Aug. 23, 2008 - I'm from the IRS and I am here to help...

One of the consulting projects I've recently (almost) finished is the construction of a policy manual for a non-profit Realtor organization. It's a pretty good-sized manual (about 150 pages, all told), because the CEO of the association has spent a lot of years standardizing the practices in the association office, and even created some processes which are included in the policy manual as a way to add consistency to office functions.

In otherwords, my client really understands the value of not having to reinvent the wheel every time dues are collected, new member applications processed, or envelopes are opened and mail distributed.

That's a good thing.

The downside is, of course, that all of this material needs to be organized and presented in a way that is user friendly to a harried staff member who needs a quick answer to a problem. So I agreed to work on “The Big Ugly”, as we begun to call this document.

However, the real impetus behind the revision is the new IRS form 990, which tax-exempt organizations will now be filing with the IRS for tax years ending December 31, 2008 and thereafter.

If you are one of the lucky ones who encounters this form, you'll find yourself enmeshed in an 11 page core form and 16 tax schedules.

“Oh,” you say. “We hire a CPA to do that stuff. Not to worry.”

Well, the problem with that is, this new 990 is more than finance: the IRS is focusing on the management, governance, and various activities of exempt organizations in a new and much more thorough way. The IRS feels that good governance is the basis of good tax information (imagine that!) and that these new requirements will encourage a new level of transparency between the organization and the members and public. (Note: even if you're a 'for profit' organization, these are worthy goals, and you might consider incorporating some of the suggestions implied by the form.)

It goes without saying, of course, that in filling out the form and responding to the questions, you always have the option of answering “No”, when asked if certain policies are not in place. There's even a place to indicate WHY the organization doesn't have these policies. The idea here is that the IRS is not mandating, only suggesting, that these are the components of good governance. You're allowed to disagree—if you wish.

However, these 'suggestions' from the IRS via the 990 might result in an organization's inclusion of the following components in its policy manual :

1. A written “Whistle Blower” policy in which the process of reporting suspected infractions is described and employees are given instructions regarding how to communicate with appropriate management. Of course there's also a guarantee that the organization will not retaliate against a good faith accusation by an employee.

2. A written “Conflict of Interest” Policy which should be renewed annually by leadership and staff. I developed a form in conjunction with “The Big Ugly” which should be signed annually by the appropriate people.

3. A written description of the process used to determine the compensation of the CEO and other key management employees of the organization.

4. A document retention policy, one which also forbids anyone from destroying documents which may become part of a legal proceding involving the organization.

5. A policy that all actions by the Board of Directors will be recorded in minutes and retained for records. Most Realtor organizations do this, but many don't make it a written policy. The IRS thinks they should!

6. Internal review of the 990. In completing the new 990, you'll find some questions about internal review of the form, particularly about whether or not the form has been reviewed by the governing body prior to filing. The point here is to encourage transparency, and while it's not a requirement that it be reviewed, you might wish to think about sharing it with the Board, or with the Executive Committee, if you have one.

7. Joint Venture activity. Examine 990 Part VI, line 16a. You'll be asked for a yes/no response about whether your organization has participated in a joint venture (taxable partnership or taxable association activity). If the answer is 'yes', you'll find that line 16b will ask if you have policies in place to govern that relationship, It's very likely that if you have an arrangement with an MLS that is a separate corporation apart from your organization, the Board attorney and/or CPA may want to draft a policy for your policy manual.

I hasten to add that I am neither an attorney nor a CPA, and my list of suggestions for a policy manual are only that: a list of suggestions. Any language you use in your manual should be reviewed by a qualified professional. However, I do think that the new 990 is a step toward identifying the components of a good governance structure for your association, regardless of your taxstatus.

Who can argue with consistency, transparency, and fairness as values which should be embraced by every association?

Aug. 21, 2008 - The Paradox

Not long ago, my good friend and Supreme Queen of Association Managers, Cindy Butts, blogged about a short training tape which she had watched called “The Abilene Paradox”. She mentioned a few interesting points which piqued my interest—namely, that often leaders of groups agree with a variety of off-the-wall propositions just because they don’t want to offend anyone by expressing opposition.

