More diversity needed on co-op boards

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Last month, a prominent Midwestern dairy cooperative held an annual meeting which drew nearly 1,100 members - not to mention the governor of Iowa as one of the speakers. A nice occasion to mark the co-op's 40th anniversary.

Just think, 40 years. The co-op has obviously done a lot of things right to have stayed in business that long, surviving in a landscape increasingly dominated by mergers and acquisitions.

It was telling, however, when toward the end of the proceedings, the chief executive officer asked the co-op's board of directors to stand and be recognized. About a dozen dairy producers stood up.

You couldn't ask for a nicer, more sincere group of people than these. And, as dairy producers, they've worked hard to manage their businesses and the co-op. But the homogeneity of this group may not necessarily be a good thing for the co-op as it enters the 21st century.

There's something about agriculture, the way we have traditionally filled the boards of co-ops or commodity organizations almost exclusively with farmers. These people provide an essential expertise, but not the only expertise needed in today's complex business world.

Look at the boards or management committees of some of the successful companies in this country, and you'd be surprised at the diversity. A quick search of the Internet bears this out. A computer software firm has six people on its board of directors, including venture capitalists, investors, entrepreneurs, and marketers. On the other end of the technology spectrum, a company that produces gourmet pasta has five members on its board, all of whom hold executive positions with other companies. One is president of a merger and acquistion advisory firm. Another is president of a well-known restaurant chain.

Not everyone can be skilled in all areas, of course. But, the skills of one board member should complement the skills of the other board members, so the board as a whole can offer intelligent guidance.

"Each organization needs to develop its own list of key knowledge areas and staff its board accordingly. One important staffing criterion should be that each board member bring at least one key competency to the board," according to the book, "Tomorrow's Organization," written by a business research group known as The Center for Effective Organizations.

"It is often desirable for a board's members to include several sitting or former CEOs from organizations of comparable size and complexity. This arrangement provides 'peers' for the CEO to talk to, and from whom to get advice and coaching," the book says.

Among the key areas facing today's co-ops are: consumer preferences and trends, labor management, information technology, and government regulatory policy.

If nothing else, we would suggest placing someone on the board - either as a full voting member or an ex-officio member - who has specific expertise in the area of mergers and acquisitions, since this is most significant trend affecting dairy co-ops today.

Keep a producer majority on the boards, but try to add in some outside resource people who can lend a new perspective.

Just as it's a good idea for producers to include persons with diverse skills on their management teams - veterinarians, nutritionists and ag lenders - we would suggest that the same principle applies to dairy cooperatives.



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