March Board Report: Policy Governance

By Idgi Potter, Co-op Board Member

Like a growing number of Co-ops nationwide, our Co-op uses a governing style called policy governance.  What does that mean?  In short, policy governance sets up a division of labor between the Board of Directors (Board) and the General Manager (GM) through a set of policies (a Policy Manual) which define the jobs of the Board and the GM.  It delegates to the Board the “vision” of the Co-op, and to the GM the “operations”.  When it's working well, it means that each of us knows what to do, and what someone else is doing, so that we don't step on each other’s toes or let something fall through the cracks.  To get there, it requires a lot of communication!

Communication from the Board to the GM comes from the A and B policies, written by the Board, that tell the GM what is expected of her.  Our A Policies (Global Ends) tell her what our overall goals for the Co-op are, and are developed in partnership with the membership through our Strategic Plan. Our current Ends are: promote the local, sustainable, and organic foods economy; be a workplace of choice; increase community access to the Co-op; educate our community; model environmental sustainability; and grow the Co-op.

 The B Policies are called Executive Limitations, and tell the GM what not to do: don't let the Co-op be insolvent, don't share members' personal information, don't treat employees or members unfairly, etc.  These policies are written as “don'ts” rather than “do's” so that the GM doesn't constantly have to check in with the Board when she wants to try something.  It encourages adaptation and flexible thinking.

Once the GM receives an A or B policy from the Board, she works to implement it and reports back to the Board using a Compliance Report, which details the steps she's taken to comply with the policy and whether or not those steps are working.  If they're not, she reports on a plan to fix it.  Each policy is reported on to the Board once a year, unless the Board requests a report sooner.  The Board reads the report, discusses it with the GM, and votes to accept or reject it.  By asking for information about store operations via reports, the Board avoids overloading the GM with scattered questions, or micromanaging her day-to-day work.  Our current GM has an outstanding record of producing very detailed reports, and we've yet to reject one! 

Policy B8, Communication to the Board, establishes lines from the GM to the Board outside of Compliance Reports, so that the Board stays up-to-date on daily operations within the store.  Currently this policy is fulfilled via email updates and a monthly FYI report, which keeps the Board informed about things like new bike racks or coolers, special events, and Co-op involvement in community activities, so that the Directors can discuss the Co-op's operations knowledgeably with members.  The Board and GM maintain an informal “no surprises” policy of keeping each other informed of anything which might generate discussion or questions from the members.

 The next sections of the policy manual are called Board Process (C policies) and Board-Management Relationship (D policies). These govern how the Board operates, and are monitored by the Board itself.  This is called direct inspection, and the current method is by using a survey completed by each Director.  The survey asks whether the Board is complying with each section of the given policy, and any section that receives a low compliance score is addressed by the Board.  Like the A and B policies, the C and D policies are reported on once a year.

Policy Governance also provides for communication to the Board from Co-op owners.  The Board provides an open forum at the beginning of each monthly meeting for any owner (including store employees) to speak to the Board about anything they'd like to.  If requested, the Board then follows up with the speaker via email after considering the issue.  The Board can also be contacted by email:  board@moscowfood.coop.

One area the Board has found our current policies to be weak in is in establishing regular communication between the store staff and the Board.  Because Policy Governance is designed to avoid the Board directly managing store staff, it can be difficult to find ways to “keep an ear to the ground” without interfering in the GM's ability to do her job.  At the January meeting, the Board discussed allowing staff to serve as directors as a way to fill this information gap.  Although it was ultimately decided that this would be riskier than helpful, the Board did agree that the Board needs to formalize a link between store staff and the Board, and tasked the Policy & Bylaws committee with finding a way to do so.  That committee will report back to the Board monthly until a solution is found and incorporated into the Board's policies.

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