![Page 1: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/1.jpg)
Cooperatives: What They Are and the Role of Members, Directors, Managers, and Employees
(Powerpoint Slides corresponding with Cooperative Information Report 11, Chapters 1- 5)
1
![Page 2: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/2.jpg)
CHAPTER 1 – WHAT COOPERATIVES ARE
Focuses on what cooperatives are, and explains their business, principle, and structural characteristics. It introduces the major participants—members, directors, managers, and employees—
whose roles are discussed in greater depth in Chapters 2-5.
CIR 11 Chapter 1 - What Cooperatives Are
![Page 3: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/3.jpg)
In the U.S., businesses are organized in different ways
depending on:• Who owns it• Who controls it• Who uses it• Who gets the profit (earnings) from it
3CIR 11 Chapter 1 - What
Cooperatives Are
![Page 4: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/4.jpg)
Business Organizations
• Individually owned• Partnership• Corporation
o Cooperatives
CIR 11 Chapter 1 - What Cooperatives Are
4
![Page 5: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/5.jpg)
Individually Owned Business
One Person• Owns• Controls• Operates• Benefits/profits
5CIR 11 Chapter 1 - What
Cooperatives Are
![Page 6: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/6.jpg)
Partnership
Two or more people• Own• Control• Operate• Share in risks and profit
6CIR 11 Chapter 1 - What
Cooperatives Are
![Page 7: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/7.jpg)
Corporation
Multiple owners• Are investors• Share profits (according to investment)• Purpose - gain value for investors
7CIR 11 Chapter 1 - What
Cooperatives Are
![Page 8: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/8.jpg)
Cooperatives Are a Type of Corporation
• Multiple owners who are user members• Variety of goods and services• Physical facilities• State chartered• Members are investors• Owned and controlled by members who use its
services
8CIR 11 Chapter 1 - What
Cooperatives Are
![Page 9: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/9.jpg)
Cooperatives
• Are primarily controlled by a board of directors elected by and from members
• Derive equity from member owners• Operate for the benefit of member owners• Allocate earnings to members based on use• Earnings from member business is taxed once• Have perpetual existence
9CIR 11 Chapter 1 - What
Cooperatives Are
![Page 10: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/10.jpg)
The Cooperative Form of Business Is Prevalent in the
U.S.• There are more than 29,000 cooperatives • Serve 350 million members (many people belong
to more than one cooperative)• They have assets of more than $3.1 trillion• They generate revenue of more than $510 billion• Employ more than 850 thousand people
10
Source: University of Wisconsin Center for Cooperatives, Research on the Economic Impact of Cooperatives, 2009.http://reic.uwcc.wisc.edu/issues/
CIR 11 Chapter 1 - What Cooperatives Are
![Page 11: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/11.jpg)
Financial, Consumer Service, Business, and Worker Cooperatives Provide
• Credit• Transportation• Facilities• Recreational
Equipment• Food• Housing• Health care• Home care
• Child care• Wholesale goods and
supplies• Electricity• Telephone and electric
services• Farm production
supplies and service
• Farm product marketing
11
And more…CIR 11 Chapter 1 - What
Cooperatives Are
![Page 12: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/12.jpg)
Cooperatives Have Unique Principles
User - Owner
User - Control
User - Benefits
12CIR 11 Chapter 1 - What
Cooperatives Are
![Page 13: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/13.jpg)
User-Owner Principle
13
The people who own and finance the cooperative are those who use it.
CIR 11 Chapter 1 - What Cooperatives Are
![Page 14: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/14.jpg)
User-Control Principle
14
The people who use the cooperative are those who control it.
CIR 11 Chapter 1 - What Cooperatives Are
![Page 15: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/15.jpg)
Members Exercise Control By:
• Voting at annual and membership meetings.
• Electing Board of Directors.• Making decisions on major cooperative
issues.
15CIR 11 Chapter 1 - What
Cooperatives Are
![Page 16: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/16.jpg)
User-Benefit Principle
CIR 11 Chapter 1 - What Cooperatives Are
16
The cooperative’s sole purpose is to provide and distribute benefits to members on the basis of their use.
