Category Archives: Governance

Association Trends – What’s Happening in Europe?

Dutch DelegationBy Asif Ahmed, Manager at Zzeem

Zzeem recently hosted an European-Canadian summit to exchange views on how associations and Association Management Companies (AMCs) operate across Canada and abroad. The 10-member delegation represented various Dutch associations and AMCs. There seemed to be a lot of similarities and differences between Europe and Canada not only in the way associations are run but also in what members perceive as value.

Current research demonstrates that networking is the major reason why people become members of an association in North America. Similarly, it stands true for the Dutch too. One member of the delegation noted that “an opportunity to meet peers and socialize” is the reason why people join an association and go to events. It’s the member to member interaction that everyone is looking for whether it be in Europe or North America. The other similarity that I observed was the fact that their members are looking for smaller, more intimate events where there are more opportunities to talk to the attendees as opposed to the big conferences with umpteen education sessions where people are busy trying to catch the next session.

One of the associations in the Netherlands has had huge success in achieving record attendance at their events by making them free for members to attend. The story doesn’t end there. They have gone a step further by penalizing the no-shows. Yes you read it right! They charge 30 Euros (CAN $45) as they consider it to be disrespectful to register and not show up at the event.

In The Netherlands, they have incorporated XDP which stands for Xperience Design Project.

The next generation of conferences are evolving as multidisciplinary, experiential marketing platforms to better personalize the learning and networking options for attendees. They’re also a hell of a lot more fun.

— Greg Oates

This is fairly a new phenomenon for the North American market. So what is XDP? It is an event built specifically for leaders who plan, design, execute, and support association events and want to:

  • Attract and invite the right people to their events
  • Create positive experiences for the audience before, during, and after the event
  • Keep attendees engaged and, most importantly, coming back

Young Professionals Network (YPN) is yet another growing trend that all parties are experiencing with respect to the structure of their associations. The Europeans have made great strides to empower the younger members by letting them have their own Board and budget for events, which is laudable. However, the challenge they’re facing is the transition for the young professionals to move over to engagement in the ‘regular’ association (for a lack of a better word) once they have crossed 40.

At the end of the day, it was a very meaningful exchange and my regret is that we didn’t get a chance to record the audio of the conversation. Nonetheless, I am happy that they left with some sweet memories – of the mutual learning and the Timbits that we ordered.

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Filed under Association, Association Management, Association Management Issues, Governance, High Performance Organization, Leadership, Member Education, Member Engagement, Member Value Proposition, Volunteer Engagement

Bylaws – Your Association’s Playbook for a Winning Team!

playbook

Many directors think bylaws are something the association is required to have but don’t see it as a vital tool for how they do business. It is considered complicated and full of legal language that no one really understands. Often no one looks at them and they gather dust.  This is a CRITICAL mistake!

Think of your association as a sports team and the bylaws your playbook. Essentially the bylaws provide important instructions about the team and individual players and how the association plays the game. If the board doesn’t follow the “rules”, the association and individual directors can face serious consequences.

Association bylaws are designed to ensure stability, continuity, and structure. They are a required legal document that represents an agreement between the association and its members. They provide the foundation for good governance practices which in turn should lead to positive results.

It is important that your bylaws: 

  • REPRESENT REQUIRED LEGISLATIVE REQUIREMENTS AND INTENT: The jurisdiction under which your association has been incorporated has specific acts and legal requirements that must be included in your bylaws and governance structure.

TIP: Invest in hiring a lawyer who specializes in not-for-profit legislation to provide the bylaw content and ensure your bylaws are compliant with current legislation.

  • ARE HIGH LEVEL AND SIMPLE: Provide just enough detail to ensure the association has adequate direction and is compliant. Address high-level governance issues such as the association’s purpose; board and officers structure, position descriptions, responsibilities, terms of office, succession and removal, official meeting requirements, membership provisions, voting rights and requirements, conflict of interest processes, how bylaws can be changed, and other non-negotiable items that reflect the association’s work.

