Managing Multisite Nonprofits

Social Enterprise Newsletter, Fall 2003

"I could show you the scars and bruises of living in an organizational structure that hasn't been well thought through," Allen Grossman, HBS Professor of Management Practice, says with a smile, explaining his firsthand experiences in managing multisite nonprofits. "There's been a lot of analysis of these structures," he continues, "but not on the management implications-especially from the perspective of leadership." Grossman and V. Kasturi Rangan, the Malcolm P. McNair Professor of Marketing at HBS, set out to explore such implications by focusing on five multisite systems: Outward Bound USA, Planned Parenthood, Habitat for Humanity, SOS Kinderorf, and The Nature Conservancy. "We needed to develop our own understanding and theory about how to manage these kinds of organisms," Rangan explains. Grossman and Rangan contend that because nonprofits serve the intense need of solving complex social problems, there is always pressure to expand to multiple activities and locations. The central premise of their research is not to offer one superior model of operation, but rather to offer ways to accommodate the unique dynamics of the multisite nonprofit organization that could inform and inspire management decision and action.

Since the best multisite systems display high degrees of both autonomy and affiliation, managers need to create balance to achieve a high level of organizational effectiveness.

"We found that certain commonalities exist that we felt could be very helpful for managers," Rangan says. They determined that as nonprofits expanded beyond one site, multisite system behavior could be mapped on two dimensions: one that exerts forces toward unit autonomy, and the other that influences the degree of organizational affiliation. These dimensions are driven by a host of traditional management functions: brand-name creation, systemwide value creation, expert assistance, economies of scale, and program customization. They believe that these functions can be shaped to produce the best aspects of both organizational affiliation and unit autonomy. "We discovered that if you really understood these dimensions, you could have either a more decentralized or a more centralized organization," Rangan explains, "and still function at very high coexisting levels of autonomy and affiliation."

Since the best multisite systems display high degrees of both autonomy and affiliation, managers need to create balance to achieve a high level of organizational effectiveness. Grossman and Rangan contend that the forces that push toward autonomy exist naturally, and should be harnessed and optimized. "On the other hand," Grossman adds, "we found that managers really are the ones who create forces of affiliation. Forces that create a strong sense of community with other units and the central office depend on skilled managers."

Grossman cites the example of brand management. "Managers need to think more strategically about how they are managing the brand," he says. "The strength of the brand is a very powerful force for affiliation." The two professors originally presented this research at the Social Enterprise Research Forum on the HBS campus. Their subsequent article, "Managing Multisite Nonprofits," was selected as the recipient of the 2002 Editors' Prize for the Best Scholarly Paper in the journal Nonprofit Management and Leadership. Grossman says the feedback from practitioners has been rewarding. "Many people in the field have told me they didn't know how to think about this before. Instead of advocating a particular organizational structure, we encourage them to think about what they want to achieve-and determine what structure would allow them to optimize forces for affiliation and autonomy, and ultimately their organizational objectives."