University of Wisconsin Center for Cooperatives

Working Together: UWCC Newsletter Winter 2000


Contents:

Director's Message
Library Move
USDA Funded Research
Extension Team
Dane County Co-op Forum
Co-op Survey
Co-op Education
Union Cab of Madison
News About Co-ops
Farmer Cooperatives 2000
Producers Drive New Governance Standards for Co-ops
The LEADing Board
So You've Been Elected to the Co-op's Board of Directors
Should Co-ops Use Outside Directors?
Performance of Co-op Boards of Directors
The Co-op Board's Role in Strategic Direction
Remembering Gar Stock
Founder Receives Award: Richard Vilstrup
Retirement for John Cottingham
Visiting Scholar from Ukraine
New at UWCC: Jody Padgham
Conferences in Brief
2000 Director Leadership Workshops
Information Services


Director’s Message

This newsletter institutes a change in both how we look and what we present. Besides informing you about UWCC's ongoing work, now we'll also feature what we hope is a thought-provoking theme. If we succeed, each newsletter's theme will serve as a catalyst for discussion and change in your co-op.

We aim to evolve our newsletter so it is more informative and useful to you, and this mailing includes a feedback postcard. Please use it to let us know if you want to remain on our mailing list and to offer feedback on the new format Your suggestions for future themes will keep our focus on meeting your interests and needs.

Now back to this issue... All corporate forms must address governance issues, and this newsletter's theme is cooperative governance. Unlike other corporate forms, co-ops—as user-owned businesses—are uniquely obliged to involve members and act on their interests.

Co-ops are especially challenged to establish governance structures and systems to keep the co-op business vibrant while meeting the needs of member-owners.

In a co-op, this responsibility rests with the elected Board of Directors. In shaping their co-op's governance approach, the Board chooses how to direct the co-op, how to delegate and/or share responsibilities with managers, and how to link with members in a two-way exchange.

The ultimate test of governance is whether the co-op satisfies its members' needs while at the same time maintaining profitability for both the short- and long-run. Like any business or organization, there is always room for improvement Being good today is not good enough tomorrow. And in today's demanding business environment and increasingly diverse memberships, fine-tuning governance is vital for success. We hope our governance discussion provides helpful ideas on governance from both the cooperative and non-cooperative world.

A significant part of improving a co-op's capacity to govern is by helping boards of directors improve their own skills for directing their co-op through training and education. As you’ll see in this issue, a substantial new initiative is underway to improve co-op education for directors on a regional basis. A new joining of forces between UWCC, WFC, MAC and CDS hopes to expand and improve co-op education options for Midwestern co-ops. This development will raise the bar on co-op education programs, their accessibility, quality and fit for today's directors and young co-op leaders.

In 2000 we will continue to improve our Director Leadership and Board President/ CEO programs and will also launch new programs (p. 15). Some of our efforts will experiment with new delivery mechanisms, such as compressed video technology, which allows interactive sessions at several locations. We will attract cross-sector and regional audiences for targeted knowledge and skill development. Besides addressing topics suggested by scores of interviews with coop leaders, we need your suggestions. Only with suggestions from you will we be able to customize bold new educational programs at the individual co-op level.

Finally, UWCC is developing its capacity to offer a variety of services to co-ops— from customized research and customized training to help with strategic planning. Let us know how we might help you in these areas as well. Please check our popular web-site at www.wisc.edu/uwcc for another way to access useful information from the cooperative world.

Best wishes for successful cooperation in 2000 and the new millennium.

—Bob Cropp


UWCC Library Moved, Dedicated to Truman Torgerson

The UWCC library recently moved from its location in the School of Human Ecology to join the Taylor-Hibbard Library in the Department of Agriculture and Applied Economics in Taylor Hall. It was officially dedicated as the Truman Torgerson Cooperative Collection at a reception honoring the Torgerson family on October 15, 1999.

The Cooperative Collection was made possible with a contribution from the Torgerson family as a memorial to Truman Torgerson. Torgerson, who died in 1996, was a nationally recognized cooperative leader and a pioneer in the dairy industry. He is credited with organizing the Lake-to-Lake Dairy Cooperative, where he served from 1947 to 1982.

The co-op's Kiel, Wisconsin cheese plant was the first in the country permitted to apply the U.S. "AA" designation on its Cheddar cheese. The Lake-to-Lake brand is still recognized nationally.

Torgerson received numerous awards and honors, and held many prominent positions during his career. In 1972, the UW-Madison's College of Agricultural and Life Sciences acknowledged Torgerson's contributions to the dairy processing and marketing fields as well as his efforts in community and civic awards with its Honorary Recognition Award.

He was named "Food Industry Man of the Year" in 1969 at the World Dairy Expo in Madison for helping to improve and promote dairy co-ops. Other awards include the Distinguished Agricultural Leader Award from UW-Madison's Agricultural & Life Sciences Alumni Assn., the Wisconsin Farm Bureau Distinguished Service Award, the Cooperative Builder Award from the Wisconsin Federation of Cooperatives, the Distinguished Co-op Service Award from the National Milk Producers Federation, and the Man of the Year Award from the World Food & Agriculture Organization.

He held many offices including serving as director of the Wisconsin Federation of Cooperatives, as chairman of the USDA Agriculture Research Committee, as secretary of the board of directors of Land O'Lakes, and as president of the Wisconsin Council of Agricultural Cooperatives. And with a B.S. in agricultural education, Torgerson taught agricultural education in Rusk County for three years before becoming a county agricultural extension agent.

His son, Randy Torgerson, received a Ph.D. in Agricultural Economics at UW-Madison and now serves as Administrator of USDA, Rural Business-Cooperative Service.

-From an October 29, 1999 issue of The Cheese Reporter.


USDA Funds Co-op Research and Development

UWCC has two new USDA-funded research projects; one will assess the economic impacts of co-ops in Wisconsin, including specific sectors such as credit, rural electrics, farm supply and marketing co-ops. The other project will develop a tool for co-ops which uses Geographic Information Systems and economic data to analyze trade areas. This will allow co-ops to better reach members, deal with mergers and consolidations, assess new business opportunities and joint ventures, and manage logistics. Meanwhile, UWCC is completing work on last year's project involving case studies of equity management practices in dairy co-ops, case studies of co-op housing projects, and assessing board training and strategic planning practices of Midwest coops.

