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Go global with an international federation.

The climate may be right to open broad new markets in your industry.

"You're asking me to work with my competitors? Impossible" spluttered a United Kingdom manufacturer at our first exploratory meeting. In the mid-1980s, AIM USA, a Pittsburgh-based association of automatic identification equipment (e.g., bar code or magnetic swipe) manufacturers launched a 10-year international effort that would turn a $15 million American market into a $15 million global industry. From AIM's first affiliate relationship with a newly formed association in the UK grew an umbrella federation of 1,000 members - 28 affiliated organizations in 30 countries.

As AIM did, your association members already may have business abroad or see the potential for new markets. Seeking out international partners and taking the lead in organizing to serve your common interests can increase association membership and exhibition attendance and improve industry market size, among other benefits. Getting started is fairly simple, but keep in mind that operations will have to mature as the organization grows. Here is how AIM launched an international federation.

First steps

Create a task force. As with any association program, conduct a needs assessment and develop a business plan for board or member review and approval. AIM's first step was to form a globalization task force of individuals already involved in international activities for their companies. We invited members that were not yet working internationally to contribute their thoughts, too.

The task force's objective was to gain organizational approval of a plan to initiate contact and establish relationships with foreign counterpart organizations. Task force members discussed the pros and cons of going global and documented and presented their findings to the general membership for approval.

Anticipated benefits included opening foreign markets to American-made products and services, contributing to the development of international standards embracing American-made goods, developing international research-and-development efforts, and learning how the field is served abroad.

Test the waters. AIM went to the United Kingdom first because members already had business there. When we first approached UK businesspeople to suggest they follow our U.S. model and form an association, they were taken aback. How could competitors cooperate? AIM staff and member leaders explained the advantages of belonging to an association. With charts and graphs we were able to show how by working together they all could benefit. They accepted, with reservations.

Rather than try to form a UK chapter, AIM planned that this new organization become the UK affiliate. We would become "AIM USA," and they would use our logo as "AIM UK." They would approve their own constitution based on our bylaws, follow our membership structure, adopt the same mission, and offer similar communication and education programs in the UK. They would elect officers, determine dues, and essentially be a legally separate but affiliated organization.

Address suspicions about becoming a federation. The second obstacle we encountered was the suspicion that affiliates from one nation would be considered less important than AIM USA. In fact, not long after AIM UK formed, we met with several European industry, representatives at AIM USA's trade show there. We proposed they jointly start a new association embracing most Western European countries. Although this idea was championed by one company headquartered in Brussels, AIM Europe rejected being legitimated by the American affiliate.

To address this concern, we formed an umbrella, the international federation. All affiliates were equal members in a sort of democracy, authorized by AIM International to use their respective national AIM logos.

Identify affiliate candidates

The North American Free Trade Agreement among Canada, the United States, and Mexico is the most recent manifestation of global business evolution. The world is shrinking because it costs less to communicate, ship, and travel from country to country. Tourism evolves into international commerce when visitors return home and want the products or services they saw abroad.

See the possibilities. Because the North American market is so vast, many businesspeople do not look beyond their national borders. American businesspeople examine their U.S. market opportunities first. From my work on various trade missions and with ASAE's International Section Council, I have found this is not the case in other parts of the world.

In Japan, Korea, Singapore, Mexico, Taiwan, and most European countries, businesspeople look to foreign markets first. These countries are relatively small and usually begin with the biggest consumer of all: the United States.

In the 1980s, the automatic identification industry was growing fastest in the United States, while the use of computers in manufacturing had just emerged in Europe and elsewhere. That meant that AIM USA, and then AIM International, usually helped brand new associations get started and then invited them to become affiliates. In more mature industries, potential affiliate associations already may exist in other countries. Then the next step is to identify them.

Identify resources. There is no easy way to identify. potential counterparts, but ASAE is a good place to start. The association has begun to contact similar organizations in other countries - those whose memberships comprise association managers. In turn, those organizations may be able to provide you with lists of their members.

Another way is to contact your own members involved internationally. Ask about shows they attend, magazines they read, and organizations to which their international offices or agents belong. Contact these organizers and organizations and develop a list of potential affiliates.

