Tag: Manual

How to Elect (and Entrust) the People with Power

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There’s an inherent quirk with how members view authority. Individuals elected for board service are often popular, though not necessarily qualified, and the qualified are not always popular.  Who’s to set the balance?

GGA Partners’ Henry DeLozier spells out the importance and role of the nominating committee; who they are, who they should nominate, and how to make sure they are a trusted agent of members at large.

In most private clubs, it is the nominating committee that sets the future of the club. The proverbial queen- or king-maker, the nominating committee profoundly impacts the tone and tenor of club governance.

In clubs using an uncontested election model (members voting for a selected slate of candidates) for board service, it is the nominating committee which selects the club’s future leaders. In clubs with a contested election model (multiple members run for open board seats and are selected by a popular vote of club members) the nominating committee either proves itself to be a trustworthy and balanced agent of the members or a group of members out of touch with the preferences and priorities of their fellow members.

In either case, nominating committee members should be well-known members of the club recognized for their integrity, character, and good judgement.

Whether your club is fortunate to possess a rich pool of individuals who meet this criterion or not, there should always be a charter in place to help guide the selection process and define the role of the committee once in post.

What other steps can you take to select and shape an effective nominating committee?

Define the limits to authority

The authority of the nominating committee should be defined within the club’s bylaws and/or Board Policies Manual, with the nominating committee charter aligning with these two governing documents.

Nominating committees should not be permanent. Clearly established guidelines must be a part of the charter for the term of service. Typical terms for a nominating committee should range from three to six years – dependent upon the term of service for board members.

On an as-needed basis, nominating committees may evaluate the board’s term limits and modify them if needed for board efficiency or to accommodate the changing size of the board.

Set the selection criteria

The charter should provide the committee guidance concerning the qualifications and/or capabilities required of future board members. For example, most clubs benefit from members with legal, banking / finance, insurance, and public accounting backgrounds.

It is desirable to nominate members whose interests differ to provide balanced and impartial governance. For example, a board made up of all avid golfers can be perceived to be out of balance by members with interests other than golf. Avoid nominating members who represent “constituencies” of like-minded members. Each board nominee should represent and seek to understand all members’ viewpoints.

Selection criteria should be definitive concerning conflicts of interest – whether real or perceived – and all other potential factors that could serve to undermine the credibility of the committee and its nominees.

Ensure candidates bring value to the table

A growing number of clubs have introduced specific requirements of board members, and this is something the nominating committee should focus on when defining methods of recruiting prospective board members. Where they are relevant and a potential source of value to your club, these should feature in the charter.

For instance, you can stipulate that a prospective board member has successfully recruited a member of the club, or you could set policies for the giving or fundraising expectations of board members. Specific, tangible value delivered back to the club which symbolizes a ‘lead from the front’ mentality, setting the tone and an example for members at large.

Not only will this help send the right message, it also ensures each member of the board is accountable, bringing something beyond their invaluable rich experience, guidance and ideas to the table.

The role and responsibilities of the nominating committee are profound and great care and transparency must be given to populating the committee with the club’s most respected members.

Conflict in the Boardroom

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What happens when board members clash, causing conflict, disruption and moving the club backwards instead of forwards?

We outline the dangers of conflict, and advise on how to turn dispute into a positive, constructive outcome and ensure all board members are a true asset to the club.

Effective non-profit boards deliberate as many and govern as one. At least, that’s how it should work. Unfortunately, many club boardrooms up and down the country are more akin to a newsroom; rife with bickering, contempt, and dysfunction.

It’s understandable. Passions run high, these overtake rational, pragmatic logic and suddenly what is intended to be a progressive, forward-thinking environment becomes one paralyzed by indecision.

What should board leaders do in the face of these circumstances? Aside from preventing it from getting to this point, it’s imperative to restore levels of cooperation, deliberation and thoughtful leadership – quickly.

There are two ways of doing this: the first addresses the issues immediately and sets the standard both now and into the future; the second addresses the onboarding process, ensuring all board members are clear in what they are signing up for and what is expected (and not expected) of them at the outset.

The Boardroom Bible

The launch point for improving club governance and reducing boardroom conflict is a Board Policies Manual (“BPM”). Think of it as a boardroom bible, describing the sound principles and guidance for effective club governance.

