How to Elect (and Entrust) the People with Power

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

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

“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

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

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

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.

Emotional Ownership in Private Clubs

Warren was delighted when his fellow club members selected him to serve on the board of governors. He couldn’t wait to rollup his sleeves and jump straight into the big issues plaguing the club: stagnant membership growth, financial uncertaintyand distrust of the board itself. Given his previous business success and background, Warren was certain that he could be a difference-maker who would put the club back in good standing with its members. Instead, Warren encountered uncooperative, unprofessional and disorganized fellow governors dedicated to the status quo . . . “Tradition” they called it.

WHAT COULD MAKE governing a
 club so much more difficult than leading
 a major corporation? “Emotional ownership makes governing private clubs so challenging,” explains Fred Laughlin, a 40-year nonprofit governance expert at PriceWaterhouseCoopers and now an associate at Global Golf Advisors (GGA). “The intensity of emotional ownership escalates significantly as people think of their churches, clubs and homeowner associations.” Faith, social network and home ownership are overpowering emotional factors that can rob the normal good sense of good people, Laughlin teaches.

Most club leaders and managers fully understand the basics of effective club governance. Club member focus groups across the U.S. generate the same assortment of member concerns with governance: transparency, communication, strategic focus and financial focus. Yet, many private club boards struggle with each category.

Board members can become misdirected because of the following contributors to emotional ownership dysfunction: their own financial investment, personal identification with the club’s mission, interaction with fellow board members, proximity to the club and the frequency of their club visits, their own roles in everyday life, impacts on their own families and club-sourced impacts on their own financial capabilities.

How should private club leaders improve governance at their clubs?

  • Establish qualitative measures that serve as criteria for board evaluation. Club members want personal accountability, openness, dependability, trustworthiness and accountability from their board members. The board must establish the performance criteria against which it will be evaluated.
  • Execute regular quantitative analysis of board effectiveness. Require the board to “post a score” for all to see. Board members should self-evaluate after each board meeting against the governance criteria to which all members of the board have committed. In addition to self-evaluation, club boards should request and receive annual performance evaluations from fellow members.
  • Communicate regularly, openly and redundantly. Board activities should be communicated in multiple media formats—email, posted notices and hardcopy reports—to all club members. No member should be allowed the option of complaining that they are ill informed.

Peter Drucker, the esteemed scholar of business practices, identifies three essential functions of every board of directors: making and sustaining sound and effective strategy, trustworthy and open financial plans and planning, and executing effective governance. For private club leaders, it is important to note that Drucker does not include management supervision, leadership by committees or personnel management.

Laughlin teaches that excellence in club governance is embodied in a board policies manual (BPM). He states, “The essential principles of good governance are that a) the roles of the primary players (board members, managers, and committees) are clearly and appropriately defined, b) the board speaks with one voice (and not through its various factions), and c) the board commits to excellence (in its dealings, communications and standards). The BPM is the storehouse of these principles.”

How can a private club board change to the BPM structure? 

Boards genuinely want to do their jobs well. Although board members may have highly successful careers in other sectors beyond private clubs, many need coaching. There are two keys to developing better governance:

  • Desire—Board members truly must want to achieve excellence. That requires work, self-evaluation and the commitment to continuous improvement.
  • Education—Many governance and ethics experts can provide guidance. The key is to find those with an understanding of the nuances of private club leadership.

Applying such simple tactics and the discipline that keeps them simple is the great challenge in an emotionally charged setting. Board members must understand their emotional engagement and limitation using tools that minimize the negative impacts from the emotion and maximizing the favorable possibilities of inspired leadership.

This article was authored by GGA Partner Henry DeLozier and Director Fred Laughlin for the National Club Association.

Keys to Uncontested Elections

As the election season heats up, it’s easy for people involved in club leadership to draw parallels—for better and worse—which begs many at clubs to ask, “Should we use a contested or uncontested method for electing board members?”

Choosing an Election Process

If given complete authority to design a process for electing the board members at your club, would you choose an uncontested election where the number of candidates equals the number of slots to be filled, or a contested election where the number of candidates exceeds the available slots?

The clear preference of the “experts” is the uncontested election. At many clubs, it’s tough enough to find good candidates without having to convince them to stand for a contested election.

Apart from the experts’ fondness for uncontested elections, the majority of club bylaws still prescribe contested elections. Why? Fundamentally, it’s the American way. It’s democratic. And, in some jurisdictions, it is statutory to a certain extent. Club members feel that closed elections take power from the people and place it in the hands of the board or a Nominating Committee, neither of which can be completely trusted.

Ah, trust. There’s the rub. Members may concede that uncontested elections are better at attracting quality candidates, but they worry that uncontested elections place too much authority in the hands of a few, where politics is valued over substance.

The challenge is not how to argue the superiority of uncontested elections, but rather convincing members that the process is objective and fair—and that candidates are selected on the merits of the job. Meeting this challenge means gaining the members’ trust.

Selection on Merits

An uncontested election is only successful when the members perceive the nominating process as objective and independent. Members must trust that the candidates are selected on merits, rather than popularity or seniority. But what are “the merits,” or what criteria should be used to select board candidates?

There are two key elements to selecting on merits: an independent, objective Nominating Committee and a clearly articulated board profile.

The Nominating Committee

The members’ trust in the nominating process depends on how they perceive the independence and objectivity of those doing the selecting, namely the Nominating Committee. Nominating Committee members may be appointed by the current president, the immediate past president, or the board.

Board Profile

Having the right people on the Nominating Committee is a key ingredient to selecting quality candidates. But having a quality committee is helpful only when the members know the basis for selecting quality candidates. Accordingly, the Nominating Committee needs to know the criteria for selection. Although the club’s bylaws may mention a criterion or two, rarely will the bylaws contain more than the basic requirements. It is up to the board to determine the criteria for selection. Using a board profile is the best approach.

A board profile is a document that describes the board from both an individual and a group point of view. The profile typically comprises three sections:

  • Criteria required by every board candidate
  • Traits that are desirable for the board to reflect multiple perspectives
  • Individual experience and competencies that can help the board to address club business

The board profile should identify members of known integrity who have demonstrated capability of working as a team member—especially candidates with a history of committee service to the club.

Building Trust
Even if you follow the guidance above, there is no guarantee that your members will support an uncontested election—but your chances will markedly improve. An uncontested election
will help identify quality candidates willing to serve on the board, in a less politically charged election process, and a more professional and effective board.

This article was authored by GGA Partner Henry DeLozier and Director Fred Laughlin for the National Club Association.

The Board Policy Manual: Aligning Authority and Accountability

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.

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