Director Recruitment: The Nominations Process

It's true. The responsibilities of being a director usually become so consuming that not much time ends up being devoted to thinking about upcoming elections. For many co-ops, the "recruitment and nominations process" begins a month before elections when one departing board member points out, in a panic, that there aren't enough candidates to fill all vacancies. Nominations are hastily collected, even made from the floor of the annual meeting. Any individual indicating even a vague interest in the position is warmly embraced as a savior and retiring board members breathe a sigh of relief at having passed on the baton.

However, this situation represents a very serious abdication of one of the most important functions of the board of directors -- that of perpetuation of a strong and effective board. And, this function is one that simply cannot be delegated to the staff, no matter how the co-op is structured. Traditional organizational theory lists perpetuation as one of the five main functions of a board of directors of any type of corporation and dictates that a board devote considerable attention to perpetuating a strong and effective board of directors.

The Name of the Game is Recruitment

Let's face it, standing by and waiting for candidates for the board of directors to emerge from among the co-op's membership does not ensure that qualified candidates will come to the fore for this time-demanding, volunteer position. Qualified candidates are much more likely to volunteer if someone approaches them and asks them to contribute their time and skills. Potential candidates will be honored to have been asked, and will very seriously consider this significant management level position in the cooperative business.

The approach of simply calling for candidates and then taking whoever comes forward bears a close resemblance to the proverbial reinvention of the wheel. While it is true that cooperatives hold a tremendous potential to develop skills and a familiarity with business practices in people who would not typically have the chance to learn to utilize such things, the board room is simply not the place for providing such an educational experience. Committees or other special project groups can better serve as such a training ground. The position of director of a cooperative corporation incurs serious enough legal liabilities for the corporation and for the individual that it merits the requirement of certain skills and prerequisites. At the very least, a board training session should be held for all candidates, to ensure that no one is ever elected to the co-op board who doesn't already know such basics as directors' legal responsibilities, how to read a financial statement, familiarity with basic business practices, etc.

Recruitment of qualified and appropriate candidates for your board is not a one-month or even a three-month process. It is a YEAR-ROUND responsibility which requires that each board member constantly keep an eye out for potential candidates. Directors shouldn't keep their "target list" to themselves, nor wait until one month before the election. They should approach potential candidates, point out their qualifications, and ask them to think about running for the board when the next elections cycle comes around. The best candidates will want to think about this and spend some time getting to know more about the co-op and the issues it faces, before making the decision to take on such a position of responsibility. Additionally, many of the best candidates may need to clear their crowded schedules.

The Nominations Committee

While each director holds an individual responsibility to watch for and recruit candidates, it is vital that a small nominations committee be responsible for overseeing the recruitment, nominations and elections process. It will be the committee's responsibility to formally approach candidates, to make nominations, to accept petitions and to oversee the election. While the major responsibilities of a nominations committee can be accomplished if the committee is formed four months prior to the beginning of the elections process, this is not optimal. It is preferrable to have a small standing committee who make it their year-long responsibility to solicit candidates, and reflect on the types of skills needed by the board, and who are prepared to recommend a candidate for appointment in the event of an unexpected vacancy. A nominations committee should be chaired by a board member who is not up for election and may be composed of board members, former board members, staff members and members at large. For the sake of efficiency however, the committee shouldn't be larger than 5 people; 2 to 3 is probably ideal.

The establishment of a nominations committee does not release each individual director from his/her "perpetuating" responsibility. The board as a whole should assist the nominations committee by providing committee members with a list of qualified potential candidates to be contacted, and set a target number (minimum and maximum) of candidates. In this way, the board can ensure that there will be a contested election between excellent candidates and that the co-op will benefit no matter how the voting turns out. A nominations committee is not doing its job if there aren't at least 8 candidates for 5 seats. At the same time, over 11 or 12 candidates for 5 seats may be too many, since several of the elected candidates will receive only a small percentage of the votes.

