Abstract
Agricultural cooperatives in the United States are larger and more complex than ever before. Due to this growth, farmer directors need to up-skill to maximize farmer member benefits. Director education is generally considered a successful strategy for improving financial and strategic performance, yet little research has examined the skills U.S. agricultural cooperative directors need. This research identified skills – and, notably, behaviors – necessary for agricultural cooperative directors to ensure financial and operational success. Interviews and focus groups were conducted with cooperative leaders. Results were consistent across these three groups and suggest that successful directors must possess the following skills and behaviors: financial/ business, governance, board leadership, industry knowledge and strategic planning. Results suggest that educating farmer directors on these skills and behaviors may benefit all farmer members of an agricultural cooperative.
1. Introduction
A board of directors is a key decision-making group for non-profit organizations, corporations, and even cooperatives. Cooperatives exist to operate efficiently and not necessarily maximize profits like most other corporations. More specifically, farmer cooperatives exist to maximize member benefits (Puusa and Saastamoinen, 2021). This can be challenging because the global agricultural industry as well as cooperatives have changed significantly over time. In the case of U.S. agricultural cooperatives, these entities have increased in asset size, business complexity, and business volume handled (USDA Rural Development, 2021). As such, the skills needed for a director to be engaged and knowledgeable may have changed. Thus, the objective of this research is to identify the necessary skills for U.S. agricultural cooperative directors by conducting interviews and focus groups with cooperative CEOs, general managers, and directors.
Well-functioning boards of directors are often associated with high performing companies. Brown (2005) analyzed how effective non-profit boards improve organizational performance and found that more profitable organizations reported having high-performing boards. Payne et al. (2009) found that board effectiveness is significantly related to corporate financial performance. Minichilli et al. (2012) found that board processes, such as effort norms and the use of knowledge and skills to determine board control, help explain board task performance and board task performance differs between boards based on their operational contexts. Kouaib et al. (2020) found that a diversified board increases management’s ability to make quality decisions and implement competitive strategies. They also found that increasing the amount of independent directors on a board increases the focus on social and environmental aspects. Erhardt et al. (2003) found that board diversity was positively associated with return on investment and return on assets.
Cooperative board of directors are also associated with high performance. Franken et al. (2017) found that orientation training for new directors and continued training of existing directors are both positively related to cooperative financial performance. Similarly, Bond (2009) found that cooperative board of directors affects the overall financial performance of the cooperative. Hakelius (2013) surveyed board chairs of Swedish cooperatives and discovered that higher performing cooperatives tended to have more cooperative directors serving on the board. Potentially this is related to more ideas being shared in the board room from a diverse skill set. Boland et al. (2011) and Burress et al. (2011) argued that director and management education are key for successful strategy implementation, which ultimately leads to cooperatives operating more efficiently and profitably.
Given the literature connecting boards of directors to a company’s success, the existing and necessary skills of the board should be considered. Research has been conducted on director skills that are needed to maintain and enhance business operations. Adams et al. (2018) studied skills needed for directors of public U.S. firms. They found that boards with directors who share common skills contribute to better overall firm performance. Asahak et al. (2018) comprised a list of eleven factors that contribute to high board performance in Australian organizations. These include aspects such as effective internal communication and teamwork, effective leadership by the chair, effective self-assessment of board functioning, clarity of board member roles and responsibilities, and oversight of strategic direction. Finally, Payne et al. (2009) identified five attributes of high-performing teams that promote board effectiveness: incentives, opportunity/ time, information, knowledge, and power. They also found that many team-based attributes and practices lead to board effectiveness and consequently, higher firm financial performance.
While most of the research on director skills focuses on non-profits and corporations, there is limited research on cooperative director skills. Additionally, cooperatives have changed significantly and necessary skills for effective governance may have changed too. Thus, the objective of this research is to identify what skills are needed and what skills are most important to being an engaged and knowledgeable farmer cooperative director to ensure operational success of the cooperative. An engaged director is someone who is committed to their tasks of establishing and implementing governance policies, working with the CEO or general manager, and move the cooperative towards its overall objectives. The goal of this paper is not meant to identify or address a knowledge gap. This research aims to identify skills needed for today’s agricultural cooperative directors, which is one step in identifying a potential knowledge gap.
