Coop Essentials What They Are PowerpointSlides corresponding with Coo - PDF document

1 Co-op Essentials: What They Are (Powerpo
Co-op Essentials: What They Are (PowerpointSlides corresponding with Cooperative Information Report 11, Chapters 1-5)United States Department of Agriculturewww.rurdev.usda.gov Committed to the Future of Rural Communiti

2 es CIR 11 Chapter 1 -What Cooperatives A
es CIR 11 Chapter 1 -What Cooperatives Are1 CHAPTER 1 –WHAT COOPERATIVES AREFocuses on what cooperatives are, and explains their business, principle, and structural characteristics. It managers, and employees—whose rol

3 es are discussed in greater depth in Cha
es are discussed in greater depth in Chapters 2-5. CIR 11 Chapter 1 -What Cooperatives Are2 different ways depending on: CIR 11 Chapter 1 -What Cooperatives Are3 •Business Organizations CIR 11 Chapter 1 -What Cooperati

4 ves Are4 •Owns•Controls•Operates•Benefit
ves Are4 •Owns•Controls•Operates•Benefits/profits CIR 11 Chapter 1 -What Cooperatives Are5 Two or more people•Own•Control•Operate•Share in risks and profit CIR 11 Chapter 1 -What Cooperatives Are6 •Are investors•Share

5 profits (according to •Purpose -gain val
profits (according to •Purpose -gain value for CIR 11 Chapter 1 -What Cooperatives Are7 Cooperatives Are a Type of Corporation•Multiple owners who are user members•Variety of goods and services•Physical facilities•Sta

6 te chartered•Members are investors•Owned
te chartered•Members are investors•Owned and controlled by members who CIR 11 Chapter 1 -What Cooperatives Are8 •Are primarily controlled by a board of directors •Derive equity from member owners•Operate for the benef

7 it of member owners•Allocate earnings to
it of member owners•Allocate earnings to members based on use•Earnings from member business is taxed once•Have perpetual existence CIR 11 Chapter 1 -What Cooperatives Are9 •There are more than 29,000 cooperatives •Serv

8 e 350 million members (many people •They
e 350 million members (many people •They have assets of more than $3.1 trillion•They generate revenue of more than $510 •Employ more than 850 thousand people CIR 11 Chapter 1 -What Cooperatives Are10Source: University

9 of Wisconsin Center for Cooperatives, Re
of Wisconsin Center for Cooperatives, Research on the Economic Impact of Cooperatives, 2009. and Worker Cooperatives Provide•Credit•Transportation•Facilities•Recreational •Food•Housing•Health care•Home care•Child care•

10 Wholesale goods and •Electricity•Telepho
Wholesale goods and •Electricity•Telephone and •Farm production •Farm product CIR 11 Chapter 1 -What Cooperatives Are11 User -OwnerUser -ControlUser -Benefits CIR 11 Chapter 1 -What Cooperatives Are12 User-Owner Princ

11 ipleThe people who own and finance the c
ipleThe people who own and finance the cooperative are those who use it. CIR 11 Chapter 1 -What Cooperatives Are13 User-Control Principle CIR 11 Chapter 1 -What Cooperatives Are14 •Voting at annual and •Electing Board

12 of Directors.•Making decisions on major
of Directors.•Making decisions on major CIR 11 Chapter 1 -What Cooperatives Are15 User-Benefit Principle CIR 11 Chapter 1 -What Cooperatives Are16The cooperative’s sole purpose is to User-Benefits•Bargaining power•Ma

13 rket access•Political action•Community •
rket access•Political action•Community •Value-added•Reduced costs•Improved •Economic •Competitive CIR 11 Chapter 1 -What Cooperatives Are17 •Patronage refunds- •Limited return on equity capital- cooperatives for servic

14 e, not for a monetary return on •Coopera
e, not for a monetary return on •Cooperation with other cooperatives- ventures, MAC’s, networks, alliances, working •Cooperative education- way of doing business and educate members, CIR 11 Chapter 1 -What Cooperative

