It is Not a Membership Problem. It's a Math Problem. - Matt Appenzeller, Executive Director, Southern Ohio Chamber Alliance
Many, if not all, chambers of commerce set membership goals based on the number of new members they plan to recruit each year. They may or may not understand the cumulative impact of retention and attrition over time. Membership retention and growth is a math problem, not guesswork. You must do the math before you make a plan. If you don’t, you and your Board of Directors will likely make unrealistic decisions regarding your growth and run the very real risk of staff burn-out.
According to the latest published ACCE membership data, the median average for member retention was 88% for Category 1 Chambers of Commerce with budgets of $450,000 or less (ACCE, 2019). This represented the highest retention rate among the five categories of Chambers that were measured in the survey. This number allows us to start doing the math about membership.
Remember those word problems in math class that we knew we would never use again? Sorry to say, but for the sake of your business planning (and maybe even your health), we were wrong. This information is critical to your long-term planning. Ready? Here it goes:
As of January 1 of this year, the Anytown Chamber of Commerce had 400 members. The Chamber has two employees, a full-time director and a part time staff member. The Board has set a goal of gaining 48 new members this year, an average of four per month. Assuming a 88% member retention rate (the median national average for a Chamber its size), how many members will Anytown Chamber have at the end of this year if they meet their membership goal?
(400 starting members x .88 members retained) + 48 new members = 400 ending members
The correct answer is 400. They’ll have exactly the same number of members at the end of the year as they had at the beginning. In other words, the Anytown Chamber will experience 0% membership growth with this set of assumptions. They can only “break even” because they gained as many members as they lost. If they use these same assumptions every year, the Anytown Chamber will always experience 0% membership growth. Numbers do not lie.
Math can also help your chamber determine your “break even” for retention and growth before you enter into a strategic planning session with your Board. You don’t want the “above average effect” (Alicke and Govorun, 2005) to creep into the session, leading to unrealistic membership goals. The above average effect is the tendency of a person to hold an overly favorable view of one’s abilities relative to others. The best way to illustrate this is with another word problem.
The Anytown Chamber is currently in a strategic planning session. A few enthusiastic Board members assert that “there’s no reason that Anytown Chamber can’t double its membership from 400 to 800 members over the next five years”. This, they argue, should be easy to do if they simply set goals to gain two new members per week (104 per year) for the next five years while achieving a 93% retention rate (5% above the median national average). They congratulate themselves for a great planning session and go back to their regular jobs. Does their math add up? Will they actually double their membership in five years?
(400 starting members x .93 members retained) + 104 new members = 476 ending members
(476 starting members x .93 members retained) + 104 new members = 547 ending members
(547 starting members x .93 members retained) + 104 new members = 613 ending members
(613 starting members x .93 members retained) + 104 new members = 674 ending members
(674 starting members x .93 members retained) + 104 new members = 731 ending members
At the end of five years, the Anytown Chamber will have 731 members which is well short of their goal. Despite gaining 104 new members per year and an excellent retention rate, the impact of attrition has a diminishing return on their net gain as the membership grows. They had a net gain of 76 new members in Year 1 which was reduced to a net gain of 57 new members in Year 5. The Anytown Chamber will not reach 800 members until the seventh year (835 to be exact). They have also “earned” a disillusioned staff who have been ground to a pulp mentally and physically. A Chamber staff of two who achieves 93% member retention and gains two new members per week for five years is a standard of excellence that few could sustain. The math says even those superhuman efforts will fall short of the goal.
The problem isn’t poor performance; the problem is an unrealistic plan. Math is relentless and unforgiving. The cold, hard truth is that the math doesn’t care about your excellent performance nor if you fall short of the ultimate goal set by enthusiastic Board members. This is why you must do the math beforehand, and you must show it to your Board before embarking upon any long-term membership growth goals.
