How To Make Decisions in a Cooperative

A Bite-Sized Legal Guide

Background

Making decisions in cooperatives can be a uniquely difficult task. There is always a diverse range of member interests, and decisions must be made in a fair and democratic manner. Before deciding what sort of decision-making process your cooperative will have, it is important to first distinguish between the types of decisions your organization will be facing.

Distinctions and Definitions

Governance vs. Management Decisions

• Governance: the strategic task of setting the organization’s goals, directions, limitations, and accountability frameworks
• Management: the allocation of resources and overseeing the day-to-day operations of the organization

Routine vs. Non-programmed Decisions

• Strategic Decisions: affect the long-term strategy and goals of the business
• Tactical Decisions: focus on medium-term goals, push towards longer-term strategy
• Operational Decisions: shorter-term, build toward long-term goals

You must decide which category each of your decisions fall into, and which administrative or governing body is equipped to make those decisions. Not each of these decisions should by made by the entire membership, or even the Board of Directors.

Examples of Decision-Making Processes

Consensus

The consensus process (shown in the chart below) is one of the most popular governance options for cooperatives. Consensus does not require a unanimous decision, but requires everyone in the group to commit to common goals.

The Bay Area Arizmendi bakeries are governed by consensual decision-making, although they will hold a 75% majority vote if a decision is time sensitive and consensus cannot be reached.[1] It is also very important to define what constitutes a “block” or objection for your cooperative. Is it simply that a member disagrees with the proposal or does a block require a higher threshold than personal opinion, e.g. that the proposal is harming or moving the cooperative backward.

Pros:

• All members of the group are heard, and their concerns are taken into account
• Decisions are often better, and more complex
• Group unity and cohesion is improved, and nobody is left behind

Cons:

• Meetings can be long and inefficient
• The loudest members of the group might get an unfair amount of resources/time
• The organization might fall into a “business as usual” trap when the membership is too afraid of endangering their jobs to make needed change

Representative Decision-Making

Not all cooperatives make their decisions by general consensus; many have an elected body that makes decisions on behalf of the cooperative. For example, Wisconsin’s Viroqua Food Coop is run primarily by its board of directors.[2] This seven-person board meets monthly, and even has the power to call sessions that are closed to the membership.

When choosing a process, make sure:

1.     It has a consistent policy to prevent arbitrary or unfair decisions, and a clear structure

2.     The board and management are strategically aware and confident in the process

3.     Smaller decisions are left to committees or individuals

4.     That a decision making process is decided upon before your cooperative begins operations

5.     To allow room for your cooperative’s decision making process to evolve over time.

References

[1] http://www.geo.coop/node/495 

[2] http://www.viroquafood.coop/board-of-directors/vfc-bylaws 

Revised December 2018