Association Governance on a Global Scale
ASSOCIATIONS NOW, February 2013, Feature
By: Joe Rominiecki
|Summary: As an association expands, its governance system stretches to the breaking point. At the Entrepreneurs' Organization, where more than half of members live beyond U.S. borders, Brian Costanzo, CAE, led the creation of a new global governance system that flexes to meet the needs of members all over the planet. [Titled "Governance Goes Global" in the print edition.]||
|The Innovators 2013|
Can you define innovation? Maybe not—it's an abstraction that can be hard to pin down—but we bet you know it when you see it.
That's certainly true of the Associations Now readers who responded to our invitation to tell us about innovators they know in the association community. After putting a series of finalists to a vote on AssociationsNow.com, we're happy to introduce the three innovators you told us you wanted to know more about.
Brian Costanzo, CAE, developed a world-class global governance system. Jill McClure, CMP, CAE, tackled a tough public policy question by harnessing diverse voices in social media. And Erin Fuller, FASAE, CAE, took what may be the ultimate risk in associations—offering free membership—and lived to tell about it. Also, see three more association innovators that were nominated.
Innovation is exciting and meaningful because it combines the abstract with the practical. After all, an idea isn't much good, and certainly not a driver of business success, until it comes out of the imagination and starts to do some real work. The association innovators you'll meet here understood that—and made it happen.
The 11-page packet makes it look so simple. A couple of bold statements, a series of FAQs, some neat bullet lists—an outsider can understand the Entrepreneurs' Organization's global governance structure in just a few minutes.
Of course, looks can be deceiving. There's nothing easy about coordinating the work of 8,700 members in 122 chapters across 35 countries. Brian Costanzo, CAE, should know. "Probably a good 200 hours worth of member conversations and staff conversations went into creating this document, at least," he says. (See the Regional Councils Governance Guide [PDF] in ASAE's Models & Samples Collection.)
Costanzo, senior vice president of global membership at the Entrepreneurs' Organization, led EO and its members on a journey of "innovation through collaboration" in 2008 and 2009 as they wrestled with the challenge of an organization growing faster and more widely dispersed than its governance structure could handle.
One member describes EO a decade ago as "the Wild West," but its global leaders and local members have tamed the chaos through a system of regional councils that, perhaps counterintuitively, releases control and embraces the diversity of a global membership.
Global Growth: Good and Bad
Headquartered in Alexandria, Virginia, EO has had chapters in other countries since its inception in 1987, and today 54 percent of its members reside outside the United States. (About 10 percent are in Canada.) By comparison, across all U.S.-based associations, the median percentage of members outside the United States is 7.2 percent, according to ASAE benchmarking research.
Brian Costanzo, CAE:
What is your definition of innovation?
Innovation is about boldly going. It's not settling for what you're doing currently. It's about taking steps to improve and to challenge yourself in the process.
What innovator has inspired you the most?
I graduated from UNLV. Steve Wynn transformed Las Vegas in the '90s with out-of-the-box thinking and progressive, big ideas. People thought he was crazy. He spent hours making sure every aspect of his hotels and casinos was perfect. All this while going blind. His drive, boldly-going attitude, and inspiration set a new standard in the industry.
What's your most memorable "a-ha" moment?
The first year the regional council model was launched, U.S. East said, "What the hell is this?" and the regional council was brought together and said, "We're wasting money." But the regional director at the time, in the second year he continued on, and he said the words "I get it." And that for me was just a reward, to know all the effort that went into it ... a member saying "I get it.
EO has also been growing rapidly. Since 2003, its membership has increased 74 percent, from about 5,000 to 8,700 in 2012. This combination of growth and geographic dispersion creates a complex challenge, says Carolyn Lugbill, CAE, a consultant to associations on international strategy.
"One of the unique aspects of a global organization is that members and operations in all parts of the world are treated equally, so if you're going to ... have a significant number within a geographic area, then it's really important to have them represented in your governance structure," she says. But too-large boards just bog down decision making, Lugbill says.
