Trade Association Governance: Policies That Support the Three “Executives” — the Executive Committee, Executive Session, and Chief Executive

In our article earlier this year on association governance policies (available here), we laid out a process for trade association boards to adopt policies that address how the board functions as a whole. Here, we focus on how association executives and boards might think about and develop policies that document how they want their critical relationship to operate, specifically by supporting the board’s executive committee and by maximizing the utility of executive sessions.

The Role of the Executive Committee

Executive committees play a crucial role in the governance and strategic direction of trade association boards. Executive committees typically are subsets of the board of directors, often including the board chair, vice chair, treasurer, and secretary, sometimes along with other board members.

To maximize the effectiveness of the executive committee and document the board’s expectations for the executive committee, trade association boards should consider adopting these points into a policy on board governance or a committee charter:

1. Clearly Define Roles and Responsibilities

Trade association boards should document the roles, responsibilities, and authority of the executive committee. The board should adopt a policy that specifies standards for election to the executive committee, the scope of the committee’s decision-making powers, expectations for how often to meet (alone and with the chief executive), and reporting requirements to keep the board apprised of the committee’s activities. Clear guidelines on these points clarify the committee members’ workflow, help prevent oversteps and misunderstandings, and ensure that the committee knows how to operate within its mandate.

A policy should describe the executive committee’s primary responsibilities, which typically include the following:

• Chief Executive Oversight: Executive committees are often responsible for regular “check ins” with the chief executive and for evaluating the chief executive’s performance, ensuring that leadership is effective and aligned with the association’s goals.
• Oversight of the Strategic Plan: Executive committees are often responsible for ongoing oversight of the strategic direction of the association. They work closely with the chief executive and senior staff to provide guidance on how to implement strategic plans, ensuring that they align with the association’s mission and goals.
• Decision Making: Executive committees often are empowered to make decisions on behalf of the full board, particularly on urgent or time-sensitive matters. This authority provides for quicker responses to emergent issues.
• Governance and Compliance: Executive committees are often tasked with ensuring that the association adheres to its bylaws, policies, and other legal requirements. They oversee governance practices and ensure that the board operates with transparency and accountability.
• Financial Oversight: Executive committees play a critical role in financial management, including overseeing budget approval, financial reporting, and the association’s financial health.

More specifically, consider answering these questions in a board policy:

• Should the executive committee set the board’s meeting agendas? If not, who should?
• How often should the executive committee or officers meet with the chief executive, and how often should the chief executive update the executive committee?
• Should the executive committee develop the association’s workplans and advise the chief executive on operations, or stay at a “higher level” to advise only from a big-picture perspective?
• What is the executive committee’s role, if any, with respect to developing or advising on new product or service ideas?
• What interaction, if any, should the officers and executive committee have with staff other than the chief executive?

2. Select Those Ready to Serve

An executive committee’s effectiveness largely depends on the capability and engagement of its members. Boards should document guidelines and, as desired, minimum requirements to select individuals who possess the necessary skills, experience, and commitment to the association’s mission. Including members who have diverse expertise and perspectives also can enhance the committee’s decision-making capabilities.

With this in mind, a board policy should identify whether there is a minimum number of years’ experience on the board or in the industry to serve on the executive committee, as well as any other requirements, such as whether members must have a minimum level of responsibility at their respective companies, a minimum level of experience in particular substantive areas (e.g., finance or business strategy), or a minimum level of involvement in the association’s programs and activities.

3. Foster Open Communication

Effective communication is vital for the success of executive committees. The board’s policy should call for regular meetings to maintain continuity of oversight, as well as regular updates and formal reports to the board to ensure that all members are informed and engaged. While it is common for the chairperson to meet with the chief executive more frequently than the entire executive committee, the policy should provide guardrails to give the board, executive committee, and the chairperson a clear sense of how “in the weeds” they should engage when serving as advisors to the chief executive.

4. Provide Training

Executive committee members, especially new ones, should receive training about their roles and responsibilities. Prior office holders can share their insights when handing off responsibilities, including by documenting their learnings from their terms of service and identifying tasks currently in process. The association’s legal counsel can also often help new members understand their roles and stay informed about best practices in governance and strategic planning.

5. Evaluate Performance

Regular performance evaluations can identify ways that the executive committee can improve and ensure that the committee remains effective. The board should adopt a policy that calls for the executive committee to solicit feedback (formal or informal) from committee members, the full board, and senior staff to assess how the committee is performing and make necessary adjustments.

Using Meeting Executive Sessions

The executive committee and the board should regularly meet without staff and the chief executive to foster discussion of confidential, sensitive matters. These “executive sessions” should focus on a narrow set of topics not ordinarily included in the regular agenda: Personnel matters and performance evaluations, legal matters, and issues involving board members are each appropriate topics for executive sessions.

1. Inclusion in the Agenda

The board should have a policy that describes how executive sessions feature in the meeting agenda. Executive sessions generally should be part of the agenda for most board and executive committee meetings. Including executive sessions on the agenda regularly facilitates their proper use without implying to excused staff that there is something problematic being discussed. They can be cut short if there are no issues to discuss.

