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    • #7473
      Jen BudneyJen Budney
      Participant

      Hi everyone,

      The MEC controversy presents a great opportunity to discuss best practices. Thinking about your own co-op or credit union:

      1. Would you consider implementing election procedure like those used by MEC? Why or why not?
      2. How does your co-operative recruit new directors? Could recruitment be improved?
      3. How do you ensure your directors have the skills needed to successfully participate on the board?

      I’m looking forward to hearing your ideas.

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    • #7517
      Janet TaylorJanet Taylor
      Participant

      I love this discussion. I have on my governance team road map to look at candidate endorsement this year so am looking forward to hearing thoughts from others.

      1. Would you consider implementing election procedure like those used by MEC? Why or why not?
      Yes I would consider implementing some of the procedures that MEC has used. I often speak about their candidate endorsement as a positive. I like that they have more endorsed candidates than vacancies and still allow members to see information on non-endorsed candidates too. Our board has requirements in place and endorsement may be the next step we take as a highly regulated financial services co-operative.

      2. How does your co-operative recruit new directors? Could recruitment be improved?
      We engage a Director Recruitment Committee comprised of an equal number of directors and Owner Representatives, non of whom can be candidates in the next election. It is their responsibility to manage the recruitment process. They begin their work shortly after the AGM in order to prepare for the next year.
      The Committee maintains what we call an Evergreen List of potential candidates. People are added to the Evergreen List either through recommendation by staff, management, directors, Owner Representatives or on their own initiative. Before being placed on the list we do vet the potential candidate to ensure they meet our minimum requirements (1 year as an Owner, financial stability and share of business with Libro). Once placed on the list our Director Recruitment Committee connects with them on an annual basis to get up to date information. From this list the Committee selects those candidates they wish to recruit each year.
      The Committee uses information provided by the board on desired skills and attributes, current skills matrix, and other relevant information to decide which candidates to recruit. The recruitment process includes the initial contact and an interview process where 2 members of the Committee meet with each candidate.

      3. How do you ensure your directors have the skills needed to successfully participate on the board?
      We have a number of ways to ensure director have the necessary skills. First, we look for candidates with the skills and attributes that we’ve identified each year. Once elected they participate annually in a Skills and Qualifications Self-Assessment which tells us about their formal and experiential skill levels. They also participate annually in peer and team assessments to understand how they function in the board room. From these each director completes a development plan which they discuss during a coaching session. Directors participate in individual and group training sessions including those specific to Libro, to the credit union industry and with national organizations like ICD. Directors also attend conferences to expand their knowledge and Libro supports those who are exploring degrees or designations that will enhance their skills as a director.

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    • #7562
      Jen BudneyJen Budney
      Participant

      This is great information, Janet. Are you able to tell us a bit more about your skills and qualifications self-assessment? Is this an open ended questionnaire or do you have a list of skills and qualifications they can choose from – and if the latter, what’s on this list? I’m also personally interested in how boards peer evaluate and self-assess. How do you do this?

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    • #7573
      Jan O’BrienJan O’Brien
      Participant

      There are a number of reasons why coops will want to ensure that directors represent the diversity of the community they serve as well as the skills necessary to oversee a large complex businesses. In the highly regulated financial sector, regulators regularly remind credit unions about the need to include directors with financial and risk expertise on the Board. This can be challenging when directors must win an election to gain a seat. At Vancity, we elect three directors in rotation every year and endorse five candidates to give the membership some choice. Candidates who are not endorsed may also run but to date none have been successful without being endorsed by the Nominations and Election Committee (NEC). The NEC consists of two directors and four or five members at large.
      Each year, the Governance Committee does a gap analysis and identifies the skills the Board is seeking. The NEC then keeps the gaps in mind when interviewing each candidate. But first of all the values of the endorsed candidates must align with the credit union. We’ve had a bit of success, electing a CA and digital expert but still seek the elusive director with complex business and risk experience. We’ve begun some discussion about whether we should seek a change to our rules to allow the Board to appoint directors with specific desired skills. What do other coops think of that?

      3+
    • #7576
      Carol RipleyCarol Ripley
      Participant

      Hi Everyone. Regarding the question whether you should seek a change to your rules to allow the Board to appoint directors with specific desired skills, I am on a Board that has recently done just that. The company has significant risk and is operating in new financial markets that many of the current directors have little experience in, and the Directors felt that we needed to recruit specific skill sets around risk assessments and evaluations. This new director position is currently unfilled, although we are attempting to recruit for the right individual to fill the role. This new director will have a three year term, but a majority of the current elected directors can terminate the recruited director if we determine that the specific skills we wanted are no longer necessary (i.e. if the business model itself changes).