UWCC is partnering with Cooperative Development Services (CDS) on a USDA grant for cooperative development work. Some of the grant will be devoted to further work in housing co-ops and to support the development of sustainable woods co-ops. The State of Wisconsin has approved $50,000 per year for two years to support the development of wood co-ops. CDS will be the lead coordinator of this development, with UWCC focusing on board training and development, some early-stage organizational development, and helping to develop collaboration within the UW system to help support local woods cooperatives' needs.

Another key piece of the USDA development grant is to work with farm supply co-ops, along with rural electric co-ops and farm credit, to consider pathways to new business ventures and diversification. One concept being developed is a cooperatively owned venture capital fund to invest in new ag- and forestry-based businesses where the specific investments relate to the core businesses of the co-ops making the investments.

Finally, UWCC is completing its support of the Wisconsin Federation of Cooperatives and the Midwest Dairy Coalition in the effort to reform federal milk marketing orders and to keep the Midwest dairy industry at the national dairy policy table.


Ext Logo

Emerging Ag Markets Team

http://www.uwex.edu/ces/agmarkets

Several UWCC staff have been very active in the Emerging Agriculture Markets (EAM) Team of UW Extension. The EAM Team's mission is to help farmers and communities identify and take advantage of opportunities in new and emerging food and agricultural markets. In its first year, the team created a web page on this topic and co-sponsored several conferences (www.uwex.edu/ces/agmarkets).

One such conference was a "Meat Summit" held January 13, 2000. Sixty-five people attended to explore opportunities and obstacles related to alternative markets for Wisconsin-raised beef, poultry, pork, and lamb.

Sponsored by UW Extension, with strong support from the State's Department of Agriculture, Trade & Consumer Protection (DATCP) and several commodity groups, this "Meat Summit" brought together meat producers, small scale meat processors, and representatives from DATCP, the University and Extension, and a number of farm organizations.

Four ad hoc committees were formed at the Meat Summit to address four priority areas: (a) increasing processor capacity, (b) training for processor employees, (c) increasing grant funding, and (d) forming producer alliances.

Participants agreed that the January 13th meeting was an important first step in working together to develop alternative markets for Wisconsin's meat products. The USDA's pending ruling on interstate trade could present a huge opportunity for both our farmers and smaller processors. The question is: will we be ready for it?


Dane County Cooperative Forum

AT DANE COUNTY FORUM meeting Oct 14 1999, l to r Gar Stock, Professor Emeritus; Frank Groves, Professor Emeritus & Past Director of UWCC; Bob Cropp; Professor and Current UWCC Director.

UWCC is sad to announce Gar Stock's sudden passing on January 24. See page 13 for our tribute to this truly remarkable man

The Dane County Co-op Forum is an informal organization that brings together the many diverse cooperatives and credit unions of Dane County, Wisconsin. The goal is to help the cooperative community explore new ideas and innovations, and find ways to support each other. In its inaugural year, DCCF held three discussion forums and funded a full-page ad in the Wisconsin State Journal promoting the county's 100+ cooperatives and credit unions.

The Dane County Co-op Forum is modeled after the New Visions New-Ventures group in the Twin Cities of Minnesota. On October 14, the Forum hosted a reception for Co-op/ Credit Union Month, which featured two speakers who were instrumental in developing the Twin Cities' group: Louis Doering, Vice President of Twin Cities Cooperatives Federal Credit Union, and William Nelson, President of The Cooperative Foundation and the Cenex Harvest States Foundation. Louis and William discussed the benefits that Twin Cites' co-ops have derived from sharing strategies, building networks, and strengthening their cooperative community.

For more info on the Dane County Co-op Forum contact Greg Lawless, 608/263-2903, lawless@aae.wisc.edu.

Learning from Others: Board Size

"0nce you get much over double digits, the dynamic changes, it becomes more of a Japanese tea; it is programmed and rehearsed. In our board meetings we are grappling with the issues. It's very informal, and very interactive."

Keith Roman, Chair of Compaq's governance committee. Business Week 12-8-97. The Best and Worst Boards


Survey of Board Training & Strategic Planning Practices

The Center surveyed over 200 general managers and board presidents of agricultural cooperatives in Minnesota and Wisconsin to evaluate current practices and future needs in board training and strategic planning. Preliminary survey results include:

Board members spend an average of 18 days per year on cooperative business. Of these 18 days, an average of 2.7 days was spent on training and 2.5 days was spent on strategic planning.

Board expenses for training averaged 13.5 percent of total board expenses. Farm credit and farm supply cooperatives spent more board time on training than did other cooperatives.

Only 14.4 percent of the boards have a written plan for board training and only 21.8 percent of the respondents periodically evaluate board performance. However, nearly 60 percent of the respondents periodically assess training needs for the board as a whole and 50 percent do so for individual board members.

On a 4 point scale (1 very satisfied, 4 not satisfied), the respondents rated current training in terms of quality at 2.52, topics at 2.54, accessibility at 2.56 and level of advancement at 2.73. Large co-ops were less satisfied with current training than were smaller ones. Farm credit was most satisfied with training, and marketing and other cooperatives were least satisfied.

General managers and board presidents rated training satisfaction about the same.

Respondents were most satisfied with board/management relations, followed by governance, and least satisfied with marketing, strategic business planning, and risk management

Respondents rated strategic planning as the topic to be most emphasized in training for current directors, followed by mergers/consolidations/alliances and cooperative finance.

For new directors, respondents rated cooperative governance followed by co-op finance and board/management relations as most needed training.

Respondents rated on-site custom training as the factor that would most likely increase training participation.

Nearly 80 percent of the responding cooperatives engage in strategic planning. Satisfaction levels with current strategic planning averaged 2.57 on a 5 point scale (1 extremely satisfied, 5 not satisfied). With an average of 2.5 days spent annually on strategic planning, 50 percent of the respondents indicated more time should be spent and 50 percent said less time.

