Merchants of change: they're gutsy, determined, and outcome-oriented. What can turnaround artists teach you about leading the way? Plenty.
She remembers vividly the shock of discovering fantasy-based budgets and unpaid taxes ... the stress of delivering constant bad news to panic-stricken board members ... the agony of figuring out which staff she couldn't afford to keep and which ones she couldn't afford to lose.
The amazing thing: Bray has turned around associations not once but twice--and she loves the experience. "I find it exciting and exhilarating. Organizational maintenance bores me. I need the chaos." She found all the chaos she needed when she was executive vice president of the National Association of Enrolled Agents, Gaithersburg, Maryland, and now as executive director of the Association for Career and Technical Education, Alexandria, Virginia.
According to Bray and others, CEOs with a flair for the turnaround possess a combination of skills that take management to a new level, and they have clear strategies for dealing with the three core constituencies--the board of directors, staff, and members--whose support is essential for any recovery.
Charles E. Bartling, CAE, wrote a book called Managing Association Turnarounds (1997, ASAE) after living through one himself. He thinks the word to describe the ideal turnaround artist is gutsy.
James R. Sargeant, author of Last Rites or Turnaround? 10 Fundamental Reasons Why Businesses Fail and How to Overcome Them (2003, Arges Publishing Company), thinks a good moniker is merchant of change.
Janet Bray's favorite descriptor is more blunt: "You have to be an idiot!" she laughs. "You have to have a very strong constitution. You have to say, 'This is a mess, and here's what we have to do and do it quickly.' You can't wait for the board and get buy-in. Just make sure you have a contract so you can't get fired, and go at it."
Because no two turnaround situations are identical, it's impossible to say exactly what you must do. In one of Bray's associations, a staff reorganization worked swiftly and smoothly; in the next one, a reorganization faltered. Uncovering the problems, she says, is like peeling an onion: You never really know what you'll find as you pull back the layers. At her current association, she uncovered tax problems that couldn't wait for the next board meeting. "In a turnaround situation, you act now and ask for permission later. I'm not saying that you ever sign contracts that have nothing to do with the association or spend gobs of money without approval. But you act as fast as you can"--and adapt as fast as you can as you learn more.
According to Bray and others, association turnaround artists share these common characteristics:
Quick reaction time. In a genuine crisis, you have little time to ruminate, says Sargeant. Chances are the association faces a dangerous mix of problems, from inertia to turf wars to the staff's and volunteers' urge to put personal interests ahead of the organization's. You have to quickly provide reliable guidance and direction by sizing up the situation, thinking through the ramifications, and keeping everyone focused on the facts.
Brutal honesty. If your association is in need of a turnaround, Bartling says that it's important for you to be the first to say it. This shows real leadership, and even if the facts take the members of your board by surprise, they will respect you for dealing with them. Says Sargeant, "You have to make everyone understand that there's a common interest in a turnaround situation--and that is survival."
Conversely, if board leaders discern problems you haven't detected or reveal them before you do, they'll probably think that you're not on top of the situation--and it's time to find someone who will be.
Brutal honesty also applies to the organization's sacred cows. Bartling recalls such an incident from his initial days as CEO of the Financial Institutions Marketing Association. Soon after starting, he was surprised to learn that in only three weeks the savings- and-loan-related group was scheduled to hold an annual black-tie dinner for board members and spouses--entirely at the association's expense. He confronted the board and made it clear that such luxuries were no longer sustainable for an association representing a dying industry.
Ability to inspire confidence. With bad news all around, "you have to be able to demonstrate that you know where you're going," Sargeant says. "You have to convince others of the benefits of even undertaking the turnaround before you can speak on specific issues and ways to improve."
Although much of Sargeant's experience is with businesses, he has had enough dealings with associations to know that getting various interest groups together isn't easy. Constituents' hostility is often caused by their frustration that something they cared about has gone so far awry. Sargeant recommends mixing decisiveness with interactivity, so that you constantly receive input, express appreciation, and show that everyone has an interest in working together despite the hard times.
