Succession Planning
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Succession planning challenges: Director loss of office

Whilst board refreshment is an important feature of good governance, instances where directors lose their seats – particularly if they have only served for a relatively short amount of time – can give rise to high levels of turnover, causing disruption and making it difficult to maintain an effective board.  

In some co‑operatives, where elected seats are lost due to the incumbent losing their qualifying office, this can also present a challenge as the individual can lose their seat at short notice or before a full term of office is served. 

How can this be addressed? 

  • Consider appointing/co‑opting some seats rather than electing all seats so that certain skills or competencies can be targeted and maintained.  

  • Alternatively, rather than move to appointed seats, when holding elections, the skills needed should be made clear in the call for nominations in line with Section 4, Provision 4 of the Co-operative Corporate Governance Code, and that only applications from individuals reaching a certain threshold can be considered for the vacancy. 

    These can then be short-listed and voted upon so as to retain the democratic element.  The appointed approach could also help safeguard some seats against the level of turnover that is often experienced in elected positions, thereby enabling continuity and allowing for a succession planning process.  

  • Make clear the expectation that board members should serve the full term of office. Upon the call for nominations, it should be made clear to members and electing organisations that the nominees should ideally be in a position to serve at least one full term of office.  

    The call for nominations should also make the term of office clear. This may, therefore, discourage the organisation from nominating an individual who is in their last year of serving with an organisation and is either up for re-election or due to complete the term of office, helping avoid potential disruption and turnover on the new board.