To reach our objective, we follow a qualitative data collection approach. Following the Delphi method, an interview questionnaire is designed that asks open-ended questions about director skills. This method is more conducive for an exploratory research approach given the lack of well-established literature and dynamic evolution of cooperatives. We use this questionnaire with current directors, CEOs, and general managers of farmer cooperatives in Kansas.
Results from the collected data show that particular skills and behaviors are needed to be an engaged and knowledgeable director. The skills and behaviors mentioned fit into five main categories: financial/business, governance, board leadership, industry knowledge, and strategic planning. Notably, the responses were consistent among the different types of participants (i.e. CEOs, directors, and stakeholders). There is some overlap with our results and the results from other studies that focused more on director skills needed for larger corporation boards (Adams et al., 2018; Asahak et al., 2018; Leblanc, 2020; Payne et al., 2009). Combining the results from this study with the literature, eleven key skills can be identified for farmer cooperative directors to be engaged and knowledgeable: cooperative finance, cooperative governance and policy, communication, time management, understand current economic and industry conditions, ask critical and constructive questions, strategic planning, networking, listening, teamwork, and leadership.
The results shown here can easily translate into training needs since engaged and knowledgeable directors contribute to board effectiveness and therefore, can improve organizational performance. It has been shown that firm productivity is linked to having individuals who are willing and able to learn new skills according to the demands of their position (Reiter-Palmon et al., 2006). Our contribution to this literature is identifying 11 specific skills that all cooperative directors should possess and enhance through training. The insights generated by this study can inform cooperative management decisions on training and development programs.
1.1 Changing agricultural cooperative landscape
Over the past century, technological advancements, industrialization, and globalization has changed the agricultural landscape; and, as a result, the cooperative landscape has changed as well. Today, there are fewer farmers and the size of farms has increased (USDA National Agricultural Statistics Service, 2021). Total farm input use has remained constant while total agricultural output has drastically increased, being driven by increased efficiencies and total factor productivity (USDA Economic Research Service, 2022). In addition to farmer needs changing because of changing farm demographics, innovation and globalization have led to the consolidation of agribusinesses, food manufacturing, and food retailers (Dunn et al., 2002).
These aspects plus many more have led to agricultural cooperative consolidations. In 1979, there were 6,445 farmer cooperatives. This number decreased to 2,186 in 2014 (Eversull, 2014). The number of agricultural cooperatives decreased again to 1,779 in 2019. Some of this decline is attributed to cooperatives going out of business entirely. However, most of the decline is due to consolidations, mergers, or acquisitions. Despite the decline in physical numbers of cooperatives, gross business volume and assets have increased. According to the USDA Rural Development Report (2021), in 2010 gross business volume was approximately $172 billion. Then, this volume grew to a 2010 constant $174 billion in 2019, a slight increase of 1%. However, assets increased 38% over the same period from approximately $65 billion in 2010 to a constant $85 billion in 2019.
Given the consolidation and asset growth among agricultural cooperatives in the United States, the skills necessary to lead these organizations has likely changed too. Cooperatives are more complex, are larger, cover more territory, and handle much more business volume than ever before. But, before we can explore the skills necessary for a director to be engaged and knowledgeable today, let’s review the literature to identify director skills needed in the past.
1.2 The roles within a cooperative
Members comprise the cooperative – they are the reason for the cooperative’s existence. Their needs make up the mission for the cooperative. Through their patronage, they support the cooperative and provide capital investment to help keep the cooperative financially viable and relevant. Members elect directors as well as serve on the board of directors. The five main roles of the member include to patronize the cooperative, be informed about the cooperative, be conscientious when selecting and evaluating directors, provide necessary capital, and evaluate performance of the cooperative (Frederick et al., 2012).
Cooperative directors are chosen and elected from the membership. They have several responsibilities including representing the cooperative membership, establishing policies, hiring the manager, safeguarding the cooperative’s assets, carrying forward the character of the organization, assessing the cooperative’s performance, and informing members (Baarda, 2003). Appointing board committees and strategic planning are additional responsibilities according to Wadsworth et al. (2015). Finally, Chapman et al. (1986) would add duties such as establishing the mission and vision of the cooperative, approving and monitoring the financial structure and budgets, and identifying future plans for growth.
Outside of the membership base and the board of directors, each cooperative has a CEO or general manager. This individual leads the immediate staff to ensure the cooperative enacts the goals and mission that the board of directors create. The CEO/GM is chosen by the board of directors and is responsible for making sure the cooperative serves the members effectively. They coordinate the business activities of the co-op; hire, train, and supervise employees; oversee cooperative operations; maintain adequate bookkeeping; and share cooperative information with members and directors (Frederick et al., 2012).
