SOCW 6070 WK5 Assignment: Leadership and Strategic Planning In this a

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Administration in Social Work

ISSN: 0364-3107 (Print) 1544-4376 (Online) Journal homepage: https://www.tandfonline.com/loi/wasw20

From Needs-Based Segmentation to Program Realignment: Transformation of YWCA of Calgary

Donna S. Finley , Gayla Rogers , Michael Napier & Jill Wyatt

To cite this article: Donna S. Finley , Gayla Rogers , Michael Napier & Jill Wyatt (2011) From Needs-Based Segmentation to Program Realignment: Transformation of YWCA of Calgary, Administration in Social Work, 35:3, 299-323, DOI: 10.1080/03643107.2011.575346

To link to this article: https://doi.org/10.1080/03643107.2011.575346

Published online: 31 May 2011.

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Administration in Social Work, 35:299–323, 2011 Copyright © Taylor & Francis Group, LLC ISSN: 0364-3107 print/1544-4376 online DOI: 10.1080/03643107.2011.575346

From Needs-Based Segmentation to Program Realignment: Transformation

of YWCA of Calgary

DONNA S. FINLEY Framework Partners, Inc., Calgary, Alberta, Canada

GAYLA ROGERS Faculty of Social Work, University of Calgary, Alberta, Canada

MICHAEL NAPIER Framework Partners, Inc., Toronto, Ontario, Canada

JILL WYATT United Way of Calgary & Area, Calgary, Alberta, Canada

This article delineates how a social service organization was transformed, enabling the transition from severe financial strain to healthy financial sustainability, now eight years running. By applying a client needs-based segmentation that informed a pro- gram and service realignment, the YWCA of Calgary significantly improved its program and service delivery.

KEYWORDS needs-based segmentation, program and service alignment, process improvement, strategy implementation, perfor- mance improvement, organizational effectiveness, transformation

In memory of Judi Osborne, YWCA of Calgary Board Chair, 2001–2003. Judi had the vision, courage and foresight to lead YWCA of Calgary to a whole new level of performance and impact in the community.

The authors would like to recognize the contributions of Mario Siciliano, formerly COO of YWCA of Calgary.

Address correspondence to Gayla Rogers, Faculty of Social Work, University of Calgary, 2500 University Drive NW, Calgary, Alberta, Canada T2N 1N4. E-mail: [email protected]

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300 D. S. Finley et al.

INTRODUCTION

Segmentation is a concept often used in public and corporate planning that can also be applied in a nonprofit context. Specifically, nonprofit organiza- tions can benefit by segmenting their stakeholders (including clients) into needs-based clusters to more effectively serve them. This paper describes how in 2001, a struggling nonprofit organization, the YWCA of Calgary,1

implemented a segmentation model based on the needs of its clients to strategically realign its programs and services, and emerged as a leading social services organization in the community.

Segmentation, in this context, involves arranging the current and poten- tial clients of an organization into clusters according to their current and evolving needs. These clusters of needs underpin their motivations for using various programs and services. In the case of the YWCA of Calgary at the time of this strategic planning initiative, multi-barriered women2 made up the largest demographic client segment (72%). Historically, the YWCA of Calgary approached serving these women with a standard menu of services based on what the organization traditionally offered rather than what the women may have actually required. Programs and services were typically designed around funding availability, not necessarily around the organi- zation’s strategic direction and clients’ needs. The array of programs and services being offered in 2001 did not evolve from actual client needs and, therefore, over time the programs increasingly underserved the YWCA of Calgary’s client base. These misaligned programs and services were not com- prehensive, lacked coordination and integration, and had unclear financial viability. Increased demand for services by clients, fierce competition for dol- lars, the search for a niche in the sector, and the hiring of a new CEO created the conditions required for transformational change within the organization. Success was quickly realized. By 2003, post-program realignment, the YWCA of Calgary was stabilized and the threat of financial disaster from 2001 was averted.

This paper describes the types of segmentation used by the YWCA of Calgary as the basis from which realignment of core programs and services could occur. It offers a model for linking such a strategic framework to operational priorities as the means for making decisions about expanding, contracting, creating, or outsourcing programs and services. In the subse- quent sections, this paper reviews the relevant literature, presents the needs- based segmentation applied by the YWCA of Calgary, discusses the program realignment that occurred, and assesses the success of this organizational transformation.

