MANAGE MENT TIP
Four high-priority responsibilities
for effective co-op management
By Jim Wadsworth, Agricultural Economist
USDA Rural Development
ooperative management has many
responsibilities to fulfill to keep the business
running smoothly. These responsibilities
hinge on overseeing day-to-day operations,
sound financial management and making the
right administrative decisions. Management’s ability to meet
the following high-priority responsibilities
is also critical to a co-op’s success or
failure:
- Responsibility to the board of directors;
- Responsibility to members;
- Responsibility to employees and
- Responsibility to the community.
If these responsibilities are all met,
management will create an effective
cooperative business environment that will
greatly increase the probability for success.
Responsibility to board
Cooperative management’s overall
responsibility is to the board of directors.
The board hires and evaluates
management and institutes the policies for
governing the cooperative. The general
manager or CEO must adhere to these
policies while overseeing and managing
the cooperative’s operations. The manager
should be transparent in relaying information to the board in
a timely fashion. This allows the board to make decisions or
determine policies, if necessary, for the manager to follow.
The manager also has a responsibility to the board to hire
employees qualified to carry out co-op operations and to
properly train and manage them.
Providing the board with annual budgets and operational
plans is another basic responsibility of management.
Management should ask for feedback from the board and
work with the directors on developing a strategic plan, which
management must implement.
Responsibility to members
Cooperative managers must be tuned-in to their members
through effective member relations and communications
programs. Open communication channels with the board of
directors, members, employees and the community are
absolutely essential for cooperatives.
Members must be made to feel like an intricate and vital
part of the cooperative. Management must let members know
they are the co-op owners and its most valued asset, ensure
that employees treat members with
respect, and constantly gauge whether the
co-op is meeting member needs. This
entails ensuring that employees fully
understand how their company differs
from others, and what is expected of them.
Co-op employees need to go the extra
mile to deliver good customer service,
because members aren’t just customers,
they are the owners.
Communication with members is an
ongoing process throughout the year — it
does not begin and end with the manager’s
report at the annual meeting. Most co-ops
use a member newsletter or magazine, email
and (increasingly) a Web site to keep
members up-to-date on the functioning of
their co-op.
Providing a reliable method for
members to communicate back to
management is just as important. Two-way
communications is probably more vital to a co-op than to
other types of business. Member committee meetings are
often a vital way for management to get regular, detailed
feedback from the field. Board meetings, of course, can fill a
similar role, but committees can focus on specific subject
areas and provide feedback on them, allowing more time at
board meetings for conducting other business.
Responsibility to employees
Management also has responsibility to employees – the
engine that drives the cooperative. It must provide
the co-op staff with adequate direction and leadership
so that they can do their jobs properly. Employees
must be treated fairly, and jobs must be properly
delegated.
Management must educate employees in a manner
that allows them to perform at their highest level.
This is important both for sound cooperative
operations and for employee self-improvement.
Management needs to provide opportunities for
advancement and promotion for those employees
who meet or exceed their expectations.
A fair system of employee evaluation is needed so
that workers know how they are doing and where
they need improvement. Bad or non-performing
employees can be disruptive to the cooperative’s
operations and harm the morale of more productive
employees. When necessary, it is management’s
responsibility to remove such employees. Of course,
to offer sustained employment, regular raises and
benefits, a cooperative needs to be profitable and
maintain a strong financial position.
A quality work environment is one that protects
employee health and safety, and which is competitive
in its marketplace for wages, benefits and retirement
options. The co-op should provide equal opportunity
to all and adhere to other relevant employment laws.
Employees should be granted the opportunity to
invest for their future and/or retirement.
Responsibility to community
Cooperative management has responsibilities to
the communities that the cooperative and its members
reside in. This includes the community the
headquarters is located in, as well as the communities
in which the cooperative has branches or other facilities.
As businesses owned by user-members, management
must work to integrate the cooperative into the
community. The co-op should get involved in
community events and gear operations to the greatest
extent possible to help build a stronger community.
Management needs to take an active role in
communicating with community leaders, local
government and other businesses to see that the
cooperative becomes an integral and healthy part of
the community. The cooperative must work to serve
the community.
When management meets all four of these highpriority
cooperative responsibilities, along with its
other important business responsibilities, the likely
result will be a healthy and profitable cooperative
business.
