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MANAGING BUSINESS

MEMBERSHIP

ORGANISATIONS

– A Manual for Trainers –

Bonn 2012

Managing Business Membership Organisations A Manual for Trainers

This trainer manual was developed by:

Alexanderstr. 10, D-53111 Bonn Tel: +49 (0) 228 98238 – 0 E-Mail: [email protected] Internet: www.sequa.de

Authors: Rolf Speit, Consultant Jürgen Henkel, sequa GmbH

Layout: U. Tenhagen, sequa gGmbH

Manual on Management of Business Membership Organisations

Table of Contents

LIST OF ACRONYMS 1

1 INTRODUCTION INTO THE MANUAL 2

2 TRAINING PROGRAMME 4

2.1 Schedule of the Entire Training Course 4

2.2 Module 0: Basic Module 9

2.2.1 Rational and Introduction into Basic Module 0 9

2.2.2 Training Contents of Module 0: Basic Module 12

Training Schedule of Module 0 12

Session 0.1: Introduction into the training 13 A Overview 13 B Trainer instructions 14 C Background Readings 15 D Charts 27 E Handouts 30

Session 0.2: Leadership and Governance of BMOs 31 A Overview 31 B Trainer Instructions 32 C Background Readings 33 D Charts 39 E Handouts 47

Session 0.3: Assessment of BMO Management 48 A Overview 48 B Trainer Instructions 49 C Background Readings 50 D Charts 66 E Handouts 78

Session 0.4: Evaluation and Closure of Basic Module 79 A Overview 79 B Trainer instructions 80 C Background Readings 81 D Charts 81 E Handout: Evaluation sheet for participants 82

2.3 Module 1: Organisational Set-up 83

2.3.1 Rationale and Introduction into Module 1 83

2.3.2 Training Contents of Module 1: Organisational set-up 84


Session 1.1: Legal Setting 85 A Overview 85 B Trainer Instructions 86 C Background Readings 87 D Charts 114 E Handouts 120

Session 1.2: Organisational Structure and Behaviour 121 A Overview 121 B Trainer Instructions 122 C Background Readings 124 D Charts 130 E Handouts 146


2.4 Module 2: Human Resource Management 147

2.4.1 Rationale and Introduction into Module 2 147

2.4.2 Training Contents of Module 2: Human Resource Management 148


Session 2.1: Introduction into Human Resource Management 149 A Overview 149 B Trainer Instructions 150 C Background Readings 152 D Charts 154 E Handouts 160

Session 2.2: Aspects of Human Resource Management in BMOs 161 A Overview 161 B Trainer Instructions 162 C Background Readings 164 D Charts 168 E Handouts 175

Session 2.3: Staff Motivation 176 A Overview 176 B Trainer Instructions 177 C Background Readings 179 D Charts 183 E Handouts 189

2.5 Module 3: Internal and External Communication Error! Bookmark not defined.

2.5.1 Rationale and Introduction into Module 3 Error! Bookmark not defined.

2.5.2 Training Contents of Module 3: Internal and External CommunicationError! Bookmark not defined.

Training Schedule of Module 3 Error! Bookmark not defined.

Session 3.1: Introduction into Communication Error! Bookmark not defined. A Overview Error! Bookmark not defined. B Trainer Instructions Error! Bookmark not defined. C Background Readings Error! Bookmark not defined. D Charts Error! Bookmark not defined. E Handouts Error! Bookmark not defined.

Session 3.2: Internal Communication Error! Bookmark not defined. A Overview Error! Bookmark not defined. B Trainer Instructions Error! Bookmark not defined. C Background Readings Error! Bookmark not defined. D Charts Error! Bookmark not defined. E Handouts Error! Bookmark not defined.

Session 3.3: External Communication Error! Bookmark not defined. A Overview Error! Bookmark not defined. B Trainer Instructions Error! Bookmark not defined. C Background Readings Error! Bookmark not defined. D Charts Error! Bookmark not defined. E Handouts Error! Bookmark not defined.

2.6 Module 4: Financial Management Error! Bookmark not defined.


2.6.2 Training Contents of Module 4: Financial Management Error! Bookmark not defined.


Session 4.1: Strategic Objectives and Revenue Sources Error! Bookmark not defined.

A Overview Error! Bookmark not defined. B Trainer Instructions Error! Bookmark not defined. C Background Readings Error! Bookmark not defined.


D Charts Error! Bookmark not defined. E Handouts Error! Bookmark not defined.

Session 4.2: Expenditure controls and financial analysisError! Bookmark not defined.

A Overview Error! Bookmark not defined. B Trainer Instructions Error! Bookmark not defined. C Background Readings Error! Bookmark not defined. D Charts Error! Bookmark not defined. E Handouts Error! Bookmark not defined.

2.7 Module 5: Membership Development and Administration Error! Bookmark not defined.


2.7.2 Training Contents of Module 5: Membership Development and Administration Error! Bookmark not defined.


Session 5.1: Strategic Issues in Membership DevelopmentError! Bookmark not defined.

A Overview Error! Bookmark not defined. B Trainer Instructions Error! Bookmark not defined. C Background Readings Error! Bookmark not defined. D Charts Error! Bookmark not defined. E Handouts Error! Bookmark not defined.

Session 5.2: Membership Dues Error! Bookmark not defined. A Overview Error! Bookmark not defined. B Trainer Instructions Error! Bookmark not defined. C Background Readings Error! Bookmark not defined. D Charts Error! Bookmark not defined. E Handouts Error! Bookmark not defined.

Session 5.3: Membership Development and Administration Error! Bookmark not defined.

A Overview Error! Bookmark not defined. B Trainer Instructions Error! Bookmark not defined. C Charts Error! Bookmark not defined. D Handouts Error! Bookmark not defined.

2.8 Module 6: Planning, Monitoring and Evaluation Error! Bookmark not defined.


2.8.2 Training Contents of Module 6: Planning, Monitoring and Evaluation Error! Bookmark not defined.


Session 6.1: Strategic Planning Error! Bookmark not defined. A Overview Error! Bookmark not defined. B Trainer Instructions Error! Bookmark not defined. C Background Readings Error! Bookmark not defined. D Charts Error! Bookmark not defined. E Handouts Error! Bookmark not defined.

Session 6.2: Annual Planning Error! Bookmark not defined. A Overview Error! Bookmark not defined. B Trainer Instructions Error! Bookmark not defined. C Background Readings Error! Bookmark not defined. D Charts Error! Bookmark not defined. E Handouts Error! Bookmark not defined.

Session 6.3: Monitoring and Evaluation Error! Bookmark not defined. A Overview Error! Bookmark not defined. B Trainer Instructions Error! Bookmark not defined. C Background Readings Error! Bookmark not defined.


D Charts Error! Bookmark not defined. E Handouts Error! Bookmark not defined.


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LIST OF ACRONYMS

ACCI Afghanistan Chamber of Commerce and Industry

AGI Association of Ghana Industries

AGM Annual General Meeting

BCC British Chambers of Commerce

BDI Bundesverband der Deutschen Industrie

BDS Business Development Services

BMO Business Membership Organisation

CAF Charities Aid Foundation

CD Capacity Development

CEO Chief Executive Officer

CFIF Cebu Furniture Industries Foundation

CIM Corporate Identity Management

FCRA Foreign Contribution Regulation Act

FIEPE Federação da Indústria do Estrado de Pernambuco

GSWF Ghana Sovereign Wealth Fund

GTZ Deutsche Gesellschaft für Technische Zusammenarbeit

HRD Human Resource Development

HRM Human Resource Management

IFC International Finance Corporation

ILO International Labour Office

ITC International Trade Centre

M&E Monitoring and Evaluation

MSME Micro, Small and Medium Enterprises

NGO Non-Governmental Organisation

NPO Non-Profit Organisation

PR Public Relations

SME Small and Medium Enterprises

SWOT Strengths, Weaknesses, Opportunities, Threats

UNIDO United Nations Industrial Organisation

US United States

ZDH Zentralverband des Deutschen Handwerks


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1 INTRODUCTION INTO THE MANUAL Background This trainer manual was developed by sequa gGmbH within the project ‘Capacity Development of Business Membership Organisations in India’ which is part of the MSME Umbrella Programme implemented by GIZ (German Society for International Cooperation) in India. The term “Business Membership Organisations” (BMOs) refers to various organisations where companies or individual entrepreneurs and sometimes other business organisations are members. BMOs advocate the interests of their members and respond to their needs by delivering required services and information. A general distinction is to be made between business associations and chambers. Worldwide there are different types of associations:

Trade or industry associations (in many cases referring to one industrial sector or cluster)

Small Scale enterprises’ associations

Business Women’s organisations

Industrial estate associations

Employers’ associations

Apex bodies / Federations (formed by other BMOs at lower administrative levels)

Beside the associations most of the countries have chambers of commerce and industry representing the business communities in a district or region (and sometimes of sectors, too). India and other countries follow the tradition of British economic policy where chambers can be established under private law while in several European countries like Germany, Austria, Italy, France and Spain chambers have a public law status with obligatory membership of companies. These countries do also have chambers for various sectors and professions like skilled crafts, agriculture as well as for lawyers, doctors, architects and other occupations. Objective, scope and target groups The objective of this manual is to support and guide trainers in providing management training to BMO representatives in management positions being Presidents, office bearers, committee members and administrative staff like General Secretaries and department leaders (if any in a BMO). The training material can basically be used for all BMOs but the main target group in India are leading representatives of BMO and here especially of industrial associations on district level. This training manual was developed to improve the availability and quality of didactic material on delivery of new services by BMOs in different countries. The manual is meant to be used as a guide and source book to implement training programs providing theoretical and practical knowledge how to develop and implement appropriate management tools in a BMO. It provides practical assistance and valuable inputs for implementing training workshops and seminars. And it conveys theoretical and practical knowledge on how to provide for a good management in BMOs. The manual contains the structure and content of various half-day up to one-day trainings providing trainer instructions, materials and background readings for its preparation. Some previous publications have addressed the topic of management of associations and chambers in a rather general or abstract manner. However, the core challenge for the BMOs lies in finding ways to translate a theoretical management concept into concrete steps of building up an internal structure which will contribute in the best way to provide the services which the member enterprises demand.


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This manual has thus been conceived as a practical working aid covering different approaches and instruments of BMO management like organisation, internal and external communication, financial management and membership development. Not every recommendation will be applicable to every BMO. National or organisational differences, especially with regard to the specific stage of a BMO’s development, will always have some bearing on the concrete form in which management is provided and the process by which it is introduced. Similarly, the proposals made for solving the problems most commonly encountered in management, will not lead to a clean sweep of every single problem. However, they have been tried and proven in practice, as have all other recommendations made in this manual. How to use this manual The manual consists of two parts. In this introductory part basic information on objectives, approach and the importance of management in BMOs is given. The second part of the manual starts with a half-day basic training module on BMO management introducing into the whole topic and dealing with fundamental questions on leadership and governance and on ways of assessing the management of associations/chambers. This basic module is followed by six training modules on specific management topics each lasting half or one full day. The structure is visualised in the following illustration.

BMO Management: Basic Training Module (1/2 day)

Specific management trainings (half to one day)

Organisational

Set-up

Human

Resource

Management

Internal and

External

Communication

Financial

Management

Membership

Development

and

Administration

Planning,

Monitoring

and

Evaluation

All participants should first attend the basic training module on BMO management before attending one of the training modules dedicated to a specific management topic. The trainings on individual management aspects can be conducted and attended independently one from the other. They are designed as separate modules and contain all necessary descriptions and materials that are required. The structure of all modules is always the same so it will be easy for a trainer to make use of the manual and to get prepared. Further explanations and information you’ll find in the second part of the manual, especially in the basic training module and in the introduction to the specific training modules.


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2 TRAINING PROGRAMME

2.1 Schedule of the Entire Training Course

Module 0 (Basic Module)

Session Topics Duration Proposed time

Session 0.1: Introduction into the training

Presenting programme, topics, methodological approach, participants and trainer

45 min. 16.00 – 16.45 h

Session 0.2: Leadership and Governance of BMOs

1. Typical problems: the vicious circle of poor BMO management

2. Purpose, vision, mission and values of a BMO

3. Requirements for good governance

90 min. 16.45 – 18.15 h

Coffee / tea break 30 min. 18.15 – 18.45 h

Session 0.3: Assessment of BMO management

1. Various levels of BMO development

2. Rating and benchmarking of BMOs 3. Success factors for BMO

management and possible actions for improved performance

90 min. 18.45 – 20.15 h

Session 0.4: Evaluation and Closure of Basic Module

1. Wrap up 2. Feedback from participants 3. Official closing

30 min. 20.15 – 20.45 h

Total duration: 4 hours, 45 min.

Module 1: Organisational Set-up


Session 1.1: Legal setting

1. Legal forms of non-profit organisations

2. The object of societies and section 25 companies

3. Some legal requirements of societies and section 25 companies

1 hour 35 min.

16.00 – 17.35 h

Coffee / tea break 15 min. 17.35 - 17.50 h

Session 1.2: Organisational structure and behaviour

1. Structure of a BMO (statutory organs)

2. Relationship and behaviour of key organs within a BMO

3. Challenges in the proper functioning of BMOs and ways of addressing them

3 hours 15 min.

17.50 – 21.05 h

Closing Workshop summary and evaluation 10 min. 21.05 – 21.15 h



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Module 2: Human Resource Management

Session Topics Duration

Session 2.1:

Introduction into Human Resource Management

1. Definition of Human Resource Management (HRM)

2. Definition of Human Resource Development (HRD)

3. Objectives of Human Resource Management for BMOs

1 hour 25 min.

16.00 – 17.25 h

Session 2.2:

Aspects of Human Resource Management in BMOs

1. Personnel policy 2. Recruitment 3. Communication 4. Performance management 5. Challenges in HRM and how to

address them

2 hours 10 min.

17.25 – 19.35


Session 2.3:

Staff motivation

1. The challenge 2. Non-financial ways of staff

motivation in BMOs 3. The Performance Pyramid

1 hour 40 min.

19.50 – 21.30 h

Closing Workshop summary and evaluation 10 min 21.30 – 21.40 h


Module 3: Internal and External Communication

Day 1


Session 3.1:

Introduction into Communication

1. The sender – receiver model 2. The perils of miscommunication

1 hour 5 min.

16.00 – 17.05 h

Session 3.2:

Internal Communication

1. Objectives of internal communication

2. Tools for internal communication

25 min. 17.05 – 17.30


1. Communication flow 2. Challenges in internal communi-

cation and how to address them

1 hour 50 min.

17.45 – 19.35 h


Session 3.3:

External Communication

1. Objectives of external communication

2. Target groups of external communication

50 min. 19.50 - 20.40 h


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Module 3: Internal and External Communication

Day 2

Session 3.3:

External Communication (continued from day 1)

1. Corporate identity 1 hour 45 min.

16.00 – 17.45 h


1. Some tools for external communication (websites, press releases, policy papers)

2 hours 15 min.

18.00 – 20.15 h



Module 4: Financial management


Session 4.1:

Strategic objectives of financial management and revenue sources

1. Financial sustainability as objective of financial management.

2. Strategic options for balancing the financial situation of a BMO.

3. Financial restructuring of a BMO – an example from the Philippines.

4. Revenue sources. 5. Exercise on the financial situation

of the participating BMOs.

2 hours 40 min.

16.00 – 18.40 h

Coffee / tea +break 15 min. 18.40 - 18.55 h

Session 4.2:

Expenditure controls and financial analysis

1. Budgeting. 2. Assigning responsibilities in

financial matters. 3. Cash flow. 4. Income statement. 5. Balance sheets. 6. Exercise on financial analysis.

2 hours 50 min.

18.55 – 21.45 h




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Module 5: Membership development and administration

Day 1


Session 5.1:

Strategic issues in membership development

1. The importance of membership 2. Expectations towards membership

and types of expectation 3. Exercise on membership profiling

2 hours 10 min.

16.00 – 18.10 h


Session 5.2:

Membership dues

1. International experiences in the payment of membership dues

2. Hints for membership fee policy and administration

2 hours 15 min.

18.25 – 20.40 h

Day 2

Session 5.3:

Membership development and administration

1. Factors influencing membership 2. What membership development

and administration are dealing with

3. Tools for attracting and retaining members

1 hour 15 min.

16.00 – 17.15 h


1. Tools for attracting and retaining members in more detail

2 hours 25 min.

17.30 – 19.55 h




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Module 6: Planning, monitoring and evaluation

Day 1


Session 6.1:

Strategic planning

2. The importance of planning 3. Definitions 4. Steps in strategic planning (steps

1 and 2)

2 hours 16.00 – 18.00 h


Day 2


Session 6.1:

Strategic planning (contd.)

1. Steps in strategic planning (step 4 to 6, starting with group work)

2. Steps in strategic planning (steps 7-8)

1 hour 50 min.

16.00 – 17.50 h


Session 6.2:

Annual planning

1. Objectives of annual planning. 2. Steps in annual planning. 3. Responsibilities in annual

planning. 4. The format of an annual/action

plan. 5. A few hints for annual planning.

40 min. 18.05 – 18.45 h

Session 6.3:

Monitoring and Evaluation

1. Objectives of monitoring & evaluation.

2. Monitoring & evaluation in BMOs. 3. Indicators as performance

measurement tools.

2 hours 18.45 – 20.45 h




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2.2 Module 0: Basic Module

2.2.1 Rational and Introduction into Basic Module 0 Contents and structure of the Manual on BMO management training This trainer manual is dealing with crucial topics of management in general and of the management of Business Membership Organisations (BMOs) in particular:

- Organisational Set-up

- Human Resource Management (HR Management)

- Internal and External Communication

- Financial Management

- Membership Development and Administration

- Planning, Monitoring and Evaluation

All these topics are worked out in individual training modules (1-6) in order to provide in-depth knowledge and instructions for trainers about the details of these BMO management items. This happens in courses of a duration between one and two training days. In contrast and in completion to these training units, the Basic Module (Module 0) picks out some highlights and cross-cutting issues of BMO management which are often recognized as typical problems and challenges of BMOs worldwide, especially of BMOs in developing countries. The Basic Module with a time volume of nearly five hours is considered as a starting point for BMO representatives in management positions and is especially addressed to persons in top positions of BMOs like Presidents, other office bearers and leading administrative staff like Secretary Generals who might have particular time constraints and not need training in quite special fields, such as human resources management and financial management. The trainings of the modules 0 – 6 can be conducted and attended independently one from the other. They are designed as separate units and contain all necessary descriptions and materials. The structure of all the modules is identical; hence it will be easy for trainers to use the manual and to get prepared on the training courses. The structure is as follows: Each module comprises the following parts:

1. Rationale and Introduction into the Module and

2. Training Program Each training program starts with a training schedule followed by various sessions each of them dealing with a sub-topic of the module subject. The training schedule gives an overview on the number of sessions forming the training module, their sequence, main topics to be dealt with, the duration of the sessions and the proposed time. If a training is scheduled for half a day, it can be run in the morning or the evening, depending on local preferences. The training schedule helps the trainer to better imagine the course of the module and the areas covered. Each training session is divided into the chapters

A. Overview

B. Trainer Instructions

C. Background Readings

D. Charts

E. Handouts


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Session overview

The 1-page summary sheet gives information on the time needed for that particular session, a brief overview on the basic content of the session and the methods to be applied, defines the learning objectives for the participants and finally enumerates the materials required to run the session.

Trainer instructions

These instructions are the screenplay of each session and give the trainer detailed information on each step of moderating and organising the course. This information is complemented by a time frame for each step and the written material to be used, whether being trainer’s reading, charts or handouts.

Written Materials

There are 3 types of written materials:

Trainer’s readings give background and further information on contents of the session to be moderated. They have been elaborated to support the trainers in their preparation before the workshop. They give theoretical and practical information on the most important topics covered by the different sessions.

Charts are slides to be presented with a projector in order to visualise the most important points during each session. They are meant to facilitate the participants’ learning process and the discussion with the group.

Handouts are a means to retain learning. Thus, important charts, tools to be used or parts of trainer’s reading are distributed as handouts to course participants. In some cases the handouts are utilised during the training session, in other cases they are taken home to be used in participants’ working places.

Interlinkage with other BMO training topics It is evident that the training manual on BMO management has linkages to existing or planned training materials focusing on other BMO topics. The knowledge about this might help BMO representatives to form training packages consisting of various training courses and which can be combined in order to achieve the highest possible progress in the development of a BMO. Except the topic of BMO management, the available or planned training materials are referring to the following broad topics: Income generating services of BMOs Advocacy Making public support schemes accessible for MSMEs (through BMOs) Promotion of responsible business behaviour Basically the above-mentioned topics can all be looked upon as services which the BMOs provide for their member companies although they are services of different types. BMO management, in contrast, is dealing with organisation and processes within a BMO. A good management set up of a BMO is an indispensable requirement for a purposeful and effective service delivery. Therefore, every BMO planning to introduce a new service or expand an already existing one should check whether it has the necessary management resources and capacities to do so. If this is not or not sufficiently the case, or if it is doubtful that the BMO has the required set up in terms of organisation, human resources, communication procedures etc. then it might first start with a management training before it starts a training on service delivery; or it might send some of its representatives to a course in BMO management in addition to staff training in the delivery of a specific service. Some examples for this can make the interlinkage between different training aspects clearer:

- Appropriate human resource management in a BMO is an indispensable precondition for a purposeful service delivery to MSME. Therefore, the training on how to establish a new service in a BMO (income generating or other) must always include the question about the skills required in the BMO for the new service. The visit of a human resource management course might complement the training on any new service or already existing services for which an expansion is considered.


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- Communication as a management topic is clearly linked to the advocacy function of a BMO. Good PR work of a BMO based on appropriate internal and external communication is normally needed for providing effective advocacy in favour of the BMO’s member enterprises. So, the advocacy training of BMO representatives should consider this relationship to communication as a management requirement and a potential training topic.

- Financial management includes the requirement of income generation for a BMO. So it is evident that training on income generating services needs to cover questions of financial management such as calculating expenses and revenues of individual services such as business consultancy and training. Identifying sources of income for cost covering, especially appropriate service fees, form a crucial aspect of any BMO which intends to grow.

- Strategic planning is an important tool for defining a BMO’s future development. It makes it clear where a BMO pretends to stand in, for instance, five years and which service portfolio should be available then. Therefore, the training on delivery of income creating services, strengthening of advocacy work, access to public support schemes and responsible business behaviour requires the development of the BMO’s vision, mission and strategic targets. At least, any BMO should have decided which services it wants to develop in the medium run. If such a decision has not yet been taken then it might be advisable to attend a training in strategic planning first.


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2.2.2 Training Contents of Module 0: Basic Module

Training Schedule of Module 0


Session 0.1:

Introduction into the training


45 min. 16.00 – 16.45 h

Session 0.2:

Leadership and Governance of BMOs




90 min. 16.45 – 18.15 h


Session 0.3:

Assessment of BMO management


2. Rating and benchmarking of BMOs

3. Success factors for BMO management and possible actions for improved performance

90 min. 18.45 – 20.15 h

Session 0.4:

Evaluation and Closure of Basic Module

1. Wrap up 2. Feedback from participants 3. Official closing

30 min. 20.15 – 20.45 h

Closing Workshop summary and evaluation


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Session 0.1: Introduction into the training

A Overview Time: 40 min.

Overview: After introduction of the trainer by himself/herself or a person of the host organisation, the participants introduce themselves. The trainer presents the entire training programme and explains the difference between the Basic Module (0) which is focusing on highlights and cross-cutting issues of BMO management and the more specific sub-topics in this field presented in the modules 1-6. The participants are informed that the Basic Module is especially helpful for persons in top positions of BMO management like presidents, other board members and leading administrative staff like Secretary Generals. At the same time, it is a starting tool for all those BMO representatives wanting to receive more in-depth knowledge about various specific management subjects in detail. The trainer explains that all the training modules (0-6) are complementing each other, but that training can happen in each of them independently from the others. He/she also shows the linkages of training courses about various aspects of BMO management with other training areas of BMO work, especially income generating services and advocacy.

Learning objectives:

- Participants are familiar with programme and concept of the training

- Participants have understood purpose and modular sequence of the training with main areas to be dealt with in this basic part of the training.

- Participants have got an impression on how the training in BMO management is linked to other crucial aspects of BMO work.

Materials required:

Background readings Charts Handouts Pin-Board (or brown paper) Felt markers Projector

Manual on Management of Business Membership Organizations

14

B Trainer instructions

Session 0.1: Introduction into the Training

Time Steps Methodology Materials

5 min. 1. Welcome Open the workshop with some introductory remarks. Welcome everyone also on behalf of local host. Introduce yourself as a trainer.

15 min. 2. Introduction of persons

Briefly describe your background and experiences.

Let the participants introduce themselves and ask them to write their names, organisations and positions on cardboard cards (in big letters, three lines, one card per person only) and to put these cards on a pin-board (or on a big brown paper sheet).

Pin-board or brown paper

25 min. 3. Introduction into training contents and program

Give explanations on the topic of BMO management and present the complete training program by presenting chart 0.1.

Explain the difference between the topics of the Basic Module and the more specific sub-topics of BMO management according to chart 0.2.

Inform the participants that the training modules 0-6 form a package but that each of them can also be trained independently from the others.

Make clear that the BMO management training has linkages to other training parts of BMO work, especially income generating services and advocacy.

Chart 0.1.1 Background reading 1 Chart 0.1.2 Background reading 2


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C Background Readings

Background Reading 1 of Session 0.1: UNIDO – BMO Toolbox. Tools and Materials for Enhancing Business Membership Organisations (2008), p. 21 – 27 Management of BMOs

Management is the link between structure and achievement of objectives. It is not sufficient for a BMO to establish an effective organisational structure and to draw up a comprehensive and practical work plan. The BMO needs management in order to really achieve what has been planned. This section deals with the management of BMOs. It raises the issue of organizing and developing their financial and personnel resources.

The first sub-chapter will introduce various possibilities of improving knowledge, motivation and performance of BMO staff as well as board members. The second sub-chapter will highlight the importance of communication as an instrument for successful management. The third sub-chapter concentrates on the financial resources that are needed for the BMO’s operations. Finally, the fourth sub-chapter highlights the issue of membership development as a crucial challenge for all BMOs. [2.3.1 Human Resource Development] [2.3.2 Internal and External Communication] [2.3.3 Income and Financial Management] [2.3.4 Membership Development] Human Resource Development

The performance of BMOs is determined by the performance of its players. These are both, BMO leaders as well as BMO staff. Investment in these players to improve their knowledge and motivation is a decisive factor for BMOs to become more professional and successful. Therefore, Human Resource Development for staff and BMO leaders should be an important element of any organisational development. There are different ways to make progress in Human Resource Development for BMOs a) Exchange with other BMOs.

Elected BMO leaders are usually in business and they travel. In this connection they will often have (or could have) meetings with other BMOs in their home country and abroad. They can thus provide their BMO with examples of how other BMOs function. The Board (best together with the Secretariat) can easily prepare a list of ‘want-to-know issues’ which the travellers can take along and respond to after their return, in writing or verbally (e.g. during the next Board/staff meeting).

Staff exchange with other BMOs is also a valuable tool that can be arranged with other BMOs at home or abroad. b) Introduction for new Board members

New Board members may have no previous experience of BMO work. In order to speed up their learning curve, BMOs should develop introduction folders (to be distributed to newcomers) containing e.g. BMO statutes, vision/mission statements, work plans, budgets, introduction papers to the Secretariat, etc. A half-day (or longer)

http://en.wikipedia.org/wiki/Organizing


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induction workshop (possibly linked with a golf tournament or other teambuilding event) is another method of getting new Board members ready for work. c) Introduction for new staff

Brief instruction sessions with relevant background information for new staff should be arranged. Furthermore, new staff will need a one-to-one introduction and systematic coaching for some time. d) Training workshops for staff and Board members

Donors conduct a number of chamber management workshops, which BMOs should look out for (in-country and abroad). They are open for Board members, Secretary General or Secretariat staff. BMOs should use these workshops as an opportunity to generate ideas for improvement and change. However, this will only work if participants get the opportunity to share their new knowledge and ideas with the BMO: Have a breakfast meeting for this!

