RA-Aus organisational restructure

[Guest airsick]

There's been some good debate about good governance, management and so forth on this site of late that has spurred some healthy discussion in many circles. I figured it might be worth having a separate thread to explore some of these issues in more detail.

 

One of the outcomes of the February board meeting was to set up a committee to explore alternative structures for the future of RA-Aus. The proposal can be seen here - http://www.raa.asn.au/wp-content/uploads/2013/05/Restructure-Proposal-RA-Aus2.pdf

 

The proposed model (in terms of board and management structure) concern me a little. Firstly, there is no explanation of why this model is suitable. It simply asserts that it is with no real detail on why. Secondly, it breaks a lot of good governance rules and principles that are proven to work and are recommended by some well regarded bodies. I've written a critique on the structure and Ross (slartibartfast on the forums) has kindly offered up some web space to host it so others can have a read and form their own views.

 

http://www.sra.asn.au/Documents/Critique%20of%20proposed%20model.pdf

 

Be warned, it is a 6 page paper so grab a cup of tea and a biscuit before settling into a comfy chair to read it. That said, 6 pages is not much and having a read might help you to develop your own opinions (even if they are different to mine) and stimulate more discussion and ideas.

 

So, the future of RA-Aus is in our hands as members. Take a look, have a think and discuss some more...

 

Cheers,

 

Mick.

 

 

[Pete Greed]

Mick: Congratulations on a most informative discussion paper.

 

I also agree that the proposed model is unnecessarily complex and would throw up more problems not far down the track. Better to go back to square one and design a governance and management structure based on contemporary good practice and utilising the tools and resources readily available to community based organisations such as RAAus.

 

Yesterday I discussed with our State rep. Jim Tatlock a firm (Australian Strategic Services) I employed as the General Manager of a community based Adult Education/Job-network provider. The organisation at that time was going through rapid expansion having taken on significant Commonwealth Government contracts. The short term consultancy and move to a Company Limited by Guarantee consolidated the Company into a solid and successful organisation - turn over last year $26 mil.

 

This forum has identified many operational issues most, in my view, caused by poor Governance. Simply overlaying a new governance structure over poor operations is not the answer.

 

Cheers Pete

 

 

[coljones]

Michael,

 

You are showcasing a philanthropic organisation as a potential model. I am not sure if it is appropriate to RAA as philanthropic organisations by their nature are, and should be, looking after someone or something else other than the board or members. Philanthropic organisations really don't have members in the ordinary sense, people who own the organisation, but have a large number of affiliates more in the way of contributors rather than owners and the real owners are very few people, self perpetuating but from a narrow population. have you ever tried to join a philanthropic as anything other than a contributor? (no matter what the title is)

 

We need the model to have a high degree of democracy and not subject to board interdiction in the democratic process.

 

RAA is a monopoly provider of services, you cannot simply sell your shares and walk away if you disagree with the direction the organisation is headed.

 

We saw the NRMA wars and the board finally won. It controls all communications with the members and is in control of the electoral process. If there was an alternative to NRMA I would resign. There isn't and I continue to be screwed.

 

You would be far better off checking out the advocacy based not-for-profits, credit unions, even trade unions for a model for organisation set up to serve their members first, the people who pay the bills.

 

RAA is also not a BHP whose guiding ideal is to make profits for as long as it can to the exclusion to all other activities (where it can). BHP has no interest in delivering Advocacy, Licensing, Registrations or Education to its shareholders unless they make a profit as part of the process. Most shareholders in BHP have abrogated their responsibilities to the board asking only for a continuation of dividends and share value. This is not a model I would choose for RAA.

 

best wishes,

 

Col

 

 

[AlfaRomeo]

Mick,

 

Thanks for your very interesting contribution to this debate. I agree with pretty well everything you wrote.

 

. . . Simply overlaying a new governance structure over poor operations is not the answer.

