Four Stages and Four Challenges of Organizational Development. •

Four Stages and Four Challenges of
Organizational Development. 
 
• Describe one model of the way that many organizations develop and the problems
and challenges that are likely to arise at various stages;
• Encourage leaders to assess where their own organizations stand, among the stages;
• Help them judge which of the challenges they’re currently facing are
“developmentally determined,” as it were, and what challenges they may expect in
the future.

In many ways, taking on the responsibility for managing and building an organization is
like assuming the duties of parenthood. It’s often easy (too easy) to accept the mantel of
responsibility, whether or not we’re really prepared for the job. And what it means to be
really prepared for the job usually only becomes evident in hindsight, when we realize
that leading an organization often requires not only good will and average ability (which
we were told) but also patience and commitment verging on the superhuman (which we
were not). And so many of us find ourselves in positions of leadership, painfully
committed to the organizations we’re nurturing, stretched to the limit of our own
capacities, and wondering how our involvement can be so rewarding and so exhausting at
the same time. It’s no wonder that when problems arise within the organization, they feel
painful and personal. And that makes them harder to solve.

How can leaders best help their organizations resolve problems? Like good parents, it
often helps leaders to remember that many of these difficulties are “phases” of sorts, and
that many organizations will pass through them and move on, if the challenges are
handled well. First, this approach helps leaders calm down and take a long-term view.
And second, in our experience, there is in fact a general pattern of maturation that many
(although not all) organizations follow, and that helps to predict the kind of difficulties
that may arise. We call this pattern the “Four Stages and Four Challenges.”
The “Four Stages and Four Challenges” model is one of many “life cycle” models of
organizations. It has its roots in the work of psychologist B.W. Tuckman, who noted that
groups:

• form – clarify their goals and membership;
• storm – test relationships and power dynamics;
• norm – set roles and process;
• perform – work toward their goals;
• transform – adjust to new circumstances.

Richard Weber extended Tuckman’s theory to non-profits, and suggested that non-profit
organizations pass through:

• an “infancy,” in which they’re formed;
• an “adolescence,” in which they work through some initial conflicts and establish
basic norms, such as mission, membership, and process;
• an “adulthood,” in which they produce results; and
• subsequent senility or transformative renewal.

A particularly useful version of the life-cycle model is that of Karl Mathiasen III, a
leading non-profit expert with a long career in the social services sector. Mathiasen
focused mainly on the development of non-profit boards, and he created a three-stage
model to describe what he had observed. He postulated:

• an “organizing” stage in which the board and organization are formed and
incorporated and begin their work;
• a “volunteer governing” stage, when the volunteer-based board assumes the role of
governing the organization and formalizes its method of working with the staff and
others; and finally
• an “institutional” stage, when the board delegates more and more of the actual
governance to the staff and a board executive committee, and focuses more on
fundraising.

