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Co-operative Governance - Ernst & Young

ErnstYoung 001(Quebec, 10 October 2012) While co-ops have a unique approach to balancing conventional profit goals with broader principles, they must demonstrate they are equipped to thrive in a rapidly evolving global economy, Ernst & Young says in a study released today at the inaugural International Summit of Cooperatives.

“Co-operative values and culture are the cornerstone of effective governance structures,” says Anne-Marie Hubert, Managing Partner for Advisory Services at Ernst & Young. “Values such as integrity, independence of thought, and respect for the views of others are embedded in the co-operative culture, and drive behaviours of people throughout the organization. As many communities around the globe explore ways to balance the need for robust economic growth with concern for the greater good, the co-operative movement is poised to play a more important role than ever.”

In the co-op business model, governance structure must prioritize members’ needs. But evolving this model, adapting values and principles to be more reflective of corporate or investor-owned companies, is critical to the future success of these organizations. “It’s a complex balancing act, but an important one,” Hubert says.

In Enlightened co-operative governance: balancing performance with broader principles in co-operatives and mutuals, Ernst & Young presents the components of a strong yet flexible governance structure:

  • Member participation and independence on the board: Disclosure and review of each board member’s financial interest in the business can be a simple yet effective safeguard.
  • Breadth of expertise and director competencies: Consider a new trend that can attract a wide range of talent: the appointment of “guest” board members – outside the member pool.
  • Board size: Shift the focus from size to composition, for a carefully crafted board that features a combination of diverse skills.
  • Directors’ length of service: Question the value of term limits, and ensure succession planning, along with mentoring and training.
  • Transparency and disclosure: Foster an environment of transparency and ethical commitment with full disclosure on sensitive issues.

“Pursuing this type of ‘enlightened governance,’ co-ops and mutuals can inspire confidence in the marketplace, elevate status and reputation as valuable business entities, and contribute to building competitive economies and cohesive communities,” concludes Hubert.

About the 2012 International Summit of Cooperatives
More than 2,500 decision-makers and influential figures from the international co-operative and mutualist community will attend the 2012 International Summit of Cooperatives in Quebec City and Lévis, Canada, from October 8 to 11, 2012. Under the theme “The Amazing Power of Cooperatives,” the summit aims to offer solutions that will promote the development and performance of co-operatives and mutuals, so they’ll be better prepared to meet the economic and financial challenges they face. Visit 2012intlsummit.coop.

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

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