Catholic Church – Under New Management

My friend and old colleague from McKinsey, Fred Gluck, published a fascinating analysis of the management challenges facing the Catholic Church under the heading of "God’s line manager" (actually the headline in the paper edition was different, but I like the one on the FT web site better) in the May 7, 2005 Weekend section of the Financial Times.

True to his style, Fred pulled no punches. He looks at the Church through the eyes of a management consultant applying the standards of good management. Anticipating some skepticism, he asks (and answers):

Is it fair to apply these standards to the Church? While it is not a corporation, the Church’s financial assets, spending and workforce dwarf those of the largest companies in the world. In the US alone (with about 7 per cent of the world’s Catholics), the Church has operating expenses of more than $100bn a year, employs more than one million people and controls an investment portfolio (including property) which, while not publicly disclosed, is probably of equally daunting proportions. Scaled up, the church could well be approaching a $1 trillion enterprise worldwide.

What does he find?

In a word, the Church is in crisis and, most certainly, in a managerial crisis. It will not be able to give effective leadership to either the faithful or the clergy until it acknowledges the immense challenge of leading and managing a worldwide organisation and rejects its addiction to a feudal system that was developed when most people were uneducated, life was local, and communications were extremely primitive.

In particular, Fred dwells on the human resource challenge:

The Church has significant human resources problems. Its ability to recruit has declined dramatically during the past 40 years and the workforce is rapidly aging. It is no longer the first choice of the best and the brightest.

It was interesting to see many of the same talent issues facing large corporations also plaguing another global institution, albeit in a much more severe form.  I found it interesting that Fred only tangentially mentions the competition from other global religions faced by the Catholic Church.  The Catholic Church is losing "market share" to Islam and, within Christianity, to evangelical and pentecostal denominations.  I suspect that the human resource challenges faced by the Catholic Church are not simply a function of internal management practices, but are in fact tied to the competitive challenges more broadly.

Institutions that grow have an intrinsic advantage in attracting, developing and retaining talent.  Talent seeks environments that will provide opportunities to develop more rapidly.  Institutions that are growing provide these kinds of opportunities in the form of exposure to a broader range of experiences and more rapid advancement. Institutions that are shrinking have a corresponding disadvantage.  Virtuous cycles and vicious cycles play out in the relationship between institutional growth and talent development.  The Catholic Church appears to be afflicted with a vicious cycle.  Adopting better human resource management practices may help, but only if the institution at the same time addresses the broader competitive challenges and finds new ways to grow its base of adherents.