TIP: Create policies that are separate from the bylaws. They will allow your association to address more detailed governance requirements in a less rigid format.

  • ARE RELEVANT: Things change and your governing documents need to reflect new realities and opportunities. The board and staff should review the bylaws annually and make revisions as needed.

TIP: Make sure the changes make long-term sense and will not unduly restrict the organization’s progress.

  • ARE SHARED AND UNDERSTOOD: All directors are legally bound to follow everything in the bylaws and what it means for the association. If a grievance is filed by a board member, volunteer, employee or recipient of services, the law typically sides with the bylaws. Ensure that new directors receive the bylaws upon installation and all directors and staff re-familiarize themselves with the provisions regularly.

TIP: Ensure an overview of the association bylaws are part of an annual Board Orientation session.

Don’t leave your bylaws on the sidelines – make them part of your winning team!

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When Should the CEO Tell the Board, “No”?

Crowds of people protested against environment pollution in outdoorThe CEO reports to the board. Right? Yes. So if the board directs the CEO to do something, he/she should do it. Right? Not always.

When should the CEO say No? When the CEO’s responsibility to the organization is in conflict with a directive from the board.

How might this occur?

When the board directs the CEO to take an action that puts the association and/or the CEO at risk of meaningful liability or seriously threatens the sustainability of the organization. Examples include jeopardization or violation of contractual agreements and violations of relevant legislation and bylaws.

Here’s a real life example.

A client of ours was experiencing a cash flow challenge. The CEO and CFO informed the board and made recommendations. The board ignored the recommendations and instead, instructed the CEO to immediately draw down the entire amount of the organization’s line of credit. The CEO and the CFO were both aware that this action would trigger an emergency alert at the bank, resulting in a negative outcome for the organization. Despite this knowledge, the CEO immediately executed the board’s instructions.

The bank, predictably, responded by cancelling the line of credit and demanding immediate pay-back of the funds drawn. The organization narrowly averted bankruptcy and limped along until another organization took it over.  Predictably, the board fired the CEO and the CFO.

The members were not well served. Had the board followed the recommendation of the CEO the outcome would have been different. What should the CEO have done instead?

Before executing the board’s instructions, the CEO should have advised the board that he/she would be requesting a confirmation of the board’s direction in writing with an acknowledgement of the advice provided by the CEO and the risk associated with executing the board’s instructions. The CEO should then have communicated with the board via email. The email would have reiterated the advice that the CEO provided and requested confirmation of the board’s decision to direct a different path.

Verbal conversations will be remembered differently by participants after the fact. It’s human nature.

When the board is requested to confirm a questionable directive in writing, where the consequences are clearly articulated, it inspires sober second thought. Had this happened, the results for the organization might have been different.

Is this a career limiting decision for the CEO?  Quite possibly. Let’s not sugar-coat the outcome.  The CEO’s job is to accept the risk of job loss to fulfill his/her obligation. Humans are complicated and directors are all human. But they don’t have your knowledge. That’s why they hired you. Have the courage to take the personal risk to fulfill your obligations to the association you serve.

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Tips for Chairing a Meeting

chairing a meetingThe primary role of a chair is to:

  1. Ensure the agenda is followed and completed on time
  2. Ensure the meeting stays on track
  3. Ensure both sides of a discussion are aired
  4. Ensure the necessary decisions are reached

Some tips for better-run meetings include:

  • Ensure clarity; explain the overall purpose at the start of the meeting, specific discussion items, identify action items, roles, responsibilities and timelines;
  • Create a balance between people, issues and time;
  • Talk less, listen and facilitate decision-making without imposing your position on the group;
  • Be impartial ensuring that your leadership position does not tilt the scales in favour of your position over others;
  • Ensure meetings are run in the spirit of fairness, equality and mutual respect;
  • Keep the meeting on track: remind people of the agenda items and intervene if they digress;
  • Manage the meeting time and work within the allotted timeframe. If more time is required, determine as a group whether it needs to allocate more time to the topic, reschedule another meeting or move to the next topic;
  • Encourage and manage participant contributions by creating a balance of speakers. Allow everyone to have an opportunity to speak and be part of the discussion;
  • Encourage members who oppose something to propose an alternative;
  • Follow up and review the agreed action points in between meetings; and
  • Review the effectiveness of the meeting to ensure future meetings are effective and efficient.