It is important to note that governance structure differs amongst cooperatives in different countries and regions around the world. One way that cooperatives are managing the changing agricultural cooperative landscape is by innovating with regards to their internal governance mechanisms. One example comes from European agricultural cooperatives who are shifting more of the decision-making power over to managers. Their goal is to compete with challenges such as market concentration and legislative reform (Bijman et al., 2014).
Cooperatives in the United States tend to follow an extended traditional model. According to Chaddad and Iliopoulos (2013), U.S. board of directors has the formal authority while the management team led by a CEO has the real authority. There is a clear separation between these two authority roles. Additionally, they note that Oceania and some cooperatives in Northern Europe and southern South America follow this style as well but offer a mixed board of directors that includes outside experts in addition to the member-elected individuals.
Chaddad and Iliopoulos also note that the traditional model can be observed in South Africa and Southern Europe. Here, the board of directors has formal and real authority over major decisions. The board might delegate some of the decisions to managers or a committee of directors. They may even empower the board chair to operate in the CEO role.
The final type of governance structure to highlight is the managerial and corporate models. Chaddad and Iliopoulos found this model to be utilized in Northern European cooperatives. This type is known for the management team maintaining form and real authority. In the managerial model, there is a supervisory committee that takes on the roles of the board of the directors and the management team. In the corporate model, the board of directors and the supervisory committee are consolidated to make an extended board of directors, which is comprised of both members and non-members.
1.3 Cooperative director skills literature
Some director skills and board performance research has been conducted in the cooperative space. Biggs (1978) argues that cooperative directors are responsible for making policy decisions and ensuring the cooperative reaches its goals and objectives, while the general manager is responsible for assigning tasks to employees and guiding day-to-day activities. Chapman et al. (1986) noted that board members are representative of the cooperative’s members, so they need to be familiar with the cooperative principles, act in good faith, act only in the interest of the cooperative and its members, understand the purpose and goals of the cooperative, listen to input from the members, and communicate the activities of the co-op to the members. Hakelius (2018) compared investor-owned firm boards with farmer cooperative boards in Sweden and identified four main tasks for boards: distributing responsibility, monitoring and controlling management, strategy, and policy formulation. Additionally, they found that educated directors were related to cooperative success.
Some research identified a specific set of skills. Cobia (1989) identified skills and characteristics cooperative directors need: business judgment, being respectful and trustworthy, being active in the cooperative, being hard working, having the energy and time to commit, the ability to work on a team, having integrity, being honest, being loyal to the cooperative and its principles, and willing to learn. Baarda (2003), Reynolds (2004), and Wadsworth et al. (2015) identified similar responsibilities, skills, and characteristics. Hine et al. (2005) found there was a need to build skills in communication, trust, teambuilding, financial analysis, and decision making when studying agricultural cooperative managers and directors in Colorado and Indiana. Park et al. (2019) found that most boards of directors are made up of farmers having similar skills and experiences. Therefore, those boards may have missing skills since cooperative members choose directors from their member pools.
Leblanc (2020) compiled a list of competencies and behaviors that all directors should possess whether they serve on corporate boards, non-profit boards, or cooperative boards. He also created a solid framework for internal evaluations of individual boards as well as the board as a whole. Leblanc found that there are three elements that contribute to an effective director: competency, independence, and behavior.
A competency is defined as ‘a collection of skills, knowledge, experience, education, and training that can be assessed, and that contributes to the effectiveness of the director’ (Leblanc 2020). Competencies can be enhanced through training and development, have the potential of being lost by lack of effort and maintenance, and are not the same as experiences. Leblanc’s list of competencies includes: enterprise leadership, governance/board, industry/sector, strategic/value creation/growth, and financial.
A behavior is defined as ‘the way in which directors act and conduct themselves, particularly in regard to fellow directors and management. [These] include a collection of qualities, characteristics, traits, and attributes that can be assessed and that contribute to director effectiveness’ (Leblanc 2020). Leblanc identifies ten behaviors. Independent judgement is needed by the director to maintain impartiality and to refrain from engaging in management activities. Having integrity requires the director to be trustworthy, honest, and dependable. One’s commitment to do the right thing for the good of the organization is referred to as organizational loyalty. A director must also commit their time to be available, attentive, and responsive. The capacity to challenge includes critically and constructively asking questions and challenging assumptions. Directors need to be willing to take action with difficult situations and have the ability to follow through on those actions. Problem-solving skills, communication skills, and teamwork skills are important as well. Directors must be engaged, have the ability to build rapport, and have mutual respect and trust with others. Finally, influence skills are key. Directors should be able to persuasively reason and effectively model their ideas.
