Change and Development of the International Olympic Committeelibrary.la84.org/SportsLibrary/ISOR/ISOR2000v.pdf · Change and Development of the International Olympic ... 1989, 1991)

Change and Development of the InternationalOlympic Committee

Dwight H Zakus*

Introduction

The international Olympic Committee (IOC) as the founding and governing body of the Olympic Movement is one of the ear-liest international non-governmental organizations (NGO) to come into existence. Its beginning late in the 19th century place it asone of the few organizations to bridge three centuries. From its small, simple beginnings it continues to govern and guide theOlympic Movement in a world that has changed considerably.

This paper will focus on the IOC as the “supreme authority” of the Olympic Movement, which exists to spread the philosophyof Olympism. To that end, first we will observe briefly the history of this organization to understand its governance and operatingprocesses. Observing how the IOC has governed and managed using its organizational structure will enable a coherent argument tobe made about its future. A discussion of the concept of corporate governance follows. Given the comments of IOC Vice-PresidentKevan Gosper1 in mid-1999, suggesting that if he were to become the next IOC president, a form of corporate governance wouldbe embraced in the future, elements of this model are discussed in terms of the IOC.

Finally, suggestions about the IOC’s current position, and its response to current crises will be discussed. From its response. anoverall strategic plan did not seem to be in place. nor did there appear to he a coherent crisis management plan in place. This sug-gests where a change in structure is required and permits speculation on the manner in which a corporate governance structuremight deal with these gaps.

Historical Overview of the IOC’s Governing Structure

An organization’s mission statement is central to its understanding. Whilst the Olympic Movement was founded on basesother than purely dealing with sport (Quantz, 1993; Hoberman, 1995), the central focus and mission have been on the developmentand production of sport, especially through the Olympic Games. Analyzing the historical documents of the IOC, and its movement,permits an organizational study with a focus on the actual manner in which the organization evolved and its current state of opera-tion (Dukerley, 1988).

The Charter of the IOC provides a basis for this analysis, but, other historical documents are valuable as well. Central to theseare the Bulletin, the Olympic Review, other in-house publications, and Lyberg’s (1987, 1989, 1991) summaries of the Sessions andExecutive Board (EB) meetings. The Bulletin contains a record of the IOC’s business in the form of minutes of meetings. whichincluded policy matters. The early versions of the Bulletin do not indicate the existence of any formalized Charter despite therebeing many operating resolutions and other policy matters included.

The earliest published account of the IOC’s mission appeared in 1908 and contained, under Regulations, a “goal.” The goalcharges the IOC, as entrusted by the 1894 International Congress in Paris, to ensure the regular celebration of the Olympic Games.to ensure the Games were celebrated within the perfection and dignity of their glorious past. and that the Games conform to the ele-vated ideals of their renovators (IOC, 1908). The third element of the goal is important for this discussion. Here the IOC’s goal isto incite or organize all the manifestations and, in general, to grasp all proper measures to orient modern sport in desirable ways(IOC, 1908). As can be seen in the latest version of the IOC Charter (IOC, 1999), the mission of this organization has not widelyvaried between the 19th and 21st centuries.

* Dwight H Zakus is at Griffith University, Australia.

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166 Bridging Three Centuries Fifth International Symposium for Olympic Research - 2000

This point is emphasized because the basis of strategy and its concomitant planning process demands a recurring analysis ofthe mission of the organization and whether or not the policies, procedures, and programs emanating from the mission-based stra-tegic plan are coherent: furthermore, does the organizational structure fit with this overall management process? While the missionof the IOC has not changed significantly, it can be argued that the perceptions held by current IOC members and how the operatingstructure carries out its goals are problematic. It could be argued that inconsistencies between espoused and active value-frame-works. as well as with the organizational structure itself are central here (cf Arygris & Schön, 1980; Carver, 1997). Hinings, Thiba-ult, Slack, and Kikulus (1996) point out that structure is the instrument for achieving the values of an organization. Further,responses to the crises of late 1998 and 1999 indicate that formal strategic planning has not taken place, nor have such other activ-ities as crisis management.