Nearly 20 percent of the respondents developed a new strategic plan each year, while nearly 50 percent updated their plan annually. The others responding either did major planning every 3 years (15 percent), every 5 years (5 percent) or did not engage in strategic planning (14 percent).

The most important source of information for strategic planning was generated internally while the least important indicated was from universities.

Respondents said training would be the most effective means to improve the effectiveness of strategic planning, followed by employee follow-through. Respondents said use of outside expertise would be least effective.

The responding co-ops ranked both board training and strategic planning as being very important to cooperative performance.

This research project is funded by USDA Rural Business Cooperative Service and is being used to inform the educational planning process underway in the Midwest The project will be completed and published in Spring 2000. Please contact Will Hughes for more information: phone 6081262-3382, e-mail hughes@aae.wisc.edu.

co-op education 'needs assessment' prompts new programs

A recent study of cooperative education in Wisconsin and Minnesota will result in several new educational programs for the year 2000, along with an ongoing process of new program development and evaluation. The project is a joint effort of the University of Wisconsin Center for Cooperatives, Cooperative Development Services, the Minnesota Association of Cooperatives, and the Wisconsin Federation of Cooperatives.

As part of the study, cooperative board members and managers discussed the issues and challenges facing their cooperatives, and contributed their ideas on good learning experiences. Over 200 cooperative leaders participated in a series of interviews, focus groups, surveys and discussion sessions this fall, as part of an assessment process that will continue throughout the year.

Several themes emerged from the assessment

  • Cooperative boards and managers have similar interests in strategic topics like managing growth, successful joint ventures and mergers, planning, and enhanced board/management relations.
  • Member relations is a critical and complex area. Managers and board members identified the challenges of serving an increasingly diverse membership, developing leadership, dealing with equity issues, and marketing the cooperative advantage.
  • Program delivery should be flexible and responsive to a wide variety of learning styles and needs.

The project team is currently developing strategies to respond to these themes with new programs, new delivery methods, and a structure for continuing the program development process.

 

UNION CAB of Madison: worker owned and operated

A close connector between the board and membership has been a key component in making Union Cab Cooperative, a 20 year old worker cooperative in Madison, WI, a model of innovation. A strong partnership between board and management is important in providing the leadership necessary to successfully guide any cooperative, but according to Board President Nan Mortensen, the real power in the vision at Union Cab comes from tapping the insights of the membership.

With over 200 members, Union Cab of Madison Cooperative is one of the largest worker co-ops in the country. Since 1979 the co-op has diversified from its beginnings as a simple taxi service: expanding into pare-transit service in 1991 and specialized bus service in 1995. Winning several large service bids in 1999, the coop has recently expanded its fleet by ten new vans and is in the process of installing a state-of-the art computerized dispatch system.

The nine board members are elected from the Union Cab worker-membership, with three seats up for election each year. Representation is very diverse: current board members hail from the repair shop (where Mortensen works), are drivers, are office staff, and are with transit and bus service.

The strength in our board is that each board member is in the trenches, a worker themselves. They are very well informed and invested in the success of the co-op Mortensen notes.

This strength shows in Union Cab's relative stability throughout recent leadership transition, including the turnover of several general managers in the last decade.

Under the board's leadership, Union Cab is currently moving toward a more decentralized management structure, with help from a consultant on core values training and the team contract approach. The current General Manager was hired in part for his support of a team approach.

Given the nature of the cab industry, and the dynamics of Madison itself, board turnover has also been a challenge. As a reactor to the stresses of board transition, the co-op has recently instituted three alternate directors, who regularly attend meetings but do not vote, to step in if a seated director leaves. Union Cab has also found UWCC's Director Leadership Workshops very helpful in providing a solid base of knowledge for their Board.

Board President Mortensen states that most of the innovative ideas and momentum for change in the co-op have come from the inspiration of the worker membership. Being at the operations level of the business, workers see systemic problems and growth opportunities very early. Discussions often start in casual conversations, then are refined and developed through a committee structure. Committees are made up of board members and interested participants from the general membership. Committees bring rough proposals to the full Board for feedback and tentative approval, then go back to the design table before final presentation and approval.

Union Cab has found that keeping the ties between membership and board members strong is key to keeping the co-op forward thinking. "You can't forget about the people that make your business," Mortensen says.

Other cooperatives can learn from Union Cab's experience, by finding ways to structure and operate that tap the power of members and employees.

To reach Union Cab: 608/242-2000.

 

news about co-ops now on uwcc website
http://www.wisc.edu

The UWCC website now includes current news about cooperatives from newspapers worldwide. We regularly search the Internet for the most recent articles, list the headlines, and offer links to the complete text of articles from regional, national, and international papers like the Minneapolis Star Tribune, the Chicago Tribune, the Grand Forks Herald, and The Times (London).

The website receives over 90,000 "hits" every month, making it a major source of news and information on cooperatives. It is linked to cooperative websites all over the world, and is often cited for its quality and comprehensiveness.

 

FARMER
COOPERATIVES
2000 Invitational
     November 10 & 11, 1999
     Kansas City, Missouri

Farm Foundation co-sponsored this conference with thc UW Center for Cooperatives, The Cooperative Foundation, Cenex-Harvest States Foundation and the Farmland Foundation.

A more complete summary of the conference appears within UWCC's website at http://www.uwcc.wisc.edu/events/2000-99tc.html. For more information, contact UWCC'o Will Hughes, phone 608/262-3362, c-mail hughes@aae.wisc.edu

 

 

the challenges of governing farmer cooperatives

Farmer cooperatives are directed by essentially volunteer Boards of Directors elected from members of the cooperative. Cooperatives face all of the complex business challenges that other corporations face—achieving economies of scale, dealing with globalization, finding capital for growth, and determining the right strategic positioning— but they face the extra challenge to serve members' needs.

Issues related to governing corporations are hot topics in corporate circles and are becoming so in cooperatives as they grow from local and regional businesses into national and international businesses.

