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Achieving Board Excellence

Exceptional governance is a critical objective for any cooperative board as directors strive to bring value to their organization and the members who elected them. Achieving board excellence is an ongoing process rather than an event, and is achievable with a commitment to consistently carrying out the role of the board and focusing on delivering meaningful guidance and value to support the long-term viability of the organization.

Foundations of Excellence
Like those who excel in any arena, be they athletes, musicians or politicians,
excellent directors and boards understand the fundamentals of strong board
governance and consciously ensure they are employing and improving in these critical areas.
• Clarify Board and Management Roles. Both the board and management
have critical roles in leadership for organizational success. The board’s focus
should be on long-term strategic direction and purpose, overall business
opportunity and risk, and oversight of organizational performance and
management, while management should focus on operating the business day to day and executing strategy. When there are grey areas, it’s important for the board and management to clarify their roles and responsibilities to increase their effectiveness.
• Establish Effective Processes. For boards to be high-performing, it’s essential to establish and update processes that ensure that necessary activities and responsibilities are carried out. Process is especially important for cooperative boards for whom board service is not their primary business. Good processes make sure the essential work gets done and that the board is fulfilling all of its responsibilities.
• Manage Meeting Agendas and Dynamics. With limited time, every board
meeting should be managed effectively to cover the essentials and ensure
sufficient time for discussion of important issues, strategic and future thinking, and thoughtful decision-making. Effective board leaders shape meeting agendas that cover and allow appropriate time for the right topics and discussions, and then manage the meeting to in ways that allow the board to focus on the most important topics while making sure everything is covered. Meetings should be facilitated in ways that build inclusion and a sense of shared purpose by all directors.
• Use Committees Effectively. As the business becomes more complex, the
work of the board also becomes more complex, and board committees become key for effective board governance. To leverage the power of committees, boards should make sure that committee expectations are and remain clear and assess committee performance periodically to make sure they’re adding value to the board’s deliberations.
• Oversee the CEO. One of the board’s biggest responsibilities is hiring and
overseeing the performance of the organization’s CEO. Effective boards employ a strategic approach to hiring a CEO, establish a strong and effective process for evaluating CEO performance, and provide helpful and constructive performance feedback to the CEO regularly. The board should also work with the CEO to ensure there is an effective a succession plan for the CEO and key executives.
• Evaluate Your Performance. Great boards take the time to look inward
at their own governance, asking how well they’re carrying out their fiduciary
responsibilities, how they’re managing their internal dynamics and how they’re adding value to the organization. These self-evaluations should identify areas of strength to leverage and areas of opportunity to improve, and should include an action plan with specific responsibilities assigned. An increasing number of boards are also instituting director peer evaluations where directors can provide each other with constructive feedback to support their effectiveness as directors.

Challenges to Excellence
Directors often face a steep learning curve when they join the board, and it is important that there are resources available to help them ascend that curve as quickly as possible. Elected directors of cooperatives usually do not have corporate experience or background in the business of the cooperative or in cooperative governance, which can make the learning curve even steeper. And time is a challenge for most directors, who are often running their own businesses and are very busy in their daily lives. This can limit the time available for director training and development, or working on process improvements.

Resources for Improvement

Excellent boards have meaningful policies around consistent director development and education and provide directors with resource options. Board education may come in various forms, both internal and external. Internal education includes management and expert presentations in the boardroom. External training and education can help directors broaden their perspectives and share best practices. FCCS offers a number of resources for in-boardroom training, along with its external board programs that include the Premier Governance Series and the Director Leadership Conference for Farm Credit boards, the Advanced Governance Series for agricultural cooperative boards.

The best boards understand that governance excellence is a journey, and one that requires them to be adaptable, become educated, and be proactive and willing to make process changes to ensure they deliver value to the organization through governance. For more information on how FCCS can support your governance excellence, including consultation, board education and facilitation and board or peer evaluations, contact Leslie Hilton, Vice President of Governance/Board Development, at 720.951.2999 or via email.

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