From the President: New Governance Model for a New Year
Three words, “change, transition and progress,” come to mind when I think of my time in Hampton Roads since joining the Alliance April of 2016. Merriam-Webster defines change as “… giving a different position or course,” and that clearly characterized my arrival when I was charged with quickly getting the Alliance back on track. Transition is defined as “movement, development or evolution from one form, stage or style to another” and that certainly describes where we are today and what we’ve been doing in 2017. Progress is a “forward or onward movement toward an objective or goal” and that, I believe, accurately frames where we are headed as we chart towards 2018.
Allow me to provide you with a bit of background and an update on the governance transition we have been working throughout in 2017. Following an initial reorganization of the Alliance team and the launch of a focused and goal-driven action plan in 2016, we moved to design and implement many needed and important governance and engagement adjustments that, when approved and accomplished, will move us from our previous form to another more effective one.
Good governance happens by design and not by accident. The Alliance governance model was originally designed twenty years ago when the organization was formed in 1997. The model was tweaked slightly when the peninsula and southside economic development efforts were combined in 2005. In sum, the Alliance was functioning or attempting to function in the 21st century with a late 20th century governance and engagement model.
What was “right” or best practice in 1997 wasn’t quite right in 2017.
In 1997 cable and digital subscriber lines were just beginning to appear in homes making telecommuting a real option. Today we are seeing the arrival of major transatlantic fiber lines in Virginia Beach as a major step forward in our overall broadband connectivity. In 1998 GOOGLE was founded and, well, the rest of that technology arc is a pervasive part of our history. Facebook was founded in 2004, Twitter in 2006, and the iPhone first launched in 2007. Today, over 95% of Americans own a cellphone of some kind.
I could go on and on, but you get the point. Our world has changed dramatically, and we were still trying to do our job with a governance and engagement model that was designed for the prior century.
So, in early 2017, we began our governance review process with some general thoughts and concepts in mind. We hoped to accomplish several things with any changes we made:
- Streamline the governance process overall and increase both efficiency and effectiveness.
- Clarify organizational roles and integrate or align our programs and activities.
- Improve private investor engagement and support more adequate resource development.
- Focus management and staff functions on the organization’s core mission and purpose.
After pulling together best practice ideas from around the country, our leadership visited the Greater Richmond Partnership to see, firsthand, the way they were organized and structured. While there are distinct differences between our two regions, we learned a lot about how getting the structure right helps provide an environment for overall program performance and success.
With a lot of work and input from our leadership, stakeholders and investors, we assembled a set of recommendations and revisions that became the basis of the proposed new Alliance governance and engagement plan. This plan has been reviewed and approved by our executive committee and will be presented, along with revised bylaws, to the full board of directors at their December 14, 2017 meeting. When approved, the new model will go into effect on January 1, 2018.
One of the more significant governance changes is the structure of the board of directors and executive committee. The board and executive committee has always been equally balanced between the public and private sector and that core feature is retained. Two major changes, however, are related to board and executive committee size and the selection process.
The prior practice of providing an automatic board seat to all private investors making at least a $5,000 annual investment led to a board of over 100 official members. Not only was this structure ineffective for governance purposes, engagement and participation had degraded significantly over time. By 2017 over half of the officially designated board members never attended a single board meeting. Clearly a change or refinement was needed.
The new governance plan calls for reducing the board size initially to 23 members while maintaining a 50:50 balance between the public and private sector. Fundamentally, there will be one private sector member for each public sector member. Additionally, election to the Alliance Board of Directors will now be accomplished through a formal nominating committee process and a board seat is no longer automatic based on a minimum investment level.
The nominating committee will annually present a slate of nominees for election to fill open board seats. The criteria for nomination will involve a combination of fair share investment in the Alliance, current engagement in and support of the Alliance and the ability to help advance efforts to achieve the Alliance mission of quality job growth and economic diversification.
Similarly, the executive committee will be reduced in size to nine members comprised of the Alliance elected officers, two at-large members from the public and private sector and two ex officio members representing key community partners and allies.
While these changes reduce the number of official board and executive committee engagement opportunities, many other changes are also underway that will increase stakeholder and investor engagement opportunities.
The role of regional economic development directors or the RED Team is being formalized and fully incorporated into the organizational planning and governance process. The RED Team will meet at least bi-monthly to help provide guidance, oversight and direction to the Alliance annual marketing and business development program. In addition to the community economic development directors, the RED Team will be expanded to include private sector firms that have a full time dedicated economic development staff position and make an annual investment in the Alliance at the established RED Team investment level.
The Regional Roundtable relationship is also being formalized. Under the prior structure, our board and executive committee had seven ex officio members from various regional organizations such as the Hampton Roads Chamber, Hampton Roads Military and Federal Facilities Alliance, Opportunity Inc. and more. These ex officio relationships are being replaced with a more formalized and functional Alliance relationship and engagement at the Roundtable’s regular monthly meetings.
Private sector investor engagement will be enhanced through three primary efforts. First, a Business Leadership Council is being established to provide the CEOs/senior managers of large Alliance investors with an opportunity to provide strategic guidance and input into the overall regional economic development effort. Through quarterly leadership meetings these top investors will have direct engagement and dialogue with the Alliance senior management team and an opportunity to efficiently and effectively provide input into the organization’s strategic direction.
In 2018, the Alliance will launch a series of quarterly meetings and forums for all stakeholders and private investors. These meeting will be informational in nature and will be held in different communities around the region so that our investors can receive updates on both Alliance activities and the positive developments underway in our regional communities. Forum topics will include site selector panels, target industry and cluster briefings and general activity updates.
Additionally, Alliance stakeholders and private investors will be called on to directly participate in special task forces that are formed throughout the year to help understand and analyze major issues and challenges related to the region’s economic growth and prosperity.
Finally, the overall Alliance investor value proposition has been considered thoughtfully throughout the development of the new governance and engagement plan. Previously, the principal investor value was the automatic board seat for the minimum annual investment of $5,000. This structure is being replaced with a tiered investment system with graduated investor benefits based on the investment level. The investor tiers will be established annually by the executive committee and board of directors with revisions as appropriate.
The new investment tiers will bring considerable benefits to the overall value proposition. Accordingly, 2018 is being considered a transitional year with each investor being encouraged to consider increasing their investment to the appropriate fair share investor tier upon their investment anniversary date.
The investment tiers begin with a new Corporate Council minimum investment level of $10,000 for all investors other than small businesses or non-profits. The graduated investment tiers and associated benefits include the Private RED Team level ($15,000 - $24,999), Brand Partner level ($25,000 - $49,999) and Leadership Council level at $50,000 or more. As noted, investor benefits such as corporate presence on the Alliance website, invitations to investor events, partner co-branding, event and program sponsor recognition and hosting of corporate relocation and site selector events are graduated to increase as the investment level increases.
The development of this new investor engagement and governance plan is intended to both improve the organization’s overall governance and support current and longer-term private fundraising and resource development. As such, the investor value proposition is intended to increase as the investor’s investment grows.
While these benefits are an important part of the Alliance private investor value proposition, they should not be considered the most important or primary reason for a firm to support our efforts. The best investor profile and the firms that will benefit the most from investment in the Alliance are those firms with a business model that maps well to the Alliance deliverables (new company locations, higher quality jobs, capital investment and office/industrial space absorption, advanced cluster development, etc.) and that have a leadership and management team interested in becoming actively engaged in the organization’s core mission and purpose. If your firm fits this profile, we’d like you to consider joining us in our efforts to foster a more prosperous and diverse regional economy by attracting, growing and retaining higher wage industries, talent and jobs. Together, we can impact real change in this region.