In this week’s Principle 6 newsletter, guest author Maurice Smith shares governance practices to help cooperatives advance their missions and achieve a strategic competitive advantage.
“Cooperative governance is the exercise of elevating inclusivity over exclusivity in every imaginable way,” Smith writes. “Leaders should expand the opportunities for members to be involved in their cooperative. This engagement will make the cooperative stronger for all participants and profoundly different than the other organizational options.”
Read the full newsletter below, then consider how cooperatives could work together to practice governance. NCBA CLUSA is on a mission to document Principle 6 collaborations across the country so we can identify trends, document best practices and share this knowledge with you—our fellow cooperators!
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Principle 6 Newsletter – Cooperative Governance Requires Practice
April 5, 2023
Every discipline demands practice for improvements. Athletes exercise before a game. Actors rehearse their lines in advance of a performance. Singers practice to show their preparedness for a recital.
Practice is often recognized as a function of a professional. Attorneys engage in the practice of law. Physicians practice medicine. Commonality among professional practices is the genesis for common industry standards.
The idea of a practice implies one’s craft is not complete. No matter how proficient an individual or organization may become, there is room for improvement. Practice fulfills an expectation that progress is the constant quest for perfection.
Cooperative practitioners are members of a profession. Consequently, there are standards to follow. The cooperative profession requires discipline and structure. Regardless of the underlying technical or regulatory framework, the cooperative form of governance is a professional practice unto itself.
The way cooperatives operate is unique. Cooperative governance requires an adherence to a particular set of tenets and rules. Those who practice cooperative governance are charged with elevating fidelity to an order that distinguishes cooperative institutions.
Effective cooperative governance is more than a check-the-box ritual. Yes, governance sets the platform on which planning and procedural decisions are based. Some industries require regulated processes. But more importantly, savvy governance can be a strategic competitive advantage for cooperatives who understand the power they will gain.
Cooperative governance has features rarely found in other forms of corporate entities. For-profit institutions offer their stockholders proportional voting rights. Cooperative members have express (usually equal) voting rights in the participation of their organizations. Some organizations flaunt the idea of equality as an aspiration for their customers and employees. Cooperatives embed egalitarianism into their corporate structure as an indelible facet. One member, one vote is revolutionary to someone fixated on capitalism.
One member, one vote is revolutionary to someone fixated on capitalism.
Corporations often talk about concern for the community as a public relations ploy to gain market share. It is cooperatives that hold fast to the sacred principle of concern for community. Community involvement is not an option for cooperatives. It is a way of being.
The practice of cooperative governance is never complete. Cooperative leaders rehearse cooperativeness every day in the way business is conducted, decisions are formulated, and members are served. Like all disciplines, the cooperative ideal can become a perishable relic without the careful practice of its leaders. The maintenance of strong cooperative identity requires intentional watchfulness.
With pressing for cooperative improvements in mind, one must consider how this special form of governance should be practiced. Here are some governance practices to help cooperatives make continual advancements:
Focus on Membership First
An effective cooperative governance structure encompasses a clear focus on the welfare of the membership. While this may seem obvious, there are shearing forces that can distract from this well-intended objective.
Cooperatives must balance the interests of various audiences. In addition to members, there are governments, vendors, employees and community groups. Each of these groups have important stakes in the cooperative. Nevertheless, each stakeholder’s interest must be reconciled with the membership’s welfare.
Focus on membership brings uber clarity to the cooperative governance process. Every decision, opportunity and transaction should be measured by how members will be impacted. An organization that loses its focus on its purpose risks going astray from its primary practice.
Encourage Diversity of Thought
The beauty of a cooperative body is found in the plurality of its members. The value of the membership concept is both at the individual and group levels. Moreover, the practice of cooperative membership calls for the full engagement of all members.
For the cooperative practice to be most effective, it is imperative that the organization aspires to hear all members. The opportunity for involvement of every voice in a governance dialog improves results. This is because each member brings unique experiences, talents and perspectives that can lead to immersed inclusion.
Diversity of thought is important for risk avoidance. Membership participation is necessary for a healthy cooperative. If a sector of the membership feels disenfranchised, they will lose interest. Such a chilling effect erodes the engagement necessary for an effective cooperative community. The enlightened practice of cooperative governance requires a fully engaged membership. The results will be a governing practice that taps the full power of the cooperative system.
Invite Grievances, Respond Fairly
Cooperatives were formed for groups to do what individuals could not. People organized themselves to pool resources and ideas for the improvement of the whole. The assembly of members in a democratic practice requires a process.
All organizations, societies and assemblies of people face occasional disagreements. The disputes may involve external or internal parties. Regardless of origin, the grievance process can often bring integrity to an organization. It is a high compliment when members have confidence their cooperatives will honor their petitions.
When members of a cooperative seek redress for grievances, certain expectations arise. Members expect justness, transparency and due process. Members want a fair hearing of their concerns. The integrity of cooperative values is demonstrated when the governance process seeks impartial results. This only happens with a governance practice that empowers members to advocate for their rights.
The practice of cooperative governance is a perfection-seeking exercise. Essentially, cooperative governance is the exercise of elevating inclusivity over exclusivity in every imaginable way. Leaders should expand the opportunities for members to be involved in their cooperative. This engagement will make the cooperative stronger for all participants and profoundly different than the other organizational options.
Stay tuned,
Maurice