Knowing the math raises many management questions for your Board of Directors and Executive staff, including:
The impact of diminishing returns on your efforts cannot be understated. As your membership grows, your “break even” numbers reset to higher levels. To demonstrate, we can also determine the break even number of current memberships if we preset our desired retention rate as well as the desired number of new members per year. For example, a Chamber that desires 95% retention and 52 new members per year has a break even point of 1,050 members. In other words, once your Chamber reaches exactly 1,050 members, you’ll need 95% retention and 52 new members per year (one per week) just to maintain current membership levels. Alternatively, the same Chamber could set a goal of 104 new members per year (two per week). They’ll need a retention rate of 90.05% to break even at 1,050 members at the end of the year. That’s two percentage points above the median national average for retention.
Is it really your plan to beat the national average every year? Or are you introducing the “above average effect” into your goal setting process? What will it take to maintain that exceptional performance over three, five, or ten years? What impact does that have on staff? Are you prepared to compensate them for beating the national average every year?
The ACCE Benchmarking data is so important. Knowing the benchmarks for a Chamber of your size and budget allows you to set smart, achievable goals. It’s also why we built the Membership Calculator on our web site (visit www.joinsoca.com and scroll to the bottom of our home page). You can enter different assumptions to find your break even point with your membership levels. You can also use the Membership Calculator, combined with ACCE Membership Data, to determine realistic membership goals for your Chamber.
The Membership Calculator can also show how many members you’ll lose over a period of time. In our example of the seven years that it took Anytown Chamber to double its membership from 400 to 800 members, they lost 293 members. Your churn increases as your membership level increases. You’ll need to decide whether or not churning through that many members is detrimental to your brand or if it’s simply a cost of doing business.
Once you know the math, your planning will become more accurate. Armed with the math, you can show your Board reasonable membership growth goals; the impact of diminishing returns on membership growth; attrition is inevitable; and that a substantial mix of non-dues revenue is critical to the long-term success of your Chamber.
Skilled workers were crucial before the COVID-19 pandemic. They’re needed even more as we recover.
Like most states and regions, Ohio and Colerain Township have felt serious impacts from the COVID-19 pandemic. While our governor and his team received praise for their decisive early actions, certain businesses and industries may have a tough road back from resulting economic losses; for some, the return could be a long one. While businesses start to re-open, it is unclear where they are going to find the skilled workers they need.
Even before the pandemic, Ohio faced a massive skills gap. To compete effectively in the global economy, about 65 percent of Ohio adults would need to have a post-secondary credential of some kind, such as a four-year degree, an associate’s degree, or a certificate or credential for an in-demand occupation.
Currently, Ohio sits at 45.5 percent of adults earning such a credential, ranking us 31st in the nation and behind several nearby states.
That simple, yet sobering fact is the centerpiece of a recent brief from ReadyNation, an organization of over 2,700 global business leader members, myself included. Frustrating the progress toward closing our skills gap, many programs are unsure how they will be able to offer hands-on training in this new age of social distancing. That is a particularly urgent problem because the current health crisis has shown just how crucial these workers in many essential and front-line industries are.
For example, health care workers are often trained in programs requiring a certain amount of time spent outside the classroom in clinical settings. Likewise, there is increasing demand for logistics and supply chain management, as anyone who has gone grocery shopping lately can attest. Yet, these programs are also struggling to offer hands-on training in certain areas. Ohio is home to large, nationally-recognized organizations in both the health care and logistics fields, with those skills in great demand.
Fortunately, the ReadyNation brief also offers solutions, calling for increased investment in three policies Ohio has adopted that have helped address these problems. They are TechCred, OCOG, and Choose Ohio First.
With more than half of Ohio’s jobs being “middle-skill” jobs that require more than a high school diploma but less than a bachelor’s degree, it is crucial to encourage both younger people and working adults seeking to re-tool their skills to consider an associate degree, certificate, and credential programs. These usually require less time to complete than a bachelor’s degree, which in return offer higher wages and oftentimes increased benefits than jobs requiring only a high-school diploma. Individuals who have attained some post-secondary education credits may work with advisers that can help parlay those previous classroom experiences and certifications as partial progress towards completion; this can save both individuals and employers even more time and money.
