HSO Course Work cont

1. HSO Course Work cont • Recap • Contrast For Profit Organizations (FPO) & Not for Profit Organizations • Note HSO we study are non profit organizations • Legal Aspects of Not for Profit HSO

2. Business side of the HSO is intertwined with the mission. Putting financial/business goals ahead of service goals can be de-motivating and suck the spirit out of the organization-effect quality of service delivered If you lose your soul and are unable to provide quality services, you will no longer be able to attract $- lose legitimacy You can run out of $ by being BAD at what you do no matter how effective at fund raising and financial mgt. practices HSO succeed in different ways, but fail in the same way-run out of money Balance: frugal and effective in providing service Link $ and service quality A MISER WITH A BIG HEART Bill Clinton Case Studies: Recap

3. Recap (cont.): What we have learned • What is an organization • Formal and informal aspects of an organization • Informal is difficult measure/understand • Informal processes can help/hinder org. from reaching goals • Research/investigating organization requires acting like a detective & gathering/analyzing data from multiple sources • Validity and reliability • Definition of HSO

4. Contrast FPO and HSO • Mission • Income • Product/Services • Profitability/legitimacy

5. FPO vs HSO (non profit) • Mission: • FPO: A business (also known as enterprise or firm) is an organization engaged in the trade of goods, services, or both to consumers. FPO are privately owned and administered to earn profit to increase the wealth of their owners. • HSO: Non-Profit An incorporated organization which exists for educational or charitable reasons, and from which its shareholders or trustees do not benefit financially • Income: • FPO: Income generated from a for-profit business can be used as business owners want. • HSO: Nonprofits receive money mostly through grants and donations, and also through service and memberships fees. Grants and donations must be used as the donor intends.

6. FPO vs HSO (cont.) • Products/Services: • FPO: For-profits are free to develop many new avenues of business to boost their bottom line. • HSO: Income earned by a Not-for-Profit must be within the limits of its mission. A nonprofit cannot receive income from a regularly carried-on trade or business not related to its mission or it can lose tax-exempt status. • For example, a nonprofit with the mission to help the homeless find jobs might start a drug-addiction program, but can not use its funding to establish a Little League team

7. FPO Profitability • GOAL is profitability. • Income must be Greater than cost. • Survival comes from approval by market and efficient management of resources. • Compete head to head with other, like firms. • Profitability determines the VALUE of the firm. • Value can be determined mathematically, i.e. Market Cap (share price x # of shares)

8. Self Sustaining Loop: FPO $ For inputs Note: Income > Cost= Self Sustaining System

9. HSO Legitimacy • Legitimacy is a conferred status the HSO earns and or is granted by entities and forces outside of the organization. • HSO also needs money to operate, does not receive $ (in most cases) from the end-user. • The currency of an HSO is “legitimacy.” • Those capable of providing resources must view the HSO as legitimate.

10. HSO: Exchange of Resources Not Directly Dependent on Output Govt., Stakeholders Legitimacy $ Output: Transformed Client Note: Beneficiary of service does Not provide Currency for new inputs NOTE: We will discuss how HSO earn legitimacy in our hso/environment relations discussion

11. Systems Theory Provides a Holistic Theoretical Perspective

12. Open Systems Theory: Organizations • Borrowed from Biology- cell to larger system interaction • Systems theory: Organization is an open system that is part of a greater/larger system. • Provides comprehensive framework for studying organizational behavior (the what and the why). • Elements include inputs, outputs, feedback from the environment within which it operates.

13. What is a System • System Defined: A functionally related group of elements, A group of interacting, interrelated, or interdependent elements forming a complex whole. • Example: Digestive system • A system comprised of interrelated organ parts responsible for breaking down and absorbing critical nutrients • Part of a greater system.

14. Systems Theory Themes • Complexity and interdependence • No organization is an island or controls its world-IMPORTANT • Open system: organization has permeable boarders • Information, resources, energy passes in and out • Energy/activity/feedback is exchanged with the environment • Actions in environment effect Org. behavior and visa versa • Organizations are self regulating/responds to feedback • The whole is greater than the sum of its parts -Can not understand the entire organization by studying its parts example is engineered system functions as prototype, but not when mass produced

15. Open System Model: Elements • Inputs: Materials and resources necessary for firm/system to remain functional. • Throughput: Transforming of inputs • Output: Finished good or service to be exchanged with the environment for new inputs • Environment/Feedback: information provided by the environment that effects the firm ability to continue operation.

16. Simple Systems Model Environment: Output exchanged for Inputs Feedback of info. Inputs: Materials Resources Output: Finished Good/Svc. Throughput/ core technology Healthy open systems regularly exchanges feedback with its external environment and adjust inner-systems as needed.

17. Thermostat • Input • The gas or electricity which comes from power company • Throughput • thermostat monitors the temperature (environment), thermostat sends a signal to our heater to turn on, the gas is burned, the fan turns on & blows warm air into the room, thermostat sends a signal to the heater to turn off. • Output • Heat

18. Thermostat (cont.) • Feedback - when the temperature falls below the desired level, the thermostat sends a signal to heater; When the temperature reaches the desired level, the thermostat sends a signal to the heater to turn off. • Feedback comes from the environment. • Environment is a very important concept in system theory and when studying HSO

19. Simple Systems Model: Thermostat Environment: Temperature change turning on or off of thermostat Inputs: Gas/Electricity Output: Heat Throughput Sends signal to turn on, Gas burned, fan turns on Blows warm air .

20. Describe the following in terms of the System Framework Elements: • Oil/Gas Company (Exxon) • Restaurant • RHP

21. Simple Systems Model: Gas (Exxon) Company Environment: Inputs: Output: Throughput .

22. CLASS EXERCISE Simple Systems Model: Restaurant Environment: Inputs: Output: Throughput .

23. Restaurant • Input: • Cooks; waiters; hostesses; fresh food; kitchen equipment…. • Throughput: • process of taking orders and preparing meals • Output: • Finished meal

24. Simple Systems Model: Restaurant Environment: Inputs: Cooks, waiters Fresh food, kitchen Equipment, Accnt. Sys. Output: Finished Meal Throughput Taking orders, preparing meals, scheduling Waiter/hostess shifts… .

25. Simple Systems Model: Rhp Environment: Inputs: Output: Throughput .

26. RHP • Input: • Teachers; admin.; education technology; STUDENTS (in HSO people are Raw Materials) • Throughput: • Educational process (includes classroom and experiential learning) • Output: • Educated/college prepared young men and women

27. Forms of Feedback: RHP Feedback Examples • Feedback is information provided by environment which causes the organization to make modification in some form. • Note: not all information is detected by the focal organization

28. RHP Environment: What are the actors and type of info provided Environment: Economic conditions, College acceptances Community perception # of people applying Inputs: Students, teachers, admin Smart boards….. Output: Educated, college prepared Young men and women Throughput Educational process, lesson plans, outdoor ed. extra curricular .

29. Next Class Read: American Red Cross: under fire. • Create a timeline of events beginning with the viejas fire and ending with the wildfires of 2003. • Include significant events such as the county supervisor becoming involved, firings/hirings • Explain what is meant “give the shirt off your back; but put a knife in yours” • Were the San Diego chapter’s leaders good business managers? • What did the San Diego chapter do to restore legitimacy? (give 2+ examples)