Overall, based on the literature, not much research has been conducted with a focus on agricultural cooperative director skills. The goal of this paper is not meant to identify or address a knowledge gap. This research aims to identify skills needed for today’s agricultural cooperative directors, which is one step in identifying a potential knowledge gap. Perhaps some of the skills from previous research are still valid while other skills have yet to be acknowledged. The list of skills identified here can update and add to the literature on agricultural cooperative directors.
2. Materials and methods
2.1 Data collection and design
The data were gathered via two primary methods: focus groups and personal interviews. Focus groups were mainly used for idea generation. We developed a focus group questionnaire in order to generate ideas on characteristics, skills, and competencies needed by farmer directors of cooperatives and obtain feedback for a broader survey of directors serving on cooperative boards. A potential limitation of focus groups is the presence of group think. The intimidation factor for some individuals may limit their confidence to speak up and participate in group discussion (Stewart et al., 2006).
Personal interviews are one method to combat some of the limitations of focus groups. Conducting interviews allowed us to push further and expand past the original short list of probing questions on the focus group questionnaire. We utilized open-ended questions in an unstructured interview setting to gather qualitative information during the interviews. Our goal was to understand the individual’s opinions in regards to the interview questionnaires and research topic. One limitation of the use of unstructured interviews, however, is that respondents may choose to answer questions in a way that is socially desirable. Interviewees may also limit the details they share in order to protect themselves even though confidentiality agreements have been signed (Fontana and Prokos, 2007). Utilizing both focus groups and interviews allowed us to capitalize on the benefits of the two methods while minimizing the risks associated with each.
An adaptation of the Delphi method was followed when collecting data. This is a technique used to find convergence of opinions when gathering knowledge from topic area experts. The method includes gathering responses from various individuals or groups at different times and combining the responses to create a single statement, such as all directors need financial skills to be engaged and knowledgeable (Sackman 1975). For example, Ramsey and Edwards (2011) used the Delphi method to identify the role of the Supervised Agricultural Experience (SAE) in providing students with technical skills needed to enter the agriculture workforce. The researchers asked panelists to identify entry-level technical skills that should be learned through the SAE. Next, the researchers asked panelists about their level of agreement of each of the entry-level skills recorded in the first round. The agreement rating step was repeated once more before compiling final results.
We conducted an initial focus group following the Delphi method, in which a short list of questions was posed to a group of Kansas cooperative leaders (experienced directors, CEOs, etc.) of cooperatives concerning the behaviors, skills, and competencies of cooperative directors. Cooperative leaders in Kansas are the primary focus group because the researchers meet with these cooperative leaders frequently. Three questions were posed to the group in an open discussion format. Questions included:
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What skills do directors need in order to be engaged and knowledgeable?
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What qualities or behaviors do you feel co-op boards should look for in potential directors?
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What do directors struggle the most to understand about serving on a farmer cooperative’s board of directors?
The second round of the Delphi method included conducting 16 focus groups in Kansas with 45 total cooperative leaders representing 18 cooperatives, with two to six of them in each focus group. Each focus group was asked the same three questions as the group in the initial round of focus groups plus one additional question: What do you think directors need to know about the rural economy?
An interview questionnaire was then developed using the focus group questions. Additional questions were added, as well. Two questionnaires were developed, one for CEOs and general managers (Supplementary Materials and methods S1 at 10.6084/m9.figshare.24441892) and one for cooperative directors (Supplementary Materials and methods S2 at 10.6084/m9.figshare.24441892). The two questionnaires vary given the different roles played by cooperative CEOs and directors. The personal interview questionnaire was beta tested with an inexperienced cooperative director and with a more seasoned cooperative director. These beta tests allowed us to create the final personal interview questionnaire to be used for the official qualitative data collection.
