• Psychological contract: Violation of conscience or consciousness?

    Reylito A.H. Elbo

    Reylito A.H. Elbo

    MANY of us admire non-profit organizations like the Boy Scouts and the Red Cross and many more, except that in recent years, their reputation has been weakened by accusations of wrongdoing that border on immorality, unethical practices, and illegal financial transactions. Other than that, we admire them for what they have done to society, business, and our respective communities.

    More than that, non-profit organizations are the best business model around us, at least according to Peter Drucker (1909-2005). With more and more volunteers becoming unpaid employees, they perform the professional and managerial tasks to sustain the operations of professional associations, churches, and communities, making them the most likely candidate for the largest employers of people.

    Drucker, recognized as the Father of Modern Management, said that decades back “management was a dirty word for those involved in nonprofit organizations. It meant business, and nonprofits prided themselves on being free of the taint of commercialism and above such sordid considerations as the bottom line.

    “Now most of them have learned that nonprofits need management even more than business does, precisely because they lack the discipline of the bottom line. The nonprofits are, of course, still dedicated to ‘doing good.’ But they also realize that good intentions are no substitute for organization and leadership, for accountability, performance, and results.”

    Let me repeat it here for emphasis: “Good intentions are no substitute for organization and leadership, for accountability, performance, and results.” If we perceive that someone or certain people deserve to be on the board of a non-profit organization, we elect them and give financial support—probably the least that we can do if we can’t be physically active in supporting their endeavor.

    That’s why we support volunteers whom we think can do more good for the nonprofits, including those outside of the Boy Scouts and the Red Cross, other membership associations, alumni organizations, and cause-oriented groups. Unfortunately, this same perception can change easily (sometimes, barely months after the election) the moment these volunteers violate our psychological contract—or any set of individual expectations about the relationship.

    If we elect someone whom we think can bring integrity, professionalism, and good governance  to the association, and he fails to deliver on that, then the psychological contract is destroyed and thrown in the waste basket, long before we imagine it. And so what’s next?

    Would you resign as a member of that association? Or would you petition for a recall election? Would you press the entire board to act on your complaint? Or would you bring the matter to a regulatory body or major financier? Or do all of the above? Most of the time, the approach is basically limited to only two—either “fighting” or “fleeing.” The approach depends much on the aggrieved parties or anyone who thinks that any good governance must be pursued to the hilt.

    It is precisely why well-meaning members of that association have to define clearly what changes have to be made and up to what extent. And most of the time—anyone should answer the basic question: Is it worth the fight?

    Many nonprofits, according to Drucker “have what is still the exception in business—a functioning board. They also have something even rarer: a CEO who is clearly accountable to the board and whose performance is reviewed annually by a board committee. And they have what is rarer still: a board whose performance is reviewed annually against preset performance objectives.”

    Before we continue answering those questions, maybe we can take some clues from American politician and sociologist Daniel Patrick Moynihan (1927-2003), who was famous for saying: “Everyone’s entitled to their own opinion but not to their facts.”

    Your facts and judgment must be supported by a majority of people, even if many of them are bystanders. After all, many questions can’t be answered by merely gathering a cluster of facts. Just the same, they still require judgment, intuition, and a genuine conjecture as to how things will ultimately play out.

    In other words, it can be difficult to compare things, like comparing an apple to an orange. It is in fact unhealthy when we compare ourselves with our insides with other people’s outsides.

    Rey Elbo is a business consultant specializing in human resources and total quality management as a fused interest. Send feedback to elbonomics@gmail.com or follow him in Facebook, LinkedIn, or Twitter for his random management thoughts.


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    1. Frank and Ruben, the internet is almost complete with news stories about the scandals in the Red Cross and the Boy Scouts. I’m not saying these are accurate reports. What I’m saying is that there are accusations that tend to diminish the reputation of these nonprofit bodies. In the Philippines, the BSP is being dragged into a controversy with VP Binay.

      The comment was about the Red Cross. Not the Boys’ Scouts.