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

1. GOOD GOVERNANCE
FOR COOPERATIVES

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 Relationships
DISCUSSION POINTS

3. • SYSTEM
• IDEALS
• RELATIONSHIPS
GOVERNANCE

4. A system designed to control
and distribute power within
an organization
What is Governance?

5. Ideals to be done to realize
organizational goals and
desires
What is Governance?

6. Set of relationships
among the board of
directors, management, an Board of
Directors
d owners of a business
entity through which the
objectives are decided and
the means for achieving Management Owners
them and monitoring
performance are
determined.
What is Governance?

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. • 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

9. GOVERNANCE
COMMON ISSUES AND PROBLEMS

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 directors
Governance Issues and Problems

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
decisions
Governance Issues and Problems

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 opinions
Governance Issues and Problems

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 practices
Governance Issues and Problems

14. • Lack of time devoted to
board work
• Insufficient oversight in
audit and risk management
Governance Issues and Problems

15. GOOD GOVERNANCE
GUIDING PRINCIPLES

16. It is the paramount duty of
the board of directors to select
and oversee the chief operating
officer.
1st Principle

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. 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. 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. 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. Employees shall be dealt with
in a fair and equitable manner
6 th Principle

22. External
Governance
Internal
Governance
Individual
Governance
LEVELS OF GOVERNANCE

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. INTERNAL GOVERNANCE
Unlike profit-motivated
entities, cooperative must
address its democratic and
member-driven nature.
Levels of Governance

25. EXTERNAL GOVERNANCE
All financial institutions are
expected to comply with the
standards of
transparency, auditing, and
financial reporting.
Levels of Governance

26. • Transparency
ASPECTS OF • Compliance
EXTERNAL
GOVERNANCE • Public Accountability
External Governance

27. • Regular, honest communication of
board activities with
members, regulators and the general
public in the spirit of full disclosure.
Aspect • Financial statements, compliant with
of External generally accepted accounting
Governance principles and local regulatory
standards, should be made available
TRANSPARENCY to members and the public.
External Governance

28. • Fully comply with regulations
Aspect and national laws and cooperate
of External with regulators
Governance • Ensure that the cooperative meets
or exceeds any relevant standards
COMPLIANCE for financial institutions.
External Governance

29. • Undergo annual external audits
within 90 days of the end of each
Aspect fiscal year
of External • Re-examine audit relationship
Governance frequently and consider changing the
auditor at least 3-5 years in a
COMPLIANCE competitive bidding process
External Governance

30. Aspect
of External
Governance Must be constantly
PUBLIC cognizant of responsibilities
ACCOUNTABILITY to government bodies
External Governance

31. • Structure
• Continuity
ASPECTS OF • Balance
INTERNAL
GOVERNANCE • Accountability
Internal Governance

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 members
Aspect
shall be encourage during annual
of Internal
general meeting
Governance
• The annual general meeting
STRUCTURE should be adequately promoted to
ensure sufficient member
participation
Internal Governance

33. • The board should create
strategies to maintain
competitiveness and
sustainability of the cooperative
Aspect • The board should create
of Internal succession plans for both
Governance directors and management
• The board should formulate risk
CONTINUITY management plan
Internal Governance

34. • The composition of the board
should aim to reflect the
demographic makeup of
Aspect members and balance the
of Internal financial service demands of
Governance members
• The board should seek to balance
BALANCE diversity and experience
Internal Governance

35. • The board is formally
accountable to the general
assembly.
Aspect • The roles and responsibilities of
of Internal the board, committees and
Governance managers should be established
clearly in the by-laws or other
ACCOUNTABILITY policies
Internal Governance

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.
Aspect
of Internal • It is the duty of management to
Governance prepare the plan and budget,
undertake operations, implement
ACCOUNTABILITY polices approved by the board
and achieve the targets set forth.
Internal Governance

37. • Integrity
ASPECTS OF • Competence
INDIVIDUAL
GOVERNANCE • Commitment
Individual Governance

38. • The cooperative should adopt a
code of conduct clearly
explaining proper behaviour
• Directors or managers must not
Aspect
have criminal or civil
of Individual
backgrounds.
Governance
• Immediate family members
INTEGRITY should not serve on the board or
in management at the same time.
Individual Governance

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.
Aspect
of Individual • The board must approve loans to
Governance directors or managers.
• Directors with loans that are
INTEGRITY delinquent for 3 months will be
removed from their position.
Individual Governance