A BMO can also organise its own training workshop for staff and/or Board development. The materials of this Tool Box can easily be used as background for such a workshop. It is even possible to organise such a training workshop together with other BMOs from the ‘neighbourhood’. e) Background Materials

Libraries should contain not only material of value for members, but also for BMO staff and elected officers. The publications mentioned in the Supporting Reference Section of this Tool Box, should have a prominent place in BMO libraries. Knowledge of some BMO publications could be made a precondition for promotion of staff. f) Job descriptions and incentives

Job descriptions are important instruments for staff development, particularly when they include quality requirements. They should be reviewed and adjusted to the actual work of the BMO regularly. Job descriptions also serve as a basis for assessing performance and deciding on incentives.

Generally, BMOs have to become more innovative in creating incentives. They increase loyalty and productivity. Staff incentives can be: promotion to a higher position, a salary increase, a bonus for good work in cash or kind (e.g. to accompany a trade delegation to a foreign country), a nomination (e.g. best staff of BMO in 2007) or even a training course.

Job rotation within the BMO is another instrument to increase productivity and motivation of new and existing staff. g) Staff Evaluation/Assessment

Normally, the person supervising an employee should assess his/her performance. The assessment should include work performance and general qualities and use a numerical grading system to arrive at objective results. It is often the case that employees rate themselves better than their superiors do. Assessments therefore have to be conducted tactfully.

Staff assessments should be conducted at least once a year. A very positive assessment could/should be followed by incentives, so as to reward the efforts of the staff to serve the BMO well. A negative assessment should be accompanied by specific advice on how performance can be improved. The results of assessments


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must be kept confidential by the BMO, they must be revealed only to the employee and must be signed by him/her. If the employee strongly opposes to accepting the final assessment score, a review by a higher superior can be made possible. There are many assessment forms that can be used. One example is given in [Manual on Organizing….] p.80. Internal and external Communication

There are various types of communication: external and internal. Further there is top-down, bottom-up, horizontal, and two-way communication. In addition, communication can be informal or formal. There are four basic rules for effective communication:

Precisely know/define the message you want to communicate

Express the message in terms easily understood by the target group or person and generally acceptable (mind cultural differences!)

Choose the best means of communication (verbal, written, etc.)

Choose the best channel (circular, meeting, advertising, etc.) for the message

While top-down communication has its merits and advantages in internal communication, two-way communication involves members and staff more and is therefore often preferable. Meetings belong to the most prominent types of two-way communication in BMOs.

The following table gives an overview of typical problems and possible solutions with regard to the organisation and success of meetings in BMOs:

Problem Solution

Meeting objective(s) not clear to participants

Define specific objectives, prepare agenda, and circulate objectives.

Too many or too few participants for meaningful discussion

Take strategic decision on who should participate, inform the participants and organise decision making.

Lengthy, chaotic debate; too much time wasted

Select manageable number of topics and discuss these only, set specific objectives to be achieved, set timetable for each topic in advance and follow the plan, choose good facilitator.

Unclear results at the end of meeting Summarize results at the end of each topic’s discussion and at the end of the meeting.

No follow-up Prepare and distribute brief report on results of meeting, list follow-up actions and responsibilities that were discussed and decided. Monitor progress.

Also ensure that the meeting venue and the seating arrangements are conducive for discussion (round table better than classroom style; etc.).

Meeting reports are often too long and boring, often they are not prepared, or if, not read. A brief report would only contain: Date of meeting, objectives, participants (annex list circulated during the meeting), results, but not (!) proceedings. For further reading on communication see [IFC, Building the Capacity of Business Membership Organisations] p. 61-62 and [ILO, Governance of Employers’ Organisations] p. 29-31 and [ILO, The Effective Employers’ Organisation , Guides 1-4] p. 24.


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Income and Financial Management BMOs are non-profit organisations, but they have to cover their cost of operation. In general, sources of income for a BMO could be:

Membership fees

Rental fees or other business investments

Earnings from government programs, delegated functions, subsidies

Business services to members and non-members

Donations from members

Donor-funded support/projects

Earnings from social functions/events

The contribution to total income of each of the sources varies greatly from one BMO to another:

Small associations (particularly in developing countries) rely heavily on membership fees and donations.

A chamber in Bangalore/India generates most of its income from renting out chamber-owned buildings/offices that have been built with earlier member donations.

Chambers of the continental type draw a high percentage of their income from membership fees, because business enterprises must by law be chamber members, hence their membership is large and all have to pay membership fees.

Governments in many countries support BMOs, e.g. by providing them with rent-free buildings; in other countries, even staff salaries (or a portion thereof) are paid by the state.

Governments may also support BMO events, e.g. training of entrepreneurs. Government support for BMO programs is in most cases a result of good lobbying and of the quality of the BMO which strives for this support.

Governments can also delegate functions to BMOs which are income-generating, e.g. issue of Certificates of Origin, licenses, permits, testing certificates for materials, etc. Delegation of government functions to chambers is widely done in countries which have continental type of chambers.

A high income from services is not easy to achieve, because BMOs have to compete with other business support providers (among them private enterprises) on the market.

A chamber in Thailand derives its main income from organizing an annual football cup event. Other BMOs earn from golf tournaments. Both activities may be good as crowd draws and money earners but are not compatible with the main mission of a BMO: to support business enterprises. From this angle, earning income by conducting commercial fairs is a better alternative.

Some BMOs hesitate to charge members for BMO services (at all or above cost), because their understanding of BMO principles forbids ‘profit making’. This attitude keeps BMOs chained to low income and donations, which are not a reliable source of income and which may come with ‘conditions’. Government subsidies may also be given only to ‘well- behaving’ BMOs.


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More Entrepreneurs join

Many BMO members

Great attractiveness to entrepreneurs

Strong Advocacy Good Services

More members pay their membership dues

More resources to develop better Advocacy and Services

The only solution for BMOs to grow beyond the threshold of membership fee income without strings attached and within their vision is to develop business services which earn an income higher than the cost of these activities. When BMOs conduct income-generating activities, they will remain non-profit organisations because their aim will remain to be non-profit. A surplus income from services is meant to cover the costs of the BMO’s operations and not to generate a profit for its members. For more information on income generation see [SEQUA, Guiding Business Membership Organisations] p. 22. Furthermore, for the issue of how to earn an income from business services see [Chapter 3].

Financial Management of BMOs includes forward planning of expected income and expenditure, budgeting, as well as cash flow calculation, accounting of actual income and expenditure, preparing statements of accounts (e.g. on income, profit and loss, etc.) and balance sheets.

The actual bookkeeping and accounting of BMOs will depend on the regulations of the relevant country and for the relevant type of BMO (e.g. different for a larger BMO than for a small association). The prevailing regulations in each country will prescribe the books and records that BMOs have to keep and provide rules for tax-acceptable vouchers and receipts, for inventory as well as for profit and loss account statements, balance sheets and audit procedures.

A necessity in financial management is cash flow planning which projects the amount of incoming and outgoing cash on a monthly or weekly basis, so that BMOs retain liquidity. For further reading on financial management of BMOs, see [ILO, Employers’ Organisations and the Promotion of SME] p. 10-12 and [SEQUA, Guiding Business Membership Organisations]p. 22-25.

Membership Development Members are the reason for a BMO to exist. More members mean more income and more political power for a BMO. Therefore, membership development should be a central issue for each BMO. This topic deals with the questions of how to gain new members, how to keep them, how to administer members, and how to structure membership fees.


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All issues of BMO management are interrelating; problems in membership development reinforce the quality of service and advocacy. Or to phrase it positively the graph below shows how a large number of members, good resources and strong advocacy as well as good services interrelate.

Membership recruitment is often left to the Membership Officer or to a special department of a BMO, which/who also handles membership administration. However, it should be remembered that membership development is a task for all BMO staff/leaders and departments. A visitor to a BMO who comes for an inquiry should be asked by any BMO person whom he/she meets (be it board or staff) whether the visitor would like to know more about the BMO and be given a brochure, if interested. A visitor should always be asked whether he/she might consider membership!

Board members should set examples in winning new members. A chamber Board in the Philippines has fixed annual target numbers for its Board members for winning new BMO members (highest target for the President!). Failure to achieve the target is fined (amount: one annual membership fee per number of failures). Some BMOs offer incentives to staff that refer new members (condition: new member must stay at least one year). In order to make membership attractive for new members BMOs can offer free, non-voting trial memberships or a discount rate for a certain period.

In order to develop an effective strategy to attract or retain members it is important to know why members leave or why non-members are not interested in joining. Undertake a survey or conduct a group discussion in order to learn about the reasons and find solutions to overcome obstacles.

Furthermore, you should put emphasis on the collection of data when members register. Complete data on members are a treasure trove for BMOs, as they are a basis for many business services (!). Specific data help to identify special needs of members and targets for services.

All efforts to win or keep members are in vain if the BMO does not have convincing services (including advocacy) and has no presence in the market and in public discussion on business issues. BMOs have to realize that they are in competition with many other institutions that may also offer strong business benefits (Clubs, Rotary/Lions, prestigious NGOs, political Parties, BDS providers, etc.). BMOs have to accept that membership development needs a permanent and more innovative approach and act accordingly.

There is a good publication on attracting new members and membership administration. You find it here: [SEQUA, Attracting New Members/Membership Administration]. It explains the importance of a growing membership for BMOs and provides several ways on how to increase membership. For retaining members you may refer to the checklist on p. 26 in [ILO, The Effective Employers’ Organisation, Guides 1-4].

One of the important reasons for discussions within BMOs about membership fees is that members are not clear about what services they can expect for their membership fees. Usually, members expect ‘free services’ to include simple information services, postage costs for circulars and other mail of the BMO, use of the


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web site of the respective BMO, use of the BMO library, standard entry into the BMO Directory, ordinary advocacy, possibly also a free copy of the BMO newsletter, etc.

A decision on fees and free services depends on the actual situation (financial position of BMO, fees/free services of competitors, etc.). Members must be informed which kind of free services they will get from their BMO. When the costs of free services are calculated or at least estimated, the result will help to define the amount of the membership fees to be charged (total cost of free services: number of members = …% of membership fee).

The following table gives an overview of typical problems and possible solutions with regard to the membership fees:

Problem Solution

Present membership fee is too low to finance free services.

Fast track: Reduce free services or raise membership fees. If necessary, subsidize free services from other income sources for a limited time. Long-term: increase membership fees annually, at least in line with inflation.

Is an admission / registration fee justified?

Yes, as registration of new members costs staff time and causes other cost (e.g. membership card, etc.). A new member will be ready to pay these fees as he is willing to join the BMO.

Should membership and registration fees be the same for all?

Not advisable. Larger enterprises can afford higher membership fees. For fee structure, use easily available criteria such as number of employees. Consider a bonus/discount for long-staying members.

Membership fees are paid late. Reminder process too costly.

Provide discount or other incentives for early payment. Limit payment intervals (e.g. twice a year only). Make payment easy (standing order for bank transfer). Limit no. of reminders and period for reminding. Stop services for non-paying members. Eliminate non-paying members from member list and directory.

Is a one-off payment for membership fee advisable?

Some BMO allow one-time payment of membership fee (usually charging 10, 15 or 20 years of annual fees). This should only be considered if a large amount of funds is needed, e.g. for construction of own building. Advantage: large amount at one time, no reminders in future. Disadvantage: no more fees from this member for a long time (in which present fees would rise).

Should a BMO only charge service fees, but cancel any membership fees?

Not advisable. Some services are difficult to charge for: e.g. advocacy, low level info service, etc. Without membership fee, no feeling of togetherness and belonging will develop within the BMO.

Should many different types of membership be introduced?

No. This increases administrative costs. All members should have the same rights. However, members can be classified by BMOs according to industrial branch, size, etc.. This facilitates communication, advocacy and service delivery. Members should be enterprises, not individuals.

Working Paper of sequa from ‘Capacity Development of BMO Project, India’: Guidelines for interlinking various BMO training modules, 2011 The purpose of this paper is to show how the different BMO training modules which are about to be developed in the CD of BMO project are linked to each other. The knowledge about this


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might help the project staff, intermediary organisations and Indian BMOs as target group to form whole training packages consisting of various training courses which have to be considered for the development of each BMO and which can individually be combined in order to achieve the highest possible progress in the development of a BMO. The training materials (e. g. manuals for trainers including curricula, instructions, supporting charts, handouts etc.) are referring to the following broad topics: BMO management Income generating services of BMOs – Business Development Services Advocacy Making public support schemes accessible for MSMEs through BMOs Promotion of responsible business behaviour Basically the topics behind the last 4 bullet points can all be looked upon as services which the BMOs provide for their member companies although they are services of different types. BMO management in contrast is dealing with organisation and processes within a BMO. A good management set up of a BMO is an indispensable requirement for a purposeful and effective service delivery. Therefore, every BMO planning to introduce a new service or expand an already existing one should check whether it has the management resources and capacities which are needed for the new or expanded service. If this is not or not sufficiently the case, or if it is doubtful that the BMO has the required set up in terms of organisation, human resources, communication procedures etc. then it might first start with a management training before it starts a training on service delivery; or it might send some of its representatives to a course in BMO management in addition to staff training in the delivery of a specific service. It is an advantage if the training curricula in the field of BMO services already contain some management elements. An example is the draft training modules on income generating services developed by a German expert. As a starting point for the whole training on income generating services of BMOs there is a basic module which mentions the need for every BMO to get clarity about its purpose, about its mission and vision before it takes decisions on the provision of individual services. This basis module also contains one session about how to organise the service delivery. All these aspects are management related. It can happen that a BMO recognises a need for additional training in a specific management topic which is not or not sufficiently covered by the training in the field of services. In detail the interrelation between training on BMO management and delivery of various services is shown in the following table.

Interlinkages between various BMO training fields

Management topics Services

Organisation

The trainer manual on income generating services includes a session on how to organise the introduction and operation of a new service. This training part can be completed by training on the BMO management sub-module on organisation.

Human Resource Development (HRD)

Appropriate HRD in a BMO is an indispensable precondition for a purposeful service delivery to MSME. Therefore, the training on how to establish a new service in a BMO (BDS or other) must always include the question about the skills required in the BMO for the new service. The visit of a HRD course might complement the training on any new service or


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already existing services for which an expansion is considered.

Communication (internal and external)

Communication as a management topic is clearly linked to the advocacy function of a BMO. Good PR work as an instrument of external communication is normally needed for providing effective advocacy in favour of the BMO’s member enterprises. So the advocacy training of BMO representatives should consider this relationship to communication as a management requirement and a potential training topic.

Financial Management

Financial management includes the requirement of income generation for a BMO. So it is evident that training on BDS as income generating services must cover the need for calculating expenses and revenues of individual services such as business consultancy and training. Identifying sources of income for cost covering and here especially appropriate service fees form a crucial aspect of any BMO which intends to grow.

Membership Development

A growing membership will normally strengthen the advocacy function of a BMO because of its larger entrepreneurial basis. At the same time improved services (BDS, advocacy, better access to public support schemes, advice/training in responsible business behaviour) are needed to attract more members to the BMO. Both the training modules on the various services and on membership development should address this mutual interdependence.

Strategic Planning

Strategic planning is an important tool for defining the wishful development of a BMO in the future. It should clarify where a BMO wants to stand in 5 years for example and which service portfolio should be available then. Therefore, the training on delivery of services, be it BDS, strengthening of advocacy work, access to public support schemes and/or responsible business behaviour, requires the development of the BMO’s vision, mission and strategic targets. At least any BMO should have clearly decided which services it wants to develop in the medium run. If such a decision has not yet been taken then training in strategic planning is recommended.

The interrelation between training on BMO management and services can work in a way that management requirements are identified if a service is planned to be newly introduced or expanded. However, the interrelationship can also work in the other direction. A BMO which is aware of its strengths in certain management areas can decide to develop services for which it already has a good precondition in terms of management resources. For example, the availability of employees and/or board/committee members having competencies on


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organising exhibitions might motivate a BMO to introduce/expand an exhibition service of the BMO.


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D Charts

Topics:

Programme

Topics

Methodology

Introduction of participants and trainer

Session 0.1: Introduction

Chart 0.1.1 - Topics


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BMO Management: Basic Training Module (1/2 day)

Starting tool for BMO representatives in management positions,

especially for Presidents, other board members, leading administrative

staff like Secretary General.

Typical problems and crucial cross-cutting issues, for instance

leadership and governance.

Mission, vision and values of a BMO.


Chart 0.1.2 – Basic Training Module


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BMO Management: Specific Management Trainings (1/2 to 1 day each)


Chart 0.1.3 – Specific Management Trainings

Specific Management Trainings

Organisational Set-up

Human Resource

Management

Internal and External

Communication

Financial Management

Membership Development

andAdministration

Planning, Monitoring and

Evaluation


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E Handouts Handouts are the training programme of the Basic Module below and charts 0.1.1 up to 0.1.3.

Training Programme of Basic Module


Session 0.1:

Introduction into the training


45 min. 16.00 – 16.45 h

Session 0.2:

Leadership and Governance of BMOs




90 min. 16.45 – 18.15 h


Session 0.3:

Assessment of BMO management


5. Rating and benchmarking of BMOs

6. Success factors for BMO management

90 min. 18.45 – 20.15 h

Session 0.4:

Evaluation and closure of Basic Module

1. Wrap up / summary of impressions from the training course

2. Feedback from participants

3. Official closing

30 min. 20.15 – 20.45 h

Total:4 hours, 45 min.


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A Overview

Time: 1 hour 30 min.

Overview: This session will demonstrate the audience that many BMOs are caught in a vicious circle of low financial resources, organisational weaknesses, insufficient services for the members and a poor membership development which will keep the financial resources limited etc. In order to overcome such deficits constructive and forward looking leadership is needed setting guidelines for the development of a BMO by clarifying its purpose and defining clear targets to be achieved in future. Participants discuss the question of mission, vision and values of their BMOs and work out what is required for a good governance of a BMO.


- Participants have learned what they can actively do in order to overcome the vicious circle of poor BMO management.

- They have understood which instruments they can use to provide for good leadership and governance of BMOs.

Materials required:

Background readings Charts Handouts Projector Flipchart Pin-board or Whiteboard Brown paper Flash cards Felt markers


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B Trainer Instructions



20 min. 1. Typical problems: the vicious circle of poor BMO management

Introduce into the topics of this session. Then ask the participants what they see as core problems for the development of BMOs in general or ‘their’ BMO in particular. They take note of such problems in key words on cards which you collect and put them on the pin-board.

After discussion of the addressed issues you demonstrate the vicious circle of poor BMO management by displaying chart 0.2.1.

Flash cards

Pin-board or Whiteboard

Background Reading 1

Chart 0.2.1

40 min. 2. Purpose, mission, vision and values of a BMO

Ask the audience how the vicious circle of poor BMO management shown in chart 0.2.1 can be broken up by effective management measures. Summarize and smoothly lead the discussion to the necessity of strong leadership (addressed in chart 0.2.2) and clarification of a BMO’s purpose; concerning the latter explain the categories mission, vision and values along the charts 0.2.3 – 0.2.5.

Then form two groups among the participants: request one of them to define some crucial elements of good leadership in a BMO, and ask the other group to develop 2 examples of mission and vision statements (in brief). After 20 minutes one person of each group shall present the results of the group work on the flipchart which are discussed by the plenary.

Chart 0.2.2

Charts 0.2.3 – 0.2.5

Background reading 2


Flipchart

30 min. 3. Requirements for good governance

Plenary discussion: Explain the term ‘governance’ in contrast and addition to ‘leadership’ and start a dialogue among participants on what is required to provide for a good governance of a BMO. Summarize the results of the discussion by dropping notes on the flipchart.

Chart 0.2.6

Flipchart


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C Background Readings Background Reading 1 of Session 0.2: World Bank Group: Building the Capacity of BMOs: Guiding Principles for Project Managers, 2005, p. 53 – 56 (in parts) BMO Management The previous sections have outlined the importance of BMOs as Instruments to aggregate, coordinate and represent the interests of small businesses as well as to organise self-help efforts. Thus far, however, BMO structures in many developing countries are of very limited use for SME development. On the one hand, numerous organisations are willing to act as chambers, federations or business associations, but they are also wasting resources by competing with each other and are too weak and unstable to represent SMEs effectively. The established larger BMOs, on the other hand, are often dominated by large-scale enterprises because they are easier to organise and bring in more economic power and political influence. Based on that BMOs should develop their organisational strength and management capacities to become more effective and ensure their long-term prospects. Better organised BMOs are more focused, enjoy greater membership participation and improve their public recognition and acceptance. They are able to fulfil their responsibilities for the whole –small and large – business community and can therefore be regarded as genuine representatives of the private sector. Bad management practices and organisational weaknesses will be reflected by the following typical problems of BMOs in developing countries: • Low membership • Poor leadership (lack of mission statement and strategic planning) • Lack of administrative skills • No clear-cut division of tasks between honorary representatives and secretarial staff • Negligible influence on government policy • Weak communication and public relations • Unattractive services • Inadequate funds and income generation It is important to realize that these problems should not be seen in isolation: by reinforcing each other, they cause a vicious circle of poor BMO management. The central problem of many BMOs lies in the lack of knowledge of what they should do now (mission) and what they want to become in the future (vision). In the absence of a meaningful mission and vision, BMOs will attract only a few members. Thus, they often have to cope with insufficient financial resources that in turn limit the scope for good services and advocacy. Without attractive benefits of membership, however, companies will abstain from joining the BMO or decide to quit. Therefore, efforts to strengthen a BMO’s management capacity have to be given consideration in the course of every donor intervention, even when the primary objective of the promotional activity is to enhance service delivery and/or policy advocacy. Figure 4: Vicious Circle of Poor BMO Management Capacity building is a gradual process. Therefore, BMO management capabilities will also develop incrementally. Donors have to consider the different phases of organisational development when designing suitable interventions. While organisations in the first phase of their development are often trapped in the vicious circle of poor management practices, BMOs in phases two and three are suitable for donor support. The phases are not always distinct, however, and BMOs may often exhibit traits from two different phases.


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Five key issues of BMO management will be analysed in greater detail: (i) finance; (ii) membership development; (iii) strategic planning; (iv) internal organisation; and (v) communications. Furthermore, the discussion will be complemented by common strategies and areas for donor intervention. 1. Finance: Quite a few BMOs keep no accounts of an acceptable professional standard and have assigned the supervision of financial procedures to untrained persons, thus resembling the situation of many SMEs in developing countries. However, members as well as other contributors (government, donors) want to know what the BMO is doing with their money. Therefore, transparent accounting is not optional but a moral and often legal requirement. Figure 5: Phases of BMO Development Many BMOs have to operate in a fragile financial environment: particularly in conditions of voluntary membership, membership dues have to be set at a modest level to avoid deterring prospective members and facilitate their collection. Public subsidies are threatening a BMO’s independence and may undermine its efficiency. Grants by donors and members are made on a case-by-case basis and are therefore not a sustainable source of finance. BMOs, whose members predominantly consist of SMEs, would always suffer from greater financial difficulties than organisations with bigger, wealthier members. In such conditions, donors should help BMOs reform their financial management practices as a prerequisite for all other capacity-building measures. The primary objectives of reform measures include the diversification of income, the provision of a steady cash-flow and the ability to build reserves for periods of financial strain. The most common areas of donor intervention are: • Accounting practices: BMO staff members are trained to deliver basic financial statements (balance sheets, income statements, cash flow) in an understandable, accurate and timely manner. The use of external financial accountants for more complex issues and audits is encouraged. • Membership fee administration: Partner BMOs receive help in adjusting their fee schedule (categories, graduation by size of membership, flat or fluctuating rate) and in how to improve the tracking and collection of dues, e.g., by facilitating workshops and staff exchanges, but also by supporting the introduction or improvement of a membership database. • Income-generating services: The promotion of new services for members should always be used to diversify the income base of the BMO. Twinning arrangements and workshops help BMOs to learn about the step-by-step implementation of new services and how to charge them adequately (see also section B.2.1). However, donors should keep in mind the possibility of crowding out existing commercial providers.


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Background Reading 2 of Session 0.2: World Bank Group: Building the Capacity of BMOs: Guiding Principles for Project Managers, 2005, p. 21 – 23 1. How to Make a Good Choice: Tools for the Selection of Beneficiary BMOs The identification of suitable project partners certainly is critical for the success of BMO support projects. The selection process should balance two extremes: On the one hand, a minimum of organisational capacity and stability is necessary to ensure the long-term success of support measures. On the other hand, excessively strong BMOs tend to develop their own agenda, which may conflict with the objective of SME promotion; they may also no longer need donor support. This section will discuss the critical elements of beneficial project partners in greater detail and deliver tools for partner analysis and selection. The ideal partner for BMO development projects combines the following characteristics: (i) a high number and extensive coverage of dedicated members mostly from the SME community; (ii) a committed and visionary leadership; (iii) a democratic and efficient governance structure; (iv) sufficient financial, personnel, and physical resources; and (v) high quality services and advocacy. The following paragraphs elaborate on these criteria. They are intended to help project managers in the field to fill in the assessment tool presented in this section (as well as the checklist in appendix A): Membership: The first and most important element of a good project partner is a committed membership base. Since it is the members who provide most of the money for operations, this aspect is especially relevant for voluntary BMOs. However, both voluntary and mandatory BMOs are based on the commitment of their members as the “owners” of the association. A strong membership base is also essential for acquiring political clout and thus influencing the political decision-making process. A strong membership base is based on (i) the membership size (the more members the better); (ii) the coverage (ratio of members to non-members in the respective geographical area, industry sector, etc.); diversity (subsectors covered; number of small, medium, large members); and relevance (financial status and political influence of members). A high rate of SME participation in a BMO is usually critical if the goal of the project is to promote SME growth. Membership growth is also an important factor, since it provides information on the attractiveness and success of a BMO. Younger associations, which are founded because of acute problems usually, show higher growth rates than older, more established bodies. It is important that BMOs maintain an efficient and updated list of members. A (computerised) database with comprehensive company information contributes greatly to the information services provided by the association's policy and business information units. Quite often, however, associations in developing countries have only insufficient and outdated membership records. As a consequence, nominal and non-paying members cannot be identified, making membership retention strategies and financial planning difficult to develop. It is also good practice to lay down membership categories and procedures in the bylaws of the BMO. Associations have different kinds of members just as they have different kinds of structures. Usually, these include active ordinary or lifetime (voting) members as well as affiliated or associated members and honorary (nonvoting) members. The contribution of an enterprise to the association may depend on its membership category and/or size. Leadership: Apart from committed members, leadership is the most important asset of BMOs. Because of the difficulties in assembling the entire membership, most decisions are usually delegated to office bearers (president, vice presidents, secretary general, treasurer) and the


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executive board. These leaders set out the general policies and strategies, and supervise the secretariat (if there is one) and the day-today operations of the BMO. Additionally, the office bearers represent the organisation vis-à-vis government and other business associations. Therefore, the reputation, foresight and experience of the Board members are vital to the BMO’s success. A good leader has a long-term vision and focus and provides for a strategic plan identifying goals, activities, and performance indicators. He communicates the BMO’s priorities in a mission statement and takes care of their implementation. Planning helps to keep the organisation focused and reduces transition problems from one set of leaders to the next. Additionally, committed leaders should be respected figures inside the business community who are able to communicate, compromise, and cooperate for the good of all members. Even with good leaders, the interests of donors and BMOs do not always coincide. Thus, donors have to be very clear and transparent about their objectives and strategies, study the vision of the targeted BMO and its expectations for the partnership, and match the objectives of both partners in a participatory process. Assuming that the main development goal is to support the growth of SMEs, the complementariness of interests between the donor and the BMO can only be taken for granted, when the membership of the prospective BMO is dominated by the intended target group (e.g., SMEs). However, there are few such “ideal” (SME dominated) BMOs in developing countries, and they are often small, locally oriented, and unstable. As a consequence, these organisations have only limited political influence and capacity to offer quality services to their members. With more established and larger BMOs, a clash of interests is more likely to occur, since they typically articulate the interests of large businesses. Therefore, cooperation with these organisations should concentrate on areas in which potential conflicts of interests can be minimised or in areas that address the specific needs of the smaller members of the BMO. Another possible strategy may involve the establishment of a dedicated subcommittee for SMEs within the BMO, which may function as a focus to represent the interests of the smaller members. Governance: There are certain structural features, which determine the level of ownership, control, transparency, and accountability of a BMO. At least theoretically, most BMOs have a democratic structure, which ensures the participation and ownership of their members. In practice, however, structures may not work as intended. One possibility is that a few influential members (or the president) use the association to serve their private interests. Excessive government influence on the operations and staffing of a BMO can also be problematic. In both cases, BMOs will not be able to act as authentic representatives of their SME members. Therefore, the ideal governance structure of a beneficial project partner should be: • Democratically organised: Key issues here are legitimization and representation. There should be general meetings and elections on a regular basis following procedures adequately described in the bylaws. Term limits for board members can be useful, to avoid the indefinite prolongation of office terms and manipulation by those in charge. • Autonomous from government: Structures should allow the BMO to work without public intervention. The appointment of representatives, the stipulation of standards and conditions for the delivery of member services, as well as a strict monitoring and supervision by government bodies are not desirable in this context. • Open: BMOs should not view themselves as closed shops or entrepreneurs’ clubs, but be willing to attract new members. Furthermore, donors should recognize that BMOs may also be used as a vehicle for influencing policies for private interests by influential membership groups. But supporting a particular interest group may lead to unintended distortions. Thus, donors


37

should always scrutinize which group the BMO is actually representing, not only in terms of region, sector, trade or firm size but also in terms of other factors such as ethnic composition.


