Co-ops need to have a system of organization and governance that fully supports the delivery of the purpose of the enterprise. Some of the most essential policies that support the crucial components of the organization may be enshrined in the legislation under which the cooperative is registered, others are normally covered by the rules/constitution. Whilst others will be reflected within the corporate governance arrangements and reinforced by codes of practice. However, if coops are to be fully effective they need more than this.
The critical organizational features need to be reflected in all of the policies prepared by the Board of Directors, and be monitored by stringent oversight arrangements. In all cases they need to be supported by robust foundation policies and the management systems that can ensure that cooperative principles and practices are fully reflected within the routine operations of the enterprise. The day-to-day running of the enterprise has got to be in full accord with all of the critical organizational features required in a cooperative.
All organizations need to evolve in order to keep pace with the changes taking place within the environment in which they operate, especially in response to those changes taking place within the marketplace. Cooperatives that do not make the necessary changes can soon become irrelevant to the lives of their members and as a result cease to enjoy their support. The crucial components of the cooperative enterprise model do not change, however, the specific practices, policies and systems required to support this model do need to evolve and change.
The legal framework necessary for successful cooperatives to exist needs to support and sustain all of their essential organizational features. A significant problem for cooperatives in many countries is that the agenda for the reform of cooperative legislation is being set by managers with the main aim of making coops more like commercial companies and less accountable to their members.
Corporate governance in co-ops
Corporate governance is the exercise of authority and control in a legal entity. In the context of a cooperative this encompasses the overall system of direction, management and control; including the exercise of power and authority and the relationship between all the individuals involved.