Board Training at Two Startup Co-ops
On an evening in early May 2004, I had just completed the first half of board of directors training for Harvest Market, a new cooperative in Barneveld, Wisc. The president asked how boards make the transition from a startup to an ongoing governance board, and I agreed to look for resources on that topic. Two weeks later, when we gathered for the next half of our training session, I had to report that I had not found any! “Perhaps we should write something ourselves?” I suggested, and the idea for this article was born.
I hope that from the stories of two recent co-op startups you will get a broader picture of the board’s job and the role of board training to support co-op leadership development.
Community Steering Committee
Mary Romolino, current board president for Harvest Market, says that getting a food co-op established in Barneveld was vital for the residents of this small, rural town. “We did not have a grocery store,” she stated. “Residents were driving 12–15 miles for food.” The board originally started out as the Community Steering Committee, composed of community members who knew a lot of people. They began tackling the jobs of producing a feasibility study and a business plan, hiring the initial general manager, raising funds from the community, negotiating the lease—in Romolino’s words, “Yikes, everything!” The steering committee worked closely with Mel Braverman, operations consultant for Cooperative Development Services (CDS), during the startup. [See Braverman’s article in CG September-October 2004.]
Formal board training was very helpful to the steering committee, Mary reflected. In the words of one participant, following the training “we set the bar higher” in expectations for board performance. Board members said they would “think policy” going forward and consider the long-term perspective. They understood they would have to let go of their day-to-day role eventually.
But the first few months of operations were not smooth sailing by any means. Six months after opening, the board had to raise another $70,000 in two weeks’ time, half of it from the community, to keep the co-op open. The board dealt with turnover among board members and hired a new general manager, who started in early April 2005. “We are just now getting to the place where we can see the bigger picture and back off from dealing with emergencies,” Romolino reported.
The board has been able to recruit new board members who have business and strategic-decision-making skills. Their next jobs are to update the business plan and to look closely at their board governance role and the sustainability of the board. They are working through committees to increase the impact of the board and identifying committee volunteers who might make good board members down the road. And, of course, they are closely overseeing their new General Manager, Mike Markin.
According to Markin, who is new to co-ops, things are going well so far, and he and the board “are working together to get improvements done. I haven’t had a major negative.” Although this is his first time working for a board of directors, he has served on committees in the past and knows how volunteers work. “These guys are giving me all the help I need,” he enthusiastically stated. “I’m sure we’ll have things to work out in the future,” he said, “and I’m confident that, by working together, we can do that.” Board members are not micro-managing. “We are able to check each other when we start getting into operational details,” Mary reported.
Just what kind of training did the board have during our eight hours together? In the first session, we covered such topics as an overview of the co-op structure, board operation guidelines, and the general roles of the board and general manager. We reviewed the basic organizational governance model and how to work as a team with the general manager. Additionally, we discussed how to work effectively with committees to strengthen the role of the board in the community.
The board and general manager were actively involved in determining topics for the second half of our training. We reviewed sample policies regarding conflict of interest and board code of conduct. We also discussed a process for evaluating the general manager that includes monitoring performance specifics, such as achieving budgeted operational costs, gross margin goals, and employee and member satisfaction. Sample board evaluation forms were shared to encourage the board to regularly evaluate its own effectiveness. Time was spent on how the Harvest Market board wants to apply all of these ideas to its own work going forward. An annual board calendar was developed to help the board establish topics for each board meeting.
We also discussed long-range planning and the role of the board. The “strategic pyramid” accompanying this article illustrates how the board and the general manager can interact to establish the co-op’s long-term focus and strategic priorities. Generally, the board is responsible for upholding the vision and mission of the co-op and, with the help of the general manager, the long-range direction. Within that focus, management directs day-to-day operations, reporting regularly to the board on progress toward achieving long-range directions.
Board President Romolino shared advice for other co-ops and volunteer board members who are just getting started: “If you look at the job too realistically, it will be daunting. You need to take the leap of faith that you can get it done. Once you are up and running, however, pay attention to even the little details because, ultimately, you are responsible. Make sure you’re running the co-op as a business.”
Just Food: Northfield Community Co-op in Northfield, Minn., decided to utilize Policy Governance, a governance system designed to ensure that the board achieves accountability by using written policies to define values, delegate responsibility, and monitor outcomes. Marilyn Scholl, CDS trainer and consultant, provided board training, and Bill Gessner, CDS business development and project management consultant, worked closely with the board.
