CLUB BOARDS ARE OFTEN CHARACTERIZED AS MICROMANAGERS. What might be viewed as the latest “distraction” can become something that derails a board’s performance for the year or the general manager’s employment— general managers can be fired for failing to follow through on seemingly innocent suggestions that come their way. McMahon Group research shows there has been significant improvement in club governance in recent years. More clubs have working strategic plans, there is an increase in the number of clubs using a slate to populate the board versus contested elections, and most important of all, there is a marked increase in overall membership satisfaction and perceived value. Despite these improvements, keeping both parties on task and effective remains challenging, which in many ways is a result of the special nature of the private club environment and governance model.
The way the board and executive work together must reflect the unique culture and structure of a private club. In the corporate world and in nonprofit agencies, there is often a stronger firewall between the domain of the board—strategy and policy—and the operational focus of the executive. That’s unlikely to happen in a member-owned and governed club. Your board members are club members first, and they are going to recreate and socialize with the rest of the membership. As they use the club, they are going to field a lot of questions about why the club does or doesn’t do certain things, many of which are in operating areas. Some training and experience can prepare them for how to respond to these suggestions, but the reality is that a club will not have the sort of separation between the stewards of mission and the people it serves that typically exists for boards of religious, educational and philanthropic organizations.
Board members are also successful, driven people, so it is also misguided to think they are going to passively observe operations in a clinical way. This is not a call to abandon the basic structure of having a mission-driven board and a fully empowered executive, but recognition that a club is different than other nonprofits and the leadership and executive should function in ways that recognize this. It should be managed and nurtured, so the organization receives full benefit from the skills and training that club managers bring to the table as well as the commitment and experience of the volunteers.
Club Governance Models
There are new and emerging governance systems that show promise in addressing the micromanagement challenge—a board chairman and the executive as club president being one—but this is a radical change that most clubs will not soon adopt. And while it has merit, there are concerns with parts of the approach, such as the elimination of all or most of the standing committees. Clubs with the will and culture to embrace this could study it further.
What is more common is a functional improvement within the model most clubs now have, one with a governing board of nine to 12 volunteer members, six to 12 standing committees and a chief operating officer/general manager overseeing operations. While not intended to be an exhaustive guide on board and executive function and performance, following are some tips offered from the perspective of a club strategist and consultant with lengthy personal experience as a club president, board member and member, and interviews with successful, tenured executives.
Board Orientations
Clubs are complex operating entities. A lot of the board’s work happens behind the scenes and someone can easily advance to a director position with limited insight into its inner-workings. A thorough orientation well in advance of their first meeting is critical in getting new directors off to a good start. In almost all cases it generates the same reaction, “Wow, this is more complicated than I thought!” A thorough orientation can also serve as a touchstone that you can refer to later in their tenure, softening the discussion when inappropriate ideas come forth. For example, it is less confrontational to remind a new director of the tutorial they were given on private club status and unrelated business income when fending off suggestions to offer take-away food services or to start advertising for weddings in the local bridal registry than it is to go through a long-winded answer that ends with “no.”
In fact, while “Dr. No” was a good James Bond movie, a club board doesn’t want to see a replay of it with their general manager in the starring role. Though it is clearly the job of the executive to point out advantages, risks, costs and other factors related to board actions— and use political savvy and interpersonal skills to kill off real threats—the board will tire of being told “no” whenever new ideas come up. An effective practice is to periodically allow time in meetings for the entire board to discuss a few of the more interesting or recurring ideas. If they prove to have merit with the full board, they’ll be worth investigating (and you can draw in the most ardent supporters to do the work). More often than not, they’ll die at the board table for lack of merit instead of executive roadblocks. Finally, develop and include in the orientation packet a visual decision-making matrix that shows which body—board, executive or membership—has the responsibility and authority for making important decisions.
Strategic Board Retreats and Goal Planning
Of course, it is critical that a club’s board engages in strategic planning. At least annually, the board and executive should review the existing strategic plan and determine the need for additional planning. There should be discussion at least quarterly of the major goals and objectives to review progress against the plan. It is also very important that the chairs of the standing committees develop goals for their committee that align with the objectives of the strategic plan. To really close the loop on this, have the chairs bring back to the board the committee’s annual goals for approval. This assures your subgroups are working on things that are of real importance to the club’s overall success and that there will be support for the recommended actions when they come before the board later in the year.