The IOC has a history of being reactionary in its structure and operation. This indicates that dissonance between the organiza-tional values, the organizational structure, and the operating processes led to the current crisis. It is only with an understanding ofthis background that comments can be made about the IOC’s governance, structure, and future possibilities within these aspects ofmanagement. It will be evident that the historical origins and the personalities involved have dictated the current structure and thatthese in turn have resulted in the current crises and the “reactionary” responses of the IOC.

Currently the “IOC is an international non-governmental non-profit organization, of unlimited duration, in the form of an asso-ciation with the status of a legal person, recognized by the Swiss Federal Council” (IOC, 1999). Other works provide a fuller his-torical account of the IOC qua organization (Berlioux, 1976; Wendl, 1996; Zakus, 1991, 1996). The main feature to examine, ishow the governance, through the IOC, Executive Board, and president, and the management (administration), through the IOC sec-retariat. evolved. It will be seen that there is a notable dilemma in how these activities unfolded historically in the Olympic Move-ment.

The early organization of the IOC was very much based on Pierre de Coubertin’s thought, action, and financial input. Tomlin-son (1999) stated that “De Couberin’s greatest quality in getting the Olympic Games off the ground was organizational. Not in anyorthodox way, though. For much of its early life de Coubertin’s International Olympic Committee was little more than a phantomorganization” (p. 205) Guttmann (1984) and Eyquem (1976) provide further support for this opinion. In other words the size ofthe IOC was such that no need existed for the separation of governance and management.

Following the First World War the size and business of the IOC increased. The work of the IOC took on proportions that werebeyond any one person or an executive to handle. Two things resulted: first an Executive Board (EB) was formed in 1921 and, sec-ond, a 1926 meeting of the EB passed a resolution “to establish a permanent Secretariat at Lausanne” (Meeting of Executive Board.1926, p. 19). Before this time de Coubertin’s homes in Paris and Lausanne formed both the headquarters and secretariat. This basisof the IOC’s operation closely follows that of other amateur sport and humanitarian organizations of the late 19th and early 20th

centuries. It is also the “paradigmatic” model that obtains in many sport organisations.With the initiation of the EB in 1921, a chancellor position was developed. Fred Auckenthaler (1922-1925), A. G. Berdez

(1925-1940) and Otto Mayer (1946-1964) tilled that position subsequently (cf. Meeting of Executive Board, 1926; M. M., 1966a,b). Lydia Zanchi tilled a caretaker role, first as a part-time secretary in 1926-1946 and then as a full-time secretary between 1946and 1966 (Roukhadzé, 1986). The chief administrative role became general secretary which Eric Jonas (1964-1965) and Westerhof(1966-1969) tilled (with Hugh Weir completing a bridging role during this time) (Wendl, 1996, p. 225-226). From 1969 this mainadministrative role became identified as the Director General. Monique Berlioux began an 18-year tenure with the IOC in 1967 andbecame Director General in 1969.

Berilioux’s tenure was one where she was able to lead strongly and control the secretariat as Brundage and Killanin did notreside in Lausanne. It was under her leadership that the secretariat expanded and became more central to the management of theIOC. It could be argued that this was the first time where governance and management took on significant and separate obligations.

When Berlioux became Director General the staff numbered half a dozen persons, which rose to 352 by 1981 (Killanin, 1983;Verschoth, 1981, p. 70; cf. IOC Chart, 1993). During this period, as Lyberg’s (1987, 1989, 1991) summaries indicate, much of theEB and Session business included discussions of human resource issues. These issues focussed on there being a insufficient num-ber of employees, the difficulties of obtaining Swiss work permits for some employees, and retention of employees in the secretar-iat. The Olympic Movement had reached a sufficient size that the IOC secretariat needed to expand. Under Samaranch the numberof employees has trebled (see Chart I).

Following Berlioux’s sacking in 1985 an administrative delegate (Raymond Gafner, 1985-present), a General Secretary (Fran-coise Zweifel, 1985-present) and a Director General (Francois Carrard, 1989-present) came to form the middle management per-sonnel of the secretariat.

Whilst the IOC and the EB had expanded, both it and the secretariat still indicated a simple bureaucracy and a traditionalmodel of sport organization and governance. That is, the amateur aspects of the IOC, the structural elements of both the IOC andthe secretariat, and the roles of each element pointed to a 19th century model of sport organization. Much of the pre-1972 (i.e.Brundage to origins) era point to this traditional model that embraced a simple, pre-modern structure. There is little point in

Change and Development of the International Olympic Committee 167

attempting a theoretical differentiation between tracks of organizational change in this period. Berlioux was able to move herselfinto a powerful position due to the lack of an in-house, professional (or at least professionally-trained) management leader.

