Why Organization's Fail

Organization failure begins at the top. Rotary did not stop growing because people were not interested in joining local Rotary clubs. The number of people joining Rotary clubs proves that. It stopped growing because its leaders assumed it was in the business of supplying humanitarian services rather than in the business of creating Rotarians; they were product oriented instead of member oriented.

Red Text Note

==============Red text has a link to a previous Rotatorial or referenced document.==============

Friday, July 31, 2015

Is Rotary's Social Capital in Decline?

"Social capital provides the glue which facilitates co-operation, exchange, and innovation."
The New Economy: Beyond the Hype.

Rotary International (RI) President Ravi is spot on prioritizing retention rates.  Retention rates are accurate measures of how effective RI and its member clubs are at exchanging social capital and maximizing the Rotary network's collective value.  For Rotary and its member clubs, retained Rotarians are greater assets than new Rotarians. They have longer lifetime values and are membership multipliers, a major advantage because, in Rotary's niche membership market, word-of-mouth and person-to-person networking are Marketing Rotary's most effective protocol.
  Everything Rotary does, from local club initiatives to the worldwide polio eradication project, is accomplished by Rotarians utilizing four paths to exchange social capital: group action, broad identities, reciprocity, and information flow.  For example, Africa, which has not recorded a case of endemic polio for a year, can thank the collective value of the Rotary network's social capital.  In 1985 RI started the worldwide polio eradication initiative through group action, broad identities, and extensive information flow.  Its success has been primarily due to local Rotarians using friendship reciprocity and information flow to jump start eradicating polio from their local social fabrics and exchanging social capital until polio no longer existed.

      1.  RI would like clubs and Rotarians to participate more with Rotary Club Central.  What are the reciprocal benefits i.e. how does the participation improve clubs' and/or Rotarians' social capital and collective value?
     2.  It has been suggested that Rotarians, particularly in North America, commit $1 US a day to The Rotary Foundation (TRF).  What are the reciprocal benefits i.e. how does this improve North American clubs' and/or Rotarians' social capital and collective value?
     3.  RI, as it should, wishes to improve the collective value of the Rotary network.  Its top organizational priority is now membership development.  Is RI being transparent and proactively supporting this ?  Can clubs trust that RI's organizational priority will not change according to the whims of future presidents?

Retention rates and Retention Growth Indexes (RGI) will increase, as will the collective value of the Rotary network, when the exchanges of social capital between RI, its member clubs, and individual Rotarians are beneficial to all concerned.

Tuesday, July 21, 2015

Calculating and Understanding RG Indexes is Simple as long as the Overall Goal Remains in Sight

    The biggest problem in calculating Rotary Retention Rates isn't the arithmetic; it is getting diverted by attempting to account for each existing member, new members, reinstated members, transferring members, members leaving for reasons the clubs cannot correct, and new members' gender/generation/ethnicity.  When focused on the Overall Goal of Growing Rotary, these issues are detractions; the result of Rotary International's (RI) many failed membership initiatives.  I have, over the years, responded to many retention rate questions.  Believe me; Rotary's foremost challenge in calculating retention rates is simply not maintaining focus on the Overall Goal of Creating Rotarians.
    In easy to understand terms, to calculate an annual 2014-15 retention rate, whether it is for a club, district, zone, region, or RI, all anyone has to know is the number of members on record as of June 30 or July 1, 2014, how many on record on the same date in 2015, and how many new members were added during the year (new members are not eligible to renew).
   Here is a real life example, courtesy of the Rotary Club of Pagosa Springs, Colorado, USA.  On July 1, 2014, it had 66 members.  On July 1, 2015 it had 72 members.  During the year, it inducted 11 new members.  Five did not renew.
    Another way to look at it is to take the number of members on June 30, 2015; 72.  Subtract the number of new members; 11.  The result is 61.  Divide 61 by 66 (the number of members on July 1, 2014).  Still, the retention rate is 92.42%; five members did not renew! 
    Common diversions to which I have responded are:
1.       How should reinstated members be counted?
          At some earlier date, they did not renew which lowered the retention rate.  Count them as new members.
2.       What to do with members who renew after the invoice deadline?
          See number 1.
3.       What about Rotarians that leave one club and join another?
          They did not renew in one club; that club's retention rate is lowered.  They are a new member in the other club.  For worldwide membership, it is a wash.
4.       How do we account for Rotarians that leave for reasons clubs cannot correct?
          They do not renew, which lowers the club's retention rate.  To grow, the lost member has to be replaced.
5.       How do we account for new members that resign and renew during the same time period?   Arithmetically, at year end, they are still only one new member.
6.       How do we deal with RI encouraging an increase in membership gender/generation/ethnicity?
          Keeping the Overall Goal of Growing Rotary in sight, all are Rotarians.

    The bottom line is that when calculating Retention Rates, do not to lose sight of the Overall Goal of Growing Rotary.  RI's premier Membership Development Award should be based on combined Retention and Growth Rates - RGIs.  

Wouldn't we be jubilant if all of RI's member clubs had the Rotary Club of Pagosa Spring's 101.52 RGI?