Transformation of YWCA of Calgary 301

SEGMENTATION LITERATURE REVIEW

Market Segmentation

Segmentation involves assessing and then clustering a group of individuals (e.g., clients, members, funders, partners) based on a predetermined set of criteria. There are multiple forms of segmentation, each of which provides value toward strategy setting and/or operational planning.3

Traditionally, social service organizations segment their clients by demo- graphics such as age, income, ethnicity, gender, and health status. This observation is consistent with McCarthy and Jinnett (2001), who found that other types of nonprofit organizations typically define their client groups geographically, demographically, or by some behavioral character- istics. These methods of classifying clients, while useful at an operational level, cannot account for the increasing complexity or the evolving nature of clients’ situations. Furthermore, these models do not enable a strategic overview of the multiplicity of products and services offered within a given community.

In the past 40 years, segmentation has taken many forms, each specific to its intended use, and each with a different level of operational or strate- gic intensity. Frank, Massy, and Wind (1972) are among the first researchers to develop a taxonomy of segmentation in the nonprofit sector. This tax- onomy was set up as a matrix, which is based on variables either directly measurable (observable) or inferred (unobservable), and variables indepen- dent of or related to goods and services (general and product-specific, respectively). While this method can be effective for segmenting clients demographically based on service use, it is operationally focused because it has limited application when reconceptualizing a full range of service offerings.

In a later paper, Robbins and Robbins (1981) use a frequency-of- participation segmentation method. This model allows organizations to segment participants into three common categories: those not disposed to participate, those disposed to participate but are not currently doing so, and those already participating. While this method allows an organization to develop strategies to increase participation, it does not determine why people are participating. Therefore, developing strategies to target one of these three groups will be challenging without knowing what motivates one’s decision to participate.

Todd and Lawson (2001) use attitude, interest, and opinion variables to segment patrons in the arts; these variables focus on demographics and statistics. While this method provides valuable insight as to who is attend- ing events or partaking in services, it does not directly inform strategy; it

302 D. S. Finley et al.

does not help us understand who is not attending and why. This method does, however, help in defining sub-segments and setting tactics that support strategic outcomes.

After employing a straight statistical demographic segmentation and only finding semi-interesting results, Pawson and Troy (2004) investigated an aesthetic approach to segmentation. The authors use product-specific unobservable (inferred) variables and are largely concerned with the aes- thetic appeal of organizational offerings. Sewall (1978) claims that aesthetic interest is a key decision-making factor when deciding whether to attend an event/program. Therefore, segmentation based on preferences is intuitive as consumer reactions to product and/or service attributes are not indicative of functionality.

Clopton, Stoddard, and Dave (2006) build on preference-based model- ing by conducting a survey of patrons of arts events. The survey contained basic demographic questions in addition to questions on preferences. Data were used to segment customers based on their relative prefer- ences for the arts in general. This allowed the authors to compare and contrast how each of the segments behaved based on the other survey questions. Furthermore, the authors tested the significance and nature of the relationships between the market segments that emerged and typi- cal demographic variables. While the comparison with demographics is interesting to the organization, it is what can be learned from the preference- based segments that effectively repositions the strategic direction of the organization.

Similar to preference-based segmentation is a needs-based segmen- tation model described by Rogers, Finley, and Galloway (2001), who explained how social service organizations can benefit from conducting and implementing a needs-based segmentation approach. Using this seg- mentation method and learning from other nonprofit sectors, such as the performing arts, social service organizations can better serve the commu- nity. Furthermore, the organization’s staff, board, and volunteers will be better equipped to meet the current and evolving needs of clients. As Greengrove (2002) described, needs-based segmentation is fundamentally a strategic process that drives product and service development, and brand strategy.

Performance-based segmentation is defined by fundamental needs that may or may not be explicitly expressed by the client. Nonprofit organizations typically struggle to define who their clients are and are generally pre- occupied with chasing funding. Identifying and understanding core needs enables the organization to take the next step: identify the clusters of client needs the organization is best equipped to serve and the clusters of client needs that are better served by (or jointly with) other service providers.

Transformation of YWCA of Calgary 303

Needs-Based Segmentation

The reason for employing a needs-based segmentation approach is that the needs that individuals would like to have satisfied are “the basic reasons for the existence of true market segmentation” (Haley, 1968).

In order to best serve their clients and achieve their mandate while doing so, nonprofit organizations must think and act with strategic intent. A needs-based segmentation allows service providers to understand the groups of clients it currently serves, should serve, and can best serve based upon clients’ and potential clients’ current and evolving needs, backgrounds, motivations, and expectations, as well as the organization’s desired future state.

