Governance, Planning and Risk Management

Governance, Planning
and Risk Management
Bobby Robertson
Genex Board Member
September 2014
Robertson Cattle
7 years as a Board Member
100 head of Registered Angus Cattle
Farming for 50 years
Robertson Breeding
Services
• Family operation
• Provide consulting and breeding to farms in Northeast
Oklahoma
• 10,000 head per year
• Also works with local dairies to provide value by breeding
to beef sires
CRI Board Member Farms
John Ruedinger
Nate Kling
Paul Greene
Alfred Wanner
Jon Wayne Danielson
Cooperative Resources
International
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Formed in 1993
Holding cooperative
Merged and acquired 25 organizations
$32 million to $160 million
CRI History
1993 CRI formed
1995
1996
1996
1999
1999
2000
First holding company for cooperatives and first direct link
between a DHI organization and an A.I. company
A.I. cooperative (Noba) joined CRI
A.I. co-op Genex joined CRI
CRI International division formed
Three A.I. cooperatives merged
Central Livestock joined CRI
CRI began marketing genetics direct
around the globe
2010 CLA merged with Genex
2014 MOFA Global joined CRI
Governance Structure
AgSource
Genex
4,352
Members
15,460
Members
75
Delegates
152
Delegates
Board of
Directors = 9
Board of
Directors = 13
5
2
CRI Board of Directors
7
The CRI Mission
Provide products and services
as effectively as possible
to maximize the profitability
of members and customers
worldwide while maintaining
a strong cooperative.
Cooperative Beginnings
“Stony Hill” Bull housing
and home of GENESIS MOET
Shawano, WI
Genex Headquarters
Shawano, Wisconsin
362 bulls
78 bulls
Bull housing
Tiffin, Ohio
230 bulls
CRI Headquarters
Shawano, Wisconsin
Bull housing
Ithaca, New York
500 bulls
CRI International
• Export semen to 68 countries
• 5 international business locations
•CRI Mexico
•CRI South Africa
•CRI Brazil
•Genex Canada
•CRI Europe
CRI Mergers and Acquisitions
Since 1993
Noba, Inc.
LABC
Atlantic Breeders Cooperative
Eastern AI
Hawkeye West
Dakota Sire Service
Alta Beef
Elrosa Dairy Equipment
South Dakota De Laval
S.W. Minn. De Laval Distributorship
Central Livestock Association
Zumbrota Livestock Auction Market
North West Labs
Brazil Marketing
Belmond Soil Lab
Dairyland Milk Lab
Central Wisconsin DHIA
Iowa County DHIA
Polk-Burnett DHIA
Jefferson County DHIA
Indianhead Milk Testing
Harris Labs
Agri-Check Labs
LGI Labs
Sioux City Direct Hogs
MofA
Cooperative Governance
What makes a cooperative?
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•
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Autonomous
United
Common aspirations
Jointly owned
Democratically controlled
Cooperative Principles
►7
core principles to put values
into practice
1.
Voluntary and
Open Membership
2.
Democratic Member
Control
3.
Member Economic
Participation
4.
Autonomy and
Independence
5.
Education, Training,
and Information
6.
Cooperation Among
Cooperatives
7. Concern for Community
There are several
fundamental
Cooperative Goals
which justify their
existence
1.
2.
3.
4.
5.
6.
7.
8.
Economic benefit to members
Member governed/oriented
Quality products/services
Competitive prices
Financially strong
Profitable
Well capitalized
Growth
Summary
It takes the
ACTIVE INVOLVEMENT
of member-leaders
for a cooperative to grow,
be successful,
and fulfill the needs of its
members.
Strategic Planning
The CRI Mission
Provide products and services
as effectively as possible
to maximize the profitability
of members and customers
worldwide while maintaining
a strong cooperative.
CRI Operational Business
Model
Mission Statement
Strategic Plan
Annual Plan of Work
Staff Key Performance Areas
Mission Statement
Answers generally 4 questions
►
What does the cooperative do?
►
Who are its clients?
►
Who are its members?
►
How does the cooperative conduct itself?
Agreement
► Long-term
planning is a primary
responsibility of directors.
► They explore the need to plan, decide
who will be involved,
► And what will be the roles and
responsibilities
Using Outside Resources
► Using
resource persons from outside the
cooperative can prove valuable
► However, the decisions must be those of
directors - not of the resource persons.
