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The Board Policy Manual: Aligning Authority and Accountability

Effective governance is a matter of aligning authority and accountability by clearly designating roles and responsibilities. It is folly to assign accountability when proper authority has not been directed to the person to be held accountable. Top-performing clubs exercise great diligence for ensuring that authority precedes accountability. And, for managers of the best clubs, accountability sustains the authority given.

The National Club Association takes an assertive role in guiding club managers and their directors in governance excellence. This, the third in a three-part series, brings focus to the putting an effective board policy manual (BPM) to work.

In the Club Governance Model, a guide developed by a CMAA Governance Study Group to assist clubs in implementing the club governance model (model) in 2007, high importance is placed on the BPM as the document that serves as a governance management system.

Frederic Laughlin, one of the authors of the Club Governance Model, says it simply, “The quality of a governance model is ultimately measured by how clearly authority and accountability are documented down and up the organization. Authority needs to be accurately traced down from members (bylaws) through the board (board policies) to the staff, while accountability is traced along the same path in the opposite direction from the staff back through the board to the members. If authority and accountability follow different paths and are not clarified in writing, a club can anticipate inefficiencies in operations, unfair assignments of blame, and a frustrated membership.”

Authority

Authority in the club governance model is derived from governing documents, such as statutes, articles of incorporation and the club’s bylaws. These documents assign the authority of purpose and governance to the board of directors when accepted by the club members.

Authority is derived from careful and deliberate legal and organizational guidance that empowers the board of directors to lead the club subject to certain requirements. Typically, boards must attend to fiduciary duties and are often challenged to eliminate conflicts of interests through which a fiduciary, such as a director, may benefit directly or indirectly from decisions he or she may make.

Authority is only as effective as the actions of the person or persons to whom the authority is given. The board may assign certain accountability to the club manager for the execution of specific and previously agreed upon goals and objectives.

The primary responsibilities of every board are to:

  • Protect and preserve the assets of the club.
  • Develop and implement highly effective strategy.
  • Provide for the reliable financial needs and means of the club.

Accountability

In the model, board committees serve and report to the board while operating committees serve the GM/CEO/COO. This simple alignment of authority directs accountability to the manager and away from the board. This is a key difference between the traditional model of private club governance and the club governance model.

Board committees include governance through Nominating and Disciplinary Committees, financial matters through Finance and Audit Committees, and long-term planning through the Strategic Planning Committee.

Operating committees include Membership, Greens, House, Golf, Tennis and Social Committees. The manager is responsible to lead and guide these committees in alignment with his or her staff to achieve the strategic goals and objectives established by the board of directors.

The objectives are simple and direct: hold those with authority to decide and act accountably. One cannot be charged with accountability when unauthorized to decide and act.

Often the issue is raised in the boardroom that the model diminishes the influence of committees when these committees report to the club manager. In fact, the result is to empower the committee members to support the club manager through direct interaction.

Committees play an important role in clubs. Although it is still an advisory role and not within the chain of authority, any general manager or staff person who is not heavily influenced by the input from the various committees will probably not last long in the job. Committees provide invaluable input from the members as customers and they provide necessary volunteer labor in the planning and implementation of club activities and special events.

The model is not intended to weaken the committees’ influence in any way—only to put it in context. The board committees are extensions of the board. They inform the board on board policy. In a similar way, the operations committees speak to the general manager and not for the general manager (or for the board). They serve the general manager as volunteers in an advisory role.

Benefits of Alignment

Servant leaders in private clubs are extremely busy with club affairs—sometimes, too much so. Derek Johnston, a partner at Global Golf Advisors summarizes the benefits, “Good governance requires a clearly defined and communicated responsibility matrix. Responsibilities must be assigned in a manner that is well aligned with strategic and operational authority in order to be effective.”

The benefits of aligning authority and accountability are evident:

  • There is clear-cut assignment of ownership of specific activities at the club.
  • Assigning operational issues and needs to the COO assures the board that management is focused on and responsible for the success of operational matters.
  • Retaining administrative and leadership responsibilities at the board level assures members that the board is attending to its primary duties and not becoming distracted with lesser operational issues or “too political” with club personalities.
  • Ensures that the committees speak to the board (for board committees) and to the general manager (for operational concerns).

The Board Policy Manual

Sometimes club leaders struggle with the effort required to convert to the club governance model. In fact, the extra effort is well worth the investment of time and intellect. Creating a board policy manual requires the greatest effort and commitment—it is a resource-consuming step in the implementation process—and most club board members have a limited amount of time to devote to their club roles. But, there are benefits to investing in the development of a BPM.