![Page 17: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/17.jpg)
User-Benefits
• Bargaining power
• Market access
• Political action
• Community strength
• Value-added
17
• Reduced costs
• Improved products and quality of services
• Economic enhancement
• Competitive yardstick
CIR 11 Chapter 1 - What Cooperatives Are
![Page 18: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/18.jpg)
Cooperatives Implement and Facilitate Basic Practices
• Patronage refunds - distribute earnings to members based on use
• Limited return on equity capital - members form cooperatives for service, not for a monetary return on investment
• Cooperation with other cooperatives - joint ventures, MAC’s, networks, alliances, working relationships, etc.
• Cooperative education - promote the cooperative way of doing business and educate members, directors, and employees 18
CIR 11 Chapter 1 - What Cooperatives Are
![Page 19: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/19.jpg)
Geographical Structure
Defines a cooperative’s size and scope of operations in reference to serving its members. May be:
• Local - small region covered, a county or so (may or may not have multiple locations)
• Regional – cover a State or a number of States; some have international operations
19CIR 11 Chapter 1 - What
Cooperatives Are
![Page 20: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/20.jpg)
Cooperative Governance System Overall Structure
Defines who the members are and how the cooperative is organized to serve them. May be:
• Centralized - Individuals are direct members
• Federated - Cooperatives are direct members
• Mixed – both individuals and cooperatives are direct members
20CIR 11 Chapter 1 - What
Cooperatives Are
![Page 21: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/21.jpg)
Centralized Structure
21
Cooperative
Member Member Member
CIR 11 Chapter 1 - What Cooperatives Are
![Page 22: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/22.jpg)
Federated Structure
22
Cooperative
LocalCooperative
Member
LocalCooperative
Member Member Member
CIR 11 Chapter 1 - What Cooperatives Are
![Page 23: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/23.jpg)
Mixed Structure
23
Cooperative
MemberMember
LocalCooperative
MemberMember
Member
CIR 11 Chapter 1 - What Cooperatives Are
![Page 24: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/24.jpg)
Cooperative Functions
Three Core Functions
• Marketing - take members’ products through processing, distribution, and sale
• Purchasing - providing needed supplies and goods
• Service - provide needed services
24CIR 11 Chapter 1 - What
Cooperatives Are
![Page 25: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/25.jpg)
Marketing Cooperatives
Assist members in maximizing returns from goods they produce by:
• Handling, processing, and selling
• Grading, transporting, and bargaining
• Adding value
• Researching and developing new products
25CIR 11 Chapter 1 - What
Cooperatives Are
![Page 26: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/26.jpg)
Marketing Cooperatives
26
Assist members in maximizing the return they receivefor the goods they produce!
Functions• Transport• Process• Grade• Add value• Research• Distribute• Bargain• Sell
MemberProducts• Agricultur
al• Forestry• Aquacultu
re• Horticultu
re• Crafts
Member BenefitsControl of products,securing markets, realize additionalmargins
CIR 11 Chapter 1 - What Cooperatives Are
![Page 27: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/27.jpg)
Purchasing Cooperatives
Provide members access to production supplies and goods by:
• Purchasing in bulk to reduce costs and increase purchasing power
• Providing members with direct ownership of refineries, plants, retail facilities, research facilities, etc.
• Obtaining supplies not available elsewhere.
27CIR 11 Chapter 1 - What
Cooperatives Are
![Page 28: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/28.jpg)
Purchasing Cooperatives
28
Used by members to gain access to affordable, quality supplies
Functions• Refineries• Plants• Feed mills• Warehouse• Manufacture• Buy in bulk• Deliver
Members• Producers• Hardware
stores• Independent grocery stores• Fast food franchises• Hospitals• Building
supplies
Member Benefits• Reduced costs• Volume discounts• Quality control• Increased access
CIR 11 Chapter 1 - What Cooperatives Are
![Page 29: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/29.jpg)
Service Cooperatives
Provide needed services
• They meet various needs
• They provide custom application of purchased supplies, transport of product, etc.
• They provide utilities, credit, housing, health care, technology, transportation, etc.
29CIR 11 Chapter 1 - What
Cooperatives Are
![Page 30: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/30.jpg)
Service Cooperatives
30
Used by members to gain access to affordable, quality services
Functions• Farm applications• Credit• Electricity• Communications• Insurance• Health care• Schooling• Housing• Home care
Members• Producers• Rural
residents• Urban residents• Public
Member Benefits• Access to services• Affordable services• Quality • Increased access
CIR 11 Chapter 1 - What Cooperatives Are
![Page 31: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/31.jpg)
Participation Roles
Cooperatives operate through the roles of principal parties
• Members
• Directors
• Manager
• Employees
31CIR 11 Chapter 1 - What
Cooperatives Are
![Page 32: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/32.jpg)
Organizational Make-Up
32
Members
Board of Directors
Manager
Employees
CIR 11 Chapter 1 - What Cooperatives Are
![Page 33: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/33.jpg)
Summary• Cooperatives serve common interests of people for
mutual benefit.
