Dave SitaramCanadian Co-operative Association

September 2009

Presentation overview

Why governance mattersRole of Boards and directorsCharacteristics of effective

board leadershipBarriers to effective

governance Trends in Canadian co-op

governance

Why governance matters

Corporate scandals, financial crisis largely due to failures in governance

Why governance matters

Effective governance Effective performance

Why governance matters

Co-op Boards must be accountable to members and abide by co-operative principles.

Not just about the “bottom line”

Roles of Boards and directors

Four key areas:LeadershipStewardshipMonitoringReporting

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

Role of Boards and directors

It is far more difficult to lead than to do!

Role of Boards and directors

Board: what is to be achieved? For whom and at what cost?

Management: how will it be achieved?

Role of boards and directorsBoard “owns” Vision,

Mission and Values (ends)

Management “owns” Strategic Plan (means)

Establishing Vision, Mission and ValuesVision: 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?

The Board’s role in strategic planningReview and approveUnderstand & challenge

assumptionsUnderstand critical success

factorsEnsure sufficient due diligenceIs the plan realistic/achievable?How will success be measured?Monitor performance

Key success factors for an effective BoardOutstanding leadershipUnquestioned legitimacy and effective powerEnlightened definition of function, role and

responsibilitiesOutstanding competenceA supportive, functional culture; andEfficient management of function, structure and process

From: MAKING BOARDS WORK, Richard Ivey School of Business, University of Western Ontario, Canada

Business know-how Dealing with people

Personal development

Strategicplanning & thinking

Finance

Co-op& industryknowledge

Marketawareness Corporate

governance

Leadership

Boardroom practice

Teamwork Influencing & negotiating

Self perception

Judgment & decision

making

Directing change

Managingworkload &

pressure

Interpersonalcommunication

Presentation

Being a Director

Directorship Competence Map

Barriers to effective governanceIneffective leadership“Representational mindset”Lack of sustained commitment to

Vision, Mission, ValuesUnclear definitions of functions, roles

and responsibilitiesLack of clarity between role of

management & BoardLack of mutual trust within Board

and between Board and management

Barriers to effective governance

Imbalance of skills/competencies

Poor information management (too much/too little)

Burnout of Board membersTurnover of Board members

and little/no corporate memoryLack of succession planning

Trends in co-op governance

Trends in co-op governance

Improved accountabilityBoard and committee

chartersBoard and director

evaluationsMember surveys and focus

groupsOn-line disclosures

Trends in co-op governanceAverage size of Board: 9.4

directorsAverage 2.5 women on the BoardAverage 10 meetings per yearAverage length of service:

Non-financial co-ops: 7.5 yearsCredit unions: 9 years

Most directors have 3-year terms

Trends in co-op governance

Trends in co-op governance

Moving forward