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Background Reading 3 of Session 0.2: UNIDO: BMO Toolbox. Tools and Materials for Enhancing Business Membership Organisations (2008), p. 18 Mission and Vision Building The essence of a BMO mission statement is a description of the purpose of the BMO, of what it stands for, e.g.: “The mission of the Association of ….. is to represent the interests of its members, and to serve them and the businesses of …..(area/region)”. However, such a mission statement is rather basic and not exciting. A more attractive version might be: “The aim of the association of …. is to deliver value for money. It strives to ensure that the business community of …. is well served so that it can operate and develop successfully”. There is no best mission statement. However, such statements should be brief, attractive, and challenging to be good. For more reading on mission statements see several examples in [ILO, The Effective Employers’ Organisation, Guides 1-4] p. 8-11. More recently, the term ‘vision’ has become prominent and is often used as a motivational and advertising tool with sometimes idealistic phrasing, e.g.: “‘Aspiring to be the most valued and respective BMO of the region/country of …., serving the interests of its members, shaping regional/national policies, leading the business sector towards sustainable global competitiveness …”. There is nothing wrong in using vision statements to describe a long-term goal to be achieved, followed by a mission statement which is more descriptive of the present BMO position. It is recommended, however, that both statements be kept brief and realistic. Long statements will not be remembered by board, staff and members, and goals that are too ambitious are de-motivating to all. A third component of vision/mission statements may be Values. They represent the priorities of a BMO culture, e.g. trustworthiness, serving a community, member-orientation, etc. All three elements – Mission, Vision and Values – can well be combined into one statement to promote the BMO, e.g.: “Our mission is “to help (=value) the London business to succeed, by promoting their interests and expanding their opportunities (= mission) as members of a world-wide business network (vision)”. The above statement by the London Chamber of Commerce contains three elements and achieves three targets: it is brief, realistic and reasonable; it can be remembered and describes the main purpose of the chamber. For a checklist for BMO Mission statements, see [ILO, The Effective Employers’ Organisation, Guides 1-4] p. 12. Vision/Mission/Value Statements are usually part of the strategic plan and are the banner of a BMO for a longer period of time (say 5 years or an even longer period). They will have to be reviewed periodically to monitor whether they are still attractive and convincing enough and whether they provide sufficient information on the purpose and aim of the BMO. A revised or new formulation of a BMO statement to guide its future may be the result of a planning workshop that typically precedes a new budget year or follows the election of a new BMO Board.


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D Charts

Topics:

Typical problems: the vicious circle of poor BMO management.

Purpose, mission, vision and values of a BMO.

Requirements for good governance.

Chart 0.2.1 – Topics



40

The vicious circle of poor BMO management:


Chart 0.2.2 – The vicious circle of poor BMO management

Poor accounting practices

Poor organization and

lack of strategies

Lack of strategic

vision and mission

Low membership

No financial

sustainability Bad services and

ineffective lobbying

Poor membership

development


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Good leaders of BMOs (esp. Presidents and Office Bearers)

Have a vision for the longer term development of the BMO (laid down

in a written statement).

Set out the general policy and strategy of the BMO and delegate day-

to-day operations to the secretariat (if there is one).

Provide for a strategic plan identifying goals, activities and

performance indicators.

Ensure that operational (e. g. annual) planning procedures are

installed and control the implementation of planned activities.

Communicate the BMO’s priorities in a

mission statement and take care of their

implementation.


Chart 0.2.3 – Leadership and Governance of BMOs I


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Good leaders of BMOs (contd.)

Communicate, compromise and act for the good of all the members.

Provide for a good representation of interests of the MSMEs among

the membership.

Are recognized by the business community, political decision-makers

and the media.

Lead the BMO in an open and transparent way.


Chart 0.2.4 – Leadership and Governance of BMOs II


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Mission building: A BMO mission statement

is a description of the purpose of the BMO (for instance ‘The aim of the

association is to ensure that the industrialists in the region…..receive

value for money and can develop their businesses successfully…..’),

shall be brief, attractive and challenging,

expresses what the BMO stands for and

what the priority issues of the organization are,

should briefly mention the specialty of the BMO’s

services in contrast to other business

associations (if any).


Chart 0.2.5 – Mission building


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Vision building: A BMO vision statement

describes a long-term goal to be achieved,

shall express where the BMO wants to stand in the future (for example in

five years),

can be used as a motivational and advertising tool (for instance by phrases

like ‘Our association has the endeavor to become the most powerful

business organization of the region by serving the interests of its members

and playing a central role in the political dialogue……’),

should be kept brief, clear and realistic and

is the starting point for defining strategic objectives

to be achieved in the longer term (for example in

five years) which are reviewed regularly and

eventually modified in the course of time.

Chart 0.2.6 – Vision building



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The values of a BMO

describe the priorities of a BMO culture like transparency,

trustworthiness, customer/member orientation, service provision for a

particular business community,

represent a favourable attitude / behaviour and

are often the third part of a combined mission/vision statement.

Chart 0.2.7 – Values of a BMO



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A BMO with a good governance structure is

democratically organized and led,

transparent in decision making,

autonomous from government (no public intervention),

open and willing to attract new members (no closed shop),

representing all parts of the membership and

organized in a purposeful manner with reasonable division of labour

between President, office bearers, committee

members and secretariat.

Chart 0.2.8 – Good governance of a BMO



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E Handouts Charts 0.2.1 to 0.2.8


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Session 0.3: Assessment of BMO Management

A Overview Time: 1 hour 30 min.

Overview: In this session information is provided on various development levels of

BMOs so that participants may develop a better idea where ‘their’ BMO stands. Then the training course continues with questions on how BMOs can assess the management performance of their organisations, and how can other parties do assessments of BMOs. Based on that success factors for their management and starting points for actions aiming at improved management will be identified and discussed.


- Participants learn to distinguish between various development levels of BMOs.

- They are basically familiar with the know-how about rating, accreditation and benchmarking of BMOs and thereby better recognize what leads to more or less success in the field of BMO management.

Materials required:

Charts Handouts Projector Flipchart Pin-board or Whiteboard Brown paper Cardboard cards Felt markers


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30 min. 1. Various levels of BMO development

Give an overview on the topics of this session. Then present chart 0.3.1 showing four different levels or phases of BMO development from ‘Club’ to ‘Knowledge Supplier’. Make clear that this is just a broad distinction between BMOs according to their development status; in reality BMOs may often exhibit traits from two different phases.

The chart 0.3.1 may help the participants to identify the approximate status of ‘their’ BMO and other business organisations they know. You shall moderate a discussion about how to proceed from one phase to the next higher one – by own efforts and/or donor support. Note the key words of the proposals on the flipchart and discuss them with the participants.

Chart 0.3.1


Flipchart

40 min. 2. Rating, accreditation and benchmarking of BMOs

Explain the audience what rating, accreditation and benchmarking of BMOs means and provide examples of concepts utilized in this regard along the charts 0.3.2 and 0.3.3.

Make clear that the term ‘accreditation’ of BMOs is used by the US chamber system for the application of quality standards for local US chambers but might also be used for example by the Indian public authorities to ‘accredit’ BMOs which are good for cooperation according to such criteria as developed by the US Chamber of Commerce or similar criteria.

Collect the participants’ views on the purpose of BMO classifications for their efforts of development. Write them in key words on cards and put them on a pin-board or whiteboard. Finally go through them with the participants.


Charts 0.3.2 and 0.3.3



Cards

Pin-board or whiteboard

20 min. 3. Success factors for BMO management and possible actions for improved performance

Sum up the results of steps 1 and 2 by writing them on the flipchart. Please also consider some core issues of management requirements in BMOs of the preceding session. Guide a discussion among the participants about specific challenges in the Indian context in contrast to international experiences.

Flipchart

Chart 0.3.4



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Background Reading 1 of Session 0.3: UNIDO: BMO Toolbox. Tools and Materials for Enhancing Business Membership Organisations (2008), p. 5-6

Phases of BMO Development In the following some light will be shed on the phases of BMO development as well as on the classification of BMOs. Stage of development refers to the organisational performance level of a BMO. The graphic below shows the ideal evolution or different developmental stages of a BMO. However, it is not necessarily said that each and every BMO will pass through all stages. Some start at stage two whereas others might stop at a certain level or need external support to achieve a higher level.

Chart 0.3.2 – Various levels of BMO management


Phases of BMO Organisational Development

„Club“• Forum for

networking• Fully run by board

members• No or few staff• No organisational

structure

Often too weak for support

“Starter BMO”

Small Secretariat

• Networking and advocacy

• Few trained staff• Lack of clear vision

and strategy• Lack of resources

and experience

Capacity development possible

“BMO”

Professional Secretariat

• Several services and advocacy

• Capable larger secretariat

• Vision and strategy• Recognized partner • Diversified

membership• good governance

Support in service delivery and advocacy

“Star BMO”

Knowledge supplier

• Active in all relevant areas

• Professional staff• Setting the business

agenda• High reputation and

influence• Large number of

members • Good resource base

No direct support needed, might serve as

host

Source: sequa

The stage of development or level of organisational performance refers to the management of the BMO, but also to its range of services and its capability to lobby members’ interests. The judgment on possible donor support (at the bottom of the graphic) is fairly general. Of course, also a BMO at the “Club Stage” can qualify for donor support, if it has a very committed leadership and has already undertaken some activities.

Some countries like Nepal have a country wide classification system (A to D) and annually the best chambers of each category are being awarded and even promoted to a higher category. Of course it is important not to compare apples and oranges. Thus BMOs need be classified according to type first, before performance is measured and compared.


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A more qualified classification would serve the purpose to cluster BMOs of the same type with respect to:

state of development

number of members

size of area/coverage or sector

financial turnover

level of representation (district, province, state, nation etc.)

and other features depending on the country.

Classification into different clusters enables a better assessment of BMOs as well as focused networking (e.g. twinning or sister-ship arrangements, see [Chapter 5.1]). It might be useful for a BMO to conduct a short self-assessment with regards to its organisational structure and performance. An easy and short tool has been developed by SEQUA [http://www.sequa.de/en/index.php].

Background Reading 2 of Session 0.3: UNIDO: BMO Toolbox. Tools and Materials for Enhancing Business Membership Organisations (2008), p. 6-10 Accreditation

An accreditation process defines standards of BMO organisation, planning and performance. The process helps to identify strengths and weaknesses of the BMO.

In the Anglo-Saxon system almost anyone can register as a chamber. Therefore the large apex bodies introduced a system of accreditation for ensuring standards of quality and performance. The US Chamber of Commerce introduced an accreditation system in which chambers (distinguished between state and local level) must meet minimum standards in different areas of expertise including: governance, finance, staff, government affairs, program development, communications, technology and facilities.

The accreditation criteria as applied by the US Chamber of Commerce are as follows:

I. Governance There is a clearly developed purpose and mission that is shared by Board

members and staff alike. The organisational structure is defined and the Board of directors and staff are clear about their roles and responsibilities.

II. Finance The chamber conforms to all Internal Revenue Service and state accounting

regulations. The chamber operates on a budget approved by the Board of Directors. A recognized auditing firm annually reviews the chamber’s financial documents.

III. Human Resources and Staff The chamber meets all federal and state regulations governing employers and

acts as a catalyst in the professional development of its staff. Each staff member recognizes his/her responsibility for implementing the decisions of the Board of Directors.

IV. Government Affairs The chamber actively participates in public policy decision-making affecting

economic and business issues.

http://www.sequa.de/en/index.php


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V. Program Development The chamber has a formal system in place to plan, document, and exercise

short- and long-term goals. Methods to monitor and evaluate chamber’s status on goals are used throughout the year.

VI. Communication The chamber has identified target markets within its membership and has

devised clear plans to communicate with them.

VII. Technology The chamber has the technological ability to effectively communicate with

membership and can efficiently implement its program of action.

VIII. Facilities The chamber conforms to all federal, state, and local building, fire, health, and

safety regulations.

IX. Benchmarking The chamber exhibits excellence or has gained organisational knowledge

through action, planning, and experience.

Depending on the chamber’s ability to meet the criteria in the accreditation process it will be rated as 3-stars, 4-stars or 5-stars chamber. For more details see:

[http://www.uschamber.com/NR/rdonlyres/ejw45eymjagxguxpctj7wswsa3jfremymru3kg57xvda5olfazzfxinncyc2jiep6bdio6ujpqylzjt27v4ephnrvdh/stateeligibility.pdf] .

The US criteria differ slightly from those applied in the UK. In 1995, the British Chambers of Commerce BCC introduced a phased approach that would lead applicant chambers through an approval process to full accreditation. In addition to the US criteria, accredited chambers are required to use a combined code of principles of good corporate governance, be an investor in people and work with a business improvement tool. Benchmarking

Benchmarking is used to measure achievements and efficiency. It is a tool to check the level of organisational performance. Benchmarking offers the possibility for BMOs of comparing themselves (within the same category/class) with other BMOs as

well as with best practice. It is a tool for continuous improvement. Benchmarking provides

useful data for the BMO, its members and even apex bodies. It reveals strengths and weaknesses of a BMO.

Furthermore, it should be mentioned that BMOs which are able to demonstrate successful benchmarking efforts will be seen as quality BMOs. They will be more attractive to government, donors and others for cooperation.

An easy, but comprehensive BMO benchmarking tool, based on an excel sheet, has been developed in a SEQUA partnership project between bfz and FIEPE in Brazil. It has been further refined and slightly adapted and adjusted to country specific conditions. Basically, the tool is a guided interview with high-level personnel of the BMO. The questionnaire requires about 1-2 hours depending on the specific situation. Right upon the completion of the questionnaire, one can view results both in tables and charts. In an immediate appraisal it can be compared to national average or best performing BMOs given that the figures have been inserted. However, it should be considered that only BMOs belonging to the same category be compared; do not mix apples and oranges. The questionnaire [http://www.sequa.de/en/index.php] addresses the following topics:

http://www.uschamber.com/NR/rdonlyres/ejw45eymjagxguxpctj7wswsa3jfremymru3kg57xvda5olfazzfxinncyc2jiep6bdio6ujpqylzjt27v4ephnrvdh/stateeligibility.pdf

http://www.uschamber.com/NR/rdonlyres/ejw45eymjagxguxpctj7wswsa3jfremymru3kg57xvda5olfazzfxinncyc2jiep6bdio6ujpqylzjt27v4ephnrvdh/stateeligibility.pdf

http://www.sequa.de/en/index.php


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1. Leadership/Management 6. Personnel

2. Management technique 7. Lobbying and Society

3. Strategy and Planning 8. Services

4. Clients and Membership 9. Finance and Accounting

5. Information and Know-how 10. Results and Processes

The US Chamber of Commerce provides best practice documents collected from a number of chambers that have recently been accredited. These documents are actual samples that have been submitted and are available for reference purposes in the accreditation process. The following link leads to best practices from the US to the above topics: [http://www.uschamber.com/chambers/accreditation/best_practices.htm ] BMOs as Project Partners

From a donors’ perspective BMOs are ideal entry points for private sector promotion; they ensure outreach and legitimacy. However, the right partner needs to be found and assessed. The first sub-chapter will help to identify the basic issues that a donor should clarify when selecting a BMO partner. The second sub-chapter introduces and describes the relevant assessment criteria that can be used; and sub-chapter three finally gives some general recommendations for a successful cooperation with BMOs.

[1.5.1 How to Pick a Partner] [1.5.2 Assessment Criteria] [1.5.3 Recommendations for Partnership with BMOs] How to Pick a Partner There are many ways of working with a BMO. From a donor’s perspective one can think of different means and methods to support a BMO. The first step is to select one or several partners.

The kind of cooperation will determine the choice of partners as well as the method of choice. A donor might be interested in SME promotion of a certain region. In this case he will select the respective chamber and build its capacity to be the SME promoter. Or a donor is interested in a specific topic and will look for a BMO that is interested and appropriate to contribute to this topic. Sometimes donors look for a BMO to host a specific facility like a trade information desk or a cleaner production centre (cp. [Chapter 4.2.3]).

Partner selection depends on the partnership’s objective, but whatever a donor is trying to achieve the BMO needs to be assessed in a holistic manner. For first assessments a questionnaire has been developed (see [http://www.sequa.de/en/index.php]). It should be adjusted according to the thematic focus and focal points of cooperation. The criteria can then be weighed accordingly. In order to compare various BMOs in a first assessment another tool based on an excel sheet (see [http://www.sequa.de/en/index.php]) can be used to get a rapid ranking and overview.

http://www.uschamber.com/chambers/accreditation/best_practices.htm


54

From experience in development cooperation, quite often a multi-partner structure is useful. Instead of putting all eggs into one basket the donor can build on several partners. This makes the project less vulnerable and dependent. Further, a multi-partner structure enhances networking and exchange within the country and can produce synergy effects. But at same time the level of complexity rises. Assessment Criteria

The different characteristics of BMOs can be assessed by specific criteria that allow an organisational analysis. Typical issues for such an analysis of BMOs include: status and governance, membership/outreach, leadership, resources, communication, policy dialogue and services. (See also [IFC, Building the Capacity of Business Membership Organisations]: 21ff).

The following list covers different organisational aspects and features that should be considered for a BMO assessment.

Status and governance of BMO refers to legal and structural features of an organisation. The legitimacy of democratically governed organisations is high. A legitimate representative of the private sector has a bigger say in government consultation processes than other bodies. Regular elections ensure members active participation in the organisation. Thus, for a BMO assessment, it is important to assess the level of ownership, transparency, accountability and legal status of a BMO.

The criterion membership/outreach is very important for assessing a potential partners’ standing. The ideal BMO would cover 100% of enterprises including those who produce the highest output. This enables the BMO to develop and act on majority positions. With regard to donor interventions a large membership base ensures good multiplying effects and eases the outreach to enterprises. In addition high membership ensures high income on membership fees and very likely high demand for income generating services, thus ensuring a reliable resource base for the BMO.

Leadership is essential in BMOs though difficult to be assessed by external persons. One way is to look at the BMOs vision and mission statement, if available. A strategic plan developed by key stakeholders in a BMO should exist and should be regularly followed-up. However, it is the office bearers who are the warrants for an applied vision. For a donor it is important to ensure that the leadership of a BMO is committed to the joint targets that have been agreed upon.

The aspect of resources concerns staff, finance and facilities. The level of resources available is a decisive factor for the performance of a BMO. A large number of highly qualified and committed staff (low level of fluctuation) in addition to up-to-date computer equipment and good office facilities can be considered success criteria. A sustainable income base enhances functional autonomy. Preferably a mix of sources (membership and service fees, sponsorships, income from rent etc.) allows for flexibility and autonomy.

Communication (see [Chapter 2.3.2]) and mobilization includes a BMOs’ ability to induce members to commit resources and abide by organisations rules and decisions designed for further collective goals. Internal communication should ensure transparent decision-making and mediation of members’ interests; good external communication increases an organisation’s visibility inter alia legitimacy/weight/ importance.


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Advocacy (see [Chapter 4]) constitutes a BMO’s impact on policy making. Cooperation with government and access to government are important aspects of a business organisation. Members do anticipate benefits from their membership, e.g. a more conducive business environment. A well placed BMO with good government links will attract more members and increase its legitimate representation.

Services (see [Chapter 3]) are usually the direct and immediate benefit expected by an entrepreneur when joining a BMO. When BMOs can offer services, crucial benefits and privileges to members, membership is very attractive. Thus a BMO is required to offer need-oriented services with two objectives: first, to gain and retain members and second, to reach and keep up financial sustainability. Delegated functions (e.g. business registration, import/export licenses, organisation and supervision of vocational training, commercial arbitration, industry regulation etc. (see [Chapter 3.4]) are special types of services. In an assessment it should be analysed which kind of services a BMO provides. It is a good criterion to assess the performance level of a BMO.

For an assessment and selection of a BMO as project partner the above criteria have to weighed and detailed according to the needs and requirements of the project. Results of the assessment should be documented as they may serve as baseline for project monitoring as well as exit and/or entry criteria for cooperation.

The comprehensive assessment of a BMO either internally or externally is to be seen as a process and not a one stop event. For a thorough assessment one needs to have the chance to talk (unobserved) to the staff, look at the membership list or database, information files, statistics, and have access to minutes of meetings, job descriptions, procedure manual, annual work plan, budget etc. In general, after the first assessment has been carried out, a SWOT analysis (see [Chapter 6.1]) can provide more insight and analysis. In addition, the implementation of small pilot activities gives quite a good impression on a potential partner’s capacities.

While looking for a BMO to host a specific facility, like an investment promotion desk, cleaner production centre, training centre etc., some additional aspects need to be considered when assessing a BMO. These include legal status of facility, applicable tax regulations, governance and control of facility, relation to similar providers, building facilities, space, etc.

Additional examples and models for BMO assessment can be found in the section on BMO accreditation and benchmarking (see [Chapter 1.3 and Chapter 1.4]).


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Reading 3 of Session 0.3 : Assessment of BMO Management

Questionnaire for assessment of Business Membership Organizations (BMOs)

Sl .No. Details Response

General Information

a. Name of Association

b. Address

c. Communication facilities Phone No.

Mobile No.

Fax No.

E-mail ID:

Website address

d. When was the Association formed? (Month & Year)

e. Whether a Regional/State/District/Cluster Association

f. Major industrial sectors represented by members

1 Representative character of the Association

a. No. of firms operating in the jurisdiction of the Association

b. Out of above, how many are members of the Association?

c. Percentage coverage

2 Membership Administration

How does the Association communicate with members? (Tick whichever is applicable)

a. As and when required

b. Regularly communicate through Newsletter/ Events

c. Regularly communicate along with feedback mechanism to

involve members

d. Regularly communicate and involve members in Committee

activities and nomination in State Bodies on behalf of BMO

3 Internal organization and Human Resources

d Vision & Mission Statements (Tick whichever is applicable)

a. Not aware

b. Aware but never prepared or thought important

c. Has a prepared Mission, Vision Statements but never

translated into strategy and targets

d. Vision, Mission, strategy and objectives in place and are

being seriously pursued

Leadership

4. a. How long the incumbent President/ Executive Committee

has been with the Association?

b.

Has the President/ Executive Committee introduced new

activities and initiatives in the Association after assuming

office?

Yes/No. If yes, specify.

c. Has the President/ Executive Committee documented any

plans or proposals for increasing/improving the services of

the Association for members/industry? If yes, give the

details.

d. Has the President/ Executive Committee developed any

strategic plans for increasing/improving the services of the

Association for members/industry? If yes, give the details.


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Governance

a. What Is the frequency for holding of elections to Office-Bearers : Yearly/ 0nce in two years/Other

(Tick whichever is applicable)

b. Are the elections held regularly Yes/ No. If no, specify the reason

If yes,

Is there a limitation to re-election to the

President and different sections are

represented in managing committee?

Are the Executive Committee meeting held

regularly and Specific task based

committees available?

Yes/ No

Yes/ No

Financial Administration

Are the accounts of the Association maintained internally/ partially outsourced/ completely

outsourced? (Tick whichever is applicable)

If maintained internally, Whether any software (like Tally) is used for maintaining accounts Yes/ No

Infrastructure & Manpower

a. The Association is having its own building/functioning in rented or leased premises/ functioning

from the President’s business premises? (Tick whichever is applicable)

b. The building or premises in which the organization is functioning-

(i) Has sufficient /not sufficient for office use only

(ii) Has enough space for office and a separate room/hall for holding meetings

(Upto 25 persons)

(iii) Has enough space for office and a separate hall for holding meetings

(26 to 100 persons)

(iv) Has enough space for office and a separate hall for holding meetings

(More than 100 persons)

(Tick whichever is applicable)

c. How many (i) laptops and (ii) computers are in use? (i)

(ii)

d. Is there a (i) photocopier (ii) fax (iii) other office equipments (LCD

Projector) available?

(i) Yes/No

(ii) Yes/No

(iii) Yes/No

. Secretariat

a. Name of all secretariat staff with

Designation and Age (within

brackets)

Educational

Qualifications

Experience No. of

years of

service in

the Assn.

Remarks

(Full Time/

Part Time)

b. Is any training been provided to staff? Yes/No

4 Finance

Sources of Income (Tick whichever is

applicable)

a. No regular source of income – dependence on subsidies or donations

b. Maximum income is from membership fees, subsidies or donations

c. Income from membership fees, subsidies or donations is almost equal to income


58

from service fees, rent and other self-generated revenues

d. Maximum income is from service fees, rent and other self-generated revenues

Membership Fee system (Tick whichever is

applicable)

a. Very low entrance fee and annual subscription fee

b. Moderate entrance fee and annual subscription fee

c. Moderate entrance fee and annual subscription fee and an additional option of

high one life time membership fee

d. Tier based membership fee depending upon paying capacity of the members

5 Services Provided

Free/Fee based services (Tick whichever

is applicable)

a. Only basic business information service such as newsletter provided free

b. Various services such as newsletter, website, workshop provided free

c. Combination of free and fee based services including trainings and consultancy

d. Combination of several free and fee based services including specialized services

Other services (like exhibitions, publications, etc.) (Tick whichever

is applicable)

a. No such services offered

b. One or two B2B meetings or other events

c. One time per year organization of exhibition/other entrepreneurial meeting

d. Regular organization of several well prepared business events

6 Advocacy

Use of Media (Tick whichever is

applicable)

a. No or hardly use of media

b. Sporadic press release or contact with local newspaper or/and radio

c. Regular issue of press release or use of website for policy statements

d. Systematic, professional and permanent access to all types of media

Liaison with Government and public administration (Tick whichever is

applicable)

a. No or almost no contact with government and public administration

b. Ad hoc communication/contacts with govt.

c. Regular contacts with administrative and political bodies

d. Permanent cooperation with govt./administration like PPP events, forums, committees

Networking with other Associations (Tick whichever is

applicable)

a. No or minimum cooperation

b. Limited cooperation with other BMOs

c. Enhanced cooperation by clubbing interests of other BMOs

d. Institutionalized collaboration among BMOs, e.g. in committees, working groups

Which are the other Associations/Federations in which the Association is a member?