Personal interviews were conducted with cooperative CEOs and directors from August to December 2021. Interviews were completed by phone and video call. A total of 13 personal interviews were conducted with each lasting an average of 45 minutes. The interviews were based on a list of current Kansas cooperative CEOs/GMs and directors. We then segmented this list based on the number of cooperative grain bin locations the cooperative managed: 0–1 locations, 2–5, 6–11, and 12 or more. Then, CEOs/GMs and directors were randomly selected from each of these groups to be interviewed. We also ensured that we spoke to at least one CEO/GM and one director from each of the segments to ensure coverage across Kansas. Unfortunately, that did not include any female leaders. All of the participants were directors or CEOs/GMs of farmer cooperatives in Kansas with one being a farmer director of a cooperative in Nebraska.
2.2 Demographic data
Cooperative leaders from Kansas participated in the data collection. Respondents connected to a Kansas cooperative are categorized based on the number of grain elevator locations they manage. Managing more locations is one way to account for business complexity across respondents. There are 13 total cooperatives in Kansas that comprise the 0–1 grain elevator locations category; 19 total cooperatives that comprise the 2–5 grain elevator locations category; 15 total cooperatives that comprise the 6–11 grain elevator locations category; and 15 total cooperatives that comprise the 12 or more grain elevator locations category. These categories allow us to account for the differing sizes of cooperatives and how that may affect the respondents’ answers. Another option when capturing complexity of the types of cooperatives the respondents represent includes the cooperative’s most recent total annual sales. A summary of the demographics can be seen in Table 1.
Qualitative data demographics.
Citation: International Food and Agribusiness Management Review 26, 4 (2023) ; 10.22434/ifamr2022.0099
A total of 68 individuals comprise the qualitative data with the majority being male. There were a total of 17 focus groups and 13 personal interviews. There is a fairly even split between directors and CEOs/GMs: 25 versus 32.4%, respectively. The remaining individuals participating were those who work closely with cooperatives including banking, insurance, and other service providers to cooperatives. Because these individuals interact and frequently work with cooperative directors and CEOs/GMs, their input on needed director skills was relevant and valuable to the research.
The majority of the participants represent Kansas cooperatives with a small amount, 7 total, representing cooperatives from surrounding states. The majority of the individuals participating represented the larger cooperatives: 21, or 42%, coming from the 12 or more grain elevator locations category. The 6–11 grain elevator locations category was represented by 9 individuals, or 18% of respondents, along with the 2–5 grain elevator locations category. There were only 4 respondents, or 8%, representing the category of cooperatives operating less than 2 grain elevator locations. However, referring to the other form of complexity observed, 24, or 48%, of the respondents represent cooperatives falling in the $15-$150 million in total annual sales category. The $150-$500 million in total sales category was represented by 15 respondents, or 30%; more than $500 million in total sales category by 10, or 20%; and less than $15 million in total sales category by 1 respondent, or 2%.
3. Results and discussion
Based on Leblanc’s (2020) work, respondent answers to the focus group and interview questionnaire were placed into five categories:
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Enterprise/board leadership: being a leader both inside and outside the board room (i.e. communication, advocacy, and reputation).
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Governance: understanding the system of rules, practices, and processes for governing a cooperative, including compliance, risk management, compensation, and internal controls.
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Industry: knowing what is happening within the agricultural industry at multiple levels, such as local, regional, and global.
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Strategic/value creation: being able to have strategic discussions, formulate and evaluate strategies, and make strategic decisions that create value for the membership.
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Financial: being able to know and understand financial statements, financial decisions, accounting and tax methods, and implications of board decisions on the cooperative’s financial position.
These represent the overall competency categories deemed necessary by the respondents. They are also consistent with the literature.
The first question posed to focus groups and personal interviewees was: ‘What skills do directors need in order to be engaged and knowledgeable?’ The key themes arising from this question include financial and business skills, communication skills, the ability to separate the board responsibilities from the farmer profession, understanding current economic conditions, and being open-minded. These findings are similar to the existing literature, especially Park et al. (2019) that put a significant emphasis on the need to enhance communication and director responsibility in training programs. Financial and business skills is one of the most important skills needed by directors, as 25 of the 30 respondents answered the question in this way. Given the question is open ended, respondents provided numerous skills that relate broadly to financial or business skills. Instead of listing each skill independently, we grouped them together. Another aspect to draw attention to is the vast differences between focus group responses and personal interview responses. One explanation for this, which is also a limitation of using focus groups as data generation, is group think. Perhaps the environment in which the focus groups were conducted led to nearby focus groups to overhear responses and record similar answers. The results can be seen in Table 2.
