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Agencies Accussed of CollusionAccording to recent reports in The Guardian the Association of Model Agencies (AMA) has about three months to submit their responses to allegations by the Competition and Markets Authority that it is involved in price fixing with some of its members.

Agencies allegedly used the trade association as a vehicle for price coordination when their representatives controlled the AMA’s managing council. Like most associations, the AMA claims its Council meets to discuss industry matters and promote the interests of its members, but it is also alleged, by the CMA, to have circulated regular “AMA alerts” that encouraged agencies to reject fees offered by customers and negotiate higher payments.

I wonder how many trade association councils haven’t at one time or another thought it might be a good idea to give members a ‘heads-up’ on sensitive commercial information; suggest ways of capitalising on their dominant position in the market; or have an ‘informal’ discussion of tenders?  Or more likely perhaps, agree a price to avoid competing with each other.

In September 2005, fifty prominent independent schools were found guilty of operating a fee-fixing cartel by the Office of Fair Trading. The OFT found that the schools had exchanged details of their planned fee increases over three academic years between 2001-02 and 2003-04, in breach of the Competition Act 1998. For their part Bursars freely admitted that they used to meet regularly and talk about fees, but maintained that the swapping of information did not amount to a concerted plot to push up fees.

It’s a familiar dilemma for association CEOs. A general discussion at a council meeting can all too soon result in some bright spark suggesting a monthly alert to all members with a guide price for some service or functions. And it’s often down to the CEO to nip it in the bud before what seemed like a helpful suggestion turns in anti-competitive behaviour, generally to the accompaniment of harrumphing about what exactly are the ‘benefits’ of membership!

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What does the brave new world of disruptive technology have in store for trade associations? Will they have a future purpose, and how will they justify their subscription?

Adapting to the Uber WorldAssociations have always adapted to change. Time was when they encouraged actors in a particular trade or industry to gather together under a shared identity, partly to validate their supposed expertise, and partly to exclude those deemed less worthy. So, if we’re honest, protectionism and elitism played no small part in achieving credentials, and arcane rules re-enforced by mystifying etiquette were fashioned, which rendered those inside the tent unassailable, and those outside beyond the pale!

This kind of `gentlemen`s club’ mentality – where simply belonging was in itself enough to justify the fee – survived in various forms until the end of the last (twentieth) century. Some associations also managed to build a quasi-official carapace around themselves, and further strengthened their position by assuming the mantle of gate-keepers: granting access to industry data and information to the privileged few.

Members were also encouraged to believe that their status granted them the ear of government. Indeed, in 1996 the Department of Trade and Industry (DTI) appeared to confirm that view with the publication of its best practice guide for The Model Trade Association. The DTI is long gone but that document remains the bedrock of many associations, cementing the notions of best practice, bench-marking, and competitiveness in their psyche.

The turn of the century saw companies` growing more concerned about trust issues and the protection of their reputation. Collectively, reputation management became a function of trade associations, achieved by furthering members’ interests with stakeholders like regulators, industry analysts, employees, suppliers, and the media. And, in response to common reputational problems brought about by industry-wide crises – like pollution, slave labour, or blood diamonds – competing firms tried to stave off aggressive government legislation through the development and enforcement of self-regulation.

Commercially, associations also attempted to influence any regulatory or trading conditions that adversely affected their members, by providing a platform for collective representation and lobbying. In reality, the so called ‘level playing field’ involved seeking favourable rules like tax breaks, subsidised research and development, or relaxed employment practices. Promote and protect was, and still is, the stated or implied motto of many associations.

However, over the last decade, the big story has been the rise of digital and the evolution of organisations to meet their members’ changing expectations. Data is now freely available to all; associations aren’t the only conduit for communication between stakeholders; and businesses are increasingly reluctant to pay to simply to `belong`. Faced by shrinking membership fees, and keeping up with members’ demands for instant access to resources and training, some associations turned to sponsorship, exhibitions, group buying, financial benefits packages, and other monetised relationships to fill the financial gap. The most successful ones have managed to continue updating and innovating – make the transition to e-learning, develop digital products – and make all their services accessible online! But how much longer can they keep ahead of the curve?

Emerging, or disruptive, technologies have the capacity to alter our lifestyle, what is understood by work, business and the global economy. Whilst disruptive innovations create new markets and value networks and eventually disrupt the existing ones, while simultaneously displacing established market leaders and alliances. The interesting thing about the current crop – like Airbnb – is that they achieve this without being subject to any of the traditional infrastructure costs and limitations.

So, as social media has already undermined the logic behind at least one of their key functions – communication – how long will it be before someone applies the `Uber’ model to trade association procedures: undermining established practice; regulation; and tradition? And how will associations represent the interests of members who find themselves displaced by, or in competition with, others driven by disruptive technology?

Reviewing your strategy and communications? Can I help? Over twenty years’ association management experience.

Bavaria 1

Michael Hoare

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Nobody expects the unexpected, but you can at least try and plan for it!

Opening up the building after the Christmas shut down a few years ago I discovered to my horror that over the holidays a small electrical explosion caused by a power surge had burnt out the main fuse box and deprived us of heat, light, switchboard, and computers. Unbeknown to me the argument that ensued about liability between the electricity board, energy supplier, and contractor, would take days to resolve and result in no power for a week, but even at this stage it felt like a disaster!

RISK REGISTER v2

Packing the staff off for what we thought would be a welcome extra day`s holiday, and thanking our lucky stars the whole place hadn`t burnt down, an intrepid colleague and I settled down in the cold to manage the recovery as best we could; literally and metaphorically fumbling in the dark to resolve the problem.