Internal arrangement on Advocacy (Tick whichever

is applicable)

a. No internal arrangement on advocacy

b. Regular discussions on advocacy in Management meetings

c. Systematic and survey based collection of inputs on advocacy issues

d. Permanent committee to work on advocacy issues

7 Business Responsibility (BR) (Tick whichever

is applicable)

a. Not Aware of BR

b. Aware what BR is, but no efforts have been made so far

c. Conducting few programs related to BR such as health camps etc.


59

d. Institutionalized BR practices in place such as hospital, school, hostels etc.

If yes, please specify

8. Government Support Schemes Utilized (Tick whichever is

applicable)

a. Not aware of any relevant schemes

b. Aware but not utilized

c. Utilized, once or twice

d. Utilized at least one large MSME scheme and many low valued schemes

Which Government schemes have been utilized by the association?

Overall Assessment and recommendation

What are the major issues of concern to the association?

What are the recommendations for future initiatives of the association?


60

Background Reading 4 of Session 0.3: BMO Benchmarking Tool (developed in the project ‘Capacity Development of BMOs in India’, GIZ/sequa/FMC, 2011)

Assessment Tool for Business Membership Organizations (BMOs)

S.No. Parameter Score 1 Score 2 Score 3 Score 4

1

Representative Character Less than 20% of relevant

units

21-40% of relevant units 41-60% of relevant units 61% and above of relevant units

2 Membership Administration Sporadic communication

with members

Regular communication through

Newsletter/ Events with members

and potential members

Regular communication with members and

potential members along with feedback

mechanism to involve members

Regular communication with members

and potential members and involvement of

members in Committee activities and

nomination in State Bodies on behalf of

BMO

3 Internal organization and Human Resources (HR)

3 a Vision/Mission Do not understand Understand but never prepared or

thought important

Vision and Mission statements existing but

never translated into strategy and targets

Vision, Mission, strategy and objectives in

place and seriously pursued

3b Leadership (President /

Board)

No previous experience in

managing an Association

Introduced new activities and

initiatives in the Association after

assuming office

Plans and proposals for improving services are

under implementation/ implemented

Strategic development plan adopted after

assuming office and under

implementation

3c Governance Election not held regularly (no

election in last two years)

Election held regularly Election held regularly with limitation to re-

election to the President and different

sections are represented in managing

committee

Election and Managing Committee

meeting held regularly.. Specific task

based committees available

3 d

Financial administration Maintenance of accounts

outsourced completely

Maintenance of accounts outsourced

partially

Maintenance of accounts done internally and

manually

Maintenance of accounts done internally

and using Tally or other software

3 e Infrastructure Operates from the office of

one of the office-bearers

Own building/long lease with

insufficient office space

Own building/long lease with sufficient office

space

Own building/long lease with sufficient

office space, conference facilities and

equipment

3 f HR available No full time executive, at best

one typist and/or peon

At least one full time executive who

can provide service to members

At least one full time manager and executive

capable of rendering some services to

members

Beside full time manager, there are

specialized executives providing

specialized service support


61


4 Finance

4 a Financial Sustainability No regular source –

dependence on subsidies

and donations

Maximum income is from

membership fees, subsidies or

donations and rest from service fees,

rent and other self-generated

revenues

Income from membership fees, subsidies or

donations is almost equal to income from

service fees, rent and other self-generated

revenues

Maximum income is from service fees,

rent and other self-generated revenues

and rest from membership fees, subsidies

or donations

4 b Membership fee system Very low entrance fee and

annual subscription

Moderate entrance fee and annual

subscription

Moderate entrance fee and annual

subscription with an additional option of high

one life time membership fee

Tier- membership fee system based on

economic strength of the members

5 Services

5 a Free/ Fee based services Basic business information

provided free of charge

(newsletter) but hardly any

other services

Various business information

provided free of charge (newsletter,

website, sporadic workshops)

Combination of free and fee based services(

newsletter, website, workshops, trainings,

consultancy)

Combination of several free and fee based

specialized services( newsletter, website,

workshops, trainings, consultancy, local

authority, publications)

5 b Other services (like

organizing exhibitions,

match making events,

publications etc.)

No such services offered Sporadic organization of B2B

meetings or other events

At least one time per year organization of

exhibition / other entrepreneurial meeting

Regular organization of several well

prepared business events

6 Advocacy

6 a Use of media No or hardly use of media Sporadic press release or contact to

local newspaper or radio

Regular issue of press releases or use of

website for policy statements and contact to

radio and TV programs

Systematic, professional and permanent

access to all relevant media for lobbying

purposes

6 b Liaison with government and

public administration

No or almost no

communication/contacts

with government and public

administration

Ad hoc communication / contacts Regular contacts to political decision-makers

and relevant administrative bodies / persons

Permanent cooperation with government /

administration, e.g. in public-private

dialogue forums or committees

6 c Internal Arrangement No internal arrangement for

advocacy

Regular discussions on advocacy

issues in Managing Committee

meetings

Systematic survey based collection of inputs

on advocacy issues

Permanent Committees to work on

advocacy issues

6 d Networking with other

associations

No or hardly any cooperation

with other BMOs

Limited cooperation with other BMOs

via personal relationships of

presidents or other office bearers

Enhanced lobbying power by clubbing the

interests of other BMOs in a federation

Institutionalized collaboration among

BMOs e.g. in committees, working groups

etc.


62


7

Business Responsibility(BR) Not aware of BR Aware of BR but no efforts made so

far

Conducting periodic community programmes

related to C BR

Institutionalized BR practices in place

8 Government Support

Schemes Utilized

Not aware about relevant

schemes

Aware, but not utilized Utilized, once or twice but low valued ones Utilized at least one larger MSME scheme

and low valued schemes


63

Background Reading 5 of Session 0.3: Extract from Working Paper of sequa: Strategic Outlines of BMO Assessment in the Project ‘Capacity Development of Business Membership Organisations in India’ (draft, 2011)

1. Purpose of BMO Assessment Targets In the short run it is intended to identify 40-50 pilot BMOs for the further work of BMO development in the project. Interviews have recently been hold with more than 100 BMOs on district level in nearly all parts of India, most of them industrial associations. With the help of a questionnaire and a draft BMO assessment tool a first sample of 25 pilot BMOs are selected, and a second sample of 25 pilot BMOs will be identified at a later date (see details below under 2 and 3.). In the long run the project is aiming at creating a tested and validated tool which can widely be used for the assessment of Indian BMOs in general. The assessment should facilitate the efforts of identifying appropriate training and advisory needs / measures for BMOs which are required to increase their capacities to provide good services to MSMEs. Modes of application BMO assessment shall first of all lead to a rating of BMOs based on their answers in questionnaires/interviews which allow to rate them by an assessment tool. This tool contains various parameters like internal organisation and HR, finances, services and advocacy through which the state of development of every BMO can be determined and measured by scores. Based on this a ranking of the interviewed BMOs is done according to the scores achieved which allows in our case to attribute the BMOs to score areas 1 to 4 (25% of the BMOs for each score area: 1 - least developed, 2 - basic, 3 - advanced and 4 - well developed). The idea of accreditation of BMOs is based on the rating concept. In the USA accreditation is done by the US Chamber of Commerce for ensuring quality and performance of local chambers in the country. In the Indian context it might mean that BMOs can be analysed by public authorities (ministries etc.) with the help of the BMO assessment tool developed by the project. Supported by the results of BMO assessments public authorities might be in a better position to decide which BMOs they want to ‘accredit’ and give access to parliamentary hearings, governmental working groups etc. However, it should be pointed out that the examples of public ‘accreditation systems’ which we know (e.g. the ‘lobby register’ of the EU) do not operate on the basis of clearly defined quality criteria of a BMO assessment tool. Such public registers of NGOs including BMOs in Europe and America are more focusing on how the lobbying power of various interest groups can better be made visible and controlled. Users and utilisation There are different users with different interests in utilising the BMO Assessment Tool which is applied by the CD of BMO Project in India:


64

BMO Assessment Tool

Users Utilisation

Project Managers Project Managers of national or international projects in the field of BMO or MSME development can use the BMO Assessment Tool for selecting BMOs as project partners and for identifying status and areas of intervention of the partner BMOs.

Business Membership Organisations (BMOs)

BMOs might apply the Tool for self-assessment so as to check where they stand, what their stronger and weaker points are, what they should improve, etc. In addition, BMOs on upper levels might possess or collect information by which they can assess their member associations or chambers on lower levels or vice versa (member BMOs assess their umbrella association)

Public Authorities (Ministries etc.)

Ministries, regional and local administrations with a competence for MSME development could also utilise the BMO Assessment Tool as supporting instrument to select appropriate BMOs which they can continuously cooperate with in the public-private dialogue and in the management of public MSME support schemes

Micro, Small and Medium Enterprises (MSMEs) need another, more specific assessment tool in order to (i) rate the performance of the BMO whose member they are or (ii) for checking the state of development and performance of a BMO they are interested to join.


65

Background Reading 6 of Session 0.3: Extract from a Working Paper of sequa for BMO promotion in India (2009): 4) Entry points and lines of action for strengthening the competencies of BMOs for technical assistance There are huge differences in status and performance between individual BMOs. Therefore, a detailed identification of action lines for BMO strengthening can only be done when concrete BMOs in designated regions have been selected for technical assistance. However, as done in the BMO workshop, identified weaknesses of Indian BMOs in general, at least of such organisations on local level, lead to major starting points for promotional actions:

Weaknesses Possible actions in response

Lack of clarity of purpose - Workshop(s) with BMO board and committee members on vision, mission and longer term targets of their organisations

- Interviews with member companies and non-members about their demands concerning BMO services

Lack of governance / organisation - Introduction of leadership methods similar to management schemes in enterprises

- Training of BMO secretariats in fields like work planning, membership administration and accountancy

- Consultancy on how to improve collaboration between BMO secretariat and office bearers

Low quantity and quality of services - Workshops for MSMEs in management, marketing, technical issues

- Training of BMO staff on how to deliver relevant services for MSMEs

Limited lobbying power on a broader scale (beyond local level)

- Workshops for BMO staff and office bearers in professional PR work

- Networking with other BMOs for common advocacy in crucial economic policy questions

Many BMOs are caught in a vicious circle which can be described as follows: Limited resources/income ► deficits in organisational set-up ► lack of services ► low membership ►limited resources/income etc. Technical assistance can help to break up this circle – apart from temporary financial support – mainly by advisory intervention with regard to organisation as a precondition for good services and, in addition, by intervention concerning service delivery itself (comprising both BDS and advocacy work).


66

D Charts

Topics:

Various levels of BMO development.

Rating and benchmarking of BMOs.

Success factors for BMO management and possible actions for

improved performance.

Chart 0.3.1 – Topics



67

Chart 0.3.2 – Various levels of BMO management


Phases of BMO Organisational Development

„Club“• Forum for

networking• Fully run by board

members• No or few staff• No organisational

structure

Often too weak for support

“Starter BMO”

Small Secretariat

• Networking and advocacy

• Few trained staff• Lack of clear vision

and strategy• Lack of resources

and experience

Capacity development possible

“BMO”

Professional Secretariat

• Several services and advocacy

• Capable larger secretariat

• Vision and strategy• Recognized partner • Diversified

membership• good governance

Support in service delivery and advocacy

“Star BMO”

Knowledge supplier

• Active in all relevant areas

• Professional staff• Setting the business

agenda• High reputation and

influence• Large number of

members • Good resource base

No direct support needed, might serve as

host


68

Short self-assessment:Display Word file

Chart 0.3.3 – Short self-assessment I


1. Governance Yes No

Is your BMO's mission statement clear and feasible?

Is your BMO's organisational structure appropriate for your BMO’s size and goals?

Bylaws, legal charter and/or statutes:

• Do they regulate the main areas of BMO management?

• Are they adequate for the laws of the state and the protection of both the organisation and its members?

• Have they been shared with the board?

Does the organisation chart include lines of authority and staff assignments?

Is there a list of the board of directors and of all committees and its chairpersons and members?

Are term limits for the board of directors?

Are job descriptions in place for the board of directors and the committees?

Does a review process exist to evaluate performance of officers and directors?

Are board meetings held on a regular basis and minutes kept on file?

2. Finance

Does your BMO meet generally accepted accounting principles?

Is an annual operational budget in place and approved by the appropriate committee(s)?

Does your BMO maintain current financial statements?

Does the board of directors review all financial statements?

Are taxes withheld from employee checks transmitted and reported to the social security system on a timely basis?


69

Chart 0.3.4 – Short self-assessment II


3. Human Resources & Staff Yes No

Is there a list of staff’s names, positions and contact details

Are distinct roles and job descriptions set up for staff and volunteer leaders?

Does the staff understand your BMO’s mission and program of action?

Is a policy and procedures manual or employee manual in place?

Does your BMO regularly evaluate the staffs’ performance?

Is there a training plan in place?

4. Government Affairs Yes No

Has a grassroots network been established?

Does your BMO actively share legislative and political information with membership?

Has your BMO identified the top 3–5 priority issues and shared policy with elected officials?

Has your BMO fostered a direct relationship with local, county, provincial, state, and/or federal officials?

Can your BMO provide three examples (within the last year) of an issue campaign that required your BMO to adopt policy, inform and

activate membership, and communicate your position with elected officials?

5. Program Development

Has your BMO developed a basic short-term action plan or work plan for the current year?

Has your BMO developed a (long-term) strategic plan?

Does your BMO have the appropriate resources to exercise aforementioned strategic plans?

Does your BMO provide an annual report to the members?

Does your BMO understand issues important to segments of the membership?

Does your BMO offer services according to the members’ needs and demands?

Does your BMO collect member feedback?

Is there an understanding of the relevance your BMO and its programs carry within the community?


70

Chart 0.3.5 – Short self-assessment III


6. Communications Yes No

Does your BMO use diverse forms of media to promote its services and events?

Has your BMO written press releases for the local media?

Does your BMO have a Web site that is used to communicate basic BMO information, which is regularly updated?

7. Technology

Do you have all basic office equipment (Computer, Telephone, Fax, Copy Machine, Internet) in place and functioning?

Does your BMO have e-mail capabilities for mass distribution, with html formatting options?

Does your BMO have a membership database system?

8. Facilities

Does your BMO’s facility project an appropriate business image? Is your BMO easily accessible to customers?

Do you own your building?

Do you have adequate meeting and training facilities?

Total YES

Total NO

For each YES you receive 1 point Recommendation

0 - 10 points A lot to do

11 - 22 points Fair but start improving

23 - 34 points Good

35 - 42 points Excellent, share your ideas with other BMOs


71

BMO Benchmarking – comparison between BMOs:

Display Excel file

Chart 0.3.6 – BMO Benchmarking


Criterion BMO A BMO B BMO C BMO D BMO E BMO F

weighing Rateweigthed Rate weigthed Rate weigthed Rate weigthed Rate weigthed Rate weigthedBoard / presidency (interest/commitment) 5% 0 0 0 0 0 0Governance 10% 0 0 0 0 0 0Membership (number/type) 5% 0 0 0 0 0 0Outreach 5% 0 0 0 0 0 0Vision and mission / leadership 10% 0 0 0 0 0 0Awareness of importance of SME issues 5% 0 0 0 0 0 0

Communication 5% 0 0 0 0 0 0Services 10% 0 0 0 0 0 0Advocacy and cooperation with gvt 10% 0 0 0 0 0 0Staff (No. And qualification) 5% 0 0 0 0 0 0Financial situation/Resources 5% 0 0 0 0 0 0Facilities (Building/Office/Equipment) 5% 0 0 0 0 0 0Interest in Project and cooperation 10% 0 0 0 0 0 0Potential for working with the project 10% 0 0 0 0 0 0

Total 100% 0 0 0 0 0 0 0 0 0 0 0 0Ranking

Rate JJ J L LL

4 3 2 1


72

BMO Benchmarking Tool:Display Word file

Chart 0.3.7 – BMO Benchmarking I



1. Legal status Not incorporated Incorporated but papers

irregular

Incorporated and papers

regularized (less than 3 years

old)

Incorporated and papers regu-

larized (more than 3 years old)

2 Representative

Character

Less than 20% of

relevant units

21-40% of relevant

units

41-60% of relevant units 61% and above of relevant

units

3 Internal organisation and Human Resources (HR)

3 a Vision/Mission Does not understand Understands but never

prepared or thought

important

Vision and Mission statements

existing but never translated

into strategy and targets

Vision, Mission, strategy and

objectives in place and

seriously pursued

3 b Leadership

(President / Board)

No previous experience

in managing an

Association

Introduced new

activities and initiatives

in the Association after

assuming office

Plans and proposals for

improving services are under

implementation/ implemented

Strategic development plan

adopted after assuming office

and under implementation

3 c Governance Election not held

regularly (no election in

last two years)

Election held regularly Election held regularly and

SME/ weaker sections are

represented in managing

committee

Election held regularly with fair

representation and specific

task based committees


73


Chart 0.3.8 – BMO Benchmarking II



3 d Infrastructure Operates from house of

one of the office-bearers

Own building/long lease

with insufficient office

space


sufficient office space


sufficient office space,

conference facilities and

equipment

3 e HR available No executive, at best

one typist and/or peon

At least one executive

who can provide

service to members

At least one manager and one

executive capable of rendering

some services to members

Beside manager, there are

specialized executives

providing specialized service

support

3 f Training to

secretariat

No training Only when free and

somebody approaches

When there is some specific

need and when association is

ready to pay parts of the

training expenses

Planned and executed every

year, association ready to pay

full training expenses

4 Finance

4 a Membership fee

realization

Very low entrance fee

and subscription

Moderate entrance fee

and annual subscription

or reasonably high one

life time membership

fee

Significant annual subscription

regularly collected

Annual subscription regularly

collected and dependant on

size of members


74


Chart 0.3.9 – BMO Benchmarking III



4 b Sources of revenue No regular source –

dependence on

subsidies and donations

At least 50% of the

income comes from

membership dues,

service fees and other

self-generated

revenues

At least 70% of the income

comes from membership

dues, service fees and other

self-generated revenues

90% of total income is self-

generated by membership

dues, service fees and other

income generating activities

4 c Financial

administration

Accounts never audited

or not in last 5 years

Accounts not audited

for less than 5 years

Accounts audited regularly Use of Tally or other software

for maintaining accounts

5 Services

5 a Information, training,

consultancy for

MSME

Basic business

information provided but

hardly any other

services

Beside business

information sporadic

training services for

MSMEs

Regular fee based training

and/or consultancy provided

for certain topics

Fee based training and

consultancy including a wide

range of services

5 b Other services (like

organizing

exhibitions, match

making events,

publications etc.)

No such services

offered

Sporadic organisation

of B2B meetings or

other events or issue of

publication

At least one time per year

organisation of exhibition /

other entrepreneurial meeting

or issue of publication

Regular organisation of several

well prepared business events

and/or issue of publications


75


Chart 0.3.10 – BMO Benchmarking IV



6 Advocacy

6 a Use of media No or hardly use of

media towards the

public

From time to time press

release or contact to

local newspaper or

radio

Regular issue of press

releases or use of website for

policy statements, sometimes

publication of position papers

and ad hoc contact to radio

and TV programs

Systematic, professional and

permanent access to all

relevant media for lobbying

purposes

6 b Liaison with

government and


No or almost no

communication/contacts

with government and


Ad hoc communication/

contacts

Regular contacts to political

decision-makers and relevant

administrative bodies /

persons

Permanent cooperation with

government / administration,

e.g. in public-private dialogue

forums or committees

6 c Networking with

other associations

for increased

lobbying power

No or hardly

cooperation with other

BMOs

Limited cooperation

with other BMOs via

personal relationships

of presidents or other

office bearers

Increased lobbying power by

bundling interests with other

BMOs in a federation

Institutionalized collaboration

among BMOs e.g. in

committees, working groups

etc.

7 CSR Not aware of CSR Aware of CSR but no

efforts made so far

Conducting periodic

community programmes

related to CSR

Institutionalized CSR facilities

in place

8 Government

Support Schemes

Utilized

Not aware about

relevant schemes

Aware, but not utilized Utilized, once or twice but low

valued ones

Utilized at least one larger

MSME scheme and low valued

schemes


76

Possible Actions for Improved BMO Performance I

Chart 0.3.11 – Possible actions I



Lack of clarity of

purpose

Workshop(s) with BMO board and committee members on

vision, mission and longer term targets of their

organisations

Interviews with member companies and non-members

about their demands concerning BMO services

Lack of governance /

organisation

Introduction of leadership methods similar to management

schemes in enterprises

Training of BMO secretariats in fields like work planning,

membership administration and accountancy

Consultancy on how to improve collaboration between

BMO secretariat and office bearers


77

Possible Actions for Improved BMO Performance II

Chart 0.3.12 – Possible actions II



Low quantity and

quality of services

Workshops for MSMEs in management, marketing,

technical issues

Training of BMO staff on how to deliver relevant services for

MSMEs

Limited lobbying power

on a broader scale

(beyond local level)

Workshops for BMO staff and office bearers in professional

PR work

Networking with other BMOs for common advocacy in

crucial economic policy questions


78



79

Session 0.4: Evaluation and Closure of Basic Module

A Overview Time: 30 min.

Overview: A summing up of the essentials of the entire training course (Basic Module)

will be done. Participants will give their feed-back orally and on evaluation sheets. The trainer will give an outlook on the training modules 1-6 which were already briefly presented during the introduction of the Basic Module before closing the course.


- Participants are familiar with relevant issues of BMO management.

- They are in a position to decide whether they will attend other courses and if yes, which ones.

Materials required:

Background readings Handouts Felt markers


80

B Trainer instructions

Session 0.4: Evaluation and Closure of Basic Module Time Steps Methodology Materials

10 min. 1. Wrap up Go quickly through the sessions and summarize main issues of the training. Ask the participants what the most relevant impressions and information they could take from the course were. Note their responses in key words on the flipchart.

Flipchart

10 min. 2. Feedback from participants

Collect the participants’ assessment of the course: good sides and room for improvement. Distribute evaluation sheets to them and ask for immediate filling of the forms and return to you.

Handout

10 min. 3. Outlook and official closing

Come back to the other training modules (1-6) which were briefly presented during the introductory session and request the participants to check whether they should attend some of these courses in order to get more specific knowledge on selected management topics. Thank the participants for their contributions to the sessions and close the course officially.


81


None D Charts

None


82

E Handout: Evaluation sheet for participants

MSME Umbrella Programme / CD of BMO Project, India (GIZ/sequa)

Training course: (to be filled in by programme staff) Place: (to be filled in by programme staff) Date: (to be filled in by programme staff) Number of participants: (to be filled in by programme staff) Evaluation by the participant

1. Content of the course Very good

Good Satisfac

-tory Enough

Is not enough

At the average

1 2 3 4 5

• Choice of the topics

• Moderation/direction of the course

• Quality of presentation(s)

• Usefulness of training for the own job

• Time for discussion and response to questions

Total

2. Organisation of the seminar Very good

Good Satisfac

-tory Enough

Is not enough

At the average

• Invitation/information about training

• Training room

• Seminar facilities/techniques

Total

. Other proposals, notes and comments:

2.3 Module 1: Organisational Set-up

2.3.1 Rationale and Introduction into Module 1 Today’s world is witnessing drastic changes. Asia’s economies developing at an unprecedented pace, governments have redefined their role in the economies and tend to act more as agents “setting the rules of the game”, rather than intervening directly into economies. These changes call upon a more vital role of Business Membership Organisations (BMOs) such as industrial associations to voice the concerns of their members in a professional manner. Among other things, professionalism means to consistently adhere to the democratic decision-making principles, to be clear about the mandate, to run an efficient organisational structure and to deliver services demanded by its clientele. Understanding the role of the BMO as a partner in development by being aware of the social and environmental responsibilities of business is likewise part of professionalism. In this context, module 1 “Organisational Set – up” intends to make participants aware on crucial aspects of the organisational structure of a BMO, thus laying the foundation for its success. Session 1 deals with the legal setting, while session 2 tackles organisational structure and behaviour. The sessions include the following topics:

- Legal forms of non-profit organisations

- The object of societies and section 25 companies

- Some legal requirements of societies and section 25 companies

- Structure of a BMO (statutory organs)

- Relationship and behaviour of key organs within a BMO

- Challenges in the proper functioning of BMOs and ways of addressing them

The module takes, roughly, 5 hours. Due to its nature, session 1 uses more traditional “lecturing” and plenary discussions, while session 2 comprises a more interactive mix of group work, plenary discussions and inputs from the facilitator or trainer. It is important to note that interactive training elements help to sustain participants’ attention and deepen their learning. This is especially important when trainings take place at evening hours.

2.3.2 Training Contents of Module 1: Organisational set-up



Session 1.1:

Legal setting

1. Legal forms of non-profit organisations

2. The object of societies and section 25 companies

3. Some legal requirements of societies and section 25 companies

1 hour 35 min.

16.00 – 17.35 h


Session 1.2:

Organisational structure and behaviour

1. Structure of a BMO (statutory organs)

2. Relationship and behaviour of key organs within a BMO

3. Challenges in the proper functioning of BMOs and ways of addressing them

3 hours 15 min.

17.50 – 21.05 h

Closing Workshop summary and evaluation 10 min. 21.05 – 21.15 h

Session 1.1: Legal Setting

A Overview Time: 1 hours 35 min.

Overview: The legal setting provides the framework under which BMOs in India are operating.

Although it can be assumed that the staff and Board members of BMOs already passed through the legal procedures for their establishment and are, to a certain extent, acquainted with the legal setting, it might be useful to recapitulate legal aspects. For instance, it is of utmost importance that the BMO understands itself as organisation acting for the public good which allows it to become exempt of income taxes. After presenting the legal forms of non-profit organisations in India, this session briefly explains the object of two common legal forms for BMOs – society and section 25 company – before it deals with a few legal requirements.


- Participants are familiar with legal forms of non-profit organisations in India.

- Participants are acquainted with a few legal requirements of societies and section 25 companies and are able to compare them.

Materials required:

Background readings 1, 2 and 3 of session 1.1 Charts 1.1.1 – 1.1.6 Handouts Flipcharts Projector Felt markers


Session 1.1: Legal setting


5 min. 4. Introduction Introduce the session by informing the plenary that you will deal with a few legal aspects of BMOs in India. These relate to the legal forms of non-profit organisations and their requirements.

Chart 1.1.1

45 min. 5. Legal forms and objects of societies and section 25 companies

Facilitator’s input: You are presenting the legal forms of non-profit organisations (chart 1.1.2) and the definition of their objects (charts 1.1.3 and 1.1.4). You point out that both, BMOs registering as society as well as section 25 company, are allowed to pursue business activities, provided the profits are applied towards non-profitable or “charitable” purposes.

Discussion: You will launch a brief discussion by asking the participants (i) what kind of legal form their own association opted for, (ii) what, according to their knowledge, advantages and disadvantages of the two most common legal forms for BMOs are. If time allows, you may also ask them, which of their associations is pursuing business activities and what needs to be taken care of in legal terms, if an association ventures into such kind of activities.

Charts 1.1.2 – 1.1.4

Background readings 1 and 2;

45 min. 6. A few legal requirements for societies and section 25 companies

Facilitator’s input: You are going through the tables displayed in charts 1.1.5 and 1.1.6 and highlight a few key legal requirements of societies and section 25 companies. Make sure that you have read the available background readings beforehand so that you might be able to forward some additional information

Charts 1.1.5 – 1.1.6

Background readings 1, 2 and 3

Handouts

C Background Readings Reading 1 of session 1.1: NGO Registration Methods Source: www.ngosindia.com/resources/ngo_registration.php.

In India, non-profit / public charitable organisations can be registered as trusts, societies, or a private limited non-profit company, under section-25 companies. Non-profit organisations in India (a) exist independently of the state; (b) are self-governed by a board of trustees or ‘managing committee’/ governing council, comprising individuals who generally serve in a fiduciary capacity; (c) produce benefits for others, generally outside the membership of the organisation; and (d), are ‘non-profit-making’, in as much as they are prohibited from distributing a monetary residual to their own members.