To situate this into a management style, Berlioux was able to govern more along the lines of the “executive model” archetypeidentified by Kikulus, Slack, and Hinings (1992), rather than the boardroom model that the IOC then followed. Further, it paral-leled the unitary model of corporate governance where the EB was the policy-setting body (Carver, 1997; Garratt, 1997; OECD,1998). and Berlioux the CEO with a strong management prerogative with both executives and the EB responsive to shareholdersand stakeholders. This, perhaps, is the most important point of historical change in the IOC. Heydebrand’s (1977) dialectical argu-ment makes sense as the IOC moved from organizing to organization. Throughout history the IOC Session has acted as the annualgeneral meeting, especially after 1921. Certainly this topic demands fuller explication and study.

Gafner was given the task of studying the structure and operation of the secretariat when he replaced Berlioux in 1985. Thefirst note of this was an organization chart contained in the EB minutes of October 1985 (Lyberg, 1991, p. 189, see Figure 1). Boththe 1985 and 1987 organization charts were simplistic and did not capture the complexity of the IOC. Following from there were anumber of further studies and postponements of discussion of this matter by the EB throughout the mid to late 1980s.

The largest physical expansion of IOC infrastructure occurred in the early 1990s. The opening of Olympic House and theOlympic Museum and Study Centre led to new operating and financial demands on the IOC. Due to both of these aspects, the IOCestablished two further legal “organs” (see Figure 3) to operate and govern in the new context. By establishing first the OlympicFoundation and then the Olympic Museum Foundation later in 1993, the IOC was able to obtain certain legal protection and taxprovisions for the operation of the IOC and for the museum (Gafner, 1993, p. 234). Both of these organizational “organs” point toa new. more modern method of operation and structure for the IOC. The final expansion of note was the establishment of MeridianManagement SA in 1995 (see Figure 4). The IOC established this branch of its operation to manage The Olympic Partners program(its marketing arm) (P. Reymond, personal communication, June 7, 2000). Here again we witness the IOC moving beyond its sim-ple beginnings in a more corporate direction.

In terms of the organizational charts we can observe those of 1985, 1987, 1992, 1993, and 1999. In each case, and remember-ing that they are models and therefore lacking in certain detail, we are able to track the difficulty the IOC encountered in trying tomake sense of its growth from a simple 19th amateur structure to a 21st century multinational one. The charts show a confusion anduncertainty over how the IOC would operate. Certainly the latest charts available on the IOC web page and in on-line publishedreports (IOC, 2000a, b) indicate this confusion and the incompleteness of the overall management process and structure. We arguethat this is a reflection of poor management practice and process, and reflective of the values of conflict evident throughout IOChistory.

Finally, in each chart and in administrative and Charter policies and regulations we observe the centrality of the president.That is, a highly centralized form of governance and structure (see IOC Charter Rule 24.4--“The President presides over all activi-ties of the IOC and represents is permanently, IOC, 1999).” This again supports the contentions of Hinings et al (1996), and the cri-tiques of Carver (1997) and Garratt (1997), indicating a serious organizational malaise.

External, professional management studies of the IOC, in 1974 (Lyberg, 1989, p. 116) by Arthur Andersen and 1986 by McK-insey & Company (1986) were both discarded as they did not align with the governance model desired. Lyberg’s (1991, p. 204)summary of an EB discussion of the McKinsey report captures an interesting point. He notes that Samaranch “thought that McKin-sey should be told exactly what the IOC wanted” during the discussion of this report. Nothing more need be said.

The report of the Arthur Andersen was not obtainable. The McKinsey report did note certain problematic matters. e.g.. redun-dancies in departments, overlapping roles, lack of specialized training of people in certain positions, lack of proper job descrip-tions, and inconsistencies and lack of formalization of recruitment and selection practices, amongst others. The McKinsey (1986)recommendations included a rationalization of the structure, several means to address the above issues. a limit on the number offuture personnel necessary to run the secretariat, and de-centralization of operation to the administrative director (in addition toother recommendations). The irony is that many of the issues confronting the IOC then became major issues in 1998-1999. At thattime the IOC had to “react” to the same issues raised by the McKinsey report a decade earlier. Clearly the IOC did not wish tochange its prerogative in line with more professional, corporate leadership, and operational dictates.