15 s Are18 efines a cooperative’s size and
s Are18 efines a cooperative’s size and scope of operations in reference to serving its •Local-small region covered, a county or so •Regional–cover a State or a number of States; some have international operations CI

16 R 11 Chapter 1 -What Cooperatives Are19
R 11 Chapter 1 -What Cooperatives Are19 Cooperative Governance System Defines who the members are and how the cooperative is organized to serve them. May be: •Centralized-Individuals are direct •Federated-Cooperatives

17 are direct •Mixed–both individuals and
are direct •Mixed–both individuals and cooperatives are direct members CIR 11 Chapter 1 -What Cooperatives Are20 Centralized Structure Cooperative CIR 11 Chapter 1 -What Cooperatives Are21 Federated Structure Cooper

18 ative CIR 11 Chapter 1 -What Cooperative
ative CIR 11 Chapter 1 -What Cooperatives Are22 Mixed Structure Cooperative CIR 11 Chapter 1 -What Cooperatives Are23 •Marketing-take members’ products through processing, •Purchasing-providing needed •Service-provid

19 e needed services CIR 11 Chapter 1 -What
e needed services CIR 11 Chapter 1 -What Cooperatives Are24 returns from goods they produce by:•Handling, processing, and selling•Grading, transporting, and bargaining•Adding value•Researching and developing new CIR 1

20 1 Chapter 1 -What Cooperatives Are25 for
1 Chapter 1 -What Cooperatives Are25 for the goods they produce! •Transport•BargainProducts Member Benefitsmargins CIR 11 Chapter 1 -What Cooperatives Are26 •Purchasing in bulk to reduce costs and increase purchasing p

21 ower•Providing members with direct owner
ower•Providing members with direct ownership research facilities, etc.•Obtaining supplies not available CIR 11 Chapter 1 -What Cooperatives Are27 Used by members to gain access to affordable, quality supplies •Warehou

22 se Member Benefits•Reduced costs•Volume
se Member Benefits•Reduced costs•Volume discounts•Quality control•Increased access CIR 11 Chapter 1 -What Cooperatives Are28 ServiceCooperatives•They meet various needs•They provide custom application of •They provide

23 utilities, credit, housing, health care,
utilities, credit, housing, health care, technology, CIR 11 Chapter 1 -What Cooperatives Are29 Used by members to gain access to affordable, quality services •Health care Member Benefits•Affordable services CIR 11 Cha

24 pter 1 -What Cooperatives Are30 •Members
pter 1 -What Cooperatives Are30 •Members•Directors•Manager•Employees CIR 11 Chapter 1 -What Cooperatives Are31 Organizational Make-Up Members Board of Directors Manager CIR 11 Chapter 1 -What Cooperatives Are32 •Cooper

25 atives serve common interests of people
atives serve common interests of people for mutual benefit.•They are complex organizations with unique •Cooperatives exist in many segments of the •Cooperatives consist of members, directors, management, and employees.

26 All have CIR 11 Chapter 1 -What Coopera
All have CIR 11 Chapter 1 -What Cooperatives Are 33 CHAPTER 2 –MEMBERSMAKE COOPERATIVES WORKFocuses on members—who they are and their responsibilities as owners, with particular emphasis on control, financing, and pat

27 ronage. CIR 11 Chapter 1 -What Cooperati
ronage. CIR 11 Chapter 1 -What Cooperatives Are34 Cooperative Members Are•The foundation of the cooperative•The reason for the co-op’s existence•The supporters and financiers, and the shapers of the co-op’s future•Indi

28 viduals, businesses, or other •The ones
viduals, businesses, or other •The ones that control the cooperative CIR 11 Chapter 1 -What Cooperatives Are35 •Commitment and Use•Ownership and Control•Finance CIR 11 Chapter 1 -What Cooperatives Are36 •Using Products

29 and Services•Maintaining Control•Provid
and Services•Maintaining Control•Providing Financing CIR 11 Chapter 1 -What Cooperatives Are37 the cooperative is members’ easiest responsibility to carry out, CIR 11 Chapter 1 -What Cooperatives Are38 Members’ use h