Crucially, its guiding principles will mitigate any potential flare ups of conflict, and be the standards and expectations all board members sign up to. How? Just one example is the inclusion of specific, dispassionate requirements to support the decision-making process, based on data and insights, rather than allowing personal opinions and perspectives to creep in.

Its introduction will unite board members, clarify points of disagreement, and have everyone focused on what is truly in the best interests of the club, in any matter.

Setting the tone

Introducing new board members can inject a welcome sense of energy and perspective, providing you have the right people to do the job from the outset. There are three practical steps you can take to ensure this is the case:

1. Board Selection Criteria – Use an uncontested board election process. This requires a reliable Nominating Committee to recommend a slate of candidates in the same number as the number of board positions open.

Providing you have a highly respected and trusted Nominating Committee, known for their good judgement and integrity, you will recruit level-headed, pragmatic, forward-thinking individuals.

The key to a trustworthy election process is the trust and respect earned by those who serve in club leadership roles. Members’ respect of the individual members of the Nominating Committee will reflect in the overall trust of the committee’s work.

2. Board Code of Ethics – All board members should be provided with (and accept, in writing) the ethical requirements of board service. Such requirements typically include:

  • Confidentiality and Non-Disclosure – Ensure board members are accountable for protecting the privacy of the board and its deliberations. Board members must be trusted by their fellow board members for their capability to be discreet and impartial.
  • Conflict of Interest – Board members must avoid conflicts of interest and refrain from benefiting financially from the club’s contracting and procurement activities. Board members are expected to refrain from being a champion for self-interests in which the individual board member is a beneficiary, such as favorable tee times for certain categories of membership.

3. Business-like Governing Practices – Club members expect their board members to take a business-like approach to corporate governance. In fact, most reference points for governing practices tie directly to members’ experiences with boards of publicly traded companies, where board conduct and process is held to a high standard.

The same should apply here. Board disciplines such as the board’s function to speak as one unit and its authority to speak for the club are expected, as are financial reporting and disclosure standards.

And yet…

In contentious times, some board members cannot be dissuaded from causing conflict within the boardroom.

You can put in place the tools to mitigate conflict, but these are only tools. Tools which require genuine leadership and execution from the board president and fellow board members to be effective.

“Going rogue”, or in other words disrespecting the duty of sound governance, should result in fellow board members confronting the rogue board member firmly and fairly. While there is tremendous value in a board member who sees a different point of view, if these views carry no weight or evidence under scrutiny, they can and should be challenged.

You can never legislate or plan for human behavior, but you can (and should) put control measures in place to keep board members focused on what matters. That’s what will make them a true asset to the club.

Being Flexible for the Future

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“Forecasting is very difficult,
especially with regard to the future.”
Yogi Berra?

Preparing for the Future

Even if the late Yogi Berra didn’t utter this statement, it’s an easy attribution. Like so many of Yogi’s statements, it tucks a truth inside a pithy, if nonsensical saying. We can speculate on the future, guess at trends, or engage a soothsayer, but we can never be certain of our forecast.

Yet as club leaders we are called upon to plan, invest, and adapt. Despite our inability to predict the future, we know the risks of sticking to the status quo. So how do we prepare for the new law, the gathering trend, the abrupt change in the economy, or other externalities – especially those that are unforeseen?

There are two issues relating to a club’s preparations for the future: recognizing the need to change, and taking the appropriate action

A club is best prepared to recognize the need to change by developing a well-constructed strategic plan and maintaining it as a dynamic document (i.e. revising it as new information becomes available). The more considered and current the strategic plan, the better prepared the club will be to respond to evolving conditions.

Next, in order to take the appropriate action, the club needs a Board that is three things: thoughtful, decisive, and nimble.

Thoughtfulness and decisiveness are features of the Board’s character and competence, and are best achieved by sound election processes to recruit Board members based on their merits (i.e. their ability to serve professionally in a culture of cooperation and respect).

Nimbleness, on the other hand, has to do with the flexibility afforded the Board via the club’s governing documents – its bylaws and Board policies. The Board’s agility is based less on the quality of its members than on its documented processes.

