Last week the Association Executives of North Carolina held an excellent educational session, Top Legal Trends that Associations Should Care About, presented by Marty Martin, JD. There was a lot to digest and it reminded me, once again, of all the challenges a CEO faces. Marty discussed four emerging legal trends that we need to understand and deal with:

  • It seems that every few weeks we learn of the misdeeds of an organization or individual we once trusted. This morning we learned of the arrests of mayors and rabbis (!) in New Jersey. It’s no wonder that a lack of trust in organizations is becoming more pervasive.
  • We demand accountability from our leaders and organizations. We will no longer put up with boards failing in their duties and tolerating unethical behavior or misguided senses of entitlement, as they did at the United Way, Smithsonian, and Nature Conservancy. Associations are tax-exempt organizations, not only accountable to our members but to the public too.
  • Transparency” is a word we see and hear more often these days, but it’s not a passing trend.
  • We’re much more critical about performance and results. If you can’t deliver, we’re going to start asking questions and taking our votes or money elsewhere. Doing well isn’t good enough; we must demonstrate our results to members and the public.

The IRS 990 Form is the most obvious indicator of these trends. If you haven’t looked at one yet because your job doesn’t require you to, take a peek and see what your CEO and Board will be dealing with. Its completion will require a lot more resources and disclosure than many associations are used to. The compensation section alone will give many Executive Directors heartburn and could create staff morale or member value issues when compensation packages of key staff are disclosed.

There must be a renewed emphasis on board governance and management of the association. The board is responsible for managing the business of the corporation – the association. Or do they think the Executive Director is managing it? The standards of service for a non-profit board are the same as a for-profit board. Do they realize that?

Are we selecting our board leaders for the right reasons? Or do other reasons enter the equation – ego, geography, seniority, politics, or relationships?

Do we educate our boards as to their duties and responsibilities? Do they understand conflict of interest? Anti-trust? Fiduciary responsibilities?

Do you get the impression that your board members don’t have the time to do the work they should to understand their responsibilities and prepare for meetings? If they’re not willing to put in the time and effort to do the work, they shouldn’t be on your board. I don’t know the source of this quote from the presentation but it’s a good one: “Your date book is your creed. What you believe in, you have time for.”

Marty defined organizational culture as a pattern of learning that occurs overtime in response to internal and external challenges. Culture operates on three levels, but all three must be aligned for a healthy organization:

  • Surface – The first impressions upon walking into your association’s office speaks to its culture.
  • Espoused values – Are you walking your talk? The board has the ultimate responsibility for adhering to these values, yet I think the Executive Director can play a critical role by modeling the right behavior and actions.
  • Basic assumptions – Assumptions are often hidden because we’re so used to them. “We’ve always done it that way.” They’re often our sacred cows. Assumptions can be an impediment to change in an organization.

In the short term, culture will prevail, even in the face of a changing external legal environment. That’s why associations may need a cultural shift to be transparent, accountable, well-governed and wisely managed.