Beyond the End of the Road: Association Turnarounds
By: Al Rickard, CAE
When an association hits hard times, you can give up or you can get going and turn things around.Association turnarounds aren't for the faint of heart. They can become necessary for a number of reasons: dramatic external events, evolution in an industry or profession, or simply the need to update and improve organizational structures and operations. But once a turnaround begins, the organization's leaders need courage, financial acumen, political savvy, and much more.
In this article, you'll meet several chief staff executives who tackled tough turnarounds and made them work.
NAA Takes Flight
When Jonathan Gaffney took over as president and CEO of the National Aeronautic Association in July 2007, the picture wasn't pretty.
With an annual budget of approximately $700,000, NAA was on track to lose nearly $250,000 by year end. Reserves stood at $250,000. Salaries and benefits were running nearly $350,000 per year, and the annual rent for office space in Alexandria, Virginia, was costing $120,000 per year. Major aeronautic companies that had been members for years had begun to drop out.
"The two major components were a chairman and board who understood the challenges and supported the changes and a staff who were unfailingly loyal and dedicated to the process." —Jonathan Gaffney
First, he arranged to move the office to the Signature Flight Support General Aviation Terminal at Ronald Reagan Washington National Airport, which reduced monthly rent from $9,400 to $2,000 (and brought the association closer to its partners and it roots). The staff was shrunk through attrition and termination from 6.5 to three full-time equivalents.
Most important, Gaffney instituted a development program based on what he termed "the solid line." "In order to create a financially stable organization, we need to draw a solid line between the work done by NAA and those who have primarily benefited from it for the past 100 years," he told the NAA Board of Directors in September 2007.
He proposed increased dues for the largest corporate members with increased benefits, including seats on the prestigious selection committee for the Collier Trophy, which Gaffney calls "the Nobel Prize of the aviation industry." The award recognizes the greatest achievement in aeronautics in America. Winners have included the Apollo 11 crew that landed on the Moon, the Hubble Space Telescope recovery team, and individuals and companies that developed groundbreaking aerospace technology.
"The president of the United States used to present the Collier Trophy every year," Gaffney recalls. "My goal is to make that happen again in the next few years."
|It's not uncommon for chief staff executives to face challenging turnaround situations when they begin at a new association. Often, that's the reason they were hired in the first place. So what advice do these executives have for others facing turnarounds?
Identify the direction of the change. "Make sure your board has a common vision of what change might look like," says Tom Dobbins of the American Composites Manufacturers Association. Bob Van Hook, CAE, who manages many interim executive assignments and some turnarounds, adds, "The big mistake that sometimes happens is that new CEOs are not clear on what the mandate is. Also, the board is often not clear about what they really want. They want someone to ride in on a white horse, and when it doesn't work like they expected the executive gets his head chopped off."
Focus on core programs. "Look at the things that detract from your basic mission and get rid of them," says the National Aeronautic Association's Jonathan Gaffney. "Then draw a line between your mission and those who benefit from it—remind them of the value the association provides."
Be transparent and open. "Even if the culture of the organization has not always shared information and been totally transparent in the past, it must be during this process," says Michele Warholic Wetherald of AAUW. "It's critical to gaining buy-in from all stakeholders—leadership, members, and staff—and helping them operate as partners on the deep level needed to achieve success."
Don't try to do it on a shoestring. "You need extra funding and resources—staff and volunteer time, consultants—to do a transformation right," Wetherald says. "It's like remodeling a house; it always costs more than you think, and you always run into unexpected challenges."
Don't rush it. "You can't turn an association around overnight," cautions Bill Weber of the Association of Pool & Spa Professionals. "So don't try. You have to be realistic about resources, impediments, and other issues. Build a plan that takes these into account and includes an appropriate timeline. Then recognize that it might take even longer due to factors beyond your control."
Take care of yourself. "Executing a turnaround is highly stressful," Wetherald says. "As the CEO, you need to take care of yourself. You are playing for high stakes—the survival of the organization—so you need to keep yourself at the top of your game and keep your wits about you. Remember that you have a life beyond the association and make time for your life. You can't risk burning out."
