As large associations innovate to retain more selective membership, their younger counterparts are looking to fresh methods of development.

When Kevin Mead helped orchestrate a merger three years ago to create PrimeGlobal, one of the five largest associations of independent accounting firms, he was expecting to be a trend-setter.

"I thought that would honestly open the floodgates," explained Mead, who now serves as president and chief executive of the association. "Just as mergers were happening in accounting firms, I thought that would open the floodgates for other association mergers to occur, but that hasn't really happened. That's one prediction I got wrong."

Mead, who before the merger was president of a firm association called IGAF, had initially been approached by Julio Gabay, who was head of Polaris International, about a three-way merger that would include another group, Fidunion International. Gaby, though, had different expectations about association mergers.

"I'm not surprised [that the trend has not continued]," said Gabay. "It was a very successful merger for IGAF and Polaris and they're a stronger group for it. I always question other groups that are going to do it, and the spark that emerges at the association level. We might see some [engage in M&A] on the bottom level and not the top - more under-the-radar, smaller groups."

Older associations with established leadership understandably face bigger roadblocks in making these transactions. "You have to go into it with an open mind," Gabay advised. "It's not always easy to find -- two associations willing to give up 20 to 30 years of history. I'm not surprised more associations haven't done it, when they're so long-established and also member-run and not a business model."

Under this membership model, the merger took Mead and Gabay two years to independently run through their separate associations and secure the necessary board member votes.

The two-year process was for "no other reason than the board members," Gabay explained. "People invest the time, are very valuable people with great experience, but with all board members, they give the little time they have. It becomes an issue for a lot of board members to run their own firms, which is busy and difficult, and then the percentage of time they have to give to an organization is minimal. The executive director can take two steps forward, and then it's, ‘Let's wait and see.'"

 

Matters of size

After helping with the transition and leaving PrimeGlobal on good terms, Gabay was able to allay some of this frustration when founding Abacus Worldwide, an international association of independent accounting, consulting and legal firms, in October 2012. Of course, there are different challenges for a small association that currently has 27 member firms in 18 countries, but with youth, Gabay also sees the opportunity to develop a unique organization.

"A lot of associations out there tend to focus on, and say they want, firms above a certain size, while we at Abacus wouldn't turn down a large firm, but don't specifically target them. We have midsized and small-sized firms -- those that are growing and needing support in other parts of the world. They are more niche in their specific market or industry; they are not a 150-to-200 staff firm, but a 30-to-40 staff firm that, say, specializes in the auto industry and has a great niche there. We are seeing a lot of those firms pop up, usually born from the younger partners that have broken off [from their previous firms] and are starting something new and fresh, and identify with Abacus."

Also fresh was the concept of aligning accounting and law firms, with Gabay estimating that only a handful of other associations have a similar structure. So far, most of the crossover comes from general sessions at association conferences, though there have been other areas of overlap in general professional services best practices. The format helps in Abacus's very active recruitment efforts, as when they attract one professional services firm, they attempt to court their accounting or legal counterpart in the same jurisdiction. The majority of members, though, are referred to Abacus, and all must successfully serve the association and vice versa.

On the other hand, the 300-plus-members, history and continued success of PrimeGlobal make its application process very competitive. "We have made significant inroads to ensuring we have pins-in-the-map coverage, but that's actually not really important -- what truly matters is quality," Mead explained. "We've made significant inroads to improving the new members inspection program, a rigorous entry system where we're really, every month, turning down applicants, most before they're even allowed to apply."

Mead estimates that PrimeGlobal rejects 50 percent of inquiries because they don't meet baseline requirements. Once applicants make it to the inspection round, they must meet special requirements and demonstrate a certain reach and maturity of services, with 10 to 15 percent typically rejected at that stage.

 

Address to impress

The selectiveness does go both ways, however, as firms today ask more of their associations. It has also become apparent in recent big moves, like the PKF offices in South Australia joining BDO International, and Baker Tilly in the U.K. leaving Baker Tilly International, which Mead likens to "when Mrs. Fields Cookies fired Mrs. Fields."

"Prior to this, I thought that once people were sticky with an association, they would pretty much stick with it, unless their business plan changes drastically," Mead explained. "But firms are assessing whether it's the right place for them, in terms of cost of services. Perhaps it's an issue of maturity in the marketplace. Previously, a lot of associations were somewhat social and acted as a glorified roundtable for managing partners. Now they are providing a lot more services, like marketing plans and leadership training. A lot of firms are looking at the payback on their investment in an association."

Some of the disruptions in the profession, including encroaching Baby Boomer retirement and leadership succession, are also informing their membership.

"It may also be a generational thing," Mead mused. "Certainly, in PrimeGlobal, the individual that set up [the membership] with an association [sometimes] is no longer the managing partner in the firms, which sure is the case for a lot of associations, as they are 20 to 30 years old, because that's when a lot of them were formed. There's no longer the pride in that foundation, but more of a commercial decision than just sticking with [an association] because of the founding partner. Now there is a commercial bias."

PrimeGlobal, then, drives retention through quantitative results, in the form of statements of value that the association brings to the firms, outlining all the areas association membership has touched, influenced and improved the firm.

 

The Net in network

As important as these results are the method of delivery -- an in-person meeting intended to initiate further discussion.

This high-touch approach, in general, remains critical for associations even in the face of technology developments, according to Mead. So while associations have evolved past the socially focused "glorified roundtables," membership relationships remain vital.

During last year's annual meeting, in Saigon, Vietnam, PrimeGlobal arranged a post-conference vacation to Cambodia that between 30 and 45 members enjoyed to great success.

"Conferences were once viewed as an end unto itself, but now conferences are a way to build business relationships, and we've added on that social part," Mead said. "Another example is in the past we've had technical sessions and then dinner or a cocktail reception, and those were great, wonderful. Now we've introduced networking with a purpose. We do things like, in Vietnam, we had firms that are in Asia-Pacific give tabletop presentations so you could learn about the firms. It's speed dating for accountants, putting people at 40 tables, 40 people walking around when the bell rang. People ordinarily sit with people they know, their firm, but with this they met everybody - we forced them. It got incredibly rave reviews. Networking with a purpose is kind of a new thing we're doing, deliberately driving people to move outside their comfort zone of people they've known for a long time."

For Abacus, however, budget and size constraints mean finding new avenues for collaboration.

"One thing we focus on, down the road, is to be a lot more virtual than I've ever been used to," Gabay explained. "The members we've seen and are attracting don't have the time to get on a plane and be at a five-day conference anymore. My experience with previous groups is that it's a conference and vacation packed into one. Five days away from the office is great when you have a 200-person firm, but if you're 30 to 40 people and your managing partner or two partners leave, it's a big deal. We do have conferences with more emphasis on making relationships, contacts and networking, and offer education at the conferences, but they are one and a half to two days, and we complement them with more Web-driven events like webinars and virtual-type environments."

PrimeGlobal has found some success in virtual networking, especially as, in the last 15 months, it has doubled the amount of active special interest groups. "It's incremental for us," Mead shared. "We are extending special interest groups away from phone calls and physical meetings, to discussion on the Internet and webinars."

The association's new special interest groups are moving away from typical niche areas, Mead reported, into support areas, with groups for chief operating officers, chief financial officers, recruitment and human resources - mirroring the profession-wide shift in executive leadership and staff.

This and other industry trends make Gabay enthusiastic about the opportunity to address them with an agile association, though he still applies the fundamentals of his experience with Polaris and PrimeGlobal: "Our focus is not on trying to re-invent the wheel...as [our members] grow, we go."

And for that kind of expansion, Gabay already has a pretty decent template.

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