Business Associations: By Nikita Bondarenko



What do associations give to businesses?


Business associations are one example of bringing people together to achieve a common goal based on a common interest. In ancient times, these were trade caravans, ancient unions of artisans, medieval workshops, guilds and corporations. Today, business associations are chambers of commerce, trade and industry groups, professional associations, manufacturers' federations, associations of representatives of small and medium-sized businesses and other similar organizations.


Their appearance indicates the maturity of a particular area of business. This means that its representatives perceive each other not only as competitors, but also as colleagues, and realise the existence of common goals and interests, which are easier to defend together.


What does the presence of a business association give?

The association is something that unites entrepreneurs into something more than just a group of businessmen. It becomes a conduit for ideas that give the existence of a business a higher meaning, or the appearance of this meaning, which is also not bad.


In addition, the association is engaged in the development and implementation of projects that unite, cement business, define and support its ideology: an industry publication, an exhibition, a training centre, the creation of industry standards, etc.


The Association acts as a coordinating and guiding force, taking over contacts with government agencies, monitoring the stability and security of business, as well as shaping its image in the eyes of society.


However, business concepts are too general, and therefore speaking about them, it is difficult to avoid common phrases. The conversation will be more substantive if we turn to what gives participation in the association to individual companies or entrepreneurs.


What does the association give its members?


By joining the association, candidates expect to receive both "political" benefits, for example, to establish themselves as a civilized player in the market, and the possibility of "behind the scenes" solving certain issues, lobbying their own interests. Also, of course, to win financially, by saving costs for participation in its projects, preferential rates for participation in the exhibition and placement of advertising materials on the association's websites and printed publications, free access to information resources, etc.


United, enterprises, especially small ones, become able to do things that they would not have the strength or the means to do alone. It is also important that by introducing common business "rules of the game", and creating industry standards, the association will primarily take into account the interests of its members.


Here are just some of the benefits members can count on:


  1. Creation of projects for members of the association

  2. Lobbying for the interests of members of the association.

  3. Assistance and collective support of the association when working with clients, fiscal authorities and third-party firms.

  4. The ability to resolve disputes and conflicts with partners and among themselves directly or through the executive bodies of the association.

  5. Prompt receipt of information about unscrupulous market participants.

  6. Support for participation in tenders, and intermediary services when entering partners and government agencies.

  7. Support in negotiations with foreign partners.

  8. Consultations on business problems, advertising activities, legal and other issues.

  9. Assistance in staff training.

  10. Access to the results of market research and objective information about its participants.

  11. Advertising and information support.

  12. Additional discounts on goods and services provided by the members of the association.

  13. Preferences and benefits on commodity loans and payments in relation to members of the association.

  14. Using the image of the association.


Most of these advantages are the result of the joint work of the association members on the implementation of its projects. Having worked together on them, members of the business community have every right to use the fruits of their labour.


What does the creation of an association give to the organizers?


Of course, it would be strange if, by creating such a useful thing for everyone as a business association, its organizer would not think about his own benefit.

Firstly, these are resources. The Association allows to accumulation of a volume of human and financial resources that are not comparable to the capabilities of one company and makes it possible to solve issues that previously seemed fundamentally unsolvable. This is something akin to the realization of a childhood dream of "becoming a wizard" and realizing the desires of a huge number of people. Of course, the association is not a magic wand, but with its help, the organizer can also create a lot.


Secondly, the possibility of developing their own project. If the "crystallization centre" of the business community is not an enterprise, but a project: a website, a magazine, an exhibition, a training centre, a marketing agency, an information network, etc., the most fantastic prospects open up for its development. For the exhibition, the association can become an analogue of the council of exhibitors, in fact, the organization of the association can begin with the creation of such a council, for the magazine, the community will become a constant source of information content and at the same time funding, the information network will receive a huge customer base, a project to develop industry standards, a large number of experts. There can be many options.


Thirdly, favourable conditions for their own company. If the organizer of the association is the owner or the head of the enterprise, then he gets the opportunity to create the most favourable conditions for his activities. The main thing is that with these advantages it does not conflict with the statutory documents of the association and the interests of its members.


