Finding and Electing Good Directors
By Robert Cropp
Central to the success of any cooperative is a board of directors that represents all the members. The board is also responsible for the co-op’s long-term future. This makes it vital that directors be free from conflicts—personal, financial or other.
The board is also responsible for the co-op’s long-term future. This makes it vital that directors be free from conflicts—personal, financial or other.
The board balances the needs of the membership with the co-op’s long-term goals. It is responsible for bringing value to the cooperative and its membership.
Some cooperatives struggle with the nominating process and finding qualified candidates. Just finding individuals willing to serve can be a challenge.
The bylaws should spell out how board members are nominated and elected. A nominating committee is preferable to simply taking nominations from the floor at the annual meeting. Nominating candidates from the floor is not likely to acquire the most qualified individuals.
The bylaws typically state who may serve on the nominating committee: current or past board members, co-op members, or a combination of members and directors.
Nominating committee members should know directors’ roles and responsibilities. A written ob description is useful. It can be forwarded to individuals interested in running for the board.
Preferably, two candidates should be nominated for each open position. That way, members can choose who they deem best qualified to represent their interests.
The nominating committee should tell candidates of their roles and responsibilities, and the time commitment required.
Individuals should not be “arm twisted” to accept nomination. Look for those who have both strong personal and business characteristics.
A good director should:
Have integrity and good character
Be able to resist pressure from special interests
Be able to work with people, to express ideas clearly, and to ask good questions
Possess a good formal or informal educational background
Be progressive and loyal
Be constructive and energetic
Business characteristics may include:
Success in managing personal business
Knowledge of the co-op’s business environment and industry
An active interest in the cooperative’s affairs
Ability to organize and make decisions
Knowledge of finance and the ability to read financial reports
The board should also reflect the composition of the membership, taking into account factors like age, size of business, and location.
If the membership is dispersed over a wide area, it may be divided into districts, with one or more delegates, who cast ballots for directors at the annual meeting.
Once individuals agree to be on the ballot, their backgrounds should be made available to the membership. The document also should highlight why candidates want to serve.
Voting & Board Size
Electing qualified directors is an important member responsibility.
Most cooperatives have a one member-one vote policy. Large cooperatives have membership districts and a few states allow proportional voting based on the amount of business done with the cooperative.
Most state laws require a minimum board size. Wisconsin, for example, requires at least five directors, unless there are fewer than 50 members. Then the board can have as few as three members. The most common board size is seven.
The number of board members generally increases as a co-op expands. Some large cooperatives have 35 or more board members. The critical question is not the size but whether the board represents the membership.
How long should a director serve? While there is no right answer, term lengths average between one to three years, with three being most common. Directors need about a year to become acquainted with the cooperative’s business, so a one-year term may be too short.
Some cooperatives impose an age limit, such as 65, or limit the number of terms a director can serve so that other qualified members can serve.
Most states restrict board seats to co-op members, but an increasing number of cooperatives have outside directors as advisors.
As businesses become more complex, it is harder for boards to capture the expertise to manage the cooperative. Outside directors, either as advisers or voting members, help fill the gap.
Robert Cropp is interim director at the University of Wisconsin Center for Cooperatives at the University of Wisconsin-Madison.
Volume 1 Issue 6