The concept of governance is most often observed at the level of individual corporations and institutions or discussed at a global level. Given the changes in the way people, especially professionals, organise themselves, it is better to look at governance at the level of associations. There are classic associations, known by their combination of tight entry and exit conditions, monitored on the basis of closed standards. We also have associations now that can be characterized as networks, with no formal entry or exit and with very open standards, if at all. Standard governance models do not fit the latter and increase the danger of preserving the status quo in a time of transformation.
From a socio-economic perspective, it is imperative that the two forms of association start interacting with each other, especially as mid-size companies and institutions are under threat. Engagement through this new way of forming associations is an answer. It does require a new way of looking at the concept of governance.
Governance comes in many shapes and guises. At the 20 year CSEND conference in Geneva, Switzerland, this author is taking part of a panel on governance. Not any kind of governance: global governance. The first two speakers describe in in detail how we try to keep the peace or reform our financial system on world scale. The third brings it home by describing the real politics of the Arab World. Nations, NGO’s and international unions fail in the sight of the challenges, in spite of our international law, our treaties and ‘understandings’. What global governance? But just talking about it makes us both hope and despair for it.
Then it is my turn. One thing I know: a global approach does not fit my way of talking about governance. It is too big. What to do?
I make it very, very small. I ask our conference leader: ‘Please, may I change the governance of this meeting? I want to make this happen by doing my lecture standing up.’ So far, all panelists are sitting behind a table. Our chairman agrees. Nobody reacts. Which made me think: so I can go from Global Governance to conference governance in a minute without even a single reaction or hint of a smile? What kind of concept is this governance? Obviously; very, very elastic.
On not too solid ground, let me look for a more classic form of governance. There certainly is one, usually called corporate governance (with its sister: government governance). The way management uses its authority, including the way it holds this authority in check, is at the heart of this classic (Worldbank) definition of governance. It started more or less in the US with the Sarbanes-Oxley legislation and then became the modern drive for the concept of governance.
In its wake, in my country, the Netherlands, we for instance have been debating the ways we can best develop checks and balances around management. On the one side stand those who go for the Anglo-Saxon ‘one-tier’ governance approach, where the executive and oversight are in one body and meet together. On the other side there are those who hold on to the ‘Rhineland’ ‘two-tier’ system, where the executive function and the oversight bodies are split. As always, governance debates like these are heavily influenced by government positions. But as interesting as this all may be, I cannot really think this corporate approach to governance gets to the point of what is going on these days.
For one, it is too much like an attempt to catch by structure what is in essence people’s business and organisation culture. Governance is about a balance of rights and obligations, ruled by formal and binding agreements. In the past this balance was usually held as much by advice and consultation by the non-executive members of a board, as by the actual checking of numbers.
In recent years this balance has all too often been upset by incidents in the media. Developments have gone far beyond what formal agreements can achieve. Ultimately governance arrangements can never prevent things like fraud and the misuse of power. It cannot even prevent excessive pay, looking at the charts of top payments in Wall Street and the City of London in the past few crisis years. The best it can do is to create a better climate for corporate responsibility.
Governance at the level of associations
But perhaps this judgement is too harsh. It could be that our media are full of reports on misdeeds and excess in some part because of the introduction of governance measures. The reports are a sign of a body fighting its bacteria. Nevertheless, it feels cold – when we think we should feel warmer. Is the classic approach to governance the right one?
Certainly the criticism can be made that we focus governance discussions too much on the single firm or institution. Governance is also too much captured in a government versus private enterprise frame. It is therefore interesting to look at literature that speaks of ‘multilevel governance’. So far this is mostly aimed at the European Union (Marck, Hooge & Black, 1993) and the financial sector (Baker, Hudson and Woodward, 2005).
As a next step, I propose we go from a multi-level to a multi-dimensional level, or more specific: to look at governance at the ‘associational level. ‘Association’ here standing for the way a sector, branch or profession tries to organise itself into a self-steering entity, where the whole is or should be more than the sum of its parts.
Where has the middle gone?
