The Board Role in the Accountability Stream

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Boards of directors are the critical link between owners and management in the accountability chain for a cooperative. If boards don’t have a good understanding of how accountability works or don’t have good systems for accomplishing it, the job can be frustrating.

Accountability mirrors empowerment

To begin, we must recognize that accountability and empowerment go hand in hand. Bill Gessner’s “Cooperative Empowerment” model (see Cooperative Grocer # 63, March-April 1996) eloquently describes how empowerment flows from members to directors to the manager to the staff to the members and back around again. He helped us understand that we improve the health of our cooperative and our community by encouraging this empowerment flow but that trying to push it upstream—boards trying to empower members, for example­—is counterproductive.

Accountability is the companion of empowerment but flows in the opposite direction: staff are accountable to the manager who is accountable to the board which is accountable to the members. Providing empowerment without holding the empowered party accountable is irresponsible. Not only are both empowerment and accountability important companions, the flow must stay in order. For example, if the board skips over its responsibility to empower the manager and tries to empower staff, this makes it impossible for the manager to maintain staff accountability.

There are many organizational aspects from which to examine the board’s role in the accountability chain. But one area in particular seems to cause repeated angst and consternation—how employees are treated. Board members at food co-ops often are very concerned that their co-op is doing all it can to ensure fair and progressive workplace practices.

Regardless of your co-op’s governance structure, staff treatment and the expectations and limitations of the general manager’s decision-making power is often a topic of discussion among board members. So how does a board properly ensure accountability in this area? First, let’s look at why it matters.

Why we care about staff treatment

When many new-wave food co-ops were founded in the 1960s and ’70s, their leaders were in part looking to create an alternative to prevailing corporate philosophies that favor short-term, exploitative solutions. Hierarchy and management were some of the “evils” that cooperation was supposed to solve. The role of management in food cooperatives has evolved from a necessary evil to a critical component of a successful cooperative and an important link in the accountability/empowerment chain. But that doesn’t mean there isn’t still a residual cultural attitude against hierarchy and management, or a tendency to mistrust the manager’s intentions.

Further, cooperative values such as equality, equity, and solidarity encourage us as cooperators to value all people and to support human fulfillment. Surely this includes special care for the people who work for cooperatives. We expect our food co-ops to do better than the average company when it comes to how staff are treated. Particularly in this area of operations, cooperators want the real thing, not lip service to an ideal.

Lastly, to be successful as retail businesses, food cooperatives must create a customer service focus. Treating staff well helps ensure the good treatment of customers. Staff who enjoy their work, are empowered, and feel respected are more likely to go out of their way to meet and exceed customer expectations.

Given our history, our values, and our business strategies, food cooperators want a workplace that respects individuals and values their contributions. This can be a very good thing. However, it’s also important to be mindful of historic anti-establishment propensities and obsession with everyone’s happiness. These factors might set up unrealistic expectations of a workplace utopia or unfairly hinder the effectiveness of the manager and compromise the accountability chain.

Management style and staff treatment

All managers have strengths and weaknesses. No matter how talented, one person cannot be all things to all people; a manager is sure to displease someone somewhere along the line. Given this truism, boards are wise to direct and monitor for outcomes rather than for style.

For example, say a board seeks and hires a general manager with an entrepreneurial spirit to turn around or grow their cooperative business. This new manager may be very “business-like” and direct, but if the previous workplace culture was more casual, directness can be perceived as bossy or alienating. Is this a situation where the manager is a bad match and needs to go, or is the co-op getting exactly what it wants and needs?

Or, suppose a co-op has an emotional general manager who gets angry or defensive or cries when the going gets tough. Can these behaviors be construed to mean this person is creating a hostile work environment, or simply exhibiting the uncomfortable manifestation of being all too human in a stressful job? Is the story about an emotional outburst the whole story or did rational productive dialog follow? And is there any indication that these behaviors get in the way of the cooperative accomplishing its ends?

It is important to acknowledge that some of the board’s discomfort with style comes from the difficulty of obtaining objective data on overall staff treatment. Random complaints and/or some discontented employees do not necessarily mean there is a serious problem. But how do you separate style issues or reports of isolated events from what could be a pattern of poor staff treatment or abuse of executive privilege?