• They are complex organizations with unique principles, practices, member benefits, and structural characteristics.
• Cooperatives exist in many segments of the economy today providing many kinds of services that benefit their member owners.
• Cooperatives consist of members, directors, management, and employees. All have important participation roles to fulfill.
33CIR 11 Chapter 1 - What
Cooperatives Are
![Page 34: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/34.jpg)
CHAPTER 2 – MEMBERS MAKE COOPERATIVES WORK
Focuses on members—who they are and their responsibilities as owners, with particular emphasis on
control, financing, and patronage.
34CIR 11 Chapter 2 – Members Make
Cooperatives Work
![Page 35: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/35.jpg)
Cooperative Members Are
• The foundation of the cooperative
• The reason for the co-op’s existence
• The supporters and financiers, and the shapers of the co-op’s future
• Individuals, businesses, or other organizations (including other co-ops)
• The ones that control the cooperative
35CIR 11 Chapter 2 – Members Make
Cooperatives Work
![Page 36: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/36.jpg)
Exercising Member Responsibilities
• Commitment and Use
• Ownership and Control
• Finance
36CIR 11 Chapter 2 – Members Make
Cooperatives Work
![Page 37: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/37.jpg)
Member-OwnerCommitment and Use
Members need to commit to:
• Using Products and Services
• Maintaining Control
• Providing Financing
37CIR 11 Chapter 2 – Members Make
Cooperatives Work
![Page 38: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/38.jpg)
Member-OwnerCommitment and Use
Using the cooperative is members’ easiest responsibility to carry out, and by using it as much as they can, or what is required by them (given agreements), members help the cooperative succeed and is also how they gain the benefits it provides.
38CIR 11 Chapter 2 – Members Make
Cooperatives Work
![Page 39: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/39.jpg)
Using the Cooperative Is EssentialMembers’ use helps them:
• Maintain control
• Fulfill the cooperative’s mission of service
• Gain continuing benefits
• Own a successful cooperative
39CIR 11 Chapter 2 – Members Make
Cooperatives Work
![Page 40: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/40.jpg)
Member Ownership and ControlMembers need to:
• Know their legal responsibilities
• Understand the cooperative
• Make decisions
• Vote
• Express opinions
• Serve on board and/or committees
40CIR 11 Chapter 2 – Members Make
Cooperatives Work
![Page 41: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/41.jpg)
Member-Owners Have Legal Responsibilities
Member responsibilities include: • Incorporating the cooperative • Approving legal documents• Signing marketing agreements or other binding
contracts (if applicable)• Electing directors according to State statute and
cooperative policy• Ensuring that general business and cooperative-
specific laws are followed• Making (voting on) major decisions that alter
legal status or structural organization
41CIR 11 Chapter 2 – Members Make
Cooperatives Work
![Page 42: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/42.jpg)
Owners Must Understand Their Cooperative
Members need to know and understand its:
• Definition and history
• Mission or purpose
• Articles and Bylaws
• Organizational structure and staffing
• Products and services
• Policies
42CIR 11 Chapter 2 – Members Make
Cooperatives Work
![Page 43: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/43.jpg)
Member GovernanceMembers need to participate by:• Voting on major decisions
• Nominating and electing directors
• Amending bylaws, accepting audit report, voting on resolutions and motions
• Serving on advisory committees or undertaking special assignments
• Considering a run for the board
• Placing the health of the cooperative in the hands of directors
• Learning as much as they can about the cooperative
43CIR 11 Chapter 2 – Members Make
Cooperatives Work
![Page 44: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/44.jpg)
Members Have Financial Responsibilities
Member-owners finance cooperatives by
• Direct Investment
• Retained margins
• Per-unit retains
They also provide startup capital when co-ops are formed
44CIR 11 Chapter 2 – Members Make
Cooperatives Work
![Page 45: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/45.jpg)
Member-Owner Financial Responsibilities
Control follows finance• Members finance in proportion to their use of the
cooperative (distribute earnings according to use)
• Members should contribute a majority of equity capital (given co-op’s capital requirement)
• Active member-users are the financiers (revolve equity, return equity to inactive members)
45CIR 11 Chapter 2 – Members Make
Cooperatives Work
![Page 46: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/46.jpg)
Summary
• As owners, members have important responsibilities of use, control, and finance
• Members should fully understand their responsibilities and actively participate in and use their cooperative
• Cooperative membership can provide personal and business achievement along with the numerous economic and service benefits the cooperative provides
46CIR 11 Chapter 2 – Members Make
Cooperatives Work
![Page 47: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/47.jpg)
CHAPTER 3 – COOPERATIVE DIRECTORS
Focuses on the board of directors. It covers characteristics members should consider in choosing a director to represent them, alternatives for nominating and electing directors, and functions and
responsibilities of directors.