Section 2(15) of the Income Tax Act – which is applicable uniformly throughout the Republic of India – defines ‘charitable purpose’ to include ‘relief of the poor, education, medical relief and the advancement of any other object of general public utility’. A purpose that relates exclusively to religious teaching or worship is not considered as charitable. Thus, in ascertaining whether a purpose is public or private, one has to see if the class to be benefited, or from which the beneficiaries are to be selected, constitute a substantial body of the public. A public charitable purpose has to benefit a sufficiently large section of the public as distinguished from specified individuals. Organisations which lack the public element – such as trusts for the benefit of workmen or employees of a company, however numerous – have not been held to be charitable. As long as the beneficiaries of the organisation comprise an uncertain and fluctuating body of the public answering a particular description, the fact that the beneficiaries may belong to a certain religious faith, or a sect of persons of a certain religious persuasion, would not affect the organisation’s ‘public’ character.

Whether a trust, society or section-25 company, the Income Tax Act gives all categories equal treatment, in terms of exempting their income and granting 80G certificates, whereby donors to non-profit organisations may claim a rebate against donations made. Foreign contributions to non-profits are governed by FCRA regulations and the Home Ministry.

The Charities Aid Foundation (CAF) would like to clarify that this material provides only broad guidelines and it is recommended that legal and/or financial experts be consulted before taking any important legal or financial decision or arriving at any conclusion.

Formation and Registration of a Non-Profit organisation in India 1) Trust 2) Society 3) Section-25 Company Additional Licensing/ Registration

I. Trusts A public charitable trust is usually floated when there is property involved, especially in terms of land and building.

Legislation: Different states in India have different Trusts Acts in force, which govern the trusts in the state; in the absence of a Trusts Act in any particular state or territory the general principles of the Indian Trusts Act 1882 are applied.

Main Instrument: The main instrument of any public charitable trust is the trust deed, wherein the aims and objects and mode of management (of the trust) should be enshrined.

In every trust deed, the minimum and maximum number of trustees has to be specified. The trust deed should clearly spell out the aims and objects of the trust, how the trust should be managed, how other trustees may be appointed or removed, etc. The trust deed should be signed by both the settlor/s and trustee/s in the presence of two witnesses. The trust deed should be executed on non-judicial stamp paper, the value of which would depend on the valuation of the trust property.

Trustees: A trust needs a minimum of two trustees; there is no upper limit to the number of trustees. The Board of Management comprises the trustees.

Application for Registration: The application for registration should be made to the official having jurisdiction over the region in which the trust is sought to be registered.

After providing details (in the form) regarding designation by which the public trust shall be known, names of trustees, mode of succession, etc., the applicant has to affix a court fee stamp of Rs.2/- to the form and pay a very nominal registration fee which may range from Rs.3/- to Rs.25/-, depending on the value of the trust property.

The application form should be signed by the applicant before the regional officer or superintendent of the regional office of the charity commissioner or a notary. The application form should be submitted, together with a copy of the trust deed.

Two other documents which should be submitted at the time of making an application for registration are affidavit and consent letter.

II. Society

According to section 20 of the Societies Registration Act, 1860, the following societies can be registered under the Act: ‘charitable societies, military orphan funds or societies established at the several presidencies of India, societies established for the promotion of science, literature, or the fine arts, for instruction, the diffusion of useful knowledge, the diffusion of political education, the foundation or maintenance of libraries or reading rooms for general use among the members or open to the public, or public museums and galleries of paintings and other works of art, collection of natural history, mechanical and philosophical inventions,

instruments or designs.’

Legislation: Societies are registered under the Societies Registration Act, 1860, which is a federal act. In certain states, which have a charity commissioner, the society must not only be registered under the Societies Registration Act, but also, additionally, under the Bombay Public Trusts Act. Main Instrument: The main instrument of any society is the memorandum of association and rules and regulations (no stamp paper required), wherein the aims and objects and mode of management (of the society) should be enshrined.

Trustees: A Society needs a minimum of seven managing committee members; there is no upper limit to the number managing committee members. The Board of Management is in the form of a governing body or council or a managing or executive committee

Application for Registration:

Registration can be done either at the state level (i.e., in the office of the Registrar of Societies) or at the district level (in the office of the District Magistrate or the local office of the Registrar of Societies). (2)

The procedure varies from state to state. However generally the application should be submitted together with: (a) memorandum of association and rules and regulations; (b) consent letters of all the members of the managing committee; (c) authority letter duly signed by all the members of the managing committee; (d) an affidavit sworn by the president or secretary of the society on non-judicial stamp paper of Rs.20-/, together with a court fee stamp; and (e) a declaration by the members of the managing committee that the funds of the society will be used only for the purpose of furthering the aims and objects of the society.

All the aforesaid documents which are required for the application for registration should be submitted in duplicate, together with the required registration fee. Unlike the trust deed, the memorandum of association and rules and regulations need not be executed on stamp paper.

III. Section-25 Company

According to section 25(1)(a) and (b) of the Indian Companies Act, 1956, a section-25 company can be established ‘for promoting commerce, art, science, religion, charity or any other useful object’, provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members.

Legislation: Section-25 companies are registered under section-25 of the Indian Companies Act. 1956.

Main Instrument: For a section-25 company, the main instrument is a Memorandum and articles of association (no stamp paper required)

Trustees: A section-25 Company needs a minimum of three trustees; there is no upper limit to the number of trustees. The Board of Management is in the form of a Board of directors or managing committee.

Application for Registration:

1 An application has to be made for availability of name to the registrar of companies, which must be made in the prescribed form no. 1A, together with a fee of Rs.500/-. It is advisable to suggest a choice of three other names by which the company will be called, in case the first name which is proposed is not found acceptable by the registrar.

2 Once the availability of name is confirmed, an application should be made in writing to the regional director of the company law board. The application should be accompanied by the following documents: Three printed or typewritten copies of the memorandum and articles of association of the proposed company, duly signed by all the promoters with full name, address and occupation.

A declaration by an advocate or a chartered accountant that the memorandum and articles of association have been drawn up in conformity with the provisions of the Act and that all the requirements of the Act and the rules made thereunder have been duly complied with, in respect of registration or matters incidental or supplementary thereto.

Three copies of a list of the names, addresses and occupations of the promoters (and where a firm is a promoter, of each partner in the firm), as well as of the members of the proposed board of directors, together with the names of companies, associations and other institutions in which such promoters, partners and members of the proposed board of directors are directors or hold responsible positions, if any, with description of the positions so held.

A statement showing in detail the assets (with the estimated values thereof) and the liabilities of the association, as on the date of the application or within seven days of that date.

An estimate of the future annual income and expenditure of the proposed company, specifying the sources of the income and the objects of the expenditure.

A statement giving a brief description of the work, if any, already done by the association and of the work proposed to be done by it after registration, in pursuance of section-25.

A statement specifying briefly the grounds on which the application is made.

A declaration by each of the persons making the application that he/she is of sound mind, not an undischarged insolvent, not convicted by a court for any offence and does not stand disqualified under section 203 of the Companies Act 1956, for appointment as a director.

3. The applicants must also furnish to the registrar of companies (of the state in which the registered office of the proposed company is to be, or is situate) a copy of the application and each of the other documents that had been filed before the regional director of the company law board.

4. The applicants should also, within a week from the date of making the application to the regional director of the company law board, publish a notice in the prescribed manner at least once in a newspaper in a principal language of the district in which the registered office of the proposed company is to be situated or is situated and circulating in that district, and at least once in an English newspaper circulating in that district.

5. The regional director may, after considering the objections, if any, received within 30 days from the date of publication of the notice in the newspapers, and after consulting any authority, department or ministry, as he may, in his discretion, decide, determine whether the licence should or should not be granted.

6. The regional director may also direct the company to insert in its memorandum, or in its articles, or in both, such conditions of the licence as may be specified by him in this behalf.

IV. Special Licensing

In addition to registration, a non-profit engaged in certain activities might also require special license/permission. Some of these include (but are not limited to):

A place of work in a restricted area (like a tribal area or a border area requires a special permit – the Inner Line Permit – usually issued either by the Ministry of Home Affairs or by the relevant local authority (i.e., district magistrate).

To open an office and employ people, the NGO should be registered under the Shop and Establishment Act.

To employ foreign staff, an Indian non-profit needs to be registered as a trust/society/company, have Foreign Contribution Regulation Act (FCRA) registration and also obtain a No Objection Certificate. The intended employee also needs a work visa.

A foreign non-profit setting up an office in India and wanting staff from abroad needs to be registered as a trust/society/company, needs permission from the Reserve Bank of India and also a No Objection Certificate from the Ministry of External Affairs.

Comparison among Trust, Society and Non-profit Company

Trust Society Section 25 - Company

Statute/ Legislation

Relevant State Trust Act or Bombay Public Trusts Act, 1950

Societies Registration Act, 1860

Indian Companies Act, 1956

Jurisdiction Deputy Registrar/Charity commissioner

Registrar of societies Registrar of companies

Registration As trust As Society As a company u/s 25 of the Indian Companies Act.

Registration Document

Trust deed Memorandum of association and rules and regulations

Memorandum and articles of association.

Stamp Duty Trust deed to be executed on non-judicial stamp paper, vary from state to state

No stamp paper required for memorandum of association and rules and regulations

No stamp paper required for memo-randum and articles of association

Members Required

Minimum – two trustees. No upper limit.

Minimum – seven managing committee members. No upper limit

Minimum three trustees. No upper limit.

Board of Management

Trustees / Board of Trustees

Governing body or council/managing or executive committee

Board of directors/ Managing committee

Mode of Succession on Board of Management

Appointment or Election Appointment or Election by members of the general body

Election by members of the general body

Reading 2 of session 1.1: Legal and tax issues of NGOs Source: www.ngosindia.com/resources/ngo_registration1.php. According to the site the information is drawn from the following website: www.usig.org/countryinfo/india.asp I. Summary A. Types of Organisations: 1. Trusts

The public charitable trust is a possible form of not-for-profit entity in India. Typically, public charitable trusts can be established for a number of purposes, including the relief of poverty, education, medical relief, provision of facilities for recreation, and any other object of general public utility. Indian public trusts are generally irrevocable. No national law governs public charitable trusts in India, although many states (particularly Maharashtra, Gujarat, Rajasthan, and Madhya Pradesh) have Public Trusts Acts.

2. Societies

Societies are membership organisations that may be registered for charitable purposes. Societies are usually managed by a governing council or a managing committee. Societies are governed by the Societies Registration Act 1860, which has been adapted by various states. Unlike trusts, societies may be dissolved.

3. Sec. 25 Companies

A section 25 company is a company with limited liability that may be formed for "promoting commerce, art, science, religion, charity or any other useful object," provided that no profits, if any, or other income derived through promoting the company's objects may be distributed in any form to its members.

B. Tax Laws

India’s tax laws affecting NGOs are similar to the tax laws of other Commonwealth nations. These laws may have some impact on U.S. grant makers, and thus are summarized here. India provides for exemption from corporate income taxes of the income of certain NGOs carrying out specific types of activities, with unrelated business income being subject to tax under certain circumstances. India also subjects certain sales of goods and services to VAT, with a fairly broad range of exempt activities. The rates range from 4 percent to 12 percent, with most goods and services taxed at 8 percent.

The income tax law and the corporate tax law provide tax benefits for donors, and these may be relevant to an American corporation doing business in India in deciding whether to engage in direct corporate grant making in India. The existence of a double taxation treaty between India and the United States may also affect gift planning decisions of U.S. corporate grant makers doing business in India. Finally, not-for-profit organisations involved in relief work and in the distribution of relief supplies to the needy are 100% exempt from Indian customs duty on the import of items such as food, medicine, clothing and blankets. Other exemptions may also be available.

http://www.ngosindia.com/resources/ngo_registration1.php

http://www.usig.org/countryinfo/india.asp

II. Applicable Laws

Constitution of India Articles 19(1)(c) and 30; Income Tax Act, 1961; Public Trusts Acts of various states; Societies Registration Act, 1860; Indian Companies Act, 1956, section 25; Foreign Contribution (Regulation) Act, 1976; Maharashtra Value Added

III. Relevant Legal Forms

The right of all citizens to form associations or unions is guaranteed by the Constitution of India, Article 19(1)(c).

There are three pertinent legal forms of not-for-profit entities under Indian law: trusts, societies, and section 25 companies (as well as cooperatives and trade unions, which, as mutual benefit organisations, are not discussed in this note). Many state and central government agencies have regulatory authority over these not-for-profit entities. For example, all not-for-profit organisations are required to file annual tax returns and audited account statements with various agencies. At the state level, these agencies include the Charity Commissioner (for trusts), the Registrar of Societies (referred to in some states by different titles, including the Registrar of Joint Stock Companies), and the Registrar of Companies (for section 25 companies). At the national or federal level, the regulatory bodies include the income tax department and Ministry of Home Affairs (only for not-for-profit organisations receiving foreign contributions).

1. Trusts

Public charitable trusts, as distinguished from private trusts, are designed to benefit members of an uncertain and fluctuating class. In determining whether a trust is public or private, the key question is whether the class to be benefited constitutes a substantial segment of the public. There is no central law governing public charitable trusts, although most states have "Public Trusts Acts." Typically, a public charitable trust must register with the office of the Charity Commissioner having jurisdiction over the trust (generally the Charity Commissioner of the state in which the trustees register the trust) in order to be eligible to apply for tax-exemption.

In general, trusts may register for one or more of the following purposes:

- Relief of Poverty or Distress; - Education; - Medical Relief; - Provision for facilities for recreation or other leisure -time occupation (including

assistance for such provision), if the facilities are provided in the interest of social welfare and public benefit; and

- The advancement of any other object of general public utility, excluding purposes which relate exclusively to religious teaching or worship.

At least two trustees are required to register a public charitable trust. In general, Indian citizens serve as trustees, although there is no prohibition against non-natural legal persons or foreigners serving in this capacity.

Legal title of the property of a public charitable trust vests in the trustees. Trustees of a public charitable trust may not, however, in any way use trust property or their position for

their own interest or private advantage. Trustees may not enter into agreements in which they may have a personal interest that conflicts or may possibly conflict with the interests of the beneficiaries of the trust (whose interests the trustees are bound to protect). Trustees may not delegate any of their duties, functions or powers to a co-trustee or any other person, except that trustees may delegate ministerial acts. In essence, trustees may not delegate authority with respect to duties requiring the exercise of discretion.

Trustees of religious or charitable trusts are charged with discharging their duties with the degree of care that an ordinarily prudent person would exercise with respect to his personal property. This is a slight variant on the duty of care applicable in many U.S. jurisdictions, which requires directors and officers to act with the degree of diligence, care and skill that ordinarily prudent persons would exercise under similar circumstances in like positions (as opposed to in the management of their personal affairs). Public charitable trusts are highly regulated. For instance, in many states, purchases or sales of property by a trust must be approved in advance by the Charity Commissioner.

Indian public charitable trusts are generally irrevocable. If a trust becomes inactive due to the negligence of its trustees, the Charity Commissioner may take steps to revive the trust. Furthermore, if it becomes too difficult to carry out the objects of a trust, the doctrine of cypress, meaning "as near as possible," may be applied to change the objects of the trust. Thus, it appears that grantors can feel fairly secure that the charitable nature of a trust will be honoured, even if the original, specific purposes of the trust cannot be carried out.

2. Societies

Societies are governed by the Societies Registration Act 1860, which is an all-India Act. Many states, however, have variants on the Act.

Societies are similar in character to trusts, although there a few essential differences. While only two individuals are required to form a trust, a minimum of seven individuals are required to form a society. The applicants must register the society with the state Registrar of Societies having jurisdiction in order to be eligible to apply for tax-exempt status. A registration application includes the society's memorandum of association and rules and regulations. In general, Indian citizens serve as members of the managing committee or governing council of societies, although there is no prohibition in the Societies Registration Act against non-natural legal persons or foreigners serving in this capacity.

According to section 20 of the Act, the types of societies that may be registered under the Act include, but are not limited to, the following:

- Charitable societies; - Societies established for the promotion of science, literature, or the fine arts,

for education; and - Public art museums and galleries, and certain other types of museums.

The governance of societies also differs from that of trusts; societies are usually managed by a governing council or managing committee, whereas trusts are governed by their trustees.

Individuals or institutions or both may be members of a society. The general body of members delegates the management of day-to-day affairs to the managing committee, which is usually elected by the membership. Members of the general body of the society have voting rights and can demand the submission of accounts and the annual report of the society for inspection. Members of the managing committee may hold office for such period of time as may be specified under the bylaws of the society. Societies, unlike trusts, must file annually, with the Register of Societies, a list of the names, addresses and occupations of their managing committee members. Furthermore, in a society, all property is held in the name of the society, whereas all of the property of a trust legally vests in the trustees.

Unlike trusts, societies may be dissolved. Dissolution must be approved by at least three-fifths of the society's members. Upon dissolution, and after settlement of all debts and liabilities, the funds and property of the society may not be distributed among the members of the society. Rather, the remaining funds and property must be given or transferred to some other society, preferably one with similar objects as the dissolved entity.

3. Companies

The Indian Companies Act, 1956, which principally governs for-profit entities, permits certain companies to obtain not-for-profit status as "section 25 companies." A section 25 company may be formed for "promoting commerce, art, science, religion, charity or any other useful object." A section 25 company must apply its profits, if any, or other income to the promotion of its objects, and may not pay a dividend to its members. At least three individuals are required to form a section 25 company. The founders or promoters of a section 25 company must submit application materials to the Regional Director of the Company Law Board. The application must include copies of the memorandum and articles of association of the proposed company, as well as a number of other documents, including a statement of assets and a brief description of the work proposed to be done upon registration.

The internal governance of a section 25 company is similar to that of a society. It generally has members and is governed by directors or a managing committee or a governing council elected by its members.

Like a society (but unlike a trust), a section 25 company may be dissolved. Upon dissolution and after settlement of all debts and liabilities, the funds and property of the company may not be distributed among the members of the company. Rather, the remaining funds and property must be given or transferred to some other section 25 company, preferably one having similar objects as the dissolved entity.

Public Benefit Status

To be eligible for tax-exemption under the Income Tax Act, 1961, a not-for-profit entity must be organised for religious or charitable purposes. Charitable purposes include "relief of the poor, education, medical relief and the advancement of any other object of general public utility."

Public charitable trusts, by definition, must be created for the benefit of the public. Societies likewise may be registered for charitable purposes. Section 25 companies are formed for the limited purposes of "promoting commerce, art, science, religion, charity or any other useful object."

IV. Specific Questions

The following discussion addresses the extent to which Indian not-for-profit entities satisfy the requirements for a charitable equivalency determination under section 501(c)(3) of the U.S. Internal Revenue Code of 1986, as amended (hereinafter the "Code"). The discussion is limited to the minimum requirements under Indian law; the governing documents of charitable entities may of course choose to include further provisions, which may satisfy the requirements of an equivalency determination. U.S. private foundation donors should, therefore, also review a potential grantee's governing documents for provisions relevant to an equivalency determination.

A. Inurement

Public charitable trusts must benefit a large class of beneficiaries and must be for the public benefit. Moreover, trustees of public charitable trusts may not engage in self-dealing. Despite the clear charitable intent of a public charitable trust, absent a provision in the trust deed specifically prohibiting private inurement, it is unclear whether public charitable trusts satisfy the prohibition on private inurement in Code section 501(c)(3).

The Societies Registration Act 1860 does not prohibit the inurement of any earnings of the society to any private shareholder or individual.

The Indian Companies Act, 1956, section 25 specifically provides that no profits, if any, or other income may be distributed by way of dividends to its members.

B. Proprietary Interest

Whether an individual may have a proprietary interest in a not-for-profit entity relates to the issue of inurement. Trustees of a public charitable trust hold trust assets on behalf of the trust. Thus, although trustees have legal title to the trust's assets, they hold these assets for the beneficiaries of the trust, not for themselves. Members of the managing committee or governing council of a society or section 25 company hold the assets of a society or section 25 company.

A. Dissolution

Indian public charitable trusts are generally irrevocable. If a trust becomes inactive due to the negligence of its trustees, the Charity Commissioner may take steps to revive the trust. Furthermore, if it becomes too difficult to carry out the objects of a trust, the doctrine of cypress, meaning "as near as possible," may be applied to change the objects of the trust. Thus, it appears donors could feel fairly secure in the event the trust can no longer accomplish its initial purposes; the trust's purposes would be changed to another similar public charitable purpose, or in the unlikely event of a distribution or winding up of a trust due to changed circumstances, the trust assets would be used for similar charitable purposes.

Unlike trusts, societies and section 25 companies may be dissolved. Upon dissolution and after settlement of all debts and liabilities, the funds and property of the society or company may not be distributed among the members. Instead, the remaining funds and property must be given or transferred to some other society or section 25 companies, preferably one with similar objects.

D. Activities

Economic Activities

There are no restrictions on Indian NPOs’ business/commercial/economic activities. However, the profits must be applied fully towards charitable objects. If this is not done, then the NPO will lose its income tax exemption and its income will be liable to tax at the maximum marginal rate (35.1%). Further the NPO must maintain separate books of account for the business/commercial/economic activities. [Income Tax Act, 1961 (seventh proviso to section 10(23C); section 11, subsection 4 and 4A)].

Investment Activities

State and national laws limit the types of investments Indian not-for-profit organisations may make. For example, Indian not-for-profit organisations may not invest in shares of public or private limited companies. Furthermore, not-for-profit organisations registered in India may not invest abroad.

E. Political Activities

Not-for-profit organisations in India may not engage in political campaign activities or legislative activities. Indian not-for-profit entities may "lobby" for non-political causes, however, provided that such activity promotes the "general public utility" and is incidental to the attainment of the charity's objects.

F. Discrimination

Article 30 of the Constitution of India gives all "minorities," whether based on religion or language, the right to establish and administer educational institutions of their choice. "Minority" is defined as those groups that wish to preserve stable ethnic, religious or linguistic traditions or characteristics markedly different from those of the rest of the population. Accordingly, special inquiry should be made when donors are considering providing grants to educational institutions.

G. Control of Organisation

With regard to charities in general, trustees are expected to be independent. It is, however, ordinarily possible for another legal person to influence the selection of directors, officers, or trustees – for example, by making a donation contingent on the donor's right to appoint a member of the board.

A for-profit company that creates a public charitable trust can exert more direct control. The for-profit company could, in the process of founding the public charitable trust, reserve the authority to appoint and remove trustees and to influence major policy decisions. This is typical of a form of public charitable trust known as a "corporate foundation," which is essentially controlled by its for-profit founder, or "settlor."

In the case of a Section 25 company or a society, members always have the right to remove directors and thus to influence policy. These members can include for-profit entities.

Reading 3 of session 1.1: Example of Articles of Association Source: Confederation of Women Entrepreneurs (COWE). Note that the document represents the draft Articles of Association of COWE.

INCORPORATED

UNDER SECTION 25 OF THE COMPANIES ACT, 1956

(1 OF 1956)

[COMPANY LIMITED BY GUARANTEE & NOT HAVING

SHARE CAPITAL]

ARTICLES OF ASSOCIATION

OF

CONFEDERATION OF WOMEN ENTREPRENUERS

PRELIMINARY Subject as hereinafter provided, the regulations contained in table C in the first Schedule to the Companies Act, 1956(hereinafter called the said Act) shall apply to this company except in so far as they are hereinafter expressly excluded, modified or verified INTERPRETATION In the interpretation of these Articles the following words and expressions shall have the following meanings unless repugnant to the clauses, subject or context.

(a) “The Confederation” means “The Confederation of Women Entrepreneurs”

(b) “The Act” means the “The Companies Act, 1956” or any statutory modification or re-enactment thereof for the time being in force

(c) “Member” means a member of The Confederation whose name stands on the Register of Members

(d) Register of Members means the Register of Members as required by the Companies Act, 1956

(e) Subscription means the subscription for the time being fixed by the Confederation

(f) Year means the financial year beginning from the 1

st April to 31

st March

(g) “The General Body” means the General Body of the members of the Confederation entitled to attend

and vote at the General meetings of the Confederation, whether annual or special and any adjournment thereof; and “General Meeting” means a meeting of the members of the Confederation entitled to attend and vote

(h) “The President”, “The Senior Vice- President” and “The Vice- President” means respectively The

President, The Senior Vice- President and The Vice- President of the confederation.

(i) “Secretary” means the secretary of the confederation

(j) Joint Secretary means the joint secretary of the confederation

(k) Treasurer means the treasurer of the confederation

(l) Managing committee means the managing committee of the confederation and the managing

committee meeting means a meeting of the members of the managing committee

(m) Office means the registered office of the confederation

(n) Rules means and includes the Memorandum and these articles of association and any other rules and regulations of the confederation from time to time in force

(o) The seal means the common seal of the confederation

Unless the context otherwise requires, words or expressions contained in these regulations shall bear the same meaning as in the Act or any statutory modification thereof in force at the date at which these regulations become binding on the company Any exemptions already granted or those to be granted in future by the central government to companies licensed under section 25 of the act, shall be applicable to the company

MEMBERS

The number of members with which the company proposes to registered is 1000( One thousand), but the managing committee may, from time to time, whenever the company requires, register an increase its number of members, as it may deem fit. There shall be the following classes of members: a) Members: Women entrepreneurs who are individuals, professionals, firms, partnerships, companies, associations and corporations engaged in trade, commerce, industry, mining, transport or any other mercantile pursuits, whose knowledge, experience and services are likely to be found useful aid in carrying out its objectives are eligible for admission as members of the confederation in their personal, conventional or corporate name. b) Life Members: Women entrepreneurs who are individuals, professionals, firms, partnerships, companies, associations and corporations who in accordance with these regulations are eligible for election as members can be admitted as Life members and shall after admission be entitled to all the privileges of members during their life time. c) Association Members: Any association of Women Entrepreneurs established for the purpose of promoting and protecting the interests of any section of trade, commerce, industry or finance may be associated to the confederation and be admitted as “Association Member provided that such an association files its rules and list of members and the names of its office bearers from time to time d) Honorary Members: Any person of eminent position and attainments, distinguished for her service to the cause of commerce, industry or finance may be admitted as Honorary Member of the confederation. Honorary Member shall be entitled to receive all publications of the confederation in the same manner as members.

APPLICATION FOR MEMBERSHIP Any individual, professionals, firms, partnerships, companies, associations and corporations in India or abroad, desirous of becoming a member of the confederation, who are otherwise eligible to become a member in accordance with these articles, shall send an application to the confederation together with such admission fees and subscription amount( for not less than one year) as mentioned in these articles. The secretary of the confederation shall cause all applications to be placed before the managing committee or the subcommittee at their next meeting or by circular for their approval. The managing committee or the sub-committee may either accept or reject the said application, after giving reasons for rejection thereof. In case the application is rejected the amount tendered by the applicant shall be refunded forthwith.

ADMISSION FEES The following shall be the fee structure of the confederation. However the managing committee shall have every right to increase/decrease the fee structure subject to the approval of at least three fourth of the managing committee members, present in person and voting at a duly convened and held the managing committee meeting 1. Registration fees Rs. 100/- 2. Individual members: Rs. 1000/p.a. 3. Life members : Rs. 10000/p.a. 4. Associate/Corporate members: Rs. 3000/p.a. 5. Honorary members/Advisory committee Every member is liable to pay the annual subscription on or before the day 31

st March, for the ensuing

year. Provided further that such members who pay the subscription after 31st March but before 30

th

April shall be entitled to vote at the ensuing AGM but not eligible to either contest, propose or second the candidacy of any member for the purpose of election to the Managing Committee or the Executive Committee. Provided further, however, that the subscription may be collected or paid in advance by the members, but this subscription so collected or paid shall not carry any rate of interest. If a member commits default in the payment of her yearly subscription by the due date, the Managing Committee shall cause a reminder to be sent by registered post to such a defaulter within _____ days from the expiry of the due date and if the payment is not received within one month thereafter, then the Managing committee shall have the power to remove her name from the register of members and take appropriate action if necessary for the collection of the arrears. Any member whose name has been removed from the register of members for non- payment of dues shall be eligible for re-admission on payment of all outstanding dues.

