RESPONSIBILITIES OF THE COOPERATIVE BOARD MEMBERS

DAIRY HERD IMPROVEMENT
1985

VILSTRUP, R.H.
VOLUME: NCDHIP HANDBOOK

Many organizations have not clearly defined the role and
responsibility of a board member. Frequently, new board members
have difficulty distinguishing between their duties as directors
and their actions as part of the entire board.

Also, some members are not fully aware of the division of
responsibility between the board of directors and management. This
fact sheet will review many of the duties and leadership
responsibilities expected of a cooperative director and the board.

Qualifications and Responsibilities of the Individual Board Member

The financial stability and growth of a cooperative depends on the
selection of skilled and effective board members. Ultimately,
directors select the leadership, hire management, set policy
direction and make critical decisions.

Cooperative directors should:

 -  Be adequately informed and qualified to make decisions in the
best interest of the cooperative.

 -  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 the meetings and contribute ideas,
questions and opinions when appropriate.

 -  Carefully listen and ask key questions to aid in
decisionmaking.

 -  Maintain a progressive attitude in developing new ideas and
concepts that contribute to the growth and success of the
organization.

 -  Become familiar with the articles of incorporation, bylaws,
board policies and the organization of the cooperative.

 -  Refrain from discussing confidential board business outside of
meetings.

 -  Represent all of the members, without showing favoritism to an
individual or a special interest group.

 -  Recognize that board of director decisions are group decisions,
that board members cannot act as individuals, and that 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, broadminded and aware of his
or her influence on the attitude of other members and staff.

 -  Avoid conflicts of interest.

 -  Be aware of the business and social environment in which the
cooperative operates.

 -  Recognize and respect the division of responsibility between
management and the board member.

 -  Be a loyal supporter of the cooperative service.

 -  Help develop a good working relationship with management and
objectively evaluate and reward performance.

 -  Be willing to participate in director workshops and leadership
development opportunities.

 -  Be future-oriented and willing to change; be able to recognize
trends and provide services that are in the best interest of the
organization and its members.

Responsibilities of the Board of Directors

The responsibilities of the board of directors may be outlined in
the state cooperative statute or the cooperative articles and
bylaws. Generally, the responsibilities listed are general and
apply to many types of cooperatives.

Many state statutes stipulate that "the affairs of the cooperative
shall be managed by a board of directors elected by the members
from their own numbers.  The membership of the cooperative elects
the board to act as its governing body. Acting within the legal
framework of the articles of incorporation and bylaws adopted by
the membership, the directors are responsible for employing a
manager, establishing operating and financial policy, and
supervising the progress of the business. The directors may
delegate responsibility, but they retain the ultimate legal
responsibility for the operation of the cooperative. Many new
directors are not aware that they are legally responsible to the
membership and can be held personally liable for their actions as
board members.

Historically, cooperative writers have outlined the formal
functions of the board in the decisionmaking, trusteeship,
advisory, and symbolic roles. In the interest of brevity, specific
responsibilities necessary for successful board and management
operation are outlined.

The responsibility for board and management decisions have been
clearly defined in some specific areas. It should be noted,
however, that there are many functions and activities where board
and management share responsibility.

  A. The board has the responsibility to hire and determine the
duties, salary and authority of the manager. Board members meet
infrequently and often are farming or engaged in other occupations.
It is essential that the board delegate the day-today management
responsibility to a competent general manager, who is held
accountable by the board for his or her decisions and performance.
The manager has the responsibility for selection and administration
of all other employees.

  B. The board of directors defines and sets the cooperative
overall objectives and policies and sets long-range goals with
management. The policies adopted by the board serve as general
guidelines for the day-to-day operations conducted by management.
Management defines the objectives, policies and goals for the
operational staff within the general board policies. Also,
management has the important responsibility of accurately reporting
on financial progress, operational concerns, organizational
problems and accomplishments at regular board meetings.

  C. The board is responsible for decisions concerning long-range
financial commitments, kinds of financing, soundness of investments
and security of assets. Frequently, boards share responsibility
with top management to establish financial relationships and to
obtain needed capital.

