Good coop governance


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Meanings of Governance
Tests of Good Governance
Governance Common Issues and Problems
Good Governance Guiding Principles
Levels of Governance
Characteristics of Good Governance
Key Cooperative Actors
Functions of the Board of Directors
Board Good Practices
Board Relationships

Published in: Business, Economy & Finance

Good coop governance

  2. 2. • Meanings of Governance • Characteristics of Good• Tests of Good Governance Governance• Governance Common Issues • Key Cooperative Actors and Problems • Functions of the Board of• Good Governance Guiding Directors Principles • Board Good Practices• Levels of Governance • Board RelationshipsDISCUSSION POINTS
  4. 4. A system designed to control and distribute power within an organizationWhat is Governance?
  5. 5. Ideals to be done to realize organizational goals and desiresWhat is Governance?
  6. 6. Set of relationshipsamong the board ofdirectors, management, an Board of Directorsd owners of a businessentity through which theobjectives are decided andthe means for achieving Management Ownersthem and monitoringperformance aredetermined.What is Governance?
  7. 7. • Does the cooperative serve all stakeholders ADEQUATELY and FAIRLY in providing services and material information? • Is management competent to run the cooperative? • Does it do so with ACCOUNTABILITY for its actions?Tests for Good Governance
  8. 8. • Does the business entity operate in accordance with the rule of law? • Is management transparent in all of its transactions? • Has management created SHAREHOLDER VALUE?Tests for Good Governance
  10. 10. • Lack of formal strategic planning and management processes • Lack of clear understanding of the actual duties, responsibilities, accounta bilities, and liabilities of the board of directors as a body and as individual directorsGovernance Issues and Problems
  11. 11. • Diverse backgrounds of directors – knowledge, experience, and training not related to the organization • Lack of sufficient knowledge in finance • Incomplete or insufficient reports and data for making decisionsGovernance Issues and Problems
  12. 12. • Reports and other required data not given in advance of scheduled meetings • Insufficient discussion of complex issues • Lack of free exchange of ideas and opinionsGovernance Issues and Problems
  13. 13. • Lack clear definition of the roles and responsibilities of the board on one hand and management on the other • Lack of knowledge of the business, statutory requirements, current and best business practicesGovernance Issues and Problems
  14. 14. • Lack of time devoted to board work • Insufficient oversight in audit and risk managementGovernance Issues and Problems
  16. 16. It is the paramount duty of the board of directors to select and oversee the chief operating officer.1st Principle
  17. 17. It is the responsibility of management to operate the business in an effective, efficient, and ethical manner in order to produce value for stakeholders.2 nd Principle
  18. 18. It is the responsibility of management, under the oversight of the board and audit committee, to produce timely and factual financial statements.3 rd Principle
  19. 19. It is the responsibility of the board and the audit committee to engage an independent accountant to audit the financial statements prepared by management.4 th Principle
  20. 20. It is the responsibility of the independent accountant to ensure that he is in fact independent and has no conflict of interest.5th Principle
  21. 21. Employees shall be dealt with in a fair and equitable manner6 th Principle
  22. 22. External Governance Internal Governance Individual GovernanceLEVELS OF GOVERNANCE
  23. 23. INDIVIDUAL GOVERNANCE In order to perform their collective duties, the individual board members and managers must maintain ethical conduct and professionalism and to speak with a single voice once decisions have been made.Levels of Governance
  24. 24. INTERNAL GOVERNANCE Unlike profit-motivated entities, cooperative must address its democratic and member-driven nature.Levels of Governance
  25. 25. EXTERNAL GOVERNANCE All financial institutions are expected to comply with the standards of transparency, auditing, and financial reporting.Levels of Governance
  26. 26. • TransparencyASPECTS OF • ComplianceEXTERNALGOVERNANCE • Public AccountabilityExternal Governance
  27. 27. • Regular, honest communication of board activities with members, regulators and the general public in the spirit of full disclosure.Aspect • Financial statements, compliant withof External generally accepted accountingGovernance principles and local regulatory standards, should be made availableTRANSPARENCY to members and the public.External Governance
  28. 28. • Fully comply with regulationsAspect and national laws and cooperateof External with regulatorsGovernance • Ensure that the cooperative meets or exceeds any relevant standardsCOMPLIANCE for financial institutions.External Governance
  29. 29. • Undergo annual external audits within 90 days of the end of eachAspect fiscal yearof External • Re-examine audit relationshipGovernance frequently and consider changing the auditor at least 3-5 years in aCOMPLIANCE competitive bidding processExternal Governance