REPRESENTATION OF MEMBERS Subject to the members shall exercise the representation rights in the following manner: In case if a partnership firm is admitted in their conventional name as a member of the

confederation, any one partner shall subject to the approval of all other partners be authorised to represent that firm.

In case of a company being admitted in its corporate name as a member of the confederation, a Director, the manager or the company secretary of the company or any other person so authorised by a board, shall be entitled to make representations for and on behalf of the company.

In case of an Association, its President, Vice- president, treasurer or secretary or any other person so authorised by the association shall be entitled to make representations

Subject, nevertheless, to the following reservations: For each act of exercise of the rights and privileges of membership by a firm or partnership, company or corporation, or affiliated association, only one representative shall be recognized. At the General Body Meeting of the Confederation, if the original nominee is not present, an alternative representative may be appointed. Every representative shall send her specimen signature and a photograph to the Confederation, to be registered with the Confederation. Whenever there is a change in the representation, the new representative shall send her specimen signature and a photograph for such registration.

REGISTER OF MEMBERS AND ELECTORAL ROLL

a) A Register of members shall be kept in which the names, categories of membership, and

addresses of the members, the changes if any in membership taking place from time to time shall also be recorded.

b) All changes in the names and addresses of their representatives shall have to be notified in writing to the Secretary by the members on or before the 31

st March of each year for the purpose of

election to the Executive Committee at the Annual General Meeting during the succeeding year. c) Any firm or Partnership, company or corporation or association enrolled as a member of

Confederation may at any time notify on or before 31st March to the Secretary of the

Confederation the name and official designation of a new representative authorized to act in the name and on behalf of such member, and every such new representative shall become entitled to exercise the rights and privilege of the member by whom she has been so nominated.

PRIVILEGES OF MEMBERS

Every Member of the Confederation shall be entitled to the following privileges:- a) To obtain gratis all the publications of the Confederation; b) To the free use of the Library; c) To attend, speak and vote at any General Meeting of the Confederation. d) To be elected to the Executive Committee

CESSATION OF MEMBERSHIP

A member of the confederation shall ipso-facto cease to be member of the Company a) By sending a notice in writing of her intention to cease from being a member of the confederation

either by the registered post/ by delivering it in person to the Secretary and on receipt of such notice by the Secretary, she shall cease to be a member, but shall be liable to pay all her dues, if any. She shall not, however, be entitled to a refund of any donations or subscriptions paid by her in advance.

b) In case of an individual member, if she is an undischarged insolvent, or if she is of unsound mind or if she is convicted of an offence involving moral turpitude.

c) In case of a firm of partnership, if it is dissolved or adjudged insolvent. In case of a company or corporation, or an association if it is wound up. Wherein any Member fails to pay subscription including arrears, if any, within 90 days after serving a notice.

d) The Managing Committee shall have the power to terminate the Membership of any individual or institution, after passing a resolution to that effect by two-thirds of majority of the members present, if it is considered that the member is acting against the interest of the confederation. The termination shall take effect only after giving a notice in writing to the member concerned and after giving a reasonable opportunity of being heard.

Provided that any person, firm or company who shall by any reason ceases to a member shall remain liable for all dues and shall pay to the Confederation all moneys which at the time of such person ceasing to be a member may be due from such person to the Confederation.

THE MANAGING COMMITTEE

The affairs of the Confederation shall be vested in toto with the Managing Committee. The first Managing Committee Members of the Company shall be: _______________________________________

CONSTITUTION OF THE MANAGING COMMITTEE a) The President, b) Senior Vice President, c) Vice President, d) Secretary e) Joint Secretary

f) Treasurer

FUNTIONS OF THE MANAGING COMMITTEE MEMBERS

FUNCTIONS OF THE PRESIDENT

The President shall be functional head of the Confederation and shall preside at every meeting of Managing Committee, and of all Committees and Sub-committees of the confederation.

FUNCTIONS OF THE SR.VICE PRESIDENT

The Sr. Vice President in the absence of the President shall have the powers of the President and perform all the duties of the President.

FUNCTIONS OF THE VICE PRESIDENT

The Vice President in the absence of the Sr. Vice President and the President shall have the powers of the President and perform the duties of the President.

FUNCTIONS OF THE SECRETARY

The Secretary shall control the working of the staff of the Confederation and supervise all the matters of the Confederation and to comply with all the applicable rules and regulations in India and abroad as the case may be.

FUNCTIONS OF THE JOINT SECRETARY

The Joint Secretary in the absence of the Secretary shall have the powers and perform the duties of the secretary.

FUNCTIONS OF THE TREASURER

The Treasurer shall perform the duties and discharge responsibilities relating to the accounts, finance and related matters thereof and accountability to the Confederation.

POWERS OF THE MANAGING COMMITTEE

a) The Managing Committee may, in addition to the power, expressly conferred on the Managing Committee by these Articles, exercise all such power and do all such acts and things as may be exercised and done by the confederation. b) The Managing Committee shall expressly exercise the following powers in accordance with the provisions of the Act:-

To take all the budgetary, economic and financial decisions for the confederation. To buy or procure the supply of all articles, goods, merchandise and other movable

property for the use of the Confederation, and to pay for such purchases. to take on lease, purchase or otherwise acquire any land, property (whether freehold,

leasehold or otherwise) with or without a building or buildings thereon, and to erect, construct and build or alter any building or buildings thereon for the purposes of the Confederation and to pay for the same in cash or otherwise.

To delegate, subject to such conditions as they may think fit, any of their powers to any Sub-Committee and to make vary and repeal the rules for the regulation of the proceedings of such Sub-committee.

To make such rules as the Managing Committee may consider expedient for the regulation of the joint working of the business of any association connected with the Confederation or for the purpose of defining the terms and conditions of the joint working of the business of such association or as may from time to time be agreed upon between such association and Managing Committee.

To call any General Meetings of the Confederation to transact such business as it is mentioned in the notice convening the meeting.

To appoint and at their discretion remove or suspend such agents, managers, secretaries for permanent, temporary or special service as they may from time to time think fit and to determine their powers and duties and fix their salaries or emoluments and to require securities in such instances and to such amounts as they think for and generally to provide for the management of the company in different parts of India or outside in any countries and to establish and maintain branch offices.

To insure or keep insured all or any of the buildings and other properties of the Confederation, and to incur and pay the necessary expenses for the same.

To commence, institute, prosecute and defend all actions and suits as the Managing Committee may deem necessary, in the interest of the confederation and to compromise or submit to arbitration the said actions and suits as the Managing Committee may in their discretion think fit through the Secretary or any person so authorized, by a resolution.

To engage the services of Advocate, Solicitors, Pleaders for the purposes of the Confederation and pay them such remuneration as may be found necessary and to authorize all or any of them to represent the Confederation in all duly constituted courts of law, before any arbitrator or arbitrators, Officer or Officers, or any committee in connection with any measures affecting the interests and welfare of commerce and industry or to engage an auditor or similar experts to appear on their behalf who they may consider desirable.

To constitute from time to time from among the Members of the Confederation a Panel of Legal Advisors and also prescribe the qualifications for the inclusion of any Member therein, advisory nature as may be furtherance of the objects, of the Confederation, as an Honorary Secretary of the Confederation.

To create and maintain a provident fund for the benefit of the Secretary and the staff of the Office of the Confederation on such terms and conditions as may from time to time be deemed necessary and expedient

To incur and pay all expenses necessary for carrying out the aims and objects of the Confederation.

To collect and receive subscriptions, donations and endowments for the purpose of the Confederation and to deposit moneys so collected in scheduled banks approved by the Managing Committee and invest the surplus funds of the Confederation in such securities as may be permitted by law in force.

To nominate and depute delegates of the Confederation to attend and take part in the proceedings of industrial or commercial congresses, conferences, and exhibition committees and in meeting of Governmental, quasi-government and other bodies or commercial or economic conferences and of organisations to which the confederation is affiliated.

To secure wherever possible organised and or concerted action on the subject involving the interest of members, including regulation of conditions of employment of industrial labour in various industries represented by the members of confederation.

To affiliate or absorb association of members of any section of trade, commerce, industry on such terms and conditions as may be found fit and desirable and to grant such rights and privileges to such associations as may be deemed necessary and advisable.

To subscribe to become a member of, and cooperate with any association, whether incorporated or not whose objects are wholly or partly identical with, or similar to those of the Confederation and procure from, and communicate to, any such association such information as may be likely to further the object of the Confederation.

To arrange to open and operate one or more accounts in such scheduled bank or banks as the Managing Committee deems fit and to appoint one or more persons as it deems fit to operate such accounts either jointly or severally or otherwise.

BORROWING POWERS - MANAGING COMMITTEE

The Managing Committee may from time to time at their discretion raise or borrow or secure

the payments of any sum or sums of money for the purpose of the company’s objects and

may secure the payment for or repay of such money by mortgage or charge upon the whole

or nay part of the assets and property of the company (present or future).

If and when the Company receives any loan or assistance in whatsoever shape from the

Central or State Government or any financial institutions shall be entitled to appoint one or

more Member on the Managing Committee of the company. Such Director/Directors shall be

known as “Nominee Member” and they shall not be liable to retire by rotation.

The Managing Committee may from time to time borrow from members or other persons or

Banks or Financial Institutions or from any other source any sum of money for the purpose of

the Company, subject to the provisions of Section 293 of the companies act, 1956

The Managing Committee may raise and secure the repayment of such money in such

manner and upon such terms and conditions in all respects as it thinks fit and in particular

making, drawing accepting, endorsing on behalf of the company any promissory notes, bills

of exchange or trust receipt or giving or issuing any other security of the company or by

mortgage or by hypothecation or charge of all or any of the properties of the company ( both

present and future) and the Managing Committee Members may on behalf of the company

stand or give personal guarantee for the whole or any part of the loan or for debts incurred by

the company. They shall from time to time determine the manner of execution of documents,

operation of Banks Accounts etc.

ELECTIONS The elections in the managing committee will be held once in two years for the Treasurer post

only. The members of the Managing Committee and the Executive Committee only shall be entitled to be present and vote. In case of any dispute the final decision lies with the Managing Committee.

Until otherwise determined by general meeting the number of Managing Committee Members

shall neither be less than two and not more than twelve inclusive of the Ex-Office Members, Nominee Members, Technical Members, Special Members, Co-opted Members, if any, and all other kinds of Managing Committee Members on the Board. The Company may by ordinary resolution in General Meeting increase or reduces the number of Managing Committee Members.

Any Managing committee member may resign from her office at any time by intimation in writing to

the President or to the Secretary but such resignation shall be final only on its acceptance of not less than two-third of the members of the Managing Committee.

All vacancies of the Managing Committee shall be filled by the Managing Committee, from the

executive committee

EXECUTIVE COMMITTEE The Executive Committee shall consist of office bearers and the elected members, the total of

which shall not exceed 20. However not more than 5 members shall be inducted into the Executive Committee at one time The members of the confederation shall be eligible to be elected to the executive committee, provided that they have been are a life member of the confederation and a period of not less than one year have elapsed from the date of their becoming a life member.

The vacancy in the Executive Committee shall be filled up in a duly called General meeting of the members of the company or at the annual general meeting of the company.

The Executive Committee shall carry out all such functions and duties as may be delegated to it by the managing committee, in furtherance of the objects of the confederation

ADVISORY COMMITTEE

Eminent personalities from industry, business, professionals, economists form the advisory committee nominated by the

managing committee and they may be permanent members in the advisory committee.

SUB-COMMITTEES

The Managing Committee may form Sub- Committees, for the purpose of taking up different projects of the Confederation. Each sub-committee shall consist of one member from the Managing Committee and two members from the executive committee. The Managing Committee member shall be the Chairperson of such subcommittee.

MEETINGS OF THE MANAGING AND EXECUTIVE COMMITTEE

The Managing Committee shall ordinarily meet once a week or as decided by the members

of the committee.

The Executive Committee meeting shall be conducted once a month for the purposes of the

business of the Confederation. Notices of the every meeting of the Executive Committee

shall be issued by the secretary to every Executive Committee member at least 7 days prior

to the meeting along with the agenda notes.

Leave of absence shall be sought by every Executive Committee Member, in event of her

inability to attend the Executive Committee meeting.

Wherein an Executive Committee member does not ask for leave of absence and is

consecutively absent for more than three Executive Committee meetings, she shall be

disqualified from continuing in the Executive Committee

REQUISITIONED MEETING OF THE MANAGING COMMITTEE/EXECUTIVE COMMITTEE

Any five members of the Managing Committee/Executive Committee may requisition a

meeting, by depositing a requisition signed by not less than five members of specifying the

purpose for which the special meeting is to be convened, and such special meeting shall be

held within fifteen days after the receipt of such requisition at the registered office of the

Confederation. Three days’ notice shall be sufficient for convening.

PROCEDURE AT THE MANAGING COMMITTEE/EXECUTIVE COMMITTEE

MEETINGS

a) At every meeting of the Managing Committee/Executive Committee, the President or in her absence the Sr. Vice President or in her absence the Vice President shall preside over the deliberations. In the absence of the President or the Sr. Vice President or the Vice President, the members present shall elect a Chairperson for that meeting from the Managing Committee members present.

b) No business shall be transacted at a meeting of the Managing Committee/Executive Committee other than the items detailed in the Agenda, except with the permission of the Chairperson.

c) The quorum for Managing Committee/Executive Committee meeting shall be eight members or one fourth of its total strength, whichever is less, but however the quorum of the Managing Committee meeting shall not be less than three members.

d) If, within 15 min of the time specified for a meeting of the Managing Committee/Executive Committee, there is no quorum present, the meeting shall stand adjourned to next week same date, hour and place. Provided that in case the meeting was convened as a result of a requisition, then such a meeting shall be dissolved if no quorum is formed within 15 min of the time specified for the meeting.

e) All questions before the Managing Committee/Executive Committee shall be decided by the show of hands, or by ballot, at the request by any member, the Chairperson of the meeting shall have a second or the casting vote in the case of equality of votes.

MINUTES OF THE COMMITTEE MEETINGS

The draft minutes of every Managing Committee/Executive Committee meeting shall be

circulated by the secretary to all the Managing Committee/Executive Committee members

within one week of the meeting.

The minutes as approved to by all the Managing Committee/Executive Committee members

shall be signed by the Chairperson at the next Managing Committee/Executive Committee, in

accordance with the provisions of Section 193 of the companies act, 1956

All sub committees appointed by the Managing Committee/Executive Committee shall cause

the proceedings of their meetings to be duly recorded in the minutes book and shall be duly

signed by the respective Chairperson or Convener or the Secretary of that meeting.

ACCOUNTS

Books of accounts shall be kept at the registered office of the company

The managing committee members shall have the powers to determine from time to time

whether and to what extent and what time the books of the company shall be kept open for

inspection. No member shall have the right to inspect except as provided in the companies

act, 1956 or by any resolution of the company in general meeting

AUDITOR

a) An Auditor shall be appointed by the members of the Confederation at their Annual General Meeting for auditing the Accounts of the Confederation on such remuneration as the members may fix at that meeting.

b) The Auditor so appointed shall remain in office till the conclusion of the Annual General Meeting.

c) The Managing Committee shall have power to fill any casual vacancy in the office of the Auditor.

d) No person shall be eligible for appointment as Auditor unless he or she possesses the qualifications prescribed by The Institute of Chartered Accountants of India.

e) No member of the Managing Committee of the Confederation shall be eligible for election as an Auditor.

f) No person other than a retiring Auditor shall be eligible for election as an Auditor unless notice of an intention to nominate such person to the office of an Auditor has been received by the Secretary from members of the Confederation at least fourteen days before the Annual General Meeting of the members. A copy of such notice shall be sent by the Secretary to the members and to the retiring Auditor at least seven days before the date of such Annual General Meeting.

g) The Auditor shall have the right of access at all times the books, accounts and vouchers of the Confederation and shall be entitled to obtain from the officers of the Confederation such information as may be necessary for the performance of his/her duties.

ANNUAL GENERAL MEETINGS

Every Annual General Meeting of the company shall be called for during business hours, on

a day that is not a public holiday and shall be held at the registered office of the company or

at some other place within the city, town or village in which the registered office of the

company is situated as the managing committee may determine

The Managing Committee shall cause a true and complete statement of accounts i.e. the

Balance Sheet as on the 31st day of March every year and the Revenue and Expenditure

Account for the twelve month period ending on 31st March of every year.

The accounts of the Confederation shall be audited by an Auditor or Auditors duly appointed,

who shall submit a report to the members as an annexure to the Annual report of the

Confederation.

a) The annual Revenue and Expenditure Account and the Balance Sheet with the Auditor’s Report appended thereto shall be signed by at least five members of the Managing Committee, the Secretary and the Auditor and shall be placed before the members for adoption at the Annual General Meeting.

b) A copy of such annual Revenue and Expenditure Account and Balance sheet shall be sent to every member of the Confederation at least twenty one days before the date of the Annual General Meeting at which such accounts are to be considered and adopted.

GENERAL MEETINGS

A General Meeting of the company may be called by giving not less than fourteen days’

notice in writing specifying the place, date and hour of every general Meeting and the general

nature of business to be transacted thereat, to such Members as are entitled to receive

notice under the Act.

Any General Meeting may be called upon a shorter notice if consent is accorded there to by

majority members entitled to vote there at.

The accidental omission to give notice of a meeting to or the non-receipt of notice of meeting

by any person entitled to receive notice shall not invalidate the proceedings of the meetings.

Two members personally present shall be a quorum for a General Meeting. No business shall be transacted at any General Meeting unless the required quorum is present. The Chairperson, of the confederation shall be entitled to take the Chair at every General Meeting whether annual or extra-ordinary. If at any meeting she is not present within ten minutes of the time appointed for holding such meeting or shall decline to take the chair, then the managing committee members may from amongst themselves appoint any one managing committee member as the chairperson. In the case of equality of votes the chairperson shall have a casting vote in addition to the vote or votes, if any, which she is entitled as a member.

REQUISITIONED GENERAL MEETING

a) The Managing Committee shall call for a General Meeting of the members within twenty-one days of the receipt of a written requisition signed by not less than one-fifth of the members entitled to vote for the consideration of the special business detailed in such requisition. Not less than twenty-one clear days’ notice of such meeting shall be given by the Secretary to the members, specifying the date, time and place of such meeting alongwith with the business to be transacted at such meeting.

b) In case the Managing Committee fails to call a General Meeting as desired by the requestors within twenty-one days of the delivery of such requisition, the requestors themselves may call a meeting by giving not less than twenty-one days’ clear previous notice to all the members of the Confederation at their registered addresses. Resolutions passed by majority at such meeting shall be binding on the Confederation.

c) All the reasonable expenses incurred by the requestors in calling the meeting shall be reimbursed by the Confederation.

PROCEDURE AT GENERAL MEETINGS

No resolution shall be passed at any General Meeting of the Confederation, unless the item of

business has been already included in the Agenda for that meeting. Five members or such other number of members as the law for the time being in force prescribes,

entitled to be personally present shall be the quorum for a general meeting and no business shall be transacted at any general meeting unless the requisite quorum is present at the commencement of the meeting, provided that no individual person shall represent more than one member.

If within half an hour from the time appointed for a meeting the quorum is formed, if called upon the requisition of the members, shall be dissolved, in any other case the meeting shall stand adjourned to next week same date, time and place and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting the members present shall be the quorum.

The Chairperson may adjourn any General Meeting from time to time but no business shall be transacted at such adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

The President and in her absence, the Vice President and the Secretary shall preside at every general meeting of the Confederation. In the absence of all the above three, the members present shall elect one of the Managing Committee/executive Committee members present as Chairperson of the meeting.

Every resolution submitted to a General Meeting shall be decided by a show of hands, unless a poll is demanded.

In case of equal votes, whether on show of hands or on a poll the chairperson of the meeting shall be entitled to a second or a casting vote.

If a poll is duly demanded by such number of members of the Confederation as required under the provisions of the Act, it shall be taken in such manner as the Chairperson directs and the results of the poll shall be deemed to be the decision of the meeting on the resolution in respect of which the poll was demanded

On a poll votes may be given personally or by proxy, provided that no individual person shall represent more than one member.

No member shall be entitled to vote at any general meeting unless she has paid the subscription fees and there are no arrears standing against her.

MINUTES OF THE GENERAL MEETING

The Secretary shall cause all the proceedings of the General Meeting of the members of the Confederation to be minuted. The minutes of the general meeting shall be kept open to the inspection of any member during office hours on a working day at the office of the Confederation, on her giving twenty-four hours previous notice to the secretary.

SERVICE OF NOTICE

All notices required to given to members shall be served in accordance with the provisions of Section 171 the Act.

ELECTION OF THE CONFEDERATION’S REPRESENTATIVES Where the Confederation is called upon by any Department of the Government, Legislature, Corporation, Municipality, or any other organisation to which the Confederation is affiliated or any other similar body to nominate one or more representatives of the Confederation to serve on, or stand for election to, a body created by the above, or send delegates to a Conference or meeting or session, the Managing Committee shall elect or appoint such persons as it deems fit, provided that the Secretary shall have sent intimation of the same to all the members of the confederation and invited nominations from them for such election or appointment. Provided that the President on the Managing Committee may, if there will not be sufficient time for sending formal intimation, to all members of the Confederation, make necessary nomination as the case may be. Provided, further, that only the members of the Confederation enjoying the benefits of the membership, shall be entitled to nominate or be so nominated and be nominated by the Managing Committee for her purposes; and further provided that any person representing an affiliate association,

any company or corporation or any firm or partnership when elected or appointed as representing a particular member, and on her place falling vacant through any reason, the vacancy will be filled up by the Managing Committee.

PROPERTY AND FUNDS OF THE CONFEDERATION

1. All the property of the Confederation, whether belonging to it or held by it in trust, shall unless otherwise provided by any instrument of trust made in that behalf be vested and be continued to be vested in the Confederation.

2. All moneys received, either as deposits or as fees, subscriptions or fine, etc., from member or as contributions towards the provident or other fund, or funds, or otherwise shall be under the absolute control of the Confederation. The Confederation shall be entitled to use them for any of its objects.

3. All funds of the Confederation shall be deposited in its own name in such scheduled bank or banks by the Managing Committee, who shall have also the power to invest the surplus funds in such banks or gilt-edged securities or in such manner as may be decided from time to time by the Managing Committee and in the manner permitted by law.

4. The Managing Committee may, at their discretion, from time to time raise or borrow from the members of the Confederation or otherwise such sum or sums of money for the purposes of the Confederation and on such terms and conditions as the Managing Committee may consider fit.

5. All the bills of exchange, notice, bonds, indemnities, Government Securities of all kinds, stocks, shares, debentures, and generally deeds of whatsoever nature shall be deemed to have been duly executed, accepted, admitted endorsed and completed on behalf of the Confederation if they be signed by the President or the Vice President, and the Secretary of the Confederation. Provided that for the purposes of is current transactions the Confederation, may have and operate bank accounts as follow:

a) The Managing Committee may deposit all the moneys received by the Confederation from whatever source in one or more bank accounts which may be operated upon jointly by any two of the 5 senior most Managing Committee members.

b) The Managing Committee may open a separate bank account, in which funds will be transferred from the above said bank accounts, and which shall be operated by any two Managing Committee members, under the authority of a resolution passed at a duly convened and held Managing Committee Meeting.

c) The above authority shall be exercised for Rs. _____________ only per month or such amounts as the President and the Sr. Vice President may jointly decide when framing the yearly budget, which will be the operating expense of the office and for recurring/regular projects of smaller nature.

d) In case of individual large projects, which would be executed under separate subcommittees, for operational convenience separate bank accounts could be opened for every such project and these shall be operated by the following persons jointly:-

1. The President or the Senior Vice President or the Vice President of the Confederation and

2. 2. The Secretary or the Chairperson of the subcommittee, who should be a Managing/ Executive Committee member.

COMMON SEAL

The Managing Committee shall provide a seal of the Company. The seal shall be in the custody of the President or such other Managing Committee Member as decided by the Managing Committee. The seal shall not be affixed to any instrument without the authority of the Managing Committee. Every deed or other instrument to which the seal is required to be affixed in the presence of the President or such other person as authorised by the Managing Committee.

INDEMNITY

No Managing/ Executive Committee member, Secretary, Auditor or any other officer of the company shall be liable for nay acts, receipts, neglects, and defaults of any other Managing / Executive Committee member, Secretary, Auditor or any other officer

CODE OF CONDUCT

MANAGING/EXECUTIVE COMMITTEE MEMBERS

Use reasonable efforts to attend Board and committee meetings regularly Each Managing/Executive Committee Member should seek to use due care in the performance of

her duties, be loyal to the Company and act in good faith and in a manner the director reasonably believes to be in or not opposed to the best interests of the Company

Dedicate sufficient time, energy and attention to the Company to ensure diligent performance of

his/her duties, including preparing for meetings and decision-making by reviewing in advance any materials distributed and making reasonable inquiries

Any member or Managing/Executive Committee Member may not obtain any loan from the

Company. When acting on behalf of the company the Managing/Executive Committee Members should

never request gifts, entertainment or any other business courtesies from people doing business with the Company (including suppliers, customers, competitors, contractors and consultants).

Unsolicited gifts are permissible if they are customary and commonly accepted business

courtesies; not excessive in value; and given and accepted without an express or implied understanding that the director is in any way obligated by acceptance of the gift. Gifts with a value of over Rs. 10,000/- should only be accepted with the approval of the Advisory Committee.

Managing/Executive Committee Members have the responsibility to safeguard and properly use

Company assets and resources, as well as assets of other organisations that have been entrusted to the Company. Except as specifically authorized, Company assets, including Company equipment, materials, resources and proprietary information, must be used for Company business purposes only.

Directors shall maintain the confidentiality of information entrusted to them by the Company. The

Company’s confidential and proprietary information shall not be inappropriately disclosed or used for the personal gain or advantage of the director or anyone other than the Company

MEMBERS

No member shall be entitled to visit or inspect any works of the Company without the permission of a Managing Committee Member or to require discovery of any information respecting any detail of the company’s trading or any matter which is or may be in the nature of a trade secret, or secret process of any other matter which may relate to the conduct of the business of the company and which in the opinion of the directors, it would be inexpedient in the interests of the company to disclose.

WINDING UP

Subject to the provisions of the companies act, 1956 the assets of the company may on its winding up be distributed to another organisation, association, company or institution having similar objects

D Charts

Session 1.1 Legal Setting

Topics:

Legal forms of non-profit organisations

The object of societies and section 25 companies

Some legal requirements of societies and section 25 companies



Legal forms of non-profit organisations such as BMOs:

The right of all citizens to form associations or unions is guaranteed by the Constitution of India, Article 19(1)(c).

Three legal forms of not-for-profit entities under Indian law: trusts, societies, and section 25 companies.

The most common legal forms for Indian BMOs are societies and section 25 companies.

Chart 1.1.2 – Legal forms


The object of societies and section 25 companies I:

Societies:

Societies are membership organizations that may be registered for

charitable purposes. Societies registered under the Act include, but

are not limited to, the following:

Charitable societies;

Societies established for the promotion of science, literature, or

the fine arts, for education; and

Public art museums and galleries, and certain other types of

museums.

Indian non-profit organisations are allowed to pursue business/

commercial/ economic activities. However, the profits must be applied

fully towards charitable objects.

Chart 1.1.3 - Object of societies and section 25 companies


The object of societies and section 25 companies II:

Section 25 Company:

A section 25 company is a company with limited liability that may be formed for promoting commerce, art, science, religion, charity or any other useful object, provided that no profits or other income derived through promoting the company's objects may be distributed in any form to its members.

