SKILTON: Corporate doesn’t mean efficient

Nobody likes inefficiency. Especially at Yale, we have limited time and energy, and we’re not interested in spending more resources — whether they’re hours on a paper or minutes in a meeting — than we need to accomplish our goals. When others take longer on work than we think they need, we get impatient; we feel like they’re wasting our time as well as theirs.

Our love of efficiency is no secret. Job recruiters, professors and student organizations all play on it. They promise that their company, class or group will use our time better and deliver more results than the competition. Yet no one sells efficiency better, or with more expertise, than consulting firms. They tell the same story to their clients and to Yalies: “Work with us and we’ll teach you what makes a business efficient. We’ll teach you how to be effective.”

Tomorrow, McKinsey consultants will be telling a slightly different version of this story to a roomful of Dwight Hall group leaders. The program’s description promises that the consultants will tell Yalies about McKinsey’s “social sector engagements” and help us “develop nonprofit management skills.” Read: After the McKinsey employees explain how their company has made some nonprofits more efficient, they will tell you how you can do the same for your student group.

Don’t believe them for a minute. Like every consulting firm, however serious its “social sector engagements,” McKinsey is a for-profit company. Its primary clients are other companies, not the government or nonprofit organizations. The firm has succeeded because it has a strategy for evaluating businesses and devising ways for them to make more money. When it advises nonprofit organizations, chances are strong that it uses that same strategy, albeit with a few verbal tweaks and a dash of social conscience.

That strategy, created for the world of private business, will not help your student group now or your nonprofit later. It may teach you a few tricks, or make you feel more efficient. Yet in the long run, taking advice on service or social change from private-sector consultants will not advance the mission of your organization. It will just make it more like a private company.

That might not sound so bad at first. After all, private companies make their own money. They don’t have to write endless grant applications, or make awkward phone calls asking for donations, or worry about sending thank-you notes on time. But businesses also don’t have to think about their purpose, structure or strategy in the same way social service and social change organizations do.

When nonprofits adopt business strategies, they fail in their missions — just like a business that decided to put a social mission ahead of profits would fail and close. The difference is that in the nonprofit world failure is more subtle. It doesn’t come when your organization’s bank account goes red or your doors close. Instead, it comes when you stop reaching toward your mission and start reaching toward something else.

The most important nonprofit management skill is humility. It’s easy for managers to believe they’re the experts on their organization and that they can evaluate it well. But a nonprofit’s clients — not the management or the people who crunch its numbers — are the experts on their own experience, and they know best whether the organization that serves them is succeeding or failing. Client opinions are the most important feedback any social service or social change organization can receive. When clients speak freely, they can tell truths we don’t want to — but must — hear about our programs. They know best if the quality of an agency’s services is low, if it’s spending too much money on staff, if the organization is too hierarchical, if more people need a say in management decisions.

In any social service or organizing work that serves marginalized people, you might well need to make choices that make your organization less efficient as private business understands the term. To provide your clients with the quality of service they deserve, you might decide to adopt a less hierarchical leadership structure, or less centralized strategies for decision-making, or different rules about how staff and clients interact. Making such choices might cost you the support of donors or volunteers, but not making them would cost you the integrity of your mission.

Private businesses face fundamentally different decisions. McKinsey and other consulting firms’ advice may help companies make profits, but it cannot help social service and social change organizations address their unique problems. Outside the private sector, adopting corporate strategies only leads to false efficiency.

Amalia Skilton is a senior in Calhoun College. Contact her at amalia.skilton@yale.edu.

Comments

  • type_b

    I find this column to be very generalized. If non-profits have a certain mission, wouldn’t they want to accomplish it effectively and efficiently (thereby serving the most people)? How is the author to say that private sector practices may be useful in the non-profit arena?

    By the way, centralized, hierarchical decision-making structures constitute bureaucracy, not efficiency.

  • dwight_haller

    Ok, we get it. Consultants are evil. But they do a job, and they do it well. You are not the first person to be critical of McKinsey, and you will not be the last. Yet they remain one of the most active nonprofit consulting teams in the world, and continue to be hired for such work by the very nonprofits they seek to help. If they were so blatantly bad at it that someone like you, who has no experience with their work, could point out their main flaw, do you really think nobody else would have noticed? Nonprofits are especially critical of the business world, and do not have the resources to spend on exorbitant consultant fees. Have more faith in the people you care about–they know what they’re doing, what they need, and who to trust with helping them.

    I for one am looking forward to the workshop.

  • River_Tam

    You know why nonprofit and public sector companies hire McKinsey and Bain? Hint: efficiency.

  • ALS

    Organizations of all kinds have many different types of challenges. Very generally, they have mission-facing challenges (“there are hundreds of homeless people in New Haven!”) and business challenges (“my organization is spending 70% of our budget on mailings and we’re seeing no results!”) Consultants can’t use business strategies to help determine your mission (unless your mission is really wishy-washy) but they can certainly recommend approaches to business problems (“Here are six ways that other successful organizations cut down on mailing costs and more effectively target their audiences.”).

    That isn’t to say that you should always hire consultants to do everything. Consultants are only useful when you can’t do something effectively on your own and need an outside perspective or outside resources. And yes, they’re often too expensive to be worth it. But if you apply the right tool to the right problem, you can actually get good results. This is a rule pretty much across the board.