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Is your board prepared to govern your cooperative?

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The agricultural industry is in the midst of a significant transformation—one the members of cooperative boards of directors need to be prepared to navigate.

Our board members have excellent business sense built through their experiences within their own enterprises and, if they have been on the board for a while, through their board experiences. But increasingly our board members are dealing with decisions for the cooperative where the context might not translate as easily from the farm business, and the history of the cooperative’s decisions are less relevant to the current situation.

The reset of commodity prices has triggered a restructuring of the industry at the manufacturing level and will likely speed up the restructuring of the agricultural retail industry. At the same time, our customers also are consolidating and seeking improvements in productivity to adjust to lower commodity prices.

Biological, mechanical and information technologies are rapidly increasing the sophistication of the farming industry, challenging retailers to make rapid changes in the products and services they provide. The changing dynamics of the industry and the increasing sophistication of customers are leading to an agricultural retail sector that is much larger, more complicated and more competitive than ever before.

Certainly, the board members of our retail cooperatives are experiencing these rapid changes within their own businesses and witnessing them within the cooperative. The decision-making process around future strategies of the cooperative have increased in complexity and the stakes have never been higher.

While the environment maybe turbulent, it also provides great opportunities for those businesses prepared to seize opportunities. Today we are considering investments in new assets, new business units, sophisticated equipment and new skill sets in unfamiliar businesses, such as data management and analysis, consulting, etc. We might be considering complicated mergers or acquisitions or investment into formulation and branding of our own products. We are considering new marketing and sales strategies that require customer segmentation and tailored offerings to particular customer groups.

Equipping our board members with strategy, finance, marketing, sales and talent management skills provides them with context to better understand and anticipate the changes in resources and capabilities the cooperative will need to take advantage of the opportunities that arise. The rapid restructuring of the industry will demand nimble decision making. Having board members more highly equipped with the business disciplines will allow them to be more proactive in the changes the cooperative needs to make to shorten the decision time.

Perhaps it’s time to think about a talent-development plan for board members. There are certainly some opportunities for board members to attend cooperative principles courses and board leadership conferences. These opportunities are effective in helping board members get up to speed on understanding financial statements, serving on committees and communicating with members. But, in my experience, few board members have been given the opportunities to be exposed to the skills that we want our high-potential employees to have.

A high-performing board will increasingly need to understand the key challenges and opportunities that cooperative managers face regularly in developing marketing strategies, designing new products and services, integrating workforces across their organizations, developing talent management strategies and more.

Investing in development opportunities for board members in the business disciplines could be a critical differentiator for cooperatives that lead the industry transformation.

ARA Management Academy

One such opportunity is the ARA Management Academy, Jan. 31-Feb. 2 in West Lafayette, Ind. Learn more and register here.

AUTHOR
Allan Gray
Allan Gray
December 20, 2016
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