Chart 1.1.4 - Object of societies and section 25 companies II


Legal requirements for societies and section 25 companies I

Society Section 25 Company

Legislation Societies Registration Act, 1860 Indian Companies Act, 1956

Registration As Society As a company under section 25 of

the Indian Companies Act.

Key registration

documents

Memorandum of association and

rules and regulations

Memorandum and articles of

association.

Members required Minimum – seven managing

committee members. No upper

limit

Minimum three trustees. No upper

limit.

Governance Governing body/managing or

executive committee

Board of directors/managing

committee

Mode of

succession

Appointment or election by

members of the general body

Election by members of the

general body

Chart 1.1.5 – Legal requirements for societies and section 25 companies I


Legal requirements for societies and section 25 companies II

Society Section 25 Company

Income tax Exempt from income tax provided

it serves a ‚charitable purpose‘

Exempt from income tax provided

it serves a ‚charitable purpose‘

Dissolution Dissolution must be approved by

at least three-fifths of the society's

members

Dissolution by members of the

general body

Chart 1.1.6 – Legal requirements for societies and section 25 companies II

Session 1.2: Organisational Structure and Behaviour

A Overview

Time: 3 hours 15 min.

Overview: A well-defined organisational structure is a key ingredient to a properly functioning BMO that serves the interests of its members with commitment and effectiveness. The second session introduces the audience into the common organs such as the general Assembly, the Board, Committees and the Secretariat. It also informs about their respective tasks and discusses a few problems that may arise in their operations and ways of overcoming them. Apart from this, the session is dealing with the relationships among the various bodies of the BMO.


- Participants are familiar with the essential organs of a BMO as well as their tasks and duties.

- Participants are sensitized about potential challenges in the fulfilment of the tasks of each of the bodies and about ways of addressing them.

- Participants and trainer have developed a list of “do’s” and “don’ts” regarding the functional behaviour among the various organs.

Materials required:

Trainer’s reading 1 and 2 of session 1.2 Charts 1.2.1 – 1.2.16 Handout? Flipcharts Pin boards / Soft boards Projector Brown paper Cards Felt markers Glue spray




5 min. 1. Introduction Present the topics of this session. Emphasize the fact that it does not only deal with the organisational set-up as such but also tries to inquire into a few challenges of the proper interplay of the different organs of a BMO.

Chart 1.2.1

45 min. 2. Structure of a BMO

Plenary discussion: Ask the plenary, what common organs of a BMO and their key functions are. Take note of the responses on a flipchart or whiteboard with “organs” on one and “functions” on the other side. Then display chart 1.2.2, thus complementing the contributions of the audience.

Be aware on the fact that designations sometimes differ (for instance “President” and “Chairman”), though they basically refer to the same organ (in this case a democratically elected head of the governing body of a BMO). Remember that the details of the tasks are defined by statutes and bye-laws of an organisation and may therefore differ. Nevertheless, the essential tasks are basically the same everywhere.

Charts 1.2.2 – 1.2.8


45 min. 3. Relationships and behaviour of key organs within a BMO

Facilitator’s input: You are explaining how two key figures of a BMO, the President and the Executive Director (if there is one) should ideally behave and relate towards stakeholders such as members, Board, staff and also the general public. This serves to define their roles more clearly and avoid misunderstandings and confusion in the BMOs day-to-day operations. In presenting your input, involve participants by asking them, for instance “How does it work in your organisation?” or “Is it easy or difficult to comply with these principles” or “Do you agree with what I have said?”

Charts 1.2.9 – 1.2.12


1 hr. 40 min.

In detail:

Instructions 10 min.

Group work

4. Challenges in the proper functioning of BMOs and ways of addressing

Group work: This exercise will explore a few challenges in the proper functioning of a Board, Committees and Secretariats and ways of addressing them. Form three groups, one dealing with Board, the second with Committees and the third with Secretariats. Each

Charts 1.2.13 – 1.2.16




30 min.

Presentations and discussions 60 min.

them group will have to respond to two questions:

i) What are challenges in the proper functioning of the organ your group is dealing with?

ii) How can it be addressed?

Provide the groups with flipchart paper and markers and ask them to visualize their output. One member of each group will have to present the output to the plenary. Each group has 30 minutes.

After the group work, the output is presented and discussed one after the other. You are moderating the discussion. If you feel, there are wrong or misleading contributions, you gently intervene in order to keep the discussion on track. In closing, you present the tables displayed in charts 1.2.13 – 1.2.16, hence either confirming or complementing the groups’ output.

C Background Readings Reading 1 of session 1.2: Structure of BMOs Source: UNIDO – BMO Toolbox. Tools and materials for Enhancing Business Membership Organisations (New York, 2008), p. 13 ff. General Assembly and Board The General Assembly is the highest authority within a BMO. It is the central body for decision-making and election of Board members. The General Assembly usually convenes in the Annual General Meeting (AGM). An AGM either is a meeting of all members of a BMO or an assembly of delegates that have been elected by the members before. The Board governs the BMO. Usually, Board members are elected for a one- to two-year term. The President heads the Board. Vice-Presidents and the Treasurer are responsible for specific areas. As stipulated in the statutes a Board consists of 8 to 20 or even more members. In many cases, statutes or bylaws of a BMO will only describe the duties of the Board, President, etc. in brief and general terms. More specific duties and responsibilities could be put into job descriptions. It is important that a more specific listing exists to guide and monitor the performance of a BMO Board, its President or other elected members. The following table gives an overview of typical problems and possible solutions concerning the work of BMO Boards:

Problem Solution

Board is too slow in decision-making

Reduce size of board; reduce its scope of responsibility; shift work to Committees (among others to Executive Committee); empower Secretary General to decide.

Scarcity of qualified board members

Establish ‘grooming’ pattern, i.e.: potential board members must complete a ‘career’ path within the BMO before they can move to higher positions.

Lack of continuity in Board policy

See ‘grooming’ pattern above; only elect 50 % of board members at any one time; keep past President(s) on the board.

Board/Committee work difficult to measure

Develop board/committee job descriptions and work plans ideally with performance indicators (see strategic planning). Evaluate work against indicators.

Committees Committees that are made up of members are an important instrument for the functioning of BMOs. Usually, BMOs have a number of committees on various issues in place. Committees are appointed by the board or – depending on the statutes – elected by the general assembly. There are standing committees and ad hoc committees. Standing Committees deal with issues of a recurring nature (e.g. customs and taxes; finance and administration of the BMO, etc.) and therefore exist continually. Ad hoc Committees are established for a special reason, e.g. when the BMO wants to conduct a fair, an anniversary, work on a special issue for advocacy etc. Due to their nature those committees are dissolved when the task has been completed. Depending on the given statutes, the BMO Board or President may – with the approval of the Board – appoint Chairpersons for Committees. These Chairpersons would then select Committee members (from the BMO members) and possibly also a limited number from the public, if provided for by the statutes. In many BMOs, Committees and their Chairpersons are elected by the AGM. In difference to the above Committees, an Executive Committee is often established (according to the statutes and not elected) to function as a short-cut BMO unit to facilitate quick decisions. Members of such a Committee are usually the President, the Vice President and one or more other important

Board members. The Secretary General should be included in this Committee in a non-voting role to give practical advice. All Committees report to the Board, which may or may not adopt recommendations that have been developed by the Committee. The connection between Committees and the Secretariat is usually ensured by involving the Secretary General or an authorized staff person as non-voting Committee member. The following table gives an overview of typical problems and possible solutions in the work with Committees:

Problem Solution

Committees are slow to pick up BMO-relevant issues and in delivering results

Request Committees to submit work plans which should include issues (in addition to those given by the Board), targets, activities, time tables, budgets.

Work plans should be approved by the Board.

Request regular reports from committees.

Committees and/or their Chairpersons have their ‘trusted’ staff in the Secretariat and give him/her work orders (loyalty conflict! with Secretary General)

Nothing wrong with trust, but the Secretariat must insist on work procedures which ensure that Secretary General is responsible for work orders to staff. Board to design relevant rules for all Committees to that effect.

Committees and/or Chairpersons follow their own business interests and not those of the Board

See solution 1.

If necessary, exchange Chairpersons and Board members.

Committees organise their own funding and staff and become independent from BMO

Nothing wrong with this in principle, but work must be in accordance with BMO interests.

See solutions 1 and 3.

Secretariat The Secretariat is the operative arm of the BMO. Usually, the Secretariat is headed by a Secretary General or Executive Director who is appointed by the Board (in a few countries he/she is elected by the BMO members, which gives him/her greater standing). The Secretary General or Executive Director is head of the BMO staff, hires the personnel and distributes the work. The Secretary General may set up BMO divisions within the Secretariat to structure the work. These divisions should have their own targets (including financial targets!), work plans and, preferably, even their own budgets for activities. A Secretariat Division budget would not include cost of personnel and other general costs, e.g. rent, electricity etc. These costs should remain with the Administration Division, which is usually located with the Secretary General’s office. All divisions should report to the Secretary General. The Secretary General must find solutions against the tendency of divisions to act without much internal networking. The Secretary General will also – when required – appoint staff to support the Board and Committees and will have to ensure that this staff keeps him/her informed of the work of the relevant committee. Respective regulations should be included into the staffs’ job descriptions. The following table gives an overview of typical problems and possible solutions in the work of Secretariats:

Problem Solution

President or Board hire staff (common in many developing countries) instead of Secretary General (loyalty conflict/‘untouchable’ staff)

Put right of hiring into job description of Secretary General. Have clear job descriptions for President and Board.

Secretary General has to ask approval Empower Secretary General with proper job description

Problem Solution

of President or Board even for minor decisions (again, common in dev. countries). This issue often stems from the early days of the BMO when Board members still had an executive role.

They don’t want to relinquish it but have no time to still play the role effectively.

that clearly assigns functions. Possibly also provide new title: Executive Director.

Complaints about the quality of the Secretary General (also widespread).

As Board members still want a share of power in execution, they do not look for high-calibre staff and advertise a low-salary job. Result: low qualification of Secretary General, poor work output. Therefore, change the job description and salary.

Secretary General changes with each new President. The new President may fear the experience/power of the present Secretariat General and wants to have a new one whom he can steer

Base all personnel decisions on objective job evaluations (see text on job assessment below). Contract Secretary Generals for longer time periods overlapping with Presidents’ terms.

Reading 2 of session 1.2: Functional Relationship among the Organs of a BMO Source: Afghanistan Chamber of Commerce and Industry – Executive Chamber Development Training Manual (Kabul, 2010), p. 26 ff. Please note that the reading, though referring to chambers, is of equal importance for industrial associations. Functional Relationships Functional relationship means how the various organs of the organisation behave and cooperate with each other. Worldwide chambers have adopted and practiced this behaviour and drawn up certain principles and rules. Some of those rules are contained in the by-laws of the chamber, whilst others are common sense and have emerged from long periods of practice. However, there is no ‘golden rule’ that fits any condition. Organisational behaviour is influenced by a number of factors, such as culture, tradition, historical circumstances, level of formality of the chamber, etc. The following relations are meant as a broad guide from international experience: Relations of the Chairperson In chamber policy The chairperson as an individual has no authority to commit the chamber to any action or policy. The status of the chairperson is that of an individual acting in a legislative capacity. The right exists to exert influence with the Board for the approval of such action and policy as may be favoured. The authority does not go beyond the vote. The chairperson has to abide to the decisions of the Board in accordance with the by-laws governing such decisions. To members of the Board The chairperson is a co-partner with the members of the Board in seeking to improve the situation in the business community through activities of the chamber. The chairperson has the trust of the other members. The chairperson should be scrupulous in the disassociation of all personal interests from the chamber. The position has to be regarded as a public trust. The attitude to other members should be one of tolerance for their viewpoints, conciliation for their differences, and zeal for the welding of diverse opinion into constructive policies for the common good. The chairperson should calendar the time to attend the maximum number of meetings. To the public The chairperson is the representative of the chamber, officially and unofficially, to the entire public. The chairperson is not authorised to speak for the chamber except on those matters where the chamber has a clearly defined and formulated policy. The chairperson should be ready at all times to defend the chamber against criticism, or where the criticism is justified, take steps to remedy the conditions by bringing it to the attention of the Board. The chairperson can frequently make a distinct contribution to the wellbeing of the chamber by bringing to the attention of the Board both the critical and constructive suggestions received by members or members of the business community and the public at large. To chamber staff Confusion and trouble can be avoided by proper understanding of the relationship of the chairperson to the chief staff of the chamber. The chairperson is not an executive officer. The chief staff should welcome advice and suggestions, but they are under no obligation to accept instructions from the chairperson and individual members of the Board. Individually, the status of the members of the Board is advisory with respect to the staff and legislative with respect to the organisation. Instructions from members of the Board can come only when they are embodied in the joint action of the Board. Through the secretariat the chairperson has a permanent administrative machine to carry on the work of the chamber. The chief staff is the Board’s counsellor and at the same time is responsible to the committee for seeing to it that the work of the chamber is carried on effectively and that its policies are executed. To committees The chairperson should consult with the Board in the creation of committees and the selection and appointment of members to these committees. Each member of the Board must take an active interest in the organisation of committees, as well as in the operation of these committees.

It is a common practice in chambers to appoint one or more Board members to each committee. This practice provides good liaison between the committee and the Board and a means of giving the Board full information of committee proposals, plans and problems. Such information not only aids members of the Board to make sound decisions, but helps motivate the action and cooperation that is so essential to the success of committee projects and activities. All projects should be approved by the Board in advance. Such a requirement is a time-tested fundamental of good organisational practice. Relations of the CEO1 To the chairperson The CEO must associate with people from all walks of life in many varied activities and personal relationships should be of prime importance. The relationship to the chairperson therefore, should be one of confidence and complete understanding of the aims and objectives on a long and short-term basis, in the interest of the organisation and the crafts community as a whole. The CEO has a major role to assist the chairperson in every way, including the enhancing of this very important office, bearing in mind that he/she should show leadership him/herself and yet, not command. Briefing on such items as meeting agendas, program of work and general activities prior to meetings is essential in order that the chairperson may be fully informed on all issues. Cooperation is an essential criterion in a successful and progressive Board. To Board members The CEO’s relationship with the other members of the Board - although friendly should be courteous but business-like at all functions of the Board. By doing so, the CEO is able to exercise leadership roles at meetings and support the chairperson who chairs the meetings. While avoiding domination of proceedings at meetings, the CEO should be looked upon as an expert in all policy matters and decisions, which the Board might want to adopt. It should be borne in mind that the CEO is the administrator, whilst the Board’s function is to develop and own policy. Any infiltration into normal management functions indicates a lack of proper orientation. Board members, because of the limited time they can devote, expect the CEO to be oriented in business affairs and development. The CEO should ensure that meetings are well prepared and all transactions are properly recorded. Minutes must be accurate and business arising from the proceedings should be followed up in consultation with the chairperson prior to distribution. All opinion offered by the CEO must be supported by fact. Knowledge provided in these fields must not detract from group participation. To members An efficient CEO who works in good cooperation with the chairperson will be regarded by members as a person of knowledge on a number of issues in the business community. Chairperson and members alike are aware that the office of the chamber is a focal point for data, information and resources for their concerns. The relationship of the CEO with the members is therefore, one of information and communication. The CEO is responsible for the issuance of notices of meetings and their general content to ensure adequate attendance. General meetings and annual meetings require time and effort for their successful planning and attendance. Establishment of a program, committee to provide necessary contact with the membership, special notice in the press, radio, and other means of communication are all parts of a well-established procedure.

1 In this paper, CEO means Chief Executive Officer which is equivalent with Secretary-General or Executive Officer.

The CEO therefore, must be an expert in his/her field, continually looking to advance ideas and to influence volunteer workers through a program of work and proper communication to the Board and general membership.

D Charts

Session 1.2 Organisational Structure and Behaviour

Topics:

Structure of a BMO (statutory organs)

Relationship and behaviour of key organs within a BMO

Challenges in the proper functioning of BMOs and ways of addressing them



A typical organisation chart:

Chart 1.2.2 – Organisation chart

General Assembly

through the Annual

General Meeting

Board of Directors headed

by President/Chairperson

Secretariat headed by

Secretary General/

Executive Director

Standing Committees

Ad-hoc Committees

Executive Committee

Unit 1 Unit 2 Unit 3 Unit 4


Key tasks General Assembly:

Serve as the highest decision-making body

Approve the statement of final accounts of the BMO prepared in

conformity with the provisions of existing legislation

Discuss and approve annual reports on the activities of the BMO

Set the agenda for the BMO’s policies

Elect Board members

Chart 1.2.3 - Key tasks General Assembly


Key tasks Board of Directors:

Chart 1.2.4 - Key tasks Board of Directors

Executive dutiesConstitutional

duties

Administrative

duties

Policy making

Target setting

Review of policies

and directions

Admittance and

termination of

memberships

Management of

funds and

properties

Appointment of

committees

Introduction of new

bye-laws or

amendments to the

Constitution etc.

Supervision of

secretariat;

Representation of

the BMO with

government, in

public and private

bodies, with other

private business

leaders.


Key tasks Committees:

Chart 1.2.5 - Key tasks Committees

Standing Committees Ad-hoc CommitteesExecutive

Committee

Develop BMO policies

in specific areas (for

instance industry

promotion,

membership

management)

Provide advice and

supervision to the

secretariat in the

implementation of

such policies

Carry out specific

and time-bound

tasks such as the

organisation of a

trade fair or

advocacy on a

current issue

Dismantled after

the completion of

the task

In case of BMOs

with large boards,

the Executive

Committee serves as

a “quick fix” organ to

enable swift

decision-making


Key tasks Secretariat:

Implement policies laid down by the Board of Directors

Achieve targets set by the Board of Directors and render periodic

reports to the Board on its progress

Pursue projects and activities that will enable the Chamber to attain its

mission

Monitor trends and developments in commerce and industry and alert

members accordingly

Provide secretarial support for Board and committee meetings and

keep proper record of proceedings

Make recommendations to the Board and members on policies and

activities

Handle the day to day operations of the Chamber

Chart 1.2.6 - Key tasks Secretariat


Comments on the organisational structure I:

An Annual General Meeting (AGM) either is a meeting of all members of a BMO or an assembly of delegates that have been elected by the members before.

Usually, Board members are elected for a one- to two-year term.

The number of Board members can vary. Board members are responsible for different areas.

Committees are appointed by the board or elected by the General Assembly.

Usually, the Secretary General is appointed by the Board. In a few countries he/she is elected by BMO members.

Ad-hoc Committees are dissolved after accomplishment of their task.

Chart 1.2.7 - Comments on the organisational structure I


Comments on the organisational structure II:

The participation of the Secretary General or an authorized staff person as a non-voting Committee member ensures connection between Committees and Secretariat.

The size of the Secretariat depends on the financial capabilities of the BMO.

Chart 1.2.8 - Comments on the organisational structure II


Relations of the Chairperson I:

The authority of the Chairperson in defining the association’s policy does not go beyond his/her vote in the Board. The Chairperson has to abide to the decisions of the Board

The chairperson should be scrupulous in the disassociation of all personal interests from the chamber. The position has to be regarded as a public trust.

The attitude to other members should be one of tolerance for their viewpoints and conciliation for their differences.

The chairperson is the representative of the association to the entire public. He or she is only authorised to speak on matters where the BMO has a clearly defined and formulated policy.

Chart 1.2.9 - Relations of the Chairperson I


Relations of the Chairperson II:

The chairperson is not an executive officer. Instructions to the Secretariat need to be embodied in the joint action of the Board.

The Chairperson as well as the other Board members should take an active interest in the organisation of committees, as well as in their operation.

Chart 1.2.10 - Relations of the Chairperson II


Relations of the Secretary General I:

The Secretary General has a major role to assist the Chairperson in every way, bearing in mind that he/she should show leadership him/herself and yet, not command.

Briefing the Chairperson on such items as meeting agendas, programme of work and general activities prior to meetings is essential.

The Secretary General’s relationship with the other Board members should be courteous but businesslike.

He/she should ensure that meetings are well prepared and properly recorded. Business arising from the proceedings should be followed up.

All opinion offered by the Secretary General must be supported by fact.

Chart 1.2.11 - Relations of the Secretary General I


Relations of the Secretary General II:

The relationship of the Secretary General with the members is one of information and communication. He or she is responsible for the issuance of notices of meetings and their general content to ensure adequate attendance.

Chart 1.2.12 - Relations of the Secretary General II


Chart 1.2.13 - Potential challenges in the work of a Board

Potential challenges in the work of a Board

Challenge How to address

Board is too slow in decision-making Reduce size of board; reduce its scope of responsibility;

shift work to Committees (among others to Executive

Committee); empower Secretary General to decide.

Scarcity of qualified board members Establish ‘grooming’ pattern, i.e.: potential board

members must complete a ‘career’ path within the BMO

before they can move to higher positions.

Lack of continuity in Board policy See ‘grooming’ pattern above; only elect 50 % of board

members at any one time; keep past President(s) on the

board.

Board/Committee work difficult to

measure

Develop board/committee job descriptions and work

plans with performance indicators (see strategic

planning). Evaluate work against indicators.


Chart 1.2.14 - Potential challenges in the work with Committees

Potential challenges in the work with Committees


Committees are slow to pick up

BMO-relevant issues and in

delivering results

Request Committees to submit work plans which should

include issues (in addition to those given by the Board),

targets, activities, time tables, budgets.

Work plans should be approved by the Board.

Request regular reports from committees.

Committees and/or their

Chairpersons have their ‘trusted’

staff in the Secretariat

Nothing wrong with trust, but the Secretariat must insist

on work procedures which ensure that Secretary

General is responsible for work orders to staff. Board to

design relevant rules for all Committees to that effect.

Committees and/or Chairpersons

follow their own business interests

and not those of the Board

See solution 1.

If necessary, exchange Chairpersons and Board

members.

Committees organize their own

funding and staff and become

independent from BMO

Nothing wrong with this in principle, but work must be in

accordance with BMO interests.

See solutions 1 and 3.


Chart 1.2.15 - Potential challenges in the work of Secretariats I

Potential challenges in the work of Secretariats I


President or Board hire staff instead

of Secretary General (loyalty

conflict/‘untouchable’ staff)

Put right of hiring into job description of Secretary

General. Have clear job descriptions for President and

Board.

Secretary General has to ask

approval of President or Board even

for minor decisions. They don’t want

to relinquish it but have no time to

still play the role effectively.

Empower Secretary General with proper job description

that clearly assigns functions. Possibly also provide new

title: Executive Director.

Complaints about the quality of the

Secretary General.

As Board members still want a share of power in

execution, they do not look for high-caliber staff and

advertise a low-salary job. Result: low qualification of

Secretary General, poor work output. Therefore, change

the job description and salary.


Chart 1.2.16 - Potential challenges in the work of Secretariats II

Potential challenges in the work of Secretariats II


Secretary General changes with

each new President. The new

President may fear the experience/

power of the present Secretariat

General and therefore wants to have

a new one.

Base all personnel decisions on objective job

evaluations. Contract Secretary Generals for longer time

periods overlapping with Presidents’ terms.

E Handouts Charts 1.2.1 to 1.2.16 Reading 1 Reading 2

2.4 Module 2: Human Resource Management

2.4.1 Rationale and Introduction into Module 2 The performance of BMOs is determined by the performance of its players and their modes of interaction. A proper Human Resource Management (HRM) is therefore key for BMOs to enhance their performance, too. However, in general, BMOs tend to handle staff issues in a very “hands-on” manner and do not pay enough attention to developing consistent human resources policies attuned to the size and the financial capacities of the organisation. A fundamental dilemma faced by many BMOs is the fact that, while they demand a lot of commitment and dedication from their staff, salaries are often comparatively low. Hence, one of the crucial tasks of HRM is to develop non-financial means of staff motivation. Therefore, Module 2 “Human Resource Management” introduces participants into key terms and concepts of HRM (session 1). Crucial ingredients of HRM, such as personnel policies, recruitment procedures, rules in communication, the concept of performance management and challenges in HRM are likewise dealt with (session 2). Session 3 explores concrete means of non-financial staff motivation. The sessions include the following topics:

- Definition of Human Resource Management (HRM)

- Definition of Human Resource Development (HRD)

- Objectives of Human Resource Management for BMOs

- Personnel policy

- Recruitment

- Communication

- Performance management

- Challenges in HRM and how to address them

- The challenge for staff motivation

- Non-financial ways of staff motivation in BMOs

- The Performance Pyramid

The module takes, roughly, 5.5 hours. It comprises an interactive mix of various didactic means such as interpretation of images, group work, plenary discussions and inputs from the facilitator or trainer. It is important to note that interactive training elements help to sustain participants’ attention and deepen their learning. This is especially important when trainings take place at evening hours.

2.4.2 Training Contents of Module 2: Human Resource Management


Training Schedule of Module 2: Human Resource Management


Session 2.1:

Introduction into Human Resource Management

1. Definition of Human Resource Management (HRM)

2. Definition of Human Resource Development (HRD)

3. Objectives of Human Resource Management for BMOs

1 hour 25 min.

16.00 – 17.25 h

Session 2.2:

Aspects of Human Resource Management in BMOs

1. Personnel policy

2. Recruitment

3. Communication

4. Performance management

5. Challenges in HRM and how to address them

2 hours 10 min.

17.25 – 19.35


Session 2.3:

Staff motivation

1. The challenge

2. Non-financial ways of staff motivation in BMOs

3. The Performance Pyramid

1 hour 40 min.

19.50 – 21.30 h


Session 2.1: Introduction into Human Resource Management

A Overview


Overview: Human Resource Management (HRM) is of utmost importance for BMOs.

However, it is often unclear what HRM is exactly dealing with and how it is distinguished from Human Resource Development (HRD). After a warming-up exercise, this session evokes the participants’ own understanding on HRM which is then compared with the common definitions of HRM and HRD. The session closes by highlighting objectives and goal of HRM in BMOs. Note that this session is highly interactive and hence requires a proper preparation of didactic aids.


- Participants are familiar with common definition of Human Resource Management and Human Resource Development.

- Participants are aware of the specific objectives for HRM in BMOs

Materials required:

Background readings 1 and 2 of session 2.1 Charts 2.1.1 – 2.1.6 Handouts Projector Flipcharts Felt markers Pin boards Brown paper Pins Flash cards




5 min. 1. Introduction Introduce the session by informing the plenary that you will deal with Human Resource Management of BMOs. Highlight the fact that the effectiveness of organisations depends to a large degree on the skills of managing and developing their staff. Inform the audience that the module is broken down into three sessions and mention the topics of the first session within the module.

Chart 2.1.1

20 min. 2. Warming-up exercise

Plenary exercise: As a “warming-up” to the session show the pictures on chart 2.1.2. Ask: “What do you associate with these pictures”. Responses such as “We must unite”, “As a group we will advance”, “We have to organise properly” or “Someone needs to lead the way” may come up. Take note of some of these responses on a flipchart. You may conclude that all of these image display relations of persons in a given setting. These relations need to be organised in a way that they lead to something, be it “climbing up the ladder” (represented by the arrow going up) or “leading to the light” (represented by the bulb).

Chart 2.1.2

Flipchart

15 min. for each partici-pants to come up with his or her ideas and 30 min for organising the chart, read all the postings and wrap-up

45 min. in total

3. Brainstorming on HRM

Plenary exercise: Chart 2.1.3 displays a graph with the term Human Resource Management in the middle and a number of arrows attached to it. You may distribute 2 flash-cards and a felt marker to each of the participants. The task is to come up with two ideas that respond to the question “What is HRM dealing with?” The participants will have to pin their responses on a pin board which contains the graph in a large format. You need to have this graph painted on brown paper in advance. While the exercise goes on, more and more ideas pop up and are pinned around the graph.

