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Co-Operative Governance Fit to Build Resilience in the Face of Complexity

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Co-Operative Governance Fit to Build Resilience in the Face of Complexity International Co-operative Alliance Co-operative Governance Fit to Build Resilience in the Face of Complexity Photo courtesy of The Co-operators Statement on the Co-operative Identity DEFINITION OF A CO-OPERATIVE A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. CO-OPERATIVE VALUES: Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and soli- darity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, open- ness, social responsibility and caring for others. CO-OPERATIVE PRINCIPLES: The co-operative principles are guidelines by which co-operatives put their values into practice. 1. VOLUNTARY AND OPEN MEMBERSHIP Co-operatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination. 2. DEMOCRATIC MEMBER CONTROL Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organised in a democratic manner. 3. MEMBER ECONOMIC PARTICIPATION Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensa- tion, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and sup- porting other activities approved by the membership. 4. AUTONOMY AND INDEPENDENCE Co-operatives are autonomous, self-help organisations controlled by their members. If they enter into agree- ments with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy. 5. EDUCATION, TRAINING AND INFORMATION Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the gen- eral public - particularly young people and opinion leaders - about the nature and benefits of co-operation. 6. CO-OPERATION AMONG CO-OPERATIVES Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures. 7. CONCERN FOR COMMUNITY Co-operatives work for the sustainable development of their communities through policies approved by their members. Co-operative Governance Fit to Build Resilience in the Face of Complexity Copyright © International Co-operative Alliance 2015 Reuse is authorised, provided the source is acknowledged. Co-operative Governance Fit to Build Resilience in the Face of Complexity Table of Contents Statement on the Co-operative Identity 2 Foreword 5 PAULINE GREEN PRESIDENT INTERNATIONAL CO-OPERATIVE ALLIANCE 1. INTRODUCTION: Co-operative Governance Fit to Build Resilience in the Face of Complexity 10 SONJA NOVKOVIC AND KAREN MINER 2. The design of effective democratic governance structures for large co-operatives 25 JOHNSTON BIRCHALL 3. Governing Resilient Co-operatives: Agricultural Co-operatives in Scotland 35 RICHARD SIMMONS, BOB YUILL, JIM BOOTH 4. Creating Competitive Advantage in Agricultural Co-operatives through Improving Governance Systems and Enhancing Member and Community Engagement 49 YOSHIAKI MASUDA, TETSUJI SENDA, KENGO NISHII 5. Worker Co-operatives In Focus 64 5a. Governance in Mondragon 64 FREDERICK FREUNDLICH 5b. Co-operation as Conversation: Suma Wholefoods UK 70 BOB CANNELL, SUMA MEMBER 5c. Union Cab of Madison, Wisconsin, USA 73 JOHN MCNAMARA 6. Governance of European Co-operative Banks: Overview, Issues and Recommendations 79 HANS GROENEVELD 7. The eternal triangle: the crucial role of the Chair and Chief Executive in empowering the board 95 CHRIS CORNFORTH 8. Governing Resilient Co-operatives: A competence based model 104 CLIFF MILLS 9. Finding the Balance: Staying Focused on the Local Member 117 PATRICK G. MANGAN 10. Governance in Solidarity 127 JEAN-PIERRE GIRARD Co-operative Governance and the Blueprint for a Co-operative Decade 135 5 Co-operative Governance Fit to Build Resilience in the Face of Complexity Foreword The co-operative movement boasts a shared iden- tity and unity of purpose as the only organisational model with internationally recognised definition, val- ues, principles, and a social movement behind it. Nevertheless, the co-operative model of enterprise is versatile and flexible. It can be adapted to any sec- tor of economic activity and takes the form of small and locally restrained businesses, as well as multi- national conglomerates. Co-operative enterprises serve, first and foremost, member needs – globally: 1 billion individuals. Governance is a key component of the co-operative difference. The co-operative values and principles call for an open, voluntary, and democratic process of decision-making, and co-operative governance is an essential tool in applying those values and principles. In an increasingly regulated, complex, and inter-dependent global economy, where mar- ket pressures are high, a current reference on the basic tenets of co-operative govern- ance is required. This exercise aims to help establish the tenets of co-operative governance and tease out its delimitations. As co-operatives innovate in their sectors of activity and in their typolo- gies, the Alliance gathers leading thought from around the world and across sectors to reflect on the balance between rigidity and flexibility we must achieve in our governance strategies and practices in order to continue building a better world. We trust that this document will catalyse further dialogue and inspiration. PAULINE GREEN PRESIDENT INTERNATIONAL CO-OPERATIVE ALLIANCE 7 Co-operative Governance Fit to Build Resilience in the Face of Complexity 1 INTRODUCTION: Co-operative Governance Fit to Build Resilience in the Face of Complexity SONJA NOVKOVIC AND KAREN MINER 9 Co-operative Governance Fit to Build Resilience in the Face of Complexity 1. INTRODUCTION: Co-operative Governance Fit to Build Resilience in the Face of Complexity SONJA NOVKOVIC AND KAREN MINER A think piece, such as this one on governance in co-operatives, is designed to be thought- provoking and invite debates and discussions, agreements and disagreements, new ideas and reassurances. Our intent is to initiate rich conversations and motivate co-operative members and leadership to re-examine the wide-ranging systems of governance they are a part of. Are these systems conducive to multi-layered participatory frameworks? Are channels of communication open throughout the organization and into the community? Starting from the Blueprint’s vision for elevated participation within the co-operative move- ment (see p. 135), we also look at the economic trends that call for networked governance. Global society is facing new trends in which co-operatives are seen to be the enterprises of the future. How can co-operative governance match those trends and expectations? Our introduction is built on those premises: looking to increased complexity in the socio- economic milieu that demands structures which build resilience, coupled with vibrancy of new networked social movements and co-produced technology, we highlight the charac- teristics of co-operative governance fit for the demands of the emerging socio-economic systems. Our introductory remarks present the building blocks of such co-operative gov- ernance systems, followed by a group of contributors who present a select sample of experiences in co-operatives, allowing us just a glimpse into the diverse world of co-oper- atives today. This document is opening the space for what we hope will be rich ongoing conversations and evolution into the next decade and beyond. Co-operative governance The word governance has its root in the Latin verb “Goubernare” which derives from the Greek “Kybernan”, meaning “to lead, to steer, to be the head of, to set rules, to be in charge of the power”. Governance is related to vision, decision-making processes, power dynamics and accountability practices. The ultimate goal of governance is to effectively fulfill an organization’s goals in a way consistent with the organization’s purpose. Co-operatives are member owned and democratically controlled organizations. Their governance has to meet co-operative’s objectives, protect member interests and main- tain member control. Co-operatives are also values based businesses whose governance and management principles and practices need to reflect and safeguard their values. Governance of co-operatives is very diverse as it reflects an evolutionary path determined by a co-operative movement dating back hundreds of years, combined with different legal environments, industry standards in sectors in which co-operatives
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