The Australian Social Economy is worth over $33 billion annually. It is larger than the agriculture, communications or mining industries. It is also larger than the economies of South Australia, the ACT or of Tasmania. The task of leading and managing a Social Economy organisation is more complex than in other sectors. In addition, the sector has undergone much change, and the rate of change continues, most notably due to the out-sourcing of activity previously undertaken by government departments. The sector and its organisations, like their counterparts globally, are growing in numbers, scale, and influence.
This exploratory study is focused on understanding how sector and its stakeholders view issues about “management” and “leadership” in the Australian Social Economy. It was not intended to be an evaluation of the sector’s current capabilities. Nor is it a laundry list of recommendations provided. Instead we seek to establish a platform that may serve as a basis for understanding and improved communication among all stakeholders who may begin to engage in dialogue and develop strategies for change in the best interests of the sector.
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The real voyage of discovery consists not in seeking new landscapes, but in having new eyes (Marcel Proust). One of the initial assumptions in conducting this research was the recognition that any change process in the Social Economy must be preceded by having a clear picture of how its members understand or misunderstand a range of issues affecting the sector. Consequently, an explicit purpose of this study was to explore the congruent and contrary nature of these understandings which we broadly defined as views[5]. |
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3.1. The Creation of Social Wealth
The Australian Social Economy forms part of a larger network of institutions, programs and projects that constitute a global economy. The “non-profit sector[15] globally excluding religious institutions is a $1.1 trillion industry”[16]. It employs 19 million fully paid employees, and represents the world’s eighth largest economy. The volunteer work of the sector accounts for over one third of non-profit labour. Its social services and culture-recreation absorb more than half of all volunteer work. And its volunteer presence is especially important in the field of environment and advocacy. This worldwide phenomenon in western economies supports the social good of nations and creates a civil society. It contributes in a significant way to national economies and has captured an increasing interest among contemporary citizens. While the Australian Social Economy does not compare in magnitude, its relative importance for the creation of social and material wealth for Australians is no less than that observed in the global Social Economy. |
A range of names is often used interchangeably to collectively describe the organisations and programs striving to create social value in society; this situation is similar to most other western economies. Terms include non profit, not-for-profit, Social Economy and Third Sector.
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In addressing issues affecting leadership and management in the Australian Social Economy it is important to understand the historically embedded character of these issues and related practices. The inclusion of this relatively brief descriptive historical account is included in this section of the Final Report not only to contextualize the topic but also and perhaps more importantly allow the reader to understand better why contemporary views which reflect members’ understandings-misunderstandings are as they are; and the inherent importance and complexity associated with particular issues raised in the research. Three principal temporal phases are identified in the relatively short history of development of the Australian Social Economy. |
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The Australian Social Economy is much larger and more important than most realise at first glance. |
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In commencing this study, we sought to obtain the most recently published sector wide data. What we found was that very little systematic data is available on the Australian Social Economy. The last authoritative scoping was conducted by the Australian Bureau of Statistics using 1999/2000 data[25]. Prior to that Mark Lyons at CACOM conducted a review that defined the sector in Australia over the period 1993-1996.
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There are two aspects in any discussion of leadership and management. The first is at the level of the organisation and individual practitioner; that is, the practices and procedures that an executive engages in to achieve outcomes for an organisation. These capabilities include the integration of functional activities (human resources, finance, operations, information technology), development of the organisational culture, motivation of employees. One framework, illustrating the breadth of general management issues is provided .
The second is at whole-of-sector level; that is, the leadership and management of the sector as a whole. Issues of policy, governance, representation, et cetera fall into this category. The discussion will be split into these two aspects as the issues raised in each and the audiences addressed are quite distinct. |
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This report works from the definition of “Leadership” and “Management” provided by John P Kotter[28] the Konosuke Matsushita Professor of Leadership, Emeritus at Harvard Business School: Management is about coping with complexity. Leadership is about coping with change |
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The past 60 years have seen an explosion in the sophistication, quantity and quality of management research and education in western economies. This growth has been driven by for-profit organisations seeking to maximise their return on investment.
There is much anecdotal praise for the benefits of management capability but until recently there was little hard evidence. A recent paper published by the London School of Economics in conjunction with McKinsey & Co[29] shows the results of five years of investigation into the performance of over 4000 manufacturing firms around the world. |
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