Confronting Reality to Achieve Corporate Transformation:

A Blueprint for United States Chess Federation (USCF) Business Renewal

compiled April 2004 by Wayne Praeder

 

Introduction

 

Note some candidates for the board show their disdain for accountability by making no campaign promises. Others just make claims as a way to get elected believing that the rules which apply to the rest of us do not apply to them. In reviewing previous candidateís statements in Chess Life I noticed that nothing that was said appeared to have been accomplished or even attempted on the membershipís (your) behalf. Therefore,rather than a description of what I have done in the past I focused my May Chess Life statement on what I would do in the future if elected so you (the membership) can hold me accountable for pursuing that result. This included working towards:

 

  • Determining and reporting where our money really goes.
  • Focusing on core programs to improve efficiency.
  • Making our 990s more accurate, timely, and available.
  • Participating in the selection and evaluation of a new executive director.
  • Strengthening board policy to avoid conflicts of interest or the appearance of conflicts.
  • Setting the groundwork for a new strategic plan.
  • Conducting an annual board and outcome assessment.
  • Including a membership survey with the 2005 election supplement.
  • Identifying, cultivating, and recruiting new prospective board members.

 

Iíd like to use this platform to put those proposed actions into context and to help give you a perspective of how that fits into an overall approach. When selecting a candidate to vote for I suggest you look carefully at what they currently are doing, what conflicts of interest exist, their game plan, and what skills they will bring to bear on your behalf.

 

The Not-for-Profit Setting

 

Mission

 

The USCF is a membership corporation. The purpose of the federation is educational and instructional, to broaden and develop chess as art and recreation, as a significant element of culture in America. Learning the game should be part of our culture. Chess is fun, keeps you mentally fit, and is a healthful lifelong recreation. We should strive to create more players and better players for the sport.

 

Members

 

The Executive Board has both a legal responsibility to discharge a public benefit purpose (its mission) as well as a moral obligation to meet the expectations of those on whose behalf the organization exists (its membership). When asked the question -- why should I join the USCF -- I can talk about the benefits members receive but that is not why the organization exists. Outside that right now I donít have a compelling answer. Perhaps that is our problem, as our reason to be has gotten lost. However, one thing Iíve learned in volunteering to serve on the board that is a good reason to join is our members themselves. Iíve had a chance to interact with some truly committed people who feel that playing chess is fun and can have an impact in peopleís lives. Our grass roots USCF members are truly the gems of the sport. Whether USCF members are donating money or time, in my view the future now could not be in better hands. Hats off to our members!It is their corporation and we have not yet begun to tap our most valuable resource, our membership.

 

Money

 

As you may be aware the USCF has been struggling financially. In today's uncertain economic times there requires a different level of focus and commitment from nonprofit organizations. In today's climate of increasing liability exposure, nonprofit organizations must demonstrate their willingness to be accountable. The way to reach this goal is to have a strong businesslike board. A businesslike board should have two broad categories of directors. First, you need advocates for your mission -- people who passionately believe in what you do. These people keep you honest to the first rule of not-for-profits: mission, mission, and more mission. The second group of people you need are businesspeople, and these folks keep you honest to the second rule of not-for-profits: no money, no mission.These two groups provide a dynamic and very healthy tension on the board and help the organization balance the needs of the two primary rules. Both groups need to clearly understand they are accountable to the membership, which is the third rule in this equation: no members, no money. Because of this our financial recovery must be our most pressing priority.