2. Limited Attendance

The policy should state who attends executive sessions and permit the board to make exceptions as needed. It is often best to begin the executive session with the chief executive present to allow time for open discussion about sensitive matters such as staffing and performance. Beyond the chief executive, it is typical for only board members and legal counsel to attend executive sessions to ensure confidentiality and the maintenance of the attorney-client privilege to the extent it applies. The chief executive should then depart the meeting at least once each year, so the discussion can turn to the chief executive’s performance appraisal or other matters for which the chief executive should not be present. Some boards will keep legal counsel present for the entire discussion, while others prefer to have legal counsel depart for certain topics.

3. Focused Discussion

The policy should capture the chairperson’s role (often with input from the executive committee) to define the agenda for the executive session to maintain focus and effectiveness. The time should usually be spent just on matters restricted to executive sessions: Review of the chief executive’s performance, matters discussed with the company’s legal counsel that should be covered by the attorney-client privilege, and issues involving board members.

In general, other topics should be deferred to the next regular session of the board. It is altogether common for directors to inadvertently provide during executive session comments about topics from the regular session of the meeting. But this risks engaging in substantive discussion that the chief executive misses, then requiring the executive committee to spend time re-stating those comments for the chief executive’s benefit. Instead, the chairperson can redirect those comments to be raised after the chief executive returns or at the next meeting. If directors are routinely sharing concerns or criticism about the organization during executive session, it can be a sign that more transparency and engagement is needed to foster discussion during the meeting’s regular session.

4. Minutes

The policy should provide guidance for how executive sessions are documented. Executive session discussions are not recorded in the regular minutes and often do not have minutes at all. If minutes are needed, they are kept separately.

There are three ways to capture what occurs during an executive session, which can be laid out in the board’s policy:

First, to the extent that the directors offer substantive feedback for the chief executive officer, the secretary or another director should capture the points for further discussion with the chief executive and for follow-up tracking.

Second, to the extent a formal decision (i.e., motion) is approved, such as to approve extending the chief executive’s contract or to engage in a search for a new one, the decision should be documented in separate executive session minutes.

Third, if a motion is approved during the executive session that should be reflected in the regular minutes because the topic is not privileged or otherwise sensitive, the regular session minutes should capture the fact that, during the executive session, a motion was approved for inclusion in the regular minutes.

Even more than minutes of regular sessions, any executive session minutes should capture what was done, not what was said. They should succinctly state the topics covered, describe any consensus-decided tasks, and capture the content of any motions made and approved.

Supporting the Chief Executive

Boards should adopt consensus-based expectations in writing to define their role in engaging with the chief executive.

1. Defining Roles

The board and the chief executive must have a clear understanding of their respective roles. It is common for the board to be responsible for setting strategic direction, overseeing the budget, and overseeing progress towards an approved plan while the chief executive manages the day-to-day operations and implements the board-approved strategic vision. But there are myriad variations on this theme, with some boards more actively engaged in the association’s operations and others being intentionally “hands off.” Indeed, trade association executives often help their boards carry out their strategic-development and budgetary responsibilities, in addition to fostering good governance by facilitating discussion about the types of policies discussed in this article. The trade association board should document the board’s role with clarity to prevent overlap and conflict and ensure that both parties can focus on their core responsibilities.

2. Involvement in Strategic Planning

The chief executive should be actively involved in the strategic planning process. The chief executive’s insights into industry trends, member needs, and operational capabilities are invaluable in shaping a realistic and forward-thinking strategy. The board should document whether the chief executive should prepare the strategic plan for the board’s input, or vice versa. Some association boards engage in regular strategic planning in conjunction with the chief executive, while others look to the chief executive to work with staff to bring a plan to the board for consideration and feedback. These variations will depend on, among other things, the strength of the association’s leadership and the trust and respect built between the staff leadership and the directors.

3. Constructive Performance Evaluation

The board should document realistic and achievable goals that align with the approved strategic plan and a schedule for annual evaluations so that expectations are managed and a process can be followed on a relatively consistent basis. Regular performance evaluations should be based on clear, agreed-upon metrics and focus on both successes and areas for improvement. Joint goal-setting also fosters a sense of shared purpose and accountability. The board’s policy should capture how the chief executive’s goals are set and monitored.

Conclusion

Our Nonprofits & Associations team routinely finds that the association board/chief executive relationship is enhanced through the board’s adoption of written governance policies. The points considered in this article are just a starting point — each board should identify its desired operations and boundaries. Some may require very little written down, while others will want a more robust set of ground rules. And an association’s board should continually review how it will engage with its executive committee and chief executive to confirm that the documented policies continue to align with the board’s actual practices and desired operations.

Brian D. Schneider leads ArentFox Schiff’s Nonprofits & Associations practice and advises associations and other member-governed organizations on governance and legal strategies that align with their business goals. He serves many associations as fractional or outside general counsel and facilitates workshops for association boards on the practical implementation of their governance objectives.