This model stimulates fruitful discussions among the leaders of
environmental and conservation non-profits. It doesn’t apply to every organization, and
there probably isn’t even a single organization which fits it exactly. For example, most
of the boards we work with don’t aspire to the “institutional stage” at all, and some don’t
even want to move past the “organizing” stage.
Mathiasen’s model does help reframe organizational problems so it’s easier to think
about them productively. It describes them as natural consequences of maturation,
challenges which they must meet and learn from as their organization grows. It suggests
that these difficulties are parts of natural phases, instead of conflicts arising from
personality clashes or incompetence. It gives leaders a language for describing the
challenges they face and what they’ve experienced, especially in relationship to their
boards. Finally, it helps to suggest different approaches that may be appropriate during
the different stages.
As leaders use the Mathiasen model, they are often able to assess the current situation of
their organizations. They may identify the sorts of organizational issues they’re likely to
confront in the future. Frequently, participants in our workshops take the model back to
their own boards to stimulate discussion and help them develop an overview of their own
role. Over the years, this model has become one of our favorite training tools, and now,
thanks to a generous grant from AT&T, we have the opportunity to extend it.
Institute for Conservation Leadership http://www.icl.org Four Stages and Challenges of Organizational Development Page 3
In essence, the Institute’s “Four Stages and Four Challenges” model looks like this:
Four Stages and Four Challenges
Volunteer-Based “The Leap” Shared Governance Institutional
An individual leader
or a small group has
an idea and forms an
organization, run by
volunteers.
Board decides to hire
staff– generally the first
executive director.
–or …
The leader raises $ for
own salary & forms board.
The board assumes the
governance of the
organization and delegates
administration of programs
to the executive director and
staff.
The executive
director and staff
assume more
responsibility for
the org’s direction.
The growing board
focuses mainly on
fundraising and
community support.
Primary challenge:
Maintaining programs
without on-going
funding or
professional staff.
Primary challenge:
Developing a systematic,
effective way for the board
to support and work with
the executive director and
staff.
Primary challenge:
Developing effective
systems to delegate more
authority for growing
programs effectively.
Primary challenge:
Remaining
responsive to the
needs of the
population served.
This isn’t a rigid progression. Many organizations may decide they’re happy where they
are. Some may wander from Volunteer-Based to Shared Governance and then, having
found it too difficult to fund a staff position, return. Some may stay in “the Leap” for
years. But the model does raise some interesting questions, and, in doing so, helps
leaders better assess their own groups and initiatives.
Let’s consider how these stages develop.
Volunteer-Based
Some organizations are begun by a single, visionary founder who leads the way and
assembles around him or herself a group of less energetic persons who are willing to
legitimate and support the founder. Mathiasen terms this a “following board,” in the
sense that it follows (and often defers to) a strong leader.
Alternatively, an organization may arise from an energetic group of founders, who
function more democratically and share responsibilities more fully. Mathiasen terms this
a “leading board.”
In the case of a strong leader and a “following board,” the brunt of the organization’s
initial work typically falls on the leader, and assistants whom he or she has recruited. In
the case of a leading board, board members and other volunteers usually pitch in, with
enthusiasm and without much formal structure. In either case, the group may contract
short-term staffers for projects, when funding is available. When the money runs out, the
organization returns to its volunteer mode. Many will later remember this “VolunteerBased” period as a honeymoon, when everyone works together equally, before more
Institute for Conservation Leadership http://www.icl.org Four Stages and Challenges of Organizational Development Page 4
complex organizational difficulties emerge. It is often during this informal period that
the group bonds and many of its cultural norms are created.
The challenge, of course, is that it’s hard to maintain a high level of on-going activities
for a long period. Many environmental and conservation organizations are formed in
reaction to impending crises–the destruction of a valuable wetlands, the passage of antienvironmental legislation–or to an upcoming opportunity. The urgency of the situation
motivates the volunteers, but with time, it becomes harder and harder to find leaders who
will dedicate the time and energy necessary to coordinate the activities. Eventually,
many organizations begin looking for paid staff to maintain the pace and continuity of
their effort.
On the other hand, many
organizations stay in this volunteer
stage, especially those which have
less frequent, easily-planned regular
activities which volunteers can
organize. Many trail groups (and
other outdoor recreational groups) live
happily in this stage, maintaining their
leaders over many years, and continue
indefinitely without ever hiring staff.
But if they happen to perceive the
opportunity or need to expand their
programs significantly, in our busy
world, many of these groups begin to
think about putting someone on
salary.
Moving to “The Leap”:
Pros and Cons
Reasons to stay in
the “VolunteerBased” Stage
Reasons to move
ahead to “The Leap”
• We’re satisfied
with our current