If the co-op’s ideals include providing a humane, caring, values-centered workplace, then a successful manager, despite his or her shortcomings, will work to create that atmosphere. Co-op performance outcomes would in part speak to the practical application of these ideals through positive growth and overall customer and staff satisfaction. And if a manager is ineffectively managing staff, this will certainly show up in the co-op’s overall results: declining sales, no increases in membership or store traffic, or failure to demonstrate accomplishment of ends or desired outcomes.

Further, the general manager is typically responsible for establishing operational definitions of board expectations and for providing reasonable measures and data to demonstrate compliance with policy criteria. Boards would do well to concentrate their efforts on articulating their values and monitoring compliance and overall results, rather than worrying over a manager’s style or an occasional dissatisfied employee. Remember that a manager needs to be effective, and sometimes that means being unpopular.

Workplace culture begins in the board room

It seems counterintuitive, but the co-op’s most underappreciated employee might actually be the general manager. Not many people want to manage multi-million dollar businesses on behalf of a diverse community with inconsistent support, ever-changing bosses, constant critical feedback, and pay often not commensurate with responsibility. What are the benefits in that?

If we are going to stand up for workplace empowerment, right livelihood, and feeling valued for your work, is it reasonable to insist that general managers hold to a high ideal of staff treatment if they cannot expect the same consideration from their boards?

Setting the tone for workplace culture starts with the board’s treatment of its general manager: how the board treats its one employee sets in motion an organizational paradigm. Want an empowered staff? Begin with an empowered manager. Want an accountable manager? Be sure not to undermine that manager’s ability to hold staff accountable.

Board role in staff treatment

If the board of directors wants to resolve staff treatment questions, the board should start by looking at existing policies and systems. If the board has adequate systems in place, that will assist in the work of achieving the right focus and perspective on a given situation.

Let’s deconstruct a scenario and see how Policy Governance informs the ways to proceed. A co-op with more than one location builds a commissary kitchen that will help its in-store delis be more efficient and profitable. The food prep staff is opposed to it. Despite their objections, the project is moving forward.

Some deli staff members go to the board with concerns about how they believe their disagreement with the commissary kitchen might affect their employment with the co-op.

In this case, the board is being called upon to consider a staff treatment issue, while on the other hand the board is also holding the manager accountable for carrying out their wishes and has accepted that building the commissary kitchen is a reasonable way to accomplish the organization’s goals. What is the board’s role in this conflict, if any, and how much time is it reasonable for a board to devote to it?

Astute directors know that if they get involved, they will undermine the general manager’s authority and open the door to staff bringing future workplace concerns to the board. But directors also know, as representatives of the owners, that some methods of employee treatment are unacceptable. Ideally, the board already will have defined those conditions and have reliable systems in place to check on them, so that when a specific situation arises the board can turn neither to each other in despair, nor to the general manager in accusation, but to their policy register.

Articulating staff treatment values

When boards are delegating authority to the general manager, so many factors come in to play, and staff treatment may be one flash point in trying to grapple with that bigger question of delegation. Empowering someone else to make value judgments to accomplish the co-op’s mission can be hard. What we are often asking our managers to do is to adopt a decision-making process that values employee input, while maintaining accountability to ends. But sometimes it’s hard to have it both ways. The board has only one employee, and that employee deals with dozens of issues every day. If boards focus on one issue (such as staff treatment) above others (such as accomplishment of the co-op’s purposes or profitability), it could have negative consequences for the co-op.

Policy Governance allows boards to define and limit executive powers, and it can help boards by providing a structure for doing that work. If the board does become concerned that the manager’s behavior might be in violation of workplace standards, the board can implement additional monitoring to determine if the general manager’s interpretation of staff treatment policies is reasonable and in compliance. By maintaining focus on ends and results, boards can balance what’s in the overall best interest of the co-op.

To fulfill its accountability to members, the board must articulate the co-op’s values and expectations. Then the board must empower its manager to accomplish those expectations and hold that manager accountable for doing so without creating unacceptable conditions. Directors have the challenging role of holding many things in perspective in their responsibility to the co-op. The benefit of a systematic approach to governance is that issues can be addressed objectively and in fairness to all parties without losing sight of the purpose of operations – that the co-op accomplishes what it should on behalf of its owners.

The author wishes to thank the leadership team of Cooperative Development Services for their contributions to this article

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Marilyn Scholl is manager of CDS Consulting Co-op ([email protected]).

See other articles from this issue: #130 May - June - 2007