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Associations Now

Benefits of a Five-Member Board

ASSOCIATIONS NOW, March 2011, Feature

By: Harrison Coerver and Mary Byers, CAE

Summary: Large boards eat up staff time. They cost more. And they inevitably concentrate real authority in the hands of a smaller decision-making body, anyway. If your association wants to respond effectively to today's challenges, reduce your board to no more than five members, say the authors of the new book Race for Relevance: Five Radical Changes for Associations. (And they have a plan to help you get there.)

Associations need to embrace radical change if they wish to remain relevant.

Whether you are a paid association professional or a volunteer leader, you have probably noticed that the association model isn't as effective as it once was. You've likely experienced the challenges firsthand: loss of market share, pressures on members' time, shrinking revenue. And you've seen the irreversible trends that are making our traditional, accepted practices obsolete: rapid advances in technology, higher member expectations, increased competition, and diverse member markets.

Significant and permanent changes have occurred. But one thing hasn't changed much: the way associations operate. They govern the same way. They deliver the same services. They communicate the same way—all despite the fact that most associations have experienced tremendous shifts in their markets, their membership base, and their ability to keep pace in a rapidly changing world.

Association executives have learned their thinking and management styles from their predecessors, their peers, and professional development programs. Our association archetypes have been passed down without much challenge or innovative thinking. After all, the traditional association management model worked for decades.

Yet that traditional model is no longer the best model, and its efficacy will continue to diminish. While most associations and nonprofits are not in immediate danger, they will struggle if they cling to conventional approaches and structures. They will survive, but they won't grow. They will function, but without vitality. They will have members, but their market share will decrease. They will exist, but their influence will decline.

In our book, Race for Relevance, we discuss five steps we believe associations must take if they want to avoid falling seriously behind. The first and most important step relates to governance—because, in most associations, governance traditions, structure, and processes are the single biggest impediment to effecting change.

A Modest Proposal

You need to reduce the size of your board to no more than five people, not including the CEO.

Yes, we said five.

Most association boards do not effectively govern or lead their organizations. They waste time. They underutilize the talent and abilities of their directors. They are reactive.

Millions of hours of staff time are squandered each year on unproductive board activities. The opportunity cost of the care and feeding of board members is immense. If you don't agree, call an association the week before a board meeting. In a small organization, the entire staff is focused on preparations for the meeting; in a large one, most of the senior management is consumed. With four meetings a year, the average association allocates a month a year to board meeting preparation alone. And this doesn't count the two or three days of follow-up activity after the meeting.

If your association could concentrate its entire staff or senior management team on one thing for a solid month, what could it accomplish? Probably something significant. That is the cost of "managing" a large board.

Of course, preparing for board meetings is only a small percentage of the effort required to support board members throughout the year—and the larger the board, the more resources are required. Tasks range from handling requests for information to pleas for better hotel rooms at the convention or seats at the awards dinner.

Why Smaller Is Better

The problem with most boards is simple: They are too large, and they are not composed for performance.

Large boards are not effective. They are cumbersome. They are slow. They are full of political entanglements. They are difficult to manage. And they generally continue to get larger. Instead of contributing to the organization, they are a drain on the association's valuable staff resources.

But the biggest consequence of a large board is disengagement. The larger a board gets, the less engaged the individual director tends to be.

When the board is small, directors know that their presence and attention is important. When the board gets to be 20 or 30 people in size, missing a meeting or being absent from a conference call won't be as noticeable. At 40 you need microphones at the meetings so that directors can hear each other. And, as we have observed, at 50, some members begin to read USA Today, text, or read emails at the board meetings.

As board size increases, authority and control coalesce into a smaller group. Years ago we came across an organization that vividly demonstrates this dynamic. A national organization's board continued to get larger. As it grew to more than 20 members, an executive committee was formed. But as the board grew larger than 50, the executive committee increased to more than 20. This larger executive committee got bogged down, so a management committee of six was formed to deal with decision making more effectively.

The board continued to grow, the executive committee continued to grow, and now the management committee increased to 20. As the larger management committee got bogged down due to its size, an operating committee of six was formed. Group dynamics drove the changes that repeatedly resulted in the appointment of a smaller, more effective group.