activity level.
• We need to
increase our
activity level.
• All the participants
share the duties
and the decisions.
• We need to
specialize so tasks
are carried out
• We probably can’t well.
raise the money
for staff salaries.
• We probably can
raise the money
• We must remain for staff salaries.
volunteer-based to
be true to our
mission.
• Having paid staff
is consistent with
our mission.
“The Leap”
The decision to hire salaried staff radically changes the way the organization works. The
board now assumes a very large challenge–to learn to work with and to support its newlyformed staff. The day that it signs its first long-term contract, it must assure a steady
enough source of revenue to pay the salary. At the same time, it must now delegate
authority to the new staffer, be that person a new executive director, office manager, or
administrative assistant, and also share power with that person as a new leader. The
financial responsibility usually causes board members most anxiety, but it’s often the
new working relationship that proves more difficult.
There is one overriding truth about giving birth to a professional, staffed organization: it
is hugely rewarding, something like raising a child, and even more demanding. Those
who shoulder this challenge will probably never be repaid for their work. The late-night
phone calls, the first wrenching staff problems, the personality issues as the board role
shifts, all the unforeseen crises that arise as the organization puts systems in place – these
Institute for Conservation Leadership http://www.icl.org Four Stages and Challenges of Organizational Development Page 5
demand a level of commitment never compensated by the meager paychecks for the staff
or the occasional recognition of the founding board members. Most organizations
survive “The Leap” thanks to the dedication of a few leaders, who cover the financial
deficit with their own sweat and tears. These people are the keys to their organizations’
future, and should look for and accept all the support they can get.
This is often a turbulent phase. As Mathiasen observes, the sorts of problems that arise
typically depend upon the organization’s history in the previous stage.
With a Following Board
A following board will frequently lend its moral support to the leader who called it
together, allowing him or her substantial leeway, often without assuming any real
responsibility for guiding the organization. If the leader becomes the new executive
director, a following board is usually content to sit by and watch the leader raise funds to
meet his or her own salary, but seldom leaps in to help raising the money. Nor does it
often provide much oversight, unless forced to do so by a major crisis.
If the strong leader does not become the first staff hire, a following board may allow the
leader to dictate to the staff member. Conflicts that arise between staff and a strong,
founding member are so common that they lead to the resignation of many first-time
executive directors. In some cases, an organization may go through two or more
executive directors before it finally recognizes the source of the problem and clarifies
board and staff responsibilities, so that the board provides direction in a more systematic
and productive manner. The executive director can hasten this transition by taking a proactive, non-threatening role to help the board evolve. The difficulties associated with
overly controlling long-term leaders are common and often dramatic, and may crop up at
almost any stage of development. Specialists have coined a term to describe them:
founderitis.
With a Leading Board
Mathiasen notes that leading boards, composed of dedicated activists, usually feel a
strong sense of ownership. They may be reluctant to hire staff, since they may not want
to share power, or they may simply enjoy the tasks they perform. In some cases, board
members may want to be the staff. They maintain a strong, even overbearing interest in
the details of the organization’s program. When they do hire, they may choose not to
invest full authority in an executive director, but instead to recruit a “coordinator” or
“general secretary” or “administrator.” The titles are indicative of the dynamic–a strong
board that feels ownership may not truly want a “director,” but may imagine that it needs
only a person to help with logistics. In fact, in our experience, the first staffer becomes
the de facto executive director, assuming the responsibilities whether or not the board
delegates the formal authority. And this can lead to tensions.
The board’s ambivalent feelings about hiring staff are often reflected in the staff’s
experience. The first staff under a leading board typically resents board
Institute for Conservation Leadership http://www.icl.org Four Stages and Challenges of Organizational Development Page 6
“micromanagement,” especially since many board members are directly involved in
program activities, and may seek to administer those activities as they did in the past
before staff was hired. (This situation also often evolves into “founderitis.”) Not only
does the staff want less board involvement in details, it often desires more “big picture”
guidance, the sort of long-term planning which would allow it to prepare for the future
and to evaluate the effectiveness of its work. The board, enamored of the on-the-ground
work, may not want to do the bigger thinking.
Fundraising
The income to cover the first staff salaries typically comes from some of the
organization’s first major programs, often grant-funded. Typically, these first grants have
short durations. Before long, staff senses the looming threat that the program will end
and with it, their paychecks and everything that has been achieved at so much effort. At
this stage, executive directors feel intense pressure to fill the future funding gap. They