Responses to: ‘What skills do directors need in order to be engaged and knowledgeable?’
Citation: International Food and Agribusiness Management Review 26, 4 (2023) ; 10.22434/ifamr2022.0099
The second question posed to focus groups and interviewees was: ‘What qualities or behaviors do you feel co-op boards should look for in potential directors?’ The key themes arising from this question include patronizing the co-op, loyalty, separating the board responsibilities from the farmer profession, understanding duties and responsibilities, critical thinking and strategic thinking skills, being open-minded, and willing to learn. Work completed by Wadsworth et al. (2015) highlighted the need for directors to be able to work with other directors, cooperative management, and members. Additionally, they found that one of the board’s responsibilities centers on cooperative policy and strategic planning. The most popular response was patronizing the cooperative with 19 of the 30 responses. The next most common responses were being a critical thinker and open-minded, both receiving 14 of the 30 responses. One aspect we would like to highlight here is the similarities between the first two questions. The questions themselves are similar but led to varying responses. We felt it was important to ask the two similar questions using the different adjectives to try and draw out all possible skills and/or qualities directors should possess. The full results can be seen in Table 3.
Responses to: ‘What qualities or behaviors do you feel co-op boards should look for in potential directors?’
Citation: International Food and Agribusiness Management Review 26, 4 (2023) ; 10.22434/ifamr2022.0099
The third question posed to focus groups and personal interviewees was: ‘What do directors struggle the most to understand about serving on a farmer cooperative board of directors?’ The key themes arising from this question include understanding cooperative finances, understanding how the cooperative operates, transitioning from having a personal agenda to being able to think for the collective good, understanding why decisions are made, understanding that there is a two-way street between the general manager and the board, and understanding the complexities of the entire supply chain. Wadsworth (2018) also found that directors need to know and understand what questions to ask in regards to financials and business matters, the governance structure, policy and legal aspects, operations and management, and strategic planning. The most common response was cooperative finances, receiving 13 of the 23 responses. How the cooperative operates and transitioning from a personal agenda to thinking for the collective good were close behind, each receiving 11 of the 23 responses. The full results can be seen in Table 4.
Responses to: ‘What do directors struggle the most to understand about serving on a farmer cooperative board of directors?’
Citation: International Food and Agribusiness Management Review 26, 4 (2023) ; 10.22434/ifamr2022.0099
The fourth question posed to focus groups and personal interviewees was: ‘What do you think directors need to know about the rural economy?’ The key themes arising from this question include rural economic trends, local commodity markets, what is happening globally, and workforce issues. Similarly, Adams et al. (2018) found that having a director that is knowledgeable and experienced in the firm’s industry is important for larger corporations. The answers receiving the most responses were workforce issues with 13 of 25 responses and rural economic trends, local commodity markets, and what is going on globally, each receiving 12 of the 25 responses (Table 5). Interestingly, one focus group noted that knowledge of the rural economy was unnecessary for directors to be engaged, despite agricultural producers and cooperatives’ importance to the rural Kansas economy.
Responses to: ‘What do you think directors need to know about the rural economy?’
Citation: International Food and Agribusiness Management Review 26, 4 (2023) ; 10.22434/ifamr2022.0099
3.1 Additional insight from personal interviews
There were a variety of additional questions only asked to the personal interview participants. Four sets of these questions will be presented here with the full question list available in the Supplementary Materials and methods at 10.6084/m9.figshare.24441892. The first set of questions of interest is: ‘Think about a director you admire. Why do you admire them as a director? Are there certain qualities that director possessed?’ The key themes arising from the responses to these questions include asking quality questions, having the ability to read the boardroom, being passionate about the director role, challenging ideas when appropriate, being outspoken, and being knowledgeable of what is happening in the community, county, state, and beyond. The most common answer was being passionate about their director role, receiving 9 of the 13 responses. Following close behind was asking quality questions, challenging ideas when appropriate, and putting in extra time to understand the director role, each receiving 6 of the 13 responses.
One aspect to highlight here is the part about admiring those directors that spoke up and challenged ideas. Several respondents made an additional comment stating that even if there were directors that challenged the status quo in discussions and votes, it was still imperative that the directors left the board room with a united front. One respondent provided the insight: ‘The directors are the most important people because they’re the checks and balances. They make sure the ebb and flows are working right and keep the manager accountable. Having a high functioning board that is engaged is the key to fully utilizing the co-op system.’ The full results can be seen in Table 6.
