Anyone who has worked for any time with trade associations will have observed how the role of industry bodies has evolved. Twenty years ago, there were many trade associations that were led by their members with a club mentality. Trade associations were cosy places for industry players to meet in a safe and non-competitive environment. Special interest committees could discuss government policy and consultations, which meant they could be a useful conduit to government officials. But this was often a one-way conversation. Essentially, trade associations were led by their members.
In contrast, a modern trade association is expected to show leadership to its members. We have a more critical role to play in supporting our sectors and responding proactively to external developments. This has required trade associations to expand the skills set of their senior staff. Along with policy experts and membership secretaries, trade association need specialists that perform essential roles as ambassadors, lobbyists and spokespeople for their sectors. These specialists are responsible for feeling the pulse of public sentiment, horizon scanning for potential threats and opportunities, and advising on how to respond.
The changing face of trade associations is a response to changes in business culture that requires industry to protect its collective reputation and promote its ethical credentials.
Arguably the change of attitude in business began with the emergence of corporate social responsibility, which gained prominence in the 1990s. Following the digital revolution and dotcom crash, industry became less insular and more sensitive to external optics. Corporate social responsibility was used by firms as a public relations tool to promote its ethical credentials and seek favour with the Blair government, which at the time was rewarding business with a deregulation agenda. Its application was expanded to include environmental responsibilities and employee rights. Around the same time, many business sectors were adjusting to new regulatory frameworks following the privatisation of key markets, such as utilities. This in turn raised the profile of all other industry regulators. Consequently, trade associations built stronger links with their regulatory bodies and began striving for much higher standards of industry practice.
Corporate social responsibility shifted the focus from compliance to behaviour, with regulators requiring firms to do more than tick boxes. It was no longer enough for firms to prove to their regulator that they were operating to the word of law, now they needed to demonstrate how they were working within the spirit of the law. There was an evolving role for trade associations to embrace this culture change and provide leadership to their members.
The growth of trade associations in every business sector reflects the part that we play in modern business strategy. An effective trade association can lead its members in industry reform by sharing best practice and promoting self-regulation, where appropriate. The work of trade associations can pave the way for statutory regulation, which by its nature will always play catch up to more responsive self-regulation. Regulators will always be slow to respond effectively to a dynamic industry.
The next evolution of business culture could be in response to the coronavirus pandemic. The lockdown restrictions have already caused businesses to adapt with a remote workforce and virtual meetings. There are likely to be other changes to business practices as consumer behaviour during the pandemic becomes the norm. We are already seeing discerning consumers calling for firms to have more sustainable credentials and stronger ethics in data protection, public accountability and conduct. Alongside this we are seeing an increased emphasis on environmental, social and governance criteria (ESG) in markets. Trade associations will need to recognise these trends and support their members in adapting and communicating this evolution to their stakeholders.
Therefore, it is important that they are able to achieve consensus in delivering reforms. Trade associations are only as strong as their weakest member, and it is skill in itself to rally a diverse market around a single cause. Perhaps we need to think how we can bottle trade association leadership and create a career structure for trade association professionals. An effective and responsive trade association will have more influence and offer more value to its members. With the government looking for solutions to work through the disruption caused by the pandemic, there is a unique opportunity for trade associations to demonstrate their value to both government and the industries it represents.
Russell Hamblin-Boone is Chief Executive Officer of the Civil Enforcement Association. Previously, he was CEO of the Consumer Finance Association. He has held senior positions at the Finance and Leasing Association and the Energy Retail Association. He has worked in Downing Street and as private secretary to the Leader of the House of Lords.