      This is a new initiative for us and so we don’t know how it will work out, but we definitely identified a skill gap that we wanted filled sooner rather than later. We were concerned that an elected director would not necessarily possess the required competencies, even if we identified the need when seeking new directors. I still think it will be a balancing act to ensure we have sufficient elected directors versus recruited directors overall.

      3+
    • #7579
      Walter PreugschasWalter Preugschas
      Participant

      Appointing directors with specific skills and experience is not uncommon in private or public corporations. So why shouldn’t it be a feature in the co-operative setting. If we place the right safeguards into the bi-laws and appoint only one or maybe two directors at the most, I can only see benefits. These appointed directors would need to be members and committed co-operative people.

      1. Our retail co-operative would not consider the procedure adopted by MEC. We effectively seek out potential candidates by talking to them and encouraging them to run for board membership.

      3. Our board encourages training of directors and has initial on boarding meetings with new members. We are just beginning a self assessment tool and a board evaluation program. I’m hoping that this will be an effective median for discussions and improvements.

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    • #7583
      Janet TaylorJanet Taylor
      Participant

      Our Skills and Qualifications Self-Assessment has specific areas of competency required by our regulator. Credit Unions can add other competencies they wish to have assessed however we prefer to do this through our other assessments/evaluations. We have evolved the format of the survey from a lengthy, multi-question format to offering statements from which our directors can select their skill level. It’s much less onerous for our directors now and meets the requirements of our regulator.

      Our peer evaluation which looks at how directors demonstrate their skills and attributes in the board room is a survey style assessment. Each director and executive rates each of the directors on 21 director attributes and provides an area for raters to offer developmental feedback. Since the director self-rates we can provide them with a comparison of their own results, those of their peers on the board, and those of the executive team. It’s a comprehensive assessment.

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    • #7584
      Janet TaylorJanet Taylor
      Participant

      I know that the practice of appointing directors to fill skills gaps is common in public companies. My personal opinion is that it isn’t a good fit with co-operative values or the democratic process. Especially in large co-ops there are member/owners who will have the skills being sought and it will take effort to find them. Sometimes it means thinking outside of the box – for instance a director with a background with emergency services (police, fire) may bring really strong risk experience to the board even if it isn’t financial risk. They have the thought process that can be used to think about financial risks. Alternatively the board can engage advisors to fill gaps when there is a need.

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    • #7589
      Jen BudneyJen Budney
      Participant

      Lots of great information, ideas, and perspectives here, folks – thanks for sharing.

      1+
    • #7617
      Desiree VandenhovenDesiree Vandenhoven
      Participant

      Hi every one,
      thinking recruitment… its so different for everyone I think. Looking at our own board and our last elections, we found it hard to identify what we were lacking or needing. As we are rural and not that large we tend to gravitate towards inviting people we know and think would fit within our board spectrum. We would discuss this as a board and then reach out and see if they are willing to put their name forth. The nominating committee does most of this.
      We have an ‘on boarding’ procedure in place and encourage new board members to start their DDP training as soon as possible.
      Being solid in your co-operative mind set and aligning with our values is very important to us.

      2+
    • #7749
      Jocelyn VanKoughnetJocelyn VanKoughnet
      Participant

      I feel board composition is part science, part art. There is no doubt that all boards need skilled directors, but I agree that in recruiting directors, especially if appointing from outside, co-operative values must be an integral part of the selection process. It is equally important in the selection of a CEO, where I believe recruiting from outside of the Co-op sector without having at least a few years as a senior manager of a co-operative is very risky.

      2+
    • #7998
      Cheryl WallaceCheryl Wallace
      Participant

      I do believe size matters and the complexity of the organization matters in board selection. I see some boards that don’t have the skill set and lose out on opportunities to grow or lose funding because they don’t know what is involved to meet the requirements of funders or regulators. Each industry is so different with regulations / expertise and knowledge requirements. That all being said having grass roots members on the board is important to add an understanding that may not be there otherwise. Having a diverse board is important to have different points of view. We saw this in Enron with board members not understanding the complexity and maybe having a conflict of interest. I am speaking in broad terms.

      As far as MEC is concerned they need to ensure they understand their strategy / mission and vision to ensure they are structuring their organization to meet that. They were able to grow their business from a small grass roots organization with those types of board members. Maybe they need to re-examine what they want their strategy to be. Governance expertise does not need to be the main requirement of board members. YOu could have a few experts and educate the others in areas they may need. They can also have external resources to support them through consultants and auditors.

      The board does not need to fully understand the operations of the business. The CEO and management need to. The board needs proper reporting to support it from a governance perspective.

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    • #8000
      Louis-H. CampagnaLouis-H. Campagna
      Participant

      Here are my answers to the many questions.

