Leading Business Associations

Making Successful Transitions

Richard Paton

• Publisher: Burnstown Publishing House
• Year: 2015
• eBook ISBN: 9780994736109
• Edition: 1
• Topic: Business
• Subtopic: Nonprofit Organizations & Charities
• Index: Business

Leadership of Canada's business associations is about to undergo enormous change as the Boomers retire. Richard Paton tells us how to make a successful transition as president of a business association, and how to manage over the longer term. Drawing from interviews with twenty-six presidents covering 206 years of experience, his book provides insight into the key steps and requirements in the transition process and how to develop and implement an agenda. He also illustrates the common pitfalls that can undermine the career of a president. The book also addresses the development requirements for aspiring and existing presidents and the need for the business associations to ensure that they have the leadership expertise to lead business associations in the future.

SECTION II

Developing and Implementing an Agenda

Introduction

Effective presidents establish clear agendas with maximum support of the board, staff, and key groups. To develop a strong and clear agenda, presidents formally or informally review three major areas: the working relationship with the chairman and board, the staff of the association, and the overall environment facing the organization.

Figure 4 (page 135) illustrates how these three dimensions contribute to the development of an agenda (i.e., priorities and role) and the key areas for the successful implementation of an agenda. The concept of agenda is explained in Appendix B, which deals with the key concepts in the book. It is also explained further in Chapter 8.

Each of these elements is covered in chapters 5–7. Chapter 8 then deals with the development of an agenda by the president, and Chapter 9 focuses on the challenges in implementing an agenda.

In the transition phase, a president needs to explore all three of these areas over the first few months and constantly identify alignments, non-alignments, or gaps that can affect the ability of the president to achieve the expectations and priorities of the board. A president then needs to craft an agenda that makes sense for the challenges and opportunities that the association faces and to build the required network of support to achieve that agenda.

It was crystal clear in the interviews that presidents who were able to develop an agenda, and make significant progress in achieving it, were able to make a successful transition as president. The presidents who had successful transitions usually had long careers with their associations and retired or moved on to other positions with a very positive track record of success.

CHAPTER 5

Developing a Working Relationship with the Chairman and Board and Understanding the Needs of Members

The first requirement of developing a successful agenda is to develop a common set of priorities or directions with the board and a sound working relationship with the board, members, and chairman. This also must be done within the context of a well-understood governance system.

5.1What Do Board Members Expect of a President?

In many associations, there is an executive committee and there are officers such as the chairman, vice-chairman, or past chairmen who play key roles in working with a president. Thus, a president in transition must understand as quickly as possible the needs and interests of these officers, other board members, and the members as a whole.

The presidents interviewed had consistent views regarding the expectations of their boards. Board members expect a president to be the person with the ongoing responsibility for the performance of the association. They want presidents to be constantly assessing the environment and key players, to anticipate key issues, and to help the board position the association in the best possible way to be effective for members.

Strong boards do not want presidents who just take direction and implement it faithfully. They expect more. They view a president as an executive and full board member with the additional responsibilities of managing the organization. They want the president to alert them to key issues. When changes are required, they want good analyses, options, and recommendations.

While they expect presidents to take the initiative and manage the organization, they also do not want a president who replaces or usurps the guidance and direction of the board. The preference is for a president who is very good at balancing the ability to assess the overall challenges facing the association and potential directions with the skill to engage the board successfully in making the decisions.

A key requirement for an effective president is the ability to listen and respond to concerns, suggestions, or insights of board members. A president must always remember that the board members are the ones who face the difficult challenge of running their companies. Their insights or concerns come from the realities they face as executives, and an association has to be able to respond to those concerns. This positive and responsive style is vital to a successful president-board relationship.

With respect to the CEO role and management of the association, most board members have incredibly difficult day jobs. They do not want to get engaged in the management of the association unless it is very necessary. They are also aware of the pitfalls of assessing a management situation without all the required information. They want a president who can manage and develop staff and create a positive environment in which staff can work with members effectively. They want a president who can help the association team work at top capacity and who plans for succession.

It is expected that when a president needs guidance or a decision on an issue such as the pension plan or a key policy, the president will engage the board. They expect a president to manage the budget successfully and to be constantly looking for ways to improve the efficiency and effectiveness of the organization.

When a president is doing a good job of supporting the board and managing the organization and budget well, a strong trust is developed in the competence the president. This trust inevitably translates into confidence in a president and the staff of the association. The reverse is also true.

Within these common expectations identified by most presidents in the interviews, there are some important variations between boards that affect their interaction with presidents. This includes the structure and composition of the board, the extent of turnover or continuity, and the overall effectiveness of the board.

These board characteristics can have an important impact on the critical relationship of the president and chairman. For this reason, it is very important in the transition phase to understand as clearly as possible the expectations, operations, and practices of the board. This is a key aspect of the development of an agenda by the president.

