Booze and Board Meetings
What's your Club's Policy?
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| One thing is for sure; it often plays a significant role in our
lives, and that of the private club industry. Sometime more
significantly than we want. Alcoholic beverages, whether a bottle of
beer, a scotch and soda or a glass of wine are commonplace in private
clubs. In fact, the sale of alcoholic beverages in many cases, is a
major contributor to a club's revenue. |
| However, there are times when the use of alcohol is appropriate
and times when it is not. The key is in discovering when it is
appropriate and when it is not...and the ramifications of each. |
| So the question: Is it appropriate or not for alcohol to be
served to board members at board meetings? |
| The serving of alcoholic beverages to board members at board
meetings has been, and is an issue at more than one club across the
country. Some clubs have dealt with the issue directly by developing
policies that work for that particular club. And it is an issue that
has been raised more than once at some other clubs. |
| So what are the opinions of those in the private club industry and
how do they feel about alcohol being served to board members at board
meetings. As we might expect, the opinions, sometimes corporate,
sometimes personal, are quite varied. |
| "Personally, I am uncomfortable with the presence of alcohol at
board meetings," says Greg DeRosa, general manager and chief operating
officer at the Boulder Country Club, Boulder, CO. |
| "I have nothing against alcoholic beverages and enjoy a cold beer,
cocktail, or good glass of wine as much as anyone, but do feel that
there is a place for alcohol and that is not in the boardroom of a
multimillion dollar organization. |
| "At our club we have a straightforward zero tolerance policy for
alcohol in the workplace for co-workers and the hypocrisy of alcohol
at board meetings just doesn't fit in our club's culture," he
declared. |
| "Board members, while not compensated at Boulder Country Club have
a fiduciary responsibility to the members to conduct the club's
business in a professional manner. I believe that professionalism
needs to be reflective of the larger publicly held corporate world.
When conducting the club's business, boards deal with numerous
intricate issues and make critical decisions involving large sums of
money, as well as delicate member issues. |
| "I believe the general membership would expect an extremely high
level of professionalism of their elected representatives and can't
imagine alcohol being a part of that expectation," DeRosa said. |
| The folks at Boulder Country Club arrived at the decision as they
would any other, with "comments, discussion and ultimately a vote of
the board on the issue." |
| David D. Cecil, CCM, general manager and COO of Fox Chapel Golf
Club, Pittsburgh, PA pretty much agrees with DeRosa. |
| "Fundamentally, I do not believe it is appropriate to serve
alcoholic beverages before or during any meeting when official club
matters are discussed. It has been my experience that the consumption
of alcohol does not enhance the quality of decisions or actions at
such meetings." |
| There is a no-alcohol policy for the Glendora Country Club,
Glendora, CA, says GM Ron Banaszak, CCM. |
| "There is no alcohol served at the meeting, but after the meeting
has adjourned, board members are served dinner and there's an
opportunity to socialize. This gives us an opportunity to deal with
our business first and members can socialize afterward." |
| The Honors Course, Chattanooga, TN takes a completely different
tack says GM Gerald Daly CCM. |
| "We have four board meetings a year, held at 10 o'clock in the
morning and there's no alcohol" served during the meetings. It's
strictly a business meeting. "Perhaps the most interesting I've
heard," says Daly, "is the club that has its meeting at 7 a.m. on
Saturdays. Everyone is fresh, and they get their work done so everyone
can go and play a round of golf." |
| So as we see, there are many options that work for different clubs
and circumstances, although the majority have a no-booze policy. |
| It's a little different at The Beach Club of Santa Monica where
Gregg Patterson is general manager. |
| "Members serve on the board and committees at The Beach Club
without compensation - they give because they're asked to give
something back to the club through service. Members who serve receive
no perks for their service - no special tables at dinner, no free
bottles of wine, no special parking spots, nothing beyond the
opportunity to spend three to 10 hours a month discussing tactical and
strategic issues of concern to the larger club community," Patterson
stated. |
| "They're asked to attend meetings during the week, usually at
night after working a long day at their paying jobs. As a consequence,
club tradition has been that board and committee members receive free
food and beverage during their meetings. That said..." |
| Patterson suggests "alcohol is part of the dining experience for
most who serve on our board and committees, sometimes a drink before
