Farm co-ops in the UK are not doing enough to recruit the right directors and monitor their performance, a new report suggests.
The study, from Co-operatives UK and the Scottish Agricultural Organisation Society (SAOS), looked at how farmer-owned businesses reward their directors.
Co-operatives UK, the national apex body for the co-op sector, says director recruitment is critical to a business’s success and a remuneration package is important in attracting the right mix of skills and experience.
But of the co-ops surveyed, only 12% have a formal process to review board performance; just 37% have a director development programme in place; and only 36% are confident that they are recruiting enough directors of the necessary calibre.
There is also a need for greater gender diversity, with only 13% of respondents having women on boards.
To remedy this, Co-operatives UK and SAOS say agricultural co-ops should build more regular director and board performance reviews into governance planning.
And boards should have a formal process to monitor director remuneration to ensure it reflects the business’s needs and ability to recruit the right directors.
Related: Governance and a volatile market: How farm co-ops are coping
The report found that director remuneration, and the amount of time spent by directors on their roles, varies widely – even among organisations with similar turnover and employee numbers.
Richard Self, agricultural manager at Co-operatives UK, said: “The board is the engine powering your co-operative. It is vital to regularly service your board just as you would your car.
“What the figures in this survey show is that, alongside some best practice, many agricultural co-operatives are not taking the time to time to ‘tune’ their boards.”
He added: “Whether through performance reviews, board development or ensuring there are appropriate levels of diversity and the right mix of skills, there is a clear need for more co-operatives to put systematic processes in place to ensure boards are best placed to drive the business forward.”
Jim Booth, head of co-op development at SAOS, added: “The quality and calibre of directors is arguably one of the most important factors in ensuring future success for a co-op.
“Farmer directors don’t expect to make lots of money while serving on their co-op board but equally they should not subsidise the rest of the membership. The remuneration level for directors needs to be appropriate to attract and retain the right calibre of people.”
