Experience in your sector
A trade association differs from a professional body in that it represents organisations rather than individuals. However, the two types of organisation share many characteristics in terms of governance.
The special nature of trade associations presents special governance issues that include:
- Members of the board often represent companies that compete with each other.
- Board members have a dual role in that they are responsible for governing the association while at the same time representing the interests of their companies.
- Board members often do not accept collective responsibility and may pursue their own individual, or narrow, ends.
- Boards may contain very different types of people from chief executives of major companies to third tier managers of big companies to chief executives of tiny companies.
- Board members are volunteers and as a result, board activities may be accorded a low priority.
- The board’s accountability is unclear and sometimes non-existent.
- The board may contain a mix of both suppliers and customers which can hinder frank discussion.
- Larger members of the association can exert pressure outside of the board.
- Trade associations are not-for-profit organisations. Normal performance data like sales and profitability are not applicable and members may well have different views about what the objectives of the association should be.
Bridgehouse Company Secretaries can help trade associations navigate these unique challenges and ensure good governance arrangements are in place.