      1. Would you consider implementing election procedure like those used by MEC? Why or why not?

      I personaly resent the current “Board recommended candidate” procedure at MEC. I think it is the worst of two worlds (I explain below). My thoughts on the matter have evolved, and resentment is currently my baseline feeling on the matter. When I vote in MEC elections — which I do most every year –, I make a point of voting for the non-recommended candidates, precisely for the purpose of fostering viewpoint diversity. I also aim for geographic and gender diversity. I am not blind to the requirement of governance expertise, however.

      2. How does your co-operative recruit new directors? Could recruitment be improved?

      At The Co-operators Group Limited (CGL), directors are eñected through a regional committee process. Member-owners in each region (some in more than one region) send delegates to the Region Committee, that then elects its assigned number of Board directors from the delegate base.

      3. How do you ensure your directors have the skills needed to successfully participate on the board?

      CGL signals to the member-owners and their delegates both a) a skills matrix and how it is currently covered by sitting Directors, and b) diversity targets, most notably a gender diversity target.

      4. Should the MEC board continue to require board candidates to have high-level governance experience? Why or why not?

      Yes and no. Its a tough nut to crack for sure. Governance experience matters. Yet viewpoint diversity matters at least as much. What if you end up with a set of very experienced directors with little familiarity with current and emerging technology? What if no one on the board can provide insight on the emerging (and disruptive) social justice warrior — diversity-inclusion-equity (d-i-e) — postmodern intersectional vibe? Especially for cooperatives, Principle 5 Director training has to be a major component of the governance solution.

      5. Does operating a large retail business in a highly competitive market justify restricting who can run for the board?

      Yes and no. We want expertise on the board for sure, but we also want representation and members involvement. This is often an either-or, cut the cake in three proposition (Birchall, 2015). We want the people who can challenge management, the people who have an ear to current trends all arounf, and as many different different individual and constituency viewpoints as the governance structure can process. Restrictions on who can join the Board set by the Board — i.e., by Management, wink, wink — leads to a loss of the kind of viewpoint diversity that can make a large co-op behave differently in the market than an investor-owned business.

      6. Should co-op elections always be as open as possible?

      Even the ancient Athenians — the historic model for democratic governance, with women, slaves, and alien residents not considered — set limits on who could be elected (Raaflaub, 2007). There were disqualifying filters, such as insanity — however defined back then — or not caring for one’s parents, etc. Most elections — except those requiring specific expertise, like the posion of military strategist, most notably — were run through sortition, mind you. Sortition (the lot) is one surest way of achieving statistical tepresentation, provided your sortition pool is large enough and that the mecanism truly provides for a random draw. The basic idea was “isonomia”, i.e., that all citizens — yes, free male citizens only back then –, if it is true that they were not equal in strength, intelligence, beauty, wisdon, wealth, connexions, etc., they could still CHOOSE to be equal politicsly — one citizen, one vote, and an equal chance to be elected to short and non-renewable positions of governance (magistratures). Specialised slaves — the ancient version of public servants, computers, and voice-to-text recognition — provided the expertise. The assembly provided member voice (involvement). This system, unique in its time, worked fairly well (for the citizens, at least) for the better part of two centuries, all things considered. We still use sortition today to select for jury duty – a most critical function in our society that requires no special expertise, beyond remaining awake and interested. Might not sortition be introduced into coop governance to help solve the expertise-representation-involvement conundrum, for sone aspects of governance at least?

      References

      Birchall, J. (2015). “The Design of Effective Democratic Governance Structures for Larger Organizations,” in S. Novkovic and K. Miner, Co-operative Governance Fit to Build Resilience in the Face of Complexity (Geneva: International Co-operative Alliance), pp. 23-31.

      Raaflaub, Kurt A. (2007): The Breakthrough of Demokratia in Mid-Fifth-Century Athens, p. 112, in: Raaflaub, Kurt A.; Ober, Josiah; Wallace, Robert, eds. (2007). Origins of Democracy in Ancient Greece. Berkeley: University of California Press.

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    • #8001
      Louis-H. CampagnaLouis-H. Campagna
      Participant

      Hi Janet. Thanks for your post. I agree with your example, per emergency service work and risk management, having myself a background in emergency services.

      My whole thinking on the matter of Director expertise was shifted after reading Mills (2015). Mills most notably presents a chain of accountability diagram (p. 113) that challenged my assumptions and connected with my experience on national Boards that presented issues of balance between expertise, representation, and member involvement (Birchall, 2015). We also need to be mindful, I believe, of what took place recently with the governance at UK Co-operative Group — precious lessons to be learned there about competency versus democracy, for sure (Birchall, 2017).

      References

      Birchall, J. (2017). The Governance of Large Co-operative Businesses (Manchester: Co-operatives UK), pp. 1-40.

