SUPERIOR PRIVATE CLUBS are very diligent in matters of governance. Those clubs know the truth of Peter Drucker’s admonition, “Culture eats strategy for breakfast.” In fact, culture in private clubs is governance. Poor governance undermines effective strategy and excellent governance creates great possibilities.
The National Club Association has taken an assertive role in guiding club managers and their directors in governance excellence. This is the first of a series of three articles aimed at private club governance that provides direction on best practices for club leaders.
Foreword to a Governance Handbook
Governing a private club it is hard work. Being on a club’s board of directors may be perceived as a status symbol, a reward for seniority, a popularity contest, or a power grab. However, none of these terms gives the role its due. As they are entrusted with the strategic direction and fiscal health of a club (and often a community), directors have a huge responsibility. Most club budgets exceed the revenues of 75 percent of the businesses in the United States. Yet too often clubs are governed in a way that lacks the clarity and discipline of even the worst run enterprises. The purpose of a governance handbook is to present a model for the most efficient and effective way for club to be governed.
A governance model is basically a decision map—how decisions (policies) are made in an organization and who is entitled to make them. And like any map, a governance model must be written down to be useful. That is what this governance handbook is all about: How best to formulate policies that 1) define where the club is going and how it will get there and 2) document those policies in one place so they are clearly communicated to all participants in the club’s governance process, which includes club members, directors, officers, the general manager (GM) and committees.
This governance handbook aligns with the recommended approach to documenting the policies of the board of directors, a document commonly referred to as the Board Policies Manual (BPM).
The BPM is a compendium of all of the board’s standing policies. It identifies the strategic direction of the club (vision, mission and strategic plan), how the board will be organized to fulfill its responsibilities, and how it will delegate its authority to the general manager and staff to implement the club’s strategic plan. The BPM comprises five parts, each with a specific role in defining the club’s governance model.
PART 1: Introduction, Purpose and Use—Here is where the board makes public its commitment to govern with excellence, adopting the principles and best practices of nonprofit governance and documenting them for everyone to see. Part 1 contains the BPM’s purpose, its coverage (all board policies), the reasons it is being written, and the method by which it is changed. Although Part 1 is often the shortest of the five parts, its contents are critical, as it establishing the principle that all board policies are written policies, i.e., there are no unwritten policies.
PART 2: Strategic Essentials—Part 2 contains the statements that define the club’s brand and strategic direction—its vision, mission, core values and other statements of the club’s fundamentals. Although statements such as vision and mission are not normally thought of as board policies, because they need to be board-owned (approved), they belong in the BPM.
PART 3: Board Organization and Process—Once the board has established where the club is going and the strategic plan to get there, it needs to decide how it will carry out its governing role; specifically the organizational structure and the processes it will employ. Part 3 covers such policies as the board’s style and strategic focus; the officer roles; the formulation and duties of board committees; how it will conduct its meetings; the type, content and frequency of board reports; and other policies relating to how the board will conduct its business.
PART 4: Board/Staff Relationships—Once the board has documented in Part 3 how it will operate, it must articulate in Part 4 how it will delegate authority to the GM and staff. Here the board makes clear what it expects of the GM and what license he/she has to meet those expectations. Part 4 typically describes a broad range of authority to the GM to manage operations. Critical to Part 4 is the policy describing how goals and metrics are set for the GM and how the board will systematically and periodically evaluate whether those goals are met. A strong board/GM relationship is fundamental to a sound governance environment and a well-managed club. Accordingly, the relationship deserves to be clearly laid out in board policy.
PART 5: Executive Parameters—While the board in Part 4 extends a wide delegation of authority, there are a number of
decisions (policies) it will reserve for itself. Part 5 contains policies addressing issues like limiting the GM’s authority to sign checks of a certain size, committing to long-term contracts, or speaking for the club to the media. Part 5 is therefore the specific exceptions to the board’s broad delegation of authority in Part 4.
Top-performing boards are highly trusted and respected by their fellow club members. The best boards and board members attend to the following four leadership principles:
- Effective boards deliberate as many and govern as “one.” Differences of opinion and minority opinions should be expressed openly and fully in the boardroom. Once the board makes a decision, it must be communicated as the entire board’s decision.
- Board decisions must be communicated widely—and sometimes redundantly—to all members in writing. Documenting decisions and seeing that the decisions of the board are known to all is proper governance and plays to the expectation expressed by most members as transparency in governance and leadership.
- Confidentiality and nondisclosure are essential to the board’s trustworthiness. Confidentiality is basic to the fiduciary duties executed by board members and is not a contradiction to its transparency. For example, matters of member discipline and personnel evaluation and compensation must be protected and preserved in the boardroom.
- Conflicts of interest must be openly identified and addressed. Every board member bears the responsibility to declare every matter of conflict and refrain from self-serving actions, as a member of the board of directors.
The second article in this series will address strategic essentials, board organization and governing processes in the fall issue of Club Director. CD
Henry DeLozier is a principal at Global Golf Advisors, a Legacy Alliance Partner of the National Club Association. GGA serves club management professionals from offices in Toronto, Phoenix and Dublin (IR). He can be reached at hdelozier