Building an Effective Board of Directors
By Harvey Weiner, Managing Partner
HARVEY WEINER SPEAKS OUT IN HIS SERIES ON BUILDING A PRODUCTIVE CLUB CULTURE
The third message from the same caller that morning carried an edge of panic. “You’ve got to get me out of here, Harv. Please call me back right away.” Was this the same guy I had been trying to “liberate” for years only to be repeatedly rebuffed? When I got back to him that afternoon he divulged his concerns. Though well into his second decade as chief operating officer at one of the nation’s foremost private country clubs he was about to be confronted with what appeared to him to be an insurmountable problem, so overwhelming that he was actually prepared to bolt before even exploring alternative jobs or possible solutions. The problem: The likely incoming president had recently retired and had so much time on his hands that he was showing signs of wanting to micro manage the club. Further, the gentleman had limited directorship experience and had packed the executive committee with like-minded friends.
A unique occurrence? No. Resolvable? Perhaps. Worth the effort? You bet!
As a senior management headhunter representing the boards and owners of private clubs worldwide since 1974 I have witnessed more than my share of horror stories when it comes to board/management relations. It is finally time we confronted the single most often cited reason why managers voluntarily resign from otherwise wonderful positions: Misgivings about either the current or next likely president. (There are some variations such as an uncooperative house chairman, micromanaging treasurer, presidential wives pushing menu, decorating and party ideas without working through the management, etc. but that’s for another column).
This series of frank articles is intended to assist the directors and concerned leaders of private clubs in focusing their efforts where they can be most productive and helping them to anticipate the inevitable land mines of club leadership.
Building an Effective Board of Directors
The impact of an ineffective board cannot be overstated. The missing sense of professional fulfillment, management frustration and fear, resulting from dysfunctional leadership, drives managers to seek employment elsewhere and potentially skillful directors to further abdicate responsibility. Let’s shine a critical light on common causes and possible cures to ineffective club leadership.
Handpicked directors have actually told me that they and their unstructured board are often expected to do the president’s bidding on command. Though it is naive to expect clubs will follow a democratic model autocracy need not be the process of choice. Lacking clearly defined roles for each director and for the board as a whole nobody has to accept responsibility. Some presidents actually force all decision-making to the top where they can govern unilaterally. These despots are directly responsible for shockingly high management turnover in the private club field and the erosion of member “ownership” of their club.
The corporate and for-profit world have learned painful recent lessons. With day-to-day management authority delegated to the club’s management ultimate success, or lack thereof, rests with the board of directors, responsible to its members.
Before figuring out how to achieve success each club must first define success for themselves. Naturally, basic components of “success” are common to most clubs: fiscal responsibility, a pleasant, safe environment, conducive to fellowship, etc. But go much beyond the basics and each club has the right to define, for and by its members, what it wants to be.
My firm has consulted with several thousand clubs over the years and a disturbing majority had no mission statement when we first met. That presents a fertile playground for the unstructured board of directors or the domineering chief executive officer. Without a clear picture of what success is and with no clearly defined mission the unstructured board will, almost certainly, during their short tenure, redefine their club to meet their personal, though transient, expectations. Control of the club must be wrested from capricious, arbitrary and, in some cases, downright incompetent directors who would destroy their club.
WHY DO PEOPLE SERVE ON BOARDS?
Of the many reasons stated by directors as to why they agreed to serve on their club’s board seldom have we heard anything about the success of the club. Personal reasons prevail. Surveys indicate members accept directorships for primarily these reasons :
1. Prestige. It’s impressive to some that you are a private club director
HOW MANY MEMBERS SHOULD SERVE ON THE BOARD?
An effective Board of directors requires sufficient variety and range of expertise to fulfill its mission. Too small? Some constituencies are sure to be underrepresented and the few directors overworked. Too large? You’ve got a members’ council not a board of directors.
Clubs frequently have an executive committee comprised of just the club’s officers. This smaller group of five to eight may be empowered to act in the board’s absence, though often, if the board is too large, may become an inner circle with inordinate power. Monitor the essentiality of their between-meeting decisions. A good rule of thumb is usually “when in doubt include more people in the decision-making process”.
WHO SHOULD SERVE ON THE BOARD OF DIRECTORS?
Successful business people who have had responsibility for hiring and training, professionals with executive and supervisory experience, consultants (CPA, marketing, PR, etc) who respect consensus usually make good working directors. Based on my experience, you should beware of fast food franchisees claiming to know everything about F&B, entrepreneurs who answer to no higher power than themselves and sole practitioners in small law and accounting firms. They tend to be overbearing, unwilling to deliberate, and may be less respectful of consensus through process. Lone rangers are best deployed on focused tasks. Spouses of successful executives or club officers may also be a problem as they counter-productively assert power. I expect many comments on this opinion.
HOW LONG SHOULD A DIRECTOR SERVE?
Ideally a director should serve for three years, permitted to succeed himself once, then, following a year hiatus may serve again. One third of the board should rotate off each year encouraging new ideas from new sources yet retaining experience and wisdom of the prior years. Presidents should serve for one year and be permitted to succeed themselves for one additional term. During the president’s second term year it is a good idea to have identified the next likely president so that s/he may begin president-elect training/orientation during the year preceding his presidency. The least expensive and potentially most rewarding asset is the club’s membership. Engage them judiciously.
FORMER PRESIDENTS’ STATUS
President’s Council (A Brain Trust)
SPECIAL PRIVILEGES FOR DIRECTORS
None. A soon as the staff begins treating some members as more important than others the whole concept of egalitarianism among members is dead. If regular members receive less service and attention than directors, the staff requires training.
DYNAMICS OF BOARD MEETINGS:
▪ Distribute agenda and prior meeting minutes by either E-mail or snail-mail prior to meeting. Require directors to actually read it beforehand.
DIRECTOR’S RELATIONSHIP WITH GM/COO & STAFF
▪ GM informs members regarding rule infractions. The board enforces the rules.
Clubs, which follow these guidelines, are most appealing to quality senior management.
The Author is managing partner of Dallas-based Search America®, International Board consultants for Private Club Management. 800.977.1784. You may send you questions/comments to [email protected] or www.SearchAmericaNow.com
Next in this author’s series:
Developing bench-depth on the board.
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