Dave Sitaram Canadian Co-operative Association September 2009

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

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. Trends in co-op governance • 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

21. Trends in co-op governance

22. Moving forward