About 135 co-op directors and staff heard from leading co-ops on how they are improving governance structures and systems to help capitalize on the need to direct co-ops as world class businesses while maintaining member-controlled, democratically-run organizations.

Topics included:

  • appropriate board size (many believe board sizes should be significantly smaller to improve the efficiency of decision making),
  • use of outside directors and advisory boards (to bring diversity and additional skills and input to decision making),
  • how to select and develop board members into strategic thinkers (strategic direction and positioning is the Board's first responsibility),
  • how to keep members informed, involved and committed to the co-ops when co-ops merge and cover wide geographic territory,
  • how to maintain member control with the widespread use by co-ops of joint ventures and alliances, often with investor-owned firms, and
  • how to address governance and member control as co-ops seek outside equity capital.

John Tyrrell, Director General of the Irish Cooperative Organization Society, related the experience of Irish dairy cooperatives in forming publicly-traded subsidiaries. These co-ops sought capital to fuel growth and to gain market value of shares for members. But the results are mixed success and the big question remains regarding whether the conversions will help future generations of co-op members. Co-op leaders attending the conference were afforded a challenging mix of governance ideas and approaches to consider putting to use in their own coops.

Conference presentations suggest that in the new millennium, your cooperative— through governance structure and systems—should be determining how to:

  • make decision-making in the co-op quicker and more flexible,
  • help Board members be more familiar with the competitive environment in which the co-op operates,
  • decrease the size of the Board,
  • spend less time in Board meetings (and probably more time outside Board meetings developing knowledge and building relationships),
  • increase the diversity of knowledge, skills and backgrounds of Board members,
  • compensate Board members commensurate with their responsibility (and maybe be compensation to performance), and
  • communicate with members in new ways to secure their commitment to and involvement in the co-op.

 

Learning from Others: ineffective directors
  • Caught up in the trivial
  • Short term bias
  • Reactive rather than proactive
  • Reviewing, Rehashing, Redoing
  • Avoiding accountability

Gene Nicolas, Dakota Growers Pasta Co-op.

 

producers drive new governance standards for farmer co-ops

The producer-owners can only set standards for the governance of farmer cooperatives. They own the business and elect the Board to direct the cooperative. At the Farmer Cooperatives 2000 Conference, producers started the conference by defining standards for excellence in governance. Here are some of their thoughts.

Jack Gilbert, Chairman of the Board of Diamond of California, shared his cooperative's governance objectives as being:

  • Reducing Board size,
  • Considering adding outside directors,
  • Reviewing director compensation, and
  • Investing more in director training (both formal and informal).

He said co-ops need to address the lack of experience of directors in other fields, their lack of diversity, and the large Board size that creates inefficiency in the use of management time. At Diamond, they're shifting to less frequent 2-day meetings, including regular presentations from customers or vendors, a format designed to help directors think outside of the box of ways for the coop to create value for its members.

Gene Nicholas, founding and current board member of Dakota Growers Pasta Cooperative, highlighted the importance of governance to the new generation's success. He put it plainly: "Good governance by a Board is critical to the outcome of a company's performance." When they put their founding board together in 1993 they looked for individuals who were visionary, had value-added and political experience, were entrepreneurial and risk takers, and were community leaders across a balanced geographic area. The business of a successful governing Board, Mr. Nicholas says, "should center around connecting to the owners, making policy decisions, working to sustain the cooperative's vision, and be responsible for the cooperative’s business performance."

Appropriately, Mr. Nicholas identified the Board's first responsibility as being able to communicate with owners. The Board's job is to link with owners in two ways: owners to the co-op and the co-op to the owners. Open communication, trust and owners' understanding of the co-op's mission is the most critical focal point in governance because it creates the confidence to invest in the co-op, and gives the co-op the ability to grow and a knowledge of the member-owner's vision for the cooperative. Board members should view themselves as servant-leaders requiring directors to know the difficulties of member-owners and their expectations of the co-op, and the compelling need for Board members to provide leadership.

Connie Cihak, Board member of Land O' Lakes and chair of the Board Performance Committee, shared the progress their Board has made in better preparing for good governance practices. The LOL Board engages in a 360 degree feedback process where each Board member evaluates every other Board member on the following attributes: attitude, priorities, honesty and trustworthiness, listening, politeness, preparedness for meetings, cooperative, team player, open-minded, respectful, and responsiveness to change. While this effort is new to LOL, it is helping to develop their Board—in combination with a unique Leadership Council process use to develop and select future Board members—into a leading practitioner of co-op governance. One offshoot of this process is the Land O' Lakes Director's pledge (see p. 7), which guides Board members in fulfilling their responsibilities.

Learning from Others: Land O’Lakes Director’s Pledge

I WILL

  • Above all things be honest and diligent.
  • Place the business interest of Land O'Lakes above my own personal business interests when making Board decisions.
  • Give as careful attention to the affairs of the co-op as I would to my own business.
  • Study the business and problems of Land 0'Lakes and the broader considerations that affect its welfare.
  • Be prompt and attentive at all meetings of the Directors, so there is no loss of valuable time.
  • Do independent and careful thinking, express an honest opinion, and not bc a rubber stamp to any group.
  • Be open minded and a team worker, and realize that thc individual views of Board members cannot always prevail, but that individual opinions are important to the decision-making process.
  • Remember that the majority rules, and that the minority must support decisions reached by the majority.
  • Present the views of the Board of Directors, rather than my own, to fellow members whenever I speak for Land O'Lakes.
  • Respect the need for confidentiality regarding the business and operations of Land O'Lakes.
  • Represent Land O'Lakes in its entirely and not just the members from my area.
  • Do all in my power to have Land O'Lakes controlled democratically, including the election of Directors.
  • Welcome new ideas or "new blood" as a means of keeping life in the association and service to member and patrons at a high level.
  • Be a good listener to the reactions of member-owners as a means of better shaping the policies of Land O'Lakes.

I WILL NOT

  • Expect any special privileges from Land 0'Lakes because I am a Director.
  • Become financially interested in any business or agency that has interests adverse to those of Land O'Lakes.
  • Interfere with management of Land O'Lakes, but will limit myself to the formulation of business, membership, and management policies.
  • Discuss policy affairs of Land O'Lakes with employees other than thc management, unless delegated by the Board of Directors to do so.
  • Carry grudges against other Directors, the management, employees, or member-owners.

