Let’s go to executive session.” These are words seldom heard in club boardrooms. Most club boards don’t know how to use executive sessions effectively and most general managers are suspicious of their purpose. What exactly are executive sessions? Why are they used? Why are they so mistrusted by GMs? And what are the best practices for them to be a constructive part of club governance?
The effective governance of private clubs sometimes requires that the board of directors and senior management deliberate sensitive matters. This is achieved through what are commonly referred to as executive sessions. In the context of club board meetings, it means a private session or portion of a meeting where one or more people are excused. Where organizations have open meetings by choice or by regulation; it means closing the meeting to club members, the media or other interested parties. Such closed meetings establish the expectation of confidentiality and privacy.
In private clubs, the excluded one is often the club’s general manager. Some boards allow other senior management to attend board meetings, such as the golf course superintendent, golf course professional and/or controller. People who hold these positions are also excused before an executive session. For purposes of this article, assume that the GM/COO is only the staff member usually attending board meetings and the only person excluded from the executive sessions. Further, assume that whenever the term executive sessions is used, it also refers to closed meetings in which private or confidential subjects are discussed. While it is common in the nonprofit world to have an executive session at the end of many meetings, it is not the practice at most clubs. Most nonprofit organizations have far fewer meetings providing less opportunity for director interaction, whereas directors at a private club associate frequently and sometimes daily. Club directors can and frequently do discuss board matters over golf, cocktails and dinner.
Historically, clubs seldom use executive sessions. However, many governance publications recommend the board routinely schedule executive sessions on their meeting agendas. If not every meeting, then quarterly so fewer suspicions and anxieties are raised than if an executive session were suddenly added.
Often an executive session implies that disciplinary or personnel issues are being deliberated. Modern day board leaders do well to understand the effective and purposeful use of executive sessions and to diminish the negative implications of executive sessions.
A Sensitive Topic
Executive sessions can be a sensitive topic among general managers. Many GMs believe the purpose of the executive session is to talk about them. Indeed, that is sometimes why executive sessions are called. The level of emotional ownership at clubs tends to blur distinctions between governance and operations and leads to micromanagement at one extreme and board abdication to the GM at the other extreme.
GMs typically support preserving the distinction when it deters boards from micromanaging. GMs are less than sympathetic when the board alone has a discussion to exercise its role as governors. Club managers do well to maintain a separation between the board’s and the GM’s roles to avoid the perception that the GM controls the board.
In fact, the best clubs enjoy a responsible balance of board independence and reliance upon the GM to serve as a servant leader of the club.
Executive Sessions: When & Why?
This brings forward the questions of when and why to hold executive sessions. Should executive sessions be regularly scheduled or on an as-needed basis? Or should the board conduct an informal vote on whether to move to executive session? A good test of whether or not to hold an executive session is the question, “Do we have the information necessary to make the best decision—and does excluding someone (such as the GM) compromise the information, expertise or perspective available to the board?” In many cases, the board is better informed with the GM in the room.
The use of executive sessions has increased in the information age where there is a need to know everything immediately, where board minutes are often posted on the club website, and there is constant communication with members through social media. This provides today’s club board fewer opportunities to have confidential and off-the-record discussions. A word of caution here, if the posted board minutes indicate that board is frequently using executive sessions, the message to members may be that there are significant issues at the club that the board is not divulging. This sometimes makes members suspicious of board governance matters and activities.
The motivation for confidentiality should be to protect a person, the club or both. Whereas, the motivation for secrecy is usually to achieve a particular outcome that would not be possible with full and open deliberation, it is always advisable for the board to deliberately manage the balance between confidentiality and trust. Confidentiality is generally secured through a code of conduct that is agreed to and, in most cases, signed by board members at the beginning of their term or each year. Presidents are wise to remind directors that beyond what is reported in the minutes, what is said in the meeting stays in the meeting. Directors have two options within the regular board meeting; they can state “let the minutes show …” or conversely, “that the minutes be silent on ….”
There are differing opinions on whether minutes are recorded in executive sessions, who takes the minutes and who retains them. In fact, the board should record that an executive session was conducted to address specific and confidential matters before the board.
A Recommended Course of Action
Boards deliberate as many and communicate as one. Matters of privacy and confidentiality maximize the importance of this axiom. Executive sessions often demand that the board members communicate openly, candidly and without reservation within the safety of the board room. Each board member is duty- and honor-bound to protect the confidentiality of the board room.
Executive Session Policy
Be sure to have a written policy for executive sessions in the club’s Board Policies Manual (see sample policy sidebar). That way, there are no surprises for the board or the GM.
It is considered a best practice for the board president to discuss the topic of the executive session with the GM in advance to ensure the president has the benefit of the GM’s input and perspective.
The board president sets the tone for the executive session and ensures that the board maintains focus on the topic and the desired outcomes. The president may discuss the results of the executive session with the GM immediately after the meeting depending upon the subject matter and with the knowledge and support of the board members.
Fortunately, there are few, if any, topics that should exclude the GM. Address these topics up front and put it in the policy. It is the topic—and not the individuals involved—that will generally be the deciding factor for whether something is discussed in an executive session and relayed to the GM after the meeting. Be clear in terms of what is off- limits and which items are best suited for an executive session.
The GM may also request an agenda item be moved to executive session. A confident and informed GM may sense that the board is uncomfortable with a sensitive matter and that directors are not sharing their true feelings. An executive session may give the board members an opportunity for a full discussion. If the rationale of the GM is sound, the board accepts this and moves on. This tactic must be used sparingly.
The solution lies with the president, the GM and a sound policy. Be proactive. Sound club governance is the primary objective.
Keys to Successful Governance
When used properly, executive sessions are a favorable tool for board work. Board leaders and club managers do well to understand the use—and misuse—of executive sessions for private clubs. The keys are to be proactive, be sensitive to the confidentiality implied, and be considerate of the cares and concerns of all involved.
Henry DeLozier is a partner and George Pinches and Fred Laughlin are directors at Global Golf Advisors. They can be reached at 888-432-9494 or globalgolfadvisors.com.