Quite often I see people a little confused by the term “trade association”. It would appear that it is often misunderstood or construed in some manner to suit the individuals notion of what it actually is and does.
Below are various quotations about what a TA is lifted from various sources on the Internet. Whilst these may prove not to be definitive in any true sense as an “official” capacity as the definition of a TA they do give a good idea of the notion behind such an organisation.
- This organisation comprises member firms and performs a number of services for them, one of which is lobbying the government.
- An organisation that represents the interests of the member firms of an industry. It usually differs from a cartel in that it has no monopolistic intent.
- A group of food-service businesses that band together to promote food service and keep members informed about important matters and legislative developments.
- A professional organisation of manufacturers or other businesses formed to promote and industry or adopt uniform standards.
- An industry trade group is generally a public relations organisation funded, founded and formed by corporations that operate in a specific industry. Its purpose is generally to promote that industry through PR activities such as advertising, education, political donations, political pressure, publishing, and astroturfing.
I’ll leave that list for a bit and come back to it throughout this article.
TA’s seem to have risen in the post-war era, after the Second World War, as a modern take on the old notion of trading guilds and the likes where, like minded traders, would often form a loose association in order to gain preferential trading terms, promote their businesses and increase buying power.
These sorts of guilds have been around for centuries in fact, looking back through history, they appear to have been rather successful in their times. With the modern day equivalent not much appears to have changed outside of the moniker that such organisations operate under.
The difference now largely seems to be the fact that some trade associations appear to be little more than a vehicle by which some at the top, running the organisation, earn a living through delivering services to the members. Now, it could be argued that, were the association not delivering benefit to the businesses involved, that the membership would dwindle away over time and die and, to be fair, we have seen this happen in some cases.
Meanwhile any business has to look at being a part of any trade association as either an investment in an ideal or look at whether or not the cost of membership is offset by the benefits of being a member. The lower the cost of membership the less it has to be justified.
Just What Does A Trade Association Do?
Well that is up to the TA to decide. There appears to be no hard and fast rules that depict what a TA has to do or not do, in fact there is little regulation at all from the research I've done. It would appear that anyone can setup a TA and that’s pretty much it.
But, if you think about it, that is entirely correct.
Any TA earns respect within its industry; it does not just get given it because it’s there. The TA has to prove its worth to its members and onlookers outside of it perhaps teetering over the merit in joining and becoming a part of any association. So, to expect overnight success with a TA is both unreasonable and, without massive backing, just about impossible. It has to grow over time, earn respect from within the industry and earn respect from government or any other bodies with which it has dealings.
But the members will ultimately determine success or failure and, if no-one joins or the members dwindle then this is a warning to any TA, especially and established one.
However to get back to what does a TA do, here’s a short list of possible reasons for a TA to exist:
- Representation of members to government
- Representation of members to suppliers
- Securing better trading terms for members
- Promoting standards to other businesses and the public
- Promoting better standards throughout the industry
- Formation of buying group/s to enhance trading terms
- Informing members of matters that may affect them within the industry
- Informing members of legislative changes that affect them
- Knowledge and information sharing
- Lead sharing
This list is far from a complete one, there are many more functions that a TA can provide to its members but, theses are generally considered to be “bells and whistles” additions over the core functions of a TA as, just like it’s older cousins, the guilds, it is there to represent and benefit its members and if it fails in that task then it will fail overall. The basic premise must be established and must be upheld.
Quite simply there seems to be virtually no rules to govern how a TA operates or to set out the scope of its functions. The purpose and modus operandi of a TA is determined entirely by its members but with the caveat that “conventional wisdom” is often applied. That is to say that, people hold certain expectations of what a TA is, what it does and how it should conduct itself.
It would seem that these perceptions are routed in the history of guilds, unions and early trade associations as they appeared to be “legitimate” organisations somehow craving acceptance in the eyes of government and public alike. Therefore the structures were put in place in an attempt to appear officious and authoritative within their own fields. In many ways this has turned out to be counter-productive as many TA’s now seem regarded as no more than pompous, self-serving (management) little clubs that do little for the actual members. Of course that may well not be the case, but the perception is very real.
The rules that govern a TA are set by the members, not by any governing legislation or by any outside party. The members run the TA for the members benefit.
Where It Gets Murky
The murky side of this is where a TA claims to represent the industry as a whole.
Fact is that, without an overwhelming number of traders in any given sector being a part of the one TA or an amalgamation of various TA’s, no TA can claim to represent an industry as, it does not. It represents its own members and its own members interests, no more and no less. To claim that a small band of traders represent an entire industry is a falsehood.
What it can say is that it offers its members views and opinion on a given subject and that is correct. This is part of the basic functions of a TA, to represent its membership. However in order to do that, the members must have an opinion on the subject in hand and, through the TA, that opinion is voiced wherever it is required to be heard.
Often however, to hear that any one TA represents an industry is false.
Again this is determined by the members, not a rule book.
However, it is generally accepted (again, through conventional wisdom) that there is a small steering committee, board of trustees or council that steer the TA.
These members are elected generally by the membership whom they then represent on the governing body of the organisation in much the same way as a democratic government structure works with members of a parliament representing the views of many.
Where this does and, has, fall down is where organisations that wish to influence the TA manage to find themselves involved in that process as this then means that the TA is no longer serving its members but rather that of outside forces. Again this does happen and it is a danger as the TA will lose relevance to the membership if it chooses to serve another agenda.
Above the “council” there tends to be a director. This is not a director in the same meaning as a director of a business per say in some ways and, exactly the same in others. He or she is there to “direct”, to steer, to advise and to act in the best interests of the members, just as in exactly the same way were it a director of a business, they would act in the best interests of the company.
Summation & Conclusions
The summation of this piece is to say that every TA is different. Every TA has a different purpose and agenda and therefore it is probably inadvisable at best to draw comparisons between TA’s in some ways and, at the same time they should all perform the same basic functions. But, like ships on the sea, they all float and they all travel from A to B but that does not mean or require that they all look and act alike, in fact, they do not. Each one has a purpose and each one is built to serve that purpose especially and individually.
Perhaps it may be time for people to re-think what a trade association is and does in the modern world.