IFA cannot rebuild under the old guard after priceless trust has been squandered
Published 26/11/2015 | 02:30
People linked with failure in an organisation need to leave quickly. Otherwise, they hamstring the job - already a demanding one - of rebuilding trust after a company or group suffers significant reputational damage.
Which brings me to the Irish Farmers' Association (IFA). Nobody who knew about the general secretary's disproportionate remuneration package, or who was party to ignoring repeated calls for transparency over a 14-month period, can hope to retain their positions. They will only harm the IFA further by staying.
Transparency and accountability are not optional extras. They are what any membership is entitled to from those at the top.
Challenging though it will be, the IFA now has a duty to regroup and rebuild, but it cannot happen under the old guard. It will not be able to begin the task of restoring reputation and regaining trust until a clear-out happens.
Anyone in a senior position who is compromised, yet seeks to stay on, is showing they do not recognise the importance of trust - both in the eyes of members and the broader community. That priceless trust has been squandered.
Where did it all go wrong? The IFA is hugely successful: it has a €12.9m annual income, and is adept at lobbying the Government. The recent Budget saw €13m in tax breaks won for farmers.
But the current debacle is a textbook example of what can happen when an organisation lacks a corporate governance framework. For example, when decisions are taken they need to be subjected to rigorous internal scrutiny.
A system of checks and balances is essential. They protect both an organisation and individuals within it. Those checks and balances provide clarity around an individual's role - and the limits to their authority. Clearly, there were failures within the IFA if it was deemed proper for general secretary Pat Smith to earn the level of salary - a total package of €1m over two years - which has enraged the membership, many of whom are struggling to keep their farms going. A guiding tenet of corporate governance is that no board member should agree to something in private which they would not be able to stand over in public. The IFA's upper echelons have fallen at this most fundamental of hurdles. Its reversal highlights the potential for disaster when one individual becomes too powerful within an organisation. You'd imagine important bodies in Irish life might have learned by now. We have watched it repeatedly, both in the banking and not-for-profit sectors, when dominant personalities were allowed to wield excessive sway. In the process, they accumulated wealth and appeared unchallengeable.
No association should allow that to happen. It can only be to the detriment of the organisation.
Reassuringly, groupthink was not a problem at the IFA, thanks to former IFA economist Con Lucey and council member Derek Deane, who attempted to challenge its remuneration policies. However, that their concerns were ignored reveals a lot about the IFA's ethos and the way it was run. Robust challenge is integral to a board member's role.
While the IFA is not a public body, it plays a valuable leadership role for the farming community. But recent events show it has lost its way - its vision, mission and values have grown blurred; it forgot its goals and who it was set up to serve. Why did it believe itself not answerable to the membership?
Meanwhile, in the land of state boards, the news is rather better. A year ago yesterday, the Government announced a new system of appointments. In the past, some diligent people were appointed to state boards, and some were beneficiaries of cronyism - most recently, when a Fine Gael Seanad candidate was shoehorned onto the board of the Irish Museum of Modern Art to improve his CV.
Following the fallout from that political stroke 14 months ago, the Government handed over appointments to state boards to the Public Appointments Service. Organisations including the Institute of Directors (IoD) had lobbied for this revised model. Now, all vacancies must be advertised openly, and the Public Appointments Service draws up a shortlist for the minister to choose from. To date, the new arrangements have been working well, although some glitches remain to be tweaked.
The current administration gave a commitment that a review would take place within 18 months, so a date needs to be set to honour that promise.
Room for improvement was highlighted in a survey published yesterday by the IoD, showing that 70pc of its members on state boards believe the process for advertising vacancies and compiling shortlists is now fair. This compares with 26pc in 2012.
However, the system grinds to a halt once the shortlist reaches the relevant minister's office. It was intended appointments would be made within six weeks, but some boards have up to three vacancies lying open for months on end, which limits their effectiveness. How hard can it be for a minister to look at a shortlist of seven or eight candidates, all approved independently and willing to serve, and choose one name?
"We recognise that a lot of strides have been made. We now have an appointments process that's transparent and is working very well, albeit with tweaks required such as ministerial delays," said IoD chief executive, Maura Quinn.
But she draws attention to an outstanding issue.
A commitment was given that the Code of Corporate Governance for state boards, introduced in 2009, would be updated by 2015. It hasn't yet happened and the year is almost spent. This is an omission which needs to be addressed. And if anyone thinks corporate governance doesn't matter, just take a look at the IFA.
Martina Devlin has studied corporate governance with the Institute of Directors