40. • All members of the board should
have basic
competencies, especially
financial literacy.
• Individual members should also
Aspect have sufficient knowledge and
of Individual skills that are needed to conduct
Governance their business and perform their
rights and responsibilities to the
COMPETENCE cooperative
Individual Governance

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. • 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 the
Individual decisions of the board, adhering
Governance to all policies that have been
adopted, regardless of personal
COMMITMENT opinion.
Individual Governance

43. 1. PARTICIPATORY
2. FOLLOWS THE RULE OF LAW
3. TRANSPARENT
4. RESPONSIVE
5. CONSENSUS ORIENTED
6. EQUITABLE AND INCLUSIVE
7. EFFECTIVE AND EFFICIENT
8. ACCOUNTABLE
CHARACTERISTICS
OF GOOD GOVERNANCE

44. • Participation of members is
a key cornerstone of good
governance
• Participation could be either
direct (AGA) or
representative (intermediate)
through officers or
committee members
Participatory

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. • Making and enforcing
decisions in a manner that
follows rules and regulations
• Making information freely
available and directly
accessible
• Providing sufficient and
easily understandable
information
Transparent

47. Good governance requires that
institutions and processes try
to serve all stakeholders within
a reasonable timeframe
Responsive

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 achieved
Consensus Oriented

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 being
Equitable and Inclusive

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 environment
Effective and Efficient

51. • Officers are responsible to
the stakeholders and to the
regulator and the public
• Cannot be enforced without
TRANSPARENCY and
RULE OF LAW
Accountable

52. • STOCKHOLDERS
• BOARD OF DIRECTORS
• MANAGEMENT
KEY COOPERATIVE ACTORS

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. Oversees management
performance on behalf of
stockholders
Board of Directors

55. Runs the day-to-day operations
of the cooperative and informs
the board of the status of
operations
Management

56. • Formulate policies
• Oversee management
• Manage risks and crisis
• Promote the cooperative
• Perform administrative
duties
FUNCTIONS OF THE BOARD

57. Considering such key policy
areas as:
 Purpose and philosophy
 Organization and staffing
 Operations and infrastructure
 Products and services
 Financial management
Formulating Policies

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 reporting
Overseeing Management

59. • Engaging outside auditors and
considering independence
issues
• Advising management on
significant issues
• Reviewing and approving
significant corporate actions
• Overseeing corporate
governance
Overseeing Management

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 policies
Managing Risks and Crises

61. • Attending social events
• Communicating with board
members between meetings
• Complying with government
and federation regulations
and requirements
Promoting the Organization

62. • Attending meetings
• Accepting members
• Hiring chief executive officer
• Performing housekeeping
functions
Administrative
Responsibilities

63. BOARD OF DIRECTORS
GOOD PRACTICES

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 value
BOD Good Practices

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 deeply
BOD Good Practices

66. • The board’s agenda must be
carefully planned, yet flexible
enough to accommodate
emergencies and unexpected
developments
• Management presentations
should be scheduled for
discussion
BOD Good Practices

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
practices
BOD Good Practices

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 annually
BOD Good Practices

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 essential
BOD Good Practices

70. • STAKEHOLDERS
• EMPLOYEES
• COMMUNITIES
• GOVERNMENT
BOARD RELATIONSHIPS

71. Communicating
candid, timely, clear, and
consistent information to make
them understand the
business, risk profile, financial
condition, operating
performance, and trends
With Stakeholders

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 retribution
With Employees

73. • Communicating honestly
with employees about
operations and financial
performance
• Providing employees with
enough resources and
technology, and conducive
work environment
With Employees

74. • Making donations or
contributions
• Encouraging directors,
managers, and employees to
form relationships with these
communities
• Promoting awareness of
health, safety, environmental,
and other concerns
With Communities

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 regulations
With Government

76. “I am because you are, you are
because we are.” - Unknown
Governance Quotes

77. “You cannot legislate good
behavior.” - Mervyn King
Governance Quotes

78. “You must be the change you
wish to see in the world . . .” -
Mahatma Gandhi
Governance Quotes

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. EDGARDO TABEQUERO GAMOLO
Chairman of the Board
Cooperative Bank of Misamis Oriental
Mobile Phone: 0999 440 9544
Telefax: 088 333 2179
Email: edgamolo@gmail.com
Thank You