American Red Cross: Obstacles of Effectiveness

EBG Projects

Southern Illinois University Edwardsville

Executive Summary

This paper explores the American Red Cross Case published by the Harvard Business School. It entails fundamental management problems throughout the American Red Cross organization. After studying the case, we found that the fundamental management problem was the lack of overall effectiveness. This issue is showcased by three main characteristics of effectiveness. All of these come together to provide solutions for the major problem of the Red Cross. Solutions can be found by revising old organizational techniques. After finding these solutions, they can be put into action to reorganize, expand, and construct the management effectiveness it lacked.

Predominantly speaking, the American Red Cross is one of the nation’s largest not-for-profit charities. Throughout the years, the entire organization has acquired over one million volunteers to help victims of disaster and in times of need. Their mission statement, “The American Red Cross prevents and alleviates human suffering in the face of emergencies by mobilizing the power of volunteers and the generosity of donors,” implies directly to how the organization proceeds to implement their goals and efforts. Although they have a prestigious name among most not-for-profit charities, they have encountered unforeseen difficulties that companies may cross. The fundamental problem of the American Red Cross management is their issue with effectiveness throughout the entire organization. This main concern is highlighted by dilemmas arising in organizational structure, growth and development, and organization environment and resources. Evaluating on organizational structure, the structure of the organization needs to be broken down first. The board is composed of fifty individuals. The chapters elect thirty of these individuals, the board elects twelve “at large board members,” and the president of the United States nominates eight. The chairperson is included in the eight nominated by the President. In the past, attendance has been an issue for those individuals that were nominated by the President. Between October 2000 and May 2005 the Presidential nominees only attended an average of one in six meetings (Lorsch, 2008). In their place they often sent their aids, which could participate in the discussions but not vote. The large size of the board of directors has been called into question in recent years as well. With such a large organization, some would argue that a large board would also be required to manage it. These individuals argue that a large board allows for more division of labor. Greater division of labor results in a larger array of topics that can be handled at once, thus increasing efficiency. Those that argue for smaller boards do so because they feel that smaller boards are able to act and make decisions quicker. With smaller boards, every member is ensured a job or task, which is not necessarily true with larger boards. Along with the fifty board members, eight board committees were also in place to handle various organizational duties. Some of these committees had over lapping or similar duties. The most noted of these committees was the Executive committee, which is composed of eleven individuals that made decisions for the organization when the full committee was not in session. The Governance committee served to recommend the twelve members of the committee that were, “at large”. The Nominations committee worked to elect the thirty members from the individual chapters. The International Services committee was in charge of determining the funding and aid to the rest of the world. The Public Services committee was charged with handling public relations. A Disaster and Services committee was created to handle reactions between the chapters. The Finance and Audit