Who Makes A Good Co-op Director

Selecting good directors is perhaps co-op members' most important ownership responsibility. Their decision may determine how effectively the cooperative contributes to the profitability of their business or quality of life.

When considering an individual for the cooperative's board, a member might ponder the answers to several questions. Would I be comfortable having this individual make personal business decisions for me? Does the individual demonstrate the ability to think through a problem independent of others? Would this person place the best interests of the cooperative above personal interests or special interest groups? Does this person demonstrate leadership qualities? Would this person as director enhance the cooperative's image? Is the person respected in the community?

Does the potential director appear to keep up with current events, particularly in the sectors in which the cooperative is involved? Would this person be a vigorous and effective promoter of the cooperative? Would this potential director be vigilant in keeping the cooperative oriented to serving members' best interests?

While a "yes" answer to these questions shapes the underlying characteristics of a good director, other more tangible and specific qualities need to be present.

Promotes co-op

A good potential director uses the cooperative's products and services fully. Just doing so makes a visible statement of belief in the value of cooperative effort. Further, maximum use gives the member firsthand, cutting edge knowledge about the cooperative's services, which provides a sound basis for directing change. Maximum personal support also enables the member to be an effective director in seeking new members and encouraging absent members to increase their patronage.

Members demonstrating a genuine interest in the cooperative's performance have a quality needed to be a good director. Instead of just complaining to others, or "voting with their feet" by trading somewhere else, they seek answers to their concerns from their director or the manager. They realize that ultimately cooperative performance is their responsibility.

Places members' interests first

Members who participate regularly in decision making exhibit a key director quality. They attend meetings and express their views. They volunteer or accept requests to serve on committees, or to represent the cooperative. They vote regularly on issues presented to them. They encourage others to help the cooperative better serve members' needs.

Serving on the board of directors can take a lot of time. So persons being considered for the board must have the time to serve, or express a willingness to make time to carry out the formal - and informal - duties of a director.

Typically, documented time for official cooperative business - travel to and from meetings, meeting time, and committee work - may be only one or two days per month. But it is unaccounted time that can add up. Directors may spend time writing letters, or writing and giving talks. They read materials to prepare for meetings, or just to become better informed. Self-directed or formal training to be a better director takes time. Directors get phone calls from members, or questions whenever or wherever they meet. With every visit to the cooperative, the director is vulnerable to "take a minute or two" to consider an issue or some aspect of the cooperative's activities.

Enhances co-op's image

Directors are often asked to represent the cooperative at community events, and perhaps to take leadership roles in community organizations in behalf of the cooperative. Particularly in larger cooperatives, they are periodically asked to visit State and Federal legislators. Often, cooperative-related time will be at the expense of the director's business or personal time.

Thinks independently

Some people seem to have a knack for picking up information, piecing facts together, being right on target with their views, and well known for having something worthwhile to say. Chances are they are good conversationalists, but with a keen ability to listen. They demonstrate a talent for expressing their views in a clear and well organized fashion. Look for these attributes in selecting a director. A key requirement for a good director is to establish two-way communications with the manager, other directors, and members.

Needed actions to maintain the vitality and growth of the cooperative aren't always readily apparent at the time decisions must be made. And some decisions may be unpopular to a sizable segment of the membership. Directors with good communications skills are needed to clearly present the rationale for board and management actions to the membership.

As a good communicator, a director can be a powerful force for strengthening member support, promoting the cooperative in the community, and in other ways influencing the business environment in which the cooperative operates.

Makes good business decisions

A unique business judgment is needed by directors of a cooperative. As members, they may run a profit-oriented business as a sole proprietorship, a family partnership, or in a few cases a family corporation. As directors of a cooperative, they are responsible for a service-oriented business owned by hundreds of members.

Fundamental business principles such as adequate capitalization, sufficient cash flow, operating efficiency, and quality control, still apply. But the new application of business judgment comes from the special relationship between member and cooperative. Decisions must be sound and beneficial from the standpoint of both, rather than at the expense of one. And rather than gaining approval by discussion at the family dinner table, the directors must have the support of a majority of many owner/members. Thus, decisions must attempt to strike a balance in addressing needs of a wide variety of members.

Whether a member has sound business judgment may be difficult to determine. Home or other business size alone may not be a valid indication, nor the member with the newest equipment, cars, or freshly painted buildings. A better barometer, perhaps, is the member who, over time, seems to be making the most with available resources and is known to be a solid thinker. Members with relevant college degrees or other business experience could bring a special experience to the board.

Pointing to the need for honesty and trustworthiness in directors should not even have to be mentioned. But it is important to point out news media reports to the contrary in the business world. At the extreme are examples of dishonest or illegal acts that have caused businesses to fail. Short of that extreme are instances in which actions of officers of a company cost the owners a great deal of money, either from business transactions or subsequent legal actions.

Shows leadership

A director should have good personal traits and exhibit even temperament. Nothing is more disruptive than an emotional outburst in a board meeting. Thin skins and quick tempers don't make good directors. Rather, the member who demonstrates an ability to get along with other people has a quality needed in a director. In assessing all the qualifications a member exhibits, an important final question to resolve is: Will this member's personality mesh with those of other directors and the manager?

Members should choose a director with the kind of personal character they are comfortable with as the representative of the cooperative and, in some respects, with each of them personally - on any occasion or in any situation.

Members who are involved in community activities are potentially good directors. They may belong to civic, church, and school organizations; participate in fund raisers or community booster projects; or be involved in another business, even perhaps a cooperative. They may be active in organizations extending outside of the community such as commodity trade associations, farm organizations, and academic and professional clubs.

Their suitability and capability to be a director would be even stronger if they are serving, or had served, in a leadership role in these activities.

Such involvement gives the director a wealth of information sources and personal contacts who could be valuable in many situations. Further, the director would have a broader understanding of the personal and institutional relationships that make up a community. Such a background gives the director a perspective to help direct the cooperative's operations within the larger context of its community and business environment.