To see why, certainly from a West-European perspective, here are some developments with strategic consequences:
- digitization and our global logistic system make it possible for professionals to have their own ultra small company and work everywhere. The downside is they often lack an effective support system in their ‘connected isolation’;
- big companies – too big too fail, too large to know – survive the crisis and start even more than before to dominate their sector and countries they are based in. The systems to manage this become ever more refined, creating RYF-organisations: Robust Yet Fragile (Zolli, 2012);
- effective business models for medium size companies and institutions are hard to find. That is dangerous, if only for the fact that most innovations take place in midsized companies. Underrepresented at the places where decisions are made, and burdened with relatively large tax burdens, they lack the surplus resources need for resilience;
- semi-government sectors like health, education, security and welfare develop their own culture and dynamics.
To summarise in too short a statement: organizations become too bureaucratic, professionals get too lonely and the middle disappears. The challenge is then to look at governance from an inter-organizational and inter-professional perspective.
Look at the way big organisations and institutes connect before designing individual governance frameworks. Look at the way professionals do their work when professional associations appear to be stuck in the non-digital world. How to strengthen the middle? And how to do so with governance structures that strengthens their position in the global market? Or is that the wrong question?
Associations: what are we talking about?
In order to understand the dynamics of associations (again: sectors, branches, professional organisations), it may help to consider a specific example. However, there is a problem with selecting any example, as there are so many associations and so many forms of associating. This author works, or has worked for, branches (finance, construction industry), professional associations (notarial services, bar association, accountants, health care professionals) and many semi-government sectors (police, prison system, courts, municipalities, political parties). In the Netherlands we do not have an exact number, but based on a combination of available research my estimate is that there are about 3000 associations with their own staff, of which about 400 set the tone.
Those 400 seem to be doing well. Even in the present economic climate their number of members does not drop. It is still very normal for Dutch professionals to be a member of several associations. Dutch society is built on a consensus between government and social partners (employer and employee associations): the ‘polder’. Under this umbrella, associations have become powerful in their own right.
Still, when talking with their representatives, not one of them is certain of its future. Members are dissatisfied. Free riders are a true problem. It is hard to get qualified board members. Professionals do the management of associations with no actual background in the product or service of the association members. How representative are they truly?
After major incidents with members in almost every major classic association, the base of mutual trust and authority between members and their customers and between the association and the government has come under heavy strain. One of the results is that self-regulation by the members of an association is no longer truly trusted. More and more the government increases its oversight activities and raises the fines. In response, certification schemes and other ‘quality’ related efforts are underway to persuade an increasingly sceptic customer that the association and its members can still be trusted. Almost all of have some form of ‘Governance Code’ to ensure there are no more ‘rotten apples’.
Meanwhile, something else is going on.
For those who know or are on a social network like Linkedin: a country like the Netherlands has about 72.000 ‘groups’ of professionals on this network alone. This figure rises by hundreds every week. This fast rise, flourishing and floundering of these associations is a certain indication that people, and especially professionals, connect themselves in fundamentally different ways. It is free of charge, free of social obligations and it seems to be free of ‘empty status posturing’. In short, ways to have a free ride in society.
The end of this development is not yet in sight, though it seems so far that association through social media does not really replace the function of classic associations. More transformations are definitely on their way. The real questions are not technological. They have to do with the way people increase their network and the value they attach to this. There is some research that suggests that people are not able to form more than about 150 meaningful relationships, with a hard core of about 15 (mostly family). So what is a person doing with 10.000 followers on Facebook? Probably it has to do with the potential network: the promise of more customers and moments of recognition.
It is in this potential that the question must be answered whether or not a classic association offers more or less chances of being effective than some form of digital connection.
The sociology of association
All the above leads to the need for a free appraisal of the way we organise ourselves by association, and how we use governance to do that. Fortunately, not everything is new. In a way we are just revisiting what is perhaps the oldest question of the social sciences: what defines a group? One of the first great thinkers on this question was Emile Durkheim. In his approach a group is defined by its boundaries: when is someone allowed entry to a group, when is that person forced to exit the group? Especially the process of entry is highly formalized and ritualized. It is a reason to speak of ‘attribution sociology’. The clothes members wear, the symbols they wield; everything indicates a membership. In the end, that is why a judge is fond of his black toga and a doctor puts on his white coat every day. In our less obviously symbolic days we seem to have replaced this with management symbols: certificates, performance indicators, codes. Exit is also formalized, and guarded by audit systems and other internal oversight systems.
It seems like there is a new definition of a group coming up. Membership cannot be described by any formal attribute, not even a membership card. What counts is the number of ‘followers’ or the size and nature of your business partners. By no coincidence this is called ‘network sociology’. The central difference with attribution sociology is that there are no formal exit and entry conditions.
