|
Boards are the key
to success |
||||||||
| The key to success for private clubs is a strong, cohesive board of directors devoted to the club mission, values, culture and ultimately, success of the club. The board of directors should establish policy and then let its professional staff manage the policies set by the board. So how can clubs make this happen? | ||||||||
| In reality, there are a number of ways clubs can foster strong boards of directors to the betterment of the club. It starts by seeking first-rate candidates, by establishing a transparent process; by ensuring the club’s agenda comes first and ensuring there’s strong, effective communication with the members. | ||||||||
| That said, sometimes it just doesn’t happen? It often goes back to the start…finding candidates who are willing to work in the best interests of the club. In the mind of Jim Singerling, chief executive officer of the Club Managers Association of America, it starts with the club itself…an operating premise. | ||||||||
| “As with all successful business practices, a firm statement of what the operation is about is a great start. Specifically define in a mission statement what the club is attempting to accomplish by being in operation. What is the reason for existing? If the club has not clearly addressed nor articulated that topic specifically, there can be no clear goals established. Not for the staff or for the board,” said Singerling, who earlier in his career served as vice-president and general manager of Coral Ridge Country Club, Fort Lauderdale, Florida. | ||||||||
| “Next, the people running for the board must have a clear understanding of what their roles as directors are going to be. Define the role of the individual directors. Have board members commit to joining with the majority on every single issue that the board addresses, after debate has closed on every issue and a vote is taken at all board meetings. If that is a component of, or condition for running to be a director, than any malcontent that carries an opposing opinion out of the board room would have agreed in advance to step down as a director.” Strong words, but they clearly define the relationship. | ||||||||
| That said, how do clubs go about finding the “right” persons for the board who will work in the best interests of the club. The great debate for this, says Rick Coyne, is whether or not board members should be elected or appointed. | ||||||||
| “I firmly believe that there are three kinds of members at every club,” said Coyne, president, Club Mark Corporation, Dallas, Texas. “The volunteers willing to work for the club, the users, who joined the club for recreation and not another responsibility, and the grumblers who hate everything that the club has ever done. (Fortunately they are the minority, albeit the vocal minority.) | ||||||||
| “As a volunteer, which is where most of the pool comes from, except the occasional grumbler who gets involved in doing something constructive, many shy away from boards that are elected, serving instead on various committees. | ||||||||
| “The rational is that most people do not want to run against their neighbors or friends for an office that is thankless and fraught with potential downsides. (Not the least of which is a higher handicap) Who wants to lose an election and be subject to ridicule or embarrassment?” Coyne opined. | ||||||||
| “Another factor in the appointment process is that clubs desperately need consistency. This means that there should be a process by which people are even considered for the board. Forward thinking, without personal agenda and with some experience on various committees should be the very minimum standard to look for in a candidate for the board,” he suggested. | ||||||||
| Additionally, Singerling suggests, “defining what the ‘interests’ of the club are and stating them over and over to the membership are the first challenges. | ||||||||
| “Individuals who cannot embrace the general purpose of the club should not run unless they express unqualified support of that purpose. The ‘best interest of the club’ then becomes much more manageable,” he suggested. | ||||||||
| So how do clubs finds these candidates? The general consensus suggests it the job of the nominating committee. | ||||||||
| “Most ‘model clubs’ that I work with elect a third of their members every year for a three-year term,” says Dick Kopplin, president of Kopplin Search, a private club executive search company based in Scottsdale, AZ. | ||||||||
| “An ‘ad hoc’
nominating committee would typically nominate the candidates. In the
past, many clubs would run more candidates than available seats,
however I believe that is truly archaic and few clubs engage today in
an actual ‘election.’ Most prefer to nominate the same number of
candidates, as there are seats available. Why?” Kopplin queried. |
||||||||
| “First of all, it is difficult to find people who will even volunteer to commit the time necessary to serve; they would typically not run if they thought they might lose in a popularity contest. Who needs that?” he questioned. | ||||||||
| “The best directors (high quality question) are typically those candidates who have served on committees and exhibit a sincere desire to see the overall objectives of the club achieved. They take a broad view of club issues and not focused on a single issue. | ||||||||
| “Most clubs allow nominations ‘from the floor’ but the best directed clubs very seldom have a floor candidate succeed. Usually the membership is very satisfied to ratify the work of the nominating committee,” he related. | ||||||||
| Singerling and Coyne are in agreement with the task of the nominating committee. | ||||||||
