An ideal board of directors disagrees some of the time, acts independently all of the time and has enough expertise to do its job.
Whether the first-ever board of directors of the Canadian Wheat Board meets these standards is yet to be seen, according to three experts in corporate governance.
While they were reluctant to comment on the yet-untested board, these academics pointed out some of the challenges it will likely face.
In Jerry Gray’s experience, representative boards of directors for non-profit organizations have the most problems working together.
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That’s because members are often on the board to look after their own interests or those of a special interest group rather than looking after the wealth of the business, said Gray, dean of the faculty of management at the University of Manitoba.
“If they come on the board to represent who appointed them, I think that’s potentially dysfunctional,” said Gray.
“The key is not who they are and how they’re appointed, but are they clear on what their role is?”
Board members should know something about the organization and be able to make independent decisions, said Gray.
“I find the hardest boards to deal with are those where most of the people on there are there for the first time, never been a board member before, and it really is an educational process. It can take a lot of time,” he said.
John Brennan said wheat board directors will have to look at their group and determine whether they have enough expertise to make sure CWB management is achieving the goals of the agency.
“If it’s not resident within the assembly, they have to buy it, they have to bring it in somehow,” said Brennan, who studies corporate governance at the University of Saskatchewan’s college of commerce.
To be successful, the directors must be independent from management, said Brennan.
There is much debate over whether the chief executive officer should be a voting board member.
Gray thinks it’s a conflict of interest, since the role of the board is to evaluate management, and the CEO is the top manager. Brennan thinks it can work as long as the CEO is not also chair of the board of directors.
Gray and Brennan agree diversity is important for boards of directors.
“There are times when a diverse group makes better decisions than groups that all think alike,” said Gray.
“There should be some disagreement, some difference of opinion … otherwise the board is just a rubber stamp.”
Brennan added each member has to operate in the interests of the whole organization, and accept decisions made by the board, or leave.
“You can’t go outside politically and fight against (a board decision) and still retain your position on the board, in my judgment.”
Marv Painter said the inaugural board of directors should have “interesting dynamics” because of the mix of farmers and corporate managers.
Customers to consider
Painter, who also teaches at the U of S college of commerce, said while most boards focus almost exclusively on making sure shareholders receive maximum profits, the farmer-customers on this board will likely also want to look at customer issues.
Added Brennan: “They also have issues that are not straight commercial issues. There’s a politicized environment in which they are working.”
Painter said the farmers on the board who are opposed to the CWB’s single-desk selling mandate can be effective members as long as they don’t only focus on that issue.
They may be effective watchdogs, said Painter, if they work on making sure the CWB runs effectively and efficiently.