In reality this distinction is not so easily made. There are more than enough classic associations that have entry conditions that are very impressive on paper, but in fact accept any member that pays the membership fee. The forced exit of members in the network sociology can be far more brutal (‘you ‘re spam, you ’re blocked’) than with associations in the attribution sociology (‘we need the fee’).
To get an insight in what is happening, it helps to create a matrix, but with an extra twist. On the vertical axis a distinction is made whether or not the association has formulated strong entree and exit conditions. It confronts attribution sociology with network sociology. To make it more meaningful, the horizontal axis makes a distinction between the use of closed or ‘hard’ standards to determine entrée or exit, and open or ‘soft’ standards. It can happen that an association uses hard criteria, but does not actually forces any member out when closed criteria are applied. In that case the association should be placed in the left side upper corner, etc.
You could say that in the lower left hand corner entry and exit is pre-dominantly done through the hard criteria of an association, in the upper left hand corner it is ultimately done by the market. In the upper right hand corner entry and exit is determined by the new business opportunities as they arise or the lack thereof. The lower right hand corner is founded or disbanded by those who belong to ‘a coalition of the willing’.
Scheme 1. Two sociologies.
A move towards more open standards
The public libraries want to be recognized as such, if only because their funding can depend on it. So they created a certification scheme. After a successful audit a public library can get a plate to put on a wall near the entrance, effectively saying ‘we are part of the system of public libraries’. So far the Association of Dutch Libraries (VOB) has, with the consent of the Dutch Association of Municipalities (VNG) held two certification rounds. A third is under way, to be designed by a committee that consists half of representatives from the libraries and half of the municipalities, with this author as an independent expert. What is described here is a stylized version of events. The matrix is also useful in the light of the discussion on governance, if only because a cultural government code is part of the certification scheme.
The members are on the whole satisfied with the certification scheme. It should be noted that not a single public library actually failed the audit. Even so, for the third round an assignment was formulated that expressed a wish to modernise the approach. An approach was chosen that aimed for a far shorter standard. For the new round it was also decided that the process of auditing should be more aimed at the actual dilemma’s the leadership of the library faces.
A short standard does not have to mean an open standard. The formulation of specific minimum standards can always help as a reality check. However, in this case it proved to be very hard. For one thing, because of automation, the usual standard of minimum number of opening hours could no longer be applied: libraries can be open 24/7. And for another, the municipalities insist on making their own standards as to what the minimum standards should be. The collected libraries should not encroach on this freedom.
So for both positive and negative reasons, closed standards were to be left behind. On the other hand, the audit was to have more bite. An audit leading to an exit is not unlikely.
Scheme 2. From closed to open standards.
Too open for comfort
However, as rational as this all sound, it has an impact on existing positions that could not be ignored. Even though an interview round had shown overwhelming approval for the new approach, in an official gathering of members, a number of the bigger libraries protested fiercely. They wanted to keep the standard as it was, or if it was to be changed, with stricter minimum standards. The effect was a sort of reality check for the committee. This is interesting for a number of reasons, part of them very old, part of them new:
- closed standards have the advantage of clarity;
- by their nature associations can not go much faster than the members that have most to gain by keeping the status quo;
- in the field there is no real consensus as to the question what a public library stands for;
- some libraries define the issue of standards in terms of a permanent conflict with te government, especially with the municipalities;
- as the impact of digitization is not really clear for many, the impact the committee foresees on standards is not in the same way shared by the members.
And two other things come to the surface. Based on his PhD research into audit systems, a colleague said to this author, that there are examples of audit systems moving from open standards to closed standards, but not the other way around (Stevens, 2012).
The other thing that stuck out from the reasoning of one of the major opponents has directly to do with the subject of this article: governance. The certificate is used to show the governing board that as a director he has the organization under control. There is no need to turn the certification scheme into more than this. In other words, it is used to keep the board at bay, not to inform them.
At this moment of writing, the committee is continuing its work, taking into account all comments and developments. In the Dutch fashion, this is now a very open discussion. It will truly be interesting to see what the new certification scheme will be, but we will get there.
Meanwhile, there is this to consider. What if governance is used to actually keep the status quo as it is? What if governance is only there to regulate the system within an organization, within an association?
