The role of associations and chambers in post-COVID-19 economic recovery
Monday, July 20, 2020
It’s an open secret that traditional business membership organizations (chambers of commerce and business associations) are facing a crisis of relevance in the 21st century knowledge and sharing economy. As the latest issue of Boardroom puts it, “In the past years, associations, no matter where they are based, no matter how big or small, have had to face challenges: loss of market share, exponential changes in technology, higher member expectations, increased competition, diverse member markets.”
Today, businesses are motivated to join their industry’s association or local chamber less for altruistic or community-based reasons, and more by the bottom line — what’s the value or ROI associated with membership?
On top of that, the COVID-19 pandemic is creating additional challenges and further disrupting the industry. But with that comes the opportunity to serve and represent the business community in its hour of greatest need and drive the economic recovery that is so critical to a prosperous decade to come.
Many business membership organizations entered this calendar year well on their way to achieving their vision for 2020 or embarking on new plans for the new decade. With the outbreak of the pandemic, existing plans quickly became outmoded as organizations switched to a crisis response mode and grapple with continued uncertainty about the future.
Successful organizations require effective leadership from boards of directors, but many board members find themselves preoccupied and focused on the survival of their own businesses. Organizations suffer as their governing bodies struggle to convene remotely and get the right level of leadership and strategic inputs. Like their members, chambers and associations have struggled to reorient their operations to a remote environment, and now to pivot to reopening amid new restrictions and hybridized work environments.
Financially, the crisis has done a number on organizations’ budgets for 2020. Revenue from meetings and events, on which most business membership organizations rely, evaporated almost overnight. With that, opportunities for sponsorship, and the needs of sponsors, are refracted through a different prism.
Meanwhile, BMOs are built around a dues model which is under strain as members prioritize the survival of their businesses. Membership renewal is simply a tough sell in this environment, and likely will be throughout the remainder of this year and into the next. Now more than ever, companies expect to receive high-value programs, products and services for their investment of membership dues.
The representational function of independent chambers and associations is just as important, if not more so. These organizations carry the voice of the private sector and are the primary champions of their members interests in a democracy. In the COVID-19 era, these organizations cannot sit on the sidelines of the important debates surrounding pandemic response and recovery. Governments the world over need the input of the business community in order to strike the right balance between appropriate restrictions to protect public health and the imperative of economic activity that underpins sustainable livelihoods. Businesses and investors crave predictability in the business enabling environment, but the terrain for business operations and decision-making shifted abruptly and dramatically across entire industries and value chains, and we haven’t seen the end of the crisis yet.
While some degree of government intervention is appropriate in most cases, there is a pernicious hazard posed by governments that use the crisis as a cover to exert greater control over market economies. Business advocacy organizations like independent chambers and associations thus find themselves presented with advocacy challenges that they’ve never seen before, and within vastly accelerated timelines that defy normal policymaking cycles.
Overlaying all of this, there’s the challenge of communications. Traditional modes of communication simply aren’t adequate to effectively engage an organization’s stakeholders, internal or external, in these extraordinary times.
It’s not just a matter of increasing the volume or intensity of communications, however. Along with the pandemic, businesses are also suffering from an “infodemic” these days. With all that has happened, the first half of this year has been a blur for most of us — an extremely fast-moving situation that has played out in a very crowded information landscape. Businesses are looking for trusted sources of information and analysis, and herein lies another opportunity.
Where associations and chambers can make a difference
Given the existential circumstances facing many businesses and the private sector as the lifeblood of economies around the world, the role of business membership organizations has never been more essential. But with the question of relevance on the line coming into the crisis, it begs the question of whether such organizations can rise to the occasion.
While there’s a long and treacherous road ahead, as theUnion of Ukrainian Entrepreneurs has put it, such organizations “are made for times such as these.” Businesses are looking for leadership to navigate the crisis and emerge intact and even stronger on the other side, and chambers and associations are uniquely positioned to provide that. The U.S. Chamber of Commerce, the world’s largest independent business federation (of which CIPE is an affiliate), is focused on ensuring that no business is ruined by the pandemic.
It helps for organizations to have such clarity of purpose during times like this. As always, an organization’s mission and strategic plan should guide its work, but a plan is only a platform for the response which needs to be adjusted and adapted to ensure relevance. The most successful organizations are using this crisis as an opportunity to fundamentally revisit how they do business — focusing on what really matters to their members and jettisoning what doesn’t.