Less than one year after Gaffney laid out his turnaround plan to the NAA board, the transformation of the association is well underway. Major corporate members have stepped up with increased dues, several new companies have joined, the Collier Trophy Dinner attracted a large crowd that included top Federal Aviation Administration officials, and buzz about NAA is spreading in the aerospace industry. NAA anticipates a 2008 fiscal-year surplus of approximately $270,000.
"The two major components of this process were a chairman and board of directors who understood the challenges and supported the changes, and a remaining staff who were unfailingly loyal and dedicated to the process," Gaffney explains. "We had to do a lot very quickly."
NAA Chairman Walter Boyne, a renowned aviation historian and former director of the Smithsonian's National Air and Space Museum, supported this strategy. "Jonathan made difficult decisions which cut to the core of NAA's problems and solved them," he says. "Perhaps more importantly, he has made clear to industry the extent of NAA's importance to aerospace companies. Without NAA, the aerospace industry quite literally cannot establish the official records it seeks."
The next challenge is to grow the association carefully and deliberately. "There are probably a hundred aviation and aerospace companies that exist on the other end of ‘the solid line,'" Gaffney observes, "and our challenge is to make them understand the importance of what NAA does for the industry and their companies."
As association nightmares go, this one was a doozy: The National Spa and Pool Institute (NSPI) was hit with a $6.6 million jury verdict stemming from a backyard pool diving accident that left a boy paralyzed.
That was in 1998. During the next few years, NSPI sold its tradeshow to raise money to settle the case, cut its staff by 25 percent, and went in and out of bankruptcy a few times.
Three years ago, the association hired Bill Weber, JD, CAE, as president and CEO. Rebuilding NSPI was the top priority as he came on board.
"This was not a traditional turnaround because we had sizeable reserves, thanks to the sale of our tradeshow," Weber explains. "But that show had provided about half our annual revenue, so we were operating at a serious deficit. The association never had the impetus before to create profitability in these other lines of business."
Weber also inherited an association with an outdated database and information technology infrastructure, inadequate policies and procedures, skewed resource allocation, and a staff that did not match association needs. He decided to pursue change along two parallel tracks: the financial turnaround and the strategic realignment of the organization.
One development that helped set the stage was a name change: NSPI became the Association of Pool & Spa Professionals (APSP). "We wanted to send the message that we were not doing business as usual," Weber says. "I also often used one of my favorite phrases: ‘You have to distinguish between doing things right and doing the right things.'"
Fortunately, Weber says, "There was a very strong volunteer culture in the organization. For all our problems, we had all the raw materials to make the changes we needed." He points out that the changes were not complicated: "They were largely simple motions well executed. They were not fancy pass patterns as much as basic blocking and tackling."
APSP now features a new education institute, new communication tools to serve eight different segments of the industry, a more nimble advocacy program geared to the state level (where most pool and spa regulations originate), and more collaboration with other standard-setting organizations.
The core function of the organization—standard setting—has remained relatively unchanged, although APSP is no longer involved in diving board standards. Nevertheless, the changes are big enough that Weber says APSP "bears very little resemblance to the old organization. We are a 50-year-old organization that is essentially two years old in terms of how we now operate."
The amount of change has concerned some longtime members. But improvements in things both large and small, including higher customer service levels fostered by a renewed team environment among staff, are benefitting all members. And APSP has reduced its operating deficit to a modest level and expects to break even next year.
"Except for the economy, we would have achieved it this year," Weber says. "But we'll get there soon."
When Michele Warholic Wetherald took on the challenge of transforming AAUW (the American Association of University Women), it wasn't a question of what type of specific problems the organization faced. "It was everything," she reports. "You name it—financial challenges, membership decline, relevancy of programs, governance issues—everything needed to be transformed."
Overlaying the obvious was an organizational structure that included four separate corporations with separate boards. The multiple groups were not only duplicating efforts and diminishing constrained resources, but also were working at cross purposes in many ways. Also, the social and cultural environment in which AAUW operated had changed dramatically since it was founded.
