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    • #8065
      Les EllsworthLes Ellsworth
      Participant

      I see two very significant causes of the failure of the Wheat Pool and could not decide on which was more significant in my humble opinion. The first was the Trade Agreements that drastically change the game for the Wheat Pool and secondly, converting the equity in to shares for trading on the Toronto Stock Exchange. I believe all 3 – Management, Board of Directors and membership was responsible for the failure of the Pool as a co-operative business.

      I believe the Board of Directors should have adapted to the Interpretive System bringing in experts in this field rather than rubber stamping the CEO and Senior Management. The board had an obligation to get access to the needed information rather than okaying all the expenditures that led to the demise of the SWP. The board of directors did not have the expertise or required information to give direction. The failure of the SWP as a cooperative is a very difficult situation in regards to it being unavoidable. In hindsight a lot of mistakes could have been avoided, but the competition was fierce and with the Trade Agreements more restrict. It possibly could have maintain its share of the market if it followed the model of the 20’s rather than going to a model such as a Stock Corporation.

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    • #8132
      Mary NirlungayukMary Nirlungayuk
      Participant

      Thanks for this, I also feel the board should of been informed and provide more information to board – in this case Management are often seen they are experts they know what’s best for the organization so boards tends to fall into a trap.

      In sayin that I feel boards could have ask more back ground rather than rubber stamping.

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    • #8140
      Walter PreugschasWalter Preugschas
      Participant

      I can remember the 90’s quite well especially from a hog production perspective. As is discussed in this module; to come to the right view of the future is not easy. To the SWP’s defense there were a lot of pressures, many of them external: freight subsidies gone, where to market grain now, competition being allowed in the industry, rail lines being closed; provincial governments saying we can diversify, each of the provincial governments saying that we can produce 10 million hogs per year in each of Alberta, Saskatchewan and Manitoba instead of the usual 3 million or so. Banks were eager to lend to large conglomerate hog farms, the Canadian Dollar was low and trade agreements seemed to be in Canada’s favor. There was overconfidence. Things changed for the hog industry quite quickly. By the late 90’s and early 2000’s the US put tariffs on hogs, there was overproduction, banks pulled back. Later the Canadian dollar improved and made the Canadian Hog Industry less competitive, the Swine Flu caused price collapse.

      In hindsight, SWP didn’t pick the right view of the future. Instead of diversifying and expanding so rapidly it needed to adjust its core business and strengthen it and keep its members on board . Getting into ventures and expansions into areas it didn’t have expertise in was the wrong thing to do.

      Who is responsible – ultimately the membership. I think there was a period where most were caught up in this wave of optimism and this wave of feeling a need to expand. Yes, management was pushing it and taking advantage of the lack of board experience. Really the SWP was not ready for the external changes at all. The board needed to sit back and slow things down and look at expansions with a more analytic approach. Overconfidence rather than rationale was too prevalent.

      Possible Governance Changes – diversify the board of directors. The Board needed to obtain outside input from experts – this was a critical time for the SWP and they were big changes being made.

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    • #8148
      Jen BudneyJen Budney
      Participant

      Great comments here, everyone. They raise several more questions about board responsibility and behaviour. In periods of rapid change (often marked by changes on multiple interconnected fronts, such as regulations, industry practices & nature of competition, markets), how much should members be expected to be able to develop the right view of the future to communicate to the board? If their views come in the form of questions, worries, concerns, rather than clear visions, does the role of the board change? In other words, in periods of rapid change, should the board amp up its two-way communications? Does it need to become more of a listening board (without giving up any of its oversight responsibilities)? Another question — by what means can a board know whether it is competent to assess management’s decisions? What can boards do to ensure that they don’t come to a point where they fail to see their inability to exercise good judgement and oversight? At what point in this story should alarm bells have gone off for the board — or, put differently, what prevented the board from hearing the alarm?

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    • #8186
      Dianne BrownDianne Brown
      Participant

      This case study is a good example of the Board of Directors relying on management for most of its information. This is a good example where a Board should have looked to additional resources, A great source is the independent Auditor that already audits on behalf of the membership. They will usually provide some sound financial advise on future projects. Early on it might have been valuable for SWP to reach out to survey the membership, looking for some collective needs and understandings of the future vision they may have. Test the growth strategy against the information that the member survey provided. Alignment with the membership might have provided for a different outcome overall.

      This study is also a good example of not having a ‘risk management’ understanding within the organization. The ageing membership and member equity should have been regular report to the Board, both a governing policy and operation policy should have been in place to direct and manage this specific risk. Board diversity or independent opinion might have allowed for this specific risk to be picked up earlier on.

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