The lesson should not go unnoticed: Large boards are not effective. In reality, almost all associations and professional societies are actually governed by the officers or an executive committee of about five individuals. As this tends to be the case in almost all boards we have encountered, why do we need the baggage of the rest of the board?

The Competency-Based Board

Most associations select their board members with the very flawed assumption that anybody can govern. Governing, however, is very difficult. Not just anybody can do it.

With a five-person board, the process of selecting the directors is critical and is guided by an understanding of what competencies are needed to govern the association and direct it effectively into the future.

The first step is to analyze the major challenges and opportunities for the association in the next five to 10 years. What high-impact trends or developments will affect the membership, the members' market, or the association's environment? This analysis should be conducted with great care. Existing research and studies should be referenced, recognized experts or specialists consulted, and member or leadership surveys considered.

Once the challenges and opportunities have been accurately identified, it's easier to determine what competencies will be needed on the board—not technical skills, but high-level knowledge and understanding. For example:

  • If the association's leadership and staff see technology emerging as an increasingly important delivery mechanism, who in our membership can bring a level of knowledge and understanding of its potential and how it might be exploited?
  • If we see increased interorganizational collaboration, joint ventures, or possible mergers in our future, who has relationships that might be leveraged or contacts that would be helpful? Who has the organizational political savvy that would be an asset in representing us in joint venture discussions?
  • If our financial situation will be complex, who brings a good understanding of financial matters?
  • If our programs and services are tired, who understands the challenges of developing marketable products in a competitive environment? Who has experience in developing a concept into a net-revenue generating product?

Keep in mind that directors don't have to be members. An association may not have five members with the necessary leadership and governance experience and competencies. Instead of leaving the position open or filling it with an incompetent, the association should look outside the membership. While it's not yet common, there are instances where associations have successfully recruited outside directors with a relationship with the industry or profession.

Directors in competency-based boards must understand that, as a member of the leadership and governing team, their input and participation on all association matters is critically important. A small board doesn't have anyone to blame for missed opportunities, failed initiatives, or glaring mistakes. All five directors have to be fully on board and fully engaged.

How to Downsize and Survive

Board downsizings are not uncommon, but most don't go far enough—they reduce the size of the board from 40 to 20, or 35 to 15. But if you are going to go through the considerable time, effort, and politics involved in downsizing, why stop at 18 or 16? You might as well go all the way to our recommended board size of five.

Downsizing a board is one of the most significant governance challenges an executive can face, right up there with eliminating board micromanagement of staff. While daunting, it can be accomplished. The following nine tips are critical to getting the job done.

1. Do not underestimate how difficult this will be. It is going to take years. You need a plan that will pace and sustain the effort. You need to be prepared to accept setbacks. You need to know when to lay low, and you need to know when to accelerate implementation. But it will be worth every minute.

2. Know that few directors want to lose their seat on the board.Eliminate the first line of resistance by making it clear that everybody currently on the board will serve out their terms—but as each term comes to an end, the vacant seat will not be filled. Board members are more likely to surrender someone else's future seat on the board than to give up their own.

3. Build your case carefully. Don't be shy about the first draft of your downsizing proposal; make it brutally honest and apolitical. Your case for change should address instances where your large board has missed opportunities and demonstrate how a small, competency-based board could have addressed situations more effectively. It should also graphically depict the amount of staff time consumed in support of your large board (versus adding value to membership). Show how the resources now spent on board support could be reallocated to important and productive efforts and what the potential impact would be.

4. Draft your plan. Develop a step-by-step strategy with timelines. Remember, it will require all directors serving out their terms. It will probably require at least two phases.

5. Take your case and plan to a current or incoming chief elected officer who has experienced the flaws of the current system.Choose someone who is an insightful leader, understands the association's politics but is not immersed in them, and who is respected by the rest of the leadership. Pick this individual carefully. If you can't make this first sell, your prospects for success are at best significantly diminished and, at worst, potentially doomed.

6. If your first champion agrees with your assessment and plan, reach out to a small core of additional leaders. These individuals may be in the chairs or on the board; they may be past presidents or a major players in the industry or profession. But they must be knowledgeable about the association, committed to its purpose and its future, and respected by their peers. With the help of this core group, you can take your unvarnished case and redraft it into a politically correct plan to restructure the association's governance.