 

the LEADing board

You can give your board a head start for the 21st century with a new video-based director training program, "The LEADing Board," available from the University of Wisconsin. Developed by Professor Ann Hoyt, this innovative director training tool is designed to provide a high quality, user-friendly professional development package for directors of cooperative businesses. The LEADing Board provides video tapes, participant workbooks and a facilitator's guide for 9 workshops that cover the unique nature of cooperative businesses, cubes and responsibilities of directors, tools for effective directing, board management relations and basic coop finances.

Each workshop is designed around one video module (Module 1) or part of a module (Modules 2 through 5 each have two parts) and has been planned to last approximately 1'~ hours. The video portions vary in length from two to fifteen minutes. Workshop length can vary by the number of exercises included and the length of time spent on discussion questions.

"We've found that these materials can be adapted to a wide variety of training formats. They are equally useful for local farmer co-ops, credit unions, rural non-farm co-ops, purchasing co-ops, worker co-ops and urban consumer, service, and housing co-ops," says Hoyt. "I'm especially pleased at the high level of interaction and discussion that grows out of the many interactive exercises in the series. Directors have been very complimentary about the series and the workshops we've held using these new materials."

Modules Include:

  • The Cooperative: A Special Kind of Business (1 part)
  • What do Directors do? Duties & Responsibilities (2 parts)
  • The Big Picture: Providing Leadership (2 parts)
  • Directing Management for Desired Results: Board Management Relations (2 parts)
  • Getting Control over the Present Financial Matters (2 parts)

Full package: $325 + postage.

Includes 9 video tapes, 9 participant workbooks, 1 facilitator's guide. Partial pricing

& quantity discounts can be obtained from Prof. Ann Hoyt.

For more information or to order the series, contact Prof. Ann Hoyt

Room 345 Human Ecology Building, 1300 Linden Drive, Madison, Wl 53706

608/262-7390 (phone), 608-265-6048 (fax) or aahoyt@facstaff.wisc.edu

Learning from Others: new expectations for directors

The National Association of Corporate Directors' new guidetine6 for enhancing professionalism on boards:

  • Become active participants and decision-maker6 in the boardroom, not merely passive advisors.
  • Budget at least four full 40 hour weeks of service for every board on which they serve.
  • Limit board memberships. Senior executives should sit on no more than three boards, including their own.
  • Consider limits on the length of service on a E5oard to 10 to 15 years to allow room for new directors with fresh ideas.
  • Immerse themselves in both the company’s business and its industry while staying in touch with senior management.
  • Know how to read a balance sheet and an income statement and understand the use of financial ratios.
  • Own a significant equity position in the company.
  • Submit a resignation upon retirement, a change in employment, or a change in professional responsibilities.

 

so you’ve been elected to the co-op’s board of directors

By Bob Cropp (UWCC) and R.H. Vilstrup, Professor Emeritus, U.W.-Madison.

The annual meeting is over. You have been elected by the membership to serve as part of the Board-Management Team. You now have accepted a vital role in directing the cooperative and representing all of the membership. Serving as a cooperative director carries many legal and implied responsibilities.

Many organizations have not clearly defined the role and division of responsibility between the elected board of directors and the hired management team. Frequently new Board members have difficulty distinguishing between their cubes as an individual director and the actions as an entire board.

The financial stability and growth of a co-op often depends on having skilled and effective Board members. Ultimately, directors select Board leadership, hire management, set policy direction and make critical decisions. Here is a review of many of the cubes and leadership requirements and responsibilities expected of an individual co-op director and the entire Board.

Cooperative directors should:

  • Be adequately informed and qualified to make decisions in the best interest of the membership.
  • Be willing and able to take the necessary, time to participate and attend all Board meetings and cooperative functions where Board attendance is required.
  • Actively participate in meetings, contribute ideas, and offer opinions when appropriate.
  • Carefully listen and ask key questions to aid in making appropriate decisions.
  • Maintain a progressive attitude in developing new ideas and concepts that contribute to the growth and success of the co-op.
  • Assist management in meeting current and future needs of the membership. With the rapidly changing business environment, this visionary role is critical to the success of the cooperative.
  • Become familiar with the articles of incorporation, bylaws, board policies and organization of the cooperative.
  • Refrain from discussing confidential Board business outside of meetings.
  • Represent all the members of the co-op without showing favoritism to an individual or a special interest group. Decisions should be based on what is best for the membership as a whole. Nevertheless, the co-op may offer different types of programs or services for different members. With the structural changes in farming, the membership is increasingly heterogeneous, and the needs of all members are not the same.
  • Recognize that Board of Director decisions are group decisions, that Board members cannot act as individuals, and that final Board decisions are the composite of the background, knowledge, experience and judgment of the entire Board.
  • Work as a team member, actively discussing issues and supporting the final majority decision.
  • Recognize that a director is elected democratically from the membership and that, except when the Board is meeting formally, the director's authority is equal only to the rights and authority of the individual member.
  • Be on time for meetings and participate conscientiously.
  • Be positive, interested, tactful, broad-minded and aware of his/ her influences on the attitude of other members and staff.
  • Avoid conflicts of interest.
  • Be aware of the business and social environment in which the co-op operates. With the changing state and federal rules and regulations and the industrialization and globalization of agriculture, this is an increasing challenge to directors.
  • Recognize and respect the division of responsibility between management and Board members.
  • Be a loyal supporter of the cooperative.
  • Help develop a good working relationship with management and objectively evaluate and reward management performance.
  • Strive to improve leadership skills by actively participating in director workshops and leadership development opportunities.

