Board Challenges and Co-op Failures

A discussion on how to govern co-ops effectively, especially large ones, has been recharged by the recent closure of Co-op Atlantic. Co-op Atlantic’s demise is covered in both the current and upcoming issue of “Cooperative Grocer.”

The earlier of those reviews a paper published by the Centre for Cooperatives at the University of Saskatchewan:

http://usaskstudies.coop/documents/books,-booklets,-proceedings/Co-op%20Atlantic%20final.pdf.  Authors Brett Fairbairn, Murray Fulton, and Dionne Pohler focus on governance as the most important determinant of co-op success or failure. 

A more detailed look at what contributed to Co-op Atlantic’s demise, written by Tom Webb, will appear in the March-April issue of “Cooperative Grocer.”

Meanwhile, another recent study looks at numerous international examples of large co-op failure and describes several common factors.  A summary, by authors Peter Couchman and Murray Fulton, appeared in the U.K. “Co-operative News:

http://www.thenews.coop/101263/news/agriculture/big-co-ops-fail/

In a followup discussion on Facebook involving several co-op commentators, Fairbairn offered these additional thoughts on board challenges:

“One difficulty is that governance and strategy are situational rather than simply based on rules; organisational leaders need to study and think about cases. But insofar as rules are useful, I would start from here: (1) directors need to recognize that their responsibility is collective, not individual – so talk about things as a board (sometimes without management). Evaluate each other's (directors') performance. Recruit or develop a board that is balanced in needed skills. Pay attention to the role of chairperson. (2)

(2) Strategy should be co-owned by the board and management, not submitted by management to the board for approval. The board provides a different level and kind of input, for sure. An annual strategic planning meeting is a place this can happen. To operate at this "generative" level, a board has to stay out of details.

(3) [The] preceding advice applies to all nonprofits, maybe all organizations. What distinguishes co-ops (and each organization differently) is who the key stakeholders are and how power is allocated among them. For lack of space, I would say simply: reflect on who the key stakeholders are, and how you know what they think/need. Be realistic and pragmatic in assessing who has power. Small groups having much power (a few managers, a few directors, employees vs members in a consumer co-op) is a risk. Look for ways to enable others to have voice in governance.”