The importance of good governance

Generally speaking, for your business to be successful, you need to run it well. In any co-operative (or member owned) organisation, the effective operation of that business includes an extra layer of complexity. This involves the co-op’s members who are central to the overall purpose of the organisation.

Keeping those members at the core of what that business does requires paying attention to the governance of the business, and good governance is essential in all co-operatives regardless of size, legal form or business sector.

The co-operative difference, when it comes to governance, is that co-ops exist to serve the needs of their members. They are founded on a set of values and principles which set the agenda for a different, fairer and better way of doing business. This means that good governance also has to encapsulate those fundamental elements.

Encouraging and demonstrating good governance in a co-op can promote transparency and accountability which helps to build trust with members. This instils confidence that the board is furthering the purpose of the co-op to the best of its ability.

 It is the board of directors (or the committee) that is responsible for the governance of any corporate body. The role of the board doesn’t change when that organisation is a co-op, but the way it is held to account and the reasons for doing so are different. This means that the methods of consultation and engagement with the with members will also be different.

A co-op should regularly review its systems and processes as well as assessing…

• Whether or not they are serving their intended purpose
• How well they reflect and engage with their members
• How well their members engage with the co-op and actively join in with governance (e.g. by attending general meetings)
• Whether or not they are operating in line with current best practice standards and legislative updates

A good place to start reflecting is by looking at the governing document for your co-op and checking if it appropriately represents the way your organisation is being run:

• Are there sections that are missing or that lack detail?
• Do you already know that it is out of date due to updates in legislation?

It may be that the rules are appropriate, but you have realised that your co-op is not necessarily acting in full according with those rules.

Governance resources to support you

Co-operatives UK’s website has an area dedicated to governance which includes links to the wheel of good governance and the co-operative corporate governance code.

This code sets out what good governance can look like and is an aspirational tool for all co-ops against which to measure their performance and success. 

Some of the most useful resources to help you reflect on your co-op’s governance and to assist with developing and improving processes are the directors toolkit, the roles and performance webpage and the simply governance guide.

Specialist advice and support

In the Advice team at Co-operatives UK, we can provide specialist support to help co-ops improve their governance:

Board and director evaluations

Evaluating the board's performance and that of individual directors provides valuable insight into how well the board is working collectively as well as the input of individuals. Evaluation forms part of the wider development of an effective board. Done regularly, it can be a useful tool to identify the positive contributions of directors, skills gaps and assist succession planning.

Governance health checks

Co-operatives UK can help assess your co-op’s internal governance to ensure things are running as they should with clear accountability and member engagement. You can check your co-op’s performance against the co-operative governance code.

Facilitated workshops for board ‘away days’

We offer workshop facilitation to support your co-op to make important decisions about its future.

This might be facilitating a business strategy workshop or board away day. We are also able to facilitate workshops to deal with particular issues such as your board composition, or whether to merge with another organisation. We will enable a systematic and objective process and can provide a write up of the session and a report recommending associated next steps.

Regular training events

We have a training schedule that includes Essential Secretary and Essential Director training and can also tailor a bespoke session/day to suit your co-op and your needs.

For more information or to discuss any of the above and more please contact [email protected]