Change and the disability sector - the case of a small business in the not-for-profit sector

This case concerns an example of a change management project in the small business category of the not-for-profit sector. The case covers several key issues including change management, decision-making, management approaches in the for-profit and not-for-profit sector, strategic management, and competitive advantage. XY was a not-for-profit organisation operating a sheltered workshop in the disability sector. Although the organisation was asset rich, the profitability trends were all negative. The organisation had depended heavily on external funding in the past, but it was apparent that such dependence was not healthy or sustainable. Although such funding had been generous, continued funding would be available only to support people with a disability and not for operating expenses which were increasing substantially. It was clear that the organisation would be unable to survive in the long-term with its then current management approach, and a strategic change from the past was required. XY also required a fundamental change and transition in philosophy and attitude by staff, management, and board members. The fundamental change required was from a management approach of a community cooperative to that of a modern business. This did not mean throwing out concern for the individual. Rather, it involved, amongst other things, adopting management practices where authority and responsibility were delegated where possible, and recognition of the notion of internal and external customers. The organisation was in the fortunate position of having resources available to contribute to its own immediate transition needs. Nevertheless, while the opportunities available indicated a viable future for the organisation, funds were needed for equipment and working capital purposes while sales were built up, and the best long-term mix of able employees and employees with a disability was attained. This latter aspect was of critical importance because it would be very difficult for XY to achieve commercial viability while the operation depended largely on disabled labour working with able-bodied supervisors. The only practical alternative was to develop business activities based on able-bodied employees, but with a charter to provide a significant proportion of jobs for employees with a disability. There were several such models in Tasmania to benchmark. The Board of Directors of XY, and to a lesser extent management, were cognisant of the above issues, and in mid 1995 determined to conduct a Strategic Review of its operations, and to prepare a Transition Plan with the goal of achieving Section 10 funding from the Australian Commonwealth Government under the Disability Services Act 1986 (Cwlth) and the Disability Services Standards. The Commonwealth Government, financiers of the project, provided strong initial and continued impetus.