GOVERNANCE EXCELLENCE IN A PRIVATE CLUB requires a plan built on a foundation of systematic and established disciplines. The resulting framework enables reliable and trustworthy structures, processes and systems. This article, the second in a three-part series, brings focus to the current-day model for private club governance and organization and identifies the key participants in governance.
Club Governance Model
In past decades, clubs had traditionally employed governance models that caused a misalignment in authority and accountability. Boards maintained all authority with no accountability and the club manager was charged with accountability lacking any bona fide authority. This traditional model relied upon authority that was conveyed through the club’s bylaws while the accountability of the club manager was stated within the club’s operating procedure documents.
While the traditional model served most clubs for years, this governance structure has inefficiencies stemming from an uneven and unclear flow of authority and accountability. Under this model, the general manager may sense that he has multiple bosses—the members, the committees, the board and the president. Looking from the top, the traditional governance structure can also leave members frustrated by not knowing who is responsible for what—lacking a basic sense of accountability.
As mentioned in the first article in this series, “A Governance Handbook” (Club Director, Summer 2016), the Club Managers Association of America introduced the COO Model of Leadership and Governance (COO/Club Governance Model) in 2002. The COO/Club Governance Model helped reduce the ineffciencies that attend micromanagement by a board.
There are some obvious differences between the traditional model and the COO/Club Governance Model, including:
- Committees are board committees—those that support board functions, such as Nominating, Finance, Audit and Strategic Planning—and operations committees, such as Golf, Tennis, Greens and Grounds, House, Membership and Communications—those that support activities and operations under the GM’s direct supervision.
- Committees act as advisors of the board and the GM respectively and not in the chain of authority. The flow of authority in the COO/Club Governance Model passes from the governing documents through the board to the GM.
- Accountability transfers upwards from staff and GM to the board. Thus accountability and authority converge.
- A president serves within the board of directors and not as a separate authority.
- A Board Policies Manual (BPM) serves as the “voice of the board,” and contains all of the board’s standing policies. While these differences help distinguish the COO/Club Governance Model from the traditional model, it is the principles embodied in the new approach that deliver the real benefits.
Defining Governance and Policy
Before discussing the COO/Club Governance Model, it is important to define two basic terms as they are used here. The first term is governance, which is the making and administration of policy. The second term is policy, which is simply a course of action or directive from a person of higher authority. When defining “policy,” it is necessary to identify the type of policy; or, who is issuing the directive. For example, members determine member policy, board of directors determines board policy and the GM determines operating policies. Policies flow down through the organization—from the members to the board to the GM and then to the staff—with each level of authority being subject to the policies of higher levels of authority. This simple clarification avoids the misconception that only the board sets policy.
Key Participants in the Governance Process
A governance model is simply the way governance is carried out in an organization, or how policy at all levels is made and administered. The COO/Club Governance Model is an explicit approach based on clearly documented roles for the key participants in the governance process, including the club members, board members, officers, committees, the GM and staff. These roles can be summarized as follows:
Although there are different types of memberships at most clubs, the term “members” in this governing context means voting members.
Club members play at least two and often three roles in a club. First, they are its owners. Second, they are its customers. Third, when members serve on committees or support the club in other ways, they are “volunteers” (see “volunteers” below). Members serve in an ownership role only when they act (vote) corporately, as when they elect board members or vote on the bylaws.
Board members are, of course, club members. They are owners, customers and volunteers. Board members are also trustees or governors in that they are elected to govern the club’s affairs subject to limitations that may be set out in the bylaws.
But board members have the authority to govern only when they are taking part in an official board meeting. When not in an official board meeting, they are serving as volunteers and not governors.
Club officers are normally board members with special additional responsibilities. They are usually elected by the board and subject to its authority and direction. As such, they have the authority only when the bylaws or the board grants it. This means that the president does not represent a separate level of authority and does not supervise the GM, except as specifically authorized to do so in the BPM.
The president is almost always the chair and is responsible for maintaining the integrity of the governance structure and related processes. He normally is the chief representative of the members and the spokesperson for the board. As board chair, he directs board meetings and ensures that the board stays on task. The president is often an ex officio member of all committees. Therefore, he can serve both in a coordinating role among the board committees and in a leadership role in keeping them focused on their responsibilities.
The COO/Club Governance Model contains two types of committees. The board committees support the board in board-level functions while the operations committees support the GM. Board committees study issues and recommend policies that support decisions at the board or strategic levels. Operations committees serve the GM by offering critical member input and in sharing the workload by helping with events and activities. As critical as the committees are in supporting both the board and GM, they serve in an advisory capacity and not from a position of authority.
The GM is the single agent of the board with responsibility to carry out the purpose of the club within the policy boundaries set by the board. He has authority to allocate resources to serve its members. In the COO/Club Governance Model, the GM is the COO and meets the requirements as the single agent of the board to manage club operations. Giving the title CEO to the GM also conveys this point unambiguously in that it clearly vests in the GM the full executive authority to carry out his or her operational duties.
Some clubs have designated the GM as the COO and reserved the title CEO for the president. Keeping the president as CEO has, in many cases, been a carry-over from the past and the title is typically nominal, since the president rarely functions fully as the CEO. Even though the title is nominal, the practice of retaining the title of CEO for the president should be discouraged as it can reduce the clarity of roles and disrupt the smooth flow of authority and accountability.
A volunteer is anyone who is unpaid and who is assisting the board or the GM. A high percentage of the volunteer work at a club is done through committees. Although a club member may come to a committee with the perspective of an owner and a customer, when the club member is working with or on the committee, he/ she is serving as a volunteer. Accordingly, while volunteers and committees are invaluable to informing the board and the GM, they bring no inherent authority to their volunteer role.
Authority and Accountability
Effective governance is a matter of aligning authority and accountability by clearly designating roles and responsibilities. Understanding the differences between governance and policy enables the key participants to exercise the best principles and practices in a consistent manner. Part three of this NCA Governing Series will address how clubs incorporate best principles and offer guidance for implementing a Board Policies Manual.
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 [email protected] or visit globalgolfadvisors.com.