Association Management and Corporate Management: How Do They Diverge?

Written by Octavio Peralta on June 17, 2018

Coming from the corporate world, when I first started working in an association 27 years ago I thought the job of an association executive would be a walk in the park. I couldn’t have been more wrong!

Fast forward to today, and I am still learning. I am involved in at least three other associations, one of which I founded: the Philippine Council of Associations and Association Executives (PCAAE). After studying on the job and being a long-time member of the American Society of Association Executives (ASAE), I can confidently say that association management is indeed a distinct field of management in its own right, due to the unique character of the association environment.

Associations are unique in the sense that their main stakeholders are dues-paying members. Their governance structure is also different, i.e., members elect the board, who selects, retains and evaluates a CEO who, in turn, is responsible for the day-to-day management of the association and its paid staff. The board, representing the members, provides oversight, policy guidelines, and strategic direction to the management team.

While association managers are responsible for tasks similar to those in corporations, such as human resource management, financial management, information-technology management and project management, there are other aspects of management that are unique only to association managers, such as membership recruitment, retention and engagement, volunteer management, development of non-dues revenues, and fundraising. Association managers must also be familiar with laws and regulations that pertain only to associations.

Based on my experience, here are eight factors (and there are surely more!) that differentiate the management of an association with that of a business corporation:

  1. Scope of purpose: Association management (AM) is geared toward a cause or an advocacy and, hence, is not-for-profit in orientation. Corporate management (CM), on the other hand, is meant to make a profit.
  2. Strategic goal: AM has a more difficult strategic objective due to its specific purpose. Aside from membership care, it has to undertake development programs or activities that entail additional cost. CM’s main concern is to generate profits. With CM’s cost-consciousness thrust, undertaking development programs or activities would be a last priority.
  3. Constituent relationship: AM relates to members as its constituency and as stakeholders of the association, while CM relates to constituencies separately as customers (buyers) and stockholders (owners).
  4. Perspective on relevance: In AM, being relevant to the cause or advocacy and to members is a top concern. In CM, relevance is viewed from the standpoint of markets, products or services, income and benefits to owners.
  5. Types of initiatives supported: In AM, there is an explicit effort to support societal progress and development initiatives with desired impacts as the basis for exploring opportunities. In CM, there is little concern for these objectives, except for the viability and sustainability of the enterprise.
  6. Posture relative to financial opportunity: AM focuses mainly on (a) membership recruitment, retention and engagement, and (b) value that will be provided to members as opportunity to create revenues for operation. On the other hand, CM focuses on (a) product or service marketing, and (b) customer growth as opportunity to make money for the owners.
  7. Sources of funding: AM relies on revenue-generation activities, such as membership dues, conference and training fees, sponsorships, etc. CM’s income stream, on the other hand, comes primarily from sales revenues.
  8. Application of excess funds: In AM, excess of revenues over expenses are referred to as “surplus funds” and are put as reserves for future use. In CM, excess of revenues over expenses are referred to as net income, which constitutes owners’ equity and is distributed as dividends.

Oh, one more thing: the notion that a corporate manager will immediately make a great association manager is an overstatement, if not unfounded. The mindset, heartset, and tools of an association manager are very much distinct. Combining these assets with a will and passion, however, you can certainly transform into one over time – a transformation I myself have gone through.