We want to make a prediction: the disability sector will soon commence ‘CEO churn’ with many CEO’s ‘spending more time with family’ (sacked) because their organisations are going broke NDIS style. While a lot of established organisations in the disability sector continue to behave like rabbits in the headlights, this year we reckon we will see a move from denial as the key strategy to responses that include panic and blame.
Lots of advice is being provided to the sector courtesy of a diverse range of government funding for ‘sector support’. Sadly, a huge amount of this advice is supporting the sector to make bad decisions in a hostile NDIS environment. We have seen great flurries of activity and few tangible improvements in the ability of many organisations to understand and meet the central challenge of the NDIS.
The most successful leaders are seeing through the noise this advice is creating; they know the key to success is developing the right culture for the NDIS, a culture that marries a commercial approach with mission and values.
The NDIS is throwing up more problems for disability support providers than anyone predicted (even us). We are seeing an incredibly diverse range of management responses that range from poorly conceived NDIS strategies to a focus on unit costing at the expense of service redesign.
So the rabbits will start to become roadkill in 2017. The Financial Review has estimated the death rate among existing disability providers could exceed 70% by 2020. NDS’s recently released State of the Disability Sector Report states: 58% of respondents had NDIS clients leave them for another provider and 22% made a loss (and this was before the real roll out hit!)… ‘Providers are reporting they will be unable to provide services at the current NDIA-set prices and believe they will have to reduce the quality of their services if some prices do not improve.’
Woah! Let’s back up on the stats: 58% of organisations had NDIS clients leave and some of those same providers are thinking they will need to reduce service quality? While it’s impossible for many providers to meet ridiculously low NDIS prices, is there a better way to speed up the process of going broke than by reducing quality in a competitive market?
Where is the leadership?
So the prediction: slowly going broke will lead to a rash of CEO sackings by risk averse non profit boards that hate losing money and do not have the business acumen to invest upfront (it is also worth noting that risk averse and NDIS are highly incompatible concepts).
So, at some stage this year the panic will commence and we will see:
Stage 1 of CEO Churn: in the face of mounting losses, boards will begin sacking CEO’s and replacing them with senior executives with commercial acumen from outside the sector.
Stage 2 of CEO Churn: the senior executives with commercial acumen will not be able to make profits quickly enough in organisations that have consistently failed to change with changing times. Many of these new CEO’s will trash their unique NFP culture and staff will leave for competitors (big mistake, staff are your major competitive advantage).
Stage 3 of CEO Churn: losses continue; boards go for one last roll of the dice, new smarter, better, faster CEO appointed. Same outcomes.
Then what? A quiet and sad death of the organisation as predicted by the Financial Review?
So how can your organisation avoid going broke in the NDIS?
CEO’s with commercial acumen who can manage an NFP culture are rarer than apologies from the NDIA. So, unless you know the new CEO’s name, you are probably better off sticking with the horse you are on.
To succeed in the NDIS requires a fundamental rethink of the way you do all of your business; it is not about tinkering. Don’t let the bean counters drive your decision making. Start having real conversations with everyone now. Stop saying stupid stuff like we will reduce the quality of services if prices do not improve. Stop paying for bad advice about how to change from consultants who have never worked in this space and have simply no idea about your culture.
The challenge for NFP’s is how to operate commercially without losing their values based culture. Surviving the NDIS requires all levels of staff and the Board to both understand and commit to finding better participant outcomes at lower cost.
Shaping the right culture will always require a unique strategy; what works in another organisation is not likely to work for you. There is no magic bullet, and the process has to be led by the CEO.
So, focus on leading a values based commercial culture; it could just save your CEO from spending more time with their family.