This month's question: What does good co-op governance look like?
Answer: What good co-op governance looks like is a tough question. I truly believe it begins with education. That includes all levels of the organization, from the summer intern to the board of directors. We are fortunate that our state and national organizations make that possible. Since the beginning, change has been a constant, and maybe more now than ever as we as an industry struggle to find a replacement for baseload energy. The discussions taking place require an educated leadership. I believe it goes beyond credentials and certificates. It takes an individual who is willing to go to the next level: Director Gold. This step indicates they are willing to continue learning to make the decisions that will improve the quality of life for their communities. Co-op culture understands the need for an open discussion of a strategic plan and the means to monitor the success or failure of those endeavors. The discussions in the board room need to be transparent to the membership and the community at large. Minutes should reflect all discussions, from the simple estate settlements to budget and rates. The direction a co-op goes should reflect that it was a board decision. I believe an educated and informed director will do their due diligence within a society that sometimes questions the need for cooperative organizations. Such leadership needs to begin at the top with a board willing to take the steps to lead.
Answer: Good governance, the secret sauce that allows an organization to function and prosper! It is the authority vested in some members, elected by the other members, who oversee the management and operations. The key word here is “oversee.” Governance sets the policy and provides accountability, while the day-today activities are handled by others. I see governance having four main objectives: hire a chief executive; retain legal counsel; contract a competent auditor; and adopt and maintain policies to enable the business to meet responsibilities and protect member investments. Governance is often understood as synonymous with “running the organization.” Not so. Decisions are made by both board and management, but they address different business needs. Governance answers the questions of “if or should the organization undertake something,” while management decides “how or how much” to meet organizational need. Said another way, governance is deciding if the co-op should donate to a cause, while management determines how much is available within the budget. The powers between governance and management are separate. Governance is a collaborative effort. It promotes transparency and trust through a relationship, with rules, to enable honest conversation between board and management, achieving accountability, risk management, ethics, safety and compliance. If you want good governance, you must be willing to let management manage and the board direct through policy and accountability.
Answer: Our ever-changing electric utility environment imposes new demands on electric cooperative directors. Good governance begins with board members keeping abreast of regulatory changes in the industry as well as evolving best practices in board governance. Additionally, directors must have an in-depth knowledge of how the cooperative functions. At MVEC, we are committed to board education, and this begins with new a new director onboarding process to educate them about our industry, the cooperative and their role. Directors also make a personal commitment to continue their education by participating in NRECA’s Director Education Program. Magic Valley develops and strengthens good governance skills with regular use in daily activities. The board engages with the leadership team through committee meetings and monthly board meetings. This helps directors learn what is happening on a day-today basis. We communicate with respect and discuss with due diligence to reach the goal of informed and thoughtful decisions for the co-op and our members. Employees embed the cooperative mission of member service in their daily work. I strongly believe that our members also play a role in how we govern our cooperative. Through membership surveys, they provide us with feedback on what services they need from their cooperative and guide the co-op’s continuing mission and strategic direction.
Answer: Good governance can strengthen the cooperative and facilitate its success. Good governance, however, requires time, energy and attention. These were the conclusions of the Electric Cooperative Governance Task Force in its final report published in 2018. I had the honor of serving as a co-liaison to the task force made up of 20 co-op leaders. All of us in the co-op program today stand on the shoulders of those co-op giants as they considered the challenges faced by electric cooperative boards. What does good governance look like? The task force “believes that electric cooperative good governance means having the policies, practices and culture to facilitate: (1) member engagement in, and democratic member control of, the cooperative; (2) fiduciary oversight of the cooperative’s operations and structure; (3) achieving the cooperative’s vision, mission and goals; and (4) acting with integrity, transparency, accountability and courage.” The task force further concluded that good governance was “a (1) board of directors being responsible for and educated regarding good governance; (2) board presiding officer raising awareness of and facilitating good governance; and (3) chief executive officer and attorney raising the board’s awareness regarding good governance and providing appropriate information and guidance to facilitate good governance.” To find out more (or to revisit) how the task force defined good governance,
view the Governance Task Force Report.