The bottom line is that Ohio faces a significant workforce skills gap that compromises our ability to compete in the global economy. This was true before the pandemic, and as we emerge from it, we will need to work together—employers, educators, and people of all ages—with greater focus on retooling and reinvesting in important human resources.
ORIGINALLY APPEARED HERE -
As a business owner, how do I know when I should engage someone to help me with our human resources needs?
The quick answer is the typical rule of thumb is to have one HR professional for every 100 employees. However, depending on the scope of the role and how proactive your organization is, this number may be more like 1.5 HR professionals per every 100 employees (Bloomberg Report).
But not all businesses have over 100 employees, and you can’t wait until you are at 100 employees to address human resources in your business. When you hire one new employee beyond yourself, your journey down the human resources lane begins. It doesn’t necessarily mean you are ready to hire a full-time HR person; but rather, you need to do some basics to get your business in shape to have employees such as:
· Setting up workers compensation
· Obtaining a payroll solution
· Posting mandated posters
· Creating employee files
· Developing a recruiting process
· Creating an onboarding program and required forms
· Setting up how an employee will be paid in compliance with various laws
· Identifying benefits–not just health, but also holidays, PTO, and programs
· Setting expectations for employees through policies in an employee handbook
Once you have your HR function setup, you may be comfortable handling your human resources function internally yourself, through your management team, or even an office manager. But, be sure you have a lifeline to an HR consultant and/or attorney to help you, should an issue arise.
As your business grows, you will also see other triggers that may tell you it’s time to get more formalized help with your HR function such as:
· Business growth
· Employee turnover
· The need for more formal policies and procedures
· Gaining or maintaining a competitive edge
· Change that is impacting your employees
· Conflict with responsibilities
Compliance with federal, state, and local laws is critical for you to stay on top of as your business grows, which again is why it’s important to at least have a lifeline to an HR consultant and/or attorney. Check out this general list of the federal labor laws by the number of employees you have on your team. This list links to details on the actual law. But, there are also many unique state and local laws that may apply to your business too.
Too often, we see businesses wait until a problem occurs: if it isn’t broken, why fix it? When it comes to HR, you are better to be proactive than reactive to avoid losing key employees, receiving penalties for violating a law, or litigation.
strategic HR inc. can help you with your human resources needs, whether you are hiring your first employee or your 1,000th. We can conduct an analysis of your HR function, establish your HR function, become your HR function, or help with key components of HR. To discuss your needs, please contact us at info@strategicHRinc.com.
Hopefully, the summer of 2019 was a fun and memorable one for all! There are so many great things to do in our state during the summer, and my family and I were able to enjoy several across Ohio: baseball games, county fairs, amusement parks, visiting family, and so much more!
Since my last CCE Ohio blog, the state budget passed, and it was a great one overall for strengthening Ohio’s families and communities. While businesses found much to like (and some to dislike), this was the most child-friendly budget in state history. Thank you for all you did, as several members signed on to our letters to legislators and Barbie Lange spoke up on the importance of improving foster care and children’s service funding, as it will serve to strengthen the current and future workforce.
As my previous blog noted, 2020 will be here before we know it. Certainly, the nip of fall and the upcoming schedules of football games, pumpkin patches, corn mazes, and marching band competitions are timely reminders the calendar will soon flip.
As 2020 will be a Census year, and communities everywhere are developing plans to ensure everyone is counted, I wanted to share with you some resources you may find helpful. First, there is ReadyNation’s Business Counts: How Businesses Can Contribute to an Accurate Census. This report contains a few examples and suggestions as to how communities and businesses can work together to ensure everyone is counted. Ohio’s Development Services Agency provides updates on state and local Complete Count Committees as well as a link to Census job opportunities. Information about the questions being asked, and why, can be found on this page from the Population Research Bureau.