become more anxious, and less selective about the source of funding, as the end date of
the present project approaches. This can cause some tensions with the board, which is
legitimately concerned that the organization stay on mission and avoid projects not
related to its goals. As they search for future grants, executive directors often feel that
they’ve been abandoned by the board, which also bears responsibility for fundraising.
Internal Systems
With their first project, most organizations set
up project-based accounting systems. It often
takes some time for board and staff to get
these systems to produce information in a
format the board can use for planning or
oversight.
Transition
As organizations move through “The Leap,”
they use the difficulties they encounter to
formalize decision-making processes and to
clarify the responsibilities of board and staff.
Board composition begins to shift from the original, visionary founders to new board
members more comfortable with formalities and process. Bit by bit, organizations build
a framework of policies which allow it to carry it out its work in a systematic way.
Moving to “Shared Governance”:
Pros and Cons
Reasons to stay
in “The Leap”
Reasons to move
ahead to “Shared
Governance”
• We like to have
staff, but prefer to
operate on a
freer, “ad hoc”
basis.
• Operating well
with staff requires
clear policies and
procedures.
• We need the
board to operate in
committee
structure.
• We want the
board to operate
as a whole.
The Shared Governance Stage
After several years in existence, organizations usually reach a certain maturity. They
may have one or more successful programs, run by the staff, which covering salaries and
Institute for Conservation Leadership http://www.icl.org Four Stages and Challenges of Organizational Development Page 7
achieve some of the goals for which the organization was created. The board is shifting
its focus to fundraising, oversight, and setting policies and goals. The executive director
administers the staff and programs and exerts increasing influence on the organization’s
general direction. The executive director and the board president emerge as the
organization’s “leadership team” – hence our term, “shared governance.”
But growth brings with it a new challenge. How can the multiple decision-makers in the
organization work together, manage expanding programs and staff and changing
circumstances efficiently, and do so without eventually burning out?
The Board
Having learned–more or less–how to work effectively with the staff, and seeing the
organization on relatively sound footing, the board typically begins to focus inward on its
own performance. Many boards reach out beyond their originally homogenous core to
new, important stakeholder groups that need to be represented. Community relations and
visibility become a more important board function, as does fundraising, often led by a
development or fundraising committee. The size of the board, and the growing number
of issues, requires that much of the board’s work be done in committee. The leadership
role of the board chair, as a coordinator and manager, grows in importance.
The Executive Director
As the organization grows, the executive director’s role changes substantially. When first
hired, many executive directors of small organizations are directly involved in the
program. A small survey of long-term executive directors of conservation and
environmental groups revealed that most originally spent an average of around 60% of
their time carrying out program functions. Several years later, it was 35%, only slightly
above fundraising. Executive directors also spend increasing time in staff management.
For many executive directors, the transition from program to administrative work is
difficult and unappealing. The increasing fundraising burden forces executive directors
to delegate more of the program work to a growing staff, something some executive
directors resist just as much as founding board members. Those who don’t delegate it run
the risk of burning out, or of driving their own staff crazy with micromanagement. With
time, most executive directors pick out staff members in whom they place special trust,
and whom then become the first level of a future hierarchy.
At the “Governing” stage, most executive directors still admit frustration with their
boards. Board members may no longer be able to keep up with the details (or even the
broad brush strokes) of the program, the budget, or the strategic plan. A typical
complaint is that board members resist raising funds. But successful executive directors
also begin to recognize their own, proactive role in helping the board assume its role. In
the best cases, they assume a nurturing leadership of the board, helping it to bond, renew
itself, communicate, and keep its committee structure functional.
Institute for Conservation Leadership http://www.icl.org Four Stages and Challenges of Organizational Development Page 8
Fundraising
The growing budget and staff need a larger, steady flow of income. Reliance on any one
source becomes too risky. Organizations which began from donations, or membership
fees, or government program funding, begin to diversify into grants. In the many
organizations which begin with grants, after staffers have suffered enough ulcers waiting
to hear whether their life-or-death proposals have been funded, most diversify in the other
direction, into major donor, membership, and fee-for-service programs.
Diversification is not easy. It requires integrating fundraising with various organizational
activities, which can be a long process. It often runs up against an internal bias on the
part of the staff and volunteers. Many people in the environmental and conservation
community look upon fundraising as unappetizing, if not downright unclean. Most prefer