30 elps them:•Maintain control•Fulfill the
elps them:•Maintain control•Fulfill the cooperative’s mission of •Gain continuing benefits•Own a successful cooperative CIR 11 Chapter 1 -What Cooperatives Are39 •Know their legal responsibilities•Understand the cooper

31 ative•Make decisions•Vote•Express opinio
ative•Make decisions•Vote•Express opinions•Serve on board and/or committees CIR 11 Chapter 1 -What Cooperatives Are40 •Incorporating the cooperative •Approving legal documents•Signing marketing agreements or other bind

32 ing contracts (if applicable)•Electing d
ing contracts (if applicable)•Electing directors according to State statute •Ensuring that general business and cooperative-specific laws are followed•Making (voting on) major decisions that alter legal status or struc

33 tural organization CIR 11 Chapter 1 -Wha
tural organization CIR 11 Chapter 1 -What Cooperatives Are41 Owners Must Understand Their •Definition and history•Mission or purpose•Articles and Bylaws•Organizational structure and staffing•Products and services•Polic

34 ies CIR 11 Chapter 1 -What Cooperatives
ies CIR 11 Chapter 1 -What Cooperatives Are42 •Voting on major decisions•Nominating and electing directors•Amending bylaws, accepting audit report, voting on resolutions and motions•Serving on advisory committees or un

35 dertaking •Considering a run for the boa
dertaking •Considering a run for the board•Placing the health of the cooperative in the •Learning as much as they can about the CIR 11 Chapter 1 -What Cooperatives Are43 Member-owners finance cooperatives by•Direct In

36 vestment•Retained margins•Per-unit retai
vestment•Retained margins•Per-unit retains CIR 11 Chapter 1 -What Cooperatives Are44 Member-Owner Financial •Members finance in proportion to their earnings according to use)•Members should contribute a majority of equ

37 ity capital (given co-op’s capital •Acti
ity capital (given co-op’s capital •Active member-users are the financiers (revolve equity, return equity to inactive CIR 11 Chapter 1 -What Cooperatives Are45 •As owners, members have important responsibilities of us

38 e, control, and •Members should fully un
e, control, and •Members should fully understand their responsibilities and actively participate in •Cooperative membership can provide personal and business achievement along with the numerous economic and service ben

39 efits the cooperative provides CIR 11 Ch
efits the cooperative provides CIR 11 Chapter 1 -What Cooperatives Are46 CHAPTER 3 –COOPERATIVE DIRECTORSFocuses on the board of directors. It covers characteristics members should consider in choosing a director to re

40 present them, alternatives for nominatin
present them, alternatives for nominating and electing directors, and functions and responsibilities CIR 11 Chapter 1 -What Cooperatives Are •Holds the key position between •Makes cooperative policy•Has specific respo

41 nsibilities•Sets overall objectives and
nsibilities•Sets overall objectives and charts the cooperative’s course CIR 11 Chapter 1 -What Cooperatives Are •Must be well versed in many areas•Need to have time and energy•Carry out formal and informal duties•Liste

42 n, inform, and advise•Lead•Represent the
n, inform, and advise•Lead•Represent the cooperative CIR 11 Chapter 1 -What Cooperatives Are •Communicate well•Clearly express their views•Good listener•Are active in community•Have leadership ability•Think independent

43 ly•Place cooperative’s interests first•M
ly•Place cooperative’s interests first•Make good business decisions•Make the most of resources available to them•Promote the cooperative CIR 11 Chapter 1 -What Cooperatives Are A director also:•Gets along with others•U

44 ses the cooperative fully•Is interested
ses the cooperative fully•Is interested in its performance•Participates in decision-making•Understands that he/she is •Understands his/her role in relation to CIR 11 Chapter 1 -What Cooperatives Are Equitable represen

45 tation is achieved by various methods:•A
tation is achieved by various methods:•At-large•Geographical districts •Along commodity lines•Volume of business done CIR 11 Chapter 1 -What Cooperatives Are •Are identified by a nominating committee or nominated by ot