"I'm not sure if the change process should ever really end. The way all associations have to respond in the future is to constantly reevaluate how to do things better." —Michele Warholic Wetherald
"AAUW did not have a viable mission and vision," Wetherald recalls. "The question was, ‘How do we become relevant not just for today, but five or 10 years from now?' We were not just trying to get the train back on the track, but get it focused on the future direction."
To do this, the leadership tackled infrastructure changes, a process that filled a 30-month window before the organization would search for the next CEO.
"The boards agreed there needed to be change," Wetherald says. "The constant dialogue and tension were about what the change would be and how much." Both boards started meeting together regularly. Another critical factor of success was the trust and support developed with the boards' presidents.
Adding to the challenge was the fact that members and staff had undergone more than 10 years of CEO transitions and were somewhat numb to change. Staff had seen many big plans fall by the wayside, and it wasn't easy for Wetherald to convince them that this time it was different. But by the time they saw the boards seriously considering merging the three corporations, they began to believe that something different was happening.
"We had to create a long-term, strategic change process, not just a traditional strategic plan," Wetherald says. "Change needed to be embedded in the values and the culture of the organization."
The association bylaws required a vote among AAUW delegates at its convention, because bylaws were affected by a transfer of association assets into the Educational Foundation, making that organization the primary entity.
"Members voted for the bylaws proposals unanimously and directed the boards to take bold action to transform the organization," Wetherald reports. "We did an intense communication campaign for six months and shared all the details. We were completely open and transparent, a first for the organization."
Wetherald has completed her assignment as AAUW's CEO and the process of implementing the major structural changes will be completed in 2009. "That's when we'll see if this strategy worked," she predicts. "But I'm not sure if the change process should ever really end. The way all associations have to respond in the future is to constantly reevaluate how to do things better."
At the American Composites Manufacturers Association (ACMA), Chief Staff Executive Tom Dobbins took over the organization two years ago following a period of strong growth in programs and membership through mergers with other associations. The challenge that growth presented was consolidating current programs and crystallizing the direction the association was headed, implementing improved business processes, and re-engaging volunteer leadership and participation.
As often happens in a leadership transition, Dobbins also faced staff turnover, but this allowed him to hire a new team and align responsibilities to support the strategic and operational plans.
The leadership and staff built a new strategic plan from scratch, and the committees and staff developed operational plans and a dashboard with financial and numerical metrics to measure progress quarterly. The engagement of the leadership, committees, and staff working together helped him transform a predominantly staff-driven culture into a collaborative culture.
"We built a strong sense of camaraderie," says Dobbins. "Through realigning the staff with the goals in our strategic plan, we also looked at our staff to see if there were strengths and abilities we weren't using."
For example, ACMA had a person in its membership department with a strong knowledge of information technology. He led the association through a renewal of its IT system and is now leading it through the purchase and implementation of an AMS system. "In seeing his leadership skills in action, we were able to expand his role in our membership department and in other program areas," Dobbins says. "We took some measured risks and gave people more opportunities."
On the volunteer leadership side, ACMA tapped the business acumen of its leadership to distill a complex, ad-hoc system of reporting results to the board into a more concise, business-focused process that allowed board members to focus on bigger-picture issues.
"We were underutilizing volunteer resources," Dobbins says. "When you get members engaged, there is a greater commitment to the organization. We have access to a lot of great thinkers and leaders in the industry. They are now running with projects that we don't have the resources to accomplish with staff. And it is a lot more fun. They are feeling ownership of the accomplishments.
"There has to be a mutual respect and a partnership in how members and staff work together to meet the goals of the association. Then we can share in the success of the organization and see how everyone's role was important."
Al Rickard, CAE, is president of Association Vision. Email: email@example.com
David Patt , CAE , January 06, 2009
It's comforting to know I'm not the only person who has had to lead a difficult turnaround. The "Turnaround Advice" on the sidebar is excellent.
I'd add, "act swiftly and decisively." When you realize something is wrong (and you often know that before taking the job), don't wait to see how things will go. Implement changes as soon as possible - it will take plenty of time for them to bear fruit.