7. Identify individuals who will stand in the way. Rank them in terms of their ability to mount resistance to the change. Know who will just get in the way and who has the potential to completely sabotage the process. Analyze their motives and consider why they would be opposed. How will they attack the proposed redesign? How can you respond to their pushback? How can they be neutralized or their opposition weakened? You may get a surprise or two, but you (along with your core leadership team) should be able to identify almost all of the potential opposition.

8. Understand concerns and be prepared to respond.There will be concerns and pushback. Some will be blindly based on "how we've always done it" or aversion to change. Others will be political or based in self-interest. But there will be legitimate questions and you need to be prepared with solid answers.

9. Picture the promise.People will only give something up for a gain or benefit elsewhere. "If we give up our traditional board structure, what do we get in return?" Identify a short list of initiatives with high impact and commit to achieving them in a very short time given the change to the five-member, competency-based board.

Though working toward radical change isn't without pitfalls, without streamlining governance at both the board and committee levels, your association will be stuck in its current model and modes of operation indefinitely. To thrive, grow, and build toward a better future, you must first build a board structure that can support nimble, strategic, and disciplined change.

Harrison Coerver is president of Harrison Coerver and Associates in Boca Grande, Florida. Mary Byers, CAE, is president of Word Works in Chatham, Illinois. They are the authors of Race for Relevance: Five Radical Changes for Associations. The authors will speak on April 14 at ASAE headquarters in Washington, DC; attendees will receive a copy of the book. Emails: harrison@harrisoncoerver.com, mbyers@marybyers.com

Sidebar: 7 Questions to Ask Board Candidates

Imagine the difference it would make if your association selected board members with a mindset of "Who demonstrates the most promising leadership?" instead of "Whose turn is it?" Questions like these could guide a competency-based board selection process:

  1. Does the candidate have basic leadership skills (not an ability to manage, but to lead)?
  2. Does he have at least a three-to-five-year horizon in his thinking?
  3. Can she guide the association into the future?
  4. Can he effectively direct the association's resources to achieve its goals and objectives?
  5. Does she have the ability to inspire and empower others?
  6. What has he done to show that he can move people and an organization in the right direction?
  7. Does she know what it means to govern?

Sidebar: Should You Retain a Search Firm for Board Members?

The selection process for a competency-based board has to be rigorous. It has to be disciplined. It can't be impulsive, rushed, or conducted in a cavalier manner. In fact, an outside professional should be retained to organize and guide the identification and vetting process. While we're not aware of this practice in the association arena, search professionals are commonly used to identify and screen corporate directors.

Many associations would not think twice about hiring a search consultant to provide professional assistance in identifying a new CEO for their association. The cost of the firm is more than offset by the potential risks of a hiring mistake. Why do we not think of directors the same way? What is the cost of appointing an ineffective director to the board, particularly if you have adopted a five-member board? Why will we invest a considerable amount in the search for our chief staff executive while simply asking "Who do you know?" or "Whose turn is it?" when it comes to selecting a director?

If an association can afford thousands of dollars for board-related travel, meals, and meeting expenses, it can afford professional search assistance for director selection. As a matter of fact, if an association has a large board and downsizes to five competency-based directors, it could redirect the costs associated with the large board and use those resources to fund the search consultation services for directors. In our opinion, it's money much better spent.

Online Extra: Nonmembers on the Board

Some associations have successfully added nonmember directors to their boards. In fact, the Indiana CPA Society has had outside directors since 1999. Gary Bolinger, CAE, president of the Indiana CPA Society, discusses his association's experience:

"We created these 'public member' positions on our board to enhance diversity of thought. [Editor's note: There are two public members at any one time to allow for continuity in the public member role.] To bring us an outside perspective. All too often, association boards, no matter how diverse they are, are all rooted in the same industry or profession. The outside view that our public members bring can be very valuable in causing the board to look at an issue or opportunity from a different perspective.

"Over the years, our public member has been attorney, a banker, the CEO of a think tank, a former state legislator, the senior vice president of a nonprofit and, most recently, a consultant in marketing and sales for professional service firms. Our public members have made significant contributions over the past 10 years. Each person has brought a unique and very valuable perspective to the table.

"I am often asked, 'But why do they serve?' Well, it isn't the money. While we do compensate them modestly—$500 per meeting—these public members of our board have told me they gain value. They learn about organizational processes and governance, they make new contacts and expand their networks, they get a different perspective, and they feel like it is one more way to 'make a contribution.' They serve for a variety of reasons. And it is interesting to note that we have never been declined by a prospective outside director—so they must perceive value and an opportunity to contribute. I just wish we had made the decision earlier to add public members to our board."