Responses to: ‘Think about a director you admire. Why do you admire them as a director? Are there certain qualities that director possess?’
Citation: International Food and Agribusiness Management Review 26, 4 (2023) ; 10.22434/ifamr2022.0099
The next set of questions was: ‘What skills, behaviors, etc. do you feel are missing from incoming farmer directors?’ The key themes arising from the responses include understanding the role of the cooperative and understanding the impact the cooperative has on the whole community such as farmers, employees, schools, and other businesses. There were not as many diverse responses to this question. The majority of the responses were understanding the role of the cooperative, receiving 6 of the 13 responses. Understanding the impact of the cooperative on the community received 5 of the 13 responses while having soft skills and understanding the director’s role each received 4 of the 13 responses. The full results can be seen in Table 7.
Responses to: ‘What skills, behaviors, etc. do you feel are missing from incoming farmer directors?’
Citation: International Food and Agribusiness Management Review 26, 4 (2023) ; 10.22434/ifamr2022.0099
The question ‘What do you see as a potential barrier to bringing on new directors?’ included key responses of time commitment, not wanting to get wrapped up in the controversies of the co-op, not seeing the value of the co-op or of being a director, and thinking the director role would be too much of a hassle. These barriers come directly in conflict with Baarda’s (2003) director standards of conduct, including the duty of care and loyalty. The variety of responses varied significantly with this question. However, the highest answer of time commitment received 9 of the 13 responses. The next highest responses were not seeing the value of being a director and not wanting to get wrapped up in cooperative controversies, receiving 5 of 13 and 4 of 13 responses, respectively. The full results can be seen in Table 8.
Responses to: ‘What do you see as a potential barrier to bringing on new directors?’
Citation: International Food and Agribusiness Management Review 26, 4 (2023) ; 10.22434/ifamr2022.0099
The last question we chose to highlight is: ‘With your current knowledge of being a director, when you were new to the board, what do you wish you knew?’ This question was only asked of directors that participated in the personal interview (only 6 total). The highest recorded response was a financial understanding of financial statements receiving 4 of the 6 responses. All other responses received only 1 of the 6 total possible. Some of those include understanding how patronage works, how the cooperative works, the director’s role, the relationship between the directors and the CEO/GM, and how the cooperative is intertwined with businesses along the supply chain. The full results can be seen in Table 9.
Responses to: ‘With your current knowledge of being a director, when you were new to the board, what do you with you knew?’
Citation: International Food and Agribusiness Management Review 26, 4 (2023) ; 10.22434/ifamr2022.0099
3.2 Additional candid responses
Since all questions were open-ended, a few quotes can be drawn from the personal interviews that contribute candidly and help to further enhance understanding of the results. Several of the interviews highlighted training and education as important pieces to director development. One respondent mentioned: ‘Training should be required for both new and continuing directors. The [general manager] needs to encourage attendance and maybe go to the trainings with the directors.’
One respondent mentioned that managers can’t necessarily expect an agricultural producer to be a professional board member. However, those board members still need guidance to do their job and this guidance can and should come from the manager. Not only do the CEOs need to make sure their directors and leaders are tactfully educated, but the directors themselves need to be engaged and willing to learn their role and responsibilities. There needs to be a culture of the board where learning and continuing education is important. One interviewee mentioned that educating the entire membership base is important. If the membership is well educated on cooperative systems and happenings, those members will have a good base of knowledge when and if they enter the director role later on.
One of the interviews highlighted the benefit to farmers when they serve as directors. This individual mentioned that the farmers learn what truly makes the co-op ‘tick.’ They learn how the co-op works, how money is spent, and how decisions are made. Those farmers then move from being a passive customer to being more of an active or involved customer. The director experience gives them a much bigger picture of agriculture and they can take what they learned at the co-op level back to their own operations.
4. Conclusions and areas of further research
We found that not only are certain skills and competencies needed to be an engaged and knowledgeable director, but behaviors of directors are important as well. The responses were consistent among the different types of participants (i.e. CEOs, directors, and stakeholders). The skills and behaviors mentioned fit nicely into five main categories: financial/business, governance, board leadership, industry knowledge, and strategic planning. Comparing these categories to the literature, Leblanc (2020) mentions similar categories of enterprise leadership, governance/board, industry/sector, strategic/value creation/growth, and financial.
