What can Nonprofits learn from Southwest Airlines?
Southwest Airlines’ disastrous December performance can serve as valuable a cautionary tale to nonprofits and other organizations.
From innovation to disaster
Southwest depended on an old-fashioned phone tree to reassign flight crews following disruptions. The airline that had done so much to innovate and modernize aviation fifty years ago somehow thought that what passed for cutting edge back then didn’t need updating for the 21st century.
When weather forced the cancellations of thousands of flights, aircrews had to dial into a handful of rescheduling staff had to manually “reach out and touch someone” (as we used to say back in the 20th century). Many were on hold for hours rather than getting quickly redeployed on the airplanes that needed crews.
In other words, a task that a computer could have done faster and less expensively was left in the hands of a few humans who simply couldn’t keep up. This led to the cancellation of thousands of additional flights, countless holiday plans ruined, and a big stain on Southwest’s reputation.
What can nonprofits learn from this?
Over my career, I’ve seen too many good organizations make the mistake of believing that what brought them success in the past will continue to bring them success in the future. Southwest’s mess represents a giant wake up call on this assumption.
Example: Technology
Depending on old technology long beyond its expiration date can frequently set us up for trouble.
For some organizations, that might be the old database that hasn’t kept up with the times. It can move slowly, wasting valuable staff time, and may require complicated work-arounds.
Even worse is the database that was custom designed by a volunteer! When that volunteer is no longer available to fix it, basic repairs (much less updates) can be expensive and painful.
Rather than avoiding technology investments until something catches fire, nonprofits can make frugal choices that improve their daily impact while reducing their risk of debacles like Southwest’s.
Example: Administrative Staffing
The administrator who did great work when your nonprofit had a $200k budget might not be ready for $1 million. A $2 million budget could break them.
When nonprofits grow, too many fail to grow their administrative skills and staffing levels proportionately. The person who expertly handled the organization’s administrative needs when it was a small organization may not have the skills, or time to learn, to meet the organization’s growing needs and complexity.
But what really breaks my heart is the cases where staffing doesn’t keep up with growing administrative needs. Too often, even if someone seriously asks whether they need to add administrative staff to match growth, the answer that comes back is either:
“We can’t afford to spend more on administration,” or
“It’s just a small task” (never mind the 100s of “small” tasks that got added to the staffer’s routine over the past few years)
Nonprofits can, and should, take this risk seriously. All too often, when they don’t, they only find out when a key administrator unexpectedly burns out one day and never comes back to the office because they’re so exhausted.
Example: Budgeting and Financial Reports
A young nonprofit with just one program and one staff member needs very little in the way of budgets and financial reports. Due to simplicity, that staffer and board leaders can typically manage without worrying much about well-built budgets and financial reports.
But once an organization starts adding staff and programs, or once it starts receiving grants that require more than bare-bones reporting, their needs change. A more sophisticated chart of accounts, budgeting process, and more complexity get introduced.
However, too many nonprofits miss a critical next step: ensuring that the budgeting and financial reports remain transparent and understandable to all leadership, not just the 7% who are comfortable with numbers. This can set up a disaster that builds over years:
Board and key staff disengage from the finances
Heavy dependence on a handful of leaders who are comfortable with the financial data
Their perspectives and lived experiences are almost certainly less diverse than the group as a whole, leading to financial blind spots and less-than-optimal decisions
If they are just one or two people, and they go away, that can leave the organization blind financially
Lower morale and engagement throughout the organization due to the above
Nonprofits that invest in dashboards, data visualization, and professional financial support to engage the other 93% of their leadership, have stronger impact instead of a ticking time bomb.
Have technology, administrative staffing, and financial reports received the resources and skilled attention they need to keep up with new trends and with your organization’s growth over the years?
Now, while the Southwest Airlines fiasco remains fresh on people’s minds, represents the best time to raise these sorts of questions at your nonprofit so you can learn from their mistakes.