What this history points to is the model that most early sport organizations embraced. From this we can observe that the his-tory of the IOC into the 1970s very much reflects the “kitchen table” model identified in the 1970s in Canada (Zakus, 1991; cf.Kikulus, Slack, & Hinings, 1992). We could also argue that the IOC resembled Mintzberg’s (1981) “simple structure,” or whatcould be identified as a “pre-modern” (non-bureaucratic) structure for most of its history. This model was very much “the” modelof amateur sport organization and management that most sport organizations had, or continue to embrace.

The position of de Coubertin, the early organizational structure and operation of the IOC, and the historic, Anglocentric basisof sport organization governance and structure are all part of the way in which the IOC (and many other sport organizations)existed from the 19th century to the present day. That is, a volunteer board overseeing the governance and management of a sportorganization, today most often with professional staffs.


The year 1921 marked a change in the governance of the IOC. Yet, it was not until Samaranch’s presidency that the ExecutiveBoard expanded and took on more of an active management role. The EB’s role as defined by Rule 26.6 of the IOC Charter indi-cates the strong managerial mandate of that organ. However, the IOC has not moved beyond the early unitary model of governanceand to a fully professionalized structure and operation. The current IOC structure corresponds to the boardroom archetype identi-tied by Kikulus et al. (1992) and does not exhibit the executive office archetype the IOC claims.

The history of the IOC is one wherein the separation of governance and organizational processes cannot be made in either the19th or the 21st centuries. That is, the way in which the IOC was structured historically heavily influences its current situation. TheIOC is trapped between an amateur avocational governance model and a fully professionalized one. The argument that Hinings etal. (1996) offer is also informative here, as the IOC is between archetypes due to the lack of congruence between the values and thestructural form it exhibits. As Sheridan and Kendall (1992) argue “there has to be an acceptable and definable structure. Without agood structure there will be chaos” (p. 220).

Models of Corporate Governance

The IOC structure and operation point to substantive and contradictory governance issues that indicate recent crises are inher-ent and endemic under the current governance system. A large part of this surrounds a values crisis as the clear, well-articulatedvalues of the Olympic Charter (IOC, 1999) look to have been devalued and indeed not followed. Secondly, the contradictionbetween the old avocational model and the fully corporate governance model might not be rectifiable within this confused valueframework and the concomitant ideological framework espoused by the IOC. These factors point to the possibilities and the con-straints of organizational change in the IOC. The following argument indicates first the general concept of corporate governanceand second where and how the IOC currently varies from this model.

The concept of corporate governance has seen a resurgence of interest following several economic anomalies in the 1980s.The issue of appropriate corporate governance has, however, been an issue since the 19th century. Though a time worn set of ideas,corporate governance is now viewed as a broader way of ensuring economic growth whilst ensuring a social and environmentalagenda is followed.

Sheridan and Kendall (1992) argue that each country will have its own idiosyncratic ideas of “good” corporate governance.Further. they state that no single definition is possible. They

believe that good corporate governance consists of a system of structuring. operation and controlling a company. . . to fulfil the long-term strategy of the owners, consider and care for the interests of employees, take account ofthe needs of the environment and the local community, work to maintain excellent relations with both customersand suppliers, [and] maintain proper compliance with all the applicable legal and regulatory requirements underwhich the company is carrying out its activities (Sheridan & Kendall, 1992, p. 27-28).

Further, this can occur if the organization is “structured in such a way that all the above requirements are catered for and canbe seen to be operating effectively by all interest groups concerned” and that “there must be sufficient transparency for this to bereadily observable without having to rely on extensive and expensive independent monitoring procedures” (Sheridan & Ken-dall, 1992, p. 28).

