The Guiding Principles of Effective Governance
Stylianos Filopoulos, the founder of Association By Design and co-chair of the ESAE Governance Community, provides some guidance to assist you in your governance endeavors.
When it comes to good governance, two things are certain: It is necessary, and it is difficult to achieve. Good governance is essential to ensure the overall direction, effectiveness, impact, and accountability of the organization. It demonstrates a commitment to acting in the best interests of the association, through the operation of transparent and ethical processes that comply with the law and can withstand scrutiny. On the other hand, bad governance leads to a lack of trust and engagement and can result to the termination of the association. With changes in society and the environment, the concept of good governance has also evolved. Based on my 15+ years of experience in association management and looking at the current socio-economic landscape, I will try hereby to outline elements of good governance.
1. Fit for Purpose:
Governance is a tool to achieve your purpose. Before creating a governance model, it is imperative to know what you stand for and what you want to achieve. Make sure to have a clear vision and set of values in place before hiring a good lawyer to help you draft the association articles and assure legal compliance. The by-laws should be a living document.
2. Board & Secretariat Empowerment:
Board and secretariat should know and understand the association's articles, the processes, their role, and liability. To this end, the association articles should be kept simple, with more detail and flexibility in the internal rules that can be updated as needed
The executive team should be educated about the governance process and the importance of following the rules. A good practice is an induction session for every new Board Director where the association governance model is thoroughly explained. Do also invest in directors and officers (D&O) insurance, it can create a sense of safety to the Board and the CEO and will help decision making.
Make sure that the internal rules are followed in the daily management. Sometimes, internal rules lay down complex processes in legal language. Visualising internal processes using timelines can facilitate implementation. Also be flexible if something does not work, check why, and change it if needed.
3. Power Transition:
Do not allow Presidents and Secretary Generals to stay on forever. Good governance requires smooth transitions of power, achieved by limiting the mandates of the President (and why not of Secretary General/ CEO) and having clear procedures in place. A President-elect system is a good solution for consistent transitions.
4. Diversity & Inclusion:
Good governance in a rapidly changing VUCA environment requires diversity and inclusion to build capacity for change. The association's leadership and members should represent its diverse stakeholder groups and be open to new ideas and perspectives. Emphasis should be placed on the perspectives of the younger generation as their beliefs on community involvement, diversity, and collective action can significantly improve and sustain associations for the future. Consider adding board members with advisory positions to assist leadership in making well-informed and diverse decisions. ASAE and ESAE are excellent resources for developing a DEI strategy.
5. Agility & Start-Up Mentality:
Associations must have an agile mindset and be willing to restructure as needed, not just for the sake of change. Introduce design thinking and member-centric approaches as they are key to innovation. Think about project management principles (discipline agile, portfolio management) to organise your secretariat as a response to mobile working and employee mobility. In every case avoid creating one more technical committee to discuss agility.
6. Digital Preparedness:
The digital age requires associations to be technologically prepared to maximize performance, impact, and accountability. Over the next few months we will be experiencing a wave of new AI tools*. In a short period, applications will provide unimaginable operational support, streamline processes, and improve decision-making and strategies. However, associations must also prepare for the ethical use of AI and its potential impact on their raison d'être.
The environmental and social challenges require everyone to contribute to sustainability. The Environmental Social Governance (ESG) has become a key requirement in the corporate world, and associations must prioritize ESG as well. This can be achieved by developing an ESG plan and setting specific targets, such as reducing carbon footprint and promoting diversity and inclusion. While ESG might seem more relevant for bigger associations, smaller associations can also take actions and lead by example for the communities they represent (e.g. with materiality impact assessments).
Setting measurable and achievable performance and impact indicators can help the association stay on track. It also allows people to make sense of what they are doing and feel proud for their achievements.
I hope this makes sense and is useful no matter if you are a trade association, a professional society, or an NGO and despite your size and the interests your associations represent. If you think that this is too much for your association to handle, I will suggest two simple guiding principles.
Do not build silos and do stay in a flow state.