Warren was delighted when his fellow club members selected him to serve on the board of governors. He couldn’t wait to roll up his sleeves and jump straight into the big issues plaguing the club: stagnant membership growth, financial uncertainty and 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.
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