Juggler's reflexes. Handling a turnaround is similar to starting a new organization while keeping the old one afloat. "You can't think, 'I'll get this one thing right and then go on to the next.' It doesn't work that way," says Bray. "You don't have the luxury of time."
Turnaround artists decide what's most important at the moment--and leave the rest for later. "When you make a poor decision or just plain fail, you have to pick up and move on," she says.
Stage presence. By the time an association is in obvious need of a turnaround, its reputation is damaged and other organizations are eying its turf-if they haven't moved in already. A turnaround artist sends a public message about the association's viability by maintaining a high profile with the board and members. A can-do example is equally important around the office. When Rob Katz, managing director of Executive Sounding Board Associates in Philadelphia, manages a turnaround, he aims to be the first person at the office in the morning and the last to leave at night.
Deep roots inside. Every CEO needs a champion--someone on the board who not only recognizes what's needed but also will serve as an outside advocate. When grappling with her association's surprise tax problems, Bray spoke daily to her then-president so that she would understand the consequences of inaction, the reasons for what Bray wanted to do, and the importance of communicating that rationale to others. If you don't have a champion, you'll need to create one--through strenuous re-education of your top board leaders.
Getting the support you need is not always simple. Once Bray had to struggle with a less-than-cooperative board leader whose special interest was micromanaging her chief financial officer. Bray approached the problem from several angles. She took him to a strategic planning seminar where he could hear a respected third party explain that the board's job is to set policy, not sit on the staff. She also told him herself--as many times as necessary--that dealing directly with staff was unacceptable and he had to work through her instead.
Deep roots outside. As a long-time ASAE member, Bray has developed contacts to call when she needs advice on the best strategic planning workshops for a recalcitrant board member or the best deal on accounting software. She has also created an informal support group of colleagues "whom you can call up and say, 'You won't believe what my board just did.' Misery does love company. When you think you can't do this anymore, that gets you through."
She also has a husband "who's extremely supportive and takes care of me" and a gym membership she can't live without, A lunchtime trip to the treadmill not only recharges her batteries but also helps generate great new ideas.
Dealing with the board
Board members don't sign on for a turnaround because they want to close down programs, face angry members and donors, lay off staff, or attach their names to a faltering enterprise. Turnarounds are emotionally hard on top volunteers, says Katz. They may be in denial. Or they may be highly territorial--their pet program can't be the one to shut down. They may even take bad news as a personal insult.
If things weren't "that bad," you would probably proceed slowly and diplomatically toward a compromise. But when you're doing association CPR, you don't have that kind of time. Here's how to bring your board on board for the tough decisions.
Communicate. When Bray started at the National Association of Enrolled Agents, one of her first official acts was to write a memo to the board spelling out her priorities for the first 90 days and the next 180 days. Her message: "If you disagree, tell me now." Once she started carrying out the plan, she began a series of regular communications, eventually sending the board an e-mail report every Monday to make sure that everyone knew what she was doing and why. Especially in troubled times, "you can never communicate too much," she says. "When [board members] felt they knew what was going on, they left me alone."
Remember you're serving members. In the rush to rescue, it's easy to avoid controversy by steering clear of directors' pet programs. But a crisis is the time to do triage, and saving a niche program at the expense of your core services won't improve your prognosis. Put the sacred cows on the block, and arm yourself with "stacks of information, from needs assessments [to] focus groups," says Bray. "Make it clear that you must meet the needs of the majority of members, and the board is not usually the typical member."
Behave realistically, but think positively. Despite its best efforts, the Glass Packaging Institute saw its membership fall from a peak of 30 down to 10 because of massive mergers, acquisitions, and consolidations in the industry. Across two years, GPI's budget was cut from $4 million to $1.8 million. Forced to choose between retrenchment and oblivion, in 2000 the board signed on with an association management firm, Clarion Management Resources in Alexandria, Virginia.
