Sound governance practices and principles are the foundation of a successful club. They lay the groundwork for the club’s board and its decisions, as well as ensure that club procedures adhere to strong legal and ethical standards. NCA, in conjunction with the NCA Foundation, recently conducted a survey of NCA’s membership that asked about their clubs’ governance policies. More than 200 club leaders responded, and it revealed some surprising results that highlight a need for clubs to ensure that they are following best practices in governance standards, policies and documentation.
THE BOARD: SELECTION & COMPOSITION
The survey detailed key elements of club governance, such as board member selection and composition. Of the clubs surveyed, 46 percent reported having 10–15 directors serving on their boards. Thirty-two percent reported having fewer than 10 active directors, while 21 percent reported having 16 or more. While board size may not seem like a particularly big issue for clubs, having too few directors could put clubs at a disadvantage by perpetuating a lack of available skills. On the other hand, having too many directors could hamper consensus building and prevent boards from quickly and effectively reaching decisions. Finding the right board size is a balancing act, and what is “right” differs for every club.
Most clubs (85%) indicated they have a set term of three years for board members, and 51 percent enable directors to serve two terms. Some clubs allow board members to serve three terms (28%), and an equal portion has either one-term limits (28%) or some other arrangement (21%). Keeping terms to three years and setting term limits can enable a club to bring fresh talent and perspective to the board while encouraging participation from a broader selection of club members.
With the rise of women in the workplace, particularly in executive and professional positions, a growing number of clubs now have women serving on their boards. A third of club leaders reported having 1–2 women on their club board, and an additional 15 percent reported having 3–4 women board members. Nearly 40 percent reported that no women serve on their board.
More than 40 percent of club leaders report that they generally have more board candidates than positions to be filled. Not surprisingly, 62 percent do not permit spouses of voting members to serve as board members.
THE BOARD: LEADERSHIP
Strong leadership is essential to any successful club. The survey indicated that 80 percent of responding clubs operate under the General Manager/Chief Operating Officer concept, and almost all of those surveyed (85%) reported that building an effective board and club leadership was of the highest importance.
Despite the agreed-upon importance of club boards, the support that boards received in terms of a framework of strong, established governance structures and policies varied greatly. Only 50 percent of clubs reported that their board members receive written descriptions of their duties and responsibilities—which can make it challenging for board members to know whether or not they are doing a thorough job in their role. For new board members at some clubs, this information may be covered in a formal board orientation, but only 61 percent of clubs report that board members participate in such a program.
Just as important as ensuring a strong foundation for club leadership is making sure that sound systems are in place to fill the positions of those who retire from their leadership roles. Unfortunately, only 43 percent of those surveyed report that their clubs have succession planning procedures in place to ensure continuity in leadership.
GOVERNANCE: POLICIES
Ever since Sarbanes-Oxley, clubs have had to pay more careful attention to auditing and governance policies and practices. When board members and staff begin their service at a club, many are required to sign certain ethics codes and/or conflict of interest policies. Even so, only 61 percent reported having a conflict of interest policy that must be signed by each club director, while even fewer had an established document retention policy—only 48 percent. Only 42 percent had a code of ethics policy for directors to sign.
In addition, only 54 percent reported having a whistleblower policy in place for club employees. Such a policy encourages transparency and accountability, and enables employees to voice concerns without fear of retribution. Those clubs that do not have such a policy in place should strongly consider establishing one.
GOVERNANCE: STRATEGY
One area that is typically a board responsibility is strategic planning. Of those club leaders surveyed, 62 percent reported that their boards shape club priorities through a strategic planning process, and 47 percent report conducting a formal member survey every 3–5 years to help guide club planning. Even with this focus, only 30 percent reported that their club boards generally focus on strategic issues in special meetings, such as retreats.
That being said, a little more than half of the respondents report that their boards focus on governing, rather than managing (57%), and about half (53%) reported that typical board agendas deal with operational items and committee reports, which leaves little time left for strategy discussions. Six out of ten respondents felt their board doesn’t always see larger, big- picture issues in routine board reports.
Self-evaluation processes are not commonly used by club boards—a meager 18 percent report that their club boards evaluate their own performance against their club’s overall goals.
MOVING FORWARD
As clubs prepare to shoulder more stringent reporting requirements and prepare for changing times, strong, clear governance procedures and policies are vital to protect each and every club and allow it to thrive. This issue of Club Director focuses specifically on reexamining those areas of club governance often over- looked, but always important, if not essential, to club success.
Jackie Abrams is NCA’s communications manager.