Scheme 3. A reaction to the move towards more open standards
The future has not happened yet
The reality is that while the association of public libraries and many other associations are still using governance as a way of internal control, at the same time others are creating a new reality. Of course there is a shift from books to eBooks, but so far that is not really changing the role of public libraries. At least as interesting is for example a development whereby people are making the content of their own private libraries accessible through Internet, creating their own exchange of books. Other initiatives involve new techniques to get children to read and older people to keep on reading. In short, all the functions that a public library can fulfil, can now be done from home.
This is not to say that the function of the public library will disappear. The reverse might be true: the professionals of the public libraries are probably needed to give this development the momentum a society needs. And perhaps private networks will consolidate into associations that are running something like a public library. One thing seems sure: there will be more and not less variety in solutions. In this time of transformation a big jump looks more likely than an incremental improvement of the existing library system.
So what then does this mean for the future of governance? If classic governance is too much focussed on the individual company or organisation, and global governance is too large in scope, than the level of association looks like the next logical level for a governance debate. But to what should this debate lead? More associations? But what if most of the present associations are more part of the problem than of the solution? What we see on the one hand is a clash between classic associations based on attribution sociology, with strong but mostly formal entry and exit criteria. On the other hand we see a largely unknown, and mostly digital, way of forming networks of persons with at least some shared goals. Classic associations need to transform to network associations and vice versa. What is now a clash, should lead to a cycle where old associations get renewed and new associations are formed.
As yet it is a cycle with a hole at its centre: those who are not a member and those who are unorganised, even in our network society. Also those people and businesses that would or should have belonged to the middle of society but are now part of those who are ‘connected in isolation’.
The active word here should not be ‘association’; it should be ‘engagement’. Engagement leads to association. The governance of engagement is then directed at the way engagement takes form and the conditions under which it takes form.
Scheme 4a. Cycle of associations
Scheme 4b. More engagement
From a flock of birds to …
There are examples where this is happening. An interesting example is the way the World Wildlife Fund, with millions of members, has transformed itself with the help of a very active virtual community. Many associations are looking with interest at the way in the US the Obama campaign organization has managed to engage people in a campaign that was almost as much about forming an active community as it was about politics.
But there are risks here. Yes, we can change, but into what? We see the success of network associations in the way the Arab Spring came about; we see its failure in its aftermath. A network association uses the rules of a leaderless flock of birds (Ball, 2004). The three basic rules are:
– you always keep an eye on the birds in your line of sight;
– you go to the middle of the flock;
– you prevent yourself from crashing into other birds in the flock.
It is (almost) that simple. And simple is good in a complex world. But these rules do not show you where to go or why to go there. Classic associations do. They were instituted for a reason: for example to ensure health care at a high level (doctors), to have a strong and independent judiciary system (lawyers) and to have a low threshold to knowledge (libraries). These reasons always have deep roots, but they provide a society with stability and high codes of conduct. So if we combine simple rules with reasons that have deep roots, you get the contours of a new government of engagement.
Peter Noordhoek is director of Northedge BV, a consultancy and education firm in the Netherlands. He has consulted and written extensively on quality, audit and oversight issues at both the level of organizations and associations.
Thank you Raymond Saner and Lychia Yui for hosting the 20th anniversary meeting of CSEND, the Centre for Socio Economic Development. It was a truly inspiring event.
A. Baker, D. Hudson, R. Woodward, ‘Governing Financial Globalization: International political economy and multi-level governance’, Routledge/Ripe, Abingdon, Oxon, 2005.
P. Ball, ‘Critical mass’. Arrow, 2004.
M. Battles, ‘Library. An unquiet history.’ Vintage, 2003.
A. Manguel, ‘The library at night.’ Knopf, Canada, 2006.
G. Marks, ‘Structural policy and Multi-level governance in the EC’ in: A. Cafruny and G. Rosenthal (ed.) ‘The State of the European Community: The Maastricht Debate and Beyond’. Boulder, 1993, pp. 391-411.
R. Stevens – Met open vizier. Auditing als stimulerende interventie. Dissertatie. Universiteit Tilburg, 2012.
A. Zolli, ‘Resilience.’ Headline, 2012.
R.J. in ’t Veld – Duurzaam openbaar bestuur vereist kanteling in Nederland. Inaugurele rede Universiteit Tilburg, 7 februari 2014.