| Vital Stats
The Environmental Industry Associations (EIA) represents
about 2,000 facilities that manage solid, hazardous and medical wastes;
manufacture, distribute and service waste equipment; and provide environmental
management and consulting services. EIA includes two sub-associations:
the National Solid Wastes Management Association (NSWMA), which represents
for-profit companies in North America providing solid, hazardous and
medical waste collection, recycling and disposal services; and the
Waste Equipment Technology Association (WASTEC), which represents
equipment and technology manufacturers and distributors and technical
consultants.
NSWMA was founded in 1969. WASTEC was founded in 1972. In 1994, the
two associations merged into EIA.
The Challenge | The Solution
| The Processs| Unintended Consequences|
Unforseen Benefits | Measurements & Results
| Lessons Learned
The Challenge
How to address industry consolidation that results in a decrease
in EIA membership and revenues? How to restructure an outmoded governance
structure to effectively lead during a period of change in the industry?
With a membership comprised of large, publicly traded as well as
smaller independent companies, EIA had a virtual monopoly on the waste
management industry from NSWMA's founding in 1969 until the late 1980s.
After the recession of 1991-92, EIA lost hundreds of thousands of
dollars in revenue as the industry entered a steady phase of consolidation.
Considerable governance problems also surfaced as a result of the
downturn. EIA's governance structure was comprised of a 55-member
Board of Directors and Executive Committee of ten individuals with
average terms of 15 years. The Board was removed from day-to-day member
issues and was too large to address the various regulatory agendas
and unique needs of its diverse membership. In addition, there was
no room in the inner circle for young, emerging industry leaders.
Various association subgroups competed vigorously for their share
of EIA's budget. Both the industry and association faced challenges
of enormous proportions.
The Solution
EIA created a strategic governance task force in 1993 and implemented
an organizational restructuring program to address industry challenges.
With the help of facilitator Phil Kuehl, EIA launched a yearlong
organizational restructuring program in 1993 to address governance
and operational issues. A few years later, prompted by a wave of consolidation
in which many smaller companies were being "eaten alive"
by larger players, EIA experienced a dramatic decline in member dues
and numbers. Turmoil in the industry made managing the association
like trying to "hang a picture in a hurricane". A second
wave of downsizing began in 1997.
The Process
While no formal, phased restructuring was planned, economic
and industry trends outside the association's control compelled the
1993 and 1997-99 organizational restructurings. In 1993, EIA sought
to address some fundamental management issues.
Phase One: 1993 Organizational Restructuring
EIA created a strategic governance task force to manage the process;
engaged a research company to develop background information to guide
decision-making; and hired an outside facilitator to guide the restructuring.
As a result, EIA implemented measures to:
- Rationalize its governance structure and procedures
- De-centralize industry subgroups
- Re-tool its identity
- Reorder staffing and operations to accommodate member needs
Governance Structure and Procedures
EIA wrote new by-laws and restructured the Board of Directors from
55 members with 15-year terms to a Board of Trustees comprised of
nine members, serving three-year term limits. All parties agreed that
this move was in everyone's best interest and it was implemented without
resistance. Also, EIA restructured key industry groups into three
sub-associations with their own representatives appointed to the new
Board. The three sub-associations were:
- National Solid Wastes Management Association (NSWMA)
- Hazardous Waste Management Association (HWMA)
- Waste Equipment Technology Association (WASTEC)
Considering the magnitude and inevitability of this restructuring
process, it was essential to foster consensus among all parties involved.
Obtaining "buy-in" from Board members was critical and EIA
accomplished this by developing a core group of respected leaders
responsible for "in-reach" and "out-reach" to
members.
The EIA Brand
NSWMA and WASTEC were folded into what became EIA in 1994. The stakeholders
of this association "holding company" wanted to reinvent
the associations' images. In lieu of outsourcing brand development
to an advertising agency, a contest was held to identify a name for
the organization. Members agreed upon Environmental Industry Associations
because it had a more appealing connotation than "waste".
Staffing and Operations
Under the CEO's guidance, EIA staff resources were dedicated as needed
to each of the sub-associations. Each association was empowered by
its own by-laws, Board of Governors and Executive Committee. A Professional
Services Support Group was created to reinvent a support structure
to handle the following responsibilities for the sub-associations:
- Public affairs
- Federal legislative affairs
- Legal and administrative
- Personnel
Accounting
- Information systems
Phase Two: 1997 - 99 The Second Wave of Downsizing
EIA recognized that the trade association needed to reflect and adapt
successfully to rapid changes in the industry it served. Beginning
in 1997, strong and deliberate measures were taken to respond to industry
consolidation. These involved:
Selling The Trade Show
EIA's WasteExpo, the largest waste management trade show in North
America, with 10,000 to 14,000 attendees and 250,000 net square feet
of exhibition space, had reached maturity. Given fierce competition
among waste management industry expositions, EIA could not continue
to dedicate the staff and resources to "take it to the next level."
