Autonomy And Independence - The Role Of Boards

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The Alliance partners with UN agencies and international organizations to secure legal recognition for co-operatives and respect in international and national laws for their autonomy and independence and equitable treatment as member controlled organisations. Bruno Roelants, multi-lingual Secretary General of CICOPA - the Alliance's International Organisation of Industrial, Artisanal and Service Producers' Cooperatives - forcefully makes the case for co-operatives.

Directors of co-operatives have a special responsibility to preserve the autonomy and independence of their co-operative, which is essential for its long-term viability.

Poor governance and bad management can threaten the viability of any business enterprise. Co-operatives are no exception. there is no greater risk to autonomy and independence than insolvency caused by poor governance and bad management.

Governance and management failures in co-operatives have led some business leaders and commentators, some even from within the co-operative movement, to suggest that elected directors do not and cannot have the skills and expertise needed to run major enterprises in a modern economy. the standard solution proposed is the appointment of more independent non-executives bringing with them the skills democratically elected board members lack, a solution which can threaten a co-operative's autonomy, independence and member democratic control. the alternative co-operative approach is to ensure that, through education, training and development opportunities for board members and prospective board members, the elected board, collectively, has the skills, knowledge and capacity to fulfil its corporate governance role. Co-operatives that identify gaps in board skills, knowledge and capacity through board skills audits should consider co-opting board members to fill the gaps identified.

This raises particular issues for co-operatives in the practical day-to-day application of this 4th Principle of Autonomy and Independence; particularly how member democratic control is reconciled with elected leaders having access to the skills, knowledge and expertise they need to ensure effective governance and to hold management to account.

The answer, of course, resides primarily in the 5th Principle: education, training and Information. Successful co-operatives ensure that all board members and those who aspire to be board members have access to the education and training opportunities needed to effectively govern their co-operative and hold management to account. boards also need business information to be presented by senior executives and business advisors clearly and intelligibly to enable key business decisions to be made and to be able effectively to challenge senior management recommendations.

In order to ensure the sustainability of any co-operative enterprise, the skills set of all board members and senior managers must include a clear vision and understanding of the Co-operative values and Principles and how to avoid compromising a co-operative's autonomy and independence.

The autonomy and independence of a co-operative will be enhanced by rules or statutes that require governance of the co-operative by its board clearly to be accountable to the general assembly of members. Governance arrangements should incorporate checks and balances, including ones that address the knowledge gap between professional management and members, that include internal and external auditing processes to ensure that members in general assembly receive independent reports from auditors on the governance and management of their co-operative, its compliance with this 4th Principle, and any risks to its autonomy and independence.