Experience in creating associations abroad


Foreign associations - features and powers


In different regions of the world, the activities and working methods of business associations differ from each other. In countries with centrally planned economies and state control, they perform purely social functions. Where the economy is based on market relations, associations play an important role in the distribution of investments, participating in making decisions affecting the interests of business. In countries with a "mixed" type of economy, business associations, professional associations and groups cooperate with the government, develop programs and support public policies aimed at economic development. In addition, their activities bring socially useful results in such areas as professional ethics, economic research, statistics and information support.


USA


The importance of the role that associations play in the public life of foreign countries and their strength is evidenced, in particular, by the data of the American Society of Association Managers (ASAE), according to which:

To date, there are 147,000 diverse associations in the United States representing almost every profession, industry, hobby, interest, etc. Nine out of ten American adults belong to at least one association, and one out of four belong to four or more associations. About 1,000 new associations arise in the USA every year; the number of employees of associations in the USA is 295,000 people. American associations annually spend $5.6 billion on printed publications and publications (of which $3.2 billion is only on printed products); almost all associations (95%) produce periodicals, and 39% of associations publish books. The association spends $2.2 billion annually on technology. 95% of associations offer their own educational programs to their members. 71% of associations conduct industry research or collect statistical data. The statistical data available to associations are often unique and cannot be obtained from other sources, so both business and government are very interested in them.


The American Society of Managers of Commercial and Industrial Associations (ATAE) was organized in Lenox, Massachusetts, in 1920 as the Society of Business Association Managers. In 1956, the name was changed to the American Society of Association Managers (ASAE). The first congress of the society gathered 68 participants, 58 of whom became charter members. The issues of relations with the state, financing of associations, management methods and legal aspects of associations were discussed here. Initially, ASAE set itself the task of "providing a convenient exchange of ideas between managing associations and improving management techniques in that part of them that relates to business associations." The ASAE charter and internal regulations have changed several times, but the basic spirit of this society has remained unchanged. Currently, ASAE, located in Washington, is a professional society. In its activities, it emphasizes the role of ethics and social responsibility, certifies those who meet the requirements of standards and maintains at the proper level the amount of knowledge about the management of associations.


Europe


In Europe, business associations serve as a link between business and government. In Germany, most entrepreneurs, their unions and associations are united by the Federal Union of German Industry (FSGP) and the Association of German Chambers of Commerce and Industry (ONTPP). FSGP participates in the development of the domestic and foreign economic policy of the government. Its committees and working groups lobby the interests of its members when making all important economic decisions.


FSGP representatives are permanent members of various advisory bodies in the Ministries of Economy, Finance, Defense, etc. Their position is taken into account when developing the government's economic strategy. The President of the Union at regular meetings with the Federal Chancellor of Germany sets out his vision of certain economic problems.


The Association of German Chambers of Commerce and Industry is a self-governing organization representing the common interests of private enterprises within its region.


At the federal level, the Chamber of Commerce and Industry influences the economic policy of the government of the country, including in matters related to the development of the EU or participation in international negotiations.

In Austria, all industry unions interact with government structures only through the Chamber of Economics. Its members are all individual entrepreneurs and legal entities, with the exception of representatives of "free professions" and agricultural producers.


In Turkey, the relations between unions and the state are not regulated by law. The interaction of the unions of entrepreneurs and chambers of commerce with the authorities consists in solving the problems facing entrepreneurs, as well as holding discussions on the development of the economy or a separate industry.

An important role in regulating the processes of economic development in their countries is played by the Federation of Swedish Industrialists, the Swiss Trade and Industrial Union, the Confederation of British Industry, numbering over 200 small professional associations and associations, the Association of Dutch Industrial Enterprises and a number of other national associations of manufacturers.


Association structure (variants)

Three main models


  1. All the variety of forms and schemes of managing the activities of business associations can be reduced to three main types:

  2. An association run by volunteers. This model promotes the active participation of all its members in the activities of the association. At the same time, the management is well aware of their needs and strives to satisfy them as much as possible.


