Multi-stakeholder Cooperatives and Consumer Co-ops

Multi-stakeholder cooperative governance may not be familiar to many in the U.S. consumer co-op movement, but it is widely seen as an appropriate and progressive model of governance for cooperatives of all kinds. More importantly, it is a way to foster the kind of member engagement that many see as crucial if cooperatives are to survive and thrive in the modern world.

Multi-stakeholder cooperatives offer a membership role to two or more groups of key stakeholders who are engaged with the cooperative in different ways. Common membership categories include workers, consumers, producers, and community supporters—but also may include suppliers, distributors, or volunteers, depending on the situation. 

In the new publication from the International Cooperative Alliance (ICA), Co-operative Governance Fit to Build Resilience in the Face of Complexity (http://ica.coop/en/co-operative-governance-fit-build-resilience-face-com...), several international governance experts cite multi-stakeholder boards as a natural fit for organizations committed to the practice of economic democracy. “Consumer loyalty…is fragile,” note authors Sonja Novkovic and Karen Miner in their introductory chapter to the ICA publication, “and often tenuous in the face of many alternative options of where to buy a product or a service.” 

The role of employees

Insiders such as employees or producers, in contrast, “are much more motivated to engage in all forms of participation,” since their stake in the organization is greater. Employees in particular, the authors note, “have the key role to play in strengthening democracy through deliberation, participation, and ultimately delivery of co-operative objectives” (p. 17 of the ICA publication). “Employees…occupy a special place as insiders with a clear interest in the co-operative’s long term viability, as well as in its organizational culture and implementation of co-operative values and principles.” 

Some might object that having employees on a consumer cooperative board would be a clear conflict of interest. Indeed, as Novkovic and Miner acknowledge, “the term stakeholder often implies a trade-off and conflictual relationship between independent self-interest groups, each with a ‘stake’ in the organization.” This would be the perspective supported by neoclassical economics, and the “agency theory” of governance. 

In contrast, however, Novkovic and Miner offer the “humanist or stewardship” approach to cooperative governance, grounded in organizational psychology and sociology, whereby “co-operative stakeholders are motivated by solidarity and a shared objective they can realize through a co-operative enterprise.” Different groups bring different perspectives to the table, but all are aligned in their commitment to the success of the organization and making the cooperative principles and values come alive. 

Maybe this sounds a little foreign and complicated, but it really is not. Remember that cooperatives in our communities successfully deal with the challenges of conflicting personal interests among members all the time. Every credit union membership is made up of both borrowers and savers, for example. While borrowers and savers may appear to have interests that are in direct conflict (one group wants interest rates to be low, the other high), in fact credit union boards seem to do a pretty good job of balancing these interests by keeping an eye on where they are all in agreement—the successful operation of a consumer-centered financial institution. 

Mondragon, Weaver Street, and Quebec

But can it work in food cooperatives? Just ask Eroski, the popular grocery cooperative based in the Mondragon region of Spain, with nearly 1,000 outlets and $3 billion in annual sales. At Eroski, governance is equally split between worker owners and consumer owners, with the board chair always held by a consumer owner. 

Closer to home, Weaver Street Market in North Carolina has had joint consumer-worker governance since its founding in 1987. John McDonald, a bread baker at Weaver Street Market currently serves as board chair. When asked about the difficulty of wearing two hats as a worker and a board member, McDonald observed, “There are certainly times when the line between the two can be difficult to discern, but we have had success navigating all situations through a commitment to our board process and our policies.”

Noting that in a previous era consumer members frequently volunteered at the store and brought that experience to the board table, McDonald says that today, that kind of “on-the-ground” point of view can only be provided by a member of staff. He is an advocate for a multi-stakeholder approach but reflects, “Even if you’ve got the best structure and policies, if you spend all your time bickering, or if there’s not trust between directors and the general manager, you will fail. Instead, use the freedom of good process to think big, innovate, and do what the co-op set out to do in the first place. Because usually it’s far more than just to sell food.”  

In Quebec, a place steeped in rich cooperative history and practice, these kinds of cooperatives are called solidarity co-ops, which is perhaps a more appropriate term. As the cooperative scholar and author Tom Webb notes: “Calling them multi-stakeholder cooperatives puts the focus on different participants having to protect their stake. ‘Solidarity’ shifts the focus to shared objectives. So, let’s set up as many of our cooperatives as possible to focus on what unites us and brings us together. I think solidarity cooperatives are the wave of the future. They will be stronger and more resilient. They will be more successful. People will admire them.”

There are many ways to structure a solidarity co-op, with no single common practice worldwide. All that is required is an open mind and a commitment to living the cooperative principles in a deep and authentic way. ♦