I can remember several such incidences in my previous position—one involved the husband of a member of the Board of Directors. To call this man incompetent and untruthful would, in fact, be very nice—complimentary, even. Of course the Director-wife in question loved him, so much so that when he said that for an outrageous fee he would be delighted to accept an offer from our association to solve all of our technology needs, the Board seriously considered his proposition, not out of ignorance but out of respect for the wife of the aforementioned con artist. Fortunately, his fee was so outrageous they finally made a decision not to spend the money at that time (not too long after which the tech turkey blew town leaving behind a lot of debts, unhappy customers with partially developed software, and a devastated former wife.)

The point of this is, of course, that yes, there was conflict of interest and yes, there was politics, but mostly there was a group of very nice people who didn’t want to make waves and instead floundered to the very edge of a steep drop-off, and a potential association disaster.

In “The Abilene Paradox” the situation is the same: the family, bored and hot on a summer Texas day, decides to go to Abilene for dinner. The drive is long, the car is hot, the dinner is mediocre, and nobody wanted to go in the first place. Why is it we do those things?

I’ve just ordered “The Abilene Paradox” video and the training materials, and I will be using these as the basis for some for the leadership training programs I’ll be doing this fall. I think being able to raise challenge points, to move decisions forward without becoming confrontational, and to constructively examine all sides of an issue are important skills to be learned in any leadership role, whether it’s in business or the organizational sector.

And whether or not I’m on your agenda for a training session, be alert! the Abilene Paradox is everywhere. Cindy describes a few situations:

“1. Committee afraid to hurt the feelings of the chairman who liked an idea so much, so they met for nearly two years to discuss the idea because they liked him (not the idea);
2. Group agreed with the loudest voice;
3. Immediately called staff "obstructionist" for suggesting negatives - so rallied around that;
4. One committee member talks incessantly so everyone voted yes so he'd stop talking and they could move on to something else;
5. The bigger the group the less likely people are to speak out;
6. Didn't want to make their friend mad, so complained about issue before and after the meeting/vote but said nothing during discussion part of vote;
7. Social events that no one enjoys or attends continue because "we can't be the ones who vote to kill it";
8. Want to be on a committee, but don't want to show up. Like having it for their resume or to get meeting materials - but not the actual participation part.”

Or, to quote Jerry Harvey in Organizational Dynamics, "organizations frequentlty take actions in contradiction of what they really want to do and therefore defeat the very purposes of what they are trying to achieve. A major corollary of the Abilene Paradox is, ' The inability to manage agreement is a major source of dysfunction in organizations'."

Dinner, anyone? I know a great truckstop on the outskirts of Abilene.

Aug. 5, 2008 - Below Average

Whew! Today I just completed one of the most frustrating assignments of my consulting career: I was hired to be a meeting facilitator for a non-profit organization for one and one-half days at the group's annual retreat. And if I had to rate the performance of the facilitator (me), I would consider my performance a total washout.

Now I write this not to be critical of myself, or to be critical of the organization for which I was working, but to shed some light on what needs to happen in order for the consulting experience to be a successful one—in this case, 'success' means that the organizational expectations for the meeting were met, appropriate decisions were made, and the money the group paid for a consultant was well worth its investment.

Here are some ideas for making sure this happens....and, needless to say, much of it didn't happen in my case on this particular assignment.

The organization needs to do the meeting pre-work. Most frequently, this stage is staff responsibility. Consider this phase a rehearsal for the performance, if you will—but it means a little prep work for everyone concerned with the meeting. The first thing that any meeting needs is a clear statement of the expectations for results. For the meeting of the Fingerpainting Arts Professionals (FAP!) (I made that name up—could you tell?), I was told that this was the annual planning retreat. “Well,” I thought, “I've done those before—30 years of 'em, actually. Since the invitation to facilitate this meeting had come from a referral group, I immediately contacted the FAP CEO, confirming the location and time. I might add, the invitation came (verbally) two weeks before the meeting. Point Number One: Plan Ahead. The attendance was good, by the way, so the meeting date had been arranged well ahead of time, just not the details, apparently.

My initial conversation with the CEO was at best sketchy. I had to ask him about the group—what was it named, who were the members, who was on the retreat group, and so on. Though I have been connected to the arts, and have done some Fingerpainting in the past, the fact of the matter was I knew nothing about this particular organization. The CEO, Dusty Nails, seemed affronted that I didn't know this information. Finally, I asked for the FAP Strategic Plan, which Dusty emailed me. I asked what the expected results of the conference were, and Dusty said, “Oh, we just get together to brainstorm. No real motions or action plans come out of this meeting. Next week I will send you the agenda.”