| “The candidates should come from a nominating committee that clarifies and discusses the club’s purposes with each candidate. The candidates should not necessarily be selected by this committee, but they should be interviewed by the committee, and the committee should offer an evaluation of the candidate to the board,” Singerling outlined. So how do you ensure directors of a high quality? | ||||||||
| “The same way that you elect politicians of high quality…impossible!” Singerling offered. “In this case you will more often be lucky than good.” | ||||||||
| At the same time, Singerling feels any member should be allowed to stand for election “as long as they accept the commitment to work with the entire board as a collective team. Directors who bring individual agendas with them will waste a lot of their fellow directors’ time and a lot of the club’s money.” | ||||||||
| “There should be a set of criteria that the club establishes for the selection process,” Coyne stressed. “This should include prior service within specific committees, a strong business background, leadership skills and an attitude that respects the paid professional staff and their responsibility to the day to day operations. | ||||||||
| But it must be there for all to see, Coyne recommended. “One of the things that must happen in the process is transparency. If the nominating committee attempts to be secretive or otherwise makes nominations in the back room, be ready for the natural perception that the process is a sham. | ||||||||
| “Create criteria, call for volunteers and go through a process. How do you check the character of a potential member? Would you do anything less for a member of your board of directors? Coyne questioned. | ||||||||
| Does this mean any member should be allowed to stand for election to the board? “Absolutely, so long as they fit a specific criteria,” Coyne suggests. | ||||||||
| “So many members get on the board because they want to ‘correct a problem.’ In most cases that’s nothing more than advancing a personal agenda. I’ve said it a hundred times; the problem with boards is that each newly elected body wants to steer the ship in a different direction. | ||||||||
| “Boards must think strategically and in the best interests of the club short and long term. It’s not where an individual or even the entire board may “want” the club to be; it’s where it “needs” to be that counts. The former is ego, the latter is business. Avoid individuals who only want to advance their own way of thinking,” Coyne stated emphatically. | ||||||||
| “The effective use of a nominating committee, with the club general manager’s input is the most effective way to insure that the club has continuity in operating philosophy. The club does not need to have a ‘single issue’ board member or someone who is campaigning with a personal agenda. Club board members should always have the best interest of the club as their motivation to run and serve,” Kopplin added. | ||||||||
| Tarun Kapoor, CEO and managing director, Kapoor and Kapoor Hospitality Consultants of San Marino, CA says elections should be by the full membership. “After all, it is their club, their community and their right.” | ||||||||
| And while the nominations, representing all stakeholders, can come from a committee, “there should be a process for nominations from the floor to provide balance and a platform for the disenfranchised.” | ||||||||
| Clubs may elect their directors, for example, on rotating three-year terms to ensure some continuity but Coyne says, “rules are made to be broken." | ||||||||
| “I’ve experienced individuals on boards who should never have had a term beyond the first two days, and others who were such clear thinkers that they would have been just as valuable 10 years into the process as they were the first year. | ||||||||
| “As a simple safeguard against a perception of ‘good ol’ boyism’ is to have specific terms. The reality is that the metamorphosis of professionalism in club staffs is simply incredible. Through the various associations that our staff members participate, as well as the many universities offering specific training in the various disciplines, today’s department heads and general managers are professionals. | ||||||||
| “It’s no longer necessary that the board stay in office long enough to understand the business. By creating a process to ‘qualify’ to be on the board, clubs can create consistency, and leadership while allowing the staff to operate the day to day mission.” | ||||||||
| A fear for many, including members and staff, has been the “chummy old boys” network that treats the club as a personal fiefdom. Is that something in the past? Well, maybe! | ||||||||
| “It is seldom the case today. Clubs have been forced to become business operations or risk going out of business. The exception would be the club that is the personal financial burden of one or two individuals. In that case, if the club is theirs I guess that they have the right to act as a ‘benevolent dictator.’ The problem emerges when the person acting as the dictator is spending everyone else’s money…now that is a No, No!” Singerling stated bluntly. | ||||||||
| In
“theory,” limited terms can prevent clubs from becoming an old boys
group,” except when there is no grooming of new leadership, clubs fall
into the trap of ‘nobody want to do the work but a few dedicated
individuals!’” Kapoor suggested. |
||||||||
| Even if clubs do take this kind of advice, it surely won’t guarantee all smooth sailing. Strong debate, and perhaps conflict and divisiveness, is inevitable, but it’s not all necessarily bad. | ||||||||
