In his last address to the group's membership, Ralph Frey, president of the Greater Washington Board of Trade, yesterday urged business representatives to step up their involvement in local affairs.

Speaking to the board's annual meeting, Frey, who will leave the post soon, lauded the organization's success in working with the City Council in revising the city's workers' compensation system and in attracting new business to the city. The workers' compensation statute, however, has been ruled illegal by a D.C. Superior Court judge.

"The Greater Washington Board of Trade is an organization that makes a difference -- because each of you makes a difference," Frey said.

Frey's successor will be J. Pat Galloway, general manager of Sears Roebuck & Co. regional operations. The board had expected Donald Tollefson, managing partner of Arthur Andersen & Co., to follow Frey into the job.

Tollefson had decided, however, not to take the post, since the District government has hired the firm to do major auditing work in connection with the financial difficulties faced by the city.

"In view of the expanded role between my firm and the District, there could be some question about my objectivity in 1981," Tollefson said in an interview yesterday. "I just felt it didn't make sense." Tollefson said he would be interested in the post in the future.

During the meeting, the board also elected new directors. Those selected yesterday are: David Abramson, T. William Blumenauer Jr., Kent Cushenberry, Geoffrey Edwards, Sheldon W. Fantle, Roderick K. Gaines, S. Buddy Harris, Louise Lynch, Thomas P. McLachlen, Frank H. Rich, Leonard P. Stuart II and Julia M. Walsh.