Clarion President Carole Rogin set out to replace what she called "a reduction mentality" with "an outcome orientation." She worked with the board to identify the most important elements of GPI's mission, determine alternative ways to fulfill it, and let go of nonessentials, such as GPI's prestigious but largely vacant office space in downtown Washington, D.C. Rogin emphasized the positive: By shedding traditions that burdened the future, the board could concentrate on new directions. To replace members lost to mergers and acquisitions, GPI amplified its roster with supplier members.
Confront bad board practices. Bray once had trouble with board members who, in the absence of a strong CEO, had grown accustomed to directing the staff themselves. She addressed the problem head on, saying, "My contract states clearly that I manage the staff. If you step over those bounds, you violate my contract." But that wasn't enough: She remembers a "knock-down, drag-out fight" with one board member who continued to step over the line until, at her request, the president-elect stepped in on her side. Finally, the board got the message that times had changed and she was in charge of setting the staff priorities.
Train your board in better behavior. Bray enlisted her two top officers to help the board rethink its biggest needs and proper role. She took the board leaders to ASAE and The Center for Association Leadership's CEO Symposium and brought in a consultant to continue training even as he helped the board develop a strategic plan. "The trick was to clean up their internal act while training them to be effective volunteers," she says. It took three years to change directors' thinking about their proper role--but it had to be done.
Once they get over their shock about the prospect of failure, board members can be reinvigorated by a turnaround. Katz recommends approaching them frankly: "I know you've given your time and money generously, but next year we'll need more than you've ever given in the past, and this is why."
He adds, "They're on the board for a reason-because they care. Don't be afraid. Call on their commitment and time."
Making staffing decisions
Staff management in a turnaround boils down to three words, Bartling says:
* You have to be fair by being honest with employees about what's happening to the association and the likelihood of layoffs.
* You have to be firm even when the decisions are difficult and staff become emotional.
* But you have to maintain a friendly demeanor so that you don't burn your bridges.
Bartling suggests that you start by telling staff: "We're going to have to make a lot of changes. You're all good people, but in my assessment, we're not going to be able to maintain the size of the staff. If I ask you to stay, it will be because I think there is a genuinely good opportunity for you here. If I have to ask you to leave, I'll do everything I can to help you land in a good place." Here's how you hold to those commitments.
Be realistic with yourself and them. When it's time to figure out who stays and who goes, "you're probably not going to be Mr. Nice Guy for long," says Bartling. Some capable, likable people may have to leave. Bray found that when she communicated straightforwardly with staff about expectations, some staff members who knew that they weren't cutting it would weed themselves out.
Focus on results. In your turnaround plan, you've identified the core services your association must provide to survive and the marginally relevant for successful operations. Now analyze your staff to see whether, as best-selling author Jim Collins says, you have the right people on the bus. This is your chance to remove underperformers. "Never accept mediocrity," Katz says. "If I believe from some people's actions that they're not working hard, I call them in and say, 'If you're not willing to work, I'll accept your resignation today.'"
If capable people are running your core services, you'll naturally want them to stay. But the best people will find it easiest to get new jobs. So take your stars aside ASAP to ask them to stay.
And if these good staffers already have one foot out the door? Make it clear that you appreciate their valuable help even in the short term and, in gratitude, will give them the flexibility to interview as needed. As Katz says, not everyone is built for the pressures of a turnaround--and that's OK.
Once again, communicate. Have regular meetings, at least every other week. Keep your office door open. Answer questions honestly--and if you can't, make it clear that you're keeping mum only at the board's request. Give out your cell phone number. And when possible, give perks and awards to let staff know that you know how hard they're working in an impossible situation. You might consider giving off an extra Monday or handing out gift certificates for a spa or restaurant. "When times are tough, people very much appreciate the little things," Katz says.
