Effective governance is vital to the success of today’s rural electric cooperatives. To assist the board in appraising and improving its performance, NRECA and the National Consulting Group (NCG) have developed an insightful and instructive appraisal system.
A board evaluation assesses the board’s performance in key areas of responsibility, focusing on the processes that the board uses to organize and carry out its major responsibilities. By undertaking this evaluation, the board is demonstrating a commitment to do its job better. NCG focuses on areas for which the board is directly accountable, though some areas also involve delegations to the manager or attorney.
The results of the evaluation process serve as an excellent platform to launch a general discussion and examination of the model governance system for your rural electric cooperative.
Individual interview sessions are conducted utilizing NRECA’s 9-point appraisal instrument with each director in a confidential and relaxed atmosphere conducive to a candid and constructive exchange of ideas, comments, and suggestions for improvement and direction. The nine areas of responsibility are as follows:
Legal, bylaw, and contractual requirements
Fiduciary responsibility, confidentiality, and conflict of interest
The process for selecting board officers and representatives to subsidiary/affiliate boards
The effectiveness of board meetings
Maintaining an effective board/CEO relationship
The relationship with the attorney, auditor, and outside consultants
Director education and development
Nomination and appointment process for new directors
Representing the interests of the co-op to external audiences
Compilation and summaries of interviews are shaped into consensus recommendations for the board’s structural, procedural, and functional improvement.
The consultant’s objective is to identify opportunities to improve the effectiveness of board operations, propose changes for improving the governance process, and revisit elements of the best practice governance principles that are most critical to your co-op.