AMC-Management Model Has Advantages over Non-AMC Models

The results are in – AMC-management model generated more consistent operating surpluses and grew reserves to a greater extent between 2006 and 2015 than did the non-AMC-model (i.e., directly employed staff and full financial responsibility for occupancy and capital costs).
(Full report here…)

For those familiar with the AMC-model, this is not a big surprise. What is newsworthy about the results is that we have credible evidence about the advantages of the model for associations. These results add to previous studies conducted in the past decade showing that the AMC-model is both the less-expensive alternative to hiring staff directly and shouldering all operational costs, including capital purchases, but also the more productive association management model. In short, the non-AMC model is overpriced and under-performing!

These latest results lead to a more interesting set of questions: Why does the AMC-model outperform the non-AMC-model? What’s the AMC-model’s ‘secret-sauce”?

There can be only two reasons – or some combination of the two. First are the economies of scale – shared resources and being able to provided the right blending of staff talent and capacity to each client organization.

Second are economies of scope – the benefits from staff simultaneously supporting other, similar client organizations. The benefits are derived directly from a richer set of experiences AMC staff bring to each client based on lessons learned from other client work.

Is the AMC staff model just more efficient? Or, do AMC senior staff officers simply make better and more impactful decisions than their direct-hire counterparts?

Either way, those of us in the AMC community know that just asking these questions can bring a strong emotional response from the non-AMC community. This is unfortunate. If there’s something to learn about more effective management from the AMC model, we should all be willing to get at the bottom of it and see how those best practices can be employed in any model.

Opinion

I’m going to step out on a limb here and express an opinion based on nearly 40 years of management experience – the last 25 years operating an AMC – and say that I think the real “AMC Secret Sauce” is the economies of scope and not the economies of scale. I think multi-client association management executives make better decisions over time than do association executives employed full time by the organization, based simply on delivering more experience.

If we think about this in terms of “practice makes perfect”, then the notion of more experience makes sense. Think about professional athletes and the years they’ve been developing their particular skills. Recall when Michael Jordan retired from the NBA and decided that he’d try his hand at professional baseball. Even this world-class athlete could not make it the top of another professional sport because he couldn’t compete with the hitters in professional baseball who’ve faced pitchers since they were children. Jordan simply could not overcome the experience professional baseball hitter had. Even professional baseball players of lesser athletic prowess than Michael Jordan, were better hitters than he could ever be.

In much the same way, staff members of AMCs have, on average, more experience performing their duties than stand-alone staff. In some respects, it’s just not fair for standalone staff!

I don’t yet know how to study this empirically. Any ideas? Please share, if you do.

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