Business Operations

Structural and operational strategies to manage the dual goals of the social enterprise

Introduction

Managers who operate social enterprises will benefit from two types of management strategies designed to deal with the dual goals of the business. First, the parent organization must develop a structure to support the manager in his or her work. Second, the manager needs to develop methods that bolster the operations of the business in order to compensate for the problems the workforce presents.

 

Structural Strategies

There are five strategies a parent organization can use to create a sound structure for operating the social enterprise:

1. Training and Counseling Program

The venture needs to be closely connected with a training and counseling program in order to deal with the social problems employees bring to the workplace. We have found the program to be most effective if it works with employees on their social problems outside of the immediate business environment. For example, a counseling session that addresses an employee’s current housing problem does not take place while the employee is working. Staff develop clear distinctions and space bet ween working and solving personal problems

Attempting to operate a social enterprise without program support will lead to serious operational problems in the venture. A business manager cannot be expected to operate a successful, profitable business while simultaneously playing the role of a social worker. While a manager can talk to an employee about a personal problem, he or she must also be able to pay close attention to the severity of it, and determine when to involve program staff. More often than not, the manager of the venture is first made aware of a problem through the employee’s work performance.

2. Role Definitions

Roles need to be clearly defined for the staff working in the social enterprise. Business managers are responsible for an employee’s work performance. This involves hiring, training, evaluations and watching for personal problems that might affect their job. Program staff are responsible for working with employees around personal issues that could affect their job performance. This might include problems with housing, school, substance abuse, domestic violence or health issues.

Many operational problems in the business and program can be averted if clear roles are defined and observed by staff. Clear boundaries also provide a more effective program for the client/employee. As illustrated in the examples above, highly volatile situations were handled in a routine way and with significantly greater ease due to the clear roles of the business staff and the program staff.

3. Decision Making Process

Establishing a clear decision making process for the manager facilitates the balancing of social and business goals. Managers will be in situations on a daily basis where they will be called upon to consider two opposing views and make a quick decision that in the long run will balance the dual goals of the business. A process that identifies the final decision makers and communicates this to all employees is the first step. Managers should be trained in how to examine two opposing views and determine the priority, while remaining aware of the impact of their decision on both sides of an issue.

4. Vision

Another structure for the parent organization to put in place involves creating a long range vision for the business venture that sets a context for decision making. Managers will have an easier time making hard day-to-day decisions if they understand and believe in the larger picture and vision for the social enterprise. A vision paints a picture, sets parameters and acts as a guiding force that helps managers make sense of the day-to-day circumstances they encounter. Understanding how a particular decision fits into the overall scheme comes from a clearly articulated vision. In the case of all four examples used in this paper, the managers were well g rounded in the vision of the business venture.

5. Culture

Developing one organizational culture that embraces both the nonprofit culture and the business culture creates an environment that supports the manager in his or her work. Building a culture that values diversity, promotes learning, rewards risk-taking and encourages patience with the dual and competing goals results in a productive work environment for the manager and employees.

 

Operational Strategies

The structural strategies described above provide the manager of the social enterprise with a strong foundation to operate his or her business. There are three operational strategies that combined with the structural strategy bolster the operations of the business venture.

1. Cross Train Staff

One of the best investments a social enterprise can make is cross training business and program staff. If the program staff have a basic understanding of business concepts they are better equipped to do their job. If they understand the financial picture of a small business they support decisions that promote the goals of the business.

Similarly, if the business staff are grounded in the basics of working with a disadvantaged population they in turn make better decisions and can manage their workforce more effectively. Business managers can make grave errors if they do not understand the basics of working with populations of people that experience social problems.

A team that is cross-trained supports one another and overall makes better decisions. Cross training staff does not need to be overly expensive and can be an added incentive for staff working in a social enterprise.

2. Balanced Workforce

While the mission of the social enterprise is to hire its employees from a disadvantaged labor pool, this must be done in a way that also helps stabilize business operations. In our experience, hiring 100% of the workforce from a disadvantaged labor pool with few skills and various personal problems leads to serious instability in the operations of the business.

We have experimented with different formulas for each of our businesses with mixed results. While there is no “one right formula” to follow, each business must determine its rules. For example, in one of our businesses we strive for an 80/20 mix – 80% of the employees come from the disadvantaged labor pool and 20% come from the general population and have more skills and fewer personal problems. This formula works for this particular business. When the labor pool moves out of this mix there is an increase in operational problems.

If a business has too many unstable employees several issues arise. First, the manager cannot operate the business effectively. Second, the employees that are under-skilled and lack experience do not have stable role models to work with and consequently, the job environment is not strong enough to promote the learning and growth that is needed.

3. Team Building

Building a strong team comprised of the business staff and the program staff add to the stability of the business venture. With a team in place, the complex issues a disadvantaged labor force bring to the venture can be addressed. Bringing both sides together on a regular basis builds the capacity of the social program and the business operations through direct communication.

Building a team requires an investment of time on the part of the business staff and the program staff. Teamwork can mean additional meetings and preparation time. It is a smart investment to have a functioning team that has learned how to communicate and solve problems together. When issues arise it can be the most effective vehicle for a manager to quickly solve complex problems.

 

Conclusion

Managing the social enterprise, while being double the challenge, also offers double the rewards. Managers working in these ventures develop skills that are learned in few other situations. Working on a day-to-day basis with employees that have experienced difficult life circumstances is a valuable experience. The energy and enthusiasm generated from these ventures make the management challenges less daunting. With the proper structures in place, a social enterprise can be one of the most creative and stimulating work environments.

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