Competitive Board Elections

Phil Kenkel

Bill Fitzwater Cooperative Chair

Oklahoma State University

The board of directors is critical to the success of a cooperative.  The board is responsible for approving major strategic and financial decisions.  They also have the critical tasks of both monitoring and partnering with the CEO.  Almost everything that happens, or doesn’t happen in a cooperative is due to the board of directors.  Cooperatives operate under the principle of democratic member control. The election of directors is where this democratic principle is put to action.  The goal for every cooperative should be to have competitive elections with more than one outstanding candidate for each open board position.

The path to outstanding board candidates starts with member education.  Members need to know how the board functions and the desired qualities for board candidates.  Members must have an understanding of the board role, and the challenges facing the cooperative in order to make an informed choice on director candidates.  Every cooperative should be educating the membership to foster an awareness and appreciation of the value created by the board.

In order to have a competitive board election the right individuals must be in the pool.  Potential board candidates must have demonstrated integrity in accord with the board’s code of conduct. Board candidates need to be independent thinkers but also must be able to contribute to the group decision-making process.  A board member must be able to consider an issue with an open and critical mind.  They must also support the policies and decisions made by the board and support the CEO when he/she is applying board policies.

Attracting board candidates should be a year around job.  Members must be educated so that they can understand the desired qualities of board candidates.  As they become better informed more members may consider running for the board.  Members are busy but they also allocate their skills and energies where they are valued and appreciated.  The path to creating a board candidate starts with asking them.

In today’s environment your cooperative needs a diverse team of engaged and dedicated directors.  Democratic member control is a powerful cooperative principle.  Strive to bring it to life in your cooperative through meaningful, competitive board elections.

Structuring to Meet Diverse Member Needs

Phil Kenkel

Bill Fitzwater Cooperative Chair

Oklahoma State University

In my last article I discussed consensus based decision making in the context of a cooperative with a diverse membership. Under consensus decision making, the cooperative leaders consider the wide range of needs of a diverse membership and then chart strategies focusing on the common needs. The downside is that the cooperative may concentrate on “business as usual” and fail to act on opportunities to meet the needs of some member groups. Over time this can prevent the cooperative from changing with its membership base.

An alternative strategy is to develop structures that allow the cooperative to focus on multiple member segments. A simple example is organizing into functional departments such as fertilizer, petroleum and grain. That organizational structure creates division managers who are focused on meeting and anticipating the needs of particular customer group. In a larger cooperative that concept can be expanded to include staff positions with greater specialization. For example, the fertilizer department might have an individual with specific responsibilities for specialty crops or precision application.

The challenge for cooperatives is in expanding that concept of multiple specializations to the governance level. The board’s role is always a balancing act, allocating the cooperative’s scarce resources to competing opportunities and member needs. As the cooperative becomes diverse, boards struggle to identify and fully understand opportunities that relate to one segment of members. Implementing structures such as advisory boards, focus groups, or key customer groups can help the board think through areas where there is a critical mass of member needs but perhaps not a consensus of member needs. A focus group representing no-till producers can help the board to better understand where the cooperative is and is not matching up with their service and product needs. The board must still of course consider whether the cooperative can profitably configure itself to meet those needs. The focus group allowed them to investigate an opportunity that might not have been on their radar screen.

The cooperative cannot be all things to all members. However, as membership becomes diverse it also can’t be one thing for all members. In a cooperative with diverse membership the management and governance system must allow the leaders to not only be on the ball but to keep their eye on multiple balls.

Simple Steps to Address Board Diversity

Phil Kenkel

Bill Fitzwater Cooperative Chair

Oklahoma State University

In my previous newsletters I have discussed the benefits of board diversity.  Boards with a healthy amount of diversity are more innovative and more strategic.  Board diversity improves the perception of the organization.  Research on Fortune 500 companies shows a clear correlation between board diversity and improved firm performance.  Agricultural cooperatives trail every other cooperative sector, as well as most investor owned firm sectors, in the diversity of their boards of directors.  In the case of gender diversity, which is probably the low hanging fruit for agricultural cooperatives, the cooperative’s membership structure may be a barrier to female board members.

The point of board diversity is to expand the pool of highly qualified candidates, not to set any sort of formal or informal quota.  There are some simple steps to addressing board diversity.  First, consider your membership policies and think through how women could run for the board of directors.  A simple solution might be to publicize board nominations in advance and establish a written procedure to express interest.  That would allow you to get a membership application from potential female candidates.  Another step is to have one or more females on your nominating committee.  A women member is much more likely to be able to identify qualified and interested female board member candidates.  A good election process with multiple candidates for every board seat helps open the door to diversity.  A female candidate obviously has an uphill battle in a cooperative with a culture of re-electing every incumbent director in an unopposed election.

A final step, if your cooperative has implemented an associated board, is to appoint one or more female members to the associate board.  The associate board is typically appointed by the board and CEO so that change can be implemented easily.  Even though they do not have a voting role, the associate board brings new perspectives into the board room.  The associate board is a great way to connect with members who may be unsure whether they want to commit to running for a board seat.  It also grooms them for a possible role as board member.

I have published a white paper on this topic which is published on the CHS Center for Cooperative Growth at the link below.  I also have a video and there are three outstanding videos from female board members at progressive agricultural cooperatives.  One of the themes in the videos is why the individuals ran for the board.  The recurring answer is that someone asked them.  In some of our cooperatives we need to remove barriers keeping women out of the board room.  In most, we just need to extend an invitation.

Center for Cooperative Growth:

http://www.chscenterforcooperativegrowth.com/