The OECD established a task force to study and prepare the “OECD Principles of Corporate Governance” (1998) model toaddress this issue. The OECD argued that the principles of corporate governance they identify are useful beyond publicly tradedcompanies. That is, “member countries consider [them] essential for the development of good governance practice,” they are appli-cable to “privately-held and state-owned enterprises,” as well, and “involve[s] a set of relationships between a company’s manage-ment. its board, its shareholders and other stakeholders” (OECD, 1998, p. 1). These principles, in other words, cover rights ofshareholders, equitable treatment of shareholders, role of shareholders in corporate governance, disclosure and transparency, remu-neration, and responsibilities of the board. As the IOC and two of its “organs” (see Figure 3) are founded under Swiss law, theirregulatory framework must conform to legalities of that country and should heed the OECD generic principles.

Finally, McIntosh, Leipziger, Jones, and Coleman (1998), in their book on successful corporate citizenship, identify corporategovernance issues that are important here. They ask the following questions on corporate governance: “how transparent shouldboards be in their decision making and to whom should they be accountable?, who are boards working for? Shareholders? Them-selves? A wider range of stakeholders?, what competencies should directors have?, and how do companies hold their employeesaccountable?” (1998, p. 86). The IOC dealt with many of these issues after the scandal of 1998-1999, basically through a quicklyformed, internal ethics commission. McIntosh et al note further that in many countries there are common problems associated withboardroom power relations (these are evident in the IOC). Here we observe many of the issues currently confronting the IOC andthat led to reactive changes to the Charter. McIntosh et al. noted that:

Change and Development of the International Olympic Committee

many boards are self-perpetuating and control nominations of new members, many people are appointed toboards as a reward for long service or loyalty, rather than because of competence, in some cases, board membersare appointed to support over-powerful chief executives, who do not want to be questioned too closely, boardmembers can become too familiar with each other and develop a common mindset, [and] many board membersdo not have the necessary competences to serve as directors and trustees of the shareholders’ and society’s inter-ests. (McIntosh et al, 1998, p. 86-87).

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Most of the issues identified above are endemic to the current way the IOC operates. Many of the IOC’s 1999 activities sur-rounded responding to governance, operating, and structural issues, with many of these focused upon the intake and quality of newmembers. Another issue surround trusteeship. As mentioned above, the perspective and behaviour of IOC members point to a val-ues conflict. We argue that a widespread abrogation of their trusteeship of the Olympic Movement is evident in the IOC member-ship. Also, it appears that accountability, transparency,3 and power are matters that require future action and change in the IOC.Central to this is identifying who the true shareholders are and how the IOC acts on their behalf as trustees.

By again observing the IOC Charter and actions of the latest president (e.g., seeking the Nobel Peace Prize, the OlympicTruce) the shareholders include all of humanity Or, is the IOC membership the shareholders? Or as the Games are the exclusiveproperty of the IOC that if ‘franchises’ to cities that successfully bid to host them, are the citizens or members of the host city, thehost country, or the host organizing committee the shareholders? The organization charts suggest that the IOC members (in Ses-sion) are the shareholders. This question of shareholder status adds confusion to how the IOC is structured and operates. It isclearly a matter that the IOC members must address further and reconcile beyond the actions forced upon them in 1999.

In terms of stakeholders, it appears that the IOC has a narrow concern with The Olympic Partners (TOP) and other sponsorsand corporate supporters rather than with the wider stakeholders and their mission. As witnessed in the 1986 McKinsey report andthe 1998-1999 debacle, there is much in the external environment that the IOC needs to address in order for it to govern proper lyand ultimately to manage properly. With its current structural confusion and questionable governance, the IOC is not past its reac-tional) basis in fulfilling its mission. As Gosper suggested, a corporate governance model could be useful in addressing many ofthe issues now publicly facing the IOC. The OECD (1998) and Keasy and Wright (1997) both emphasize the need for a “properdistinction between their roles [chairman and chief executive], and if the two roles are combined in one person, the rationale forsuch action” (p. 220). This would demand that the president not have a dictatorial style of leadership and that the EB complete itspolicy mandate and stay out of management. As Keasy and Wright (1997) argue, there is a role for non-executives who “must formpart of the wider governance debate that incorporates strategy, structure and enterprise” (p. 17). These variables are central to theanalysis and the contradictions evident in the IOC’s current siuation. It is in conclusion that we now address a way ahead for theIOC.

