Governance in Cooperatives (Second part)

Continuing the previous article, we describe below some basic concepts about governance in cooperatives and good cooperative governance.

Governance in Cooperatives

Due to their character as democratic and participative organizations, it is essential that in cooperatives governance is promoted and monitored from the base, that is, its members. If this is not the case and there is no involvement of the social base, the risk of ungovernability is great and the existence of the organization itself may even be endangered. But, of course, not only members must be involved, but also all the parties that make up the political and administrative structure must be involved, such as the governing bodies, management and employees.

Governance as a democratic process, starts with ethical foundations that establish the necessary guidelines for good cooperative government, which is not valid if there is not a leadership structure sensitized on the importance of implementing transparency practices that regulate the entire organization. For this reason, it is essential not only to promote these practices in the cooperative but to sensitize and promote democratic leadership that experiences these practices not only as leaders, but in all of their activities as a person in the society in which they operate.

This vision is aimed at adapting models of involvement and participation that promote "transparency" and that is reflected in what they decide and communicate through what they do. For this reason, it is the system that allows establishing the limits between the exercise of power and its control within an organization. Beyond the quality, integrity and good faith of the people who can be part of an organization, governance is what sets in motion a formal system that meets the conditions that favor the achievement of an organization’s mission, its development and its permanence.

Taking into account then the importance of democratic leadership in the full exercise of cooperative governance, it is necessary to sensitize managers of cooperatives on the need to have a profile of leaders who practice and guarantee, through their transparent acts, a good government in their organizations. Likewise, it is necessary to put on the agenda for discussion the urgency for cooperatives to invest in the training of managers that can replace other leaders in the different spaces and levels of the organization.

The Specificity of Cooperative Government

Cooperatives differ from traditional companies mainly because they are created with the purpose of satisfying the needs of their members. People who choose cooperatives do so for solidarity, transparency, democracy and equity.

A good governance regime in cooperatives should contribute to ensuring that the use of resources is not only carried out effectively, but also strengthens the trust generated by the transparency with which it works. This fully guarantees that directors are responsible for their actions before members.

The fulfillment of the business mission, guided by the vision of its leaders, takes place in an internal system that establishes norms and guidelines that should govern its exercise and performance. In this way, transparency, objectivity and clarity are guaranteed in the allocation and administration of financial resources, in our case, of cooperatives.

The explicit will of the Board of Directors, which supervises management on behalf of the members, is transmitted under the premise that the cooperative responds with a truthful and efficient behavior to its commitment to all people who have contributed resources of any nature.

Governance in cooperative companies must take into account the development of an "ethical leadership" based on moral virtues in accordance with cooperative principles. For this reason, it must be borne in mind that the management of the cooperative must first of all be democratic.

Therefore, an indispensable condition for achieving good governance in cooperatives is to have ethical leadership, for this reason it is necessary to develop and promote the basic competences, skills and abilities to have more participatory leadership. In this sense, it is essential to develop and promote a code of good practice so that each cooperative achieves good governance, not only for the well-being of its members, but also to benefit economic and social development in their communities.

Towards the strengthening of cooperative governance

Governance in cooperatives seeks to clarify and objectively differentiate the roles of the Board of Directors and its management. This can be ensured with timely, coherent and consistent communication, internal and external.

Governance implies having the ability to avoid difficulties in its actions. For this, adequate communication mechanisms must be established, and transparency and fluidity and integrity of the information that must be transmitted to members, to people in the cooperative and to the general public must be promoted. This requires that the cooperative have adequate legal frameworks and governance structures; a better infrastructure for regulatory and control bodies; fight corruption and bribery problems with more and better training.

The leaders and members of a cooperative must be very clear about the values that must guide their actions, in order to function properly, achieve their objectives and avoid actions such as corruption, centralization of power, inadequate accountability processes, limiting access to information and the lack of transparency in decision making.

In summary, all good governance management must be supported by the indispensable and necessary principles and values, so that its foundation and applicability focus on conduct that is above personal interests and at all times prevails the proper precepts for management successful according to cooperative principles and values.

In a future article we will talk about the guidelines for cooperative governance.