Elections
The board’s composition must be intentional, not accidental. This is unlikely to happen if board formation is the result of popularity contests. The Nominating Committee and board must assess the competencies and attributes of each director and take steps to see that new board members expand the board’s experience and talent pool in important areas. This should be based on established criteria, such as experience in leadership roles and nonprofit boards, participation on committees and task forces, active participation in the club, and understanding of club structure, regulation and mission/ vision. It is critical that the board develop member buy-in to this approach.
Resources and Networks
It is imperative that your board be a learning group, using the best resources in the industry to understand trends, legal and legislative issues and functional challenges. In addition to providing them access to written resources that help them understand the club industry, also build a network of outside advisors to support important areas of the operation like finance, human resources, technology and strategic planning. This can reinforce the recommendations they might be getting from the executive and provide a fresh perspective for everyone.
Often overlooked is the need to help directors fully understand the programs that are at the core of your club. Like a lot of volunteerism, the demographics of the involved group could vary from the membership as a whole. So while your board may agree that they are leading a “family club,” make sure they see this in action. Invite board members without children to attend important family activities like your annual gingerbread house-building event, family bingo night, or the pre-season enrollment party for summer camp and junior activities. They’ll leave with a fuller understanding of what “family focused” really means. Additionally, give directors complimentary invitations to parties and special events. The members will like seeing board members at these events and it’ll further expose them to the diverse makeup and interests of the membership.
Invite Them In
There is typically a good deal of frustration among former club directors as they often feel they stepped up to help the club by donating their time and professional experience, but they were forced to sit on the sidelines as decisions were made. Many leave the board at the end of their term with the feeling their skills weren’t tapped and their most memorable experience was sitting through a lot of routine meetings. Instead of erecting barriers, bring them into the picture, selectively. For example, invite a director or two with expertise in lending or finance to sit in on or review the work of the CFO when evaluating a new golf car lease or other financial study. While most management teams could handle this analysis, participation by volunteer leaders engenders a sense of fulfillment among the directors called on to participate in the process. There is also a good chance their experience will add to the result and it clearly helps sell the recommendation at the board table.
Make It Social
Finally, it is important to build some social time into the board process. This increases understanding within the group and leads to smoother decision-making, especially when sticky issues arise. People who develop comfort and friendship with one another tend to work well together.
Coordinated Committees
The committee system represents an underutilized resource in many clubs. They are the most loyal of members and they’ve volunteered their time to help the club improve and prosper. While some suggest dismantling the committee system as part of modern governance, this can backfire on the board and the management team. It shuts off a key source of input that can be utilized to improve performance and stay ahead of problems. Committees are also de facto “clubs within the club” as these members use the club more frequently than others and they want to see it be successful. Unfortunately, they often operate in silos and the participants have limited understanding of how their efforts fit in with the club’s overall strategy and success. Many of them are often new members with limited understanding of how the club really works. Committee members will benefit as much or more as directors from a good orientation and if you get them on board with the overall mission, they’ll spread the gospel to their friends.
Steps to better committee performance include developing written job descriptions and, as noted above, establishing goals that are aligned with and supported by the board. Once your board has set the agenda for the year, share it with your committees in an all-committee meeting. This is an opportunity to thank these members for helping out, while also increasing their understanding of the board’s overarching agenda. It is also important to establish a game plan for the year ahead. Organize the calendar to focus on a specific topic at a meeting or in a series of meetings. For example, the House Committee might focus on dining concepts in March, review the facilities in May and discuss competition in June. Don’t wait until your well into the year to decide what to talk about at next month’s meeting.
It is also healthy to review meeting frequency. A club’s Finance and Membership Committees should meet every month, but that may not be necessary or constructive for other ones. It is likely that if you bring together a dozen or so people each month they will think it is their duty to come up with a slate of new ideas and recommendations. Six, or maybe even four meetings focused on substantial topics will produce better results than less focused or unscripted sessions.
Work the System You Have, Not the One You Wish Existed
The governance system is one of the things that make member-owned private clubs special. It is civic duty at the most basic level, a group of volunteers banding together to lead an organization that serves it constituents as effectively as possible. The organization functions best when the volunteer leaders are focused on mission and strategy and the executive is empowered to develop and execute a supportive operating plan. It is also important to also recognize that it is ultimately a club and the demarcation of duties will not be as ironclad as they might be in other types of organizations. Smart boards and executives embrace this reality and adopt practices that form a strong partnership and bring out the best in this unique environment.
Frank Vain is president of McMahon Group and is secretary of the NCA board of directors and chairs the Communications Committee. He can be reached at [email protected].