The skills and comments from our qualitative study do align with results found in literature. Adams et al. (2018) identified what skills current corporate directors possess. In addition to the skills we found, they identified skills such as compensation, entrepreneurial, international, legal, management, manufacturing, marketing, risk management, scientific, sustainability, and technology. Asahak et al. (2018) would contribute to this list by adding skills such as effective meeting management and record keeping, information management, self-assessment, and internal performance management. Leblanc (2020) would add accounting, advocacy, and diversity. Leblanc would push further to say a director should possess behaviors that include independent judgment, integrity, organizational loyalty, commitment, capacity to challenge, and willingness to act, all of which align with some of the responses we heard in our study. See Reynolds (2004) and Wadsworth et al. (2015) for further literature support of our results.
Comparing the results from this study with the literature, a total of 11 key skills can be identified for farmer cooperative directors to be engaged and knowledgeable: cooperative finance, cooperative governance and policy, communication, time management, understand current economic and industry conditions, ask critical and constructive questions, strategic planning, networking, listening, teamwork, and leadership.
In turn, engaged and knowledgeable directors contribute to board effectiveness and therefore, can improve organizational performance. This could easily translate into training needs. It has been shown that firm productivity is linked to having individuals who are willing and able to learn new skills according to the demands of their position (Reiter-Palmon et al., 2006). Orientation training for new directors and continued training are both positively related to cooperative financial performance (Franken and Cook, 2017). Furthermore, director and management education are key for successful strategy implementation and evaluation (Boland et al., 2011). It has been found that the skills provided by being a community leader or involved in agricultural production are less likely to adequately prepare those individuals to be engaged and knowledgeable cooperative directors (Bond, 2009).
One limitation of our approach is that the actual skill level of the directors in relation to the list of skills needed is unknown. Identifying the gap between beginning farmer directors and more seasoned directors as well as identifying the gap of where farmer directors should be in order to be an engaged and knowledgeable director would be beneficial. That insight would allow training programs to be directed toward what skills need more focus, especially since time and resources are always limited.
Another limitation is the particular focus of the qualitative research. We interviewed directors and CEOs/GMs in Kansas, which contains agricultural cooperatives in the farm supply and grain marketing space. Expanding this scope to identify agricultural cooperatives of different types would be beneficial to see if the results found here can be generalized. The size of agricultural cooperatives that operate in Kansas is also limited compared to the sizes of agricultural cooperatives that could be studied across the globe. The various types of governance structures of cooperatives seen around the world may affect the skills needed by directors.
Future work should expand the geographic area covered in the data collection process. It would be interesting to expand this research into other states or even countries to see if the same skills list can be created. More diverse respondents may change the results as well. For example, the majority of our respondents were male and there was not an even representation of the varying sizes of agricultural cooperatives that operate in Kansas. Expanding this research to include various sizes and even types of cooperatives (i.e. agriculture, service, electric, grocery, etc.) would provide interesting results.
Furthermore, our approach could be conducted internationally to identify director skill needs across the globe. Given our results and the provided survey questionnaires, we feel international cooperative researchers have a good start to continuing this very important work of identifying the skills necessary for a cooperative director to be engaged and knowledgeable.
Much of the director skills literature that currently exists focuses on corporations with very few concentrated on cooperatives. Another area of future research could include comparing and contrasting the skills needed by directors of corporations and by directors of cooperatives.
In summary, our findings provide important insights for identifying and prioritizing director skills and can result in more targeted and customized cooperative management and development programs. For example, training programs can be designed to focus on new directors as well as directors with more experience. The five main categories of financial/business, governance, board leadership, industry knowledge, and strategic planning would be general areas in which to start training new directors. The more specific 11 skills of cooperative finance, cooperative governance and policy, communication, time management, understand current economic and industry conditions, ask critical and constructive questions, strategic planning, networking, listening, teamwork, and leadership would be key areas to focus on when conducting continuing education/training for directors with more experience. Regardless, all boards of directors should conduct periodic self-evaluations to see if they have adequate expertise in the 11 key skills.
Acknowledgements
Thank you to the group of state cooperative council leaders from Kansas, Nebraska, Iowa, South Dakota, Oklahoma, Texas, and Missouri; Funding provided by CoBank, CHS Inc., ProValue Insurance, and Pride Ag Resources.
Supplementary material
Supplementary material can be found online at 10.6084/m9.figshare.24441892.
Materials and methods S1. CEO/GM questionnaire.
Materials and methods S2. Director questionnaire.
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