With year-end accounts to complete and membership renewals in full swing it could hardly have happened at a worse time. But a lucky break came with the discovery of one lone top floor power socket that was unaffected. As – being an old building – it was probably connected to next door`s supply! So, with the aid of a long extension cable, we powered up the servers and key colleagues were able to use remote access connections (the one thing we had planned for) to return us to some semblance of normality – at least to the outside world!

Now, how likely it is that we could have anticipated the catalogue of other people`s errors that led to this incident is a moot point. But it is illustrative of just the kind of risks that lurk around every corner. But, the fact that we avoided a disaster was down to luck, rather than planning.

You could categorise our mini disaster under the heading of a technical failure, or even a service provider failure, but risks come in all shapes and sizes and can include loss of key personnel; reputational risk; regulatory and legal failures; financial losses; poor project management; compromised governance; or environmental factors like flood, gale, snow, or fire.

Risks tend to cascade, trigger a domino effect, or worse still collide to exponentially magnify the consequences. So, formulating a risk register that identifies threats, and puts in place plans to deal with the fall out, has got to be a good idea. Yes?

Of course, risks sometimes revolve around people too. I know of one trade association that suffered severe trauma due to the loss of its CEO and Chairman. Reputational risks ensued from allegations of inappropriate behaviour, leaving a compromised and rudderless Board in charge. Finding scapegoats, apportioning blame, and alienating those who could have mitigated adverse publicity did nothing to help. And, despite loyal staff eventually regaining equilibrium, the long-term damage is impossible to calculate. But much of it could have been avoided had there been a plan in place for the Directors to follow!

Dull as it may seem, a risk register lists all the risks pertaining to a business (or project), their grading in terms of likelihood of occurring and seriousness of impact on the company, initial plans for mitigating each high level risk, and subsequent results. It also usually includes details of who is responsible for managing the risk, and an outline of proposed mitigation actions (preventative and contingency). It must be regularly re-assessed as existing risks are re-graded in the light of the effectiveness of the mitigation strategy, and new risks are identified. So, ‘filing and forgetting’ it isn’t an option!

So, a risk register tells us the what, where, and how of risk management, but it also provides the trustees, management committee, and funders with a documented framework against which risk status can be reported. It also ensures the communication of risk management issues to key stakeholders and compels them to act. Let’s face it, disasters happen! Some are predictable, others preventable! But if they strike while you’re in charge, neither shoving your head in the sand, or running around like a headless chicken are attractive options!!

Bavaria 1

Reviewing your strategy and communications? Can I help? Over twenty years’ association management experience.     Michael Hoare FIAM
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It may be flattering to be asked to join your trade association’s board but it could also be a very bad career move. So, before joining, you should conduct your own due diligence, and start by asking some probing questions.

All aboard the associationServing as a board member is one of the most challenging and rewarding of assignments, whether in the commercial, not-for-profit, or membership sector. But, while appointment or election may be an honour, board members have important legal and fiduciary responsibilities that require a commitment of time, skill, and resources. Prospective board members should do themselves a favour – and show that they are serious about the commitments they make – by asking some basic questions before joining any organization’s board. Probe the member who issued the invitation to join; the chief executive; the chairperson; and other current and former board members. Anyone with inside knowledge!

Start by asking for copies of the board minutes from the last 12 months and study them to see what has been agreed and achieved. You’ll find yourself defending those decisions whether you like them or not! Note how many directors showed up to meetings, and whether decisions were reflected in the company’s strategy and performance. While you’re at it find out what the organisation’s mission is, how its current programs relate to it, and if they have a strategic plan that is reviewed and evaluated on a regular basis?

Study the calibre of the other board members. Find out what experience they have, what they have done in their past careers and what their reputations are like in the industry.  Most importantly of all, check out the chairman. A board’s performance will reflect their talent and management abilities. After all, this person is the board’s manager.

The chairman should oversee each meeting, keep discussions on track and on topic, and recognise when there is an issue – when a topic is too big to be solved in one meeting – and when offline meetings, or further information-seeking sessions, are required. A good chairman will recognise when specific directors are struggling or not pulling their weight, and will take action. And when certain directors are overly forceful in their opinions, a great chairman will restore balance and ensure every voice is heard before a decision is made.

He or she should also be able to tell you about the structure. What about descriptions of the responsibilities of the board as a whole and of individual members? What about committee functions and responsibilities?  Is there a system of checks and balances to prevent conflicts of interest between board members and the organisation? And for your own peace of mind, does the organisation have directors and officers liability coverage?

Problems aren’t always visible from the outside. After all, a board’s job is to appear balanced and always in agreement even when it is not. So look for signs of dysfunction. These include regular resignations and appointments; organisational underperformance; the constant missing of objectives; and the CEO and senior management struggling for support. What about the board’s relationship to the staff – particularly the executive staff – and how do board members and senior staff typically work with each other?

Do a bit of probing into the finances too. Are they sound, does the board discuss and approve the annual budget, and how often do board members receive financial reports? Who does the organisation serve, and are the clients or members satisfied?

Once you’ve done all that, get down to the personal stuff.  What can I can contribute as a board member? How much of my time will be required for meetings and special events? Am I committed to the organisation’s mission? Can I put its objectives above my own professional and personal interests when making decisions as a board member? Can I contribute the time necessary to be effective?

If you can answer all those questions to your own satisfaction you’re almost there. Now all you’ve got to do is get elected!

Reviewing your strategy and communications? Can I help? Over twenty years’ association management experience. Bavaria 1       Michael Hoare FIAM
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