Notes:
Since RI has adopted the practice of invoicing clubs based on the number of members each have on June 30 and December 31, Retention Rates, Growth Rates, and RGIs should be based on the memberships of record on these dates.

If anyone wants the Excel spreadsheet with embedded calculations, send an email to jrhjr@jimhenrybooks.com.  In the Subject Line, put RGI Calculation Spreadsheet or the email will probably get stuck in my spam filter.

Sunday, July 19, 2015

MEMBERSHIP DEVELOPMENT AWARD

At last, the Rotary International Board of Directors has acknowledged that membership awards should be based on annual, invoiced dues instead of having interim cutoff dates.  

The pictured Membership Development Award brochure can be downloaded by going to https://www.rotary.org and searching for Membership Development Award. 

It is interesting to note that this went into effect this Rotary year but doesn't seem to be common knowledge among Rotary's almost 35,000 member clubs.  I wonder why?

Friday, July 17, 2015

Is Rotary International a Member-Dependent Business?

Rotary International (RI), an association of almost 35,000 member clubs, gets virtually all of its income from the clubs' dues-paying members (Rotarians) so the answer is obviously a big YES - RI is a member-dependent business.  That makes creating Rotarians RI's only purpose - its priority!   It does that by creating and supporting its member clubs.  The most accurate measure of its success is the number of Rotarians that renew their membership.  The second most accurate measure is the number of potential Rotarians its member clubs attract.
   Using Past RI President Ray Klinginsmith's Cowboy Logic, if member clubs are satisfying the reasons Rotarians joined, they will renew their membership (membership retention, RI's most important factor).   Retained Rotarians are usually satisfied Rotarians.  Generally, they, by word of mouth, attract new Rotarians (RI's growth factor) Combine the two and you have lassoed Rotary's Retention Growth Index (RGI), a meaningful metric easily tracked using elementary arithmetic.
   The RGI, to be solid information, must be based on INVOICED membership numbers.  Basing membership information or recognition on any other membership numbers is like naming marathon winners before any participants cross the finish line.  It would also be delivering to Rotary's leaders misleading false positive information.  Recognizing achievement and making business decisions based on false positive information is simply bad business and delivers the wrong perception about membership's importance.  Rotary International and its only customers - its member clubs - are not-for-profit businesses and deserve to receive sound, meaningful information.
   Here is an example, a photo of a readily available Excel spreadsheet, of what a meaningful Semi-Annual RI Membership Report could look like:

   Here is an example of what an Annual RI Membership Report could look like: 



RI receives all information necessary to calculate, publish, and track RGIs, a service it should be providing for itself and its customers; a service that would give all Rotary leaders solid information to use when formulating and implementing membership development plans.  And measure their effectiveness! 

Note:  The Excel spreadsheet pictured, with the necessary arithmetic relationships embedded, is available upon request.  Email Jim Henry at jrhjr@jimhenrybooks.com.  Put in the subject line RGI Spread Sheet or your email may not make it through my spam filter.  Should anyone have any questions about this method, please ask.

Sunday, July 5, 2015

Are Rotary's Leaders Leading its Growth or Managing Its Ride?

Rotary International's purpose is to sustain itself; to create Rotarians; to grow.  Rotary International does not exist to reach a specific goal.  The difference is subtle but significant.  Organizations require growth.  Projects require goals.  Leaders reach for growth - individual and organizational - because growth stimulates and helps achieve goals.  Managers reach for goals.
     One of the most critical elements in delivering perception is for leaders to be consistent in measuring and recognizing important metrics.  Starbucks' officers, for example, receive daily same store sales data (i.e. cups of coffee served, repeat customers, etc.) therefore every Starbucks employee perceives that these metrics are important and strives to produce favorable metrics.
    Let's be honest.  Rotary's most critical growth metrics were not even on senior leaders' radar until 2011-12 when RI Director John Smarge brought the number of people joining and leaving Rotary out into the open at an International Assembly.  Prior to and after PRID Smarge's speech, senior leaders continued to transmit the perception to coordinators, district governors, and clubs that membership wasn't really very important.  DON'T YELL AT THE SCREEN YET!  Yes, Past RI presidents always had some membership time-related goal in their Presidential Citation criteria.  BUT the perception was that it was not very important because membership was seldom treated seriously at institutes, assemblies, seminars, or conferences.  Not only that, little attention was paid to the citation's goal because clubs and districts treated it as a foregone conclusion the goal would be achieved:  clubs only had to wait until after the cutoff date to purge their rolls.  This year President Ravi snapped the membership goal chain and targeted a growth metric - retention rate.  Unfortunately it, too, has an arbitrary cutoff date which converts this critical growth metric back into an easily attainable goal: clubs can simply do what they have always done.
Rotary must be consistent in encouraging improving retention and growth rates - but they must be based on the membership information on semi-annual invoices - preferably the December 31 invoices.  Only then will these critical rates become helpful growth metrics.  Then, of course, to reach and sustain realistic rates, Rotary's leaders must continually deliver the perception that creating Rotarians is Rotary's priority.  That is when Rotary will become an organization of leaders leading Rotary.