While there are legislative prohibitions regarding the remuneration of charity trustees, governing board members of incorporated societies are not debarred from accepting financial consideration for time spent on directing its affairs. Notwithstanding such an entitlement relatively few such entities with an emphasis on professional societies have implemented such a scheme. As practising professionals their members do not have the advantage of a sponsoring corporate organisation with the ability to subsidise secondment. However, times are changing with evidence in Australia of a gradual increase over a three year period to 13% of surveyed associations reporting paying board members in consideration of their time commitment and responsibilities.
An Australian Research Survey that preceded the publication of The Future of Associations revealed board capability, traditional mind-sets and resistance to change as major obstacles in running associations. To quote from the book: “Board capability is the second biggest problem (facing associations), yet there is immense pressure on boards to develop the skill sets and decision making capability to navigate into the future. Adding to this challenge a quarter of associations have raised Governance Structure as an issue.” The time commitment mentioned involved at least two days per months, with Chairmen devoting more time in support of the CEO.
Another matter that has been mentioned from time to time is the appointment of external directors and trustees, who have no direct relationship with the industry or cause that the organisation represents. Bringing professionals from legal, accounting and marketing backgrounds to the table, who are not influenced by personal business interest, ensures greater objectivity in the decision making process.
Based on extensive experience in the NFP sector with an emphasis on industry associations and professional societies, NZARC can see sound reason for a more lenient approach to remunerated governance depending on the size and prominence of the entity. There is evidence in many key sector organisations of a shortage of industry leaders on their governing boards. Representation at middle management level can frustrate timely decision making without the authority to commit the employer during a meeting. The noticeable absence of heavy hitters can also weigh against the association in its advocacy role on behalf of the industry. At the same time it deprives its chief executive of the knowledge and wisdom of a (gender neutral) Chairman between meetings in the execution of critical strategy and action arising from it.
There is also a need to observe board diversity with a good mix and balance in respect of age and gender to achieve a nurturing environment for emerging leaders with ability, but lacking experience in a governance role. Dealing with the complexities of the modern economic system and compliance regime places copnsiderable responsibilities with attaching legal liability on board members. It all demands greater attention and time commitment that carry a financial cost.
NZARC maintains reciprocal relations with a number of kindred support structures in Australia and UK resulting in the exchange and access to critical information. Such a valuable link exists with Better Boards Australasia, which undertakes an annual study and reports on NFP Board Member Remuneration. The just released latest data are revealing and provide much room for thought at a time when most constituencies should be giving serious consideration to the year ahead and their association’s operation in an increasingly challenging competitive environment.
The Board Member Remuneration Report 2016 by Better Boards is available to download at http://betterboards.net/rem16