      Birchall, J. (2015). “The Design of Effective Democratic Governance Structures for Larger Organizations,” in S. Novkovic and K. Miner, Co-operative Governance Fit to Build Resilience in the Face of Complexity (Geneva: International Co-operative Alliance), pp. 23-31.

      Mills, Cliff (2015). “Governing Resilient Co-operatives: A Competence-Based Model.” In Sonja Novkovic and Karen Miner (eds.), Cooperative Governance Fit to Build Resilience in the Face of Complexity, 104-116.

      1+
    • #8031
      Tina NgoTina Ngo
      Participant

      Here’re my answers

      1. Should the MEC board continue to require board candidates to have high-level governance experience? Why or why not?
      How would you consider implementing election procedure like those used by MEC?

      I believe it’s important that the candidates have the experience and knowledge required in order to be a board member, for effective decision making. Otherwise, we will have the “rubber stamp” situation since the boar member has no experience to provide a valuable perspective and oversight.

      In order maintain better governance and allow the people the member a chance to be a board member, MEC can create a minimum criteria that each board must have (Credential). Provide necessary resources for a member to get the training he/she needs. If a member wants to participate, then at the very least, we know the person has the basic understanding and the foundation to be able to execute the job,

      2. Does operating a large retail business in a highly competitive market justify restricting who can run for the board?
      How does your co-operative recruit new directors?

      I believe the restricting the board member is just since we need the right person for the right job. We need to seek member that will not only fit the co-operative value, the person need to contribute to the co-operative culture as well. This is how we can grow and not fall behind. The board is there to serve the members, if the board itself lack the experience, there’s no point of having one at all. The member might have the right intention for joining the board, but lack of experience can potentially do more harm than good.

      Our Board, same as others, elected by the members with the experience and understanding of the business. This way, they will be able to understanding and make decision effectively. In addition, having the board member events where they can commingle with the employees and get to know the business better will provide the Board a better insight into the business operations.

      3. Should co-op elections always be as open as possible?
      How do you ensure your directors have the skills needed to be successful?

      The co-op election should be open to all member that meet the minimum skill-sets. This way, you’ll know the candidates, at least has the foundation to effectively execute their roles.

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    • #8033
      Jen BudneyJen Budney
      Participant

      Great comments, folks, thank you! Louis-H. – I think you make a very good point that diversity on many levels is essential – it is the best way of ensuring the board is prepared for the unexpected and questioning business-as-usual — which, if it goes unquestioned, can be disastrous.

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    • #8078
      Ward WeisenselWard Weisensel
      Participant

      1. Would you consider implementing election procedure like those used by MEC? Why or why not?

      We are in the process of implementing a Director endorsement process so our answer would be yes we would consider it. In a large retail coop that is increasingly complex, understanding the skill sets of director candidates and evaluating them is increasingly important. In addition, with a membership in excess of 300,000 I think members are looking for more information on the slate of candidates they are considering each year in the elections. As a Director, I cannot count how many times during an election campaign that I get asked by members about which candidates they should vote for. I think an endorsement process is an unbiased way to guide members and at the same time assists in having the diversity at the Board table that is critical to good governance and decision making.

      2. How does your co-operative recruit new directors? Could recruitment be improved?

      We do have good interest in our election process every year so from that perspective there is strong interest in the organization. We do encourage people to run where we see gaps that need addressing and this has been successful at times. That said, the nature of the democratic process does mitigate the effectiveness of these strategies. We have also brought independent un-elected candidates on to our Board as advisors from time to time where we see significant gaps that need to be addressed. This has resulted in interest in our coop as in one example they ran and were elected. The process is a bit ad hoc tied to an identified need but I think it is important to balance the need against the need to be open and democratic.

      3. How do you ensure your directors have the skills needed to successfully participate on the board?

      We strongly encourage Board training and we are formalizing specific budget availability for directors to enhance their training beyond the programs that are available through FCL.

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    • #8223
      Jim RossJim Ross
      Participant

      Finding directors and assembling a high performing board with all the required competencies is a challenge and always a work in progress.
      A balance of best practises is needed to mitigate problems caused by conflict, collusion, unethical and uninformed behavior.
      Outside the board, sources of balance can be found in professional staff when they fulfill their governance role in providing information that has correct format and content to the board for deliberations.
      Some third party assistance may be required such as an accounting firm or governance consultant to do the board’s needs assessment and director vetting and election procedure in order to prevent perception of collusion, conflict and to preserve director independence.
      So far any organization that I have been involved with has comparatively under developed board succession policy. Desiree mentions an on-boarding and it is presented in such a fashion that usually it is more about understanding the business and very little about board roles and governance
      Cheryl points out that each industry is so different with regulations/ expertise and knowledge requirements. Where ever I end up I try to champion what isn’t being talked about but what needs to be talked about and introduce best practise that might have the greatest impact. Definitely not the easiest path though.

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