Let’s be honest, one of the most challenging issues to deal with in associations is the interface between the President and the CEO. For many years now I’ve contemplated how best to define the relationship in a way that respects and values both the role of president and the role of CEO and I’ve decided to publish this article because I know it’s an area that creates some very interesting debate among my peers.
As a Fellow of the Australian Institute of Directors, I figured the best place to start was to look at the role of Chairman in a pure corporate governance model. Without going into the significant role that a chairman has in managing the board, the AICD states that one of the primary roles of the chair is “acting as an important link between the board and the company without inhibiting direct access of fellow directors”. This speaks to the chairman having an important role as the interface between the board and management but also respects that the CEO ultimately reports to the board rather than the chairman. The AICD goes on to say that outside the board the chairman has a role in communicating with shareholders on matters of corporate governance, chairing shareholder meetings and being available to speak with large institutional investors. That pretty much sums up the role of a chairman under a corporate governance structure.
However, we know that the role of president in an association is different. An association president represents the members as the figurehead for a profession or industry which is where the question arises around defining the role of an association president and the ways in which it differs from that of a corporate chairman. More importantly, how do the differences between what might be considered best practice for a corporate board and what we see in associations impact on the relationship between the President and the CEO and most importantly on the performance of the organisation. Well let’s see if we can talk it through.
Usually a president of an association will come to the position with a degree of technical expertise. This is particularly helpful as the knowledge of a profession or industry can be crucially important in some settings. For example, where the media wanted to talk about the collapse of a building, the President of a building related association is likely to be the perfect person to interview due to their technical skills. This is not normally a role taken on by a chairman under a corporate governance model so it’s a unique component of governance that applies in associations. Equally, in some associations such as the AICD or CPA Australia, the CEO will take the lead on speaking in the media on behalf of the Association. This creates one of the most challenging interface environments between the President and the CEO of any governance environment I’ve seen. I’ve seen it manifest in situations where presidents use the power and authority they have personally assigned to the role to force their way into meetings in which they offered very little value, and they have usurped a very capable and experienced CEO in the process. These situations are often met with the statement “but I’m the President” with little regard for good practice, the value expectation of members or the skills of a CEO, sometimes with many years of experience in leadership, advocacy and policy. Equally, I’ve seen presidents leave newly appointed CEOs to fend for themselves with limited guidance or input on matters of extreme importance to members. I believe we need a better discussion around the role of Association President and what attributes might make up good or best practice in this area.
So I’m going to take a moment to go through where some of the differences between a corporate governance model and an association model lay and see if we can’t tease them out into a best practice governance model for associations.
Firstly, it has to be said that the presidents role and the CEOs role in an association must simbiotic. The two must work together to deliver value for the organisation and for the membership. To flow on from that, every organisation will have differences depending on the skill sets held by both the President and the CEO and that these skill sets will ultimately define the relationship. It is apparent however that any organisation that has gone to the market and sought a skilled and professional association executive as a CEO should have done so with the intention of allowing that CEO to operate at the top of their skill set and that the role of the president is to move over time toward a best practice governance model in which the CEO is expected to represent the organisation to the maximum of their capacity. This presents the best opportunity to maximise value from professional staff.
In the context of maximising the value of professional staff, there is an equally legitimate role for a president to bring value into key areas. Firstly, a president provides gravitas on behalf of an association. A president that attends the opening of an envelope undermines the gravitas of the position and can begin to limit the extent to which the prestige of the position adds value. However, there is nothing more powerful than explaining to government ministers that the President attends Parliament only once a year and that a meeting with the President of the Association is considered a valuable opportunity for ministers to speak directly with your most senior office bearer. Naturally the CEO or other staff need to lay the ground work but gravitas is a powerful motivator. This gravitas is of course undermined if the President appears at every meeting with anybody remotely associated with decision-making so one of the goals of presidential meetings should be to protect the gravitas of the position.
The second crucial role for a president is to be an authoritative source in the external environment on technical issues. This is becoming increasingly important as we see association executives becoming more professionalised and much less likely to be a member of the profession or industry. A good association CEO will come to many policy discussions armed with well constructed policy and organisational positions which will be appropriate for the vast majority of policy consultations. However, there are a good number of situations where government departments and the media will have questions that need to be answered on the spot (so the CEO or staff doesn’t have the opportunity to seek advice) and where technical skills and knowledge help to add significant value. This should not offer an opportunity for members to run the age-old argument ‘but you’re not one of us so you can’t possibly advocate for us’ as this is simply nonsense where well prepared and skilled staff are concerned. It reflects a lack of understanding and appreciation for the skills of a good advocate and fails to respect that the average CEO has spent significant time focused on the association and the issues of members in the first three months of their full time tenure.
The following diagram attempts to define the two positions in a way that brings the collective value of the two to the table. It reflects that both the President and the CEO are accountable separately and individually to the whole of the Board of Directors and that they both have a role to play in accountability. It reflects that the President has a primary function around governance and gravitas and that the CEO has a primary function around executive leadership and management. Both will interface with the external environment in different ways, both will interface with each other and both will interface with the board as a whole.
To sum up this article, we can look at a pure corporate governance best practice model to understand the vast bulk of the responsibility of an association president in the governance structure of the organisation. The President clearly takes on the role of chairman and is responsible for managing the board including its policy, processes and culture. The President provides a regular interface between the CEO and the whole of the board and also has two additional functions from what I can see, to act as the figurehead for the industry or profession and to use the value provided by that gravitas to exert influence as well as to bring technical skills and knowledge into the most important situations where seeking further advice is impractical. In a best practice model, anything beyond that is the role of a professional CEO in managing the organisation.
Where I will throw in an additional footnote is to recognise that some associations don’t have the resources to run proper professional staffing and it is not unusual for those associations to have a board where members volunteer their time to undertake operational activities. I’ve previously written on how to manage volunteer board’s so as to still provide a clear line between the governance and operational functions of the organisation.
I’d be very interested in getting people’s feedback because I do know that there are people who have a different view to me on this point and it would be useful to engage in the debate on how close we can get to developing a best practice model for association governance that respects the different role that a president may have compared to a corporate governance chairman.