BODs: The

Leadership In
Cooperative
EVERYTHING
RISES AND FALLS
ON LEADERSHIP
Dr. John C. Maxwell
The Most Essential Quality for
Leadership is not perfection but
CREDIBILITY. People must be able
to trust you or they cannot follow you .
How do you build credibility? Not by
pretending to be perfect but by being
honest.
 SERVANT LEADERSHIP

The Servant as Leader…”begins

with the natural feeling that one
wants to serve… to serve first,
then conscious choice brings one
to aspire to lead…
Participatory leadership in
cooperatives like servant
leadership emanates from the
desire of serving people and
its organization as a whole.
 Being a co-op director is a very
prestigious and responsible
position.
 The long run success of a cooperative depends more
on a strong board than on a strong manager.

 The board by law is responsible for leading the co-op.

The board can delegate duties to hired management,
but they cannot delegate the responsibility to lead
and direct the cooperative

 Naturally, for a successful cooperative there should

be a strong board and a strong manager that work
well together as a team.
 “The board of directors faces a two-fold
challenge:

(1) It represents an owner-member and

consumer-member leader of the cooperative
business, and
(2) it is vested by law with the duty to reasonably
conduct and directs the affairs of the
cooperative as a leader.

The Board represents the heart of what makes a cooperative work and
function as provided for under RA 9520 for the good of all its officers,
members, management staff, and the cooperative as a whole.

“The Board of Directors of Cooperatives”

 Unique Role of a Co-op Director:

 A leader who represents the best interest of members

in the short and long run operations of the
cooperative.
 Directors of other agencies are usually concerned
with profit and returns while Directors of co-ops are
ensures product affordability and quality, best and
efficient service, transparency and effectiveness of
operations other than profit and return on capital.
 Being a director of a co-op entails great challenge of
leadership flexibility and participatory governance.
 Board Roles and Responsibilities

 A Guiding Vision in representing co-op

members.

• unbiased “voice” for all members.

• Member’s hope and expectations
• Conflict resolution for the cooperative and its
members
• Peer support initiative source
 Board Roles and Responsibilities

 A Good Listener in hiring and supervising

the cooperative management

 Making the perfect match

 Succession and the future
 Supervision or interference
 What about other employees?
 Does the board have an annual appraisal and evaluation of
the manager/CEO? If so, describe the procedure.
 First, let’s review why boards need to annually,
at a minimum, appraise and evaluate the
manager/CEO.

 By failing to evaluate the manager, boards miss an

opportunity to express support for the manager’s
strengths and strengthen his/her performance.

 Neglect of this board responsibility can be costly,

resulting in higher management turnover, mistrust, and
ongoing poor performance.

 Fulfills the board’s fiduciary and legal responsibilities

as a leader of the cooperative.
 Managers need feedback on performance. Good
managers welcome honest feedback.

 Also, this annual review provides an opportunity

for boards to express formal appreciation to the
manager for a job well done.

 Most important: Manager’s performance affects

the performance of the entire cooperative —
assuring successful performance is one of the
board’s chief responsibilities.
 Board roles and responsibilities
continued:

 Fiduciary: Honesty in the performance

and responsibility of protecting the
cooperative assets.

• Accounting system
• Financial health
• Resources to serve
To carry out their fiduciary responsibility to
protect the cooperative assets, directors must
meet three duties:

 Duty of loyalty

 Duty of care

 Duty of obedience
 Duty of loyalty:

 Directors should have an undivided loyalty to the

entire co-op. He/She shall not represent the special
interest of one or group of members over the
memberships as a whole.
 Directors must refrain from conflict of interest
 Directors are obligated to act in good faith
 Cannot divulge confidential information
 Have a code of ethics
 Independence as a director is a mindset that
includes no agenda, no bias, and a willingness to
challenge
What practices or policies does your board of
directors rely on to ensure the board represents
the “entire” cooperative?

What potential conflicts of interest could you

encounter as a director of this cooperative?