While chambers of commerce have been leading efforts in communities to encourage a complete count during many prior Censuses, the 2020 Census presents significant new challenges. First, instead of receiving forms in the mail, residents will receive postcards telling them how to fill out their form online, providing a link. (As many as three may be sent periodically in 2020.) A postcard has the potential to be overlooked, and many may be concerned it might be some type of scam. Some, particularly the elderly, may not have Internet access and/or a comfort level with cyberspace to participate. They may need a trusted friend or family member to assist.
Also, to allay concerns about being required to provide personal information, the Census Bureau only collects name, address, date of birth, and demographic data. The Census does NOT ask for Social Security or other identification numbers, let alone any other type of personal financial information. As a reminder, the information collected is kept private for 72 years and is only publicly available in statistical (aggregate) form from this Census until 2092.
Lastly, there are the usual privacy concerns about government agents coming to people’s homes and onto their property. This desire to be left alone is as old as America itself, but the best way to remain left alone is to fill out the Census accurately when the postcards start to arrive.
As we get closer to the count date of April 1, 2020, there will be public service announcements on TV, online, in newspapers, radio, and other forms. No one expects the local chamber of commerce to carry this burden alone. I am personally excited to be participating in the Census campaign by working with both the business leaders of ReadyNation and the other organizations under our Council for a Strong America umbrella. Please do not hesitate to contact me if you would like to learn more.
I continue to be impressed with the hard work and dedication of local chamber executives, not just in promoting your communities as a great place to do business, to raise a family, and to visit, but also in going the extra mile make it so. In carrying out these awesome responsibilities, there is something taking place next year for which participation, backed by your support, can help all our communities continue to thrive.
It’s hard to believe, but we’re only a few, short months away from the year 2020. Around the turn of the 21st century, many communities undertook long-term planning, imagining what their neighborhoods and business districts would look like next year. Key to measuring that vision, or adapting it to current needs, is the Census. As it turns out, 2020 is also a Census year, where every resident in every community is supposed to be counted via a nationwide canvass.
Why should the local Chamber of Commerce care about the U.S. Census? Simply put, an accurate Census helps businesses make decisions about local expansions and opportunities for growth and development. This could be anything from a manufacturing facility analyzing the educational attainment of the local workforce, to a family-run coffee shop opting to expand because of a noticed increase in area growth and diversity. Also, the Census helps local communities attract public dollars, which can go towards funding parks, roads and bridges, even equipment for public safety and first responders.
So what can a Chamber do to help put the community’s best, most accurate foot forward in the Census? First, the Census needs good workers in order to be successful, and the temporary jobs provided by the U.S. government help expand the local workforce. Census 2020 will be a bit different as everyone will get a postcard with a website to enter information. While some of your residents will immediately do their civic duty when the postcard arrives, others will set it aside with the rest of the mail, and forget about it. Still others may be reluctant to do so because of online privacy issues.
That’s where the local enumerators come in, canvassing door to door. Studies show that people will be more responsive to a local Census worker who is perceived to be a local, trusted individual. Because employment rates in most communities are much higher today than in 2009-2010, it will be more challenging to fill temporary enumerator and processing positions. The link to apply for a 2020 Census job ishttps://2020census.gov/en/jobs
Additionally, chambers can encourage your membership to assist their employees to complete the Census, and, perhaps most importantly, count their children. According to most studies, children aged 0-4 are the most undercounted age group. Since children are our future, a complete count of children would show that a community has a robust future. Additionally, public-facing businesses with Wifi can offer places for residents without Internet access to complete their forms online. In much the same way that local leadership typically encourages those around them to participate in our community by voting in elections each November, it helps greatly to have your voices encouraging those around you to take a few minutes and count themselves and their family members in the Census. This is a once-a-decade opportunity to make sure that everyone in your community counts.