Online Extra: Case Study: Moving to a Five Member Board

Association: New Jersey Veterinary Medical Association (NJVMA)
Budget: $450,000
Number of Staff Members: Managed by Professional Management Associates (an association management company)
Number of Members: 1,000

The New Jersey Veterinary Medical Association (NJVMA) has done what few before it have: Moved from geographically-based board representation to competency based and decreased the size of its board to five members. Both changes are the result of a close look at the reality of association management and governance today: Volunteers are pressed for time and associations are more complex than ever. Many association boards are moving from an operations focus to setting strategic direction and evaluating overall performance, mirroring for-profit boards more than a traditional association board.

Rick Alampi, NJVMA executive director, doesn't mind. In fact, he says, "If you're not changing the governance and structure of your association, you're going to run the risk of becoming irrelevant."

Alampi serves as the executive director of six associations, including NJVMA. None are still represented geographically or by special interest. All have recognized the value of finding the best and brightest leaders, rather than those who happen to live in a certain region or represent a special interest. He says, "I simply tell the volunteers I work with, 'If you picked a baseball team by zip code, you may end up with nine catchers.' They get that. And I follow up by saying, 'If we've got three superstars that live in the same town, why wouldn't we want the three superstars?'" Now, instead of recruiting volunteers based on special interest or location, leaders are recruited based on a list of core competencies compiled by the association. These include vision, resilience, flexibility, open-mindedness, passion, and commitment to both the profession and the association.

The change to a competency-based board took 18 months and was underway when the reduction in board size was initiated, also the result of a hard look at reality. The truth for NJVMA is that three or four people drove board meetings—and many of the others on the board were unprepared. "You've seen it," says Alampi. "We'd create these board books and we'd send them out three weeks ahead of time, and they didn't even put on the sham of pretending. They'd actually be opening the envelopes at the board meeting. When I pointed this out to the board, they acknowledged that they don't have time and that often, they don't understand the issues."

Though the change to a smaller board meant displaced volunteers, some moved to the association's foundation board while others are now involved with a regional veterinary conference. Others were happy to simply end their service to the association.

The NJVMA board is now elected by the membership as a whole from a slate of at-large candidates. The five-member group elects its own president and treasurer and meets four times a year. Meetings last less than two hours.

Alampi admits that the move isn't for every association. Some of the groups he manages are too social for the change. "That's a big obstacle when I talk to other execs about this," shares Alampi. "Their boards are very social and they wouldn't want to give up their friendships and everything else that they have. But they're approaching it not on the basis of what's good for the association, but what's good for them."

Alampi acknowledges that there's a high level of trust between him and the NJVMA board, which made it easier to steer the group through the change since consensus is key to navigating the white waters of change. Alampi advises association executives proposing change to, "Get some of your trusted volunteer leaders together … have dinner, and just talk to them about it. And you'll get a feel for it. And if, after talking to three or four of them, if it's all negative, then just give it up. If they think it's intriguing, at that point take it to the next level. Bring in more leaders."

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  Belinda Moore , March 17, 2011
I clicked through and read Michael's comments and found them overly harsh. The personal attacks on the authors and AN editors were such that I started to wonder if there was some personal amimosity to them above and beyond this article.

I agree that one size doesn't fit all. However in the past 21 years I've sat on a large number of boards and have found that the larger the board the less effective it is. If I was forced to choose between the two I would choose a smaller board.

It is true that some elements of the article were missing that I would have like to have read, such as the risks of a 5 member board. However it is just an article that invites people to learn more rather than an all encompassing reference manual.

Thanks to the authors for taking the time to submit and article and to AN's editorial staff for putting forward some food for thought. And thanks to Michael for providing a different perspective to consider (even if it was a little harshly worded).
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  Michael LoBue , CAE , March 16, 2011
Unfortunate choice for feature article, perhaps even a 'back article' in AN. While it was very well written and contained a few good points, overall its message that a 5-member board of directors is right for any and all associations is: a) unsubstantiated; and b) naive.

See http://bit.ly/i1Ql0E for a more detailed comment, especially if you're new to the field of association management and governance.




 

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