When the Future Arrives

Good doctors do two things well: make accurate diagnoses, and prescribe effective treatments. Similarly, effective club Boards do two things well: assess the impact of new laws, growing trends or shifting styles, and then take the action appropriate to address the impact.

So, what can a Board do in the present that will equip it to respond to the future when it arrives?

For years we at Global Golf Advisors have strongly recommended that club Boards develop and maintain a Board Policies Manual (BPM), which contains all of the Board’s standing policies in a succinct, well-organized document. We also recommend that bylaws be amended to afford flexibility for the Board to carry out its fiduciary responsibilities in a professional, transparent manner. The two actions must go hand in hand.

A club’s bylaws are actually “member policies” – instructions from the members to the Board. Members will be reluctant to cede authority to the Board without knowing how that authority will be used, and that’s where the BPM comes in. If the bylaws instruct the Board to maintain a publicly available BPM that clearly lays out how it will govern, then the members can be well informed as to how their Board is serving them.

Our advice is simple: include in the bylaws only the basic requirements, and let the Board formulate and publish in a BPM those policies it believes will allow it to govern effectively. Why? Because when the future arrives – say, a new law is passed, a new trend is affecting the club, or new amenities are being demanded by the members – a Board needs the flexibility of responding without having to go back to the members for a vote.

Of course, there are limits to ceding authority from the bylaws to the BPM. We are not advocating a carte blanche transfer. But in our experience, most club bylaws can be streamlined so they contain only the basics, thereby leaving plenty of room within which the Board can operate. The BPM is the centerpiece to the Club Governance Model*, which is the standard for excellence among the club community. There are many reasons for a club Board to develop and maintain a BPM. Preparing for the arrival of the future is just one of them.

For further advice on creating and maintaining a Board Policy Manual (BPM) for your Club, connect with GGA Director, Fred Laughlin.

*GGA’s Guide to Implementing the Club Governance Model is available to club leaders and Board members on request.

Board Self-Assessment: 5 Steps to Evaluate Your Performance

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Effective boards set goals and work to achieve them.  The best, top-performing boards execute an annual self-assessment of their performance.  This is the time of year to evaluate how your board performed in 2018.  To conduct a proper self-assessment each board should take the following five steps.

The self-assessment is a simple performance evaluation survey which requests answers ranging from “strongly disagree “to “strongly agree” with three levels of moderation in between (“disagree, neutral, and agree”).  This evaluation will yield the performance evaluation as a measure of results from one to five.

More detailed guidance for board self-assessment can be found in the NCA’s Board Toolkit (available to all members as a benefit of membership).

Step One – Evaluate Board Structure

This section of the assessment explores how well the board does its business.  Questions address issues of board organization, committee engagement and performance, and resources such as time allocation and staff support.

Questions in this step include the following:

  • The board has the right number of members.
  • The board has the right number of meetings.
  • There is adequate time in board meetings to address matters of importance.
  • Board meetings efficiently use time and human resources.
  • The board has adequate indemnification and D&O insurance coverage.
  • Board committees are constructive to effective club governance.
  • Committees have the right number of members.
  • Committee reports are timely submitted and require the proper amount of board review.
  • Committee assignments and charters reflect the best advice of the board.
  • Committee performance is right for the club’s current needs.

Step Two – Evaluate Board Information

The following types of questions validate the quality and use of information going to the board:

  • The club’s Board Policy Manual adequately communicates the duties and expectations of individual board members.
  • The board benefits from adequate pre-read time, information and materials to enable it to be effective.
  • Information provided the board is fully vetted and applicable to current and emerging conditions at the club.
  • Presentations by officers and staff are accurate and unbiased.
  • The board has adequate access to internal and external advisors (e.g., auditor, legal and risk management) to make informed decisions.

Step Three – Evaluate Board Dynamics

The following questions assess the dynamics or growth and changes exhibited by the board:

  1. The board addresses the right issues for the club.
  2. The board does what is right.
  3. The board clearly and timely communicates goals, objectives and results tithe members.
  4. The board properly balances its guidance and supervision of the general manager.
  5. The board promotes a culture of accountability at all levels of club governance.

