When it comes to communicating, Cherryland Electric Cooperative CEO Rachel Johnson and Board President Gabe Schneider have their own unique style.

Instead of sitting around a table in the Michigan co-op's Grawn headquarters, they stroll through a local park each month to discuss the upcoming board agenda.

Schneider's dog, Toby, accompanies the two leaders, who are undeterred even by deep snow.

“We both love the outdoors, so we go for walks and talk," Schneider says. “Sometimes, we take a little scrap of paper to write down ideas. It works for us. We get along very well."

The strong partnership that Johnson and Schneider have developed is the kind of CEO-board president relationship that can benefit every electric cooperative in the nation, says Pat Mangan, NRECA senior director of governance education.

And new connections will be developing as a growing number of veteran CEOs retire and directors adapt to new leaders, he says.

Almost 500 co-op CEOs are eligible to retire in the next five years, according to NRECA data.

“Sometimes, we see boards slowly making that adjustment," Mangan says. “They're used to the way the previous CEO worked, and the new one has a different approach that they have to get used to. They forget that it took years to lay all that groundwork with the retiring CEO and it's going to take time to do it again."

While the relationship between the CEO and the entire board is important, the partnership between the co-op manager and the board president or chairman is key, he says.

“Especially during a transition, that connection is critical to getting it right," Mangan says.

Co-op leaders say success depends on open, honest and frequent communication that builds trust on both sides and lays the foundation for working together to plan a co-op's future and tackle tough issues like rate increases.

“I err on the side of providing more information than less," says Brian Heithoff, who has served as a co-op CEO for more than 25 years, including the past five as CEO/general manager of Trico Electric Cooperative in Marana, Arizona.

“Some people would argue that that's hazardous, and it can be because sometimes boards may use the increased information to cross the line and start managing the co-op. I try to provide the right level of information to help the board guide the organization, not manage it."

It's important for directors and CEOs to stay in their own lanes and not try to do each other's jobs, says Gerald Anderson, board president at SECO Energy in Sumterville, Florida.

“I think a new trustee has to understand from the beginning that they have a responsibility to the membership to set the policy of the co-op," he says.

“And the CEO, he's totally responsible to administer that policy and he's our only employee. You can't be telling other employees what to do. You can talk to them and ask questions but never, ever try to give them any direction. That's a line you cannot cross. If there's a problem, talk to the CEO."

Anderson, who has been president for three years, says he and CEO Curtis Wynn trust each other to stick to their assigned roles. Wynn, a former NRECA president, has been SECO Energy's CEO since late 2021 after serving as president and CEO of Roanoke Electric Cooperative in North Carolina for 24 years.

“If there's an issue among the board members, Mr. Wynn will say to me, 'That's your problem, not mine,'" Anderson says. “And if there's a complaint from somebody on the co-op staff, I say to him, 'That's your problem, not mine.' We really respect each other and each other's point of view."

Wynn said he and Anderson have worked to create a culture in which board members are encouraged to ask questions so that they have the information they need to make important policy decisions.

One of the most challenging was whether to approve a hefty rate increase for area lighting that affected developers and homeowners' associations in some of the developed communities the co-op serves. The rate had been so low that less affluent members were effectively subsidizing street and neighborhood lighting for homeowners in wealthier areas, Wynn said.

“The rate increase raised a lot of concerns from area developers and county governments," he said. “Anytime that happens, it of course puts a lot of pressure on board members."

In the end, the board voted in favor of the rate hike.

“I was proud of the board coming out of it," Wynn says. “They made a really tough decision, and when all is said and done, it was the right decision. We fixed something that was off in terms of our rates. It wasn't fair to our lower-income homeowners, and the board treated it accordingly."

For Johnson, the biggest project she has tackled with her board since she became Cherryland's CEO in June 2023 is the construction of a new headquarters, which is expected to be completed in 2028.