Pete, I agree that our current Board have shown disregard if not disdain for the Constitution we currently have. I would be prepared to bet a schooner or two that many have never studied it and just don;t know what it says. I think it would be an even safer bet that they haven't read the Act or its Regulations.

 

So, as Pete says, what's the point of a much more complicated structure because it could be even more easily ignored.

 

The problems we have seem to me to stem from the fact that a number of the people on our Board, unfortunately in the majority, are out of their depth. I don't doubt for a second that they are well meaning or that they have done a lot of good things for RA-Aus over its relatively short history. However, the organisation is now of a size that requires management by people who are familiar with how modern Boards operate and how Boards should relate to the employed management.

 

Simply, we have too many on the Board and most of the people we have on the Board do not have the skills, qualifications and experience that would equip them well to do the job that needs to be done.

 

They get on the Board because they want to help steer RA-Aus, are widely known and liked and live in a particular geographical locality. At one time during 2012, seven out of the ten Board Members were CFI's. That is not the Bio-diversity that is needed and critical skills were not available. Running a small business, probably not incorporated, does not necessarily equip you to act as a Board Member of an organisation the size of RA-Aus.

 

We need a simple structure that values relevant skills above post code of residence. We need a Board that is small enough (5 or 7) to bond as one team yet large enough to incorporate diversity of skills and experience. We need a President, or more correctly, a Chairperson that sees their role as bringing the Board together and getting the best out of each Board Member and builds teamwork. The structure must respect a chain of command that operates from the Board through the the chief executive (currently the General Manager) not one that has individual Board Members believing that they have a role in the operation of the business of RA-Aus. Even the Treasurer must be in the mode of a Finance Director - an advisor to the Board - rather than the chief financial officer.

 

On the basis of our recent experience, Board Members must promise to uphold the Constitution and accept that they must resign if they breach the Constitution. There must be that level of respect for the Rules.

 

I can't see any reason in this day and age to have a Board Executive that can act independently of the Board. The Board should not have to be making decisions on day-to day matters as that is the work of the General Manager. With all the electronic means of communication available today, their is no need for an Executive.

 

 

[Guest airsick]

Thanks guys, there's some interesting comments and feedback. Probably the two most contentious points are related to the use of a model from a philanthropic organisation and laying good governance over poor operations. I'll try to examine these points here.

 

I chose to compare with philanthropic organisations firstly because it is difficult to get good information on successful associations structured like ours and secondly because these guys are there to provide services to a group of stakeholders much like the members of RA-Aus. While we are members and therefore 'own' the association in a sense compared to the beneficiaries of an organisation like CanTeen or similar, we still face the same challenges. I think the major difference is that the person handing over the funds is not the beneficiary for a charitable organisation unlike us. That said, there is still a strong onus on the organisation to ensure that the funds they receive are used appropriately and the services they deliver are done so in the most efficient manner. This is something that RA-Aus needs to do. We have to stop reacting to crises and start strategic planning things out under a proper framework and that begins with good governance. This brings me to the second point.

 

Poor operations will always be the downfall of any business, association or likewise. There's no questioning this. What a good structure coupled with good governance will do is provide us with a way to see whether we are operating poorly or not. I, and I'm sure many others, thought that RA-Aus was going alright until November last year. All of a sudden things went pear shaped quite quickly, or so it appeared. In reality we had been poorly managed for a number of years and that led to our demise. If we had the right structure in place with the right people and some good governance there's a fair chance our poor management would have been dealt with well before it got this bad. We sure wouldn't have given an under performing CEO a pay rise at the very least.

 

I think it's also important to leave the power in the hands of the members. My proposal ensures that members get the final say on who gets onto the board. All we are doing is putting in place a bit of screening to ensure we get the right people nominated. At any point the members can still elect to have someone removed or not even put into office in the first place. I agree with Col on this and maintain that it is an extremely important element. It should never change. The constitution should always enable the members to take action if the need arises as it does now. In my mind this should be strengthened to include removal of under performing board members but that's another discussion...