Disadvantages of the scheme: a long decision-making process, lack of organizational control, and frequent policy changes depending on the choice of new officials.


  1. An association run by hired staff. The main advantages of this model are better coordination, quick decision-making, and strict control over resources.


Disadvantages: members of the association lose interest in its activities, and it is difficult to involve them in the work of committees and commissions. There may be a misunderstanding between the hired staff and the members of the association.


Balanced Leadership Model


This model has all the advantages of the previous two. It requires a clear delineation of the duties and responsibilities of the chief elected and chief full-time official. At the same time, an effective leader is needed for the effective functioning of the association.


There is no ideal structure suitable for all associations


In the book "Principles of Association Management", in the chapter on organization, planning and control, an authoritative expert on the theory and practice of association management Lee Van Bremen writes:

"One of the signs that distinguish an association from a commercial organization is a clearer separation of management and the implementation of the principles of activity (policy).


In many associations, voluntary structures also operate in parallel. These divisions, engaged in administrative activities and policy implementation, are the main components of the management subsystem.


The staff performs administrative functions, volunteers make policy."

An idea of how the structure of business associations is organized in practice can be obtained by looking at the following schemes taken from the websites of various associations:


Option 1. The meeting of members of the association elects the president, the audit commission and the council, and also approves the composition of the executive directorate, which is headed by the director appointed by the meeting.


Option 2. Unlike the first option, the president is elected not by the assembly, but by the association council. The President appoints the Executive Director, and together with the council directs the work of the committees.


Option 2 a. Everything is the same as in the previous case, only the executive directorate is appointed not by the president, but by the management board.


Option 3. The work of the committees is led by a director appointed by the Chairman of the Management Board elected by the General Meeting.


Development of the Association


Stages of development


Business theorists judge the degree of development of the association by the number and level of responsibility of employees. And this approach has its own logic.

According to Walter Schaw, a certified specialist in association management (Walter Schaw, CAE, "International Handbook on Association Management", ASAE, 1998, p. 6-8), the structural evolution of any association can be divided into the following stages:


Creating an association


A group of people gathers to discuss common problems and interests. Over time, these meetings are formalized, and an association is formed. As the association grows and becomes more complex, its procedures, rules and legal status are legalized through the charter and regulations. The management functions of the association at this stage are carried out by volunteers.


The appearance of hired staff


The first employee of the association is often called the Secretary (with a large "C"), his duties include keeping records of members of the association, drawing up protocols, financial accounting and providing other types of assistance to the governing body of the association. Then an accountant and an employee who works with the membership base of the association join the Secretary. Over time, the administrative functions of hired personnel are significantly expanded. So, for example, there is a position of a technical director who monitors research, tracks technological or trade developments in the relevant field of activity, organises educational programs, etc.


The appearance of the first functional specialist on the staff of the association


The first functional specialist of the association is often a PR manager. With the growth of the association, the professional specialization of the staff is also deepening, which now performs functions from marketing and sales to conducting research and managing meetings. The culmination of the development of the organizational structure is the emergence of the position of executive director. He is usually selected and appointed by the management board, for the implementation of whose policy he is primarily responsible.

Russian practise often diverges from overseas theory. Associations can be headed from the very beginning by a person whose position will be called "executive director", a person legally responsible, who also performs the duties of a Secretary (with a large "C"). Nevertheless, the basic principle remains the same: with the development of the association, its staff also grows.


Projects that will help the association


In fact, the main object and product of the business association is information. Its accumulation, processing and distribution occur through a variety of projects.

Participation in them is what people unite in associations for. The main thing is not to turn them exclusively into a source of funding for the directorate. Projects are a very serious tool that, in addition to purely practical benefits, serves as an ideological "cement" that binds the association (see chapter 1).


Below are examples of successfully implemented projects

Information network


One of the first tasks that the association must solve is to ensure the informational interaction of its members. The most effective way to do this is to use the capabilities of the Internet to create an information network.


