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AN EVALUATION OF THE IMPACT OF STRATEGIC PLANNING ON ORGANIZATIONAL EFFECTIVENESS

ABSTRACT

This study aims to understand the reality of social service organizations, the level of implementation of the strategic planning as well as the impact of its application on organizational effectiveness. At first, we will group organizations in clusters according to the level of strategic planning implementation and its degree of effectiveness. Secondly, we will analyse all the different groups. Given the growing number of social service organizations and the consequent complexity of their structures, it turns out the need for these organizations adopt formal management techniques. Strategic planning is a valuable strategic management tool and one of its main objectives is to make organizations more effective. Therefore, the research has been conducted in order to determine if strategic planning is implemented in social service organizations and which effects has its application on organizational effectiveness. The survey, applied to 220 social service organizations, allowed us to gather them into different clusters, showing that different levels of strategic planning determine distinct degrees of organizational efficiency. Finally, it should be noted that findings of this research may be essential to decision makers of these organizations, because it was shown that the adoption of strategic planning has a positive influence on organizational effectiveness of social service organizations.

CHAPTER 1 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

In recent decades, many countries have experienced a significant expansion of the third sector. However, the increase in the number of non-profit organizations (NPOs) was not accompanied by a similar increase in terms of available resources, so these organizations have been adopting a more pragmatic approach, using techniques and processes often used in for-profit organizations (Cruz, Martins, Reis, & ElKouba, 2009; Randle & Dolnicar, 2009). The understanding of NPOs in terms of interpretation and importance of management and planning is sometimes unclear and the more evident concerns are those related to funding due to the fact that management roles are often pushed to a secondary position (Pope, Isely, & Asamoa-Tutu, 2009). Traditionally, management was associated with organizations that were intended as for profit, and for NPOs this concept did not have much meaning, because it was believed that NPOs should not be thinking about profit and because it was considered that NPOs did not require management (Drucker, 1999). Currently, the growth, development and complexity of the organizational structure of NPOs demonstrate the need for establishing guidelines and expert guidance on how to effectively manage those organizations (Drucker, 1999) and therefore the use of appropriate tools (Carvalho, 2005). The emergence of the idea of more professional management roles became inevitable (Willis, 1991), whereby management has been based on the concepts such as flexibility, good will and natural capacity which turned out to be quite insufficient for proper functioning of those organizations (Cunningham, 1999). Thus, the success of these organizations is underpinned by changes in management structures at various levels, including strategic management since, as Drucker (1989) points out, good intentions are not a substitute for management and leadership, responsibility, performance and results. It is evident that the changes in NPOs environment call for a more formal management structure, in order to understand the relationship between strategy and organizational effectiveness (Akingbola, 2013). The use of policies, strategies, structures and generally tested and successful for-profit administrative practices does not always result in a non-profit environment. In Portugal, there are no specific standards for NPOs management models (Carvalho & Braga, 2010) so is very natural that this isomorphism occurs. However, we noted that NPOs are now more aware and sensitive to a
Management, Vol. 20, 2015, 2, pp. 1-21 M. R. Ferreira, J. F. Proença: Strategic planning and organizational effectiveness in social… 3 professional management (Dartington, 1991) and to market orientation, since this alignment can help NPOs facing pressure to become more business-like due to increasing competition in the current global environment (Chad, 2014). Nevertheless, its contours have still not been completely defined (Anheier, 2000). The context of our research is based on the recognition that the future will bring a growing third sector with more pressure being put on the economies (Carvalho, 2005) and on the need for NPOs to adopt formal management techniques (Alfirević & Gabelica, 2007). Thus, our main objective is to analyze the degree of implementation of strategic planning in social service organizations in Portugal and the impact of higher or lower degrees of adoption of those techniques on organizational effectiveness.

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