October 2002 Bulletin

Organizational evaluation: Setting a course for high performance

Over the first half of this year, the Board of Directors conducted an extensive evaluation of the organizational structure of the AAOS. This review was the final piece in the puzzle we have called "AAOS in 2005," in which the AAOS leadership and senior staff have reviewed old programs and brainstormed about new programs to keep our association’s performance high. We requested proposals from several consultants late last year and selected RSM McGladrey, a Chicago-area firm specializing in work with professional organizations, as the group to work with us on this organizational review.

Our consultants interviewed all members of the Board of Directors and over 30 people in senior AAOS management levels. All employees were provided an opportunity to respond anonymously to an electronic survey and about 80% of them did so. Extensive information was garnered from 19 other professional medical associations to allow us to benchmark AAOS against these other associations in several areas. The presidential line spoke at least weekly with our consultants for several months in early 2002.

The RSM McGladrey final report was presented to the Board of Directors in May 2002. The four major components of this report included benchmarking information regarding other professional medical associations, recommendations for general organizational improvements, recommendations for a change from our current executive structure, and recommendations for changes in our finance function. The benchmarking data and these recommendations will be a very useful guide for the AAOS leadership in the next few years to come.

Benchmarking

With regard to size of the professional medical associations providing information for the benchmarking data, the Academy was approximately at the median level. The data allowed us to compare several aspects of the AAOS to other associations, such as numbers of employees per member, sources of revenue, expense allocations, services provided, number of committees and executive structure.

As with any benchmarking data, it is important to dig deeper than the superficial numbers to make the most of the information. For example, the AAOS ranks high in the number of employees per member but also ranks high in services provided to members and in non-dues revenue production. This balance between staff numbers and services provided needs to be kept at a level that will provide the best value for the Fellows.

This year we have established the concept of the Annual Program of Work (APW), which requires evaluative criteria for new programs and requires annual evaluation of current programs to ensure that the service provided is key for the AAOS and that costs are appropriate. The strategic goals of the AAOS guide this APW, which also provides for closer monitoring of financial parameters.

Another example of the use of the benchmarking data involves travel expenses for AAOS volunteers and staff. At least partially as a result of this new data, there has been a change in travel expense guidelines approved by the Board last month. There will be many other examples of the use of this data in the months ahead. The plan is also for the professional associations to keep this data current over the years ahead as these other organizations have also found this data useful in planning.

New organizational structure

The Board-approved changes in the AAOS executive structure have already been communicated to the Fellows by e-mail and fax in August. Briefly, this new executive structure is the model of a CEO and an executive team, consisting of the COO, CFO, Executive Medical Director and Chief Education Officer.

This transition is planned for Spring 2003 and is supported by Dr. Bill Tipton and Dr. Larry Rosenthal, our current EVP/CEO and DEVP/COO respectively. Dr. Tipton will transition to the Medical Director position in April 2003. A search committee, chaired by Dr. Jim Weinstein, has been charged with selection of the new CEO by April 2003.

The recommendations for general organizational structure changes and changes in the financial arena have been addressed by two project teams of the Board and implementation of some of these changes has already begun. Dr. Jim Herndon headed the project team on general organizational changes, which were divided into those mainly the responsibility of the staff, those primarily the responsibility of the Board and those on which the Board and staff need to work closely together. Implementation of these recommendations will require more horizontal integration of AAOS activities on all levels and this horizontal integration planning is already in progress. You will hear more about the changes resulting from these recommendations in the months ahead.

Financial recommendations

Dr. Andy Weiland, Treasurer of the AAOS, headed the project team of the Board that looked at the recommendations in the financial arena. One specific recommendation was to move the CFO position to a more strategic position as a part of the executive team, so that the financial ramifications of programs, either new or old, are fully appreciated when decisions on the Annual Program of Work are made by the Board.

Other actions resulting from these recommendations are closer tracking by senior AAOS management and the Board of programs’ adherence to budget and fuller reporting of past trends and future financial forecasts. The close look at this area within the AAOS is focused on keeping expenses in check and maximizing revenue opportunities, while the value of the AAOS to our Fellows is pushed even higher than it presently is. To learn more about what is planned, read "AAOS: Ensuring a sound financial future," the article which follows this message.

Valuable exercise

There is insufficient space here to go into much more detail on the organizational structure changes we have been looking at and have approved. However, this has been a very valuable exercise and has provided much more value to the AAOS than the approximately $150,000 consultant costs. It is now up to us to implement these positive changes, a task that I, the rest of the presidential line and the Board are all committed to do.

If any Fellow has further specific questions about the above commentary, please write me at vtolo@chla.usc.edu or by regular mail.

Vernon T. Tolo, MD


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