Learning from Others: the best corporate boards

Based on input from an expert panel on governance and their survey of over s 200 top corporations, Business Week has identified that the best boards:

  • Evaluate performance of the CEO annually in meetings of independent directors.
  • Link the CEO's pay to 6pecific performance goals.
  • Review and approve long-range strategy & 1-yr operating plans.
  • Have a governance committee that regularly assessed the performance of the Board & individual directors.
  • Pay retainer fees to directors in company stock.
  • Require each director to own a significant amount of company stock.
  • Have no more than two or three inside directors.
  • Require directors to retire at age seventy.
  • Place the entire board up for election every year.
  • Place limits on how many other Boards its directors can serve on.
  • Ensure that the audit, compensation, & nominating committees are composed entirely of independent directors.
  • Ban directors who directly or indirectly draw consulting, legal, or other fees from the company.
  • Ban interlocking directorships: "I'm on your board, you're on mine."

Keith Raman, Chair of Compaq’s governance committee. Business Week 11-25-96, The Best and Worst Boards.

 

should co-ops use outside directors?

In 1998, Ohio modernized their cooperative law. Among the key changes, the law allows for outside directors with voting privileges. In Virginia, statutes require outside directors and farmer cooperatives to include university extension personnel, and federal law authorizing Farm Credit requires each association to have one Board member as an outside director with voting privileges. In Wisconsin and Midwest states, outside directors would not be permitted to vote if a cooperative chooses to add a non-voting director to its Board.

More and more cooperative Boards across the county are thinking about adding outside directors to their Boards. The questions for cooperative Boards are whether outside directors are needed and what qualifications should they have, if they are added to a cooperative Board.

As Boards look for diversity in skills, knowledge and experiences from within their membership, there are challenges in comprising the ideal. Board. Outside directors can bring new, outside perspectives to the cooperative Board, including business and marketplace experience that might be vital. Outside directors play a different role than a consultant. Many could have experience in hiring CEO's, expertise in serving on committees, new ideas for research and development and new products, and critical financial, or even global, expertise. They can also help challenge a Board to be more forward looking.

Are outside directors appropriate for every cooperative? It is the Board's and organization's choice to determine if an outside director is helpful. Certainly, Boards should not jump on a bandwagon to use outside directors just because others are doing it. They should evaluate their own performance and gaps in expertise first, before adding an outside director.

Testimonials from cooperatives that have outside directors, such as CoBank, Welch's and ProFac, suggest that outside directors can add significant value to a Board's decision-making. However, any outside directors should have certain essential qualifications that the Board specifies, including holding comparable philosophies, being committed to helping add value to the cooperative, willingness to challenge (and be welcomed to challenge) the Board, and having the specific experience and knowledge that fits the cooperative's business needs.

Those using outside directors suggest that each outside director should have a job description spelling out the person's roles/responsibilities and policy on conflicts of interest Most will require compensation, and possibly higher compensation than inside directors. Cooperatives can find outside directors from a variety of sources including: other cooperatives, trade organizations, universities, community businesses, and executive search firms.

*Other changes included changed voting methods (allowing for example voting by fax and e-mail) and allowing non-member investment in co-ops with a separate voting class.

—From a presentation at Farmer Cooperatives 2000 by Roy Orton, Vice Chairman of CoBank.

 

performance of co-op boards of directors

The Cornell Cooperative Enterprise Program in working with 11 agricultural cooperatives over the last decade has summarized evaluations by Board members and managers of their cooperative Board's performance. Directors and managers were asked a variety of questions on: Board operations and process; director proficiencies; the effectiveness of the chair; minimizing politics and conflicting interests; understanding and fulfilling director roles; Board-management relations; and overall strengths and weaknesses.

Some key findings include:

  • Directors rated Boards lower than expected on the tendency for discussion to get side-tracked, and some directors tending to dominate meetings. Directors strongly disagreed that there were no "politics" on their Boards
  • Chairman of Boards were given high marks in all of the leadership dimensions for that role.
  • Several areas of conflicting interests were identified as having a negative impact on cooperative performance: one district versus another district, one state versus another state/other states, and different factors of the Board. Large commercial farms, small farms, or management issues were not identified as sources of potential Board conflict, but rather the average size farms were seen as potential sources of conflict.
  • Boards agreed that cooperatives had well-defined missions, objectives and goals, but disagreed that their cooperative had a well-developed, written strategic plan.
  • Directors strongly disagreed that there were conflicts between the Board and management.
  • Directors tended to rate themselves lower on their doing a good job of evaluating managers and on their understanding of the role of the Board in fine-tuning and approving policy. Directors evaluated themselves as having a clear understanding of the role of management
  • Directors rated themselves lower than expected for contributing to and evaluating strategic plans, and evaluating market plans and strategies
  • Managers tended to rate director performance lower in the area of evaluating financial issues and in conveying accurate expectations to members, and in spelling out what is expected of management

The implications of this work suggest that Boards might benefit from additional expertise in analyzing financial issues, strategic planning, marketing and in evaluating management. Director education programs might be designed and offered to address those areas. As the authors of the study conclude: Boards might consider expanding their pool of talent and expertise beyond the pool of talent and beyond their membership base by utilizing non-member directors. For sure, the study illustrates the importance for Boards to evaluate their performance and to take steps to address weaknesses.

Source: Evaluating the Performance of Agricultural Cooperative Boards of Directors by Brian M. Henehan & Bruce L. Anderson, Cornell University, (1999).

 

Learning from Others: making public assessments of director performance

"'Sunlight is the best disinfectant"' said David Johnson, CEO of Campbell soup, quoting Justice Louis D. Brandeis, on why Campbell requires that annual self-evaluations of the effectiveness of the Board and its committee are publicly disclosed.

Business Week 11-25-96, The Best and Worst Boards.

 

Learning from Others: governance payoffs

Too many Boards fail to pay attention to good governance practices until times get really tough. But it's a little like brushing your teeth. If you brush them all along, you'll probably have fewer cavities.

William D. Crist, President of thc Board of CalPERS. Business Week, 12-8-97. The Best and Worst Boards.

 

the co-op board's role in strategic direction

The Board's responsibility largely rests on setting strategic (of real consequence) director for their cooperative. This means that Boards must see that the cooperative has clearly established goals and strategies for achieving them, that they are appropriate for the circumstances, and that management understands these strategies.