Maintaining member morale
The third constituency a turnaround artist must manage is the membership. Every association has two kinds of members: those who want to follow every gory detail of internal political machinations and the checkbook members who only care about getting a good return on their dues payment.
The first group will want you to air your dirty laundry. What should you release? "Only what's necessary," Bray advises. At annual business meetings, Bray would give presentations on trends in membership and budget--the sorts of things that people who bother to show up at such meetings want to know. For other members, the important news is information on what programs and services you're dropping, keeping, or expanding.
Even when the changes your association must make are unpopular with most members, a true turnaround artist is forceful about the need for change and diligent about leading the way. "You must exude confidence and inspire all members to participate," Sargeant says. "Everyone has a common interest in turnaround."
Want more information on this topic? Check out the "Outtakes and Exclusives" and "Link to Learn" areas at www.amonline.org.
RELATED ARTICLE: how the turnaround association SAVED ITSELF
Have you heard the one about the turnaround association that had to undergo a turnaround?
"Is that a hoot or not?" asks Randall Wright Patterson, managing partner of Lake Pointe Partners in Chicago. He's been a board member of the Chicago-based Turnaround Management Association since the organization hit rough times a little more than a decade ago.
"The humor was never lost on us," says Thomas D. Hays III, a former TMA board chair and principal of NachmanHaysBrownstein in Narberth, Pennsylvania.
OK, maybe the situation didn't seem so hilarious back in 1992. That's when the members of the board decided the only way they could reimburse creditors from their just-finished fall conference was to launch a major new spring conference and use those proceeds to pay the previous meeting's bills.
But TMA's volunteer leaders can laugh today because the organization is now--no joke--strong and steady.
TMA got its start in 1988 thanks to new lender liability laws that fueled rapid growth in the turnaround field. Lenders became reluctant to tell cash-strapped customers how to get back on their feet, because they'd be held responsible if the advice didn't work. So lenders started telling troubled businesses that they could borrow to stay afloat only if the businesses would hire an approved "corporate renewal specialist" to turn the situation around.
To some degree, TMA's early troubles were no different from those of other fledgling associations. "You have big plans and you really want them to happen, and you're faced with the question of whether you should go ahead and do things even though you don't have the money," says Patterson.
One unusual problem was the bravado that's a natural by-product of a business made up of professional saviors. "We're turnaround guys." Patterson says. "We like to fix things fast. When our backs are up against the wall, we find a solution."
Eventually, though, the solution came down to a tense meeting where all board members agreed to dig into their own pockets for $5,000 apiece to keep the association solvent. Patterson still sounds a little dazed at the memory. "Back then I couldn't afford it. If they'd asked me first, I'd have said no." But peer pressure prevailed--along with a belief in the mission. "We had a vision, and we just believed in our ability to deliver--so much so that we made it happen," he says. "That's the way you have to be in our business."
The board's cash infusion inspired the membership. Luckily, the profession was also experiencing explosive growth, creating opportunities for new revenue from advertising and sponsorships. The board took another chance and raised annual dues from $195 to $295. TMA moved into office space donated by a board member and hired a capable, full-time executive director who brought in better accounting and organizational systems.
From a membership of 637 in 1990, TMA now has 7,000 members and cash reserves of $1.3 million.
But what really turned the turnaround association around, Hays says, was this: "We had a clear vision of the future. We asked ourselves, 'Should this organization survive?' And we decided it should. What we do is important. At any one time, a couple of million American jobs are on the line, and what we do is fundamentally important to maintaining those jobs."
"The irony of the situation," Hays adds, "was never far from the surface for any of us." But when board members asked themselves whether the Turnaround Management Association had something of genuine value to contribute to a world in constant need of its own turnarounds, the answer was a profoundly serious yes, and they were willing to do what it took to turn the association around.
Karla Taylor is a contributing editor of ASSOCIATION MANAGEMENT. E-mail: firstname.lastname@example.org.
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|Date:||May 1, 2005|
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