46 her members•Should be studied by the mem
her members•Should be studied by the membership -biographical sketch -prior to the election•Are considered for election at the annual •Secured nominations (nominated, seconded, CIR 11 Chapter 1 -What Cooperatives Are

47 •Develop sound policies for the cooperat
•Develop sound policies for the cooperative to •Use strategic perspective to better serve members’ needs•Delegate daily operational control to the •Need to understand their role CIR 11 Chapter 1 -What Cooperatives Are

48 Directors Recognize Division of Responsi
Directors Recognize Division of Responsibility •Have primary control•Tactical perspective•Develop operational and organizational policies •Take counsel from manager•Big-view decisions•Provides direction•Hire/fire mana

49 ger Manager: •Has operational control•Ta
ger Manager: •Has operational control•Tactical perspective•Follows operational and organizational policies•Advises board•Day-to-day decisions•Acts in line with directors’ direction•Hires/fires staffCIR 11 Chapter 1 -Wh

50 at Cooperatives Are •Preserve cooperativ
at Cooperatives Are •Preserve cooperative character•Safeguard assets•Hire the manager•Set policies•Distribute benefits•Plan for the future•Evaluate (co-op, manager, plans, etc.)•Elect board officers•Appoint committees

51 CIR 11 Chapter 1 -What Cooperatives Are
CIR 11 Chapter 1 -What Cooperatives Are By serving according to:•Laws•Bylaws•ArticlesAnd by ensuring that ongoing co-op education •Members•Directors•Managers•Staff CIR 11 Chapter 1 -What Cooperatives Are Directors Safe

52 guard Co-op Assets by:•Protecting member
guard Co-op Assets by:•Protecting members’ investment •Being accountable and making •Hiring an auditor and presenting an CIR 11 Chapter 1 -What Cooperatives Are •They originate and approve them•They periodically revie

53 w and CIR 11 Chapter 1 -What Cooperativ
w and CIR 11 Chapter 1 -What Cooperatives Are •Director and manager functions and •Employee and public relations•Organizational requirements•Operational activities such as credit, pricing, •Purchasing, marketing, and

54 services provided•Distribution of net in
services provided•Distribution of net income CIR 11 Chapter 1 -What Cooperatives Are •Policy: the manager shall prepare an annual business plan for approval and make progress reports at monthly board meetings. Impleme

55 ntation: without further specifics, the
ntation: without further specifics, the manager prepares a budget for approval, then compares it to actual business transacted, and reports any other information that will help the board understand the cooperative’s o

56 perational and financial •Policy: An ann
perational and financial •Policy: An annual membership meeting shall be conducted; the board president addresses the membership. Implementation: management plans, organizes, and conducts the annual meeting; the board

57 president presents a report to the memb
president presents a report to the membership at the CIR 11 Chapter 1 -What Cooperatives Are •Amount of patronage refund•Allocated and/or unallocated equity•Proportion in cash (at least 20% of allocated •Retained ear

58 nings•Equity revolvementand retirement t
nings•Equity revolvementand retirement terms CIR 11 Chapter 1 -What Cooperatives Are •Assess general and changing business •Evaluate challenges—internal and external territory, assets, etc.•Develop objectives and corre

59 sponding strategies for management to im
sponding strategies for management to implement•Monitor plan progress and adjust if CIR 11 Chapter 1 -What Cooperatives Are •How well the board is performing and how effective its meetings are•Directors should assess

60 themselves•Assessments identify weakness
themselves•Assessments identify weaknesses•Allows for corrective actions Provide education to address weak areas.CIR 11 Chapter 1 -What Cooperatives Are By electing board officers•President –presides over all meetings,

61 main communication link between managem
main communication link between management and •Vice president –performs the duties of president in absence of president•Secretary –keeps a record of meetings, custodian of seal, bylaws, membership records•Treasurer –

62 overseas bookkeeping and business accoun
overseas bookkeeping and business accounts to ensure proper handling, presents periodic financial reports to board and membership CIR 11 Chapter 1 -What Cooperatives Are Directors Appoint CommitteesDivides board’s work

