Ethical Conduct Makes for Good Governance: A Guide for New Cooperative Directors

By Douglas M. Kleine, CAE

Lying, cheating and stealing make good headlines, whether on the front page, the sports page or the business page. Since cooperative members are already aware of illegal activity to avoid, ethical conduct and relationships are appropriate and important to broach on three levels; conduct and relationships in the boardroom and with the executive team; conduct and relationships with cooperative membership and the community; and personal conduct and relationship to self.

In the Boardroom

The board’s primary role is to plan, decide and evaluate. The rules are pretty simple to carry out that role. Be informed. Being informed means more than reading the materials; it also means ascertaining whether the materials you have been provided are sufficient in scope to enable a decision to be made. It means asking clarifying questions and, when faced by technical matters and “experts,” not being intimidated and making sure the expert is a good resource.

Keep an Open Mind
Another rule is to come into the boardroom with an open mind. When power blocs are already lined up, dialog has no chance. New solutions and winwin solutions can come from the understanding created by intelligent discussion and careful understanding of the pros and the cons.

Practice deciding by the three R’s. Reasons-why are we doing this, what is the need and who has asked for it? Risks-what are our chances of success, what is the price of failure, what is the price of inaction? Rewards-what will the benefit be to the cooperative and our members?

Respect Boundaries
Foster the board’s relationship with the manager. The board is only in session for a few hours each month. The manager has to interpret new directions and deadlines and keep routine work running, so be clear in those few hours about priorities, goals and expectations. Be sure there is a meaningful evaluation process for the manager’s performance.

Recognize that the leadership team is more than directors. Staff and the manager are part of the boardroom relationship. Respect boundaries between staff and board functions and realize that for every decision, there is an implementation responsibility that falls to staff.

Do Your Homework
Understand the finances of the cooperative and provide adequate resources to get the job done. Too many cooperatives adopt budgets with arbitrary expense cuts and unrealistic review targets. Too many are far behind in technology, and the technology lag affects so many factorsstaff productivity, customer service and data collection needed for evaluation and decision-making.

Disclose Conflicts
Disclose conflicts of interest. Having conflicts interest is not the issue-everyone has them. The issue is that you and the cooperative recognize and deal appropriately with them when they arise. It is a good idea to have a gift policy, too, so there is clear guidance when to accept gifts from vendors and others, and when the correct response is, “No, thank you.”

Govern All, Not Just One Part
You represent the whole, not the part. If you were elected by one membership sector or geographic area, you can still represent them by bringing their concerns to the board, but having done that, you must then act on behalf of and in the best interest of all the membership.

When You are Among Members in the Community

Some of the most unethical conduct can occur outside of the boardroom. Again, the rules are not that hard to grasp, just difficult to put into practice sometimes.

Resist the Temptation to Intervene or Carry a Cause
One rule is not to speak or act on behalf of the cooperative unless authorized. You are not a 24-hour ombudsman, and you have no authority to intervene in operations, customer transactions and staff intrigue. Learn to ask deflecting questions when members seek your intervention (“Have you asked the manager about this?”) and to be sympathetic within promising something beyond your ability to make happen. Refer inquiries to staff when appropriate.

Respect the Board’s Decision
Occasionally, the board may take an action for which you disagree. The correct public conduct is to support the board’s decision. The damaging conduct is to undermine the board’s decision by citing to the members all the reason why you think the decision was wrong.

Relationship with Self

From time to time, fortunately not often, a board member’s personal life comes into the forefront in a way that brings embarrassment to the cooperative or makes it harder for the board to get a quorum because you cannot get to the meeting. Promise yourself to avoid those situations, and if unavoidable, be quick to step down.

Serving on a cooperative board is a commitment-a commitment to make the time, but even more, a commitment to be engaged with your board members, cooperative members and cooperative issues.

During your service, make room for others by inviting their input, sharing what you know with them and reaching out to under-served or under-represented members. As your service winds down, don’t linger. Let others follow in your footprints and be comfortable in their making some of their own footprints.

Douglas Kleine, CAE, is president of Professional Association Services, providing governance training and consulting to cooperatives and other nonprofts. He was NAHC executive director from 1999-2007. Previously, he served in the Condo and Cooperative Branch of the U.S. Department of Housing and Urban Development.

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