Council for a Strong America
1212 New York Avenue NW, Suite 300
Washington, DC 20005
Visit our new website: StrongNation.org/ReadyNation
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A message from Michael Harlow, Ohio State Director, ReadyNation
Many suburban and rural Chambers of Commerce operate on tight budgets with no more than two paid staff. If that’s the case for you, then spending a lot of time chasing new members isn’t necessarily the answer. You may very well end up churning through members and burning yourself out at the same time.
At the CCEO Winter Conference last week, I asked a room full of Chamber Execs how many of them operated with only one or two paid staff. The overwhelming majority raised their hands. Then I asked how many of them have between 200 and 300 members in their Chambers. Approximately half the room raised their hands again.
Then we dove a little deeper into the membership trap. I asked the audience to make three assumptions:
On the surface, these sound like lofty promises, and they may even sound too good to be true. But here’s the problem: even if they are true, your net results are a gain of only one new member in the first year. Here’s the math:
Part of the value of attending the CCEO Winter Conference is being challenged to think differently about your Chamber operation. It was clear that a lot of Chamber execs in the room were surprised by the math.
As you can see, depending on whether we round a decimal point up or down over the course of time, it will take you at least ten years to go from 250 members to 260 members. During that ten year span, you will have churned through at least 25 members per year. In other words, you will have churned through 250 members during that time to increase your membership rolls from 250 to 260 members, only to find that by using the same math, your net gain is ZERO members in the eleventh year!
Reality can be depressing sometimes. What’s even more depressing is that it doesn’t get any easier if your Chamber is more than 260 members. For example, Chambers with 500 members need to gain one new member per week combined with 90% member retention just to reap net growth of just two members for an entire year’s work!
Of course, ultimately you are a membership organization and membership is important. All I am saying is that you need to be aware that membership can have a limited impact on your budget. You need to evaluate whether or not you have the right revenue models and dues structure. You also need to be open to a variety of non-dues revenue opportunities, even if they do not originate in your community.
More importantly, your Board of Directors needs to be aware of this math, and they need to commit to doing all that is necessary so that Chamber Executives can lead successfully.
A couple of weeks ago, I learned from a detective at a local police department that someone had attempted to open a business account at a high end electronics store and a couple of business lines in my name. The perpetrator had my social security number, driver’s license number, and home address.
I can’t really say that I was angry. Identity theft is far too commonplace for me to believe that I am somehow exempt. Part of me was just plain disgusted. All I could do was shake my head and mutter, “Everything is for sale, I guess,” in the stark realization that a huge market exists for personal information, and mine has been bought and sold for ill-gotten gain. These buyers and sellers don’t give a damn about you or me or anyone else. They just want the personal information so that they can commit fraud and other crimes. As you can see from my tone, I am still disgusted.
Another part of me was relieved and thankful that I have ID Shield, a benefit that is offered to Chamber members through SOCA by our friends at Data Guard Partners. It is reassuring to know that I can call someone immediately with a team of people who are working on my behalf.
Kara at Data Guard talked me through how to access and print my credit report. Then she advised me to call the Kroll investigators at ID Shield to report the matter.
When I contacted Kroll, an investigator named Chase asked me how I knew that the detective at the police department was legitimate, and not someone impersonating a detective. My face reddened and I felt embarrassed. I told him I hadn’t thought of that. He asked if I gave any additional personal information over the phone and I replied that, fortunately, I didn’t volunteer anything new.
Chase also recommended getting a copy of my credit report and he also said that they would send me a ChexSystems report to see if any new accounts had actually been opened in my name. Additionally, he urged me to make sure that detective was legitimate (She was legitimate. I called the City, asked to be transferred to the police department, and then asked to speak with the detective by name and got to her for a second conversation.).
I received my Chexsystems report in the mail about a week later. So far, so good. There are no new accounts. But who’s to say that it won’t happen again? It’s abundantly clear that key pieces of my identity have already been bought and sold.