Such a needs-based segmentation approach was employed by Finley, Gralen, and Fichtner (2006) to pull a performing arts organization out of bankruptcy protection and reposition it into a sustainable organization4 that maintains a sizable surplus. Needs-based segmentation guides the design, growth, and closure of programs, services, and processes to meet the targeted needs of clients. Figure 1 is a depiction of the movement from demographic-based to needs-based segmentation.

Typically when organizations develop strategies, they focus on demo- graphics and firmographics (demographics of organizations or “firms,” rather

Demographics • Age • Gender • Language • Geography

Firmographics • Size of organization

• Sector • Size of client-

base

Behaviours • Convenience

sensitivity • Quality

sensitivity • Price sensitivity

Needs-based • Security • Power • Esteem • Confidence • Tangible

resources

Powerful in defining sub-segments and setting tactics.

Powerful in setting strategy and designing programs and processes.

Traditional Focus

FIGURE 1 Process from demographics to needs-based segmentation (color figure available online). Source: Framework Partners Inc. planning tool.

304 D. S. Finley et al.

than of people). When using demographics and firmographics to develop strategy, organizations become focused on “doing things right,” and out- comes tend to be operational details. Organizations can also segment their markets by behaviors (e.g., what do my clients consider when deciding to access my program or service?). However, even behavioral segmenta- tion tends to be tactical; it informs the implementation of the organization’s promotional strategy and does not contribute to that strategy’s development.

Using needs-based segmentation, organizations can think of the clients they serve and could serve (prospective clients) at a higher level—“are we doing the right things?” The needs-based segmentation approach helps define an organization’s target market, or more specifically, target client. A primary target client is a segment of the market that the organization can best serve with its programs and services, which are provided with the highest level of expertise and/or lowest cost of implementation. An organization’s secondary target client is generally served with programs and services complementary to the organization’s primary breadth of services that are less actively promoted. Lastly, the organization will opportunisti- cally serve clients; those needs-based segments that the organization can efficiently serve, however, are not part of the organization’s target market.

By identifying and deeply understanding an organization’s primary tar- get clients, programs and services can be tailored to meet all the needs of the target client. An organization can become more effective and focused, and achieve better client retention because the organization now understands and appreciates the depth and breadth of the programs and services it must deliver.

Once the strategically focused needs-based segmentation is complete, demographics, firmographics and behavioral characteristics can be used to sub-segment the needs-based segments for operational decisions/purposes.

One case example is provided by the YWCA of Calgary. One needs- based segment might include anyone (i.e., women, children, and men) who requires abuse counseling. This segment of the market can be tar- geted and served with focused programs and services. However, it could be that women require a female counselor and men require a male counselor. While the entire needs-based segment is targeted and served in the same way, the sub-segment of gender plays an important role and informs strat- egy to ensure that when hiring counselors the appropriate ratio of female to male counselors is considered.

Ideally, an organization would differentiate clients by their needs and create as many specific needs-based segments as possible in order to exhaus- tively meet every need of every client. In reality, this is not feasible and it is recommended to limit the number of needs-based segments from six to nine. One must consider weighing the increased revenue/expenses from better meeting the needs of one’s clients with the increased cost of altering

Transformation of YWCA of Calgary 305

promotion, funding, and/or HR plans (Peltier & Schrobrowsky, 1997), or realigning programming.

Greengrove (2002) discussed a needs-based segmentation from the medical sector where it was discovered that needs-based segments can be independent of pathology. In other words, it is better for doctors to treat the patient and not the pathology (e.g., in some cases, the needs of a breast cancer patient are more aligned to those of a gastric cancer patient opposed to the needs of other breast cancer patients).

A more relevant example to social services of using needs-based segmentation is the United Way (UW) of Las Vegas who examined the “exchange” relationship between donors and fundraisers in the 1990s. Donors and non-donors were clustered based on “needs” that included gen- eral attitudes toward charities, reasons for giving, perceptions of the UW, and individual ranking of particular causes. The UW of Las Vegas’ needs-based segmentation approach increased donations nearly 25% in the first year of implementation, and UW Las Vegas was instantly the fastest growing UW in the United States (Peltier & Schrobrowsky, 1997).

