by Béatrice Richez-Baum, ESAE Board member, Director General of ecoDa
The governance of associations is too often neglected although it is an essential prerequisite for efficiency. A healthy relationship between the board of directors and management is a guarantee of professionalism. Associations benefiting from healthy structures will be certainly more resilient, something particularly useful during the Covid crisis, because they are based on relationships of trust and on clear principles. The crisis has the effect of imposing shorter and better structured board meetings. It leaves no room for unspoken issues or games people play. Understanding the value of associations’ governance is essential.
1. First of all, governance should be seen as a strategic topic.
Associations tend to treat it as a mere formality, or a simple question of compliance. spending much more time on issues like membership fees than clarifying the roles and prerogatives of the various bodies. Governance is a guarantee of efficiency as it provides a clear chain of command. It is all about power delegation and reporting lines.
Whatever the type of organization is, it is essential to have the right people in the right place and make sure they know what is expected of them.
In fact, governance is just as important in associations as it is in companies. Especially in associations, that bring together volunteers (i.e. members that voluntarily decide to join and contribute to the association), it is important to set limits, checks and balances to prevent the association from becoming the plaything of an overly controlling CEO or founding president. The voluntary commitment of members can create a lot of emotions. When volunteers invest time, they want to be appreciated and they feel that the more they do the better it is for the association. In reality, everyone needs to know what is expected of them and to know where their role stops. Governance should therefore also be transparent and well understood by the associations’ management and members.
2. Governance is not just a reminder of legal rules, but rather an opportunity to be innovative. There is no one-size-fits-all approach.
For instance, if an association wants to bring new perspectives to its board, it can open it to independent board members, should they be business people or academics.
Conflicts of interest occur often in associations. Board members don’t always understand that they are there to act for the benefit of the association and not to represent specific interests. To avoid those situations, an association can choose to appoint a lead independent director. A lead independent director is a board member with specific role in terms of assessing board dynamic, a concept well known in corporate governance.
Another good recommendation is to convene non-executive meetings at board level in order to encourage the board to make a proper assessment of the management or to engage more in strategy. Board evaluation is unfortunately not a common practice in associations. However, this is an important time for self-reflection, which must be motivated by a desire for continuous improvement. A good starting point is to request feedback from the board members after each board meeting to assess the board dynamics.
From the point of view of the CEO, the induction of the members of the board of directors should not be neglected. A board member not well-informed about the history of the association, its culture, and its objectives will take even a year to get up to speed.
3. It is true that the younger the association, the simpler the governance structure is.
It is not uncommon to see associations without a management team. In this case, the board acts more like a management committee. In such cases, the board tries to sort out all the issues and is obliged to play a management role. This shouldn’t last for too long, because it is not a healthy situation. It is rare that this kind of board engages in strategic issues, they get lost in the day-to-day management.
Remember:
-- Don’t simply follow the legal rules and be creative;
-- There are solutions that can solve the problems easily but make sure to define them in advance;
-- Don’t expect the same complexity from all organisations: proceed step-by-step depending on the maturity of the Association.
The article presents the conclusions of the ESAE panel discussion "Power Games: Board Vs Secretariat" that took place on 15 September, 2020.