63 •Special (temporary) or permanent•Certai
•Special (temporary) or permanent•Certain phases of operations (finance, purchasing, marketing, feasibility, membership, •Study problems and make recommendations to •Power to decide (in some instances), subject to CIR

64 11 Chapter 1 -What Cooperatives Are •Bo
11 Chapter 1 -What Cooperatives Are •Board is the co-op’s central decision center•It is a listening post, communications hub, advisory body, and decisionmakinggroup•It is accountable to members in all its capacities•M

65 embers choose and elect directors•Direct
embers choose and elect directors•Directors set objectives and makes decisions that set the course the cooperative follows to achieve objectives and to be successful•Directors serve like trustees, charged with legal ob

66 ligations to protect members’ assets•Dir
ligations to protect members’ assets•Directors fulfill their responsibilities and exercise due care to act within the parameters of the co-op’s policies and the law CIR 11 Chapter 1 -What Cooperatives Are CHAPTER 4 –WH

67 AT THECOOPERATIVEMANAGER DOES CIR 11 Cha
AT THECOOPERATIVEMANAGER DOES CIR 11 Chapter 1 -What Cooperatives AreFocuses on managers and their responsibilities, with particular emphasis on differences between managing a cooperative versus other forms of business

68 . •Investor-owned firm managers seek to
. •Investor-owned firm managers seek to investment and satisfy stockholders•Cooperative managers seek to satisfy member-owners and serve their needs as determined by the co-op’s board of CIR 11 Chapter 1 -What Coopera

69 tives Are •Are critical to the success o
tives Are •Are critical to the success of the cooperative•Must have a good working relationship with the board of directors•Are hired to operate the business and focus efforts on everyday operations to serve •Decide ho

70 w to best carry out what the board wants
w to best carry out what the board wants the cooperative to do, subject to board •Know the difference between their CIR 11 Chapter 1 -What Cooperatives Are •Implements board policy•Advises the board•Manages daily oper

71 ations•Hires and trains staff•Sets short
ations•Hires and trains staff•Sets short-range tactical goals in line with •Reports to the board•Reports to members•Represents the cooperative CIR 11 Chapter 1 -What Cooperatives Are •Must clearly understand the •Follo

72 ws the policies to the best of CIR 11 C
ws the policies to the best of CIR 11 Chapter 1 -What Cooperatives Are The manager provides technical advice on:•Competitive strategy •Financial management •Operational efficiency •New technology and equipment •New pr

73 oducts and services •Policy changes need
oducts and services •Policy changes needed•Regulatory changes•Governmental affairs CIR 11 Chapter 1 -What Cooperatives Are •Supervises and coordinates functions•Manages people, capital, and •Is responsible for day-to-

74 day operational effectiveness and effici
day operational effectiveness and efficiency CIR 11 Chapter 1 -What Cooperatives Are Hires Staff•Maintains a competent staff•Selects, trains, and supervises •Leads, directs, and motivates •Appraises employee performanc

75 e CIR 11 Chapter 1 -What Cooperatives Ar
e CIR 11 Chapter 1 -What Cooperatives Are Sets Tactical Goals and Implements •Plans as he/she directs the daily affairs of the cooperative•Creates short-term goals in line with •Develops action plans to reach the CIR

76 11 Chapter 1 -What Cooperatives Are •Iss
11 Chapter 1 -What Cooperatives Are •Issues and circumstances•Statement of operations•Balance sheet •Accounts receivable, delinquent accounts•Progress toward planned objectives•Summary of operational activity•Proposals

77 for immediate or longer term CIR 11 Ch
for immediate or longer term CIR 11 Chapter 1 -What Cooperatives Are •Informal contact during working hours•Open houses•Letters•Newsletters•Meetings (district, regional, annual, special) •Visits•Social media, website