This example of the UW of Las Vegas also applies to program and service alignment. Caramanica, Cousino, and Petersen (2003) argue that pro- gram and service alignment to an organization’s strategic direction is the first step to success. If different departments are implementing programs and services that do not align with the mandate of the organization, then this misalignment creates uncertainty amongst its staff, clients, funders, and the programs and services. Furthermore, the risk of mission-drift arises as the organization or departments within the organization lose focus as to the purpose of the organization. Aligning organizational objectives to the organization’s strategic direction is akin to and just as important as aligning programs and services to target clients.

Ideally, an organization defines its mission and then identifies its pri- mary and secondary target clients before developing the programs and services it intends to offer. However, most social service organizations have been operating for several years (even decades) and suffer from legacy client targets that have evolved with the operation of the organization, not through strategic thought and mission alignment. Employing the ‘strategy’ of pro- viding programs and services “because those are the programs we have always offered” will likely lead to offering programs and services that do not sufficiently meet clients’ needs.

In 2001, the YWCA of Calgary experienced this same series of legacy issues. However, through its program and service realignment analysis (dis- cussed later in this paper), the organization clustered all programs under one of three categories: growth, restructuring, and divestiture. After this analysis, the YWCA of Calgary was better equipped to realign its current program and service offerings with the needs of its target clients.

306 D. S. Finley et al.

THE PROCESS OF NEEDS-BASED SEGMENTATION

The needs-based segmentation process describes how an organization can move from traditional segmentation methods to identifying needs-based seg- ments, determining which clusters of client needs can be served best by the organization and which client segments are best left to be served by other organizations. Box 1 in Figure 2 illustrates how most organizations assume they are serving one type of client with one primary need or a limited set of common needs. Box 2 shows how clients can be segmented into clusters based on their differentiating needs. Some of these clusters may develop overlap, while some clusters may be very distinct and separate from all oth- ers. Box 3 highlights that by deliberately selecting specific groups (segments) of clients that the organization can best serve, the organization defines a unique value proposition and becomes more effective at serving the clients within the chosen segment(s) (the dark circles in Box 3). The value proposi- tion is a tight explanation that staff and volunteers can use when advocating for the organization or explaining to clients, funders, and the community how the YWCA of Calgary can help.5 This focus on unique value proposi- tions increases the opportunity for forging partnerships with other service providers in order to better serve clients’ needs (the light circles in Box 3). Partners and potential partners also become more aware of the services of the original partnering organization (in this case, YWCA of Calgary) and can redirect/refer clients as well.

The internal process of moving an organization’s client focus from Box 1 to Box 3 usually takes time and encompasses lengthy discussions for those engaged in the organization’s strategic planning. Nonprofit organiza- tions typically do not have the resources for internal strategic reflection—a systemic weakness in the nonprofit sector. However, as nonprofit orga- nizations face increasing client wait lists and decreasing funding, a more

Segmentation divides clients into clusters with similar needs.

Many organizations perform assuming one cohesive set of client

needs

In reality, there can be multiple sets of

differing client needs

Understanding differing expectations and

consciously targeting selected needs to serve is

key to effective performance

Value Proposition 1

Value Proposition 2

Value Proposition 3

Value Proposition 4

FIGURE 2 Segmentation model (color figure available online). Source: Framework Partners Inc. planning tool.

Transformation of YWCA of Calgary 307

systematic re-examination of their strategic direction leading to program and service realignment is warranted.

Once an organization has segmented its clients and identified those clusters it can best serve, there is an opportunity to streamline and redesign programs and services to meet the needs of the target segments. This step in the process may include divesting programs and/or services that are no longer required because they no longer meet the needs of the organization’s target segments or because these programs/services are not effective from a cost-benefit perspective. This process of restructuring and repositioning may be revolutionary for some organizations and, therefore, it is vital that consen- sus is reached within the group so that the actions to take will be supported by the organization. It is also important to engage key stakeholders in the realignment process to build commitment and understanding of the need for restructuring. These stakeholders will more likely support such a poten- tially disrupting change (in the short run) if they are included throughout the realignment process, kept abreast of progress, and encouraged to sub- mit input. Also, by including updates throughout the process, revaluation of a large restructuring plan is not unveiled on unsuspecting staff, volunteers, clients, and funders.

