Pure Governance Versus Relative Governance

To the editor:

As a student of cooperative governance I followed with interest the positions outlined by authors Donald Kreis and James Morgan [Cooperative Grocer #127 and #128]. My reaction draws favour from both articles and lands somewhere outside of each. In my experience, governance, like other important aspects of cooperative life, tends to engender debate from either practical or philosophical bases. The merits of the Carver model are an excellent spark to ignite such discussions.

In the case of board governance, I consider the Policy Governance model an ideal that is virtually never achievable. The following table is the simplest characterization of governance by restricting the players to the management group—board and general manager. This table is measured on a binary scale. A more representative table would have a wider scale and would expand to include other stakeholders such as staff and perhaps committees (a non-Carver reality) reflecting a given situation. However the simplification holds for my purpose to illustrate the idealized nature of the Policy model.

The two fundamental roles of governance are supervision and planning. A general manager is, in the first order, operationally minded. Thus at a minimum, a competent general manager (presuming at least an adequate staff) will keep the doors open in spite of a not fully competent board and be workable. A good board will recognize both its responsibilities and its deficiencies. The good board will work towards optimizing its collective skill set and then strive to maximize it.

Conversely, a competent board, coupled with a less than competent general manager, means that the operations are at risk. How much at risk is depended on the relationship and where the deficiencies lie. The organization is vulnerable. When neither the board nor the general manager is competent, the operation is seriously in jeopardy. This does happen.

However, operations are not the whole story. Planning has two basic flavours—operations and strategic. There are aspects to both operational and strategic planning that are financial and particular to each phase. I leave the financial aspects aside to concentrate on the main point. Strategic planning is not operational planning run out for five years or so. That is extended operational planning. Carver dictates that management creates the planning documents and the board assesses them in consideration of approval. When the board and the general manager are both competent, this works. When only one is competent, it doesn’t work. The competent component is placed in the position to compensate for the incompetent component. When neither board nor management is competent, it works even less.

Where does the board come from? In most cases, it comes from the membership. Is the membership of a typical co-op a pool of trained planners—operational and\or strategic? No. Is this fact, in and of itself, terminal? No. The membership comes to the co-op governance table with a personal legacy of operational experience with the co-op. A given candidate may have operational or technical training from other sources advantageous to the board. Very few have experience with formal strategic planning processes.

The very strength of the closed-loop nature of the co-op structure is also the source of its greatest weakness—the need for fully competent board members. This fact means that reliance on competent board training, competent management support, competent committee support, and committed board members on a continuing basis is a perpetual necessity. It is also why the Policy Governance board is an ideal and virtually never a reality.

Is the Policy Governance board, as ideal as it is, a good thing? Yes. One of the two primary roles of the board is supervision and getting the policies right for both management and the board, providing the structure for each to do their respective job well. Setting policies is the structure. Executing policies is segregating the continuing work of a successful organization. The reality of cooperative governance is relative governance, not pure governance.

Larry Sadler

February 25, 2007

Larry Sadler is IT services manager at Ontario Natural Foods Cooperative ([email protected]).