47CIR 11 Chapter 3 – Cooperative Directors
![Page 48: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/48.jpg)
The Cooperative Board of Directors
• Holds the key position between members and hired management
• Makes cooperative policy
• Has specific responsibilities
• Sets overall objectives and charts the cooperative’s course
48CIR 11 Chapter 3 – Cooperative Directors
![Page 49: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/49.jpg)
Directors
• Must be well versed in many areas
• Need to have time and energy
• Carry out formal and informal duties
• Listen, inform, and advise
• Lead
• Represent the cooperative
49CIR 11 Chapter 3 – Cooperative Directors
![Page 50: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/50.jpg)
Selecting DirectorsSome attributes of potential directors:
• Communicate well• Clearly express their views• Good listener• Are active in community• Have leadership ability• Think independently• Place cooperative’s interests first• Make good business decisions• Make the most of resources available to them• Promote the cooperative
50CIR 11 Chapter 3 – Cooperative Directors
![Page 51: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/51.jpg)
A director also:
• Gets along with others• Uses the cooperative fully• Is interested in its performance• Participates in decision-making• Understands that he/she is representing owners in
their business• Understands his/her role in relation to that of
management
51CIR 11 Chapter 3 – Cooperative Directors
![Page 52: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/52.jpg)
Electing Directors Equitable representation is achieved by
various methods:
• At-large• Geographical districts • Along commodity lines• Volume of business done
(Also, sometimes proportional voting is used)
52CIR 11 Chapter 3 – Cooperative Directors
![Page 53: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/53.jpg)
Potential Directors• Are identified by a nominating committee or
nominated by other members
• Should be studied by the membership - biographical sketch - prior to the election
• Are considered for election at the annual meeting
• Secured nominations (nominated, seconded, favored) are put on the ballot for voting
53CIR 11 Chapter 3 – Cooperative Directors
![Page 54: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/54.jpg)
Elected DirectorsHave primary control:
• Develop sound policies for the cooperative to follow
• Use strategic perspective to better serve members’ needs
• Delegate daily operational control to the manager
• Need to understand their role
54CIR 11 Chapter 3 – Cooperative Directors
![Page 55: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/55.jpg)
Directors Recognize Division of Responsibility
Directors:• Have primary control• Tactical perspective• Develop operational and
organizational policies • Take counsel from manager• Big-view decisions• Provides direction• Hire/fire manager
55
Manager:• Has operational control• Tactical perspective• Follows operational and
organizational policies• Advises board• Day-to-day decisions• Acts in line with directors’
direction• Hires/fires staff
CIR 11 Chapter 3 – Cooperative Directors
![Page 56: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/56.jpg)
Director Responsibilities
• Preserve cooperative character
• Safeguard assets
• Hire the manager
• Set policies
• Distribute benefits
• Plan for the future
• Evaluate (co-op, manager, plans, etc.)