 

Management

 

To quote USCF President Marinello:ĎLet's face it: Our Executive Board and our Delegates are enthusiastic amateurs. We use the word "amateurs" in its best sense -- we are all "lovers" of chess. But our operations are now too large, complicated, and far-flung to be managed by amateurs, no matter how enthusiastic and well meaning. We need a high-quality board of experienced and successful people, and a sophisticated professional staff that runs our nonprofit business according to best mod≠ern practices.í

 

The Executive Board by default has the principal responsibility for fulfillment of the corporation's mission and the legal accountability for its operations. Board members therefore hold the key to organizational accountability and are its guardians on behalf of you -- the membership. This means that the board is in charge of establishing a clear organizational mission, forming the strategic plan to accomplish the mission, overseeing and evaluating the plan's success, hiring a competent executive director and providing adequate supervision and support to that individual, ensuring financial solvency of the organization, interpreting and representing the membership to the organization, and instituting a fair system of policies and procedures for human resource management. The board in essence directs, oversees, and measures how the mission is accomplished. Right now, to be effective in my opinion, the board needs professional people with experience in the above disciplines who are willing to roll up their sleeves and pitch in.

 

The Challenge

 

Since 1980 the USCF has ended up with a negative annual fund balance at least sixteen times. Another negative annual fund balance is expected this year. Some would argue this condition has occurred even more often as Life Member Assets and other segregated funds were commingled with operating funds masking the annual result. As of this year our Life Member Assets are now, for all intents and purposes, gone. The fundamental problems facing the USCF can be summarized into three distinct areas that must be addressed.

 

Mission Drift

 

The purpose of the USCF is solid but seems to have been lost or diluted.  Over time the corporation emphasis appears to have shifted from chess promotion to chess promoters. The schemes employed vary but are often oriented around using USCF membership dollars to subsidize or compensate tournament organizers/directors or related service providers. Alternately under priced memberships are sold or given away to claim a membership gain while leveraging our financial future. Thus, in the view of many, the focus has become internal rather than external and means have become ends. As a result, there is no clear-cut membership facing business plan, no validated strategic goals, and no accountability for meeting these nonexistent goals. The USCF is facing an identity crisis. We must get our original purpose back to the forefront of all that we do.

 

No Fiscal Discipline

 

The folly of the last decade for the USCF has come from a focus on increasing the number of members and the amount of sales revenue without regard for expenses. Overly optimistic revenue projections and artificially inflated reporting have been additional problems.  The budget is largely ignored once passed. If the board wants to do something, it votes for it, whether there is money available or not. If the Executive Director wants to cut a deal with someone, or wants to hire new staff, they just do it, regardless of budget. There is simply no reliable financial oversight. The USCF must learn to ground and manage its budget and reporting processes in reality.

 

Lack of Accountability

 

For more than a decade now the Executive Director or their equivalent has ignored the direction of the board. We have been unable to put in place an Executive Director who will obey board financial or program directives. We have also had Presidents who have ignored such directives. The Board of Delegates and Executive Board also have ignored the direction of the membership or had their own agendas. No one has been held accountable to produce results on behalf of the organization. Special interests and secrecy have been major organizational issues. Organizational accountability must be improved.

 

Generating Energy for Transformation

 

Focus on Core Mission and Strengths

 

Program decisions need to be based on a strategy platform that focuses the mission on outcomes. Understanding exactly where the money comes from and where the money goes for each core program is essential to keep the mission and associated outcomes on track. By identifying program costs, we will be in a better position to determine which activities deserve our time and attention. We must tighten our focus on core activities that are central to our mission and do them as well as possible -- quality is what will matter in our services and programs. Now is the time to prioritize and scale back our activities to focus on core items such as the Chess Trust, ratings/rules infrastructure, the magazine/web information, and chess governance. From there we should rebuild our services consistent with the mission and consistent with what you the membership feels is of value. Membership dues should address core programs and all other activities/services should be self supporting and fee based. Dues and membership benefits need to be right sized accordingly. We must also maintain a balanced budget while accomplishing mission results. Thus, we need to take a hard look at our revenue and expenses and at this point plan for the most likely and worst-case scenarios for our organization, and develop strategies to deal with each one.