  D. The board is responsible for employing a competent auditor or
auditing firm to make an unqualified audit and report directly to
the board. The auditor also should have access to the board
minutes, which show board actions that may have a bearing on the
final report of the auditor.

  E. The board has the primary responsibility for long-range
planning. Short-range planning is the responsibility of management
and is conducted within the policy guidelines of the board.

  F. Directors have the final responsibility for securing board
legal counsel and professional assistance. Generally, management
makes recommendations to the board and works closely with the
professionals selected.

  G. The board has the responsibility to direct management to
develop annual operating budgets. These budgets should be reviewed,
along with written financial reports and operating statements,
throughout the year.

  H. The board has the responsibility to review insurance coverage
for the cooperative, ensure adequate bonding of employees, review
accounts receivable and major losses, and establish a credit
policy. Also, the board approves employee and retirement programs.

  I. The board has the responsibility of maintaining competent
directors. It should adopt an adequate nominating procedure to
attract interested and capable members as candidates for director
positions that will be elected by the membership. The board has the
responsibility of filling board vacancies occurring between
membership elections.

  J. The board has the responsibility of keeping accurate minutes
and records, and reporting the accomplishments of the organization
at the annual meeting with management. Also, the board is
responsible for developing a system to keep the membership
adequately informed so that sound decisions will be made by
members.

  K. Member relations is a responsibility shared by management and
employees. Directors can help interpret cooperative policies and
actions to the members and monitor member attitudes and
perceptions. Often, board members are asked to help develop good
public relations with other organizations, agencies, government and
the general public.

In summary, a director of a cooperative has many significant
responsibilities both as an individual and as a full board member.
It is important that directors exercise keen judgment and wisdom in
their role as elected representatives of the membership. Their
leadership position requires unique skills and dedication in
working closely with fellow board members, general members,
management and staff. The board members need to clearly recognize
the difference between the responsibilities of the board and the
responsibilities and duties delegated to the management and staff.
Finally, the legal responsibility of the position requires a strong
commitment and increased knowledge and professionalism.

Opportunities for further development of knowledge, skills and the
basic understanding of director responsibility can be obtained
through the American Institute of Cooperation, Agricultural
Cooperative Service, The National Cooperative Business Association
and the National Council of Farmer Cooperatives. The Cooperative
Extension Service, state cooperative councils and associations, and
other educational sources and agencies also should be contacted.

References

  1. The Cooperative Director. 1979. St. Paul Bank for
Cooperatives.

  2. Abrahamsen, M.A. 1976. Cooperative Business Enterprise. McGraw
Hill.

  3. Dewey, D. Legal Responsibilities of Directors of Agricultural
Associations. Wichita Bank for Cooperatives.

  4. Handbook on Cooperative Basics. 1984. American Institute of
Cooperation.

  5. Roy, E.P. 1974. Cooperatives Today and Tomorrow. Interstate.

  6. Vilstrup, R.H., and F. Groves. 1978. Techniques of Cooperative
Communications. University of Wisconsin Cooperative Extension
Service.

  7. Garoyan, L. and A. Haseley. 1969. The Board of Directors in
Agricultural Business Cooperative Extension Service. Oregon State
University.

  8. Sargent, D. 1983. Role of Cooperative Directors and Managers.
American Cooperation. AIC.

  9. Vilstrup, R.H., F. Groves, P. Mohn. 1981. New Dimensions of
Cooperative Leadership. University of Wisconsin Cooperative
Extension Service. USDA.

10.  Leith, G. January 1983. Cooperatives Must Be Deeply Committed
to the Success of the Business. Farmer Cooperatives.

11.  Torgersen, R.E. November 1982. The Director Skills Development
Gap. Farmers Cooperatives.




תתתתתתתתתתתתתתתתתתתתThe National Dairy Database (1992)תתתתתתתתתתתתתתתתתתתת
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%f TITLE;RESPONSIBILITIES OF THE COOPERATIVE BOARD MEMBERS
%f COLLECTION;DAIRY HERD IMPROVEMENT
%f ORIGIN;Wisconsin
%f DATE_INCLUDED;June 1992