“At the beginning, I sat down with my board chair at the time and said, 'This is how I would like to approach this project,'" she says. “I walked through the options and my recommended path. I asked him his recommendation for how we should approach the board and he said the board members wanted workshops and a board liaison to work with staff. We're almost to the final planning stages now."

Johnson, who was the co-op's member relations manager for more than a decade before becoming CEO, calls the process “a deceptively simple thing."

“Whatever it is, sit down with your board chair and talk it through," she says.

CEOs are in the unique position of carrying out the board's policies while also assisting in educating directors about the electricity business, Mangan says.

Education and training are important, giving directors the information and confidence they need to do their jobs and evaluate the performance of their CEOs, he says.

“If you've got a reputation as being trustworthy and competent, your advice will be considered when the board is making difficult decisions."

Wynn says his board members have all decided to enhance their training by completing NRECA's three-part Director Education Program. The association's Credentialed Cooperative Director program consists of five courses that focus on basic governance knowledge and essential skills that can benefit co-op directors.

Wynn and Anderson also spend a full day giving newly elected board members a personal orientation session to educate them about what's going on at the co-op.

“They're basically getting ready to merge onto the interstate at 60 mph," Wynn says. “We want to help them get up to speed as early as possible to try to eliminate that fear or that feeling that they don't know what's happening. We can't do it all in one day, but it's a good start."

As part of the education process, it's important for the board and the CEO to agree on how and when the CEO will be evaluated, Mangan says.

“Ideally, the board should provide regular feedback to the CEO on his or her job performance and not hold everything back until the CEO's annual appraisal," he says.

Mangan describes one case in which a co-op board lost a new CEO after just one year because they failed to let him know how he was doing.

“A young CEO was coming in and they expected him to somehow read the tea leaves and know what they wanted," he says. “Their attitude was, 'We're paying him all this money, he ought to know what to do.' After a year, they gave him bad feedback and he left.

“Boards spend a lot of time and money to get that person in the CEO seat. Nobody wants to go through that work again. If they get it right, they will be able to face challenges together. But if they get it wrong and have to fire the CEO or the CEO decides to leave, it's back to square one for the board."

At Cherryland, Schneider says, they've avoided that nightmare scenario by making sure Johnson always knows where she stands.

“Rachel is good at asking for what she needs, and she knows that she works best when she gets a lot of feedback from the board," he says. “She proactively brings us a list of goals, then I facilitate a discussion with the board to see if we agree on the goals. It's very clear and defined. She's evaluated on if she met them."

Johnson says she regularly asks the board, “Am I getting it right?"

“I still remember walking into my first board meeting as a CEO," she says. “It can be very intimidating. It's such a heavy moment. But you have to remember that they want you to be successful, too. You must trust that you can do great things together."

Tips for a Successful CEO-Board Relationship

• Boards should speak with one voice to the CEO. The board should set its expectations as a group through the formal voting process and communicate them to the CEO.
• The board should provide regular feedback to the CEO on his or her job performance and not hold everything back until the CEO's annual appraisal.
• An effective board-CEO relationship is centered on the partnership between the CEO and the board chairman or president. They should work closely to develop the meeting agenda. They should also be able to openly discuss concerns expressed by other directors.
• The board president should be able to lead without being perceived as either a partisan supporter or opponent of the CEO or of any of the other directors. An effective chairman is best described by fellow directors and the CEO as a neutral and honest broker.
• The CEO should understand and respect the duties and responsibilities of the board. It is the job of the board president, not the CEO, to deal with internal problems among board members.
  
• A board that is split into two or more warring factions is a nightmare for any CEO. Board members will have normal differences of opinion over issues, but when factions become entrenched, it may require outside mediation.
• The board should develop and follow clear guidelines regarding contact with co-op employees beyond the CEO. It is not the job of directors to tell employees how to do their work. That's the CEO's responsibility.
• If co-op employees complain to a director about a policy or a supervisor, the director should advise them to discuss the matter with their boss or—if the boss is the issue—someone higher up on the co-op's leadership team.