Monday, August 25, 2014

Parameters for efficient and effective organizational performance?

By Steven M. Worth, President at Plexus Consulting Group, LLC

Would having specific standards or performance benchmarks be helpful to professional and volunteer leaders of associations? Would such standards be helpful to potential donors in evaluating which organizations merit their time and financial support? If so, what do you think of the following as areas worthy of standards development?

• Money handling procedures that minimize potential for embezzlement
• HR hiring and promotion processes that assure alignment of personnel resources with organizational purposes
• CEO versus average staff income ratio—what is optimal?
• Cybersecurity training and procedures in place
• Secure office space
• Audit committee processes in place

• Fact-based, consensus driven strategic plan in place and promoted to all stakeholders
• Metrics identified to measure meaningful progress against strategic goals
• Strategic partnerships identified and utilized effectively to achieve shared vision
• Incentive plans in place that are effective and fair
• Has clearly stated code of ethics and means in place to enforce them

• Has policies in place that ensure ecologically and environmentally sustainable practices
• Over 50% of income comes from sale of mission-driven products and services
• Has plans in place to expand market share
• Invests in R&D to ensure continued relevancy
• Has significant reserves to ensure stability but not so large as to hinder growth

Monday, August 18, 2014

Helping Your Board to Be More Effective - Five keys for high-level governance

By Virgil R. Carter

Despite the great diversity among non-profit organizations, we all seek effective governance by our boards.

A critical starting point is to recognize what a vital resource time is. Recruiting new board members is challenging because volunteers are concerned about drains on their time. Governing well is critical because a board’s time together is limited. Thus, how you and your board use your time matters.

Boards that are forward-looking, focused on strategy, provide the maximum effective (and enjoyable) leadership when time is limited. Strategic boards spend the majority of their time identifying broadly important outcomes, setting priorities, and monitoring the way the staff and other volunteers implement major initiatives.

Here are five steps volunteers may take for an effective, productive, and rewarding board.

1. Define success. Establish and practice a shared definition of organizational success. No matter how well an organization may perform in any 12-month period, if it can’t perform effectively year in and year out, it can’t really be called a successful organization. Thus, success has a lot to do with consistency and continuity over time.

2. Understand your core assets. Every organization has core assets. Typically they include: 1) knowledge, 2) community, and 3) advocacy. These are the resources for an organization’s accomplishment of its mission. Volunteers and staff must be strategically focused on the welfare of assets that cause members and customers to value the organization.

3. Think the unthinkable. Ours is a rapidly changing world in which we face unprecedented competition. To remain both up-to-date and competitive, focus on and prepare for the unthinkable—both opportunities and threats. Effective boards consider the one thing that would most revolutionize their organization and the one thing that would most jeopardize it. Thereafter, boards focus strategically to realize the opportunity and head off the threat.

4. Set priorities and monitor them. Resources are always finite—there are never enough. So develop strategic priorities and communicate what is truly important. To maintain a strategic perspective, boards must think in terms of what is important, not how to achieve results. The staff and others of the organization’s operational side are the ones to be held responsible for executing the action.

5. Establish a respectful staff partnership. The professional staff of an organization offer important resources—so important that it may be impossible for a board to be truly strategic without them. For example, staff members may have access to knowledge, contacts, and resources that may be unknown to a board. The staff is uniquely positioned to help develop and implement a definition of organizational success that’s built upon consistent performance, year after year.

Effective boards are both enjoyable and productive where it matters most: achieving the organization’s mission.

Tuesday, August 12, 2014

Listening Is Hard Work

Steven M. Worth

How many of us as children remember our parents pointing out that there was a reason we had two ears and only one mouth — could we please just listen? Apart from our parents wanting peace of mind, there is a lot of wisdom in this advice. But the temptation to follow one’s own ideas at the expense of what someone else may be trying to say does not stop in childhood. Many an association has followed strong leaders with more vision than wisdom down the wrong path, making mistakes that could have been avoided had more importance been placed on listening.

Do any of the following scenarios seem familiar?

  • Mindful that his term of office was coming to a close, the chairman of the board of a major professional society pushed for his fellow board members to ignore market research findings which pointed to the need for the association to form strategic alliances with other associations in the industry as they developed and introduced a new professional certification. Such an ally-building process would be too time-consuming and would necessarily compromise his vision of what should be done.
  • The board of directors of another association is persuaded that the time had come for the organization to merge with a much larger association. The association simply didn’t have the clout its members needed to have its voice heard in Washington. The association had no desire to survey its membership on this since the need seemed so obvious.
  • Concerned about the motives of some of the members of his board of directors, an executive director of a large foundation took great care to select a strategic planning facilitator whom he knew and had confidence in. He wanted to assure that no policy initiatives were going to come out of this strategic planning exercise that he did not want.
In each of these examples either the board of directors or the executive director made a decision to limit outside influence in a predetermined policy direction. This decisiveness guaranteed speedy action — but was it in the right direction?