  30. 30. Aspectof ExternalGovernance Must be constantlyPUBLIC cognizant of responsibilitiesACCOUNTABILITY to government bodiesExternal Governance
  31. 31. • Structure • ContinuityASPECTS OF • BalanceINTERNALGOVERNANCE • AccountabilityInternal Governance
  32. 32. • Composition of BOD shall be in odd number, no less than 5 and no greater than 15 • Consideration should be given to the rotation of directors • Dialogue with general membersAspect shall be encourage during annualof Internal general meetingGovernance • The annual general meetingSTRUCTURE should be adequately promoted to ensure sufficient member participationInternal Governance
  33. 33. • The board should create strategies to maintain competitiveness and sustainability of the cooperativeAspect • The board should createof Internal succession plans for bothGovernance directors and management • The board should formulate riskCONTINUITY management planInternal Governance
  34. 34. • The composition of the board should aim to reflect the demographic makeup ofAspect members and balance theof Internal financial service demands ofGovernance members • The board should seek to balanceBALANCE diversity and experienceInternal Governance
  35. 35. • The board is formally accountable to the general assembly.Aspect • The roles and responsibilities ofof Internal the board, committees andGovernance managers should be established clearly in the by-laws or otherACCOUNTABILITY policiesInternal Governance
  36. 36. • It is the duty of the board to establish strategic direction, approve policies and monitor management’s implementation of policies and achievement of targets.Aspectof Internal • It is the duty of management toGovernance prepare the plan and budget, undertake operations, implementACCOUNTABILITY polices approved by the board and achieve the targets set forth.Internal Governance
  37. 37. • IntegrityASPECTS OF • CompetenceINDIVIDUALGOVERNANCE • CommitmentIndividual Governance
  38. 38. • The cooperative should adopt a code of conduct clearly explaining proper behaviour • Directors or managers must notAspect have criminal or civilof Individual backgrounds.Governance • Immediate family membersINTEGRITY should not serve on the board or in management at the same time.Individual Governance
  39. 39. • Board members must excuse themselves from participating in discussions and voting on matters form which they or their family have a potential conflict of interest.Aspectof Individual • The board must approve loans toGovernance directors or managers. • Directors with loans that areINTEGRITY delinquent for 3 months will be removed from their position.Individual Governance
  40. 40. • All members of the board should have basic competencies, especially financial literacy. • Individual members should alsoAspect have sufficient knowledge andof Individual skills that are needed to conductGovernance their business and perform their rights and responsibilities to theCOMPETENCE cooperativeIndividual Governance
  41. 41. Leadership Competency Model KNOWLEDGE B E HAVI O R Finance Marketing SKILL Building Trust Human Capital Focus and Drive Strategic Planning Negotiation Systems Thinking Running the Communication Conceptual Thinking Business Problem Solving Emotional Change Management Intelligence Coaching/Mentoring Leadership Center 7 September 1999
  42. 42. • Directors should be willing and able to commit necessary time to the cooperative. Failure to attend board meetings may result to dismissal.Aspects of • Directors must respect theIndividual decisions of the board, adheringGovernance to all policies that have been adopted, regardless of personalCOMMITMENT opinion.Individual Governance
  44. 44. • Participation of members is a key cornerstone of good governance • Participation could be either direct (AGA) or representative (intermediate) through officers or committee membersParticipatory
  45. 45. • Good governance requires fair legal frameworks that are enforced impartially. • Good governance also requires full protection of rights.Follows the Rule of Law
  46. 46. • Making and enforcing decisions in a manner that follows rules and regulations • Making information freely available and directly accessible • Providing sufficient and easily understandable informationTransparent
  47. 47. Good governance requires that institutions and processes try to serve all stakeholders within a reasonable timeframeResponsive
  48. 48. Mediation of the different interests to reach a broad consensus on what is the best interest of the whole organization and how this can be achievedConsensus Oriented
  49. 49. • Ensuring that all members of the organization feel that they have a stake in it and do not feel excluded from the mainstream • All groups, particularly the most vulnerable, have the opportunities to improve or maintain their well beingEquitable and Inclusive
  50. 50. • Processes and institutions produce result that meets the needs of society while making the best use of resources at their disposal • Sustainable use of natural resources and the protection of the environmentEffective and Efficient
  51. 51. • Officers are responsible to the stakeholders and to the regulator and the public • Cannot be enforced without TRANSPARENCY and RULE OF LAWAccountable