This brings home the need for good governance within organizations, where directors, in partnership with staff executives, are not just fiduciaries that provide oversight but also bring the critical insights and foresights to set the course for a successful future. To the extent that board members are preoccupied, the nimbler organizations are revisiting the demands and formalities of the director role are so they can continue to serve.
Operationally, organizations need to assess the impact of the crisis on their members and market segments. For example, we know from the American Society of Association Executives (ASAE), that meetings revenue accounts for 35% of total annual revenue among U.S. associations. This is particularly jarring as business membership organizations create much of their value through the power of convening.
With meetings and events having been cancelled for most of the year, this creates a gaping hole in most organizations’ balance sheets. That statistic will vary quite widely from market to market, but it is critical for organizations to understand the financial implications of the crisis. Adaptive organizations are engaged in contingency budgeting to reforecast income and expenses, identifying sustainable sources of revenue tied to a new strategy for the rest of the year (at least). With that comes a reassessment of IT infrastructure, revamped communications platforms and new channels to reach members remotely, and revised sponsorship opportunities.
If membership was a tough sell before the crisis, it is likely to be even more so now. But just as no business should be ruined by the pandemic, no organization should lose a member because of this crisis. The good news is that market demand for what business membership organizations can offer under these challenging circumstances is high. Chambers and associations exist to serve their members, and businesses have never been in more need of the sort of services that these organizations can and do provide.
If organizations successfully reorient themselves to meet today’s challenges and deliver value to their members, then they can be very successful in keeping their members and even growing. There are numerous examples of chambers and associations that are adding new members in the midst of this crisis on the basis of the unparalleled support they’re providing. It should be noted that most business membership organizations are built around a dues model, which must be adapted for the times, to include a flexible array of options from extensions to hardship waivers. Businesses will remember which organizations stayed by their side during these challenging times.
Chambers and associations have little choice but to retool the programs, products, and services that they offer, with a focus on delivering immediate value. For example:
- Organizations are realizing a critical role in curating relevant, timely, and needed information, along with expert analysis, perspective, and foresight. The Kenya Private Sector Alliance (KEPSA), for example, established a dedicated COVID-19 information portal and telephone hotline to guide businesses through the crisis.
- Many organizations are providing a level of online engagement that they may not have thought possible before — by repurposing their conferences and events into webinars, education, speakers’ series, and other forms of exchange. The European Business Association of Ukraine has staged an impressive array of online events covering the transition to digitization, local market insights and international perspectives, rethinking work models, and brand power, in addition to dialogue sessions with public officials.
- Organizations are deciphering government regulations for companies to make compliance easier. The Philippine Chamber of Commerce and Industry is issuing advisories to its members to help them understand new regulations surrounding restrictions on business operations, tax filings, fiscal support programs for affected companies, and relief available for workers, among numerous other issues.
- Organizations are serving as a conduit for corporate social responsibility by mobilizing private sector contributions to the crisis. The Association of Lebanese Industrialists, in a unique collaboration with the Beirut Bar Association, provided Lebanese-made cleaning and sanitation supplies donated by its member companies to prevent an outbreak within the prison population.
Finally, there is arguably no more important function that chambers and associations can play during this period than as advocates for their members’ interests. These organizations are uniquely well-positioned to understand how the crisis is affecting their members, identify solutions, and convert them into actionable policy recommendations.
Advocacy under such extraordinary circumstances has various dimensions and requires a sensitive (and sensible) balancing of interrelated interests (business, social, health, and economic). Adding to the complexity, the process to get an issue advocacy campaign off the ground that once may have taken months now must unfold in mere days. The Jordan Forum for Business and Professional Women, seizing an opportunity to inform and influence its government’s deliberations surrounding pandemic response, did just that and issued a position paper conveying the priorities of its constituency.
Business membership organizations around the world have taken up prominent positions on government commissions and task forces to formulate the conditions for lockdown, set the parameters around reopening, and design economic recovery strategies. From the Nigeria SME Business-Owners Working Group to the Confederation of Indian Industries, business membership organizations and coalitions of every size and type have articulated thoughtful and powerful issue advocacy agendas that are providing the roadmap for the reopening of economies and a path to economic growth.
Whether it’s dealing with liability protections, stimulating investment, or myriad other issues on the agenda, private sector leadership is essential to recovery, and independent chambers and associations the world over are providing that in droves.
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