Structure for growth

The international federation should be an independent organization with its own name, constitution or bylaws, officers, organizational structure, dues, budget, bank account, and programs. Of course, it takes two or three affiliates to form an international federation, but once started, it's poised for growth. As new organizations are discovered or formed in other countries, the structure is in place to bring them into the federation.

Establishing leadership. Each member organization elects volunteer leader representatives to the federation; their number, titles, and duties can vary according to your agenda. At AIM, volunteer leaders spoke for the federation at international meetings and exhibitions.

Start-up costs. International federation start-up costs today can be as little as $10,000. Initial costs for AIM included travel to the United Kingdom for two meetings, telephone, fax, and overnight delivery charges. AIM International typically invited potential new affiliates to meetings scheduled around shows we all attended anyway. Later on, however, AIM International staff recognized that growth required more frequent member contact, promoting new affiliates, and more involved management. This would mean a significant travel budget and dedicated staff.

Dues and licensing. Once the federation was established, members shared operating costs. At AIM International, we based the dues or license fee to be an affiliate on the number of members the affiliate had. So for example, at $50 per member, an affiliate association with 100 member firms paid $5000 dues to AIM International. The amount paid to the federation also determined the affiliate's voting strength, which tended to keep us all honest in paying dues and reporting member size. As your federation grows, you likely will need to increase dues.

Linking licensing to control. If a federation imposes on affiliates any requirements for communication procedures, code of conduct, member composition, financial condition, and so forth, enforcement is an issue. Affiliates empower the federation to exercise authority by giving it control of the logo.

At AIM International, "affiliation" was in the form of a license renewable on an annual or multiyear basis. The license required the affiliate to gain federation approval of any changes to its constitution and to pay a nominal fee based on number of members. By federation bylaw, each affiliate had the same membership requirements. The federation also monitored affiliates to ensure that they were fair to all members, maintained the mission, and promoted AIM's desired image.

Affiliate dues also functioned as a licensing fee that bought the right to use the AIM logo. For your group, the logo's value - in terms of consumer recognition and associated quality - increases as membership grows. Keep in mind that to maintain equality among members, the international federation, not the American-based affiliate, must own the logo and license its use to every affiliate.

Programs. Initially, you can limit federation programs to coordinating the establishment of new affiliates and basic information exchange among federation members. Once the leadership concludes all significant countries are represented, you can undertake activities like developing international standards, organizing an international congress, and so forth.

Budgets. AIM International's initial funding needs were nominal. Overhead costs included stationery, postage, telephone, duplication, and minor meeting expenses. Since we typically met at events members budgeted to attend anyway, our meeting costs usually included beverages and perhaps some audiovisuals. Federation members approved any other expenses as funds permitted.

Staffing. As you get started, the federation's office of record can be located at one of the stronger, founding-member affiliates. In our case, AIM USA served as secretariat for several years, donating about 15 percent of my time and of one support staff person's time to manage AIM International. Another option is to rotate the office of record among the affiliates about every two years. Ultimately, AIM International became a legally distinct organization from AIM USA, moved its headquarters to Reston, Virginia, and hired an executive director and one staffer.

Meetings. Getting acquainted and communicating industry information is the federation's first objective. AIM held at least two international meetings each year. Your meeting scan coincide with major industry events, such as conventions or trade shows that affiliates' members typically attend.

At our meetings we conducted business - electing officers, reviewing documents, planning programs, and so forth. We also went around the table delivering informal industry status reports by country. Discussion covered joint concerns and activities like standards development and educational events.

Forming affiliate associations

Two approaches. There are two approaches to forming affiliate organizations, and the steps vary only slightly. In one, an interested individual - possibly a foreign business partner of one of your association members - assumes responsibility for organizing the affiliate in his or her country. A lot of responsibility rests on this individual.

The second and more effective approach is for a federation representative (either a staff person or a knowledgeable elected leader) to travel to another cotta try and make a presentation to a group of industry leaders.

Step-by-step. In either case, the steps are as follows:

1. Identify industry leaders in the target country who are candidate members for the proposed new organization. Review federation files for any local contacts.

2. Organize a meeting of these industry leaders. A major industry event is an ideal venue. At this meeting, either the local organizer or a federation representative can explain the concept and start discussion.

3. Ask for an expression of interest at the meeting. With a large group, solicit volunteers to serve on an organizational steering committee. Hold a follow-up meeting immediately to identify and assign the following tasks:

* Identify national or local legal requirements for starting an association. There may be none, as in England, or government approval may be required, as in Singapore.

