal and external activities. A former burden and drain on resources can develop into a competitive advantage, which will enable the organisation to expand more effectively the impact it can make and assure the long-term sustainability of its programmes.

For more information, visit CRUCIAL's website at www.crucial.ie

¹ Edwards, M (1999). NGO Performance - What Breeds Success? New Evidence from South Asia. World Development, Vol. 27, No. 2 (1999), pp. 361-374, p. 363

² Roberts, SM., John Paul Jones III and Frohling O. 'NGOs and the Globalisation of Managerialism: A Research Framework'. World Development, Vol. 33, No. 11 (2005), pp. 1845-1864, p. 1850

³ Smillie, I and Minear L (2003). The Quality of Money: Donor Behaviour in Humanitarian Financing. Feinstein International Famine Centre, (April), p. 29, http://hwproject.tufts.edu/new/pdf/donor_behav.pdf 2. The Need to Improve Administration in Ethical Organisations

⁴ Davies, R. Monitoring and Evaluating NGO Achievements. In Desai, Vandana and Robert B. Potter (eds.), The Arnold Companion to Development Studies, (Arnold Publications, London, 2002). Also at www.mande.co.uk/arnold.htm

⁵ Uvin, P, Pankaj S. Jain, and L, Brown D. (2000). Think Large and Act Small: Toward a New Paradigm for NGO Scaling Up. World Development, Vol. 28, No. 8, pp. 1409- 1419