Business Strategies: join things

There are many associations that have excellent objectives, and which actively work towards improving standards amongst their members. However, it is important to realise that, unless membership is compulsory, then failing to be a member does not mean that someone is not good at what they do, nor is leaving such an association - or even being expelled - does not mean that they have committed some harm. Equally, and perhaps more importantly, being a member does not imply inclusion on some form of "white list."

Membership of many associations is voluntary, and it is often based upon little more than a willingness to pay a joining fee and an annual membership.

For example: the Hedge Fund Association was formed in 1995. It is not a professional body because membership is entirely voluntary. Interestingly, the HFA, which issued regular press releases went silent in after a release in March in 2008, until a release in December saying that there had been a decline in Hedge Funds in November. It has not issued any statements in relation to hedge funds collapses, including the Madoff fraud.

Of course, part of the point is that Madoff, a former Chairman of the SEC, remember, was not a member of the Hedge Fund Association. Indeed, on its website, the HFA lists only 31 member firms - and not all of those are actually fund managers.

Allying oneself with what amounts to a pressure group can be valuable. For example, in the USA, there are various pieces of legislation that regard women as a discrete minority and therefore entitled to positive discrimination. Therefore a group calling itself The Women's Business Enterprise National Council has been created to "certify" that businesses are "women owned." They have even created an acronym - WBE - that they hope will become a by-word for women owned (sorry, "Women Owned" - they always use capitals). But The "Council" has no statutory underpinning - founded in 1997, it describes itself as "nation's leading advocate of women-owned businesses as suppliers to America's corporations. It also is the largest third-party certifier of businesses owned and operated by women in the United States."

It is said that the certificate is accepted by national corporations and government authorities: but one has to wonder how much that certification adds to, say, an annual return showing that a company meets gender-ownership criteria. Incredibly, our colleagues over at www.bankinginsurancesecurities.com will be interested to hear, one of the documents that the WBENC demands a copy of is the bank account signature card.

In July 2008, software company BlueWare, which is 100% owned by Rose Harr, was held up as a shining example of the benefits of certification - and showed the discrimination that is fostered : A media release, which seems more crafted for the benefit of WBENC and other pressure groups than for that of BlueWare, says "Certification as a Women Owned Business will allow BlueWare to promote their offerings in areas that require a Women Owned Business or where a minority status is a favourable route to business, such as public sector engagements."

It seems that belonging can have benefits - but only to a point. After all, if someone needs to trade on their minority status, what does that say for the quality of their product or service? The implication that men will deal with women only if forced to do so seems somewhat bizarre in today's world, and the idea that a certificate to prove ownership and control of a business exceeds the statutory records on such seems, quite simply, a good excuse.

One of the objectives of a professional association is to put the interests of the client above that of its members. Perhaps that is why the Hedge Fund Association has a very small number of members relative to the large number of funds. Madoff's case certainly suggests that this may be so.