Managing a Cooperative with Diverse Member Needs
Phil Kenkel
Bill Fitzwater Cooperative Chair
Agricultural cooperatives were formed because a group of individuals perceived that a
cooperative firm could provide benefits that they could not obtain individually. Those benefits
typically related to economies of scale and scope, although the cooperative’s value in
disciplining the market place and pooling risk was also often recongnized. As cooperatives
mature, the membership becomes more diverse. These differences may relate to the size of
farming operation, crop and livestock mix, location, length of membership and degree of
technology adoption. Because of those differences the members have different economic
interests and different opinions on the cooperative’s decisions and operations.
The cooperative board of directors has the fiduciary responsibility for overseeing the financial
stability of the cooperative. They also have a responsibility to represent the members’ interest.
The first responsibility represents the needs of the group while the second involves the often
diverse needs of the members. The board and manager must reconcile and harmonize these
competing responsibilities.
There are a number of potential strategies for dealing with diverse member interest. One path is
management by consensus. In a consensus-based organization the individual preferences and
views are communicated but it is understood that decisions reflect the majority of beliefs. The
consensus building process encourages the board and management to consider alternative
perspectives in making decisions. In general, this can lead to better decisions. It also promotes a
perception of fairness in the cooperative’s dealing with members.
Consensus-based decision making also has several disadvantages. It can lead to a “business as
usual” culture where the leadership team avoids new initiatives. At times it can lead to
inefficiencies. There may appear to be a consensus on offering a particular service or
maintaining a location because a minority of the members has strong opinions and the remainder
is not engaged. The major disadvantage with consensus decision making is that it reduces the
cooperative’s ability to meet the needs of a changing customer base. While there may not be a
consensus that the cooperative should concentrate on precision agriculture, there may be a subset
of members who can use and will pay for those services. Ignoring the needs of those members
encourages them to exit the cooperative and is not in the interest of the overall membership.
In my next newsletter, I will discuss some other strategies for dealing with diverse member
needs. Best wishes for a safe and happy holiday season!