Crisis Management in the Church

By Frederick W. Gluck
Downloaded December 3, 2003

The Catholic Churchin the United States is going through the greatest crisis in its history. Dealing with crises is not a problem unique to church leaders; it is a task faced by leaders of any complex organization. When faced with a crisis, U.S. corporate leaders often bring in a firm like McKinsey & Company to help them think through their situation and construct a meaningful program for change. The consultants-working closely with management-analyze the causes of the crisis, both internal (like inadequate personnel, mismanagement, misallocation of resources, not keeping up with technological improvements or a dysfunctional corporate culture) and external (aggressive competition, for example, changes in consumer preferences or a decline in the company's reputation). They then jointly develop strategies and programs to respond to the crisis so that the company can prosper. While at McKinsey, I often advised corporate leaders on dealing with crises. What advice would I give the Catholic bishops for dealing with the current crisis? Unpleasant and challenging as the recent sexual abuse scandal has been, that is not the crisis to which I am referring. I have in mind rather the long-term decline in the relevance, or at least perceived relevance, of the Catholic church to the lives and spiritual well-being of its members, the concomitant decline in the church's capability to serve them and the resulting loss of the church's influence and standing in the greater population and in our society. This decline has been in progress for at least 30 years and has now reached the stage where there are very serious questions about the very future of the church in the United States. The reasons for this situation are many and complex, but I do not believe that there can be any question about the seriousness of the situation. On the positive side, there seems to be a very large number among the laity who, while embarrassed, upset and enormously frustrated by the current state of affairs, remain deeply committed to their faith and the church, are willing and able to help and are thirsting for direction and leadership from the clergy. The CurrentState I will examine the current state of the church from the perspective of a management consultant. I will look at: human resources, finance, general management and market position.

1. There are two broad problems with human resources in the church: insufficient talent and inadequate processes for managing it. More specifically, on the talent side: * The work force is rapidly aging. * The church's ability to recruit has declined dramatically over the last 40 years. * The church is no longer the first choice of the best and the brightest. * Church people are demoralized by internal conflict and public scandal. And on the process side: * Many believe that church personnel policies are overly restrictive and are counterproductive. * There is no effective performance measurement system at any level, which makes constructive change very difficult, if not impossible, to either plan or execute in any timely manner. * There is no effective planning mechanism in place to deal with the dramatic changes in mix between clergy and laity in important positions in the church and its related network of social services that has already taken place and will inevitably continue. This further complicates the change process. * While the contributions of the laity to the administration and management of church affairs is already quite important and will undoubtedly become ever more critical, there doesn't seem to be a comprehensive plan for achieving a smooth integration. In summary, the church seems to lack even the rudiments of an effective human resource management process or system at a time when the need is enormous and increasing rapidly.

2. On the finance side: * The church's traditionalsources of revenues are drying up. * Church costs are escalating rapidly as it no longer is attracting high-quality, cheap labor. * The plant is rapidly becoming obsolete. * Potential liabilities as a result of the recent scandals are large and growing. * The processes for financial management seem to be highly fragmented, uncoordinated and much too underdeveloped to deal with the problems enumerated above.

3. With respect to management:
*The U.S. church is a subsidiary of a large enterprise located in a foreign country where management has been historically committed to resisting change and maintaining the status quo. * The U.S. church organization has no effective central point of leadership that can energize the necessary change program. * Church leadership is aging and is also largely committed to the status quo or even the status quo ante. * Church tradition of hierarchy dominates most of the leaders' thinking about management.

4. The character of the church's membership and its potential membership (market position) has changed substantially. As a result of these changes and the managerial shortcomings cited above, the U.S. church's market position has deteriorated in a dramatic way. * The potential market is much better informed and aware of the options available to them than in the past. * Many of the faithful (customers) no longer feel committed to the product line and openly reject portions of it as irrelevant to their lives. * The church's reputation has declined precipitously as a result of recent scandals and many of the faithful no longer trust church leaders or believe in their infallibility. * On the positive side, most of the faithful remain highly committed to the basic message and thirst for sure-handed leadership and dramatic change in the delivery system. Strategy for a Turnaround

The situation is not withouthope; but the church, I believe, is in what can only be called a "turnaround" situation. In the business world successful turnarounds are generally characterized by: * changes in leadership, * a single-minded focus on measuring performance and acting quickly when it is unsatisfactory, * quick identification of the causes underlying the major problems and development of specific action plans to remove them, * dramatic cuts in cost and staff, * sale or closing of unprofitable operations, * a comprehensive challenge to all the assumptions underlying strategy, organization and operations. Coming to grips with this formidable set of challenges, in an organization as historically successful as the church, will be a daunting challenge and can be accomplished only by a comprehensive program of change with strong leadership from the top. Moreover, little constructive change will be possible until some of the most glaring shortcomings in church management and governance approaches are remedied. These shortcomings are most evident in the management of finance and human resources. These shortcomings-there are undoubtedly others-are the legacy of years of operation with a management and governance system tuned for a very different environment. Nevertheless, I believe that church leaders can make much progress in the short term by addressing finance and human resources, and they would send a very constructive message to both the clergy and the laity that real change was afoot.

Since there is no "C.E.O." of the U.S. church-and very little likelihood that one will be appointed-the U.S.

Conference of Catholic Bishops seems to be the only place where the necessary leadership energy can be generated. This would require significant change in their mode of operation, however. Here are some examples.

1. The conference should make a strong public commitment to managerial change that will address shortcomings in the administration of the U.S. church and to an examination, with the full participation of the laity, of the controversial and divisive policy issues that plague the U.S. church.

2. The managerialagenda should include: * Ensuring financial accountability and transparency in each and every parish and diocese and measuring financial performance and correcting shortcomings therein. Some accounting and reporting guidelines were adopted by the conference in 1971 and 1983 under the leadership of Cardinal Terence Cooke; but these were only guidelines, which could be ignored. No review or enforcement mechanism was provided. * Developing and standardizing an approach to managing the human resources of each parish and diocese and the U.S. church as a whole. This effort should encompass such needs as: - Integrating the laity into the overall governance and management of church affairs and planning for the inevitable continuing shift of responsibilities at all levels of the church to the laity - Defining and implementing a comprehensive program of performance measurement and management development - Defining a comprehensive set of personnel policies to guide the management of the U.S. church and to shape recruiting and human resource development policies. - Developing a systematic approach to dealing with controversial issues in the U.S. church that integrates the laity completely into the process-including, most importantly, the definition of which issues should be addressed. The agenda of issues should include, for example, the role of women, the role of the laity, clerical homosexuality, celibacy, birth control and divorce. In order to accomplish these goals, the U.S.C.C.B. should recruit an advisory board of prominent Catholic laypeople capable of devoting substantial time and effort to the organization and management of these efforts. Representatives of this advisory board should be included in the senior council of the U.S.C.C.B.. The U.S.C.C.B. should concomitantly examine its own organization and capabilities and make the necessary changes required to discharge these new responsibilities. Finally, the U.S.C.C.B. should communicate to the pope and the Roman Curia the absolute necessity of adopting modern management methods in the U.S. church and the inevitability and desirability of including the laity as equal partners in deliberations about important policy issues. I recognize that the changes recommended may appear to more traditional members of the church to be radical and impossible to implement. Turnaround situations, however, always require radical action; and unless some dramatic action to energize a change program for the U.S. church that fully incorporates the laity is undertaken, I believe the decline that is already well under way will only accelerate.
Frederick W. Gluck is a former managing director of McKinsey & Company, the consulting firm, and a former vice chairman and director at The Bechtel Group.


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