 

There is a lot broken at RA-Aus right now and we need to fix it. We could start at the bottom and put in place good managers but would that really work? In the last week or so we have seen that it hasn't been the magical fix many might have hoped for. We still have a board that interferes with management issues, hiring and firing is still done by the board! There is no governance in place to define (and abide by) the roles and responsibilities of management versus the board. At the same time management has failed over the last couple of years with some seriously concerning turnover in the Tech Manager role and a grossly under performing CEO. Our board had no clear understanding of what was expected of these management positions or themselves and so of course they couldn't react appropriately. Appropriately wasn't even defined! We are broken all over but at the top, the people making the important decisions, we are rudderless!

 

If we are to rescue the association and halt our steady slide into oblivion we need some good solid frameworks that management, employees, members and of course, the board understand. On top of this we need to keep the power in the members hands like Col says. For this to work though we need a clear structure with some sound guiding principles so everyone knows what is expected of them and what can happen when they don't deliver.

 

 

[pmccarthy]

Alfa I agree with all that you say. We need a smaller board, elected for ability and not regionally, an experienced chairman, and an executive team reporting to the board. I favour requiring board members to join AICD and therefore they would have to participate in the continuing professional development programme.

 

I am a member of a comparable organisation with 12,000 members that requires around 20 staff to deliver the services required. I suspect that RAAus has been seriously understaffed from the outset. That other organisation had many of the problems that we are experiencing until it dropped the regional representation model about 15 years ago and replaced its governance model with a board of directors.

 

 

[rhysmcc]

Reduce the board to 7, voted by members (either region or nation wide), who's role is to set the overall policy/direction of RA-AUS. Appoint/hire qualified professionals for the running/management/day to day who has set goals/kpi's. A Chairperson is appointed by the board (from within) who's job is to insure the board and management are on the same page, but not get involved in the day to day. The GM is responsible for the management and day to day functions of RA-AUS.

 

 

[Oscar]

Mick's dissertation provides a lot of food for thought; I also found the original proposal somewhat short on logic and reasoning. However, I don't believe it is either necessary nor of best value to attempt to adopt a model from elsewhere, though recognition of the governance principles certainly is valuable.

 

Of primary importance is to recognise the environment in which RAA operates. This can be conveniently split into two streams: those elements that are determined externally and those which are selected internally.

 

The external elements are ones imposed upon the organisation. They include compliance with rules and regulations that have legislative force for the operation of aircraft (tech. standards, operational standards etc.); standards for financial management, standards for corporate management (e.g. the rules for incorporated associations), and other standards such as OH&S that apply to any organisation. Add to that list a wider requirement to 'operate within the law', in terms of all exposure to legal matters that can result from RAA's existence and operation.

 

The internal elements are ones that are completely the choice of the Association, including such things as how the Board is to be compiled, voting rights, etc.

 

Just to add to the complexity, there are what might be called 'cross-over' elements: where a specific function or responsibility is required as a result of the external elements but the way in which this is handled is able to be selected by the Association (subject sometimes to 'approval' by the external authority. A classic example of this has been the appointment of the TSCC: the requirement for an SMS is clear but the mechanism by which this is achieved does not specifically require one responsible person to be nominated - there may have been other mechanisms available to the RAA by which the requirement could have been met. Let's not get bogged down in this particular piece of minutiae, however.

 

It seems to me that in any restructuring proposal, a lot of regard needs to be placed on ensuring that all external requirements placed upon the organisation are covered in a manner as consisent as possible with the internal elements RAA has selected (and some of these may need to be adjusted if they cannot be reconciled with the external elements).

 

It is generally recognised that a large and complex organisation NEEDS the strategic guidance of and scrutiny by competent persons: usually a Board of some sort, comprised of people with the appropriate skills. At the level below that, staff implement the Board's strategic decisions ensuring compliance with the detail of the relevant requirements.

