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Some management companies willing to take on administrative functions while CEO stays in place; ‘They’ve given me good people’
Oct. 17, 2014
By William Ehart
Leaders struggling to deal with nonstrategic functions such as building management and benefits packages are finding association management companies willing to provide services below the CEO level so chief executives can focus on higher-value issues.
“CEOs are increasingly open to the outsourcing of functional areas,” said John Dee, COO and CFO of Chicago-based Bostrom. “AMCs in the past have been threatening to smaller organization CEOs. They’ve felt that maybe they would lose their job.
“In the last 10 years we’re seeing a lot more openness to see the AMC as a partner,” Dee said.
Bostrom, a midsize AMC, has a model called “COO down,” where the company provides all staff while the CEO remains a direct employee of the association.
The $1 million-revenue Council of Medical Specialty Societies is an example. CEO Norman Kahn sought out an AMC shortly after taking charge of the stand-alone group.
“It became clear to me that given what we wanted to accomplish, we needed more,” Kahn, a former family physician, told CEO Update.
“We were not big enough to afford a full-time staff in every category that we would need, like IT and human resources and meeting planning and executive assistant and executive director,” Kahn said.
CMSS hired Bostrom in 2009.
Kahn said the board did not oppose the move, though there was concern for the association’s three-and-a-half full-time-equivalent employees. However, two were ready to retire. (Staff turnover is a major reason small groups turn to AMCs for help, experts say.)
“I told the board, ‘You hired me to take this organization to the next level. We’re going to need more services,’” he said.
Kahn still has ultimate say over people, he said.
“I have the authority to tell Bostrom that I want a different person, but they’ve given me good people,” he said.
The arrangement has benefited CMSS, which has seen greater attendance at its meetings.
Kahn works from his home office in Kansas City, though Bostrom makes office space available for him in Chicago when necessary.
Investing in outsourced services
Small to midsize AMCs are generally more open to such a hybrid model, but giant groups such as SmithBucklin and Kellen also offer the services.
“The prevailing thought in the association community is that we only provide full-service management,” said Matt Sanderson, chief executive of SmithBucklin’s business and trade industry practice. “In fact, we also provide outsourced services for stand-alone associations and the executives who run them.”
Kellen President Rick Cristol said that CEOs sometimes bring their groups to Kellen and either go to work for the company or remain an employee of the board if they are strong leaders and the chemistry is right.
“We really prefer to provide the full gamut of what associations offer but we do have a couple of those arrangements and they’ve worked out fairly well,” he said.
“It’s really important for the association executive thinking about going to an AMC—is the executive planning to come with it, or just use the AMC for support services?
“A lot of the AMCs are not interested in doing that kind of work. If (executives) want to hire back-office management, there are smaller AMCs that do that,” he said.
Cristol said associations only should choose from AMCs accredited by the AMC Institute.
Going to work for the AMC
In some instances, stand-alone association CEOs go to work for the AMC that contracts with their group.
“You would think it doesn’t happen but it does,” said Megan Cohen, executive director of the $2 million-revenue American Association for Cardiovascular and Pulmonary Rehabilitation and vice president of the health care and scientific industry practice for SmithBucklin. “(Sometimes) a stand-alone executive director will come to work for SmithBucklin.”
More typically, boards of associations in the $1 million to $5 million-revenue range will approach the company looking to make a change for the group, she said.
“One of the things that they are interested in is our ability to staff up and staff down,” said Cohen, who led the then $3 million-revenue, Baltimore-based International Dyslexia Association before leaving the group in 2007 to join SmithBucklin. The group had 15 staff.
“I was dealing with building management, human resources issues and trying to figure out our benefits package,” she said. “I was just doing all kinds of things that come with that stand-alone job that take you away from being strategic with your board, driving your team.
“Most of us come from associations where we’re either in government relations or in meeting planning or in finance,” she said. “It’s hard to be a jack-of-all-trades at a small, stand-alone association.”