co-ops

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

CFAES Center for Cooperatives kicks off Appalachia Cooperates Initiative

A group of individuals interested in growing co-op culture in central Appalachia filled the meeting room March 22 at the West Virginia State University Economic Development Center in Charleston, WV when the Ohio State University CFAES Center for Cooperatives hosted the inaugural meeting of the Appalachia Cooperates Initiative.  The group ranged from farmers and small business owners, to attorneys, credit unions, and cooperative business development agencies.

Featured speakers included Dr. J. Todd Nesbitt, Professor in the Department of Sociology, Anthropology, and Geography at Pennsylvania’s Lock Haven University and Leslie Schaller, one of the founding members of Casa Nueva, a successful worker-owned restaurant cooperative and also the Director of Programs at the Appalachian Center for Economic Networks (ACEnet) in Athens, Ohio.  Nesbitt, who has studied and developed a course on sustainability in Appalachia, shared “A Case for Economic Distributism in West Virginia.”  Schaller shared the history and development of Casa Nueva and insights on the success of the cooperative business.

Participants also heard from Gail Patton, Executive Director and Ursulette Huntley, Program Director at Unlimited Future, Inc., a non-for-profit microenterprise development center and business incubator, who shared their experience with the development of one of West Virginia’s first non-agriculture cooperatives.

During lunchtime, attendees viewed the film, Shift Change, and learned about worker-owned co-ops not far from the Appalachian region and around the world.  “Seeing how a worker-owned co-op can empower members of a community and provide jobs and economic growth for an area helped to spark some ideas among those in attendance,” said Joy Bauman, program coordinator at the OSU CFAES Center for Cooperatives.

Daniel Eades, West Virginia University Rural Economics Extension Specialist and Michael Dougherty, West Virginia University Community Resources and Economic Development Extension Specialist led a discussion about challenges with developing businesses in Central Appalachia, ways Appalachian communities are uniquely positioned to develop businesses, and what resources and tools work well in Central Appalachia’s environment.  This activity led to much discussion and discovery of ways those interested in growing the cooperative culture in Central Appalachia can network to assist each other and share solutions.

OSU CFAES Center for Cooperatives program manager Hannah Scott spoke about resources and technical assistance offered by the Center and encouraged participants to stay connected and consider becoming involved on a regular basis with the Appalachia Cooperates Initiative group.  “Getting cooperative-minded people together to connect and learn from each other’s experiences will help them build a network that fosters cooperative business,” Scott explained.

Scott said that the CFAES Center for Cooperatives will soon be planning another activity for those interested in the Appalachia Cooperates Initiative, and that she hopes to hold quarterly events for the group over the coming year.  If you are interested in developing co-op culture in Central Appalachia, for more information, or to be added to the Appalachia Cooperates Initiative email list to be notified about upcoming events, contact Joy Bauman at 740-289-2071 ext. 111 or email bauman.67@osu.edu.

Changes to Tax Law: Section 199A Deductions

The cooperative world has seen a lot of discussion this month about the potential consequences of the new Tax Cuts and Jobs Act of 2017 for agricultural cooperatives and their members. Explore these resources from Iowa State University’s Dr. Keri Jacobs and Dr. Brian Briggeman of Kansas State University with Dr. Philip Kenkel of Oklahoma State University to learn more.

“A Discussion of the Sec 199A Deduction and its Potential Impacts on Producers and Grain Marketing Firms” by Dr. Keri Jacobs in farmdoc daily.

“Impact of Tax Reform on Agricultural Cooperatives: Special Edition ACCC Fact Sheet Series Collaborative Research KSU/OSU” by Dr. Brian Briggeman and Dr. Philip Kenkel.

 

Cooperative Roots Run Deep

Modern cooperatives, whether they market agricultural products, operate a food store, or purchase hardware supplies, typically operate according to a set of widely recognized cooperative principles. These “cooperative principles” tie cooperatives across the United States and the world together in a larger movement. Where did these principles originate? How did the cooperative model and movement develop?