 

So, in brief summary: we need a Board capable of providing the strategic expertise to meet the externally-imposed requirements ( i.e. a Board that contains the 'skill set' to be identified - and this is a fairly straight-forward matter, I would suggest), that is achieved within the mechanisms that the organisation sets for itself internally. Or, in even simpler terms: we need to decide WHAT skills etc. are needed at the top, HOW to achieve this, and WHETHER we need to adjust our internal requirements to allow this to happen.

 

 

[pmccarthy]

The constitutional review can set the number of directors, length of a director's term and how many consecutive terms can be served. Guidelines on the attributes sought in directors can be published. Thereafter it will be up to the members to elect the best candidates and not their mates. We will be in the hands of the membership. Directors will elect a chairman. Then, if a good group of directors has been elected, all of the other problems that we have been worried about will be resolved in a reasonable period. Directors wil set direction and ensure that a competent management team carries it through.

 

As to the attributes of directors, senior management, CEO or board experience is highly desirable, together with some knowledge of aviation. While a mix of accounting, legal and technical backgrounds would be good, it will be hard to achieve through democratic elections.

 

How quickly and through what processes can we make this happen?

 

 

[AlfaRomeo]

One way to overcome the issue of "While a mix of accounting, legal and technical backgrounds would be good, it will be hard to achieve through democratic elections" would be to directly elect the Treasurer and Secretary. These are roles where specific technical skills and experience are a great advantage. So, when somebody runs for the position of Secretary, a statement of legal and company director skills and experience in the pre-election statement will aid the members in making their choice.

 

The Chair should continue be elected by the elected Board from within their numbers. And we should get away from the Aero Club analogy of "President" who is the chief executive of the Club and call the role what we need it to be: Chair/Chairperson/Chairman/Chairwoman depending on how PC you want to be.

 

 

[pmccarthy]

I don't agree that the elected positions of secretary and treasurer should exist. The company secretary should be appointed by the board, the accountant or financial controller also. We just elect directors. I think I am agreeing with you Alfa.

 

 

[facthunter]

I'm split on that. You need a public officer who would be a board person. I'm inclined to agree though you might designate say 3 persons on the board to run a finance committee. A qualified staffer could do the secretarial work . The minutes are taken by a staffer, but there might be occasions where an In Camera situation exists and that wouldn't happen. Nev

 

 

[AlfaRomeo]

The roles of the Treasurer and Secretary are oversight of the functions largely executed by the Admin Manager and his/her staff. The Board members in these roles have a responsibility to ensure compliance happens rather than do it themselves. The Treasurer for instance needs to see that plans are in place to get the Budget done in time. The Treasurer should meet and be the senior point of contact between the Audit Partner and RA-Aus. These two should agree audit schedules and reporting schedules. The Treasurer needs to get the best understanding of the financial reports. This could involve working with the Accounting staff and external accounting services providers and doing a few sums for themselves. The Treasurer must be able to advise the Board regarding signing off on the Accounts and provide answers to the membership. The Treasurer has an obligation to satisfy themselves that the commercial and accounting systems of the organisation are sound and well/appropriately controlled. The role of the Secretary is analogous.

 

 

[coljones]

Who is Alfa Romeo in real life?

 

 

[dazza 38]

Who is Alfa Romeo in real life?

A French car manufacturer started in 1910 by some dude and it was originally just called Alfa, but was taken over in 1915 by Nicola Romeo. Then it was known as Alfa Romeo M something. After a while they dropped the last word so it came to be named just Alfa Romeo.

But if you mean who is Alpha Romeo here on this forum- Err , I do know but I would be very naughty of me, if I mentioned their name. Some people

 

like to be incognito. Kind of like Superman or Batman.