Step Four – Individual Self-Assessment

Every board member must be accountable for his or her own work as a servant leader.  Questions that help to evaluate individual board member performance include:

  1. Engages in the board’s work.
  2. Understands the club’s strategy and strategic issues.
  3. Evaluates and fully understands club budgets.
  4. Understands and closely monitors the club’s financial performance.
  5. Respects the confidentiality of the board room in all matters.

Step Five – Board Communications

Members expect to know what the board is doing and what matters are being addressed.  Poor communication is one of the most frequently stated points of member dissatisfaction with club boards.

Communicate the board’s self-assessment and a composite assessment to the entire club membership.  Show the questions that were asked and the performance ratings that the board assigned to its own performance (not the individual scores).  Candid and genuine self-assessment of the board’s performance will build trust at the club.

Self-assessment is a form of the personal accountability that members expect of their leaders.  Communicating the results openly and honestly will make the club stronger and more capable of meeting the next generation of challenges.

This piece was authored by GGA Partner Henry DeLozier for the National Club Association’s Club Director quarterly magazine.  

Board Priorities: Add Brand Management to Your Fiduciary Responsibilities

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There are typically three priorities that command the attention of private club boards: (1) developing and using sound strategy; (2) ensuring the financial security of the club; and (3) governing the club responsibly.  However, in these days of over-supplied markets and the ongoing regeneration of many clubs, brand management has become massively important to clubs.

Some board members claim that a private club is “private” and, therefore, not a commercial brand. These outdated beliefs are a sure-fire plan for damaging the long-term brand health of the club.

Private club board members share several fiduciary duties, which include the duties of care and loyalty, such as good faith, confidentiality and disclosure.  Directors’ duties also expand to the responsibility to protect the identity—which may include its trademarks, intellectual property and public-facing images.

Brand Planning and Security

What is your club’s brand? And how is it being protected?

A brand is a small piece of real estate “owned” in the mind of the consumer, according to Al and Laura Reis, authors of “The 22 Immutable Laws of Branding,” a marketing classic on branding commercial companies.  Some board members claim that a private club is “private” and, therefore, not a commercial brand.  These outdated beliefs are a sure-fire plan for damaging the long-term brand health of the club.

Brand health, which means admiration, trust and desirability, is an important duty for private club leaders.  Social media proliferation and unending public awareness and scrutiny of private clubs require the club board to pay attention to the club’s brand.  Club leaders should routinely execute a brand audit to validate the club’s market impact.

Strategic Planning

The club’s strategic plan is its long-term direction and scope of operations.  The plan helps the club stay focused on its priorities, and to fulfill stakeholder expectations.

Board members are responsible to fellow members to ensure that the club has a sound strategy and that the strategy is being faithfully enacted.  Directors are duty-bound to know the club’s strategy and ensure that it is preserved and routinely used.

A sound strategic plan extends for a period of three-to-five years and should be fully reviewed annually.

Financial Security

Directors are responsible to protect the financial resources of the club.  This means that directors must carefully measure the future financial needs of their clubs; plan for the sources and uses of funds; and ensure the economic sustainability of the club.

Economic sustainability requires that the club generates revenues adequate to pay the costs of the operation and to fund future capital needs of the club.

Board members must fully understand the club’s financial capabilities and limitations.  A key tool used to report the financial profile of a private nonprofit, tax-exempt club is a Department of Treasury Form 990, which each director should also understand.

Club Governance

Every club director should strive to provide sound governance to their club.  Effective club governance is built on the regular usage of the strategic plan and a board policies manual (BPM).

A BPM documents the methods that will be used in governing the club.  It also includes a description of the organization, the authority of the board and the manager, and the relationship of the board with the manager/COO.

The BPM is as fundamental to effective club governance as the strategic, financial and brand plans.  It must be developed and used on a regular basis.

Today, governing a private club is a bigger and broader job than at any previous time.  Brand knowledge and management have become just as important to the overall health of the club as other fiduciary duties, such as strategic planning and financial security.

GGA’s Henry DeLozier penned this article for the National Club Association’s Club Director Magazine.