the meal and more often than not wine with dinner. In the interest of
"efficiency" the meeting is conducted over dinner. |
| "My experience has been that this format makes the meetings go
longer, offers a less "professional" atmosphere than is optimally
productive, encourages wide ranging "organic" discussions, works
against "linear" checklist style meetings, builds team through lowered
inhibitions and often leads to more emotional situations than a
strictly 'business only - food and beverage after' style of meeting,"
Patterson outlined. |
| Cecil has encountered "three different approaches" at other clubs
he has managed. |
| "One club chose to offer cocktails and wine with dinner that
preceded the official board meeting. This proved time and time again
to be a mistake as only one board meeting adjourned before midnight in
the two-plus years as general manager," he stated emphatically. |
| "An approach at another club was to conduct the board meeting,
then, once all the official business was addressed and the meeting was
adjourned, a brief cocktail reception followed by a seated dinner was
provided. |
| "This approach," he suggested "placed the business at hand first,
and then followed with an opportunity for the members of the board to
socialize after the business was concluded." It's his opinion this
"provided board members some reasonable consideration for volunteering
their time and expertise." |
| A third approach had the board conducting "the business at hand,
adjourn the meeting, and enjoy dinner in the dining room at their own
personal expense. Often members of the board would gather together
with their spouses for dinner that helped to bring some revenue to the
club. |
| "Furthermore, there was no criticism from the members at large
about the perception of inappropriate 'club-funded' fancy dinners or
drinks," Cecil opined. |
| The Fox Chapel GM also feels when alcohol has been served at board
meetings a more casual approach has been taken, no matter how
important the issues. "Furthermore, I witnessed many times where more
rambling and side chatter took place during the discussion." |
| The booze - board issue has been raised in many different ways at
many different clubs across the country. At the Boulder Country Club,
for example, there had never been an ironclad policy over the years
and GM DeRosa said that while there were never any problems with
alcohol at board meetings, "it has certainly been an issue of concern
and at the very least created some discomfort for directors as well as
me. |
| "Recently we dealt with the issue and created a board policy that
now eliminates any alcoholic beverages from the meetings," he said.
|
| "As we all know perception is reality and even though most
directors felt strongly that alcohol never has nor probably ever would
play a detrimental role in a decision making process, the perception
alone... and the magnitude of a directors responsibility, made the
decision easy," DeRosa explained. |
| So this raises other issues...the ability to make decisions, legal
complications and fiduciary responsibilities. |
| Kevin P. Bjerregaard is an attorney in Newport Beach, CA and he
offers these opinions, some based on California law, but which provide
food for thought. |
| "An individual serving on a board of directors owes the
corporation and its shareholders a fiduciary duty. Although each state
has its own particular definition of 'fiduciary duty,' generally, the
fiduciary duty requires the director to act in good faith in a manner
that the director believes to be in the best interest of the
corporation and its shareholders," he said. |
| "This fiduciary duty requires that a director act in a reasonable
manner, and make such reasonable inquiries as an ordinary person in a
like position would use under similar circumstances," points
Bjerregaard bases on California Corporations code section 309(a). |
| "In many states a director will not be held liable for negligent
judgment - so long as the process leading up to the judgment is
reasonable," he opined. |
| It is also Bjerregaard's opinion that, as it is under California
Corporations code section 5047.5, there may be differences for
non-profit corporations in other states. "In many states, the standard
of care for a director is lesser if the director is not being paid and
is working for a non-profit corporation. In such cases, a director
will be held to violate his or her fiduciary duty only if the director
acts with gross negligence or in wanton disregard for his or her
duties," he added. |
| That may be the law, but what of practical advice? Bjerregaard has
plenty and it's pretty straightforward. |
| "Although I have found no case directly on point in this matter, I
would advise against serving alcohol during the actual decision making
process at a board of directors meeting. If any decision of a director
were challenged, surely the challenging shareholder would raise the
question, 'why was the director consuming alcohol while making an
important decision affecting this club?' |
| "In such a dispute, the consumption of alcohol would probably not