What actions should you take if you believe you

may be in conflict of interest?
Duty of Care:

 The standard of conduct is defined as the

degree of skill, diligence or reasonable care that
an ordinary prudent person would exercise in
similar circumstances.
 To meet the duty of care, directors use
reasonable care to:
• Prudent selection of management
• Provide adequate supervision
• Delegating responsibility and monitoring performance
• Directors’ are presumed to have knowledge of the
cooperative’s books and records.
Duty of Obedience:

 In role of leader for the cooperative, a

director must comply with:

• Public statute

• Articles of incorporation

• Cooperative bylaws

• Board polices
 Board role and responsibilities
continued:

 Integrity in preserving the cooperative’s

character

• What makes it unique?

• The cooperative’s strengths and weaknesses
• Expectations
• Flexibility or abandonment
Perhaps the most important responsibility of
directors is to ask the right questions of
management.
B. Henehan and B. Anderson handout

 You can no longer be passive. Directors need

to be engaged at every board meeting.

 You will not get into trouble for making the

“wrong” decision, just careless, uniformed, or
conflicted decisions.
 Director Liability:

 A director is protected if they fulfill these three duties

 Directors should have liability insurance
 Make sure:
• Good board minutes are kept; record votes
• Always speak with one voice
• Have a board manual
• Absence from a board meeting (unless beyond control)
will not excuse you.
• Claiming you were “out of the loop” won’t work
• Claiming the action was manager’s responsibility won’t
cut it.
How does board make informed
decisions?

 Rubber stamp manager’s recommendations?

 Have difficulty in making timely decisions?

 Ask good questions:

 What problem are we trying to solve?

 How does the decision fit our long-range plan?

 Does the current financial condition support the idea?

 What happens if we don’t do this? What are the

alternatives?
As co-op leaders, BODs should be
aware of everything that rises and
falls on cooperative governance…

He/She must have the ability to

understand and exude the true spirit
of cooperativism…

and committed to serve and lead the

cooperative way.
21 Irrefutable Laws of
Leadership
By John Maxwell
 Law of the LID
Leadership ability determines one’s
level of effectiveness
 Law of Influence
Anyone can steer a ship … only a
leader can chart the course
 Law of PROCESS
The measure of leadership is
INFLUENCE, no more, no less
 Law of Navigation
Leadership Develops Daily, not in a
day
 Law of EF Hutton
When the real leader speaks, people
listen
 Law of Solid Ground
Trust is the foundation of leadership
 Law of Respect
People naturally follow leaders stronger
than themselves
 Law of Intuition
Leaders evaluate everything with a
leadership bias
 Law of magnetism
Who you are is who you attract
 Law of Connection
Leaders touch a heart before they ask for
a hand
 Law of Inner Circle
A leader’s potential is determined by
those closest to him
 Law of Empowerment
Only secure leaders give power to
others
 Law of Reproduction
It takes a leader to raise up a leader
 Law of Buy – In
People buy into the leader, then
the vision
 Law of Victory
Leaders find a way for the team to
win
 LAW OF BIG MO
Momentum is the Leaders best
friend
 Law of Priorities
Activity is not necessarily
accomplishment
 Law of Sacrifice
A leader must give up to go up
 Law of Timing
When to lead is as important as what
to do and where to go
 Law of Explosive Growth
To add growth, lead followers to
multiply , lead leaders

 Law of Legacy
A leaders lasting value is
measured by succession
 QUALITIES OF A LEADER
 Loyalty – ‘disagreement is not necessary disloyalty’
 Courage – fearless/face challenger
 Desire – inherent commitment to influence people,
process and outcomes
 Emotional stamina – ability to recover rapidly from
disappointment/ bounce back from
discouragement
 Physical stamina – ability to withstand physical stress
 Empathy – appreciation for and understanding of
values of others, cultures, beliefs and
traditions.
 Decisiveness – knows when to act and
when not to act.
 Anticipation – anticipates thoughts,
actions and consequences
 Timing – timing of recommendations &
actions
 Competitiveness – desire to win
 Self-Confidence – feeling of assurance
 Accountability – account for personal
actions, heap praise or praise
others
 Responsibility
 Credibility – word & actions must
be believable/trusted
 Tenacity – unyielding drive to
accomplish assignment
 Dependability
 Stewardship – a caretaker quality,
subordinate not to be abused
but to be guided, developed
and rewarded
4 TASKS OF THE CO-OP
LEADER

