The Benefits of Building More Diverse Cooperative Boards

Over the course of the last year, many businesses and organizations have recognized their lack of diversity. Harvard Business Review reported that “in a fall 2020 analysis of the 3,000 largest publicly traded U.S. companies found that just 12.5% of board directors were from underrepresented ethnic and racial groups, up from 10% in 2015. The report also found that only 4% of directors were Black, while female directors held 21% of board seats.”

As directors, management, and employees address the lack of diversity on their board, the co-op community has developed more and more research about the benefits of board diversity. From individual cooperatives sharing their success with building diverse boards to development organizations researching the impact of diversity on cooperative boards, the response has led to more diversity, equity and inclusion initiatives hoping to create more representative cooperative boards.

The growing need for more diverse cooperative boards has led to new research analyzing issues, needs, and benefits to creating a diverse board. Below, I will explore recent research revealing the benefits of diversity on boards.

Better Understand and Represent the Co-op Community

Diverse boards bring together more backgrounds, experiences, and ages to engage in the  decision-making process. When directors better represent their member-owners, their decision-making can better reflect the cooperative members, emphasizing democratic member participation, the second cooperative principle. By bringing together directors with different geographic backgrounds, sexual orientations and genders,  and/or races or ethnicities, among many other characteristics, boards that foster diversity better represent their community and make better-informed decisions for the cooperative and its member-owners.

Oklahoma State University’s Dr. Phil Kinkel found in “The Need for Board Diversity in Agricultural Cooperatives” that board diversity can help a board “relate to its internal and external stakeholders.” For example, women are an important part of the employee teams at cooperatives and “female representation on the board gives those employees a greater sense of connection with the cooperative and improves the perception of a career path.” Board diversity allows cooperatives to understand and serve both their member-owners and employees.

Better Change Styles 

Another benefit of building a diverse board of directors is the advantage that the diversity of experiences and knowledge brings to change management. The unique perspectives that each director brings to the board room can help guide the cooperative through both low risk change and high risk change that may threaten the sustainability of the business.

Dr. Phil Kinkel has found that cooperative diversity led to better change management. In his study of gender diversity on agricultural boards, Kinkel stated, “[b]oards with greater gender and age diversity appear to make better decisions, particularly when dealing with strategic issues or organizational change.” This research pushes boards to think about how diversity of ideas and experiences can benefit the entire cooperative.

In a recent blog about the value of board diversity, Ohio State’s Fisher College of Business shared research findings indicating that by having more diverse human capital, companies can better navigate “disruptive change.” The study conducted in 2018 by Bernie, Bhagwat, and Yonkers found that the “aggregate skillset” and diverse experience on more diverse boards changed the outcome of more volatile changes in the company. By including individuals with a diversity of experiences, boards can lead better together through economic, business, and social change.

As recent research has shown, cooperatives have both a social interest and a business interest in building diverse, equitable, and inclusive boards and many cooperatives are approaching board recruitment and development with renewed focus on diversity, equity, and inclusion to build more representative and sustainable enterprises. Harkening back to the seven guiding cooperative principles, diverse boards better serve their members by staying true to the democratic foundations of cooperation.

 

For more inormation:

https://fisher.osu.edu/blogs/leadreadtoday/navigating-disruption-why-board-diversity-leads-better-outcomes

https://hbr.org/2021/03/you-say-you-want-a-more-diverse-board-heres-how-to-make-it-happen

https://extension.okstate.edu/fact-sheets/the-need-for-board-diversity-in-agricultural-cooperatives.html

Counting Ohio’s Cooperatives: Mapping Cooperatives across the Buckeye State

Over the last year, team members with the CFAES Center for Cooperatives have collected, reviewed, and verified information from industry trade organizations, the Ohio Secretary of State, and other public sources to develop a census of almost 1,100 cooperative locations across the Buckeye state. From credit unions to food co-ops, Ohio is covered in new and established cooperatives that contribute to the state’s economy.  

In partnership with the CFAES Knowledge Exchange team at Ohio State, the data was built into an interactive map that will be available to the public. The Center is releasing a self-guided exploration of the cooperative economy that highlights the interactive map and the diversity of Ohio’s co-ops. The map will allow co-op leaders, community ownership advocates, policymakers, cooperative developers, and entrepreneurs to find cooperatives in their area and locate cooperative models to learn from as they develop new co-ops. The data will also create opportunities for the team at the Center for Cooperatives to conduct comparative historical analyses and other applied research on Ohio’s cooperative economy. 

Explore the map of Ohio’s Cooperatives here.

 

To build the cooperative database, Center staff gathered data from numerous public sources, including industry trade associations such as the National Council of Farmer Cooperatives, the Ohio Credit Union League, and the National Rural Electric Cooperative Association, as well as federal and state sources including the U.S. Department of Agriculture, the U.S. Farm Credit Administration, and the Ohio Secretary of State, among others. Center staff verified each cooperative in the database by assessing whether the entity was mutually owned by multiple members, operated on a non-profit cooperative basis, or provided bulk purchasing on a cooperative basis. Center staff also verified whether each cooperative was still active, using public sources like websites, social media, and news articles.   

The project revealed the true diversity of cooperatives in Ohio. From breweries and laundries to financial services, agriculture, and housing, each cooperative plays an important role in the state’s cooperative community and economy.

Out of the 452 cooperatives headquartered in Ohio, 228 are credit unions. The figure below shows a breakdown of cooperatives headquartered in Ohio by sector. The 1,088 physical co-op locations included in the map of Ohio’s cooperatives include cooperatives headquartered in Ohio, branches of co-ops that are headquartered in Ohio, and branch locations in Ohio of co-ops not headquartered in Ohio. 

According to the National Cooperative Bank, of the largest 100 cooperatives in the U.S. in 2019, three were headquartered in Ohio, including United Producers, Inc. (#80) headquartered in Columbus, Heritage Cooperative (#83) headquartered in Delaware, and Buckeye Power, Inc. (#84) headquartered in Columbus. 

Appalachia Cooperates Tours the Region’s Cooperative Economy

On January 27, the Appalachia Cooperates Initiative (ACI) hosted the “Exploring Appalachia’s Cooperative Economy” webinar. Our center manager, Hannah Scott, and cooperative program specialist Ryan Kline prepared a presentation on the region’s cooperative efforts. Together they explored the co-op model’s foundations, cooperatives as economic development agents, and collaborative efforts in Appalachia today during the webinar. According to the program organizers, the virtual event was a success, with the webinar having almost 100 attendees. That number does not include additional people who registered but could not attend and requested the recorded webinar.

Central Appalachia fosters a network of cooperatives as diverse as the people who call the region home. ACI is a learning network connecting cooperative, community, business, and economic developers and advocates in Central Appalachia interested in expanding cooperative efforts in the region. The CFAES Center for Cooperatives works with cooperators across the region to coordinate speakers and promote regional cooperative development.

Though you may not have been able to participate in the webinar, it is not too late! Because of increased interest, we have recorded the entire webinar for anyone interested in exploring cooperatives throughout Central Appalachia. You can contact the staff for a recording of the whole webinar!

For more information, or to learn more about what our Center offers, email us or check out our website.