► Directors carry the sole responsibility for
the plan’s content and its execution.
Strategic Plan
►
Long-term plan to fulfill the needs of
the members
►
Responsibility of directors
►
Directors decide who will be involved
in planning and implementing, but
maintain the responsibility for it being
carried out
Strategic Plan
► To
achieve the Vision
► Analyze
strengths, weaknesses,
opportunities, and threats (SWOT)
► Strategic
Plan must align with
Mission Statement
► Set
short-term goals and objective
targets to track progress
► Reevaluate
the plan as you go
Annual Plan of Work
► Each
department head presents
Key performance areas and the
budget
Key Performance Areas
► What
the plan is
► When
► Who
is it to be implemented
is accountable
Budget
► Each
department has to budget
what their needs are and then
stay within it
► The
directive plans the annual
cooperative budget accordingly
CRI Operational Business
Model
Mission Statement
Strategic Plan
Annual Plan of Work
Staff Key Performance Areas
Enterprise Risk Management
(ERM)
►Weigh
risk against potential profit
►Certain tolerance for risky
business ventures
►Zero tolerance for fraud, illegal, or
unethical business ventures
CRI Financial Background
►Predecessor
cooperatives
operated
“at cost.”
►CRI decided that it needed to
generate profit
Why Are Profits Needed?
►Need
to return member equity to
cooperative members.
►Need capital to finance growth.
►Finance new technologies and new
efficient methods
►Need reserves to weather financial
storms like we saw in 2009
Establish A Road Map
► Achievement
of profit indicators is a
long term process.
► Commit
to meeting profit goals over a
several year transition period.
► Profit
indicators are not a budget.
► Annual
budgets will vary from profit
indicators in any given year.
Employee/Board
Development
►Investing
in the future includes the
capacity of people.
►Train the employees
►Train the board members.
►Youth training for future leaders
►The 5th cooperative principle is
training
How Do We Achieve Goals?
►Achievement
of profit indicators is
part of performance review for
Chief Operating Officers.
►Profit indicators are considered
when developing the annual
budget.
►Board of Directors compares
budgets to profit indicators.
Operating Expense Chart
March
Actual
Zumbrota
Albany
March
Budget
$242,396 $252,491
March
Variance
YTD
Actual
YTD
Budget
YTD
Variance
$10,095
$728,803
$707,001
$(21,802)
115,033
109,551
(5,482)
332,687
315,822
(16,865)
West Fargo
67,017
62,148
(4,869)
206,689
200,637
(6,052)
Rock Creek
43,524
38,593
(4,931)
113,834
112,757
(1,077)
TEAM
16,843
14,887
(1,956)
45,195
56,108
10,913
Country Ops.
35,033
37,378
2,345
103,383
110,251
6,868
LFP
10,521
13,508
2,987
37,607
39,166
1,559
Other
76,280
41,872
(34,408)
165,976
124,045
(41,931)
$606,647 $570,428 $(36,219)
$1,734,175
$1,665,787
$(68,388)
Total
Expense
Summary
►Achievement
of goals is aided by
agricultural economy.
►Achievement of goals also
indicates management’s focus on
goals.
►Will not meet annual goals every
year, but will remain focused on
long term process.
Risk Management
Enterprise Risk Management
(ERM)
►Weigh
risk against potential profit
►Certain tolerance for risky
business ventures
►Zero tolerance for fraud, illegal, or
unethical business ventures
Real Situations: MofA
►Research
and Development was a
large emphasis in previous
strategic planning session
►Able to move fast on acquisition
because it fit in the strategic plan
►Knew it was putting the co-op in a
positive direction
Real Situations: CRV
► CRI
and CRV were joint venture
partners for many years
► Their bull selection wasn’t meeting
the needs of the CRI producer
► Decision was made to end the joint
venture partnership
► CRV then established a location in the
U.S. and became a large competitor
for both business and staff
Real Situations:
Bull Stud in Canada
► Long-standing
board priority to limit
reliability on U.S. as only source of bulls
► Board monitored world events and
increased the priority for a location
outside U.S.
► After leaving the planning session, the
board was ready for this step as soon as
the situation was available
Thank you!
Are there any questions?