  53. 53. … have little voice in the day- to-day management of operations, but have the right to elect directors to look out for their interests and to receive the information they need to make investment and voting decisions.Stockholders
  54. 54. Oversees management performance on behalf of stockholdersBoard of Directors
  55. 55. Runs the day-to-day operations of the cooperative and informs the board of the status of operationsManagement
  56. 56. • Formulate policies • Oversee management • Manage risks and crisis • Promote the cooperative • Perform administrative dutiesFUNCTIONS OF THE BOARD
  57. 57. Considering such key policy areas as:  Purpose and philosophy  Organization and staffing  Operations and infrastructure  Products and services  Financial managementFormulating Policies
  58. 58. • Planning for management succession • Understanding, reviewing, & monitoring strategic plans • Understanding and reviewing annual plans and budgets • Focusing on the integrity and clarity of financial statements and reportingOverseeing Management
  59. 59. • Engaging outside auditors and considering independence issues • Advising management on significant issues • Reviewing and approving significant corporate actions • Overseeing corporate governanceOverseeing Management
  60. 60. • Identifying possible risks and crisis • Drawing up plans and policies to control, mitigate, or eliminate risks and crisis • Reviewing periodically risks and crisis management plan and policiesManaging Risks and Crises
  61. 61. • Attending social events • Communicating with board members between meetings • Complying with government and federation regulations and requirementsPromoting the Organization
  62. 62. • Attending meetings • Accepting members • Hiring chief executive officer • Performing housekeeping functionsAdministrativeResponsibilities
  64. 64. • Directors must participate in board meetings, review relevant materials, serve on board committees, and prepare for meetings and for discussion with management • Directors must be given incentives to focus of long- term stakeholder valueBOD Good Practices
  65. 65. • Acceptance of a new directorship should be thoroughly considered in order not to compromise the ability to perform present responsibilities • Board responsibilities may be delegated to committees to permit directors to address key areas more deeplyBOD Good Practices
  66. 66. • The board’s agenda must be carefully planned, yet flexible enough to accommodate emergencies and unexpected developments • Management presentations should be scheduled for discussionBOD Good Practices
  67. 67. • The board must have accurate, complete information to do its job • New directors must be provided with materials and briefings to permit them to become familiar with the business, industry, and corporate governance practicesBOD Good Practices
  68. 68.  From time to time, it may be appropriate for the board and committees to seek advice from outside advisors  The performance of the full board and the committees should be evaluated annuallyBOD Good Practices
  69. 69.  The board should have a process for evaluating whether the individuals sitting on the board bring the skills and expertise appropriate for the business and how they work as a group  Planning for the departure of directors and the welcoming of new board members are essentialBOD Good Practices
  71. 71. Communicating candid, timely, clear, and consistent information to make them understand the business, risk profile, financial condition, operating performance, and trendsWith Stakeholders
  72. 72. • Treating employees fairly and equitably • Providing employees with competitive compensation and benefits • Establishing mechanisms for employees to alert the board and management to allegations of misconduct without fear of retributionWith Employees
  73. 73. • Communicating honestly with employees about operations and financial performance • Providing employees with enough resources and technology, and conducive work environmentWith Employees
  74. 74. • Making donations or contributions • Encouraging directors, managers, and employees to form relationships with these communities • Promoting awareness of health, safety, environmental, and other concernsWith Communities
  75. 75. • Developing, implementing, and maintaining effective legal compliance programs • Contributing to the public policy dialogue • Involving in discussions about the development, enactment, and revision of relevant laws and regulationsWith Government
  76. 76. “I am because you are, you are because we are.” - UnknownGovernance Quotes
  77. 77. “You cannot legislate good behavior.” - Mervyn KingGovernance Quotes
  78. 78. “You must be the change you wish to see in the world . . .” - Mahatma GandhiGovernance Quotes
  79. 79. “Apply yourself. Get all the education you can, but then, by God, do something. Don’t just stand there, make it happen.“ - Lee Iacocca (Legendary President of the Chrysler Corporation)Governance Quotes
  80. 80. EDGARDO TABEQUERO GAMOLO Chairman of the Board Cooperative Bank of Misamis Oriental Mobile Phone: 0999 440 9544 Telefax: 088 333 2179 Email: edgamolo@gmail.comThank You