A couple of suggestions for CEOs who are planning to hire a consultant, speaker, or meeting facilitator arise out of this scenario:

Point Number Two: Develop a background packet about your organization and use it for any instances where people need to be informed. Include what your organization is, its membership and structure, key points a speaker should know, and any unique snippets of information (how many of us have had speakers who can't pronounce “REAL' tor? How many Association Exec presenters have we experienced at seminars who think our job is to sell real estate?).

Point Number Three: Develop a written statement of meeting expectations. For instance, if your planning retreat should produce a stronger leadership team, an informed background of industry trends, and a clear work plan for the coming year, say so. Tell everyone—meeting facilitator, attendees, staff. Let folks in on the secret!

Point Number Four: Groups need action steps. The FAPs got really frustrated by the end of the retreat because the rule (stated several times) was “no action motions are made here at the retreat.” But what the group knew was, it only meets three times a year, and all of these wonderful ideas they were having were apparently just discussion items. Where would they ever see them again? No matter how fertile the discussion, participants want to have some notion that attention will be paid to their ideas in the future...even if it's just the promise that some of the steps suggested will be assigned to work groups or considered as inclusions in future budgeting. Something. Anything!

About four days before the retreat, the agenda arrived. It had three items:

Review of the Past Year

Consideration of Future Projects

Organizational Restructuring

There was no schedule, no indication of time frames, no breaks indicated, no evening activities described, and no convening and adjourning times. Perhaps some of that is convention that the group understands, but what about the new members? And, I might add, the Facilitator?

I placed another call to Dusty. “I'm a little puzzled,” I said. “I am reviewing the agenda, and I am still not sure of my role in this meeting.”

“Oh,” he replied. “You're the facilitator.”

“What does that mean to you?” I asked. “Do I introduce people? Start with an icebreaker? What?”

“The president will make the introductions and call the meeting to order. You're the facilitator,” he reiterated.

Point Number Five: Develop a job description for the consultant you're hiring. Review it with him or her. And in this case, the FAP president needed a little direction as well, and perhaps a conversation between the president and the facilitator might help clear the air.

Many association exec I know develop a script for these kinds of meetings. What that does is put into action form (much like a play) the chronology of the events and the responsibility for each. It might look something like:

1 PM: President calls the meeting to order. Outline the following three objectives

for the conference. . . . Introduce the two new members on the Board (include

bios). Directions for restrooms, snacks, cell phones, etc. Introduce Facilitator.

1:15 PM: Facilitator begins warm up exercise designed to build teamwork and

incorporate new attendees into the group.

And so on. Will the group stick to the script? Probably not—scriptwriting is not meant to be an exercise in micromanagement. But will the leaders and staff have more confidence because they know the scope of the events and who is doing what? Certainly, they will.

Point Number Six: Spend a few face-to-face moments with the consultant prior to the meeting. Dusty said, “Oh by the way, some of the Board members are getting together for lunch, prior to convening the conference. Why not meet us at 11:30 at the Moosejaw Tavern?”

“Oh, good,” I thought. “Maybe I will get some clues then.”

But no, the Moosejaw doesn't open for lunch, and our group of weary travelers went searching for food and a discussion venue in Moosejaw Village, population 300. Not an auspicious beginning, and by the time we got situated and had sandwiches in front of us, it was almost time to leave for our meeting. I had fully intended to ask Dusty and the president of FAP if there were any dysfunctional situations or loaded topics I should know about in advance. Oh well, then, I can run through the land mines with the best of them...

The best part of this story is that FAP has a great board of directors! Every board member brought considerable knowledge and experience to the table, and most felt comfortable in speaking and asking questions. Many were administrators of schools and had some power to effect results, and were supportive of FAP and its programs. I found myself enjoying their conversations and modes of finding information and coming to consensus.

So the retreat was not, for them, a waste of time. Participants came away energized and recommitted, and Dusty came away with many new ideas (and some rejections of his favorites). And me? Well, this group didn't need me in the first place.

And my report card should read “C-. Did not fit in with group. Overdressed. Contributed little to discussion.”  I'll let YOU grade Dusty.