| “I don't know why anyone would think that they could ever prevent divisiveness,” Singerling suggested. “Look at who is on the board...all successful decision-makers in their own professional lives. Now you ask them to sit around the table with eight or 10 other successful decision-makers and reach consensus. It could be the single most difficult challenge that most of the directors of the clubs have faced in 20 years. If you have strong leaders as officers of the club, it can be a very gratifying experience for a club director. The leadership on the board and the confidence in the staff professionals are key components to a successful board.” | ||||||||
| Kapoor says, “clubs operating with a strategic plan eliminate the divisiveness created by individuals with a personal agenda. Clubs should implement bylaws that state all candidates and all board members must explicitly and implicitly accept the strategic plan and its implementation. Board members should not be able to unilaterally decide to shelve it. If they do not agree with it, they should work towards changing it.” | ||||||||
| Be open and communicate, Coyne adds. | ||||||||
| “Today’s club is faced with a lot of issues from legislation to economy, from membership losses to difficulty in replacing them. It’s only natural for members to become distrustful of the operational practices if they don’t see the big picture. Fireside chats, town hall meetings and other forms of open communications will go a long way in sustaining trust in the system and the process, whatever that process may be,” Coyne commented. | ||||||||
| “I offer these opinions and comments knowing full well that the diversity of the membership base of all clubs makes any general definition almost impossible. These are observations and it is clearly the responsibility of each board and club to define their purpose and to ensure that that purpose is fulfilled or redefined,” Singerling said. | ||||||||
| “Require the professional management team to manage board policy. If the membership has a clear direction of where the club is going and what the purpose of the club is, the board is seldom challenged,” Singerling suggested. | ||||||||
| “Effective communication is the single largest shortfall of the club industry. Most club members operate within their limited social circle. Embracing other segments of the club is a lot of work. The culture of your club must evolve as the membership evolves. Most successful clubs relegate the responsibility of managing the overall culture of the club to the chief operating officer/general manager of the club.” | ||||||||
| And to help achieve these objectives, Singerling says it the CMAA’s job to ensure clubs have a competent professional management pool from which to select the professional staff leading the parade. | ||||||||
| “CMAA's relationship with over 150 campus-based college-level programs and student chapters on 33 campuses with club management programs leading their undergraduate degree offer the future for the profession of club management. We are linking faculty, management professionals and students to the club industry. No one has or will embrace that role.” | ||||||||
| Even so, there seems to be on underlying theme in all of this discussion. | ||||||||
| “The best club that I have ever seen in handling the board process is Rio Verde just outside of Scottsdale. By thinking strategically, by acting on the basis of sound analysis, by communicating openly and by choosing volunteers who would work for the common good of the club and the community, the combined leadership of country club board and the community association have recharted the course for this marvelous community and country club. | ||||||||
|
“Club President Jim Peterson simply asked his board members to ‘leave your personal agendas at the door.’” |
||||||||
| Sound advice! | ||||||||
| Publisher's final thoughts | ||||||||
| In a nutshell clubs should not nominate board members just because they are well liked or because they represent a particular interest group. Rather clubs should be seeking board members who are self-confident, articulate, respected by members, can provide business skills, and do not have a conflict of interest…a personal agenda. Those who meet the criteria should be encouraged and nurtured. | ||||||||
|
For members
communication can be a way to success, but communicating is something
many clubs don’t do well. Avoid misconceptions, be open, honest and
seek transparency. It’s easy for those who face increases and
assessments and “not in the know,” to become disenchanted and
distrustful of the process. Most members, given the same information
as board members, will follow in the same direction. The key?
Communication…information. Keep members in the loop so they know
what’s happening.
|
||||||||
| It is vitally important board members clearly understand the club mission and perhaps most importantly a willingness to familiarize themselves with board responsibilities and ethical issues such as their fiduciary duties. | ||||||||
| New board members need to fully understand their responsibilities, be given an orientation and provided with information that will enable them to govern effectively. | ||||||||
| In today’s litigious society, directors and officers must be fully informed so boards can be protected from every-increasing liability actions, and of course the rising costs of directors and officers liability insurance premiums. For more information on how to protect your board from lawsuits and increasing D/O premiums, please contact John G. Fornaro at john@pcma.net. | ||||||||
| John Fornaro Publisher |
||||||||
| We welcome feedback and comments on any of our editorial features. If you have an idea for a topic you'd like to see addressed in a future "Publishers Perspective," please contact our editorial department at (714) 596-6611 or via e-mail at jody@boardroommagazine.com | ||||||||
|
||||||||