• Elect board officers
• Appoint committees
56CIR 11 Chapter 3 – Cooperative Directors
![Page 57: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/57.jpg)
Directors preserve co-op character
by serving according to:
• Laws
• Bylaws
• Articles
57CIR 11 Chapter 3 – Cooperative Directors
![Page 58: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/58.jpg)
And by ensuring that ongoing
co-op education is available to:
• Members
• Directors
• Managers
• Staff
58CIR 11 Chapter 3 – Cooperative Directors
![Page 59: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/59.jpg)
Directors Safeguard Co-op Assets by:
• Protecting members’ investment and increase value of benefits
• Being accountable and making sound financial decisions
• Hiring an auditor and presenting an annual report
59CIR 11 Chapter 3 – Cooperative Directors
![Page 60: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/60.jpg)
Directors set Co-op PoliciesThat relate to the internal and
external functions and business conduct
• They originate and approve them
• They periodically review and update them
60CIR 11 Chapter 3 – Cooperative Directors
![Page 61: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/61.jpg)
Policies Set By Directors Cover
• Director and manager functions and relationships
• Employee and public relations
• Organizational requirements
• Operational activities such as credit, pricing, functions performed
• Purchasing, marketing, and services provided
• Distribution of net income
61CIR 11 Chapter 3 – Cooperative Directors
![Page 62: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/62.jpg)
Example Policies
• Policy: the manager shall prepare an annual business plan for approval and make progress reports at monthly board meetings. Implementation: without further specifics, the manager prepares a budget for approval, then compares it to actual business transacted, and reports any other information that will help the board understand the cooperative’s operational and financial status.
62CIR 11 Chapter 3 – Cooperative Directors
![Page 63: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/63.jpg)
Example Policies
• Policy: An annual membership meeting shall be conducted; the board president addresses the membership. Implementation: management plans, organizes, and conducts the annual meeting; the board president presents a report to the membership at the meeting.
63CIR 11 Chapter 3 – Cooperative Directors
![Page 64: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/64.jpg)
Directors Distribute BenefitsHow net income is to be distributed:
• Amount of patronage refund
• Allocated and/or unallocated equity
• Proportion in cash (at least 20% of allocated
equity)
• Retained earnings
• Equity revolvement and retirement terms
64CIR 11 Chapter 3 – Cooperative Directors
![Page 65: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/65.jpg)
Directors Strategically Plan
• Assess general and changing business climate
• Evaluate challenges—internal and external growth, business volume, membership, territory, assets, etc.
• Develop objectives and corresponding strategies for management to implement
• Monitor plan progress and adjust if necessary
65CIR 11 Chapter 3 – Cooperative Directors
![Page 66: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/66.jpg)
Directors Self-EvaluateBoard should conduct internal
assessments
• How well the board is performing and how effective its meetings are
• Directors should assess themselves
• Assessments identify weaknesses
• Allows for corrective actions
66
Provide education to address weak areas
CIR 11 Chapter 3 – Cooperative Directors
![Page 67: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/67.jpg)
Directors Choose LeadersBy electing board officers
• President – presides over all meetings, main communication link between management and directors
• Vice president – performs the duties of president in absence of president
• Secretary – keeps a record of meetings, custodian of seal, bylaws, membership records
• Treasurer – overseas bookkeeping and business accounts to ensure proper handling, presents periodic financial reports to board and membership
67CIR 11 Chapter 3 – Cooperative Directors
![Page 68: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/68.jpg)
Directors Appoint Committees
Divides board’s work• Special (temporary) or permanent
• Certain phases of operations (finance, purchasing, marketing, feasibility, membership, marketing, etc.)
• Study problems and make recommendations to the board
• Power to decide (in some instances), subject to review by entire board
68CIR 11 Chapter 3 – Cooperative Directors
![Page 69: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/69.jpg)
Summary• Board is the co-op’s central decision center
• It is a listening post, communications hub, advisory body, and decision-making group
• It is accountable to members in all its capacities
• Members choose and elect directors
• Directors set objectives and makes decisions that set the course the cooperative follows to achieve objectives and to be successful
• Directors serve like trustees, charged with legal obligations to protect members’ assets
• Directors fulfill their responsibilities and exercise due care to act within the parameters of the co-op’s policies and the law
69CIR 11 Chapter 3 – Cooperative Directors
![Page 70: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/70.jpg)
CHAPTER 4 – WHAT THE COOPERATIVE
MANAGER DOES
70
Focuses on managers and their responsibilities, with particular emphasis on differences between
managing a cooperative versus other forms of business.
CIR 11 Chapter 4 – What the Cooperative Manager Does
![Page 71: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/71.jpg)
Managers• Investor-owned firm managers seek to
maximize return on stockholder investment and satisfy stockholders
vs.