The association community across the country has never known greater turmoil. The number of associations being formed, merged, or downsized is at record levels. In such a highly charged environment decisive leadership is welcome. But it is also true that what one does not know can often prove fatal.

The distinguished British statesman Benjamin Disraeli once noted, "As a general rule, the most successful man in life is the man who has the best information…." The same is true for associations. But is it possible for an association to act decisively while still allowing for a thorough gathering of information? Some associations do. They do so by:

  • Making time and resources available for thorough strategic planning on a regular basis. Market conditions are changing so rapidly that most associations now undertake strategic planning exercises once every two years.
  • Starting the process with factual research into your members’ market — chances are you are sitting on the answers to key problems or opportunities. You just need to find them. Such research also lessens the degree of subjectivity that inevitably creeps into policy discussions.
  • Limiting the instinct to "control." Use respected outside consultants who have a demonstrated understanding of your association to provide the objectivity that is needed — then let go. Know that you are only doing yourself and your association a disservice if you try to predetermine the results.
Of these three points, the last is without doubt the hardest. We all know associations are great lumbering things that require dynamic and focused individuals to get them to move in any direction. But sometimes these very leadership qualities interfere with the "listening" process that is needed if the right decisions are to be made.

The hardest part of association management is dealing with the many differing points of view, personalities, and interests that are involved in every association. This can be a frustrating experience for those coming from the military-like decision-making structures of most for-profit corporations. But there are two ways of viewing this flat decision-making environment: one is as an obstacle to overcome; the other is as an information-rich environment in which new opportunities and creative solutions to old problems are waiting to be discovered. The key is to foster a culture in which listening is valued.

It’s been said that President John F. Kennedy was such an avid and alert listener that it was exhausting to talk with him. Viewed in this light, listening is far from being a passive state. It is active, exhaustive, and methodical. And it might just be the key to your association’s future.

Monday, August 4, 2014

Financial Resources: Strength Through Diversity

Virgil R. Carter

Non-profit organizations need financial resources in order to achieve their mission. Non-profit finances are really simple-no money, no mission--it's that simple! For success, of course, non-profit organizations also need other essential resources--human resources and value-added knowledge resources, for example, which pertain to the field, discipline or industry of the non-profit. Non-profit organizations don't exist to make money, but successful financial operations are essential for non-profits to remain viable and successfully pursue their mission over time.

For many individual member and trade associations, annual revenue streams may result from one or two major sources--dues and non-dues revenues. Dues revenues come from new members who join and existing members who re-new their membership annually. Non-dues revenues may come from members and from non-member customers and supporters. Non-dues revenues are important for at least two reasons: 1) they enable financial diversity for associations, and 2) they provide additional resources for associations to address their mission in ways beyond that which is possible when revenues are solely from membership dues. Financial strength for non-profit organizations is obtained when there are diverse, dependable revenue sources.

There's an old association rule of thumb that says that associations whose dues revenues comprise more than 50% of their total revenue stream may be "cash poor" and may not have sufficient resources to address many of the needs of their members, customers and other constituencies. Organizations whose majority revenues are derived from member dues may live a "hand-to-mouth" annual existence, since new member recruitment and existing member renewal are frequently processes beyond the direct control of the organization. Who hasn't struggled to increase membership through increased recruitment and/or improved retention?

This "hand-to-mouth" financial condition is often typical of non-profit organizations whose annual revenues are under $1 million USD. On the other hand, non-profit organizations whose annual revenues are over $10 million USD may have annual revenues where membership dues may be in the 25%-30% range of total revenues. Many non-profit organizations find themselves somewhere in between these two examples, challenged to increase both dues revenues and non-dues revenues, striving for some reasonable financial balance between dependable dues and non-dues revenues.

Where do non-dues revenues come from? Sources of non-dues revenues may be from members, non-members and sponsors/advertisers who purchase goods and services from the non-profit, such as event registrations, product sales and fees for services and business opportunities, event sponsorships and the like. For many associations, non-dues revenues are developed from "traditional" meetings and conventions, trade shows, educational programming and advertising/publication sales. Other associations have found non-dues revenue opportunities in "innovative" global partnerships and programming, standards development, certification and credentialing programs and professional development/continuing professional education activities, etc. Grants, intellectual property and licensing also offer non-dues revenue opportunities for associations in the "knowledge-development" arena. The range of opportunity for non-dues revenues may be limited only by one's imagination.

Control over finances is the number one skill needed in association work, according to Critical Competencies of Association Executives, commissioned by ASAE and conducted by Lawrence Leiter & Company. Uncertain and challenging economic times are strong incentives for prudent non-profit organizations to seek to accomplish their mission through diversified revenue-producing activities, supplementing membership dues revenues with new and/or expanded non-dues revenues. Financial diversity is strength, especially when it comes to non-profit organizations. Does your organization have the strength of financial diversity?