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What is a High Performance Organization and How Do We Get There?

< Use this link to view a 2-part webinar series on this topic: http://vimeo.com/111229759 and http://vimeo.com/113734754 >

A membership organization is an organization, typically not-for-profit, that collects fees from its members in return for services, and whose primary purpose for existence is to serve its members. A membership organization is a business and must be operated as one to be sustainable. At a minimum, this means that revenue must exceed costs and that the organization’s resources must be used effectively and efficiently to deliver a high level of service to members. More than ever before, members are questioning the ROI on their membership fees. Membership organizations must be seen to deliver value commensurate with their fees and in excess of alternative options. A high performing membership organization (HPO) delivers a highly efficient “back stage” and a highly valuable “front stage”. Back stage efficiency drives down costs and improves service delivery. Front stage value drives revenue. The back stage elements are the internal systems and processes that support the outward facing activities of the organization. Like plumbing and electricity, the back stage is invisible when it is working well and painfully visible when it is not. The front stage includes the elements that stakeholders and members see and interact with. They are highly visible and have a direct impact on the credibility and profile of the organization.

8 Elements of the High Performance Organization

There are 8 elements to the High Performance Membership Organization:

  1. Governance
  2. Planning
  3. Resource Management
  4. Human Resource Management
  5. Revenue diversification
  6. Member Value Proposition
  7. Sponsor Value Proposition
  8. Stakeholder relations and issues management

These 8 elements comprise the front-stage and back-stage elements that tie back to the Sustainability Model for membership organizations. Each of the eight elements plays a key role in the success of the membership organization. These eight elements map back to the Sustainability Model. The Sustainability Model has 5 pillars. We have observed that membership organizations that have all of these pillars in a healthy state are invariably sustainable. In practice however, many organization are not able to provide all five pillars. Therefore they must be particularly strong in the service areas they can provide – to balance their more limited scope.

5 Pillars of the Sustainability Model for Membership Organizations

  1. Regional Networks. The organization has grass-roots chapters or networks that connect directly with members in their local area.
  2. Stakeholder Relations and Issues Management. This is often referred to as advocacy or government relations. The organization has a program that builds and strengthens relationships and influence with stakeholders and proactively manages issues affecting its members.
  3. Knowledge Products and Communications. The organization publishes and/ or provides meaningful reference materials that help its members pursue their business, trade, profession or special interest.
  4. Events. The organization provides in-person events where members can network or learn, or both.
  5. Professional Development and Certification. The organization provides recognized and relevant learning opportunities and/ or certification that helps its members to become more proficient at their business, trade, profession or special interest.

HPO Back Stage Back Stage Efficiency = Lower Costs, Better Service

HPOGraph_1

(click to enlarge) 

HPO Front Stage

Front Stage Value = Higher Revenue

HPOGraph_2

(click to enlarge)

Higher Revenue + Lower Costs = Higher Sustainability

How to Become a High Performance Organization?

Find out where you are now and close the gap. We’ve taken the elements of the HPO Model and rolled them out into comprehensive action steps and processes that allow membership organizations at any level to identify the gap between their performance and that of the high performing organization. These action steps and processes are identified in an assessment template that can be used to identify areas of excellence and areas for improvement. Read more about the High Performance Transformation Program…

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10 Flaws on Boards

These are provided by Paul Tellier – a corporate director and the former president and CEO of Canadian National.

