Review faults Red Cross management under leadership of Elizabeth Dole Headquarters employees complain to auditors of ineffective appointees

February 15, 1997|By KNIGHT-RIDDER NEWS SERVICE

WASHINGTON -- When Elizabeth Dole looks out the window of her office at the Red Cross headquarters, she can't help but notice her neighbor's larger and more elegant yard.

Her neighbor, just a block of parkland away, is Bill Clinton.

As Bob Dole and other allies have taken to hinting, Elizabeth Dole could be seeking that very White House in just four years.

But to move gracefully onto the Republican ticket in 2000, she will need to address some serious problems at the Red Cross first.

A new independent management review, a copy of which was obtained by Knight-Ridder, concludes that the Red Cross needs "a more robust leadership team" at headquarters than the one Dole established during her first term.

Red Cross employees told the reviewers that senior managers -- most of them appointed by Dole -- are not particularly effective.

And in an organization whose bylaws demand political neutrality for the staff, Dole has filled a number of top positions with political friends from the Reagan administration and her husband's campaign.

There are fiscal worries as well.

In the past few years, the charity has had to borrow tens of millions of dollars a year from reserves to keep up with the escalating costs of its three main missions -- disaster relief, blood banks and aid to military families.

Revenues have been flat for the past three years ($1.8 billion in 1996), but the charity is hardly in dangerous financial shape. And Dole is a proven fund-raiser, having brought in nearly $600 million in her first term.

The management study found that two-thirds of the Washington employees and more than half the poll's sample of 30,000 paid staff nationwide believe that the Red Cross faces a "looming financial crisis" at the national level.

So do six out of seven Red Cross board members surveyed.

The study was commissioned by Gene Dyson, acting president during Dole's leave, after he discovered some unexpected shortfalls last spring. It was conducted by experts from KPMG Peat Marwick, the Red Cross' auditor.

The review found that just 3 percent of more than 150 headquarters employees surveyed in August rated the Red Cross' senior management "very effective."

More than two-thirds graded Dole's top team "somewhat effective" or "not effective."

Dole is credited even by her critics with having dramatically improved some Red Cross services, notably disaster relief and blood products.

The national staffers may still have reason to be unhappy with management, however. After reorganization in 1984, realignment in 1987, attrition through the 1990s and force reductions in 1996, the surviving national headquarters staff of 1,500 faces cuts again this year to offset $16 million in red ink.

Consultants found the Red Cross' headquarters planning resources to be "dispersed, dysfunctional or nonexistent" and long-term objectives unclear.

The management style, they said, was so top-down that Red Cross headquarters is often slow to react.

In addition, they found that "accountability for failures and successes is non-existent."

"Just as with any large organization, particularly a volunteer organization, we have some challenges and some problems which I don't want to minimize," said the Red Cross board chairman, Norman Augustine, who is chief executive officer of Lockheed Marietta.

"At the same time," he said, "the Red Cross does a great job for an awful lot of people. It makes a difference in this world, and it's our job to make it better."

Red Cross spokesman Roy Clason offered the interview with Augustine in lieu of one with Dole, who was unavailable.

The study's authors recommended that Dole consolidate her headquarters and create two new top positions -- chief operating officer and chief financial officer -- to shore up top decision-making.

She has already hired a new top operating officer, saying it was her idea before the study recommended it, and is looking for a new top financial officer.

The new management study jolted many on the Red Cross' 50-member national governing board, according to members who spoke with Knight-Ridder on condition of anonymity. The findings, leaked to the Non-Profit Times, an influential publication in the world of charities, also provoked an editorial last month urging Dole to step down.

Pub Date: 2/15/97

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