A New Governance Framework

Governance is a key factor in determining organizational success and one that is particularly important for co-operatives. Unlike other institutions, co-ops have a unique governance structure based on the principle, “one-member, one-vote” and often use federated structures (a co-op where its members are autonomous co-ops), which introduces a wide range of unique governance challenges. 

Recognizing the importance of co-operative governance and that it must evolve over time to maintain the sector’s relevance into the future, Federated Co-operatives Limited – on behalf of the Co-operative Retailing System in Western Canada – invested $300,000 over a five-year term starting in 2015 to establish the CRS Chair in Co-operative Governance at the Canadian Centre for the Study of Co-operatives. 

“The research completed in the first term was valuable in that it created an innovative framework to support improving co-operative governance,” said Sharon Alford, FCL’s president/chair of the board. “There have always been governance challenges across different sectors, but modern pressures on the co-operative sector underscore the continued need to be accountable to members and maintain our relevance for future generations. This is crucial not only for the CRS, but all co-operatives in Canada and around the world.” 

As the inaugural chair, Dr. Murray Fulton (PhD) brought a wealth of knowledge in co-operatives and governance to the table. As a faculty member at the University of Saskatchewan for over 30 years, and as a professor in the Johnson Shoyama Graduate School of Public Policy, he had already collected numerous international accolades for his research on industrial organization, agriculture industry analysis, community development, and co-operative theory. 

The establishment of the CRS Chair in Co-operative Governance supported a five-year ambitious research and educational agenda that focused attention on creating a new way of thinking about this unique form of governance—one that offers new insight for the co-operative sector and the larger economy and society. 

In his role as CRS Chair, Fulton, along with research fellows from the Canadian Centre for the Study of Co-operatives, Dr. Brett Fairbairn (PhD) and Dr. Dionne Pohler (PhD), developed an innovative model for analyzing governance challenges in co-operatives. 

Research on governance has long been focused on the role of the board, the relationship between the board and senior management, and sometimes the relationship with suppliers and/or with employees. Review of governance practices has also been used as an approach to analyzing long-term strategic decision-making. Simultaneously, governance has been connected to organizational issues of having legitimacy (or a lack thereof). 

For the researchers, rather than treat each of these governance issues as being independent phenomena, an effort was made to understand them as part of a dynamic that stemmed from the comprehensive idea of governance as being about, “Who gets to decide what?” 

Fulton believes there are three basic governance challenges that all co-operatives and credit unions must continually address: 

1. Strategic Interdependencies - ensure the various stakeholders coordinate their activities and co-operate with each other efficiently and effectively;
2. A cognitive view of the future - ensure there are sufficiently diverse and informed views of the future to position the organization in a changing environment; and
3. Legitimacy - ensure the stakeholders view decisions made by leaders in the organization as legitimate and acceptable. 

“Since its development, the governance framework has re-shaped our approach to researching, teaching, and providing advice on governance to co-operatives and credit unions in Canada,” said Dr. Marc-Andre Pigeon (PhD), CCSC director. 

“We’ve been able to develop new case studies of co-operative failures and successes, a new Graduate Certificate in Co-operatives and the Social Economy and a Co-operative Governance School for Emerging Researchers—the latter of which brought together young researchers from around the world, which has resulted in several academic publications.”  

This new framework has also formed the basis of a free Massive Open Online Course (MOOC) on co-operative governance, co-developed with Co-operatives First and co-delivered to more than 1,500 individuals worldwide, and informed an in-person governance course prepared for the CRS and offered in conjunction with the JSGS.  The Centre’s focus on governance research has also spilled over into the development of a governance database that co-operatives will be able to access to assist them with determining roles and responsibilities of co-op leaders. 

“The CRS chair provides co-op researchers and practitioners with the language to understand key questions such as, ‘is it advantageous to add professionals to a board?’ or ‘Why do some co-ops convert to investor-owned enterprises?’” said, Fulton. “It also provided us with an opportunity to develop a framework to help co-operatives respond to the massive social and economic changes that are underway and that can be expected to continue.”