 

Communicate Clearly, Honestly and Regularly

 

To manage speculation or fear of the future, we must communicate both formally and informally with the membership on a regular basis about what's happening with the organization, and keep the lines of communications open with the members. Better disclosure of corporate information will help with this communication. Communications must be a two way street. Far too often, we think we know what our membership thinks and needs. Businesses such as ours can't be successful if they don't continue to meet the real needs of their membership. There should be few activities as important as finding out what the membership thinks and wants for outcomes, products, and services as well as finding out what they think of ours. Fortunately, there are a variety of practical methods that organizations can use to gain feedback from its membership.

 

Engage and Tap Skills for the Organization

 

Board improvement is important. Board members must always place the USCF needs first and not have their interests divided with those of other organizations.Every board must be willing to accept and even thrive on change. Self-assessment, new perspectives, and different ideas keep the board and organization moving forward. All boards need to select members with the skills and aptitude that meet the organizationís needs. We must look for ways to increase the skills of our current board or make changes in board membership so that we have the right sets of skills and commitment required for todayís uncertain environment. Board skills that are even more critical in these times include financial management, fund raising, information technology, and communication. We also need to better engage the talents within the federation to help the board with all the work that needs to be done. Rather than using board committees as dumping grounds we must reengineer, empower, and challenge our committees to meet objectives and produce results required by the board. Effort must be expended by the USCF to solicit the help of the membership. The organization must be more open, inclusive, and results oriented if it is to regain the trust of the membership. Along with earned trust will come new blood and participation.

 

One of the key duties of a board is to hire a competent and professional chief executive to run daily operations. Part of this duty assumes that there is a valid job description and a performance evaluation process in place. The board's role is to oversee that the organization is well run; not to interfere in the domain of the chief executive. The chief executives performance affects the performance of the entire organization. Clear objectives and limitations combined with regular evaluation of the chief executives performance is important to produce useful results and to improve organizational performance.

 

Renew the Strategic Plan

 

Strategic planning is an important management tool. As with any management tool, it is used for one purpose only: to help an organization do a better job - to focus its energy, to ensure that members of the organization are working toward the same goals, to assess and adjust the organization's direction in response to a changing environment. In short, strategic planning is a disciplined effort to produce fundamental decisions and actions that shape and guide what an organization is, what it does, and why it does it, with a focus on the future. Any merger considerations must be part of this planning process to properly determine that it is the right solution for the organizationís restructuring needs. We must reassess and develop an organizational strategy that everyone understands. We need to balance short-term and long-term planning, so that the organization can respond quickly to this month's challenge while still keeping your eye on the future. Every organization has competitors, including not-for-profits. They compete for donations and grant funding, skilled personnel, and for market share with the products and services they provide. In order to be successful, they must provide services that are in demand at a price that allows the organization to sustain its mission-driven operations. We need to clearly establish the goals and vision for our future.

 

Closing the Gap

 

We must be able to create new meaning for our organization. An important component of this task is to articulate a new strategic intent for the business, one that explicitly connects important membership needs with the core competencies of the corporation. We must ground the new vision in a business success model that tests its assumptions and provides metrics to gauge progress toward it. Then we must facilitate an honest assessment of the capability of the organization to renew itself. Nothing less than an examination of the total system will suffice. No sacred cows can be allowed to graze undisturbed. From this process, the major gaps separating the current organization from the desired organization and our future vision must be identified and prioritized. Only then will we be in a position to distill a limited set of corporation-wide trans≠formation initiatives that are needed to focus the organization and define the new critical path for our success. To jumpstart the process our first small steps must be to focus on core mission and strengths; communicate clearly, honestly and regularly; engage and tap skills for the organization; and renew the strategic plan. At this point we should be able to begin our transformational journey.

 

Your Vote Can Make a Difference

 

Well meaning as they may have been, your leadership has let you down in the past and there was little you could do about that except leave the organization. Now you have the opportunity to vote and make a difference. Iíd like to be part of that difference. Iím an independent business professional and feel I can bring something useful to the USCF. I hope you do too. Whether you are interested in having me represent you on the board or not, I encourage you to vote. Together I believe we can create a better USCF.