For clarity’s sake, you should ensure that identical or similar flash-cards are posted near to the same arrow. Finally, you read each card in order to give everybody an overview of the group’s work. You close the brainstorming exercise by saying, for instance “Great, you have come up with so many contributions and I can really see that

Chart 2.1.3

The graph sketched on brown paper

1 or 2 inboards

Flash-cards and felt markers



you are almost experts in the subject matter. Now I would like to present two charts and compare your work with what I have prepared”. Of course, you can also say something different. But it helps create a positive group spirit, if you acknowledge the group’s output and find a nice way to lead over to your input.

15 min. 4. Defining Human Resource Management and Human Resource Development

Facilitator’s input: You present charts 2.1.4 to 2.1.6, which distinguish Human Resource Management from Human Resource Development and present the objectives of HRM in business associations. Whenever possible, you refer to the group’s output of the prior exercise.

Charts 2.1.4 to 2.1.6

Background readings 1 and 2

C Background Readings Reading 1 of Session 2.1: Introduction into Human Resource Management Source: Susan M. Heathfield in http://humanresources.about.com/od/glossaryh/f/hr_management.htm What is Human Resource Management?

Human Resource Management (HRM) is the function within an organisation that focuses on recruitment of, management of, and providing direction for the people who work in the organisation. Human Resource Management can also be performed by line managers.

Human Resource Management is the organisational function that deals with issues related to people such as compensation, hiring, performance management, organisation development, safety, wellness, benefits, employee motivation, communication, administration and training.

Human Resource Management is also a strategic and comprehensive approach to managing people and the workplace culture and environment. Effective HRM enables employees to contribute effectively and productively to the overall company direction and the accomplishment of the organisation's goals and objectives.

Human Resource Management is moving away from traditional personnel, administration and transactional roles, which are increasingly outsourced. HRM is now expected to add value to the strategic utilization of employees and that employee programs impact the business in measurable ways. The new role of HRM involves strategic direction and HRM metrics and measurements to demonstrate value.

http://humanresources.about.com/od/organizationalculture/a/culture.htm

http://humanresources.about.com/od/glossaryv/g/value_add.htm

http://humanresources.about.com/od/glossaryv/g/value_add.htm

http://humanresources.about.com/od/hrbasicsfaq/a/hr_role.htm

http://humanresources.about.com/od/humanresourcesstrategic/tp/human-resources-strategic-planning.htm

http://humanresources.about.com/od/humanresourcesstrategic/qt/Create-Value-With-Human-Resource-Measures.htm

http://humanresources.about.com/od/humanresourcesstrategic/qt/Create-Value-With-Human-Resource-Measures.htm

Reading 2 of Session 2.1: Introduction into Human Resource Management Source: Susan M. Heathfield in http://humanresources.about.com/od/glossaryh/f/hr_development.htm What is Human Resource Development?

Human Resource Development (HRD) is the frameworks for helping employees develop their personal and organisational skills, knowledge, and abilities. Human Resource Development includes such opportunities as employee training, employee career development, performance management and development, coaching, mentoring, succession planning, key employee identification, tuition assistance, and organisation development.

The focus of all aspects of Human Resource Development is on developing the most superior workforce so that the organisation and individual employees can accomplish their work goals in service to customers.

Organisations have many opportunities for human resources or employee development, both within and outside of the workplace.

Human Resource Development can be formal such as in classroom training, a college course, or an organisational planned change effort. Or, Human Resource Development can be informal as in employee coaching by a manager. Healthy organisations believe in Human Resource Development and cover all of these bases.

http://humanresources.about.com/od/performancemanagement/a/perfmgmt.htm

http://humanresources.about.com/od/glossaryc/g/coaching.htm

http://humanresources.about.com/od/glossarym/g/mentoring.htm

http://humanresources.about.com/od/glossarys/g/successionplan.htm

http://humanresources.about.com/od/glossaryt/g/tuition.htm

http://humanresources.about.com/cs/performancemgmt/a/super_workforce.htm

http://humanresources.about.com/od/training/a/training_dev.htm

D Charts


Topics:

Definition of Human Resource Management (HRM)

Definition of Human Resource Development (HRD)

Objectives of Human Resource Management for BMOs



Question: What do you associate with these pictures?

Chart 2.1.2 - Pictures


Brainstorming: What is HRM dealing with?

Chart 2.1.3 - Brainstorming

Human Resource Management


Definition Human Resource Management:

Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization.

Chart 2.1.4 – Definition HRM

Human Resource Management

Compensation

Recruitment Performance

management

Safety

Wellness

Benefits Employee

motivation

Communication

Administration


Definition Human Resource Development:

Human Resource Development (HRD) is the framework for helping employees develop their personal and organizational skills, knowledge, and abilities.

Chart 2.1.5 – Definition HRD

Human Resource Development

Training

Succession

planning

CoachingCareer

Development

Mentoring


Objectives of Human Resource Management for BMOs:

To recruit staff that meets the requirements of their jobs.

To develop the capacities of the Secretariat, Board and Committees.

To retain competent staff.

To motivate staff.

The ultimate goal is to

Have a highly professional BMO that produces excellent outcomes for its members at acceptable costs.

Chart 2.1.6 - Objectives

Session 2.2: Aspects of Human Resource Management in BMOs

A Overview

Time: 2 hours 10 min.

Overview: This session explores important aspects of HRM specifically related to

BMOs. It informs about the need for a BMO to have guidelines for staff management (“personnel policy”) and proposes key items of this policy; it deals with crucial issues of recruitment procedures, tackles communication issues related to staff management and provides an introduction into performance management. In a final exercise, various challenges in HRM are brought to the fore and ways of addressing them are discussed.


- Participants gained an understanding of the necessity of a BMO developing and adhering to staff policies.

- Participants are familiar with various tools and procedures that help to professionalize staff management.

- Participants are sensitized to challenges in HRM and are acquainted with various ways (tools, procedures, behaviour) of addressing them.

Materials required:

Background readings 1, 2 and 3 of session 2.2 Charts 2.2.1 – 2.2.7 Handouts Projector Flipcharts Felt markers Pin boards Brown paper or flipchart paper Pins


Session 2.2: Aspects of Human Resource Management


5 min. 1. Introduction You are now digging deeper into a few aspects of HRM deemed important for BMOs, namely personnel policy, recruitment, communication and the management of the performance of the Secretariat. In the final part of the session you will conduct an exercise on the challenges related to HRM.

Chart 2.2.1

20 min. 2. Presenting and discussing personnel policy, recruit-ment, communication and performance management

Facilitator’s input and plenary discussion: You go through each one of the aspects (charts 2.2.2 to 2.2.5) and present your inputs according to the charts. It is suggested that you ask the plenary for comments after each slide (alternatively after you presented all of them), and discuss them.

Chart 2.2.2 – 2.2.5


5 min. instructions; 30 min. group work; 45 min. for presentation and discussion; 10 min for the presentation of charts 2.2.6 and 2.2.7

1 hour 30 min. in total

3. Group work on challenges of HRM in BMOs

Group work: This exercise will explore a few challenges in HRM. It is linked to the previous presentation in the sense that some of the recommendations given will come up again in the group work.

Proceed as follows: Form 3 groups, each one of them will have to respond to two questions:

i) What are challenges in HRM management of BMOs?

ii) How can they be addressed?

Provide the groups with flipchart paper and markers and ask them to visualize their output (maybe in the form of a table as in charts 2.2.6 and 2.2.7). One member of each group will have to present the output to the plenary. The group work takes, approximately, 30 minutes.

After the group work, the output is presented and discussed one group after the other. You are moderating the discussion. If you feel, there are wrong or misleading contributions, you gently intervene in order to keep the discussion on track. In closing, you present the tables displayed in charts 2.2.6 and 2.2.7, hence either confirming or complementing the groups’ output.

If the exercise takes long or if the output

Charts 2.2.6 – 2.2.7

1 or 2 pin boards

Flipcharts

Flipchart paper

Felt markers

Session 2.2: Aspects of Human Resource Management


of the group work already contains everything you intended to present in the two charts, you might opt for skipping the presentation of these two charts. Make sure that the groups output is typed and forwarded to the participants either by email or as hardcopy.

15 min. 4. Defining Human Resource Management and Human Resource Development

Facilitator’s input: You present charts 2.1.4 to 2.1.6, which distinguish Human Resource Management from Human Resource Development and present the objectives of HRM in business associations. Whenever possible, you refer to the group’s output of the prior exercise.

Charts 2.1.4 to 2.1.6


C Background Readings Reading 1 of session 2.2: Aspects of Human Resource Management Source: ZDH Partnership Program: Manual on Organising and Managing Chambers of Commerce and Industry. By Judy Tan Lan Eng. Singapore, March 2000, p. 28 – 31. Please note that the reading, though referring to chambers, is of equal importance for industrial associations. Staff requirements and qualifications Staff recruitment falls under the ambit of the Secretary-General. The size, staff-mix and professional qualifications of the staff vary with the Chamber’s vision, focus and finances. Generally however, a majority of Chamber’s executive staff is engaged in providing services to members and “characteristic” requisites of the job are competency in English and well-honed info-communication abilities. A common problem that Secretariat staff encounters is that the representatives of member companies tend to treat them as “employees” and it is not always easy for the Secretariat staff to meet such “bossy” mind-sets with equanimity; hence, a well-developed interpersonal skill would be a definite advantage. Staff administration Staff administration covers:

- recruitment (interview, pre-employment screening) and offer of employment (includes job descriptions, assessment of job-worth and determining remuneration packages);

- setting personnel policy (includes staff discipline, salary, overtime and leave administration);

- maintaining employment records (include staff bio-data, employment commencement date, overseas assignments, promotions, transfers to departments within the Chamber, disciplinary actions, if any, etc.);

- staff training and development;

- staff appraisals, salary increments, merit awards, etc.

Personnel policies It is essential that all staff should have a clear understanding of their responsibilities and accountabilities and in this respect, detailed job specifications (see annexes 4 – 6 for sample formats) and a comprehensive staff manual is recommended. The staff manual should outline the Chamber’s policy regarding…

- conditions of employment (pre-employment medical examination, period of probation, confirmation, notice of termination or resignation, dismissal, etc.);

- remuneration packages (salary scales, payment in kind, transport and other allowances, provident and/or retirement funds, gratuities, annual reviews);

- leave (annual, sick, maternity, compassionate; accumulation of leave);

- medical benefits and insurance;

- travel allowances.

Staff development and motivation Most Chambers of Commerce and Industry cannot afford elaborate training programmes for their staff; hence, staff are often initiated “hands on” into their jobs. However, it is pertinent to provide training in cases where …

- special product/service knowledge are required – e.g. in operating a training centre, article numbering, export promotion services such as issuance of Certificates of Origin, ATA carnets, etc.

- training is relatively inexpensive but the skills picked up would be beneficial to the Chamber e.g. in the training of receptionists as they are often the first point of contact and their attitude would make a lasting first impression on trade enquirers.

Other training avenues that Chambers of Commerce and Industry may consider are to co-operate with associate Chambers whereby staff could be seconded or attached to them for training on a reciprocal basis. An organisation like the International Trade Centre (ITC) offers free or subsidised training for Chamber staff. These institutions also publish numerous manuals and other documents on chamber/association development and SME promotion that offer useful pointers to Chamber staff.

Chambers face problems of staff attrition through resignations because they offer limited career prospects (since most Chambers cannot afford to carry large secretariats). If Chambers are to retain good employees, the Secretary-General must pay particular attention to staff motivation in the form of competitive remuneration packages, perks such as travel opportunities, job satisfaction and a conducive work environment. Annual salary reviews are also vital although staff appraisal may not be as easy as in the case of profit-making organisations since “bottom-lines” may be intangible and difficult to quantify. However, the Secretary-General could use criteria such as the staff’s rapport with members, ability to meet targets and deadlines and successful completion of projects assigned to him/her (a sample staff assessment form is attached as Annex 7). Chambers that are engaged in a wide scope of activities will have to place extra emphasis on co-ordination and team-work. For effective co-ordination of the staff’s activities, the Secretary-General (and if applicable, the Management Committee) should hold regular meetings with the heads of divisions/departments. Staff meetings are good avenues for

- the Secretary-General (and if applicable, the Management Committee) to be kept informed of the activities that the staff is involved in and to monitor progress in the tasks they are assigned to and regarding the targets they are to achieve;

- the staff to share their views and experiences and render feedback on policies to the Secretary-General and colleagues;

- the staff to identify areas where their respective divisions/departments could pool efforts and resources, to avoid duplication and unnecessary waste of time.

Reading 2 of session 2.2: Aspects of Human Resource Management Source: ZDH Partnership Program: Manual on Organising and Managing Chambers of Commerce and Industry. By Judy Tan Lan Eng. Singapore, March 2000, p. 28 - 31 Example of an Employee Requisition Form

Reading 3 of session 2.2: Aspects of Human Resource Management Source: Sequa – Guiding Business Membership Organisations. A Manual for Presidents and Directors of BMOs interested in strengthening their Organisation. Tool developed by Martin Wahl, Rolf Speit, Andreas Dohle and Reyes Marinho. Nine commandments of Human Resources Management To help promote a sequential chain of high moral and intelligent dedication to the BMO, presented below are the nine commandments of Human Resources Management: 1. Believe in the potential of your collaborators and stimulate their development and growth in order to liberate them. 2. Persuade employees and colleagues with your ideas. 3. Regularly enter into dialogue with employees. 4. Stipulate, plan and communicate work objectives and demand results. 5. Concentrate your own efforts on key matters or strategies, delegating tasks to your subordinates and colleagues. Do not allow these tasks to be re-delegated. This is done with the objective of developing the abilities of all. 6. Negotiate with collaborators and colleagues in an objective manner, always trying to arrive at realistic solutions. 7. Make decisions in a clear manner based on solid information. Recognize when decisions should be made by a group and when they should be made by the President alone. 8. Evaluate the performance and behaviour of an employee in an objective and creditable manner; deal with errors in a constructive way, offering concrete support to help avoid repetitions. 9. Speak openly, clearly and directly with collaborators and colleagues, maintaining the will to discuss matters even in difficult situations.

D Charts


Topics:

Personnel policy

Recruitment

Communication

Performance management

Challenges in HRM and how to address them



1. Personnel policy:

It is essential that all staff have a clear understanding of their responsibilities and accountabilities.

Therefore, a BMO needs to develop guidelines for HRM (“personnel policy”)

The policy should outline

Conditions of employment (pre-employment medical examination, period of probation, confirmation, notice of termination etc.)

Remuneration packages (salary scales; transport, travel and other allowances; retirement funds; gratuities; annual reviews)

Leave (annual, sick, maternity, accumulation of leave)

Medical benefits and insurance

Performance targets and review

Chart 2.2.2 – Personnel policies


2. Recruitment:

Recruitment is based upon the organisation structure and the staffing plan of the BMO.

Recruitment refers to the replacement of staff as well as hiring of additional staff.

Each staff position should be specified in writing, including tasks, duties and the required qualifications.

The required qualifications include education, professional degree, professional experience, computer literacy, language skills and softskills (e.g. interpersonal communication).

Recruitment capacity should stay with the Secretary General

Chart 2.2.3 – Recruitment


3. Communication:

The Secretary General should hold regular staff meetings (for instance once every week) in order to organise the work and to ensure a transparent information flow.

Staff’s competences in external communication need to be clearly stated. Contacts with the media are usually delegated to the President, the Secretary General and the Public Relations Director.

Crucial incoming and outgoing correspondence should be made known to the Secretary General (for instance through “cc” in emails).

Chart 2.2.4 – Communication


4. Performance management:

In addition to the job description, employee and superior may define specific performance targets on a timebound basis (for instance “Three exhibitions successfully conducted in the next year; satisfaction rate of exhibitors 80% on average”).

Bonus payments may be made contingent upon achievement of targets.

Performance targets may be reviewed in annual “staff development meetings” between employee and superior. These meetings may also serve to

provide feedback to the employee and obtain feedback from the employee,

inquire about proposals for improvements of the BMO’s operations

review contractual arrangements such as the salary and

define measures for staff development (for instance a training course).

Chart 2.2.5 – Performance management

Chart 2.2.6 - Potential challenges of HRM I

Potential challenges of Human Resource Management in BMOs I


Low salaries Emphasize non-financial forms of staff motivation.

Introduction of a new

employee into his/her

job is too hands-on

Conduct a training on key features of the BMO; assign a staff

member as a coach to the new colleague; superior to hold face-

to-face meetings with the new employee quite often in the

beginning.

Board members exert

influence to recruit

family members

Professionalize the entire recruitment system; establish

recruitment committee.

Distribution of tasks is

done ad-hoc

Develop an organisation chart with clear job descriptions;

familiarize staff with job descriptions; plan work with foresight,

institutionalize regular staff meetings to plan weekly tasks.


Chart 2.2.7 - Potential challenges of HRM II

Potential challenges of Human Resource Management in BMOs II


No systematic feedback

from superior to staff

Establish „staff development meetings“ on a face-to-face basis

in order to allow for mutual feedback.

Members and Board

treat Secretariat as their

personal employees.

Board to familiarize itself with the job descriptions and to reach

an agreement to channel tasks to be carried out by the staff

through the Secretary General or his/her assistant.

Distrust and lack of

cooperation among staff

Develop transparency in the organisation of the work (for

instance through regular staff meetings); the Secretary General

to treat all staff equally and in a friendly, though professional

manner; team building events.


Session 2.3: Staff Motivation

A Overview


Overview: The final session of module 3 focuses on one aspect of HRM that many

BMO managers consider as a “real headache”: How to ensure commitment and high performance of the staff when the resources for financial rewards are so limited? After the facilitator briefly outlined the challenge, the participants venture into group. The task is to brainstorm about non-financial ways of staff motivation. The contributions of the groups are presented and discussed. In a final step, the facilitator presents the Performance Pyramid. The Pyramid emphasizes that financial rewards are only one aspect in motivation and that there are several types or clusters of non-financial forms of staff motivation. The session is closed by a set of conclusions based on the Pyramid.


- Participants understand that staff is not only motivated by financial but as well by non-financial rewards.

- Participants are clear about the fact that, since most BMOs are struggling with scarce financial resources, developing non-financial rewards is an appropriate means for staff motivation.

- Participants familiarized themselves with a broad range of non-financial means of staff motivation.

Materials required:

Background readings 1 and 2 of session 2.3 Charts 2.3.1 – 2.3.6 Handouts Projector Felt markers Flash cards Pin boards Brown paper or flipchart paper Pins


Session 2.3: Staff motivation


5 min. 1. Introduction One of the challenges discussed in the previous session is of overriding importance for most BMOs worldwide: the dilemma of low salaries that the BMO is able to pay, and a high degree of commitment required from its collaborators. Due to its importance, this aspect gains prime attention in the final session of module 2.

Chart 2.3.1

5 min. 2. The challenge

Facilitator’s input: Very briefly, you point to the challenge by using chart 2.3.2 and commenting the picture presented there. As a little joke in between, you may present the sticker on chart 2.3.3.

Chart 2.3.2 and 2.3.3

Background readings 1 and 2

5 min. instructions; 30 min. group work; 45 min. for presentation and discussion; 10 min for the presentation of the Performance Pyramid and the associated conclusions

1 hour 30 min. in total

3. Group work on non-financial ways of staff motivation in BMOs

Group work: The objective of this exercise is to generate and discuss practical ways of motivating staff to perform well. The focus is on non-financial tools for staff motivation.

Proceed as follows: Form 3 groups, each one of them will have to respond to the question: What are non-financial ways of staff motivation in BMOs? (see chart 2.3.4)

How can they be addressed?

Provide the groups with flash cards and ask them to write their responses on these cards. One member of each group will have to present the output to the plenary, pinning the cards on pin-boards. The group work takes, approximately, 30 minutes.

After the group work, the output is presented and discussed one group after the other. You are moderating the discussion. If you feel, there are wrong or misleading contributions; you gently intervene in order to keep the discussion on track.

In closing, you present the Performance Pyramid (chart 2.3.5), which basically says that (i) financial rewards are only one aspect in motivation and (ii) that there are several types of non-financial forms of staff motivation. You may then go to chart 2.3.6 and provide a few conclusions related to the Pyramid and HRM in

Charts 2.3.4 – 2.3.5

1 or 2 pin boards

Pin boards

Flash cards

Felt markers



general.

Make sure that the groups’ output is typed and forwarded to the participants either by email or as hardcopy.

C Background Readings Reading 1 of session 2.3: Staff Motivation Source: www.sustainable-employee-motivation.com

The Performance Pyramid

How do you find ways to motivate employees? How do you know what makes them tick? How do you keep them committed?

The decision on how committed an employee will be towards the organisation, division or team, depends entirely on the individual. Therefore, the first step is to engage with each individual. Find out what makes him/her tick.

The purpose of this article is to know what to look for when you engage with the individual.

Use the Performance Pyramid

The Aon Consulting firm did extensive research in employee commitment. They came up with the five drivers of employee motivation, also known as the performance pyramid.

Yes, I know, it reminds you of Marslow's Hierarchy of Needs. It wasn’t intended that way. It just worked out like that. In any case, I have found that the performance pyramid can provide some wonderful guidance to know what to look for when you engage with your employees. Let’s have a look at the five drivers and see how it can help you to find ways to motivate employees.

Safety and Security

Along with a physical sense of well-being, there must be a psychological belief that the environment is free of fear, intimidation or harassment. Rewards Yes, you knew it. Most people won’t come to work tomorrow if they win a big lottery today. This is the perception that the organisation attempts to satisfy the employee’s compensation and benefits needs. Affiliation This is a sense of belonging. It includes being “in the know” and being part of the team. This is also where a difference in personal and organisational values can have a big impact on employee motivation. Growth Employees want to have the belief that achievement is taking place. I might feel safe, get all the money I want and feel part of the team. But if there are no growth opportunities, I might think about leaving the company. Work/Life Harmony This term speaks for itself. Someone might have all the rewards that they want, but he/she will burn out sooner or later if they don’t have the time to spend it on the other things they want.

What Should You Do With These Drivers Of Employee Motivation?

While all five levels are important in finding ways to motivate employees, the key is to pinpoint where the individuals and the workforce are not having their needs met.

Start by offering a safe, secure work environment and equitable compensation and benefits packages. This is the foundation. But before you launch those new and trendy benefits, engage with each individual and take a good, hard look at the basics. The young smart upstart employee might not be as excited about that benefits program. His needs might be to use that money to buy a new sport scar. The opposite might be true for the 40 something baby boomer. Some other pointers to keep in mind: Be aware of the five drivers of employee commitment when you engage with your employees.

Make your own assessment of what the needs of each individual are.

Engage with each individual. Explain the Performance Pyramid and ask them where they find themselves on the pyramid. What’s his/her biggest needs?

Engage with bigger teams and eventually with the whole organisation about the performance pyramid to find ways to motivate employees.

Do something about it. If someone wants growth, give it to him or her. If they want work/life harmony, make a plan. And ditto for the rest of the drivers.

Reading 2 of session 2.3: Staff Motivation Source: UNIDO – BMO Toolbox. Tools and materials for Enhancing Business Membership Organisations (New York, 2008), p. 21 ff.

Management of BMOs - Human Resource Development The performance of BMOs is determined by the performance of its players. These are both, BMO leaders as well as BMO staff. Investment in these players to improve their knowledge and motivation is a decisive factor for BMOs to become more professional and successful. Therefore, Human Resource Development for staff and BMO leaders should be an important element of any organisational development. There are different ways to make progress in Human Resource Development for BMOs a) Exchange with other BMOs. Elected BMO leaders are usually in business and they travel. In this connection they will often have (or could have) meetings with other BMOs in their home country and abroad. They can thus provide their BMO with examples of how other BMOs function. The Board (best together with the Secretariat) can easily prepare a list of ‘want-to-know issues’ which the travellers can take along and respond to after their return, in writing or verbally (e.g. during the next Board/staff meeting). Staff exchange with other BMOs is also a valuable tool that can be arranged with other BMOs at home or abroad. b) Introduction for new Board members New Board members may have no previous experience of BMO work. In order to speed up their learning curve, BMOs should develop introduction folders (to be distributed to newcomers) containing e.g. BMO statutes, vision/mission statements, work plans, budgets, introduction papers to the Secretariat, etc. A half-day (or longer) induction workshop (possibly linked with a golf tournament or other teambuilding event) is another method of getting new Board members ready for work. c) Introduction for new staff Brief instruction sessions with relevant background information for new staff should be arranged. Furthermore, new staff will need a one-to-one introduction and systematic coaching for some time. d) Training workshops for staff and Board members Donors conduct a number of chamber/association management workshops, which BMOs should look out for (in-country and abroad). They are open for Board members, Secretary General or Secretariat staff. BMOs should use these workshops as an opportunity to generate ideas for improvement and change. However, this will only work if participants get the opportunity to share their new knowledge and ideas with the BMO: Have a breakfast meeting for this! A BMO can also organise its own training workshop for staff and/or Board development. The materials of this Tool Box can easily be used as background for such a workshop. It is even possible to organise such a training workshop together with other BMOs from the ‘neighborhood’. e) Background Materials Libraries should contain not only material of value for members, but also for BMO staff and elected officers. The publications mentioned in the Supporting Reference Section of this Tool Box, should have a prominent place in BMO libraries. Knowledge of some BMO publications could be made a precondition for promotion of staff. f) Job descriptions and incentives Job descriptions are important instruments for staff development, particularly when they include quality requirements. They should be reviewed and adjusted to the actual work of the BMO regularly. Job descriptions also serve as a basis for assessing performance and deciding on incentives. Generally, BMOs have to become more innovative in creating incentives. They increase loyalty and productivity. Staff incentives can be: promotion to a higher position, a salary increase, a bonus for good work in cash or kind (e.g. to accompany a trade delegation to a foreign country), a nomination (e.g. best staff of BMO in 2007) or even a training course. Job rotation within the BMO is another instrument to increase productivity and motivation of new and existing staff. g) Staff Evaluation/Assessment

Normally, the person supervising an employee should assess his/her performance. The assessment should include work performance and general qualities and use a numerical grading system to arrive at objective results. It is often the case that employees rate themselves better than their superiors do. Assessments therefore have to be conducted tactfully. Staff assessments should be conducted at least once a year. A very positive assessment could/should be followed by incentives, so as to reward the efforts of the staff to serve the BMO well. A negative assessment should be accompanied by specific advice on how performance can be improved. The results of assessments must be kept confidential by the BMO; they must be revealed only to the employee and must be signed by him/her. If the employee strongly opposes to accepting the final assessment score, a review by a higher superior can be made possible. There are many assessment forms that can be used.

D Charts


Topics:

The challenge

Non-financial ways of staff motivation in BMOs

The Performance Pyramid



The challenge:

Chart 2.3.2 – Staff motivation

Salaries in BMOs can

often not compete with

corporate companies or

even the public sector

Still, BMO work requires

dedication and passion


What are non-financial ways of staff motivation in BMOs?

There are many answers. One is this:

Chart 2.3.3 – Non-financial ways of staff motivation I


What are non-financial ways of staff motivation in BMOs?

Brainstorming:

Please respond to the question above

Use the flash cards

30 minutes

Please remember:

One idea per card

Write in block letters

No more than 3 lines per card

Use the entire card space

Chart 2.3.4 – Non-financial ways of staff motivation II


Chart 2.3.5 – The Performance Pyramid I

Performance

Pyramid


How to deal with the Performance Pyramid:

Be aware of the five drivers of employee commitment when you

engage with your employees.

Make your own assessment of what the needs of each individual are.

Engage with each individual. Explain the Performance Pyramid and

ask them where they find themselves on the pyramid. What’s his/her

biggest needs?

Engage with bigger teams and eventually with the whole organization

about the performance pyramid to find ways to motivate employees.

Do something about it. If someone wants growth, give it to him or her.

If they want work/life harmony, make a plan. And ditto for the rest of

the drivers.

Chart 2.3.6 – How to deal with the Performance Pyramid I

E Handouts Charts 2.3.1 to 2.3.6 Reading 1

managing business managing business … on management of business membership organisations 2 1...

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