A few years ago he spoke to an audience of well-nourished diners at the Conference Board in Montreal and he delivered 10 zingers. These are 10 flaws that he has observed in corporate boards in Canada. At least 5 of them can be attributed to a lack of training (or perhaps willful ignorance).

These are equally applicable to non-profit organizations. I’ve seen every one of them –repeatedly. How many apply to your board?

Here are some excerpts from that presentation:

1. The chairman is not sufficiently inclusive. Some chairs tend to create two classes of directors and favour an inner circle without the equal involvement of all. This is a waste of talent which could eventually create tensions.

2. The dominating role of a strong CEO. On most subjects to be discussed, the CEO is usually the most knowledgeable. He also has the advantage of controlling, to a large extent, the information flowing to the board. The chair and all directors share the responsibility to ensure that the CEO does not control the agenda.

3. Too much focus on projects may be to the detriment of discussing the broad strategy and neglecting risk management. Directors should leave the day to day management of the enterprise to the executives. Directors should instead consider where the corporation should be in the next five years and focus on how to get there.

4. The role of consultants can be too pervasive and intrusive. This is especially true when directors are dealing with issues of human resources (such as compensation) and of mergers and acquisitions. Consultants should tender their advice and then leave the field to the directors.

5. Power Point presentations take too much time, to the detriment of greater dialogue and discussion.

6. Directors should not limit themselves to the boardroom. They should take every opportunity to get to understand the underlying realities of the company they oversee.

7. Directors may stay on too long, I stayed on the boards of Bell Canada/ BCE for 14 years- this was too long. British guidelines refer to six years as a director: in exceptional circumstances, up to nine.

8. The chair is reluctant or too slow to get rid of non-performing directors. A chair must have the conviction to approach a board director to inform them that he or she is not adequately performing the job.

9. There are still too few female directors and progress has been too slow. Among Canada’s top 500 private and public sector companies, only 13 per cent of directors are women. Canadian corporate governance will not live up to its potential so long as we find excuses to exclude the available talent.

10. Neglecting the creation of shareholder value. Directors may lose sight that their prime fiduciary responsibility is to create value for the shareholders. Beyond the effect of the recent financial crisis, there are some companies where shareholders would have been better off over the years to invest in Canada Savings bonds rather than shares in these corporations. Many of the problems were the result of bad decisions made by some boards.

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Financial Reserves- How much should an association have?

I had a great question today from one of my favourite clients. They are a membership organization of about 1,000 members. They are in the fortunate position of being well-endowed with cash and their finance committee is trying to decide how much to set aside in reserves. Here’s what the CEO told me. “The committee is proposing 2 years of operating expenses, which I think seems really large – even 1 year of operating reserves seems like a lot to me. What is the norm?”

Personally I agree with her finance committee. Two years is a good, prudent amount of reserves. I have seen organizations go through 2 years of reserves so quickly it would make your head spin. It’s not as much as it seems when you run into difficulty or have a large investment to make. However, this amount of reserves is rare for a membership organization. Most just can’t do it.

The vast majority of Canadian membership organizations have less than a year in reserves. We do a benchmark survey every year and the typical range of reserves is 3-6 months of operating expenses with the average nearer the 3 month mark. The survey highlights for 2012 are on this page – scroll down to the section entitled Financial Reserves. http://www.zzeem.com/BenchmarkSurveyforMembershipOrganizations.aspx.

So if you want to be “normal” you could have 3 months of reserves and be part of the majority. But if you want to be safe- have a least a year in reserves. Also, to ensure you’re on the right side of the CRA, make sure you have documented what you have planned for the reserved cash (e.g. operating reserve, investment in new software, staff, marketing, PR, etc.) so it doesn’t look like you’re simply stockpiling it.

Some accountants will tell you that the CRA “does not allow” NFPs to have more than 6 months of reserves. This is bunk. However, if the CRA audits you, they will expect to see that you have a plan for your reserves and this must not include any plan to return it to members- either directly, in the form of cash, or indirectly, as a reduction in membership fees or services.

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