be a definitive factor in evaluating whether a decision was
inappropriate," he added. "However, at a minimum, the director's use
of alcohol would be relevant and would not help the director defend
any decision made during the meeting. |
| Bjerregaard says "if a decision is made while 'intoxicated,' there
is law that provides that the maker of the decision did not have the
proper 'capacity' to make the decision, and therefore the decision is
void. |
| "For a court to find a lack of 'capacity' due to the consumption
of alcohol, the court will need to find the decision maker was unable
to understand the consequences of his or her decision due to the
alcohol. |
| Bjerregaard's opinion is short and blunt. "Why take the risk? If a
board chooses to serve alcohol at a meeting, wait until the business
is concluded and the official meeting adjourned." |
| Some general managers share Bjerregaard's opinion that alcohol can
affect fiduciary responsibilities and the decision making of board
members. "I believe strongly that it can," says GM DeRosa. |
| "The physical effects of the presence of alcohol in the human body
have long been documented and it is a medical certainty that there are
physiological changes that occur when alcohol is present. Obviously,
all of this depends on the individual and the amount in question. |
| "Given that, it would seem that introducing alcohol into the
boardroom would rarely if ever create a more productive outcome, and
at the very least, it's presence creates the possibility and
opportunity for less than the highest levels of concentration and
decision-making," he added. |
| "Fiduciary responsibility is in effect a trust the membership
places in their directors to take seriously the running of the club's
business affairs. Knowing everything we do about alcohol, I can't
image that trust including the consumption of a nice Merlot or frosty
Fat Tire Ale while conducting club business. |
| "Why risk the potential for our constituents to draw negative
conclusions regarding our director's abilities or intentions?" he
queried. |
| "One of the most difficult components of managing a club is the
diversity of the members, including those in governance positions.
While a policy of this nature is never going to keep everyone happy, I
feel it is prudent and appropriate to keep business separate from
pleasure," DeRosa concluded. |
| Cecil believes "alcohol can adversely affect judgment of many
individuals. Business is business and should be conducted in an
appropriate environment. My guess is that the board meetings of
Fortune 500 corporations are alcohol-free." |
| While it's a long-standing policy at Fox Chapel "not to offer any
alcoholic beverages at any board or committee meetings" there is an
exception and that's "the annual board dinner that is strictly a
social affair," Cecil said. |
| Although the board at The Beach Club operates differently, it's
not for trying. |
| "Each year I present the idea that meetings be food and booze
free, that the working meeting be completed before the "eating
meeting" begins. Still no luck after 20 years in the same operation,"
GM Patterson opined. |
| "That said, The Beach Club is very successful using whatever
criteria you choose to use. Fact is, any system will work if good
people are part of that system. Here there's food and beverage
available from the moment the group assembles until the moment they
exit. Good things have happened and continue to happen at the club.
|
| "It works here because the quality of the participants insures
that it does. In an ideal world it would be business only, but in an
ideal world they'd be compensated for their expertise and their time,"
Patterson suggested. |
| "Besides, I talk so much at meetings that I rarely have time to
enjoy the meal and drinking for any employee, including me, is
strictly forbidden by me. Oh well, the members have a good time..." |
| Publisher's final thoughts |
| My opinion, and obviously that of many in the private club
industry, is that alcohol is taboo at boards of directors' meetings.
Private clubs are businesses and club business should be conducted in
a business-like atmosphere. Alcohol at board meetings sends out the
wrong message. Private clubs today are facing many issues such as
declining memberships, club loyalty, decreasing dining room sales,
aging facilities, rising dues, member assessments, environmental
concerns, rising health premiums for staff and the issue itself of
finding and retaining good, qualified staff. |
| By approving the use of alcohol at board meetings, it sends a
signal it's a social affair, not serious business and it's the wrong
message from the beginning to end. Board meetings even at the best of
times, can be infused with an emotionally-charged atmosphere. Alcohol
can inflame these emotions. |
| Private clubs need to do what's in their best interests and allow
decisions to be made based on clear-minded thinking, solid facts,
research and what's in the best interest of the club. At least that's
the way I see it. |
| |
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 |