Board presidents and directors should look to a horizon more distant than the end of their terms, because a true measure of the BPM’s value is over time. While the start-up costs are typically incurred in the short-term, during the first year or two of implementation, the benefits accrue once the BPM is in place.

The objective of documenting policy in the BPM is to address controversial issues and resolve differences in the short term to save time in the long run. Some boards seem to believe that time is saved if controversial topics are deferred or left unaddressed altogether. However, leaving fundamental issues unresolved only increases the time that will be needed to discuss and resolve associated issues.

Avoiding difficult issues is an effective way to model basic values like integrity, respect and transparency. Good boards address issues where there are differences among the board members—and then they document the consensus in the BPM. They incur the “cost” of working out the differences, but they incur them only once. They recoup those costs when they build on that agreed-upon language in the BPM—as do their successor board members recoup those same costs many times over in the form of benefits of a living, breathing governance management system.

If a board wants to leave behind a valuable legacy to the club, it will commit to more effective, trustworthy and understandable governance. George Pinches, a club governance expert, retired club manager and associate at Global Golf Advisors says, “The most controllable expense a club may incur is the choice to invest in responsible governance.”

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.

Case Study: The Desert Highland’s Board Policy Manual
Successful Governance Practices 
By Terra Waldron, CCM, CCE, ECM

In the winter 2015 issue of Club Director, “Successful Governance Practices” discussed The Desert Highlands Association (Association) board policy manual (BPM). The Association board of directors adopted the BPM as a living document by which the board and committees would govern. This manual communicates to the board members how they will meet their fiduciary responsibilities, be compliant to the HOA Covenants, Conditions & Restrictions (CC&Rs), and to provide clear, proactive policies to guide them. At each board cycle, the new members use this manual to become familiar with the governance model, resulting in more efficient procedures, including elimination of redundant or conflicting policies over time. Before the BPM was adopted, board meetings were known to last an entire day. Since the adoption of the manual, the board meetings last approximately two hours—this is a success in itself.

In the past year, the Association had a change in board president along with one-third of the board of directors. With this change and the successes of the Association, the governance of the board continues to operate smoothly as a result of the BPM. Each year the board welcomes three new members, and the Nominating Committee also receives three new members, who consist of a former board member, a member at large and a member from a committee. During the Nominating Committee’s vetting process of interested candidates, they also discuss an abbreviated version of the BPM to give the interested candidate the opportunity to view what is expected during his/her tenure on the board if elected. This positive practice highlights the transparency of the function of the board.

Immediate Past President Darcy Goodman states, “Effective leadership requires that Desert Highlands’ board has a comprehensive vision of its own job. The board policy manual provides that vision with specifics to philosophy, accountability and basic organizational methods. This allows the board to operate effectively, focusing on the important strategic and policy matters.”

As a new member is voted onto the board, they are provided with a personal copy of the BPM, which I personally go over with them. This orientation gives the new board member the ability to ask questions and to fully understand his role as a new board member.

During board meetings, a copy of the manual is placed at the head of the table for the president’s use if a situation is discussed that needs to be clarified during the meeting—which also helps keep the board focused on tasks at hand.

As current President Tom Plimpton states, “Having served on one of Desert Highlands’ committees, and then on the board of directors, and now as president of the board, I fully endorse the creation of and robust use of a BPM. While it is the cornerstone of good governance, a broad reaching BPM provides for efficiency and consistency in the busy world of club management. Keeping the board focused on directing and management focused on managing is a key result of a good BPM.” He adds, “The creation of a BPM is a key success factor, and while not difficult to develop, institutionalizing the use of the BPM can be a challenging, but rewarding, effort.”

This BPM describes the roles of the board, the committees and the chief operating officer/general manager. Having everyone’s roles clearly defined helps to alleviate the issue of micromanaging. For instance, when committees become interested in managing the operations rather than being an advisory source for the day-to-day operations of the club, they are nicely reminded that their job is to advise not to manage.

This manual also serves as a quick reference guide to the CC&Rs, bylaws and local laws. Management also uses the manual to verify board-approved rules when doing research for a committee or the board.

Having a BPM is a perfect way to for the board and management to follow today’s approved policies and reap the benefits: At Desert Highlands Association that includes improved services and amenities, adoption of a master plan, improving property values, and increasing staff commitment.

Terra S.H. Waldron, CCM, CCE, ECM is chief operating officer and vice president of The Desert Highlands Association in Scottsdale, Ariz. She is a director of NCA and serves on the Communications Committee. She can be reached at [email protected]  

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