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Posted on Wed, 02/1/2012 - 05:56 AM by
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Attorneys and consultants who work with associations see their share of troubled boards of directors. In fact, I believe that troubled boards outnumber focused efficient boards by a substantial margin. Notwithstanding their problems, most boards seem to get by, although they could be better. However, when a board of directors has more than its share of troubles and struggles, it can become dysfunctional. This article will point out ten key indicators of a dysfunctional board. While every association has a different way of working, the presence of more than a few of these signs is cause for concern. Key indicators are: Power Struggles - power struggles shift the board's focus from the business of the board to individuals or sub-groups gaining/maintaining "control." A board that is controlled by an individual or sub-group is inherently dysfunctional. So, whether right or wrong about the issues, controlling the board is harmful, while use of vision, influence, knowledge and ideas is completely appropriate and desirable. Vote-Counting Prior to Meeting - counting and collecting vote commitments prior to a meeting is always inappropriate. It generally results in conflict, distrust, and weak decisions, because decisions are made prior to full discussion and analysis. Lack of Civility and Respect - a board that tolerates hostility, aggressiveness, or disrespect among board members, weakens itself and wastes time and leadership input. A weak board finds it difficult to stop abuse, personal agendas, and other disruptive acts. It may have difficulty recruiting quality members. Board Micro-management - whether you are micro-managed or not, you already know what I mean. Preoccupation with Bylaws and Parliamentary Procedure - while bylaws must be adhered to, and on occasion may require clarification or interpretation, disputes about bylaws or parliamentary procedures usually indicates more serious problems beneath the surface. See "Power Struggles" above. Focus of Negative Attention on the Executive - when one or a minority of directors is openly critical of an executive, a great deal of resources tend to be devoted to that issue. Distrust and struggles are likely to occur, along with frequently unfounded accusations against the executive. Many times, if not most, the problem is with the board itself, not just the executive. Last Minute Proposals - if important or controversial items of business are handled via lastminute (read: sneaky) proposals when there is no true emergency, the board is probably being manipulated. Likewise, a board that is swayed by last minute proposals, and shallow or slick presentations without full analysis and discussion, is not doing its job. Overly Powerful Executive - sometimes executives amass so much "control" over the association that board members feel no need to do their job, or are reluctant or too intimidated to openly question what is happening. Directors as "Representatives" - when directors act as representatives of their constituents rather than in the best interests of the whole, difficulties will abound. Some directors go so far as to criticize the decisions of the board to their constituents -- a particularly disloyal and disruptive act. Rump Sessions - while discussing problems and ideas outside of a meeting is fine, unofficial group discussions outside of official meetings nearly always exclude at least some key stakeholders, and therefore undermine communication and trust. These are the ten warning signs that I have observed in my practice. Are there others that you could share? Please let me know. MORE NEWS FROM BLUEMAUMAUTaxes and the DeficitNormally, this column is supposed to cover the tax changes over the prior year and how they impact the hospitality industry. Last year, we commented about how 2010 was an interesting year but little in the tax field had passed. 2010 was all about health care reform, the change in control of the House and the rise of the tea party. It was a very political and partisan year. If anything, 2011 was worse. Never has so little been accomplished by so many. Brinkmanship was the key word for 2011. It will be known more for what did not occur rather than what did. It is not unusual for partisan politics to take center stage in an election year. While 2011 was not, the race for the Presidency and control of the House and Senate began before all the winners from 2010 were known. National Press Writes about Restaurant FranchisingOn May 18th, the national press, both The New York Times and The Wall Street Journal, wrote about restaurant franchising. Some additional notes are warranted. Mediation: Good, Bad or It Depends?Mediation is often touted as the greatest thing since sliced bread for faster, fairer, and cheaper dispute resolution. Is it? Going International? Don’t Forget One Important ThingFranchisors that are considering exporting their franchise concept to other countries are advised to prepare by following a checklist of key items. However, there is one area that is often overlooked or shortchanged in the process. Going Green Costs Franchisees Much GreenBeing forced to buy imaginary products is just one of the nonsensical results of government policy affecting franchisors and franchisees. RELATED SMALL BUSINESS NEWSMobile Franchises: Do You Like Cars? Hot Franchise Topic: Getting a LoanIt seems like the entire franchise industry is focused on funding, and with good reason; franchise loans are still a bit challenging to secure. Good News, U.S. Hotel Profit RecoveryAccording to the new PKF Trends survey, the U.S. lodging industry produced a 12.7% profit growth in 2011. 80.5% of participating hotels enjoyed an increase in total revenue while 72.3% achieved growth in profits. The recently released 2012 edition of Trends presents data from a sample of nearly 7000 financial statements of United States hotels. For the Trends report, hotel profits are defined as net operating income (NOI) before deductions for capital reserves, rent, interest, income taxes, depreciation and amortization. Federal Court Invalidates "Quickie" Union Election Rule, For NowOn May 14, 2012, the U.S. District Court for the District of Columbia set aside a controversial final rule of the National Labor Relations Board ("NLRB") that was designed to make it easier and faster for unions to hold organizing elections. Chamber of Commerce of the United States of America, et al. v. NLRB, Case No. 11-02262 (D.D.C. May 14, 2012). Business groups are hailing the decision, but the celebration may be short lived. Because the ruling was essentially decided on a procedural point, the NLRB may seek to resurrect the rule, which creates a very short window for union elections, and leaves employers with little time to react to an organized union campaign. Field Representatives Coach Franchisees to Victory
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