Network members get access to a variety of resources, can participate in training and seminars, and receive newsletters, reviews, manuals and other documents. If necessary, consulting assistance and distance learning can be provided through the network.


Journal


An own print edition is a great tool for business promotion. The magazine will serve as a source of industry news, a guide to the policy of the association, and a platform for discussions and exchange of experience.


However, the mass media, as the classic wrote, "is not only a collective propagandist and agitator but also a collective organizer." The organizational potential of the journal can be fully used in the preparation of other major projects.


Exhibition


The magazine can become a base for the informational promotion of the exhibition because its subscribers are potential participants of a new project.

By organizing the exhibition, the association performs the functions of the exhibitor Council, the collective body of co-management of the exhibition, and undertakes the organization of feedback, collection and processing of opinions of participants and visitors of the exhibition, studies and analyzes statistics, develops proposals that improve the quality of the event. Development of the exhibition positioning, planning of marketing campaigns and promotion of the exhibition itself. At the same time, the resources of other projects of the association are used, the subscriber base of the magazine, the magazine itself, and Internet sites.

Organization of the scientific program of the exhibition from the formation of the theme to working with speakers and preparation of speeches. Defending the interests of the association and its members when participating in the exhibition: increasing influence on the project, informing the association members about the exhibition, its preparation, opportunities, providing preferences for the association members, and conflict resolution. Work with exhibitors who are not members of the association: informing about the exhibition, attracting them to the association, to its projects. Prompt response to problems arising during the exhibition. Information support for exhibition visitors (guides, website).


Development of the exhibition development concept


Training Center


The shortage of qualified personnel is a problem that is quite common in many industries. Therefore, the training of specialists is a project, the implementation of which sooner or later is thought about in any association. Their main advantage over "singles" is the ability to rely on the resources of already working projects. When organizing a training centre (specialist training program), both a magazine and an exhibition can be used to collect information about the needs of the industry and promote training courses. For the implementation of the distance learning stage, the resources of the information network are perfect.


Marketing Agency


To provide the association members with the necessary information, as well as to interact with the rest of the business community, a marketing agency can be organized. In its research, it will rely on the resources of other projects: an information network, an exhibition, a magazine, etc. At the same time, the members of the association act both as sources of initial "raw" information and as a consumer of the results of its analysis.


Of course, we did not tell about a tenth of the projects that the business association can implement. In addition to the above, it may be a product certification project — if there is a need to create standards in the industry, a project of interaction with the authorities in order to create more favourable conditions for business may be in demand. There are an infinite number of options.


Self–regulatory organizations - unique opportunities for business communities


Why are self-regulating organizations needed?


For business representatives, of course, a situation is preferable when they themselves, without the direct intervention of the state, establish the "rules of the game", determine sanctions for their violation and create mechanisms for conflict resolution. For this purpose, self-regulatory organizations (SRO) are created. The potential benefits of creating them are obvious. Firstly, the norms of self-regulation, as a rule, are more flexible than those established by the state, they are easier to adapt to changing circumstances, and allow you to quickly fill in gaps in legislation.


Secondly, it is easier for market participants to influence self-regulatory organizations than government agencies.


Thirdly, conflict resolution with the participation of SRO usually costs the parties less and takes less time than a trial. Indeed, in this case, dispute resolution procedures are better adapted to the conditions of a particular business area and the specifics of interaction between market participants than a general civil court, and sanctions applied by self-regulatory organizations cause less rejection than those emanating from the state.


The state itself, having transferred part of its functions to self-regulatory bodies, saves budget funds.


Finally, the creation of self-regulatory organizations enhances the transparency of business, and positively affects the attitude of society towards it.

In theory, these considerations are enough for entrepreneurs to decide to take power into their own hands and begin to unite in SRO. However, it must be remembered that in Russia, reforms are usually carried out "from above", and many market participants thought about self-regulation only after the state made it impossible to continue activities in a number of industries without joining the SRO.


By Nikita Bondarenko

President of the Business Committee of the Asia-Pacific Region