There are some useful lessons for membership groups from the euro debt crisis

It may seem like a strange comparison, but there are a number of parallels behind the coalition of not-quite-equals that makes up the European Union, and the coalitions of businesses that come together in the various corporate social responsibility membership organisations.

Here are some lessons from the recent debt crisis in the eurozone, and parallels that both management and members of those groups should consider.

1. Choose the right governance for what you want to achieve

The membership organisations that get the strongest commitment from the companies that join are those that persuade top decision makers that it is their organisation, and they are a crucial part of its governance. They see it as something they own, rather than something that is separate from them that may try to push them to do things that they don’t want to do.

One of the biggest undermining factors of institutions in Europe has been that national politicians see it as something separate and apart. They have served their home agendas by taking credit for good things that come from European agreements and blaming European bureaucrats for things – many of which they signed up for – that are unpopular at home.

That may serve the narrow agenda, but chickens then come home to roost when times get tough. Almost no country in Europe can hold a referendum any more and expect it to deliver the result the Eurocrats want. Likewise, if you function as an organisation that constantly harries your members to do things “for their own good” that they don’t want to do, then times are tough. The business case for that membership fee is now looking pretty thin.

The downside, however, of having coalitions led by the membership is that they will embrace a wide pool, and tolerate many failings because they will see their chief loyalty to each other. So, while they may accept that there should be rules behind membership, they will be inclined to draw them rather broadly, and very disinclined to expel members for not meeting them.

You need to understand that it is a spectrum. If the organisation aims to drive members to change behaviour, it needs a strong intellectual core that can be informed by members, but not watered down. Alternatively, if you want to engage the most businesses on some very broad shared vision, you need strong inclusive governance, but will have to accept that the ability to deliver effective pressure for change will be a lot weaker.

2. Create a shared collective vision

The imperative to give companies a solid business case for joining an organisation tends to lead to a big focus on providing value-for-money services.

If you are focused on giving every company services in proportion to the amount of money they contribute, you may as well start up a commercial corporate responsibility consultancy that would at least enable you to develop the quality and professionalism of services to a higher level.

In the European Union, some countries contribute more because they recognise that they benefit from the health of the whole. A strong, healthy network of companies committed to corporate responsibility that learn from each other, and challenge each other to improve, is an immensely valuable thing. Great companies can often be convinced that this is an enlightened business case.

So don’t talk about value for money. Talk about the benefits they get from having a strong movement, how much they can learn from each other, and how much better it is for business in the country when people see a broader base of companies voluntarily minding their impact on society.

3. Make membership a privilege – something to aspire to

We now know, of course, that when Greece was allowed into the eurozone, it simply didn’t qualify. It had structural features that enabled it to duck the rules about budget deficits. There was also too much routine corruption, and a huge culture of tax avoidance, ultimately resulting in unsustainable debt.

People value what is hard to achieve. So, make membership a privilege. Create a member status and an aspiring member status. Make it clear what has to be achieved in order to qualify for full membership. And once you have clear membership criteria, don’t fudge them just because you want the money.

Ultimately, if someone joins the club and it becomes clear that their business practices bring the corporate responsibility movement into disrepute, it can be used to discredit the value of the wider organisation, and even the wider movement of responsible business.

This is a tricky area. What one person considers irresponsible behaviour, another sees as entirely legitimate business practice. You can’t avoid any company that has made mistakes and upset stakeholders – you’ll have no members at all. All the more reason to draw your boundaries with great care, and in consultation with those members whose values you most trust to give good advice.

4. If membership has rules, enforce them. If not, avoid being hijacked

Beware of potential members that want to use membership in ways you didn’t intend, and in ways that may undermine the credibility of the whole.

If there are rules to being a member, make sure you’re regularly monitoring whether the companies are meeting them. If there are no rules, make sure that companies can’t use your brand as an endorsement brand in any way.

The worst of all worlds is if there are no rules – any company can join so long as it pays the fee – but then members use their affiliation as proof of their social responsibility. It puts your brand in constant peril.

5. Financial stability – you can’t change the world if you run out of cash

Don’t allow too much of your core funding to come just from one or two rich members. It will give the relationship that too-big-to-fail status that will distort your ability to influence that member, and rather give them the power to influence you in ways that might not serve the wider movement.

If, for whatever reason, you do find yourself in the position where a lot of funding comes from one member, make sure you don’t use such money for central functions that will become dependent on that company. Make sure you plan every year as though that funding may disappear, and have a realistic contingency for it.

If the member concerned starts throwing its weight around, be polite but robust in the face of pressure. It is involved because it wants to be, after all, so the chances are it doesn’t really want to walk away. But if it knows you simply can’t afford for it to walk away, there won’t be much you can do about it. Don’t put yourself in that position.

And keep the funding of specific projects simple and transparent. Don’t cross-subsidise things “under the hood”.

Don’t create categories of membership that cost you more to service than they actually bring in. If you do, then as you grow you will find yourself in an increasingly non-viable position. If new members are going to cost you money, consider very carefully the factors that make that work.

That said, stay lean. Nobody wants to pay premium prices for some fat bureaucracy, whether it’s the vast system of Eurocrats or inflated overheads. If they think there’s value, skill and expertise they’ll be happy to pay. If they think its overheads inflated by inefficiency, poor management and delivery – well, you get the idea.

Lessons distilled

1.           Choose the right governance for what you want to achieve.

2.           Create a shared collective vision.

3.           Make membership a privilege.

4.           Enforce the rules.

5.           Keep it financially transparent and viable.