How CEOs Destroy Nonprofit Corporations
Nonprofit corporations in most cases are large multinationals based in several nations. However, there still exist nonprofit organizations, which are considerably small and growing. Nonprofit corporations depend on grants or funds contributed by partners who may be either institutions, governments or individuals. Like all other corporations, nonprofits are headed and managed by top executives with the CEO being the highest ranking individual whose responsibility is to make decisions on behalf of the corporation. As such, the success of a nonprofit corporation depends on the effectiveness of the CEO (Burn, n.d). A CEO being the overall manager of the organization has the ability to affect the daily operations of a corporation. For instance, nonprofit corporation operations revolve around social and community work, the board, funders, partners, employees, volunteers, professional consultants among many other people. This implies that the actions of the CEO may either motivate or discourage the people working with the corporation, inspire them and impact them in working towards the vision of the corporation. The performance of a corporation and the traits of a CEO go hand in hand since an individuals ability to influence others is dependent on their traits and personality.
According to Premuzic (2014), CEOs for a long time have been regarded so highly, which is understandable. However, CEOs have been slowly destroying companies through their actions. Premuzic (2014) adds that some of their traits for instance lavish spending has affected most companies, since these CEOs have been taking home hefty pay packages which is approximated to be 217 times the pay of the ordinary employee in an organization. Moreover their lavish spending particularly in recession is a big discouragement to the members of an organization who are still trying to make ends meet.
Additionally, the styles of leadership used by CEOs have also contributed to the destruction of corporations. CEOs who tend to be arrogant and make self-centered decisions negatively affect the performance of an organization (Premuzic, 2014). Moreover, these CEOs are more likely to be charged with fraud since they self interest conflict with the interest of an organization leading to them indulging in fraudulent activities.
Such traits affect the reputation of a corporation, strains employee morale and reduce the overall performance of an organization. According to Vesantham (2014), employee morale is an essential contributor to the success of any organizations. In spite of there being many reasons behind the success of an organizations such as the vision, financial standing, market establishment, reputation among others, employees are considered the greatest assets since the objectives of the corporation are achieved by them. Vesantham (2014) opines that the among the factors that affect the morale of employees are the objectives of the corporation, the structure of the organization, job satisfaction, the work environment and the type of leadership or supervision in the organization. Moreover, the CEO is not only supposed to maintain the morale of employees but maintain his or her relationship with the partners and the Board (Burn, n.d).
With the increasing focus on the performance of corporations, a greater level of pressure has been directed to employees by the CEOs since they are the major implementers of the decisions made. However, this performance cannot be attained when the employees have morale. Bowles and Cooper (2009) defines employee morale as the “the state of individual psychology wellbeing based upon a sense of confidence and usefulness and purpose.” This implies that employees’ morale is a psychological factor that affects the feelings, emotions, intelligence and overall wellbeing of an employee. According to Avey, Reichard, Luthans and Ketan (2011), the psychological capital has an impact on the attitude, behavior and performance of an employee. The authors in their research found that psychological capital which is the state of optimism, efficacy, and resilience and hope portrayed by an individual resulted to organizational commitment and psychological wellbeing. As such, a CEOs mode of relating to his employees contributes much to their attitudes and their productivity. If his or her trait is the ‘no-nonsense type who never have time to listen, there is a likelihood of a corporation being destroyed.
Cases of embezzlement of corporation funds are common especially in organizations that deal with massive cash flows. Embezzlement, in most cases always involves a CEO with a few other top management individuals. When such cases come to the attention of the public, not only is the CEOs name tarnished but also the corporations. This particularly has a greater impact on nonprofits since they depend on grants to finance their activities. According to Cima (2007), the reputation of a company is a major risk that needs to be taken into account alongside other risks associated with corporations. The problem with reputation is that it takes years to build a good reputation but it may take a day to destroy it. According to Burn (n.d), CEOs have the huge responsibility of maintaining how its funders, employees, partners and clients perceives it. Therefore, in the event a CEO is the type of person capable of using corporation money to fund his personal activities, he not only affects himself but also the company.
As such, this study aims at examining how CEOs destroy nonprofit corporations through their traits that affect the operations of a corporation resulting to its destruction. Previous researches conducted have concentrated on how CEOs destroy profit-making companies, however, a gap exist in the nonprofits corporations. The research problem is therefore the traits in CEOs that leads to the destruction of a nonprofit organization through affecting the reputation and the morale of employees among others.
Methodology and Design
This study will use the mixed design method where by two groups will be used to find the final results. These groups will consist of the personnel, partners, clients, and funders, board members of 5 failed nonprofits organizations and 5 nonprofits that are still in existence. The mixed design is combination of both the qualitative and quantitative approaches where it combines interviews and surveys. According to Creswell (2003), the mixed design is believed to neutralize the biasness of each of the methods when combined since all methods have limitations. This design was selected for the study since questionnaires alone could not be relied upon hence raising the need to interview some important individuals in the nonprofit corporations such as partners and board members who have much information about the organizations and the CEOs compared to the employees. Therefore, the design will enable the study to collect quality and more reliable information and cancel out any manner of bias that may exist in either of the methods.
The study targets 650 participants (n=650). They will include 30 employees, 10 partners, 10 clients, 10 board members and 10 funders of 5 functioning nonprofit corporations which will be labeled as Group I. Group II will consist also of a similar number, only that they will be former employees, partners, clients and board members of a failed nonprofit organization. The study is nonprofit organizations from Europe and America and hence the participants will come from the nations within the two continents. The study is open to participants aged 20 to 65 years since they are capable of providing viable information which is useful for the study.