• Cooperative managers seek to satisfy member-owners and serve their needs as determined by the co-op’s board of directors
71CIR 11 Chapter 4 – What the Cooperative Manager
Does
![Page 72: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/72.jpg)
Cooperative Managers
• Are critical to the success of the cooperative
• Must have a good working relationship with the board of directors
• Are hired to operate the business and focus efforts on everyday operations to serve members
• Decide how to best carry out what the board wants the cooperative to do, subject to board review
• Know the difference between their responsibilities and those of the directors
72CIR 11 Chapter 4 – What the Cooperative Manager
Does
![Page 73: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/73.jpg)
Cooperative Manager Responsibilities
• Implements board policy
• Advises the board
• Manages daily operations
• Hires and trains staff
• Sets short-range tactical goals in line with long-range plans
• Reports to the board
• Reports to members
• Represents the cooperative
73CIR 11 Chapter 4 – What the Cooperative Manager
Does
![Page 74: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/74.jpg)
Implements Board PoliciesThe manager:
• Must clearly understand the policies set in place by the board
• Follows the policies to the best of his/her ability
74CIR 11 Chapter 4 – What the Cooperative Manager
Does
![Page 75: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/75.jpg)
Advises the BoardThe manager provides technical advice on:
• Competitive strategy • Financial management • Operational efficiency • New technology and equipment • New products and services • Policy changes needed• Regulatory changes• Governmental affairs
75CIR 11 Chapter 4 – What the Cooperative Manager
Does
![Page 76: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/76.jpg)
Controls Daily OperationsThe manager:
• Supervises and coordinates functions
• Manages people, capital, and physical resources
• Is responsible for day-to-day operational effectiveness and efficiency
76CIR 11 Chapter 4 – What the Cooperative Manager
Does
![Page 77: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/77.jpg)
Hires StaffThe manager:
• Maintains a competent staff
• Selects, trains, and supervises employees
• Leads, directs, and motivates employees
• Appraises employee performance
77CIR 11 Chapter 4 – What the Cooperative Manager
Does
![Page 78: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/78.jpg)
Sets Tactical Goals and Implements Actions
The manager:
• Plans as he/she directs the daily affairs of the cooperative
• Creates short-term goals in line with longer term objectives as set by board
• Develops action plans to reach the cooperative goals
78CIR 11 Chapter 4 – What the Cooperative Manager
Does
![Page 79: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/79.jpg)
Reports to the BoardThe manager informs on:
• Issues and circumstances
• Statement of operations
• Balance sheet
• Accounts receivable, delinquent accounts
• Progress toward planned objectives
• Summary of operational activity
• Proposals for immediate or longer term consideration
79CIR 11 Chapter 4 – What the Cooperative Manager
Does
![Page 80: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/80.jpg)
Reports to MembersThe manager communicates via:
• Informal contact during working hours
• Open houses
• Letters
• Newsletters
• Meetings (district, regional, annual, special)
• Visits
• Social media, website, email
• Formal report at annual meeting
80CIR 11 Chapter 4 – What the Cooperative Manager
Does
![Page 81: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/81.jpg)
Represents the CooperativeThe manager is the face of the co-op:
• In the community
• With other cooperatives
• In the industry
• With government officials
81CIR 11 Chapter 4 – What the Cooperative Manager
Does
![Page 82: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/82.jpg)
SummaryCo-op managers wear many hats
In fulfilling a unique role, the manager becomes a:
• Coach and player
• Leader and follower
• Educator and motivator
• Diplomat and dictator
• Mediator and magician
• Judge and jury
• Analyst and activist
82CIR 11 Chapter 4 – What the Cooperative Manager
Does
![Page 83: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/83.jpg)
Focuses on cooperative employees, what they do, and the characteristics of quality employees.
83
CHAPTER 5 – WHAT COOPERATIVE EMPLOYEES DO
CIR 11 Chapter 5 – What Cooperative Employees Do
![Page 84: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/84.jpg)
Cooperative Employees
84
• Work closely with members, who are the owners of the cooperative, as well as business associates on a day-to-day basis.
• Need to emphasize people skills given the unique relationship they have with member-owners.
• Are judged whenever they have direct contact with members.
