The Governance Toolkit for the Cooperative Sector 20 Attitudes for Boardroom Excellence

Number 1: Know the terrain Attitude Recognize the nature of the Cooperative Sector and differentiate from Limited Liability Corporations, State-owned Corporations, and Not-For-Profits. Applied Governance Build the Team that takes you through the terrain. Include specialists and generalists.

Number 2- Know your master Attitude Directors and Officers are expected to act in the best interests of whom? The member? The regulator? The Board? Applied Governance Who is the “master”? What are the potential “collision zones”? How will you act when you get to a collision zone? Buckle up & be prepared for the collision!

Number 3- Know the rules Attitude Directors and Officers must know the laws, guidelines, standards, best practices & case law that impact governance. Applied Governance Remember collective and individual obligations. When in doubt, PAUSE!

Number 4- Know your duties, responsibilities & potential liabilities Attitude Directors and Officers assume significant fiduciary responsibilities. Some of these may create exposure to personal civil and criminal liability. Accept in a selfish way that risk is collective and personal. Applied Governance Follow the strict terms of the law and rules, deviating only where independent professional advice permits. Do not “over counsel” & self counsel! Strike the appropriate balance.

Number 5- Know the Co-operative’s mandate Attitude Directors & Officers must know the entity’s mandate & stay within it. Applied Governance Ask yourself, is this something we are authorized to do?

Number 6- Develop Director & Officer Competencies. Attitude Not all Directors & Officers are created equally! Applied Governance Directors must understand the manner in which Boards, Committees and Staff are assembled. Individual competencies should be known and utilized in the best interests of the Co-operative. Director & Officer development should ensure that Board members possess certain basic skills.

Number 7- Hold Management accountable- get answers Attitude The CEO is the first line of management accountability. Applied Governance Directors, through the Chair, must ask the CEO, and in some cases the Secretary and the Internal Auditor, to furnish the Board with information. Avoid the culture of overreaching Chairpersons! Do not “descend into the arena”!

Number 8- Create the Organizational Chart Attitude Good Corporate Governance can only exist in an environment of information flow, risk management, and independent professional advice. Applied Governance The Board is also required to ensure that the company is appropriately staffed. The Org Chart is a snapshot of organizational effectiveness. Is corporate governance appropriately covered? Legal? Internal Audit? Corporate Secretary? Risk Management? Are their undesirable overlaps? Dual lines of reporting? Potential for conflicts or grey areas?

Number 9- Value the roles of Secretary & Internal Auditor Attitude Functions like Internal Auditor & Secretary are independent offices, with a mandate to work directly with the Board on matters of governance, risk management and compliance. They are on your side!! Applied Governance Ensure these functions are staffed by qualified, competent, and independent minded professionals. Do not cut corners. Hire based on real expertise, experience, and good standing in the professions.

Number 10- Keep clear lines between Directors and Management Attitude Directors manage Senior Management Applied Governance Directors must work with Senior Management, but must also consult in the absence of Senior Management. The Board must assess Senior Management performance and hold them accountable. Build into the meeting agenda a 10 minute period when Directors meet without Senior Management. Clearly identify meeting takeaways; person responsible; deadlines; exactly what follow up is required; and plan follow up meeting agendas to capture follow up information.

Number 11- Read Minutes and Board & Committee Papers Attitude Directors & Officers are collectively and individually responsible for decision-making, especially those in which they have fiduciary responsibilities. Applied Governance Directors & Officers must take time to read Board Papers, Draft and Final Minutes, Correspondence - including emails, texts, and voice mails. Demand that management describe “Matters for Decision”; “Matters for Information”; “Matters for Consideration” etc, etc. Ask specifically “what am I agreeing to or being asked to approve?” Ensure decisions and deliberations are accurately recorded. Board members may be personally liable for decisions made.

Number 12-Defer if uncomfortable Attitude When in doubt, pause! When in Doubt - Stand Out! Applied Governance Directors are often asked to make decision where all information is not readily available; Something is a “work in progress”; there’s pressure; there’s an “emergency”; there’s Chairperson pressure or “groupthink”. Directors must declare a lack of understanding, disagreement or failure to read Board Papers. Board members must be prepared to defer a decision in order to understand the implications.

Number 13- Dissent when necessary Attitude Groupthink is a real risk in decision making, especially in environments that long-serving Chairs or Directors control. Applied Governance Directors must strike the appropriate balance between facilitator and enabler. Directors must avoid “group think” conditions. Each Board member must assess what is in the best interest of the entity, and must be prepared to dissent, if that dissent is in the best interests of the entity.

Number 14- Assume that nothing will be secret Attitude Directors, Officers, Employees, Contractors must hold the affairs of the Cooperative as confidential except to the extent required by law. Consider before you create! Applied Governance Directors must be aware that even in the best circumstances leaks and breaches of confidentiality take place. That should not restrain a Board member from expressing a view, but understand that you may have to defend that position later on.

Number 15- Trust your instincts Attitude Directors must be personally comfortable with decisions and must make those decisions based on what is before them. Applied Governance Directors must identify the potential risks in the Co-operative and generally. The biggest risk lies in membership loans, procurement, hiring & lack of accountability. Predict the collision zones and decide on your behaviour when you near or enter those zones. Let your gut feelings guide you.

Number 16- Avoid conflicts of interest- ask questions, declare interests Attitude Every law, guideline or best practice on good corporate governance lists conflicts of interest high among risks. Applied Governance In small society the potential for conflicts of interest is high. Be wary of Trojan Horses; discuss even the remotest possibility with the Chairman/Corporate Secretary; get external advice if possible.

Number 17- Rely on independent professional advisors Attitude Directors minimize collective and individual risk by acting on independent professional advice to measure “the best interest” of the Membership and carry out fiduciary duties. Applied Governance Board governance is a specialist skill. Sometimes technical skills are required to make decisions. Directors should seek external, independent advice on matters that require the input of a specialist.

Number 18- Ensure Management RECOMMENDS for decision Attitude Directors are not executives. They rely on Management for recommendations. Applied Governance Insist on Management recommendations! Look out for requests to rubber-stamp. Look out for pre-determined decisions. Management must lay out the case and make specific recommendations.

Number 19- Don’t be a rubber stamp! Attitude Directors must act in accordance with the law and their fiduciary duties. Practice Matters from Committees and Management are not done deals. Determine if something comes to the Board for information or approval. Where the Board must approve, Board members must deliberate on the matter and make their decision.

Number 20- Always act in the best interests of the Membership. Attitude Board members are required to act in the best interests of the Membership! Applied Governance Decisions may be contentious; there may be divisions and lobbies; there may be pressure. But, at all times, the interest of the Membership is the interest Directors must serve.

Thank You (& stay out of trouble!!!)