There are conflicting views on the role a Board should play in strategic planning and setting the cooperative's direction. Some practice the view that Boards' play a generally passive role and more or less sign-off on the cooperative's strategic direction. Here, the Board is often a rubber stamp for the management's strategic plan. Others provide for the Board to pro-actively lead the strategic planning process with management input and support. This approach leaves the Board in the driver's seat. In either case, not only do individual Board members often express a desire for their cooperative to be more strategic, they increasingly know it is their first responsibility.

So given the variation in practice in how far the Board goes in setting strategic director and developing strategic plans, how can the Board become more effective in its contribution to setting strategic direction within the framework and culture of its own cooperative? First, the organization needs to acknowledge that the Board can add value to the strategic director process. After this is acknowledged and acted upon, the decision needs to affect Board selection, training and behavior.

Obviously, the challenges facing co-ops are complex, both business-wise and technologically, so management staff and often outside expertise must be involved in partnership with the Board in setting strategic direction.

It may be easy to write-off lay Board member skills as being irrelevant or of limited use in helping the cooperative think strategically. This thinking has roots in culture and tradition and is self-fulfilling. Continuing on this path, though, both shirks the true responsibilities of directors (which by law cannot be done) and limits the cooperative capacity to be strategic.

Boards need to be involved directly and actively in strategic planning.

There is no one answer regarding whether management versus the Board drives much of the specifics in planning and director setting. Truly it is a partnership and a collective art borne within the organization.

But Boards have to understand the cooperative business environment (macro-level, competitors, and internal capacities), and the cooperative's strengths and weaknesses relative to this environment, if they are to set and approve strategic director. From these steps flows their role to approve capital budgets, human resource budgets, and operating budgets to carry out strategic director. Finally, the Board has to develop policies consistent with strategic director and then monitor results.

To put the Board's responsibility for strategy in perspective, the Board chooses the CEO and sometimes terminates he or she. If the CEO walks, or if the CEO chooses a strategic director rubber-stamped by the Board, that later fails (and the CEO walks), who's responsible? For cooperatives, the buck clearly stops with the Board. As stewards of the cooperative, it would be absurd for the Board to wait for the CEO or staff to define why the cooperative should exist and what its priorities and standards for performance should be.

The Board then must define these expectations through some process. This process is strategic planning and it generates the strategic thinking that defines the fundamental questions of "why the organization exists?" and "where do we want it to go?" If the Board does a lousy job at this at the front end of the process, management and staff are forced to do their detailed 'determining how' end implementation planning in a vacuum. In strategic planning, the Board defines the 'ends' and the CEO defines the 'means'. Of course the Board also has to create the risk management framework, where they set limits on how far management can go in various situations and circumstances.

Does setting 'ends' boil down success to simply meeting financial goals? 'No' generally and definitely 'no' in a member-owned cooperative. In an analysis comparing the 'best of the best U.S. companies, with similar but less successful companies, it was found that the differentiating factor was a compelling vision. Purpose and director enabled these companies to ride out business cycles and bad decisions. The need for having a compelling purpose for a member-owned cooperative speaks for itself.

If the Board concentrates on desired 'ends' and a compelling vision, it must continually engage in strategic thinking. After all, the world is changing fast. The Board must look outside its past, often a successful past at that, into the horizon where the rules of the game are changing and a new map for the cooperative must be charted. Defining the hard edge achievements for the cooperative that benefits member-owners and can be accomplished with the resources that can be allocated will give management and staff the clear authority to get the job done.

Success today does not guarantee success tomorrow for cooperatives or any other organization. The active strategic thinking and monitoring by the Board can help govern the cooperative for the best interests of its current and future members.

From a March-April 1999 article on Good Governance by Boardworks International.

 

Learning from Others: board improvement

"This board is obsessed with self-improvement."

John Coleman.Campbell Soup Company General Counsel. Business Week 12-8-97, The Best and Worst Boards.

 

remembering gar stock

After the verb 'to love,’ ‘to help' is the most beautiful verb in the world.

Bertha von Suttner

Gar Stock, age 68, died Monday January 24 at UW Hospital in Madison. (Please see photo, page 3.)

All who knew Gar will miss his well-rounded perspective, his fun-loving nature, and his passion for helping. At UWCC he was a Professor of Cooperative Management, leading our international seminar, which hosted over 2,500 visitors through the years. His international training took him to Algeria, England, France, Greece, Indonesia, Italy Jamaica, Mexico, Morocco, and Spain. He specialized in management of human resources, with emphasis upon motivation and participative management (management by objectives) as a key to increasing individual and organizational productivity on supervisory skills training,

and on co-op housing development.

After his 1992 retirement from a full-time position with UWCC, Professor Stock continued to participate in UWCC activities, teaching workshops, hosting international visitors, and lending a supportive ear, always with levity and humor.

He received his Ph.D. in 1968 in Rural SociologyAgriculture & Extension Education; Master of Science in Rural Sociology in 1966; Master of Sciences in Agriculture & Extension Education in 1963; and Bachelor of Science in Agriculture 8 Extension Education in 1959, all from UW-Madison.

Professor Stock's conviction to help people was evident in his many altruistic activities. He was a current active member of Volunteers for Overseas Cooperative Assistance (VOCA) over the last eight years, Kids 4 Local Access Telecommunication Commission (City of Sun Prairie), AARP-Capital City Task Force member and Chair, State Legislative Committee (representing 700,000 AARP members statewide), a volunteer at UW Hospital and member of the United Methodist Church, Sun Prairie and its Scholarship Committee.

Gar was a U.S. Navy veteran, serving in the Korean War. A former member of the Wisconsin United Methodist Church Conference as Chair, Sun Prairie Board of Education, he also served on many Boards through the years, including Western Building Products, inc., Co-op Auditing, Inc., and the Association of Co-op Educators (ACE).

 

uwcc founder receives award: richard vilstrup

IACE hall of fame website:http://www.occe.ou.edu/halloffame

The International Adult and Continuing Education Hall of Fame has honored Richard Vilstrup, founder of UWCC, as one of its distinguished members. Election to the Hall of Fame acknowledges innovative leaders who have made significant contributions to the fields of continuing education and adult education.

