Defining a high-performing board, how it is formed, what it does, how it does it and how it is measured are fundamental challenges becoming more relevant as members seek efficiency, effectiveness and transparency from their boards. Drawing on data from hundreds of clubs, scores of general managers and club leaders, thousands of hours of member focus groups and formal governance reviews of clubs of every size and scope, GGA Partners has developed an approach to governance proven to benefit clubs and their boards as they seek to improve the ways to serve their members.
Member Policies and Board Policies
The bylaws of a club are essentially member policies. They convey authority from the members to the board and typically describe the:
- Types of membership
- Qualifications and privileges of the different types of memberships
- Organization that will govern the club (e.g., Board of Directors/Trustees)
- Size and terms of board members and officers
- Process for nominating and electing board members and officers
- Authority given to the board and limits on the authority
- Process for amending the bylaws
- Other administrative matters, such as board member indemnification, member meetings, quorum requirements, and the like
Of the sections included in the bylaws, we are most often asked about the size of the board, the length of terms for directors and officers and the level of detail in the bylaws.
Board Size: There is no magic formula for the number of directors on a club board. The question involves a trade off between efficiency of decision making and the distribution of board duties. Generally speaking, while a board is more efficient with fewer directors, it also is adding burden on a per member basis. The most common board size is nine members, which is also the mean and median size. Some bylaws will give a range to board size, e.g., from seven to 10. Having a range affords flexibility and, on its face, does not violate any principle of good governance. However, its use is infrequent, suggesting a greater member comfort in a specific number.
No one-size-fits-all number exists for board size, however, nine members provide an appropriate balance of efficiency and distribution of duties.
Board Terms: The most common terms for board members are three years and four years. Of the boards with three-year terms, about half allow for an additional term. Clubs with four-year terms are less likely to allow an additional term. The issue with board terms is a tradeoff between allowing more members to serve on the board and the benefits of a more experienced board member. Generally speaking, the quality of board membership improves with length of service. Accepting this assumption, while allowing a board member to serve an additional term reduces the opportunities for club members to serve on the board, it is a price worth paying for a higher functioning board. Accordingly, absent any other factors relating to board terms, offer a three-year term with the option of standing for election for an additional term. This recommendation rests on the requirement to stand for election, meaning that the board member’s additional term is based on his/her performance during the first term.
Officer terms: Although the most common term for club officers is one year, it is not uncommon for those same clubs to allow officers a second year of service. Of course, officer terms tend to be linked to terms for board members. For example, if the term for a director is limited to three years without the option of another term, the term for officers is generally one year. However, if board members may be re-elected for a second term, officer terms are often two years or one year with an optional addition year. It’s advisable to offer the optional second term for directors, as well as the optional second year for officers—with the understanding the officers will be re-elected for the additional year based on their performance during the first year.
Good officers are hard to find and if they perform well for a year and are willing to serve another year, it makes sense for the club to benefit from another year of their leadership. Too often, however, an officer, particularly a club president, is burned out after a year and declines to serve the second year. Improvements in the governance process can reduce the load on the president and improve the chances of her/his serving the additional year.
Bylaw level of detail: Bylaws vary considerably in length and level of detail. For example, one set of bylaws may simply authorize the board to form committees while another set will prescribe what specific committees are to be formed, how the committee chairs and members will be selected, the scope and authority of the committees, etc. Bylaws should contain only the basic information such as the items listed above, thereby allowing the board to detail in its policies how it will use the authority granted in the bylaws. The more flexibility afforded the board, the greater its ability to adjust to changing situations. Baking restrictive policies into the bylaws can hamper the board’s flexibility to govern efficiently.
Board Policies: Keeping the bylaws lean is advised only if the board takes action to develop and publish its own policies. Members deserve to know how the board will use the authority that the members delegate to accomplish the mission of the club. This is where a board policies manual (BPM) comes in. The BPM is a compendium of all standing board policies, which describe how the board will use the authority granted by the bylaws to carry out its governance duties. They address issues like:
- Articulation and confirmation of strategic direction such as vision, mission, values and strategic planning
- Expectations of the board as a whole, its commitment to transparency, civil discourse, strategic thinking and club rather than personal loyalty
- Expectations of individual board members regarding attendance, open-mindedness, committee leadership and maintaining confidentiality
- Committee structure, formation and role in supporting the board and the general manager
- Meeting conduct, use of a consent agenda, premeeting materials, minuting and resolution of differing views
- Relationship between the board and the general manager, the expectations for their performance, the annual evaluation process, the scope and limits on their authority and other requirements
Often a club’s bylaws will dictate how the board will carry out the above duties, thereby restricting the board’s ability to adjust to changing situations. The importance of a BPM will be addressed in subsequent articles in this issue, but to the question of how much detail to include in the bylaws:
- Keep the bylaws lean thereby giving the board latitude to develop its policies
- Include in the bylaws the requirement for the board to develop a BPM
Unless the board is transparent in documenting how it will use the members’ authority articulated in the bylaws, it invites the members to be more directive in its instructions. A BPM will encourage the members to give the board the license to develop policies that can be amended to changing situations without going to the members for approval.