A Possible Way Forward for the IOC

“The fish rots from the head”--Chinese SayingJohn Carver, a successful consultant on public and non-profit board governance, (whose clients include the USOC) provides astarting point for this summary, Carver (1997, p. 212) cites Goethe’s comment, “to rule is easy, to govern difficult.” Carver arguesthat,

the greatest difficulty may lie in shifting from old to new paradigms. . . . Successful strategic leadership demandspowerful engagement with trusteeship, obsessive concern over results, enthusiastic empowerment of people, big-ness in embracing the farsighted view, and the commitment to take a stand for dreams of tomorrow’s human con-dition. Re-creating governance can generate a zestful new genre of strategic leadership in the boardroom,(Carver, 1997, p. 212).

We argue that this is necessary for the IOC under its current circumstances and in regard to the dramatic issues of 1999. It mustshift organizational and management at paradigms if it is to get back on track with its mission. It should also look at implementing atwo-tier governance model or a learning governance model as suggested by Garratt (1997).

The IOC has a mission that is desirable, based on the attention and support given to the Games. Fundamental Principles two,three, and six of the IOC Charter (1999) are those that most people in the world would embrace. This too is the heart of the IOC’sability to market and commercialize its brand/trade marks and cultural spectacle. Carver (1997) argues that the key role of NGOboard governance is policy governance. It would appear that the actions of the IOC, the various organizational structures imple-mented, and the rapid commercial expansion of the Olympic Movement has led to a serious dissonance between the values andmember behaviour, (or perspective as Carver argues), its organizational structure, and its potential future enterprise. As Garratt(1997) indicates:


As I see it, the key to organizational health is a thoughtful and committed board of directors, not managers, at theheart of the enterprise. It is the board‘s job to keep striking balances between the external and internal pressureson the organization to ensure its survival. The board must give a clear direction to the business and create theemotional climate in which its people can align and attune to that direction. It is the board’s job to ensure thatsufficient numbers of members are pointing in the same direction, committed to a common purpose, with similarvalues and behaviours, so that the organization can function effectively and efficiently. (p. 3)

The Australian Broadcasting Corporation (ABC, 2000) produced a three-part series on the role of civil society in the operationof societies. In contrast to the first and second sectors, government and business (especially corporations), this series noted that a“global revolution [is] under way, [and] a new emphasis on the role, significance and power of voluntary non-profit, community,or non-governmental organisations, now often called civil society organisations (CSOs) is emerging” (ABC, 2000; cf. McIntosh etal, 1998).

The difficulty if not the dilemma, is that the IOC appears to want to embrace a 19th century model of organization and gover-nance that is antithetical to its current reality and the current reality of global society, and of NGOs within that context. Through aprocess of alignment with a corporate governance model, embracing Carver’s concepts and focus on policy governance, then per-haps the IOC can become part of the 21st century and truly fulfill its cultural, symbolic, social, and civil society roles. Finally, if itis able to separate and govern instead of manage, then perhaps it can realize the higher goals and values central to is mission. TheGames do exhibit most of these values yet become reduced by the negative political and patronage endemic to the culture and oper-ation of the IOC (cf. Hining et al. 1996). By becoming a post-modern organization (Clegg, 1990), or one that embraces a learningorganization on paradigm (Senge, 1990), the IOC can further its “glorious and dignified” origins and those of its renovators.

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Zakus, D. H. (1991, May). “Organizational change in the International Olympic Committee: From superstructure to base.” Paperpresented at the meeting of the North American Society for Sport History Conference, Chicago, IL.

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Endnotes

1. The author attempted to interview Mr Gosper on his ideas of corporate governance for the IOC. This did not happen nor didMr Gosper respond to facsimiled questions.

2. This contradicts the IOC’s 1992 documentation that shows 32 persons in the headquarters

3. One of the knee-jerk reactions of the IOC to increase its transparency was to add auditors statement to its web page, have audioand video tape of its meetings available on this medium. and to form an ethics committee to internally monitor its activities.

Chart 1IOC Organizational Chart (IOC, 1993)


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Figure 1IOC Organizational Chart 1985, 1987 (IOC, 1987)


Figure 2Structure of the IOC (IOC, 2000b, p. 5)


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Figure 3The I.O.C. Organization Chart (IOC, 2000b, p. 14-15)



Documents

Change and Development of the International Olympic Committeelibrary.la84.org/SportsLibrary/ISOR/ISOR2000v.pdf · Change and Development of the International Olympic ... 1989, 1991)