Association founder trap

20121019-210659.jpgThe principle of “founder trap” is alive and well, but not only in the small to medium size enterprise (SME) which is the area traditionally thought of when talking about founder trap, but it is alive and well in our not for profit (NFP) space.

When we talk about founder trap, typically we are talking about a trap that many entrepreneurs fall into. It describes the phenomenon where people with good craft skills are successful in growing their enterprise to a point where it requires professional management. The trap that many fall into is assuming that they are equipped to manage such a business despite the lack of education and training in management. This phenomenon is well documented in the literature related to SME’s.

The area where it is not well understood is in the not for profit (NFP) space. Often we see organisations built by a collective of founders and we see constitutions built to ensure the bloodline of the founders continues to govern the organisation in perpetuity. The classic example of this is the professional association. Such organisations are founded by professionals and quite rightly their constitution restricts control of the organisation to a professional bloodline. In rare cases, we even see constitutions that force the employment of a CEO from within the profession.

To get back to the concept of the founder trap, there comes a point where the founders, or their current day professional equivalents, may need to recognise that association management is in20121019-205904.jpg itself a field of professional endeavour. This applies equally to a wide range of NFP’s that have reached a tipping point where they either professionalise or they risk failing in the pursuit of their members objectives. NFP management is increasingly becoming a mainstream area in the field of management studies and competency. Specialist skills in this area should not be undervalued by boards in this day and age.

It is incumbent on boards to regularly ask the question of whether it is now time to shift to “professionalised management” and to move itself to a pure governance role rather than a hybrid management and governance function. The need to make this assessment is driven by a boards obligation to act in the interest of members ahead of all else and should be underpinned by increased education and skill building in the function of governance for the board. For those that are fearful of such a change, there is more of a place in modern economies for professionals with governance and strategy skills than there is for professionals who should have governed but chose to manage instead.

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