Blog article

Board evaluations for co-operatives

With the AGM season in full swing, many co-operatives are looking towards electing their Boards. 

Those co-operatives with an elected board will naturally go through a cycle where members stand down and in some cases seek re-election, some will welcome new members to the board and others may be faced with a completely fresh board bringing a new dynamic to their boards. 

The role of a co-operative board is to ensure the long-term success of the enterprise in accordance with the co-operative values and principles acting as the custodian of the co-operative’s assets in order to safeguard the co-operative for the future. 

An effective board will be diverse and include a balanced mix of skills, knowledge and expertise needed for the size and complexity of the cooperative’s business. 

So, how can co-operatives, ensure that the board has all of the skills, knowledge and experience it needs, demonstrate how well the board is working collectively and how individual directors are contributing their individual skills? The answer is to take time to understand how the board is functioning/performing and the best way to do this is to evaluate board performance. 

What is the purpose of a board evaluation?

A board evaluation is a process that helps boards to understand whether their systems of governance and oversight are fit for purpose and operate effectively for the benefit of the members and the co-operative as a whole. It should not be treated as a tick box exercise, rather it needs the buy in of the whole board and should result in an agreed action plan. 

Before starting an evaluation it is important to understand who it will include – the board as a whole or individual directors, what it will include – having an agreed criteria to evaluate against and how you will do it – by choosing a method that aligns with the outputs of the evaluation and what it will be used for.

Getting started

An ideal starting point before embarking on an evaluation would be for all directors to understand the role of the board as a whole and their role within it. It is a good exercise to remind the board from time to time why it exists, for what purpose and what the duties of individual directors are in moving the co-operative forward.

Our directors’ toolkit includes some handy guides and templates to help you put these things in place.

Deciding on a board or individual director review

Once the board is familiar with its role and has an understanding of the decisions and actions it takes it is essential to “take its pulse.” This means setting criteria on which to measure the performance of the board and its individual directors. This criteria will be different depending on whether you are undertaking a review of the board as whole, individual directors or specific roles, such as the chair.

For a whole board review criteria will include examining practical considerations including how often the board meets, how well the board makes decisions together, its diversity and communication both inside and outside the boardroom.

For an individual director review, it goes without saying that you will be looking for what each individual already contributes to the board as well as trying to uncover other expertise they may be able to bring to the board. It’s helpful to have some key competencies that the co-operative is looking for and to be able to assess who on the board has them, who demonstrates them and how they may be sourced if they are missing.

Adopting some key board competencies that are aligned with the size and scope of a co-operative business assists with a board evaluation. It can identify gaps on the board but also aid succession planning – especially where one or two directors hold a lot of key competencies that could have a negative effect on the effectiveness of the board if those people stood down.

In addition, identifying key competencies doesn’t always mean recruiting someone with that specific competency but could mean that an existing director could be trained and supported to develop or acquire that competency. Co-operatives UK can work with you to put a competency framework together for your board.

How to evaluate?

The method chosen for an evaluation will depend on what works best for your co-operative. An online questionnaire is a quick determination to capture director thoughts but often lacks detail. To gain real insight you may consider interviewing directors, adopting a 360 degree feedback approach or observing the board/individual interactions at board meeting in order to dig deeper into certain areas where particular improvement is needed.

Whatever method is chosen, it is important to have buy-in from the board so that they can understand why an evaluation is a positive exercise which doesn’t just identify gaps but enables directors to showcase their strengths.

Providing feedback to the whole board as well as individual directors is an important part of the evaluation process as it enables the board to create an action plan to prioritise the areas to be worked on and be aware of any development needs.

Board evaluation can be an intimidating experience for many boards – especially where the board has been static for a period of time or has not undertaken an evaluation before. Where this is the case, it is often useful to de-personalise the experience.

An external facilitator can be a useful tool to employ in this situation. This is also where Co-operatives UK can help.

Our experienced governance advisors have worked with boards of large and small co-operatives to undertake board and director evaluations. We can offer our expertise throughout the whole process or just for the parts that may be a bit tricky – including setting the evaluation criteria, reporting back to the board about the outcome of an evaluation or where an external voice helps – attending a board meeting to consider board dynamics.

If you are considering a board or director evaluation and need help getting started, visit our advice pages and contact [email protected] to start the conversation.

Written by Anthony Collins Solicitors
Updated: 03/07/2019