Last year, SOCA rolled out ID Shield with Data Guard Partners (along with Legal Shield). It is our belief that Identity Theft is here to stay, and it is only going to get worse. Nick Goodwin of Data Guard Partners pointed out, “Did you know that the average American worker is twice as likely to suffer an identity theft than a broken bone, and the Federal Trade Commission says that identity theft issues suffered by American workers account for a minimum of 100 hours of lost productivity time per worker who suffered a breach? A recent survey of American workers also found that 66% of respondents took at least one day off from work in the past year to deal with legal issues.”
Legislation has already begun to catch up to this new fact of life. Employers may now purchase identity theft protection services for their employees and receive a tax deduction. SOCA chose ID Shield because identity theft is not just a personal issue. Rather, legislators recognize that identity theft affects employers and employees.
There are really only three ways to solve an identity theft: Reimbursement, Resolution, and Restoration. Reimbursement is popular because of its extremely low cost. However, this doesn’t provide any proactive monitoring of my personal information. Rather, it simply reimburses me for my time and expenses to fix my identity on my own if my information is ever used by a thief.
Resolution is a step better as it focuses almost exclusively on proactive credit monitoring (think Lifelock). Yet, as I understand it, this accounts for less than 20% of identity theft in the United States. These types of services also provide “800 number” assistance if I ever have any questions while I am fixing my own ID.
Restoration is the best form of protection. Restoration services monitor all aspects of a “member identity” including credit and non-credit related identifiers such as medical insurance cards, social security numbers, driver’s license numbers, court records, address changes, etc. Additionally, restoration also provides licensed and credentialed investigators to completely restore a member back to pre-theft status in the event of a breach on the member’s behalf.
SOCA is committed to providing employers with products like ID Shield’s full restoration services that provide exceptional value.
Your information is for sale and so is mine. That is the new reality, no matter how disgusted I may feel about it. On days like the one I experienced a couple of weeks ago, I’m very glad that my family is covered by ID Shield.
With tax time in full swing, it’s easy to get swept up in the chaos of this busy season. However, this chaos undoubtedly contributes to the uptick in email scams trying to take advantage of businesses. We are here to help prevent this from affecting your business through education.
Return vs. Value
Through our decades of history in the chamber of commerce, we as professionals have had difficulty explaining the value of joining your local chamber. The ACCE Horizon 2025 report tells us that we can no longer rest on the fact that a business will join the local chamber just because its the right thing to do.
How do we explain real value to the membership, the community in a manner that illustrates the value that we already believe it to be? The real value that membership to the Chamber of Commerce brings is now being explained by VOI and not ROI. We will attempt to give you five reasons why you should also consider this change.
Value of Investment - The Chamber brings its members valuable cost-savings programs that directly impact its members bottom line. Traditional programs have been Health Insurance, Worker's Compensation Pooling, Energy Programs, Member-2-Member discounts programs - all designed to lower the cost of doing business.
Value of Information – The Chamber brings its members unique resources – Roundtable discussions, workshops, advocacy on local and state issues, contacts, reference to other businesses, expertise – all information that is timely and relevant to the success of your business operation.
Value of Influence – The Chamber represents its members and communities interests – whether it is representing your business at the local, state or federal level, the Chamber is the advocate on all issues of importance to business.
Value of Interaction – The Chamber provides its members opportunity – people want to do business with people they know, like and trust. Numerous networking events, Member-2-Member programs, and partnerships foster relationships that encourage leads, referrals and more business for our members.
Value of Impact – The Chamber is one of the few, if not the only, organization that can impact the three main pillars in its service area (Government, Citizens, and Businesses). ACCE's Horizon 2025 report tells us that this helps to position the chamber in a place of opportunity to deliver like we never have before. The Chamber represents the area in which they serve – the strength of the membership and the direct results of the initiatives affect outcomes that benefit the members.
Special thank you goes to St. Tammany Chamber of Commerce for the idea and concept of this post.