 

 

[coljones]

A French car manufacturer started in 1910 by some dude and it was originally just called Alfa, but was taken over in 1915 by Nicola Romeo. Then it was known as Alfa Romeo M something. After a while they dropped the last word so it came to be named just Alfa Romeo.But if you mean who is Alpha Romeo here on this forum- Err , I do know but I would be very naughty of me, if I mentioned their name. Some people

like to be incognito. Kind of like Superman or Batman.

Yes, but?? Alfa Romeo cars are out there, proud of their place in the world, tipping their lid to no-one and delivering 110% of the time (well apart from the clutch and brake master cylinders, the brake booster and rust in my '73 1750 Berlina - but I did drive to WA and Carnarvon, twice, at speeds Gavin would froth over).

 

Alfa Romeo, what are you hiding? are you now owned by Ford or Chrysler or great Wall?

 

 

[Pete Greed]

AlfaRomeo said: The Treasurer needs to get the best understanding of the financial reports. This could involve working with the Accounting staff and external accounting services providers and doing a few sums for themselves. The Treasurer must be able to advise the Board regarding signing off on the Accounts and provide answers to the membership. The Treasurer has an obligation to satisfy themselves that the commercial and accounting systems of the organisation are sound and well/appropriately controlled. The role of the Secretary is analogous.

 

In any RAAus restructure I could see the role of the currently elected Secretary being absorbed into that of a part-time, appointed Company Secretary - paid or voluntary depending on the circumstances of the individual. This would be a key specialist position and amongst other things would advise the board on policy documentation, compliance and process.

 

Pete

 

 

[Pete Greed]

http://asspl.com.au/

 

A web site worth a look ........

 

Pete

 

 

[pmccarthy]

I think we are on he same page PG, a part time Company Secretary would be sufficient. But we should not allow any voluntary positions, peanuts and monkeys. To run properly we are probably several positions short. Call it five staff at $70,000 each (Canberra). That's an increase of $35 in annual fees per member. Who would object to that if it resolved the woes complained about on his forum?

 

 

[David Isaac]

....Alfa Romeo, what are you hiding? are you now owned by Ford or Chrysler or great Wall?

Someone you at times cuddled with ...

 

 

[kaz3g]

Is this a boy thing?

 

Kaz

 

 

[ozbear]

Who is Alfa Romeo in real life?

Will we use one of these to track him down

 

 

[David Isaac]

Is this a boy thing?Kaz

Go for it Kaz

 

 

[Pete Greed]

I'm sure there are a good few members on this forum who could describe the principles of good governance and the benefits of going to a corporate structure such as a Company Limited by Guarantee (a commonly used corporate facility employed by the not-for-profit sector). In fact the original RAAus was incorporated as a Company Limited by Guarantee. I wonder why it was ever changed?

 

This is not rocket science and can be learned by anyone who values the democratic process and understands the need for order and process when elected to a position of responsibility. It is about representing constituents, teamwork and leadership.

 

Just as important in any restructure, is the retention of the heart and soul of an organisation. It is important that the knowledge base, skills and passion that saw RAAus into existence still provide the strategic direction as we go forward.

 

This of course is the greatest challenge for our existing Board Members, who need to go back to representing their constituents and lay down the foundations of a strategic plan that incorporates the very best of the past with the aspirations of the future.

 

Those aspirations are being regularly discussed and articulated at most Recreational Flying Club meetings around Australia.

 

If we did away with the current State/Territory board selection process and went with a smaller skill based board that formally received its strategic thinking via our regional Clubs, then the communications deficit, which we all experience, would all but vanish over night.

 

What about it Board......get your heads out of the cockpit, leave management to manage and re-engage with the great outside.

 

Went for a flit in the Jab yesterday evening (with 4 mates in their Jabs) ........beautiful

 

Pete

 

 

[pmccarthy]

PG with the structure that you suggest you can still have regional representatives who communicate regional issues to the CEO and organise regional meetings for training etc. Once a year the regional reps can meet with the senior staff and directors for a strategic planning weekend, to set the course for the following year. This frees the directors from regional bias so they can focus on good governance.