Cooperative Principles and the Rochdale Pioneers

The cooperative principles recognized by the International Co-operative Alliance, and the broad cooperative community, are generally recognized to have originated from the efforts of 28 working men who founded the Rochdale Equitable Pioneers Society in 1844 and operated a cooperatively owned store that started out selling butter, flour, sugar, and oatmeal. The Rochdale Pioneers, as they came to be known, were working toward social goals that arose out of the conditions of their time, including harsh working conditions. Read more about the Rochdale Pioneers and their efforts on the website of the Rochdale Pioneer Museum.

Watch this video commissioned for the Rochdale Pioneers Museum and the Co-operative Heritage Trust to learn more about the development of the Rochdale Equitable Pioneers Society. 

The original rules of the Rochdale Equitable Pioneers Society included:

  • That capital should be of their own providing and bear a fixed rate of interest
  • That only the purest provisions procurable should be supplied to members
  • That full weight and measure should be given
  • That market prices should be charged and no credit given nor asked
  • That profits should be divided pro rate upon the amount of purchases made by each member
  • That the principle of ‘one member one vote’ should obtain in government and the equality of the sexes in membership
  • That management should be in the hands of officers and committee elected periodically
  • That a definite percentage of profits should be allotted to education
  • That frequent statements and balance sheets should be presented to members

Today, the cooperative community recognizes seven core principles.

 

Early Cooperation

While modern cooperative principles can be traced to Rochdale, England in the mid-19th century, the cooperative business was not a new form of organization. In fact, mutual insurance companies existed as early as 1530 in Paris and London and various ‘friendly societies’ operated in England in the 1700’s to provide financial assistance to members in difficult times of sickness, unemployment, or death. Purchasing cooperatives operated in various Western European countries by the 18th century and consumer controlled mills operated in England in the early 1800s. The Fenwick Weavers Society in Scotland began collective purchasing in 1769; according to the Rochdale Pioneers Musuem, the society is the “earliest cooperative retail society for which records survive.”

Some cooperative scholars trace the history of cooperation much further than these efforts. Rather, they look to ancient social norms of mutual aid, such as the collegia of ancient Rome’s, the craft guilds of 11th century Europe, and the Ahi movement in Anotolia or what is today, Turkey. Ed Mayo’s short publication, “A short history of cooperation and mutuality,” provides a fresh perspective on these movements and the ways that they were influential in shaping the modern cooperative movement.

Cooperatives in the United States

In the United States, Benjamin Franklin helped to start the first recognized cooperative business, a mutual insurance company, in 1752. Agricultural cooperatives played an important role in the development of cooperatives in the U.S. with the first ag co-ops beginning operations in 1810 in dairy and cheese making. From 1810 until 1887, cooperatives were founded in many sectors of agriculture, including hog marketing, irrigation, fruit marketing, and cotton ginning, among others. The Grange, one of the first farm organizations in the U.S., organized cooperative development efforts while other farm groups like the American Farm Bureau and National Farmers Union were also instrumental to developing agricultural cooperatives. In fact, Farm Bureau helped to establish Growmark and Nationwide Insurance while National Farmers Union helped to establish CHS, Inc., the largest agricultural cooperative in the U.S. today.

Sources and recommended reading:

A short history of co-operation and mutuality by Ed Mayo
The Rochdale Principles, Rochdale Pioneers Museum
About Toad Lane, Rochdale Pioneers Museum
About the Pioneers, Rochdale Pioneers Museum
History of the Co-operative Movement, International Cooperative Alliance
Rochdale Pioneers Museum Time Machine, Rochdale Pioneers Museum
Cooperatives: Principles and practices in the 21st century by Kimberly A. Zueli and Robert Cropp

 

Contribute to the 2017 Worker Co-op Census

The United States Federation of Worker Cooperatives is gathering data on worker co-ops and other democratic workplaces in their annual census. If you are a worker co-op or other democratic workplace, please consider responding. Reliable data contributes to cooperative development in many ways!

U.S. Federation of Worker Cooperatives Annual Economic Census of Worker Cooperatives and Democratic Workplaces