The Nominations Process

In a nutshell, the annual responsibility of the nominations committee is a three-step process: 1) recruit individuals and collect some background on all interested candidates; 2) select a slate of candidates; and then 3) allow additional candidates to come forward by petition after the committee's slate has been announced. (See sidebar outlining a step by step procedure for this part of the nominations committee work.) In this way, the co-op isn't caught in the position of having no good candidates or only enough candidates to fill vacancies. The process also allows candidates to be nominated themselves if they were not selected by the committee.

The committee will want to promote its search for qualified and skilled candidates broadly throughout the community. Information should be sent via Public Service Announcements to local newspapers, community newsletters and radio stations, as well as to local small business associations or industry groups. The committee should prepare background material for candidates delineating the time commitment required, the length of terms available, some background on the co-op, a description of the responsibilities of a director, and the compensation provided to directors (discount, stipend, what expenses are covered, etc.). A list of specific skills or training requirements should also be made clear, including what type of orientation and training the co-op will provide to its directors. Committee members should make sure that candidates know what they're getting into and make it clear that selection by the nominations committee does not ensure election as a director.

Finally, a report should be made to the full board outlining candidates selected and those nominated by petition and any appropriate details. In most organizations, the committee's job doesn't stop there. Typically, the nominations committee is also responsible for overseeing the elections process, enforcing corporate policy regarding removal of directors, overseeing any cases potentially involving conflict of interest, structuring board committees and making committee assignments, training and orientation of directors, formulating any recommendations regarding compensation of directors and conducting an annual evaluation of board performance.

The process of recruiting and electing new board members is key to strengthening the upper-level management body of a cooperative enterprise that aspires to providing unequalled and unparalled service to its member/owners. How a board manages the nominations process is very reflective of the co-op's commitment to democracy in the marketplace. If you do nothing else as a director of your co-op, leave behind a director as a replacement who will be better than you!

Director Recruitment:  Step-By-Step

As a part of any new director orientation program, the co-op's commitment to continuous recruitment of new potential directors should be emphasized.

When committee assignments are made (preferably within a month of the commencement of new board terms), a small nominations committee is convened. If the co-op has never had a nominations committee, guidelines for the committee's operations should be established, such as: reporting requirements, timeline for completion of key tasks, committee composition, budget, etc.

The beginning of the elections process -- when ballots are mailed out -- should be at least a month before the annual membership meeting. At least four months prior to the ballot mailing, the committee announces the opening of nominations. Background packets are made available for interested individuals. Announcements are to be sent out to community groups, newspapers and radios, as well as through the co-op's communications-bulletin boards, newsletters, minutes, etc.

At the same time, the committee begins formally contacting candidates recommended by staff and board members. All interested candidates are asked to complete a short application form which outlines formal training and education, employment and skills, and informal experiences appropriate to being a director of the co-op.

Two months before the ballot mailing, the committee announces its selection of candidates needed to at least provide the minimum number of candidates targeted by the board. All individuals are notified by mail either that they have been selected and are given deadlines for submitting candidates' statements (and possibly photos); or that they have not been selected by the committee and are given guidelines on how to become a candidate by petition.

Petitions are provided by the nominations committee with background materials and clear instructions.

One month before the balloting begins, the nominations process closes. All petitions are due along with statements from all nominated candidates. This should allow plenty of time for production of a mailing or newsletter article, and possibly an in-store display featuring candidates.

The nominations committee oversees the collection and counting of all ballots and makes its final report to the board of directors and, if required or appropriate, to the annual membership meeting.

Karen Zimbelman is Director of Training for the Rochdale Institute and Director of the Consumer Goods and Services Department of the National Cooperative Business Association. Thanks to the following individuals for their assistance with this article: Sean Kenny, Derek Murray Consulting Associates; June Lane, National Rural Electric Cooperative Association; John Nash, National Association of Corporate Directors; and Margaret Goldstein of the National Cooperative Business Association.