Board of Directors
by Beth Neher
Governance comprises the processes, rules, norms, and actions that describe and define the decision-making, interaction, and strategic leadership of a group such as a board of directors. Governance may also focus on the way the rules, norms, and processes are created, implemented, monitored and evaluated, and changed.1 Broadly speaking, this definition applies to the governance of a range of formal and informal, for-profit and non-profit organizations or groups.
Governance models define the main role(s) of the board and its relationship to stakeholders and management in the governance of the organization. These models can result in a board having a limited perspective of the organization they serve rather than seeing all the constituencies involved; models can also result in boards having a constrained or narrow role in the governance of the organization.
Cooperatives are different. They are community-owned assets that exist to meet member-owners’ collective economic, social, and cultural needs, and so are different from other types of business. Cooperatives are autonomous, independent businesses owned and democratically-controlled by their membership. Membership is voluntary and open to all, and there is shared concern for community and collective values. When possible, economic benefits are distributed to all members, often proportionally, based on members’ participation in the cooperative rather than on the amount of their investment.
Early in 2014, CDS Consultants Marilyn Scholl and Art Sherwood took on the challenge of articulating a governance framework for cooperatives, one that seeks to offer a broad perspective to “light up the entire stage and all the players.”2 At its foundation, the model has cooperative principles and values. Built on this foundation are four pillars, each one made up of co-op stakeholders (staff, member-owners, management, and the board), all supporting and contributing to the economic, social, and cultural success of the cooperative. The four pillars are: Teaming, Democracy, Strategic Leadership, and Accountable Empowerment.
Teaming has to do with everyone–the member-owners, staff, management, and board “working together to achieve common purpose.”3 In other words, we all work together to support the economic, social, and cultural success of the cooperative. In terms of the board’s governance, teaming requires that the board work together effectively to manage its work, to think and learn together in the context of diverse individual board member opinions, and to make decisions that balance the interests of the owner-shareholders and future of the Co-op.
Democracy involves member-owners, staff, management, and the board “successfully practicing, protecting, promoting, and perpetuating… healthy democracies” (p. 19). This goes beyond member-owners casting votes. Democracy is also about everyone being informed about opportunities and challenges facing the Co-op, and reflecting on and participating in discussions about the current state and desired future of the Co-op. The work of the board is to listen to and understand the views of member-owners, and to build a shared understanding of the Co-op and the strategic options it has.
Strategic Leadership “is about defining purpose and setting direction” (p. 21) and “setting up the organization for movement in this direction” (p. 19). It is the board’s responsibility to articulate what the Co-op is setting out to achieve economically, culturally, and socially in order to meet member-owner and wider community needs successfully and in line with cooperative values and principles. A cooperative board cannot do this without feedback from, and in alignment with, member-owners, staff, and management.
Accountable Empowerment involves two things: first, ensuring staff, management, member-owners, and the board have power—“the ability to get things done and to be effective” (p. 20).
Accountable empowerment involves two things: power, defined as " having the ability to get things done and to be effective," and accountability, where first each group ensures that expectations, roles, and responsibilities are clear to everyone, and then that these expectations, roles, and responsibilities are carried out in the way expected. So, for example, as part of its stewardship role on behalf of the entire membership, a cooperative board oversees the financial progress and health of the cooperative by monitoring and scrutinizing financial reports prepared by the GM and the chief financial officer, holding them accountable. Member-owners' accountability begins with getting informed so that they can exercise democratic control through participation— from voting for their representatives on the board to participating in meetings or other activities. The GM holds staff accountable for the success expected by the board and member-owners, and so on. In all cases, each group must have the ability to get things done (empowerment), or successful progress is endangered.
The four-pillar model offers a framework for everyone—staff, management, member-owners, and the board—to understand their roles and responsibilities and to see that each is essential to the success of the organization. The model clarifies the complexity involved in successful cooperatives: relationships, informed voices, shared vision, and accountable empowerment. Finally, the framework offers the board a means of keeping its focus on the bigger picture, as well as on specific roles and responsibilities, so that it can successfully carry out the governance work it has been elected to do: to provide effective stewardship and leadership.