- Kyle White

Why employees might make good board members

Every co-op is governed by a board made up of member shareholders, and these directors generally bring different skills and experience to the table. Typically, boards have at least one member who is good with numbers, and another familiar with legislation. A Human Resources (HR) professional is also a good choice. Whatever the makeup, it’s important a board is diverse.

But there are other — perhaps unexpected — talents and insights to consider, ones that can only come from employees. No doubt about it, putting employees on a board is a complicated option; however, some co-operatives (and other businesses) do have employees on their boards and it seems to pay off.

The concern with employees on boards

For worker co-ops, having employees on the board is pretty much a given. For other types of co-ops – like retail consumer or producer marketing – the decision isn’t so obvious. Having employees on a board that oversees, well, employees is counter-intuitive and seems to be a natural conflict of interest.

This is a legitimate concern. For example, how should a consumer co-op with an employee on the board deal with labour disruption? Likewise, the board oversees the executive class or general management of the organization. So, an employee board member would essentially become the boss of their boss. Not often an ideal situation.

That said, employees of consumer co-ops are also often members of that co-op. In effect, they are already, as an owner, the “boss,” and they are ones that bring insights to the business that no one else has. So, if you trust your employees to do their jobs, you can probably trust them to do a good job on the board – provided they understand their role.

The advantages of having employees on boards

As mentioned, having employee perspectives on a board has its advantages when making decisions about the business.

Employee board members understand how a business works on a day-to-day basis in ways other board members don’t. They can also bring staff concerns to the board’s attention before they get out of hand – so a board is not learning of employee concerns from a picket line, for example. Employees also know better than anyone how policies the board makes will affect employees.  This is all valuable knowledge.

So, should employees sit on a board or are there other ways to get this type of input? Because employees are often also members of the co-op, it could be argued that simply ensuring quality membership engagement and up-to-date human resource policies and practices should be enough. Maybe, but having the authority of sitting on the board will carry more weight and increase the legitimacy of the input coming from employees.

Plus, the trust placed in these employees has the potential to influence their fellow employees so that decisions being made at the board level are taken seriously by those carrying out the co-op’s daily operations. This factor alone should make this option worth considering for larger co-ops.

Is it worth it?

As mentioned, despite the advantages, there are downsides. Employees can easily face conflicts of interest while sitting on a board. A co-op’s board makes decisions that affect the livelihoods of staff. Is it possible for an employee who is also a director to be objective when discussing things like wages, HR policies, or dismissing workers?

Allowing employees to serve on the board comes with risks. It can be hard for them to keep sensitive HR information confidential when they talk with other employees every day. Labour negotiations, disputes, dismissals, or conflicts with management are all topics that can place employee-directors in an awkward position.

Because of these difficulties, there are laws that put some restrictions on employee board members. In western Canada, there are limits on the number of staff that can sit on a co-op’s board. In Alberta and Manitoba staff can’t hold a majority of board seats, while Saskatchewan only allows staff to compose up to one-third of the board. British Columbia is the only western province with no restrictions on the number of employee-directors.

So, is it worth it? We give it an unequivocal “maybe.” A survey of the Co-operative Grocer Network in the UK found that 62% of its member stores had employees serving as directors. The survey also found that employee directors are valuable team members with unique perspectives. Will it work in your case? This is more difficult to answer. But here are a few best practices to follow.

Some best practices

The first thing to consider is that if your co-op adds a bylaw stating employees aren’t allowed to be board members, you might get some push back because it creates a ‘two-tiered’ membership: those who can serve on the board and those who can’t.

A better solution is to limit the number of employee board members in your bylaws and mitigate the risk through policy – or leave this out of your bylaws entirely and manage the risk through policy and solid membership engagement.

Employee board members can provide great insights to a board and make the businesses they represent better. It’s important, though, to provide good training and policies so employee board members know their role and the rules around sitting on the board. And much of this is good practice for all board members.

Here are some important approaches to keep in mind:

  • Directors need to understand that their role is to act in the best interest of the co-operative, regardless of their personal beliefs. It’s important for employee-directors not to think of themselves as representing the co-op’s staff, but as any ordinary member.
  • There should be restrictions on which employees can join the board. The general manager for example, who reports directly to the board, should not also serve as a board member.
  • Employee-directors shouldn’t hold ‘officer’ positions on the board. An officer (ie. president, vice-president, and secretary-treasurer) will have a strong, ongoing relationship with the co-op’s management team. This is a tricky position for employee-directors: they shouldn’t oversee managers to whom they answer in their daily work.

Is your co-op considering adding employees to the board of directors or already have employees on the board? Tell us about your experience. We’re creating tools and resources for the Co-op Creator for groups going through the same thing as you. Your input will help make these tools better. Contact us.

 

Related:

Why diverse boards are rare and what to do about it

When to remove a board member and how to do it

People in a co-op