When Quaker Process Fails

We Friends rightly take pride in our institutions. The integrity, simplicity, sense of community, equality, and respect for human dignity that animate our best schools, retirement communities, and other social service organizations are the envy of non-Quaker peers. From the earliest days of Quakerism in America, our forebears were renowned for business acumen and astute financial stewardship. Quakers played crucial roles in the Industrial Revolution, launched—and then dominated—industries that depended heavily on consumer trust (ranging from confectionery to banking), and taught the world the virtues of principle-based capitalism. Notable Quaker leaders include Joseph Wharton, who founded Bethlehem Steel Corporation and later endowed the Wharton School of the University of Pennsylvania. With such a track record, today’s Friends can be forgiven for believing that we are experts at business management and that there is little we need to learn.

Unfortunately, pride can blind us to ways in which we need to improve. For example, when it comes to our own affairs as a religious denomination, Friends in Pennsylvania’s Delaware Valley have been in decline for decades—in numbers, in appeal to the young, in resources, in impact upon the larger society, perhaps even in relevance. The seemingly inexorable decline of the only religious denomination ever to win the Nobel Peace Prize for pacifist leadership continued even as our country suffered through two unpopular wars. Meanwhile, many Friends institutions were caught flat-footed and flailing in the deepest and longest-lasting recession of our lifetimes, which began more than four years ago. There are exceptions: a few monthly meetings have arrested their declines in membership, and a handful of Friends organizations acted promptly and effectively in response to the challenges posed by the recession. Far too often, however, Friends responses to such challenges have been to deny their severity, quibble with the facts, and hope the problems will simply disappear.

 

The available evidence suggests that much of our denomination’s shrinkage and our institutions’ mismanagement of responses to the financial crisis can be traced to contemporary Friends’ shortage of skills and knowledge relating to business matters: governance, finance, marketing, human resources.

Historically, the ranks of Friends in the United States included people with a broad range of skills. From the seventeenth century onward, monthly meetings in the Delaware Valley counted in their numbers a distribution of careers that mirrored that of the larger American society. That is no longer true. By the turn of the present century, career choices represented by active members and attenders of monthly meetings in the Delaware Valley had skewed sharply and disproportionately toward the “social sector.” If we count Friends who work full time and participate actively in the affairs of their meetings, we find an abundance of social workers, educators, and employees of community service organizations, but few business leaders.

The adverse effects of demographic changes have been aggravated by our collective failure to seek out essential help. We face ongoing challenges:

  • While our monthly meetings have abundant talent with which to fill the ranks of such committees as Peace and Social Concerns, precious few monthly meetings can draw upon the skills of a Friend who has built a business from the ground up for finance or endowment work.
  • The income distribution of active Friends no longer mirrors the bell curve for other well-educated Americans. Friends able to make relatively large gifts to their meetings and favored institutions are few and far between.
  • Friends have little appreciation for the difference between capital and income. Perpetual endowments are raided to cover current expenses—or see their purchasing power eroded by excessive “income” withdrawals.

To illustrate each of these difficulties, it may be helpful to consider the current predicament of Philadelphia Yearly Meeting (PYM). Occupying geography of special importance to Friends, claiming more than 10,000 active members, and entrusted with a $40 million endowment, PYM was once one of the most influential institutions in the Quaker world. As recently as the first half of the last century, the organization was an inspiring model of Quaker vitality and excellence in the conduct of its own affairs. Early this year, however, PYM’s leaders shocked their members by announcing that PYM had been running huge operating deficits for the preceding six years. Until then, Friends had been assured that their yearly meeting was a “vital and growing” organization with operating budgets kept scrupulously in balance. But now, Friends were told, the accumulated deficit amounted to $2.4 million—for an organization whose annual spending had ranged from $4.9 to $5.7 million. The leaders went on to say:

PYM has spent more money for general operations than has been available from unrestricted funds. As a result, there have been significant, consecutive deficits in the unrestricted operating account. No one person or committee is at fault for this experience. Rather, it has come about as a result of our faith community’s discomfort in making the hard decisions necessary to lay down programs or staff. (Open Letter to Members of Philadelphia Yearly Meeting, January 4, 2012, posted at www.pym.org.)

Friends were further informed that program cuts and layoffs would be essential in order to bring the operating budget into balance at some point in the future.