The participants will be required to fill in a questionnaire that will a section requiring them to fill out their details, a second section that will contain their opinion on the CEO traits and finally a third section requiring them to measure their level of emotions, attitudes, feelings and satisfaction towards the activities and decisions that were highly influenced by their CEOs. Since the study is covering a vast geographical area, the participants will be reached through a call and e-mail to invite them as participants to the study. The participants have an option of declining and hence the study will invite a greater number in order to reduce the chances of not reaching the 650 target.
Besides questionnaires, interviews will be conducted with the top notch management and funders since they are closer to the CEOs than employees and are able to provide reliable information after much probing.
Recruitment will be undertaken through two methods, which will be different from the two groups. Recruitment of participants in-group I will be done through the assistance of the corporations’ management where I will request the five functioning nonprofit corporations to assist me in this study through allowing several members of their organization to volunteer. This will mostly apply to the employees. Additionally, I will request the corporation’s management to link me with some of their partners, clients, funders and their board members. However, this may result to collection of data which is biased since they is a likelihood of the corporation connecting me to individuals who have a right standing with them and avoiding to refer me to individuals who are critical of their activities. Therefore, I will search for some partners and clients through the internet. The Group II participants will be recruited through emails and connection, whereby former employees, partners, funders, clients and board members will refer me other former members of the failed nonprofit organization.
The study is scheduled for a duration of 12 weeks. Data will be collected in the first 8 weeks in order maximize data collected. In the first 4 weeks, the participants will be required to fill out a self-description questionnaire with 21 questions measuring the degree of their feelings, emotions, attitudes and thoughts concerning the effect of the CEO on their daily responsibilities. The questions will be divided into subscales that will determine how the participants perceive to be treated, their relationship with the CEO, their love for the corporation and satisfaction. The next 4 weeks will involve the participants filling out the questionnaire on reputation which will consist of their opinions on the reputation of the corporations. In order to collect data from all participants, they will be receiving reminder emails every week.
The data will be collected through questionnaires sent to the participants’ emails where they will fill out 21 questions. During the data collection period, participants will be allowed to ask questions for clarification in order to increase the honesty of information given. When the 8 weeks are through, the participants who filled out the questionnaires will be sent an email thanking them for participating.
A number of partners, board members and funders will be personally interviewed since a one on one data collection method is able to provide reliable information even through observation of the participants reaction to the questions asked.
Data Screening and Analysis
Data screening will be undertaken to ensure that the data collected is complete and of quality. This will be done manually by going through the questionnaires to ensure that all questions were filled out and also to ensure that the participants did not give more than one answer to a question.
Prior to data analysis, the study will use the confirmatory factor analysis to confirm the measurement theory. The study will use this particular package since it is able to confirm and reject the measurement theory of the research hence will be enable me to confirm whether my proposal’s theory is measurable. Costello and Osborne (2005) opine that confirmatory factor analysis enables researches to test their hypothesis through certain inferential techniques and is also able to provide more analytical options. Since this study involves a lot of data and several variables, the confirmatory technique will be informative in this case.
When the confirmatory factor analysis confirms the validity of the measurement method, the data analysis will be conducted with an aim of measuring the significance of the effect of CEOs activities to the feelings, attitudes, intelligence, and emotions of employees, partners, clients, funders and board members. The analysis will prove whether this theory is logical since it involves the measurement of non-physical factors. Data analysis will be conducted using cross-tabulation, a SPSS technique that will determine the relationship between the variables. This is because cross-tabulation is enables one to obtain results with clear significance and relationship measures (Garson, 2012).
This research proposal aims at establishing how CEOs destroy nonprofit organizations through particular activities and decisions they make that affect employee morale and the overall corporation’s reputation. As mentioned earlier, employee morale has been linked to the performance of organizations, however, the impact of CEOs decisions and activities are yet to be established whether they destroy a corporation. Moreover, the reputation of a corporation has also been established as a success factor since a good name attracts clients and builds good relationships with stakeholders. The research findings will be determined through the feelings, emotions, intelligence and attitudes of the participating individuals. The findings will be used to assist existing nonprofits corporations in establishing factors that may contribute to the downfall of the organization yet have been taken lightly since they have no connection to the physical world.
Avey,J. B., Reichard, R.J., Luthans, F., & Mhatre, K.H. (2011). Meta-analysis of the Impact of Positive Psychological Capital on Employee Attitudes, Behaviour, and Performance. Human Resource Development Quarterly, 22(2).
Bowles, D., & Cooper, C. (2009). Employee Morale: Driving Performance in Challenging Times. Basingstoke, UK: Palgrave Macmillan.
Burns, M. (n.d). Seven Warning that Something may not be Right in your Nonprofit. Retrieved from http://nonprofitboardcrisis.typepad.com/mbblog/Seven_Warning_Signs.html.
CIMA. (2007). Corporate Reputation: Perspectives of Measuring and Managing a Principal Risk. Retrieved from http://www.cimaglobal.com/Documents/Thought_leadership_docs/cid_exrep_corporate_reputation_june07.pdf
Creswell, J.W. (2003). Research Design: Qualitative, Quantitative and Mixed Methods Approaches. London: Sage Publications.
Costello, A. B. & Osborne.J. (2005). Best Practices in Exploratory Factor Analysis: Four
Recommendations for Getting the Most from Your Analysis. Practical Assessment Research & Evaluation, 10(7).
Garson, G.D. (2012). Cross tabulation. Retrieved from http://www.huffingtonpost.com/tomas-chamorropremuzic-phd/the-dark-side-of-executiv_b_4462127.html http://www.statisticalassociates.com/crosstabs.pdf
Premuzic, T.C (2014). The Dark Side of Executive Narcissism: How CEOs Destroy Companies’ Reputation and Employee Morale. Retrieved from
Vesantham, S. (2014). Employee Morale and Employee Retention. International Journal of Management, 2(11), 1.