Values are the Key to Cooperatives

By William Nelson

The success of any business is dependent upon several factors—response to customer needs, efficiency, good management and good employees. However, member-owned cooperatives are unique in that they are the only form of business in which the customers own the business. In fact, a cooperative’s members actually created the business so that they could be the customer and receive value greater than found in the marketplace.

It is values and value that create a successful cooperative. The first value is culture and the values of the customer/member/investor. Cooperatives are based upon the values of democratic control, equality among members, trust, sharing for mutual benefit, pride in ownership, satisfying involvement by members, self-help and independence. I believe that conditions for success of a cooperative are more a function of the culture and values of the members than the business functions it performs. Every business goes through cycles of good and bad times. It is the belief and value system that sustains a cooperative during difficult times, much the same as a marriage is sustained by the partner’s values in times of stress.  

There are many examples of cooperatives that thrive under these conditions. They include electric and telecommunications cooperatives, dairy cooperatives like Cass-Clay, many retail groceries, some local marketing and supply cooperatives, and even some “new generation” processing cooperatives.

One of the keys to this success is member, director, management and employee education on what it means to be a cooperative member or employee. Beliefs and values are created through experience and educational activities. It is no accident that many strong cooperative members are second- or third-generation cooperative activists. My father was a member of eight cooperatives, helped to start two and served as board president of the local creamery and grain elevator simultaneously. It was in his blood and some of that carried over to me.

Some cooperatives have forgotten that youth education and involvement with cooperatives is important for the sustainability of cooperatives. They have forgotten that unless younger members are given the opportunity to become involved in the governance of their cooperative they will follow the short-term economic advantage. They have also forgotten that education is a life-long requirement. They have forgotten that directors also need education and training to be a “good” director, to completely understand cooperative financial statements and the respective roles of directors and management, and to realize that strategic planning is a necessity and is the responsibility of the board to initiate.

Member communication and education are equally important. Creation of a “sense of belonging,” a very powerful human need, doesn’t occur without effort. Cooperatives that place priority on these activities can create this unique feature of a cooperative and that will also lead to good management, good service and prices and a reasonable return on their members’ equity.

It is ironic that the most important expenditure of a cooperative—support of communication, education and training—is frequently the first to be eliminated during tough financial times, and frequently forgotten to be reinstated. It seems that profit maximization and return on investment have become the only goal for some cooperatives. Frankly, if that is the only goal, it might as well be a corporation and members might as well invest in bonds and the stock market.

Successful cooperatives provide more than return on investment; they are based on a set of human values that create additional value through meeting a variety of needs of their members.

 (William Nelson is the former director of the Quentin Burdick Center for Cooperatives at North Dakota State University, Fargo)