 

This is not an article about PYM. Quite to the contrary, the fiscal mess at PYM simply typifies the situations of dozens of Friends organizations and institutions, ranging from monthly and quarterly meetings to schools and social service institutions, that struggled in responding to the Great Recession. Careful study discloses that the troubled organizations exhibit most or all of the following weaknesses.

There is disregard of elementary principles of accountability. Ironically, many of the same Friends who have been vocal in demanding that those who brought about the national subprime mortgage crisis be brought to justice tolerate the notion that no one should be held accountable for incompetence or mismanagement of a Friends’ institution. Thus, perhaps the most striking element of the letter from PYM’s leadership is its assertion that the entire “faith community,” rather than successive treasurers and clerks of the yearly meeting with access to the facts, was responsible for the multimillion dollar deficit. In the larger society, or indeed anywhere outside of Lewis Carroll’s Wonderland, such an assertion would be rightly ridiculed.

There is an insensitivity to ethics. At far too many Quaker institutions, incest is the order of the day. One need not look far to find Friends who serve on boards of trustees charged with overseeing organizations that buy services from themselves or that employ members of their own families. Apparently some Friends believe they are able to function effectively as independent overseers despite the conflicts of interest. Such insensitivity is “Quaker exceptionalism” (i.e., arrogance) at its worst. It fails to appreciate the damage inflicted on the organization by the resulting appearance of impropriety.

There is weak-to-nonexistent strategic planning and goal-setting. For the most part, the organizations that suffered the most in the Great Recession were those that failed to embrace the discipline of strategic planning. In meetings for business in the Delaware Valley, we frequently hear members of a small but strident minority reject that concept, labeling it as “corporate.” Notwithstanding four centuries of contrary Quaker business history, “corporate” is now somehow an evil in and of itself. The essence of strategic planning, however, is a very simple and compelling precept: decide what you are about, then examine and test your programs and plans against that purpose. Bowing to knee-jerk, anti-business rhetoric and  avoiding strategic planning invariably has grave consequences. Lacking a clear common understanding of its mission and goals, one becomes vulnerable to the winds of externally triggered crises because there are no sound principles to guide contingency planning.

There is a lack of realistic priorities. With rare exceptions, our organizations are uncomfortable with setting priorities. To illustrate, one prominent organization recently circulated a computerized survey to its members to guide its operating budget. The survey compelled each respondent to name eight priorities, even if the respondent actually believed there should only be one or two! The same survey neither asked nor permitted respondents to express a preference among priorities. The unspoken premise of such an approach is that an organization can be very good at many things. History shows that notion to be a self-deluding snare. An organization that claims eight unranked priorities actually has none at all and will likely fail in all eight. Quaker reluctance to prioritize is understandable; it can be challenging to find unity in a large group. But the difficulty of achieving unity is no reason to avoid a humble and pragmatic ranking of goals.

There are poor personnel practices. Too many Quaker organizations follow dubious personnel practices—for staff and board members—that have the predictable effect of selecting and retaining the “nice person” who, if ever judged by objective standards, is utterly incompetent. Then Friends scratch their heads as incidents of mismanagement inevitably unfold.

There is scant appreciation for expertise. Historically, when facing seemingly intractable problems, Friends were inspired by our core tenet, the Inner Light, to show humility, to listen carefully to expert guidance, and to find the most weighty guidance. At its best, Quaker process leads to solutions that are spiritually inspired, broadly understood and supported, and sound. But somehow our guiding precept has been corrupted. Nowadays, the tacit premise of far too many meetings for business seems to be that there is an expert on every subject inside every Friend. Far too often, rational discourse and the search for the wisest spiritually guided solution degenerate into a poorly informed exchange of labels. Friends who wouldn’t think of making a racist, sexist, or homophobic remark apparently think nothing of labeling anyone whose success ranks them in the top one percent of the population—including Friends who have spawned life-saving inventions and lived their Quaker values as business people—as inherently evil. Friends who would never consider looking to a banker for pastoral counseling give credence to broad-brush, anti-corporate statements from individuals who have never worked in a business, studied economics or finance, supervised others, or met a payroll. When injected into a meeting for business, such notions make a mockery of our defining beliefs, undermine the wisdom and integrity of our decision-making process, and impair organizational effectiveness.