78 , email•Formal report at annual meeting
, email•Formal report at annual meeting CIR 11 Chapter 1 -What Cooperatives Are Represents the Cooperative•In the community•With other cooperatives •In the industry•With government officials CIR 11 Chapter 1 -What Coop

79 eratives Are SummaryCo-op managers wear
eratives Are SummaryCo-op managers wear many hatsIna CIR 11 Chapter 1 -What Cooperatives Are Focuses on cooperative employees, what they do, and the characteristics of quality employees. CIR 11 Chapter 1 -What Cooperat

80 ives AreCHAPTER 5 –WHAT COOPERATIVE EMPL
ives AreCHAPTER 5 –WHAT COOPERATIVE EMPLOYEES DO •Work closely with members, who are •Need to emphasize people skills given •Are judged whenever they have direct CIR 11 Chapter 1 -What Cooperatives Are •Promote the co

81 operative•Deliver supplies•Handle member
operative•Deliver supplies•Handle members’ products •Order and maintain inventories•Sell, market, process, manufacture, •Conduct lab work •Keep accurate records•Recommend products/services•Handle complaints•Maintain fa

82 cilities•Represent the cooperative•Educa
cilities•Represent the cooperative•Educate others on what the cooperative is CIR 11 Chapter 1 -What Cooperatives Are •Understand the cooperative•Know and follow policy•Respect members and treat them fairly•Are well tra

83 ined•Are team players•Communicate well•M
ined•Are team players•Communicate well•Maintain assets•Participate in community activities•Are professional CIR 11 Chapter 1 -What Cooperatives Are •Take pride in the uniqueness of the •Understand cooperative principle

84 s•Know who the owners are –members!•Are
s•Know who the owners are –members!•Are well informed and able to answer •Do not reveal information that could help CIR 11 Chapter 1 -What Cooperatives Are •Keep abreast of current policies and rules•Implement policie

85 s in a fair and equitable manner to safe
s in a fair and equitable manner to safeguard member interests and set good business standards•Seek guidance when they think there might CIR 11 Chapter 1 -What Cooperatives Are Respect All Members•Treat all members fa

86 irly and with respect•Are polite and pro
irly and with respect•Are polite and professional•Offer services or products in an equitable status in the cooperative CIR 11 Chapter 1 -What Cooperatives Are Are Well Trained•Are able to explain technical information

87 about •Can recommend the right products
about •Can recommend the right products and •Can answer questions and resolve member •Understand the operations and methods the CIR 11 Chapter 1 -What Cooperatives Are Are Team Players•Know the objectives of the coope

88 rative and •Work together toward achieve
rative and •Work together toward achievement of •Are aware of the service level required to meet the cooperative’s objectives and their expected contributions to the team effort CIR 11 Chapter 1 -What Cooperatives Are

89 Communicate Well•Are the eyes and ears o
Communicate Well•Are the eyes and ears of the cooperative •Keep supervisors and other employees •Listen to supervisors, other employees, CIR 11 Chapter 1 -What Cooperatives Are •Keep facilities, equipment, inventory,

90 and •Take seriously the job of keeping a
and •Take seriously the job of keeping assets in CIR 11 Chapter 1 -What Cooperatives Are Participate in Community Activities•Carry a positive image of the cooperative to the community when participating in various act

91 ivities (service clubs, schools, youth g
ivities (service clubs, schools, youth groups, business organizations, town meetings, etc.)•Should try to take part in some aspect of community activity•May volunteer to help serve the needs and welfare of the communit

92 y•Are careful about taking a particular
y•Are careful about taking a particular stand if participating in an activity which has special social, political, or religious orientation CIR 11 Chapter 1 -What Cooperatives Are •Present the cooperative’s image while

93 •They must be professional: they are po
•They must be professional: they are polite, positive attitude, and are enthusiastic about the cooperative’s mission. CIR 11 Chapter 1 -What Cooperatives Are •Employees play an important role in a •Employees must fu

94 lly understand the uniqueness of the coo
lly understand the uniqueness of the cooperative and its •Employees closely interact with members and •They fulfill their responsibilities while forging relationships with member-owners•Employees, together with members