5.2The Structure and Composition of the Board

The first step in determining how to work with the board and members is to understand how the board is structured, how it makes decisions, and how the board members interact with each other and staff.

There are huge variations between associations in the composition of boards. Some associations include all their members on the board, which can result in boards of forty or fifty people. Others have boards in the eight-to-twenty range based on membership of fifty to two hundred members. In these cases, the largest companies usually are automatically appointed to the board, and smaller companies or particular groupings of members have representation on the board.

National associations can include provincial organizations on their boards and therefore involve very complex representation of provincial organizations, such as crown corporations, along with private-sector organizations.

Some associations have executive committees of a smaller group of members who are usually included in the succession process for the vice-chairman and chairman roles. There are differences among associations regarding committees. Some have special committees, e.g., finance, audit, or governance. Others just include all those roles in the executive committee. Some associations also have specific subsets of the association, or councils focusing on particular interests. Generally, the more complex the board and committee structure the more time board functions will require of the president.

Selection of Board Members

It is important to understand how board members are selected and whether there are any criteria that are used to build an effective board. Most associations try to maintain a balance on the board that represents the members of the association and their relative importance to the sector. There are some important variations in selection that can have an impact on how the association works.

Some associations automatically include all member companies on their boards. Other associations select a number of board members to represent the overall membership and restrict the number of board members. When boards have an opportunity to select board members, they can determine whether they will be committed to the board or will meet some of the requirements of board membership. In associations where board members are automatically appointed due to company membership, the president and board have much less flexibility in determining the board membership.

If there are stewardship programs, some associations may also use their level of commitment to these programs as a qualifying factor for participation on the board.

Diversity, Conflict, and Common Goals of the Board

The composition of the board can have a major impact on the degree of co-operation or conflict. Associations with a small membership (six to twelve) who are all in the same business and competing directly with each other can find that policy decisions are difficult because they can affect the performance of one company differently than another.

On the other hand, associations that involve a few large members and many smaller members or companies can find that they have vastly different interests. The same can be true if their businesses have very different competitiveness factors. This can create significant strains in the board — thus making consensus difficult to achieve. One association chairman who was involved with a board with many small companies and a few large companies with different economic needs put this in colourful language: “The board was so divided that they could not agree on what to put on a pizza if they had to.”

Several associations have faced these issues and some have resulted in a split of the association into smaller, more homogenous associations based on the large versus small dichotomy. In other associations, the larger companies became so big that they figured it was to their advantage to hire their own government relations staff and as a result withdrew from the association. In some cases the larger companies in a sector belonged to the national association but ran a parallel organization to represent their specific interests. This, of course, created all sorts of issues for the president.

Finally, some boards have a deep history of focusing on the “common good” of the sector because of the realization that all companies in the sector can benefit from common advocacy as well as robust stewardship programs that gain the credibility of government and communities. As one president noted, in these associations, it is much easier to gain consensus because companies “leave their guns at the door” and often co-operate in areas such safety, standards, or advocacy where they share common goals. In these associations, it is well understood that when companies have a specific company need (e.g., special funding by governments) they pursue this on their own — not through the association.

5.3Board Membership and Turnover

Some boards may have members for many years who can maintain a strong corporate memory that is useful to the governance of the association. It is likely these board members are part of a selection committee for a new president and have additional influence on the board.

In other sectors, the rapid change in business through mergers and acquisitions or the movement of staff in global companies can result in very high turnover. When this occurs, it is very difficult to engage board members in the work of the association. Some may be board members for less than two years and even if they attend all the board meetings in that time, they may be involved in only a half-dozen meetings. Worse, they may know that they will be transferred in a couple of years outside the country and will not see involvement in a Canadian board as an important priority. If they come from another country and have no experience with the parliamentary system, they also may have difficulty determining how to contribute to policy and advocacy strategies.

One president noted that in his tenure of over ten years, the turnover rate per year had changed from about 15 percent to 30–40 percent. By the time a board member was appointed to the board and engaged in the issues, he or she was gone. This also made it very difficult to recruit chairmen who could make a two-year commitment as chair.

Even with a high rate of turnover, a board can maintain excellent decision making — but this generally requires several board members who can provide the corporate memory and leadership for the board. When most of the board is changing every two years, it requires a dramatically different approach to meetings and governance. For example, board agendas have to be prepared assuming that this is the first time the members have been briefed on the issue. Board members also have to be reminded of previous decisions by the board that hopefully can provide a building block for future decisions. If board members have little exp...

Table of contents

• Leading Business Associations: Making Successful Transitions
• Title
• Copyright
• Dedication
• Contents
• Foreword by Dr. Susan Phillips
• Foreword by Michael Bourque
• Preface
• Acknowledgment
• Introduction
• Section I: First Steps in Transition and The Role of An Association President
• Section II: Developing and Implementing An Agenda
• Section III: Leading for The Long Term and Leadership Development Challenges
• Appendices:
• Bibliography
• About the Author