There is an unworkable organizational structure. The organization chart of a typical Quaker institution resembles a bowl of spaghetti. Not only does it lack accountability, but also its responsibilities are split up in incomprehensible ways. Thus, it is not uncommon for staff members to report to multiple boards of trustees or for boards and committees to have ludicrously high numbers of members. The driving organizational concept seems to be the notion that everyone needs to be involved in everything. But that has never been a premise of Quaker business management. The activities of a school with hundreds of students ranging from ages 3 to 18 and many dozens of skilled staff members, or a continuing care retirement community with hundreds of residents and three levels of personal care, or a yearly meeting serving more than 100 monthly meetings across a territory of several hundred square miles, simply cannot be managed competently by a “committee of the whole.” To return to the example of PYM, that body today has more so-called standing committees, working groups, granting groups, and ad hoc committees than a mangy dog has fleas, along with a group labeled “Interim Meeting” that at last count was made up of more than 100 Friends who supposedly act as the equivalent of a board of directors. Those bodies attempt, in one way or another, to micromanage activities most of which ought rightly to be delegated to PYM’s competent staff, and no one can honestly claim that he or she knows who is responsible for what. Useful energy is squandered in conflicts among the myriad pieces of the bureaucracy. The result is a lot of dubious decisions.

There is a lack of transparency. More often than not, Friends’ approach to bad news is to pretend it doesn’t exist. We forfeit the opportunity to learn from our errors, largely because we live in denial that errors ever occur. The logical result, as in the case of PYM’s whopping deficit, is that problems fester and become far larger than they would have been if nipped promptly in the bud.

There is a failure to measure. Although historically diligent when it came to collecting records of birth, marriage, and the like, today’s Friends as a group have become pathologically allergic to data collection and measurement. Over and over, Friends who seek to track progress methodically against goals hear one or more of the following excuses: “We’re a social service organization, and what we do is not capable of quantitative assessment”; “Evaluating what we do is exceptionally difficult, so we shouldn’t try”; or even “We don’t want to collect that kind of information because the results might be divisive.” The unfortunate reality, however, is that an organization that fails to develop an objective and credible system for evaluation of its (and its leaders’) performance is doomed to repeat its mistakes and to fail. If we won’t measure something, we can’t manage it.

There is a failure to look outside. Not only are Friends organizations incestuous, they also tend to be ingrown. Notions of “Quaker exceptionalism” are routinely used to thwart efforts to learn from the successes and failures of peer organizations, both Quaker and non-Quaker. Rare indeed is the Quaker organization that in 2008 or early 2009 pressed the query, “What are the best practices of our peers in coping with the Great Recession, and which of those practices would work well for us?”

These shortcomings unfortunately describe many Friends organizations in the Delaware Valley today. But we should not lose sight of the exceptions. A few Friends organizations model the opposite on each of the dimensions discussed above. Not surprisingly, those organizations reacted to the global financial crisis with urgency, seizing the opportunity to engage in rigorous strategic planning. They reexamined their operations from top to bottom, self-criticized, and reinvented themselves as needed. Today, such organizations are not only thriving, but surpassing peers on the most relevant measures of effectiveness and faithfulness to mission.

One such example is Friends Fiduciary Corporation. Not only does FFC hold itself to strict objective performance standards, but they constantly measure themselves against peers, including peers who do not practice “socially responsible” investing. Perhaps most important of all, FFC publishes the results on their website and shows how strict governance policies preclude conflicts of interest (such as nepotism or payments to firms connected to board members).

 

Centuries of Quaker history in the United States establish that professionalism is not a dirty word. Longstanding Quaker principles and testimonies demand accountability, ethics, strategic planning, prioritization, meritocracy, deference to expertise, simple organizational structures, transparency, measurement, and openness to external models of success. Even today, there are a few shining models of organizational excellence in our midst. We need only open ourselves to the opportunity to emulate them.

John M. Coleman

John M. Coleman is an expert on business ethics and institutional governance.  He currently serves as chief operating officer of NCI Consulting LLC, and teaches a seminar on corporate governance at Rutgers University. He serves, or has served, in leadership positions on the boards of directors of four Fortune 500 public companies as well as those of many Quaker organizations. He was previously the Senior Vice President – Law and Public Affairs of Campbell Soup Company and a lecturer at the University of Pennsylvania School of Law. He is a member of Moorestown (N.J.) Meeting.

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