Richard Vilstrup was a Professor of Ag. Econ., Agri-Business and Marketing at UW-Madison for 27 years. He began UWCC with an initial focus on international co-op education, and throughout his career has been active in international leadership and educational programs of nearly all the major regional co-ops and state co-op councils. He guided Farm Credit Service Assn's leadership into developing combined services; assisted credit union leaders in adapting new member programs; served on the team that established the first co-op holding company; and consulted on several efforts to coordinate, consolidate, and merge marketing and supply co-ops in the Midwest and Western states.

Professor Vilstrup was the leading spokesman for Cooporation Among Co-ops at an International Co-op Alliance meeting in Paris, France. He has represented the U.S. in meetings with co-op leaders in a government mission to Africa, Algeria, Central America, Czechoslovakia, Denmark, Germany, Norway, Sweden, and Switzerland. His publications on co-op communication and leadership issues have been translated into several languages.

 

retirement for john cottingham

Professor John Cottingham's career as an Extension Marketing Specialist began when he joined UWEX in 1971, as one of the two first Extension specialists to be based at a campus outside of Madison. As UW-Platteville's Statewide Marketing Specialist, he specialized in direct marketing of agricultural goods.

From 1982-1986 he sewed as Deputy Secretary of Wisconsin's Dept. of Agriculture, Trade & Consumer Protection. He says the experience deepened his awareness of international issues, because his term coincided with development of new trade agreements with Mexico and the Pacific Rim. "I learned from that experience what it takes for agriculture in the U.S. to compete in the global market and was able to use that in my policy seminar."

When he resumed to the UW in 1986, he found a new and growing interest in direct marketing, and made this trend his niche. He publishes a regular newsletter for direct marketers and offers special training and workshops to help people develop alternative markets for produce and keep up with changes in direct markets.

With a BS from UW-Platteville and a Ph.D. in agricultural economics from UW-Madison, Prof. Cottingham taught portions of UWCC’s Director Leadership Workshops and was an active member of the UWCC team.

-From News and Ideas, the official UWEX newspaper (6/99).

 

visiting scholar from ukraine

UWCC was honored to host Ms. Ludmilla Remneva, an International Research and Exchanges Board (IREX) visiting scholar from me Ukraine, for three months this fall. Ms. Remneva, newly appointed Dean of Economics at the Chernigiv State Institute of Economics and Management in Chernigiv, Northern Ukraine, came to UWCC to explore labor organization and employment regulation in co-ops in the U.S. and the world.

Dean Remneva's research at UWCC was focused on finding labor-related statistical information, as well as models and information toward her greater mission of new cooperative development in the Ukraine. We enjoyed her smiling presence, and the opportunity to share and learn of each other's cultures.

new at uwcc: jody padgham

After spending three years in the Seattle area, I was happy to return to Madison, my hometown, to start as UWCC's newest Outreach Specialist (Spring '99). With a background in consumer co-ops, small business development and sustainable farming, I have been focusing most of my work at UWCC in these areas.

l to r Ludmill Remneva, UWCC visitor from the Ukraine; Konstantin Parshin, UW-Madison visitor from Tajikistan; Jody Padgham, UWCC

I am a member of the Emerging Markets Extension Team (p. 3), which is busily planning the February Value Added Conference (featured in our next newsletter), and recently went online with a New Farm Options web page (www.uwex.edu/ces/agmarkets/). I'm also part of the education redevelopment committee and look forward to the continuation of that group effort in developing new education programs and services for coops of all types.

Starting as a volunteer at my first co-op back in 1979, I continued my commitment to co-ops as a long-time member of the collective staff at Madison's Mifflin Street Community Food Co-op. I was a member of a housing co-op for many years, and served on the Board of North Country Co-op Development Fund and North Farm Co-op (alternate). When in Washington State I switched gears a bit, working on numerous small farming operations, developing an organic produce home delivery business and serving as staff for WA Tilth Producers, the state sustainable farming organization.

My Bachelor's Degree in Wildlife Ecology from UW-Madison reflects my ongoing passion for Wisconsin's outdoors, which I manage to placate through hiking, biking, skiing, camping and canoeing. The rare moments I am inside are filled with friends, good food, books, and a new addiction to learning the accordion.

 

conferences in brief:

CCMA
CONSUMER CO-OP MANAGEMENT ASSN.CONFERENCE
June 8-10,2000
Boston, Massachusetts
For info: Ann Hoyt, 608-262-7390

 

director leadership workshops

Various dates & locations throughout Wisconsin

For info, or to register: Dawn Danz-Hale or May Potour, 608-262-3981.

The Director Leadership Workshops offer an excellent opportunity for new and experienced directors and managers to strengthen their leadership and management skills. These workshops explore critical issues and innovative approaches to modernization. Experts and peers will teach about solutions to today's cooperative issues.

Workshops may be taken in any order. With completion of the series of four, each director receives a personal plaque certifying completion of the workshop series. Each co-op receives a separate gold-plated plaque inscribed with the graduates' names and year of completion.

Workshop 1: Cooperative Governance

Feb. 3 / Richland Center / White House Inn

Feb. 16 / Wausau / Best Western Midway

Workshop 2: Financial Management

Feb. 15/ Green Bay / Best Western Midway

April 5/ Barron / Harvest Inn

Workshop 3: Strategic Direction (**see below**)

March 30 at Ramada Inn, Eau Claire:

Workshop 4: Internal 8 External Communication

March 22 / Holiday Inn, Fond du Lac

March 28 /Arrowhead Lodge, Black River Falls

 

information services

Cooperative Library: 608-262-5440, Room 106 Taylor Hall.

UWCC Home Page on the World Wide Web:http://www.uwcc.wisc.edu

UWCC Cooperative Listserver: e-mail subscription requests to:reynolds@aae.wisc.edu

 

The UWCC's mission is to study and promote cooperative action as a means of meeting the economic and social needs of people. The Center works in rural and urban settings in both the U.S. and overseas. It develops, promotes, and coordinates educational programs, technical assistance and research on the cooperative form of business.


 Return to UWCC Homepage