According to Stuart Reid, general manager of Just Food, the Policy Governance decision was an important one. He specified in his interview process that he preferred to work with a board that uses Policy Governance. One of the earliest decisions the board had to make was how to handle board elections. Stuart reported that, “the board’s process emphasized transparency and multiple ways to get involvement and ongoing training, including pre-election training of new board members. The board wanted to establish a continuity of vision.” Policy Governance helped them accomplish this goal.
Just Food was formed initially, Reid stated, because “local farmers were lacking good outlets for their product, especially those with larger volumes of produce.” There are two supermarkets in Northfield, but not much focus on natural foods or organic produce. Ron Griffith, current board president, noted that, “Our community already has a successful farmers’ market, at least two CSAs, and about 10 buying clubs. We knew they didn’t satisfy all the needs for access to natural foods and products that support sustainable living.” In addition, “We wanted to make a larger contribution than any old natural foods store would make. We wanted to take care of the environment, to be fair to producers, to provide a great work environment, to deliver value to customers, to strengthen the community, and to be fiscally responsible to the owners of the enterprise.” Within this context, the name Just Food takes on a broader meaning!
During the startup phase, a core team accomplished the organizing work. “Only after a feasibility study,” Griffith reported, “did we have enough confidence to incorporate. This step required forming a board of directors.” All told, this organizing process took about five years, and even after incorporation, there were another 20 months before the store opened. Once incorporation was accomplished, the board became involved with “reaching out to the community to sell the concept of a co-op, building relationships with potential suppliers and planning and initiating store operations.”
The board decided to establish a Founding Team that included people who were not on the board. “We tried to have wide participation in the Founding Team and its task forces,” Ron reported, and “the Founding Team had a totally open membership.” Since the hiring of the general manager, the Founding Team and its task forces have been phased out. “Only member recruitment remained as a volunteer activity once the store opened.” As Griffith noted, the ongoing role of the board is governance. “We have adopted Policy Governance as the model that best supports us in that role. Within that framework, our job is to formulate board policies and to monitor compliance in order to represent the needs and values of the membership.”
Establishing the Founding Team to carry out the work of getting the co-op started helped the board avoid a hands-on role. The board remained in its governance role during the startup phase. That outlook, Griffith said, “limited the extent to which we developed the habit of a hands-on board and allowed us to phase out the groups that had been doing the work as it became the responsibility of the staff.” It wasn’t always easy to let go, despite this separation of volunteers from the more formal board role. “This letting go was a bittersweet experience,” he stated. “The Policy Governance training reinforced our decision to empower the general manager.”
Training is an ongoing board process. “We are attending CCMA (Consumer Cooperative Management Association conference), reading articles in Cooperative Grocer and material by John Carver (founder of Policy Governance), meeting with the board of a nearby co-op that uses Policy Governance, reviewing policy manuals from a number of other co-ops, developing our policies, and getting formal training regularly,” Griffith reported.
Reid voiced concerns regarding the policies the board has developed. He felt it would have been helpful for the board to have invested the money and the time on at least one more day of training to complete the policies. In addition, he thinks the board is having “some trouble writing policies that are not overly restrictive, cumbersome, and difficult to follow.” He felt that all board members want to protect the co-op, but “some people use different words to convey the same meaning.”
What other advice does he have for startup co-ops? “Don’t be afraid to tackle the initial membership equity issue head on. We ended up at a $125 member share price, and we could have gone to $200. People will understand the co-op’s need for equity if you explain it.” Stuart concluded, “The board just did so many things right. The Founding Team idea is worth replicating.”
Griffith is looking to the future. “The board is searching for how we can participate in the wider co-op movement,” he said. “We need better definition of the board role in cooperation among cooperatives.”
The board is also looking for new ways to recruit board members. Griffith had some advice to share with other startups: “Find at least a few people who are able to contribute a lot of time. It is essential that one or more of these volunteers has good group-process skills. Keep the board separate from the hands-on work of starting the co-op. And hire an experienced person as general manager, one who works well with the board.”
*** Ann Marie Waterhouse is the principal of EagleHeart Consulting, providing board training and strategic planning facilitation ([email protected]).