Task 1: Personal Growth

 Ideal Picture of Coop and Knowing

Personal Obstacles to Overcome and
how to realize the personal visions and
aligning them to Coop Visions
Task 2: Building Relationships

 Building Good Relationship with Coop

Officers, Staff and Members

 Analyzing Personal leadership Style and

understanding behavior and values
towards greater leadership effectiveness.
Task 3: People Development

Producing Leaders within the

Organization
Delegation and Empowerment

Task 4: Productivity
Some points to
ponder…
 The ultimate legal responsibility for the
cooperative is the board

 Make timely decision that Know delays can

be costly in money, staff morale and goodwill.

 Accept and adopt to change. Welcome new

ideas and be imaginative, learn from your
mistakes and other’s and move on.
 Be enthusiastic about the job and
prospect of serving the members.
Be an ambassador for the cooperative.

Cooperate with other directors and

support decisions once they are
made.
Decisions reflect board consensus and
majority rule
 Find the ways to resolve conflict.
Don’t allow it to derail board operations.

Stick to the facts and push to consensus

Make the cooperative an active

force in Improving members
welfare.
This may extend beyond strict definition of
coop financial services
 Be familiar with cooperative services
and use them.
if you don’t how can you expect
others to?

 Be objective , exercise independent

judgment and avoid or properly
handle all conflicts of interest.

 Honor the confidentiality of members

personal information
Commit to give the time and
perform your duties well

Prepare yourself for meetings

read the reports you receive from the chair and
management attend all meetings.
Constantly improve your
knowledge and skills.

Study your cooperative

Financial Reports.
Financial statements, Budget and latest
comprehensive audit .If you don’t understand,
ask questions until you understand
 Make sure management keeps
you fully informed about the
cooperative operations.

 Get help when you need it.

No board is expert in everything, When expertise
is needed, get it , even if you have to pay for it
 Individually, leaders should
commit to doing the best job
possible, expanding their range
of expertise as they progress.
 Learn and know the
important and applicable
skills and knowledge a
Co-op Leader needs
 You don’t have to become an
expert in every field, but you
need to know enough so that
you can make informed,
responsible decisions and
policies
 Know the philosophy and
history of the Cooperative
movement by heart and live by
it… plus history of your own
cooperative and be proud of it!
 Must have general
understanding of the regulatory
compliance and legal issues.

 Knows and uses latest

technology for office
operations and member
services.
 Must have knowledge in finance
and an ability to read and
interpret financial statements.

 Must be fully aware of all

services your cooperative
currently offers and new services
the members need or want.
 Must know what the
competitors are doing, and
the current issues in the
financial market.

 Must know the technicalities

of delivering financial
services to the membership.
 Possess leadership and management
skills (personnel, planning,
information technology, marketing
and budgeting).

 Knowledge on local, national, and

international economy, the social
environment and their effects on the
cooperative movement.
 Must be aware of your cooperative
operation and personnel policies,
strategic plan, and other documents
for which the board is responsible.

 Must know the activities of your

sponsoring organization(s) or
national federation.
 Knowledgeable and skilled
leaders/directors make a huge
difference to a cooperative’s
SUCCESS - - - so much! That
they must make continuing
education a requirement.
  In cooperatives, the ultimate
direction setting authority belongs
to the members. . . and the
ultimate legal responsibility is
assigned to the board of directors,
who interprets and performs the
direction given by the general
membership…
Thank You 