Selling the Magazine
Similarly, Waste Age, with a circulation of about 39,000, was facing
strong competition and required a large, dedicated staff to maintain
its leading market position. EIA signed a five-year cooperative agreement
and sold both the trade show and magazine to Primedia/Intertec, a
large multi-media conglomerate.
Downsizing Staff, Headquarters and Regional Office Operations
In tandem, the size of EIA's Washington headquarters staff was reduced
from 84 to 30 people in less than two years, reflected in a move from
27,000 to 8,300 square feet of office space. The Hazardous Waste Management
Association was folded into NSWMA. Similarly, 33 state chapters had
been managed from 3 regional EIA offices, each staffed by a manager
with 2-3 assistants. EIA closed the regional offices and moved the
managers into home offices supplied with fax, printer and remote access
capabilities.
While it was difficult to dismiss employees, everyone involved understood
the reason behind the decision. Generous severance packages were negotiated
and EIA made every effort to secure new opportunities for staff members
with the new trade show owner. Although the move wrenched younger
staff from their comfort zones, it also led them to new and possibly
better opportunities. Financially, revenue losses from the sale of
the trade show and magazine were recouped by the sale of assets and
investment portfolio earnings.
Unintended Consequences
Managing "Control" Issues
With separate governing boards, independent budgets and specialized
constituencies, allegiances built around each sub-association in lieu
of the association as a whole. Intramural disputes developed over
funding of common programs that were not seen to benefit the sub-associations
equally. In the beginning, this slowed EIA's ability to develop pro-active
initiatives.
Branding: How Effective is the "EIA" Acronym?
In practice, the acronym "EIA" is readily misunderstood.
"Environmental Industry" covers a wide conceivable range
of sectors and activities, not necessarily associated with waste management.
While the nomenclature is technically appropriate and points to industry's
ultimate goal of cleaning the environment, industry outsiders do not
readily connect "EIA" with waste management.
Legislative Affairs Challenges
Each sub-association is empowered by new by-laws to pursue separate
legislative and regulatory agendas, which may in theory conflict.
EIA has only one government affairs representative responsible for
representing the associations on common issues. EIA makes every effort
to avert such disputes at the outset by serving as a mediator.
Unforeseen Benefits
This process resulted in a number of unintended benefits including:
- Information management systems upgrade and hiring of a full-time
systems manager. Prevented computer problems, minimized down-time,
instigated a schedule for software upgrades, and cut reliance on
consultants
- Dissolution of Hazard Waste Management Association (HWMA) decreased
staff, streamlined the association and allowed the shifting of resources
to better uses
- Greater issues cross-fertilization among staff. As staff became
more knowledgeable of each other's duties, bureaucratic reliance
decreased allowing faster and easier service.
In 1998, the HWSA was dissolved, since many of the very environmental
regulations for which EIA had lobbied, literally put some of its members
out of business! As industries were mandated to reduce hazardous waste
volumes, they were compelled to fund the development of "clean"
manufacturing processes. As the post-script to an environmental success
story, the volume of hazardous wastes was cut to such a degree that
HWSA was effectively disbanded and NSWMA assumed representation of
member companies involved in hazardous waste management.
Measurements & Results
Goals and measurement criteria are set out in EIA's three-year operating
plan. As a result of the overall restructuring process, EIA saved
$2.6 million in salaries and fixed costs, without any significant
reduction in its delivery of services and programs to members.
Lessons Learned
The secrets to this successful organizational restructuring were:
- Decisive leadership - leading people to success and giving them
the credit for getting there
- Effective anticipation and preparation of Q & A's
- Focus on consensus-building
- Good and timely communication - explaining "why" and
not promising more than can be delivered
- Development of informal channels of communication resulting in
effective "in-reach" and "out-reach"
It took time to "do everything right" and to achieve "buy-in"
on all aspects of the restructuring. Success required a disciplined
effort to assess all potential political and business considerations.
Above all, EIA's experience shows that decisive leadership is the
most critical requirement for successful crisis management. According
to CEO Bruce Parker, success involved making "right decisions
for the right reasons at the right time." No effective leader
can afford to be paralyzed by the fear of making difficult decisions.
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