Over-streamlining an organization’s focus so that it leads to stagna- tion, or the prevention of expansion and/or renovations is not common nor much of a threat to an organization undergoing such a transformation. However, planners are advised to be aware of this possibility. To avoid this risk, significant client analysis (including a re-evaluation of the needs-based segmentation) should be completed about every five years to ensure the organization remains in line with evolving client needs. Also, preventing large expenditures such as renovations could be a positive outcome if the organization would have otherwise dissolved before the renovations are complete, or shortly thereafter.6

The act of dividing clients into distinct segments allows an organization to selectively develop programs, tailor services, and communicate specific messages to targeted groups of clients (and funders) in order to maxi- mize organizational effectiveness. Thus, in the face of declining financial resources and increasing demand for quality service, a client needs-based segmentation can be an effective and efficient strategy when nonprofit orga- nizations are making decisions about program priorities, best uses of limited resources, and/or better methods of targeting funders due to the clarity gained from the client-focused programs and services.7

THE CASE OF YWCA OF CALGARY

While the academic literature on using needs-based segmentation to align programs and services within primary and secondary target client markets is limited, it is this very path that the YWCA of Calgary took in 2001 to achieve

308 D. S. Finley et al.

a new level of sustainability. The motivation for the YWCA of Calgary to ini- tiate such a strategic planning initiative was that the organization was facing severe cash shortfalls. The organization’s board agreed that quick action was required. As part of a comprehensive strategic planning effort, the board approached the bank to refinance the organization’s debt; a decision was made to sell its camp at Sylvan Lake; a serious cost-cutting program was implemented so that payroll could be met; and a systematic rethink of the YWCA’s programs and services was initiated to significantly improve ser- vice to clients. The staff was highly engaged in the restructuring process, which created buy-in and commitment during the implementation phase. While defining the strategic positioning is vital to the process, implementa- tion follow-through on the part of the staff is equally important. The role of the CEO during this sensitive time to take the board’s strategy work and implement it with the staff was paramount to the transformation’s success. Furthermore, the CEO (newly hired at the start of the transformation process) had to skillfully manage the relationships between the board, senior manage- ment, and a third-party strategic planning consultant. The YWCA of Calgary implemented its renewed strategic direction over five years (2001 to 2005).

Background

The YWCA advocates on behalf of women and children, particularly in the areas of economic autonomy and domestic violence. The YWCA of Calgary is one of the 36 YWCAs in Canada. Throughout its more than 150-year his- tory, the YWCA in Canada has been a pioneer in meeting women’s emerging needs (see Figure 3)

At the end of the 20th century, the YWCA of Calgary was struggling to overcome a number of growing issues within the organization, including long-term operation in a state of chronic financial vulnerability. With finan- cial and human resources continuously constrained, the YWCA of Calgary experienced difficulty in delivering its services. Changes to internal fundrais- ing models also became a challenge for the organization; the need for greater attention to donor stewardship, including reporting to donors and the demonstration of program and service sustainability, stretched available resources to the limit. Furthermore, competition in the market for additional fundraised dollars was fierce at the time when the organization was attempt- ing to decrease its dependence on government funding. In addition, while the YWCA of Calgary’s profile in the local community remained relatively high, public awareness and appreciation of the organization’s role within the community and its implementation of programs and services were very limited. The roles of the YWCA and YMCA remained significantly unclear to the public, and their relationship with each other appeared competitive opposed to collaborative.

Prior to initiating a strategic planning process, the YWCA of Calgary’s programs and services were spread across a broad client base of women,

Transformation of YWCA of Calgary 309

Lending libraries

(Montreal, Quebec

City)

Evening classes for employed

women (English, bookkeeping)

• School of Cookery (Toronto) • School of Domestic Science (Hamilton)

• Hostess Houses (for wives of service men)

• Farm Service Force (camps for women and girls doing farm labour)

Daytime Programs for Young Mothers Researching and educating

on the role of women in Canadian Society

1985 Community Model approved (to accommodate co-ed programs)1870 First

Canadian YWCA

(St. John)

1894 World YWCA

1893 National YWCA

1919 Canadian

Women Get Vote National Centennial

Shelter For Women and Children

Employment & Education Programs

Programs for Unemployed Women

Prayer and Shelter for Women

Education & Shared Resources

Social Advocacy

YWCA’s History

1995 First Community

YWCA Established

1954 First YMCA/YWCA

Established

18 50

–6 0s

18 70

–8 0s

19 10

–2 0s

19 30

–4 0s

19 50

–6 0s

19 70

–8 0s

19 90

–

20 00

s 18

90 –

19 00

s

FIGURE 3 Evolution of the YWCA of Calgary from 1850–2000 (color figure available online). The YWCA of Calgary’s planning initiative, 2001.

children, and men. Multi-barriered women were the traditional focus for pro- grams and serv