2018 Club Governance Model Executive Summary

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The Club Governance Model (Model), which was developed in 2007 and updated in 2018, is built upon accepted principles and best practices in nonprofit governance. Although this Model is directed primarily toward member-owned clubs, the principles embodied in the Model are no less applicable to clubs with a different ownership structure. The primary purpose of the Model is to optimize the most fundamental quality of a governance system – the smooth flow of authority from the club owners to the club staff and the corresponding flow of accountability from the staff back to the club owners. The Model, as shown in the flow chart below, is simply a set of principles designed to keep communications throughout the organization clear and the roles of key participants unambiguous.

The extent of the changes required of a club to implement the Model will depend on the governance system that it presently employs. However, the ease of implementing the Model will depend less on the number and extent of changes needed and more on the commitment of the club’s leaders, namely, the President, the Club General Manager/Chief Operating Officer (GM/COO), and the Board members. A club that is considering the Model for its governance structure and processes must not only assess the necessary steps in moving to the Model, but it must also measure the resolve of its leaders to follow through on the implementation. The caution to be followed here is “don’t start the process unless you have the commitment to finish it.”

Implementing the Model will usually involve amending the bylaws, although the changes recommended are usually straightforward and non-disruptive. The implementation step that will call on the greatest effort, and therefore commitment, is the development and eventual employment of a Board Policies Manual (BPM). From the time that the Board approves the initial version of its BPM, this important document can serve as a governance management system that provides a clear-cut path to success. As with any good system that is utilized on an on-going basis, the BPM will be continually modified and refined to respond to a changing environment. As the Board rely more and more on the BPM to be its single and clear voice, it will reinforce the underlying principles of the Model and allow the club to accrue the substantial benefits of an efficient and effective system of governance.

Overarching – From a high-level perspective, boards are meant to only serve a strategic role whereby their main function is safeguarding assets and evaluating and developing long-term strategic options. The role of management is to operate the club, while committees are meant to only serve an advisory function, with no authoritative or executive powers.

Board Members – Board members are, of course, club members. As such, they are customers, and volunteers. Board members are also trustees or governors in that they are elected to govern the affairs of the club subject to limitations that may be set out in the bylaws. But Board members have the authority to govern (i.e., are “governors”) only when they are taking part in an official Board meeting. Even though Board members are often active in committee meetings or efforts to assist the GM and his or her staff, when Board members are not in an official Board meeting, they are serving as volunteers and not governors.

Club Officers – Club officers, typically the President, Vice-President, Secretary, and Treasurer, are normally Board members with special responsibilities in addition to their duties as Board members. They are usually elected by the Board and subject to the Board’s authority and direction. As such, they have the authority only when it is granted by the bylaws or the Board. This means that the President does not represent a separate level of authority and does not supervise the GM except as specifically authorized to do so in the Board Policies Manual. The President is almost always the Chair of the Board and is responsible for maintaining the integrity of the governance structure and related processes. He or she normally is the chief representative of the members and the spokesperson for the Board. As Chair of the Board, he or she sets the agenda of Board meetings and ensures that the Board stays at an appropriate level with its thinking, discussions, and policy development. The President is often an ex officio member of all committees. Therefore, he can serve both in a coordinating role among the Board Committees and in a leadership role in keeping them focused on their respective scopes of responsibility. The duties of other officers are not discussed here because they have less to do with the governance structure and processes.

Committees – As shown in Exhibit I, the Model contains two types of committees. The Board Committees support the Board in Board-level functions (e.g., Governance, Finance, and Programs) while the Operations Committees (e.g., Golf Committee, Green Committee, Tennis Committee, Food & Beverage) support the GM. Board Committees study issues and recommend policies that support decisions at the Board or strategic levels. Operations Committees serve the GM by offering critical member (customer) input and in sharing the workload by helping with events and activities. As critical as the committees are in supporting both the Board and GM, they serve in an advisory capacity, not from a position of authority.

General Manager – The GM is the single agent of the Board with responsibility to carry out the purpose of the club within the policy boundaries set by the Board. Therefore, he or she has operational authority to employ and allocate the resources of the club to serve its members so long as he stays within the boundaries set by the Board in the Board Policies Manual.

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This article was authored by George Pinches, a Director at Global Golf Advisors, who specializes in Club Governance. Reach him at gpinches@globalgolfadvisors.com.

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