Back From the Brink: Association Turnaround Stories

Back From the Brink Associations Now July/August 2018 Issue By: Tim Ebner

What does it take for an association to come back from a near-death experience? Following substantial declines in revenue and membership, three associations changed course and restructured their business, leading to a more prosperous future.

To this day, Mike Clementoni calls it “the death spiral,” and he’s not being overly dramatic.

In 2009, as board president of the Modular Building Systems Association—now known as the Modular Home Builders Association—Clementoni was part of a skeleton crew: He led as one of four remaining manufacturer members that rode out the worst decline in the association’s 35-year history.

“Everything went downhill very fast,” he says, a result of something MBSA and many other associations didn’t see coming: the 2008 recession. “Because of the housing crisis, manufacturers were going out of business, and we were losing membership and revenue quickly. Suddenly, we lost our office space in Harrisburg [Pennsylvania], and then our staff had to be let go.”

At its nadir after the recession, the organization went from four full-time staffers to a single part-time executive director. No one was recruiting or serving members, and MBSA had about $3,000 left in its checking account.

“The writing was on the wall,” Clementoni says. “We were close to saying, ‘It’s over.’”

But it wasn’t over. His story, and those from two other associations, reveal common steps leaders can take in do-or-die scenarios to pull an organization back from the brink. By changing quickly, working to reestablish trust, and overcoming the fear of failure, these three associations successfully changed course. Now, each is on a new path of continuous improvement that’s leading to a more prosperous future.

“We’ve made major changes, and obviously the [recovering] economy had a lot to do with it,” Clementoni says, “but we’re still figuring out ways to support our staff, members, and profession in both good times and bad.”

Step 1: Triage

Like an emergency room doctor who checks a patient’s vital signs to determine the urgency of an illness or injury, leaders at an organization in crisis must quickly evaluate its condition before deciding what actions to take.

With no management fees and basically no expectations at all, we came to reevaluate and change the course of the organization.
—Tom Hardiman, CAE, Modular Home Builders Association

In MBSA’s case, Clementoni called in Hardiman-Williams, LLC, an association management company, to help diagnose the organization’s primary problems. Tom Hardiman, CAE, partner at the AMC, was hired as executive director in 2012 largely because he managed another association in MBSA’s space—the Modular Building Institute, representing the industry’s commercial builders.

“With no management fees and basically no expectations at all, we came to reevaluate and change the course of the organization,” he says.

Hardiman stopped the bleeding by updating the bylaws and changing the association’s name in 2013 to the Modular Home Builders Association. The name change was symbolic, signaling that the organization was opening full membership to additional stakeholders in the modular home industry.

“The original bylaws said that every manufacturer could serve on the board and had voting rights, but suppliers and associate members [home builders] didn’t. … We broadened the association to builders so that both the bylaws and name indicated this wasn’t just a manufacturer’s association anymore,” Hardiman says.

Within a year of making those changes, MHBA grew its membership from four to 28 companies. That initial rebound pushed the association on a path to change—first a new website, then a shift in advocacy focus, which historically had supported manufacturers but did little for suppliers or home builders.

Hardiman and his team took a two-pronged approach. They continued MHBA’s advocacy for manufacturers by monitoring state-level regulations. And in 2014, they introduced a consumer-focused Modular Home of the Month contest, which gave home builders a platform to promote their latest projects via Facebook and other social networks.

“As this program grew in popularity, so too did our membership,” Hardiman says. “We reached 50 members within a year.” Today, MHBA has more than 115 member companies.

Step 2: Reestablish Trust

Like MHBA, the Illinois Park and Recreation Association was in trouble after the financial crisis of 2008. Over the next five years, IPRA cycled through four executive directors, laid off almost a dozen people, and had virtually no financial oversight. The organization was overinvested in staff, supplies, and technology. In 2012, Debbie Trueblood, CAE, was brought in to rebuild.

By then the financial fires had been put out and IPRA’s office had moved three times. When Trueblood started, the remaining four staffers were working from a member’s commercial garage.

“It wasn’t pretty, and the space was tight,” she says. “Within four cubicles you had a single copy machine, a coffeemaker, and staff being asked to do things like selling off office supplies to make payroll.”

But staff and volunteers stepped up. A few board members lent a hand with administrative work, and the four employees formed a pact to stay and push for changes that would benefit both members and the organization.

Priority one, Trueblood says, was to restore trust with donors, who in 2001 had donated to a major fundraising effort that had helped IPRA purchase a shiny, new suburban Chicago office building. Seven years later, IPRA sold the building and used the funds to pay down a rising stack of bills.

“Our donors were very upset,” Trueblood says. “In the midst of the financial crash, donors who could have otherwise helped us did not trust the association.”

To begin to repair the damage, IPRA’s board formed a separate foundation and set aside surpluses each year to rebuild the depleted fund of $245,000 that supporters had donated. That fund today is almost twice as large and is helping to finance scholarships and other member programs.

“My philosophy as a leader is that you have to rebuild trust, keeping a balance between the support of your members on the one side and the organization on the other,” Trueblood says. “You can use member recruitment, engagement, and satisfaction to help raise revenue that then helps you to reinvest in staffing and resources.”

In a period of slow growth, Trueblood allocated more budget to improve member outreach and enhance programming, including raising the quality of speakers at its annual conference. Meanwhile, IPRA kept dues nearly steady, implementing just a single increase of $10 per member.

“You have to be intentional with slow growth, and part of that, especially when you’re in a turnaround situation, is that you need member buy-in in a much bigger way,” Trueblood says.

That gradual growth led IPRA to a new, more comfortable normal. Staff has doubled in size, and Trueblood and her team recently moved from the garage into a renovated commercial office space that has room for future expansion.

Step 3: Overcome Fears

In 2014, when David Zepponi came on board as president and CEO of the California Association of Community Managers, nobody told him that the organization was sinking, but there was a palpable sense of fear in the air.

The reality was that CACM’s membership was declining and staff didn’t know what to do next.

“The biggest challenge was that this organization had been autocratic," says Zepponi, who recently left CACM. “No one felt empowered to act. What we didn’t have, culturally, was an ability to fail.”

The fear of failure carried all the way to the boardroom. Zepponi got pushback from long-term board members when he presented an aggressive turnaround plan that included changing CACM’s traditional membership structure.

“Change at this velocity can be very hard to withstand,” he says. “When someone within the organization says, ‘Wait, let’s go back,’ you have to be patient, listen, and show them how their fears can be overcome.”

Eventually, Zepponi persuaded his board. CACM created tiers of membership. He also refocused the group’s acquisition strategy to target businesses, which often pay individual members’ fees associated with coursework and exams required to earn CACM credentials.

The strategy helped to reverse several years of membership decline, but Zepponi says it didn’t come without a “boomerang effect”—an impulse to resist change.

“Selling to businesses was a big opportunity for us but a real challenge to our board, because we had always been a member organization for managers,” he says. A true “turnaround artist,” he adds, directly addresses the fears in a room, recognizing that it takes time, communication, and business intelligence—hard data—to move an ailing organization forward.

“You need to be patient and persuasive in getting your board to understand and support your turnaround story,” Zepponi says. “This isn’t going to happen overnight, because, remember, you’re building a new [organizational] culture, one that’s able and willing to take risks.”

 

Tim Ebner

Tim Ebner is senior editor of Associations Now in Washington, DC.