1. Dave Sitaram Canadian Co-operative Association September 2009

2. Presentation overview Why governance matters Role of Boards and directors Characteristics of effective board leadership Barriers to effective governance Trends in Canadian co-op governance

3. Why governance matters Corporate scandals, financial crisis largely due to failures in governance

4. Why governance matters Effective governanceEffective performance

5. Why governance matters Co-op Boards must be accountable to members and abide by co-operative principles. Not just about the “bottom line”

6. Roles of Boards and directors Four key areas: Leadership Stewardship Monitoring Reporting

7. Role of directors Role of Boards and directors “The directors manage or supervise the management of the business and affairs of the co-operative.” Canadian Co-operatives Act

8. Role of Boards and directors It is far more difficult to lead than to do!

9. Role of Boards and directors Board: what is to be achieved? For whom and at what cost? Management: how will it be achieved?

10. Role of boards and directors Board “owns” Vision, Mission and Values (ends) Management “owns” Strategic Plan (means)

11. Establishing Vision, Mission and Values Vision: were do we want to be in the future? Mission: Why do we exist. And for whom? Values: What essential beliefs guide our decisions/actions?

12. The Board’s role in strategic planning Review and approve Understand & challenge assumptions Understand critical success factors Ensure sufficient due diligence Is the plan realistic/achievable? How will success be measured? Monitor performance

13. Key success factors for an effective Board Outstanding leadership Unquestioned legitimacy and effective power Enlightened definition of function, role and responsibilities Outstanding competence A supportive, functional culture; and Efficient management of function, structure and process From: MAKING BOARDS WORK, Richard Ivey School of Business, University of Western Ontario, Canada

14. Business know-howDealing with people Personal development Strategic planning & thinking Finance Co-op & industry knowledge Market awareness Corporate governance Leadership Boardroom practice Teamwork Influencing & negotiating Self perception Judgment & decision making Directing change Managing workload & pressure Interpersonal communication Presentation Being a Director Directorship Competence Map

15. Barriers to effective governance Ineffective leadership “Representational mindset” Lack of sustained commitment to Vision, Mission, Values Unclear definitions of functions, roles and responsibilities Lack of clarity between role of management & Board Lack of mutual trust within Board and between Board and management

16. Barriers to effective governance Imbalance of skills/competencies Poor information management (too much/too little) Burnout of Board members Turnover of Board members and little/no corporate memory Lack of succession planning

17. Trends in co-op governance

18. Improved accountability Board and committee charters Board and director evaluations Member surveys and focus groups On-line disclosures

19. Trends in co-op governance Average size of Board: 9.4 directors Average 2.5 women on the Board Average 10 meetings per year Average length of service: Non-financial co-ops: 7.5 years Credit unions: 9 years Most directors have 3-year terms

20. Trends in co-op governance

22. Moving forward