Presentation by Mike Groome ACAG Flying NZ Conference Hamilton Airport Conference Centre 13th July Good and Effective Governance

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1 Presentation by Mike Groome ACAG Flying NZ Conference Hamilton Airport Conference Centre 13th July 2013 Good and Effective Governance I am going to spend a few moments discussing the role of club committees and their responsibilities. A very well known and respected CFI once said The definition of the demise of an Aero Club is, Death by Committee. What he was saying is that without good governance your club is on a path to failure. And he is correct. One thing that is often forgotten by members of Aero Clubs and that is that the club is a business and must be run as one. The Club is not a benevolent society and if treated as one, the club it will certainly fail. All clubs operate differently, but they all have one thing in common, and that is that they operate on the generosity of the members giving of their time voluntarily. One group of volunteers within that club is the Club Executive Committee. Committee members have generally offered their service to the committee for a variety of reasons, because they believe that they have the ability to make sure that the objects of the club are maintained and that they can deliver value to the club members. Committee members must remember though, that although they are individuals and that they may have their own agenda, they are a part of a democratic process of which decisions made in the committee room may not be of their liking. If the committee person has a conflict of interest then they must declare it and leave the meeting, so that they do not compromise themselves. Page 1

2 Many clubs have got into trouble through divisions within the committee, with individuals trying to push their own agenda without thinking about what is best for the club and its members. Committee members have, in case law, the same responsibilities as those of a company director. Not many people understand those responsibilities. The enquiry into the tragedy at Pike River has had a huge impact on the responsibility of governance in every organisation, from major companies to small one man organisations. As a Committee you have a duty of care to make sure that you keep yourself, your employees, your members, your contractors, your customers, and your visitors safe from harm whilst they are on your premises or partaking in an activity associated with your Club. Have you considered what would happen if there was a serious accident involving your club, or an activity associated with it. This can be quite a sobering thought and highlights the need for careful consideration by the committee. All committee members are equally liable for actions and decisions taken by the committee. Non attendance at a committee meeting at which a decision is made does not absolve a committee person from a shared responsibility, accountability or liability. Unfortunately many clubs find it difficult to get members to put their hands up to stand for the committee. This can create a problem where a member may end up on the committee just to fill a seat and make the numbers up, without having the background knowledge of the current position of the club. This person may be putting themselves at risk to a situation of which they are unaware. Committee Responsibilities Some of those responsibilities are 1. To act in good faith. 2. Exercise power for a proper purpose. 3. Must not put the club into serious risk or loss to its creditors and or members. 4. Must exercise care, diligence and skill in performing their duties. Page 2

3 5. Must not put themselves in a position where their own personal interests or duties conflict with that of the club. 6. Must not allow the assets of the club to be put at serious risk. The last responsibility is very important. If the club has a commercial division, set up a separate entity from the club to run that business. This will protect the club if the commercial division goes into receivership, and if set up properly the club assets are secure. There are three aero clubs within the Flying NZ movement that have done this well. Southland, Canterbury, and the Hawkes Bay and East Coast Aero Club. These three clubs are part of the Air NZ FTO partnership, and it is no mean feat to do this, but all three have separated their commercial divisions from the club. I have personal experience of this, as I was the person that set the company up with the Hawkes Bay and East Coast Aero Club. This company owns no assets other than a few computers and some furniture. They lease the aircraft from the Club and they lease the offices from the Club. The club is the sole shareholder and the company has its own Board of Directors separate from the club committee. If the Company, Air Hawkes Bay Ltd, was to unfortunately get its self into financial trouble and went into receivership, then the club assets are safe from this failure. There are nine steps to good governance. These basic nine steps are used by organisations large and small. Sport New Zealand has a very good book on Governance which these nine steps are outlined. They also have it online and at the end of this presentation I will put up the link to it. Step One: Get the right people on the Committee Without the right skills and attributes present amongst the committee, the committee will struggle to deliver good governance. Everyone has strengths in differing areas and the challenge is to tap those skills to benefit the club. Page 3

4 Step Two: Define and Agree to the Committees Role There needs to be an agreement between the committee members, as to exactly what the committee s role is and what areas of responsibility each committee person is responsible for, and what should be delegated to the club management and or CFI. These roles must be documented and should become a part of a more comprehensive club policy or charter. Most clubs have a policy of some sort, but in most cases it is not documented. The President of the club has no more or authority within the club than an ordinary committee person. The President, as chair of the Committee will facilitate the discussion and must listen to all views before putting an issue to the vote. The only extra privilege the President may have is a casting vote depending on the club rules. Step Three: Employ and Support a Manager or CFI. The Manager and or CFI needs to know what his or her authorities are and what the committee expects should be achieved. A clearly defined delegation policy will provide the Manager and or CFI with the confidence to carry out their roles without having to get permission from the committee to do the job they are employed to do. There is nothing more demoralising for management than to have governance interfering in their role. Step Four: Provide Strategic Leadership. A strategic plan makes it clear what is to be achieved. This should be written in outcome language, so as to be able to measure the effectiveness of the plan and those implementing it. eg Stating that the club will get 10 new members this year. Or We will paint the clubhouse this year. Or get the SIDS done on the C152. It is easy to quantify. Step Five: Make Committee Meetings Count. Committee meetings should count. They should not be just a social get together once a month. The meetings should be well run and should focus on the committee s job. The committee meetings should be predominately forward looking so that members can leave the meeting thinking that their experience, expertise and wisdom has added some value to the club, and that they can see some progress. Page 4

5 Step Six: Stay On Top of The Governance Role. Time should be taken at every committee meeting looking ahead. This should be the equivalent of a mini strategic planning meeting. Even the most experienced Committee person can find themselves drifting away from the Governance role and involving themselves in management matters. It is imperative that the committee stays on top of its role and not get involved in management matters, other than assessing the Manager and or CFI on a predetermined timeframe. Individual committee members must not interfere with day to day management matters. If the Committee person has a problem with management then this should be brought to the committee table and discussed, with every committee person having the opportunity to have their say, and not to done behind the managements back. If the latter was to happen and allegations were made, then the club could find themselves with a constructive dismissal case. And believe me the cost to the club could be expensive and devastating, as the employment court generally rules in favour of the employee. Remember the Committee sets the Policy and the Management carries it out. There is no hard and fast rule as to whether management should be a part of the committee, but generally they should not. Management should attend committee meetings in their capacity as operational managers of the club, but they should not have a vote. Step Seven: Develop the Work Plan. Committee members must view their role as continuous, involving themselves in all committee matters, making time for all the tasks that the committee must attend to during the year. Not just to turn up when it suits them. Remember the committee is responsible and accountable for the clubs affairs. Stick to the Plan. Page 5

6 Step Eight: Regularly Review the Committee Performance. Committees should always review their own performance. This can be easily done by comparing their performance against the strategic plan. If they are falling behind ask the question why and do something about it. Step Nine: Correctly Induct and Provide Support to a New Committee Person Most committees have new people elected at the AGM every year, bringing new skills and enthusiasm. It is important that new committee members are brought up to speed with the affairs of the committee and the club. By doing this the new committee person can make informed decisions and take a full part in committee meetings at an early stage rather than warming a seat for a year because they are just coming to grips with the club affairs. The Club President and one other senior member of the committee should formally induct the new committee person, to bring them up to speed as to the state of play within the club. I know this talk may have seemed a bit tough on the individuals who very generously give of their time and effort for the clubs, but it is the reality in today s world of accountability, responsibility and litigation. If you follow these steps you will have a good and effective committee which is working for the best interests of the club and its Members. Prove a certain CFI wrong and have Success by Committee. Page 6