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).

This article was authored by GGA Partner Henry DeLozier for the National Club Association.