Going Out on TopBy Sandra Sabo
Association Management, December 2000
Ten years ago, after a 30-year career in corporate human resources, Michael R. Losey, CAE, took the top staff position at the Society for Human Resource Management (SHRM), Alexandria, Virginia, and promptly told the board he would never raise dues. "I'd been with the Society about two weeks when I attended my first board meeting. I had to tell them we were going to lose $250,000, even though the board had increased dues several times in the previous five years," says Losey.
"We couldn't keep going back to the members, just because we were inefficient, and continue increasing their cost. So I said, "I'm not going to increase dues while I'm here." Everyone laughed. But putting that stake in the ground changed the whole mentality of the society. Our dues in 1990 were $160. They are $160 today. Yet our revenue has gone from $12 million to $72 million."
Losey is retiring at the end of this year to spend more time with his wife (whom he has known since the ninth grade) and to take on an occasional speaking engagement. In his decade at SHRM, the society's membership has increased 275 percent. Conference attendance is up nearly 300 percent. And SHRM's foundation has $6 million in reserves, up from $600,000 in 1990. How did he do it? Here Losey shares some of his thoughts.
ASSOCIATION MANAGEMENT: How did you achieve the financial success?
Losey: It was a double-pronged effort: Hold costs down, and make everything better. We began to operate more like a business, making sure we put more money in the cash register than we took out. But we also had to invest in bringing things up to speed that had been overlooked because the society had been cash short. We had to give members more for their money: a better magazine, better newspaper, a better information center.
Now, members ask, "How do you give me all this stuff for $160 a year?" We don't--our dues don't cover all the membership benefits. We can afford them because our nondues income has grown even more than our membership. When you have good financials, you can capture opportunities.
ASSOCIATION MANAGEMENT: How much of what you have done is applicable to other associations?
Losey: Almost all of it. It requires developing new products, but doing so cost effectively. It means hiring staff with a clear justification of what each would do and how each one would contribute to the society's net assets. It means growing your membership and working on retention. When I came to SHRM, retention was at 76 percent. We now have an 85 percent retention rate.
ASSOCIATION MANAGEMENT: How does working at an association differ from a corporation?
Losey: Most corporations have a chairman or CEO who serves 6, 7, even 10 years. The problem with associations is what I call "the association disease." You get a new chair every year who chairs three or four board meetings, gets a plaque, and then leaves.
It takes great skill for an association executive to keep the ship on an even keel. That is best accomplished when there is agreement between the staff and the board on the strategic plan. In the corporate world and at SHRM, the staff drives much of the strategic plan. Each year we start with a board visioning meeting and an environmental scan. The board has its input, but then the staff comes back with objectives and a budget to align with the strategic priorities. The board says yes or no. It doesn't say, "Here, staff, is what we are going to do this year."
ASSOCIATION MANAGEMENT: What advice would you give to a new association CEO?
Losey: Run the organization as though you owned it. Whenever you go in front of the board, always tell the truth. Do the right thing: Be honest and credible.
There is too much gaming in the association business. Some executive directors say, "I have to figure out who is my friend on the board because that person will advance my interests." That's baloney. The board is the board--you must respect each and every board member. If you're not good enough to make the business case for something and convince the board, well, maybe you shouldn't be the CEO.
Sandra R. Sabo is a writer and editor based in Mendota Heights, Minnesota.
Reprinted with permission from ASSOCIATION MANAGEMENT, copyright 2000 American Society of Association Executives, www.asaenet.org.