to segregate fundraising from their programs, a sure kiss of death for the fundraising. We
see many organizations hire development directors, give them insufficient support, isolate
them from the program work, and then, when they fail to produce new revenue in a short
period, let them go. Their investment in these people and the relationships they’ve built
is usually lost. But eventually, the best organizations diversify and integrate fundraising
into their work in a way that the its staff and volunteers can accept and support.
Program
Organizations usually arrive at the “governing” stage with growing programs, and there
are pressures to continue expanding. The larger staff needs a bigger budget. New
opportunities arise. The organization has typically developed an entrepreneurial mindset
which moves into new market niches as they open. The board typically views expansion
as a sign of success.
However, some board members may begin to worry about the consequences of
expanding willy-nilly into new areas, and begin to insist that programs be restrained by
the organization’s mission. The expansion of the program, or of program opportunities,
often triggers a decision to begin strategic planning.
As the program professionalizes, the role of volunteers typically declines, or at least
shifts. If staff members aren’t dedicated to maintaining volunteer participation, many
will find it easier to rely on other paid professionals instead. As a result, many
organizations neglect their volunteer programs. One repercussion is that they often
develop fewer volunteer leaders, people who might ascend to the board, and consequently
board renewal may begin to suffer. Eventually, the best organizations learn, and begin to
invest substantial effort in identifying good volunteer activities and providing training
and support.
Institute for Conservation Leadership http://www.icl.org Four Stages and Challenges of Organizational Development Page 9
Internal Systems
The expansion of staff and activities usually requires a new administrative superstructure
and new management systems, such as personnel and board management policies,
insurance, computer networks, and the like. To account for their costs, organizations
begin to track staff time, or at least apportion it across multiple projects. As soon as they
do, they begin to notice the amount of time and effort dedicated to administrative costs
and begin the difficult process of developing systems for estimating and charging
overhead.
Transition
Most of the environmental and conservation
organizations with which we work are in “the
Leap” or “Shared Governance” stages.
Relatively few have passed into the
“Institutional” phase, more commonly
associated with long-established
organizations and institutions such as
universities, hospitals, and cultural and arts
organizations. Perhaps most environmental
and conservation groups are still too young to
have reached this phase. Perhaps their
product isn’t one easily marketed, a mainstream service which could bring enough
income to build a large staff. Perhaps the
kind of persons attracted to most
environmental and conservation groups are
inherently uncomfortable with large,
corporation-like institutions and their levels
of administrative superstructure. Some
advocacy groups simply don’t want to grow
into something like the entities they’re
working against. In any case, with a few
notable exceptions, most environmental and
conservation groups never reach, or aspire to
reach, the size or culture of large institutions.
Moving to “Institutional Stage”:
Pros and Cons
Reasons to stay in
“Shared
Governance”
Reasons to move
ahead to
“Institutional Stage”
• We need to grow
to achieve our
mission. We need
a visible, stable
presence.
• We want to remain
lean & responsive
to our constituency
or issue.
• We want to stay
smaller and avoid
hierarchy & rules.
• We can manage
hierarchy & rules
so they support
our mission.
• Our mission isn’t
compatible with
dependence on
big funding
sources or being
an institution.
• Our mission is
compatible with
income from big
funding sources.
• We have products
and programs we
can plan & build
over the long term.
• Our funding
sources change
often.
• We just plain
grew!
Those that do grow usually have on a clearly defined “product,” aggressive marketing,
regional or national scope, and the ability to package their service so that subsidiaries and
affiliates can easily deliver it. Many are organizations with missions or issues which they
must maintain over the long term, such as environmental education centers, or land trusts,
which need a solid financial base over many years. Others may be regional and national
organizations which need a substantial institutional structure just to manage their people
and financial resources.
Institute for Conservation Leadership http://www.icl.org Four Stages and Challenges of Organizational Development Page 10
The Institutional Stage
At the institutional level, organizations face challenges which arise largely from their size
and success. Having developed a large, multi-layered institutional system that efficiently
delivers their service, the greatest difficulty becomes reacting quickly to external or
internal changes that effect their ability to deliver their services well.
Board
Institutional boards are typically large, numbering up to one hundred people. They
usually function in committees. Being elected may be a matter of social status, and some
board members may be more attracted by the social opportunities membership offers than
by the organization’s mission. Institutional boards typically focus on fundraising, and
they often set contribution goals for their individual members. They usually delegate
supervision of the organization’s budget and affairs to a smaller executive committee. It
becomes increasingly difficult for the board as a whole to provide effective oversight,