* Nominate interim association leadership (chair or president, vice chair or vice president, treasurer, and so forth).

* Create the governing constitution or bylaws based on a model from a founding organization or the federation itself.

* Circulate the model constitution to potential member companies for review.

* File any necessary legal paperwork to protect the organization's name. (The federation may do this directly or prepare a power of attorney for the local affiliate).

* Prepare a draft budget identifying dues and initiation fee requirements of each association member.

* Open a bank account.

* Identify an office of record and individual contact person.

4. Ensure that charter (dues- or initiation-fee-paying) members hold an inaugural meeting. They may discuss and confirm the new association's interim officers, dues and fees structure, budget, constitution, programs, and activities.

Eventually, charter members may apply for international federation affiliation or membership. The application should include the expected name of the organization; a list of candidate members; interim leaders and organizational structure; constitution; and possible programs and activities. The federation can approve membership if appropriate at this point.

Affiliate staffing. ASAE's research has found professional association staff are much more common in the United States than abroad. Working as we were with very little budget, AIM International looked to a variety of resources to staff new affiliates. In England, we found a travel agency that wanted to become an association management company. AIM UK engaged them as the office-of-record and association staff.

In Australia, the principal of a publishing and trade show management firm agreed to the task. In New Zealand, the affiliate engaged the services of a public relations firm to serve as its headquarters.

Two of the founding-member companies in Japan loaned executives to staff an office rented and equipped by the association. In Korea and Singapore, the office-of-record was in the office of one of the larger members. (I don't recommend having the affiliate office at a member company for longer than two years.)

The cost of staffing a start-up association does not have to be substantial. The main idea is to get the affiliate formed, then let it grow to afford the staffing situation it desires. It is also true that we get what we pay for, and more professionally run affiliates naturally will make your federation operate more effectively.

Association executives can make the most of the globalization trend or wait for others in their industry to pave the way. Going international can significantly benefit the entire membership as well as members who already have a presence abroad.

ASAE's International Section

ASAE's International Section publishes a newsletter for section members, puts on roundtable presentations, and more. For information, contact ASAE's International Section manager, Carolyn Lugbill.

Phone: (202) 626-2828; Fax: (202) 408-9633; e-mail: intlsec@asae.asaenet.org.

RELATED ARTICLE: HIGHLIGHTS

* Unlike a chapter organization, an international federation links independent associations through the mechanism of a logo-licensing fee.

* Today, you can start up a federation for $10,000 or less - but be prepared for greater operating costs down the road.

* You can maintain equality among members and still reap the benefits of being the prime organizer.

RELATED ARTICLE: Why a Federation?

As an American organization scouting for prospective affiliates abroad, you have two problems: You may come across as an "ugly American" if you assume others speak English and that you're the most important player in the negotiation. And people in other countries may perceive you as wanting to run the show, whether you do or not. As they consider a new professional relationship, they want to avoid any appearance of subservience to another culture, particularly the United States. A federation is a neutral entity, the hub in a wheel uniting many national organizations.

A federation's main functions are to help develop relationships and serve as an information conduit. Members may also assign regulatory duties to the federation, such as creating and enforcing uniform codes of ethics or other standards.

A federation's three basic goals are as follows:

1. Open new markets and improve business for all members.

2. Improve industry products and services.

3. Foster a creative and competitive environment.

Key objectives leading to these ends are these:

* Open and sustain a dialogue among the national organizations.

* Develop a better understanding of similar associations and their activities and industry conditions.

* Facilitate the exchange of member lists, standards, publications, and other information among organizations.

* Sponsor educational activities.

Affiliates usually allow reciprocal membership benefits. all affiliates contribute to the success of the other organizations by sharing ideas for programs, educational materials, standards, and so forth, at nominal charge if any. The federation is a global network of individuals working for the good of the industry.

Bill Hakanson is president of Hakanson & Company, Inc., a Pittsburgh trade show and association management company, and a past executive director of AIM USA, Pittsburgh.
COPYRIGHT 1995 American Society of Association Executives
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1995, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:includes related article
Author:Hakanson, Bill
Publication:Association Management
Date:Nov 1, 1995
Words:2625
Previous Article:Forging a better world.
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