EO, in fact, shrunk its board in 2003 from 23 members to 10, but as the association grew, managing chapters all over the globe with a centralized committee became untenable. "We looked around the room at the chapter development committee and just said, 'We can't do all this,' " Costanzo says. "It was a tipping point."
The struggle also led to a growing perception problem. "Members didn't understand where their money went, didn't understand how it benefited them locally," Costanzo says. "So the problem was how do you get members involved in the decision making to help effect what's best for them? And that's where the innovation came in."
The Missing Link
In concept, the governance modification EO made is simple: an additional layer of volunteer leadership between the global and chapter levels. Regional councils, as EO calls them, oversee the work of chapters in each of eight regions and are given autonomy within their regions.
CEO Robert Strade calls the regional councils the "missing link" that everyone knew was needed, but hammering out the details and building buy-in was a lengthy, collaborative process. It took "eight months and a lot of input from a lot of different people," says Costanzo.
The initial regional council model was beta-tested in EO's Asia Pacific region in 2008 and 2009. It consisted of a regional director and a few area directors, who each serve as a direct liaison to four to six chapters, but it became apparent that the core activities in each region needed directors, as well. The regional councils approved by the EO global board in 2010 consist of the regional director, regional director-elect, learning director, membership director, communications director, three to five area directors, and Forum director. (Forum is a system of small, facilitated peer groups that every EO member participates in.)
The model strikes a careful balance: The governance document presents a clear list of 16 duties the regional councils are authorized to carry out and 18 actions that are not authorized. For instance, a regional council can endorse chapter launches, allocate the spending of its discretionary budget, and hire a regional staff administrator, but it cannot launch or shut down chapters, charge regional dues, or hire or fire global staff. Meanwhile, annual funding for each region is determined with a formula based on its total number of chapter members and the number of chapters with more than 25 members.
Costanzo says his role in deliberations on the regional council model was to "help nurture the idea."
"We have entrepreneurs with a lot of different ideas," he says. "I was an arbiter in discussions where people had different viewpoints on what they thought the direction of the councils should go in." Then he worked as "the lead salesperson" in explaining the value of the model to members and staff and gathering their input.
"Getting this thing off the ground was sort of the equivalent of starting a multinational business," says Miranda Barrett, vice president of membership development at EO. "And that meant working out the components of who reports to who, what's the structure, how often does this group meet ... all those little situations had to be thought through, and that's the kind of stuff that just repels entrepreneurs."
Before joining EO in 2005, Costanzo worked in hospitality, including time at Ritz-Carlton and as a solo consultant on meeting and event management. Strade says Costanzo's relationship building turned EO's governance innovation into reality.
"His passion and enthusiasm help build that kind of esprit de corps amongst the people who are scattered all over the world," he says.
A Bold Change
Three years in, the regional council model is proving its value as both a driver of local member activity and a pipeline for volunteer leadership. The number of regional, multichapter events has doubled since 2009. Plus, eight of EO's 10 board members in 2012 were former regional directors or area directors.
A trend in the regional councils' first year signaled the sense of duty they felt with their new autonomy.
"In the first year, a lot of the budgets that we pushed back to the regions weren't actually spent," says Fletcher McKenzie, a member of EO-New Zealand who completed a three-year term on EO's global board in 2012 after serving as regional director of its Asia Pacific region during the beta-test year. "Suddenly these guys were going, 'We can't just spend this money willy-nilly. We've got to be very careful.' "
The regional councils are also "boots on the ground," Strade says. They're more sensitive to cultural nuances and better at handling challenges at individual chapters, part of what had been most difficult for the global chapter development committee as EO expanded.
Last year, the regional directors were added to that committee, part of an ongoing evolution of global governance that EO hopes will both enable and accommodate future growth. The regional councils are free to embody EO's stated core value on innovation, "Boldly Go!"
"We've empowered them, gave them money, gave them support, and they go off and conquer," Costanzo says.
Joe Rominiecki is a senior editor at Associations Now. Email: firstname.lastname@example.org
Find these articles and more at www.asaecenter.org.
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