CIR 11 Chapter 5 – What Cooperative Employees Do
![Page 85: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/85.jpg)
Cooperative Employees
• Promote the cooperative
• Deliver supplies
• Handle members’ products
• Order and maintain inventories
• Sell, market, process, manufacture,
• Conduct lab work
85CIR 11 Chapter 5 – What Cooperative Employees
Do
![Page 86: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/86.jpg)
• Keep accurate records• Recommend products/services• Handle complaints• Maintain facilities• Represent the cooperative• Educate others on what the cooperative is
86
Cooperative Employees
CIR 11 Chapter 5 – What Cooperative Employees Do
![Page 87: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/87.jpg)
Characteristics of Quality Cooperative Employees
• Understand the cooperative
• Know and follow policy
• Respect members and treat them fairly
• Are well trained
87CIR 11 Chapter 5 – What Cooperative Employees
Do
![Page 88: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/88.jpg)
Characteristics of Quality Cooperative Employees
• Are team players
• Communicate well
• Maintain assets
• Participate in community activities
• Are professional
88CIR 11 Chapter 5 – What Cooperative Employees
Do
![Page 89: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/89.jpg)
Understand the Cooperative!Quality employees:
• Take pride in the uniqueness of the organization
• Understand cooperative principles
• Know who the owners are – members!
• Are well informed and able to answer questions
• Do not reveal information that could help the competition
89CIR 11 Chapter 5 – What Cooperative Employees
Do
![Page 90: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/90.jpg)
Know and Follow PolicyQuality employees:
• Keep abreast of current policies and rules
• Implement policies in a fair and equitable manner to safeguard member interests and set good business standards
• Seek guidance when they think there might be an exception to a rule or policy
90CIR 11 Chapter 5 – What Cooperative Employees
Do
![Page 91: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/91.jpg)
Respect All MembersQuality employees:
• Treat all members fairly and with respect
• Are polite and professional
• Offer services or products in an equitable fashion to all members, regardless of their status in the cooperative
91CIR 11 Chapter 5 – What Cooperative Employees
Do
![Page 92: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/92.jpg)
Are Well TrainedQuality employees:
• Are able to explain technical information about services the cooperative provides
• Can recommend the right products and services
• Can answer questions and resolve member problems
• Understand the operations and methods the cooperative uses to provide products and services
92CIR 11 Chapter 5 – What Cooperative Employees
Do
![Page 93: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/93.jpg)
Are Team PlayersQuality employees:
• Know the objectives of the cooperative and understand their role in achieving them
• Work together toward achievement of objectives
• Are aware of the service level required to meet the cooperative’s objectives and their expected contributions to the team effort
93CIR 11 Chapter 5 – What Cooperative Employees
Do
![Page 94: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/94.jpg)
Communicate WellQuality employees:
• Are the eyes and ears of the cooperative in their interactions with members
• Keep supervisors and other employees informed of pertinent working issues and problems
• Listen to supervisors, other employees, and members
94CIR 11 Chapter 5 – What Cooperative Employees
Do
![Page 95: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/95.jpg)
Maintain AssetsQuality employees:
• Keep facilities, equipment, inventory, and supplies in good condition
• Take seriously the job of keeping assets in top condition
95CIR 11 Chapter 5 – What Cooperative Employees
Do
![Page 96: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/96.jpg)
Participate in Community Activities
Quality employees:
• Carry a positive image of the cooperative to the community when participating in various activities (service clubs, schools, youth groups, business organizations, town meetings, etc.)
• Should try to take part in some aspect of community activity
96CIR 11 Chapter 5 – What Cooperative Employees
Do
![Page 97: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/97.jpg)
Participate in Community Activities
Quality employees:
• May volunteer to help serve the needs and welfare of the community
• Are careful about taking a particular stand if participating in an activity which has special social, political, or religious orientation
97CIR 11 Chapter 5 – What Cooperative Employees
Do
![Page 98: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/98.jpg)
Maintain ProfessionalismQuality employees:
• Present the cooperative’s image while carrying out their day-to-day duties
• They must be professional: they are polite, courteous, serious, articulate, well educated on what they are doing and what the cooperative does, have a positive attitude, and are enthusiastic about the cooperative’s mission.
98CIR 11 Chapter 5 – What Cooperative Employees
Do
![Page 99: In the U.S., businesses are organized in different ways depending on:](https://reader036.vdocuments.site/reader036/viewer/2022062718/56812e73550346895d94145c/html5/thumbnails/99.jpg)
Summary
• Employees play an important role in a cooperative
• Employees must fully understand the uniqueness of the cooperative and its principles
• Employees closely interact with members and management
• They fulfill their responsibilities while forging relationships with member-owners
• Employees, together with members, directors, and the manager, run the cooperative business
99CIR 11 Chapter 5 – What Cooperative Employees
Do