FCCS News & Insights

Why Evaluation is Critical to Good Governance

When stepping into the boardroom, directors are asked to evaluate many things—from financial performance to management effectiveness. Yet one of the most important evaluations for the success of the board—and ultimately the organization—is often not a high priority: the evaluation of the board itself.

“Because there is no higher authority in a cooperative’s leadership structure than the board, the willingness to self-evaluate sends a powerful message to stakeholders,” says Chad Klawetter, FCCS Vice President of Governance and Development. “That message is that the board holds itself accountable and is committed to continuous improvement of its governance capacity.”

Some may view board elections as a form of evaluation. But long before an election occurs, effective boards take time to assess their own performance, effectiveness, and impact. Proactive self-evaluation strengthens governance, sharpens board focus, and supports continuous improvement.

A thorough board evaluation examines key governance competencies:

Fiduciary responsibilities – Duties of Care, Loyalty, and Obedience

The board consistently demonstrates its fiduciary responsibilities by exercising informed decision‑making, acting in the best interests of the cooperative, and ensuring alignment with the organization’s mission, bylaws, and applicable laws.

Organizational soundness & reputation

The board actively safeguards the cooperative’s financial strength, long‑term stability, and public trust by overseeing risk, monitoring performance, and setting expectations that reinforce the organization’s reputation with members, regulators, and stakeholders.

Board structure & composition

The board maintains an effective structure by ensuring the right mix of skills, experience, and perspectives are represented, and that directors serve in roles that best support strong governance and effective decision‑making.

Accountability & conduct

Directors uphold high standards of ethical behavior, mutual accountability, and professionalism, individually and collectively honoring their fiduciary duties and holding one another accountable to board expectations.

Audit & compliance

The board provides effective oversight of internal controls, audits, and compliance processes to ensure regulatory requirements are met and financial and operational risks are appropriately managed.

Strategic direction

The board focuses on the cooperative’s long‑term success by setting clear strategic priorities, monitoring progress toward goals, and ensuring decisions align with the organization’s mission and risk tolerance.

Board–management relationship

The board fosters a strong, respectful partnership with management by providing oversight and strategic guidance while clearly maintaining the distinction between governance responsibilities and operational management.

“Self-evaluation works best when boards are willing to engage honestly—individually and collectively,” says Barb Wilkinson, FCCS Senior Governance Consultant. “The method matters less than the willingness to have meaningful conversations and address areas that need attention.”

Formal evaluations like surveys provided by FCCS, offer directors the opportunity to individually evaluate the board on the chosen competencies followed by a summary of the board’s evaluation shared directly with the board. A more informal approach, simply carve out time in a board meeting to discuss one or more of the competencies – this approach takes trust by board members to have the necessary open dialog if there are issues that might need to be addressed.

Ultimately, meaningful board evaluation is not about checking a box—it is about strengthening how the board governs. When directors commit to regular, thoughtful self-assessment, they create a culture of accountability, trust, and continuous improvement. Whether through formal tools or open conversation, intentional evaluation helps boards remain focused on their purpose, responsive to change, and positioned to lead the organization forward with confidence.

Special Note: For directors serving on Farm Credit boards, the Farm Credit Administration (FCA) requires boards to conduct an annual self‑evaluation. Evaluation requirements for other agricultural cooperatives vary and are determined by the governance practices of each individual cooperative.