especially as the organization grows, and there is the danger that it may lose touch with
the program.
Executive Director & Staff
The executive director’s time is typically dedicated to administration, fundraising, and
the duties of representing the organization. He or she has little time left for program,
which is carried out by the staff, under the authority of area directors. The organization’s
success attracts a new type of applicant, usually a person with professional specialization,
possibly also interested in the status and upward mobility the organization now offers.
The diversity of programs requires more specialists, and it becomes a challenge to keep
the entire staff focused on the organization’s mission. Individual projects are frequently
assigned to different departments, which often function somewhat like microcosms of the
whole institution, and may compete among one another for resources. As the staff grows
and new levels are added, career pressures increase, and these internal tensions can
corrode the common sense of purpose and the trust necessary to function effectively. In
response, the executive director and other managers must work harder to ensure that lines
of communication stay open, and that the staff’s activity is always oriented toward the
organization’s long-term goals.
Fundraising
Having successfully integrated fundraising into its operations, most institutions have
overcome the negative perception of money which hampers many smaller groups. Staff
becomes comfortable with fundraising, and some staffers specialize in it. (This shift in
the organizational culture regarding money is one of the characteristics that most people
associate with an “institution.”) The institution’s fundraising success can sometimes
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cause jealousies among other environmental or conservation groups which ought to be its
allies, but which resent the institution’s access to donors.
Program
As the program grows, the organization can have a greater impact. It can address its
programmatic goals on multiple fronts, and benefits from the synergy of coordinated
efforts. On the other hand, as the program diversifies, it often becomes more difficult to
perceive its central thrust, or to measure its cumulative impact. It’s harder to set
meaningful and measurable goals by which it can be evaluated, and some institutions can
move from project to project without learning clear lessons or improving their
performance. Since they often have close ties to large government programs and donors,
institutions may be tempted to take on new efforts which may or may not build upon
what they’ve done before, in order to cover their budgets. On the other hand, many large
institutions make good use of the opportunity to partner with large funders, refining their
programs along the way.
Successful organizations develop a “culture of planning.” They create tools and systems
for capturing information which can tell them if they’re achieving their goals. The best
organizations link their plans and goals all the way down to staff work plans. This is a
substantial administrative burden, but it when carried out correctly, it allows
“institutions” to be “learning organizations,” and to maintain staff commitment to the
mission.
Internal Systems
As organizations grow, so do the internal systems, necessary to gather information in
order to keep it on track. Large institutions typically have formal hierarchies, lines of
communication, and career paths. These systems sometimes grow to the point that they
may begin to stifle creativity. A tension between the organization’s culture and its
mission begins to arise.
The On-Going Challenge
When organizations find a stage at which they’re comfortable, the long-term challenge
for most of them is more or less the same: remaining responsive to the needs for which
they were created. External changes in the world around an organization will often
require internal shifts, if the organization wants to continue to deliver service efficiently.
Internal changes will also require adjustments in other parts of the organization.
For small, hungry organizations, this is readily apparent: every major change in funding
or program results brings repercussions, which are quickly felt. But as organizations
grow, staff become more insulated from on-the-ground results. Consequently, they need
to dedicate a conscious effort to regularly measuring their impact, and in turning their
measurements into learning and revising their programs based on it. This is usually part
of a planning cycle. Large organizations must also begin to develop a culture which
Institute for Conservation Leadership http://www.icl.org Four Stages and Challenges of Organizational Development Page 12
enforces its basic norms but does not subdue creative efforts that question its basic
assumptions and look for new solutions. For organizations to remain at their peak, they
must be able to create elaborate systems, get their staff and volunteers to apply those
systems, and at the same time, reward individuals for rethinking and improving those
very structures.
Once organizations have reached a certain maturity, it’s much less easy to predict what
sorts of transitions lie ahead. The only certainty is that something will change, however.
And organizations which have embraced the challenges during their growth will be better
prepared for the new, inevitable, challenges which await.
We often diagram the transitions like this:
Volunteer –
Based
The Leap Institutional
Stage with staff
predominant
Shared
Governance
between
staff & board
With a “leading
board”” of committed,
active members
With a “following
board” and a strong
leader.
Where would you locate your organization on this chart?
What challenges would you anticipate based on your “stage of development”?

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