Friday, September 26, 2008

Economic Linkage

There is going to be much talk in Weaver Street in 2009 about "Economic Linkage" and "Ownership Culture." The ambition is to improve the loyalty of our Owners - both Consumer and Worker.

The way it works is that we make the return Owners receive from their investment in us dependent on our performance, and in return for that, we offer Owners a greater say in our performance.

I came across these concepts as I was researching for my involvement in the WSM Elections Task Force at the beginning of 2008. I had an exchange of correspondence with Brett Fairbairn, the academic theorist behind the concepts. I set out one of those e-mails below.

Our exchange formed the basis for the introduction to the strategy document I submitted to the Task Force.

Peg Nolan, whom many of you will know from Weaver Street, has written two articles for The Co-operative Grocer, commenting on Fairbairn's original treatise: Three Strategic Concepts for the Guidance of Co-operatives: Linkage, Transparency, and Cognition.

I link to those articles here and here.


Dear Geoff,

Thanks for writing -- these are interesting issues, and ones that periodically surface in many co-ops. Unfortunately I have not had a lot of time to develop the ideas I presented at CCMA any further, because I have become quite involved in administrative leadership at my university. Two things that might be of use, both I believe available as downloads from the Centre for the Study of Co-operatives website, are my booklet on 'Linkage, Transparency, and Cognition' which is intended to put issues of this kind into a broad perspective, and my 'Self-Assessment of Democracy in Organizations,' which is a kind of analytical tool for thinking about ways in which organizations are or can be democratic.

The topic of relations between managers, on one hand, and boards/volunteers/members is a huge issue in governance of co-ops and nonprofits, and there are lots of resources available. Generally I would say the basic considerations are that (1) managers have to be free to manage, and be accountable for overall results rather than be scrutinized for individual day-to-day decisions; and (2) the board (at least) has to have a big, participatory role in the part of strategic planning that involves setting long-term directions and highest organizational priorities. Often (I would say) it is helpful for the board and management to engage different members and stakeholder groups in discussions about the broadest aspects of long-term directions. All of this suggests boards and managers who respect each other's roles and competencies, and who work at developing a collaborative relationship in which each party does its job, and not the other's. Generally this kind of relationship carries with it a strong understanding that the board is a collective entity, and that its individual members do not play prominent autonomous roles.

There are aspects of the general Carver governance model (boards worry about policies, managers make decisions within policies) that are not bad at getting at these issues in practical ways, though the Carver formula can be a bit over-prescriptive, I think.

Naturally elections come into all this, since they connect the members to the board. But a director election is usually about people and competencies, and may not be a great forum for discussions of strategic directions. I think looking for ways to stage discussions, participation, and input apart from director elections is a good thing for all co-ops to do. I often wonder whether what most members really want is (a) to have 'someone' do the director's job competently for them (not necessarily a burning desire to participate on this front) but (b) for the co-op to 'listen' to their ideas and concerns when they have them.

I often find that case studies of how other organizations work are good ways for people to think about the issues involved. This allows them to set aside, temporarily, their own organization's issues, think about the more general questions involved, and return to their organization's concerns with fresh understandings. Often a trainer or facilitator, if you have access to one through some network in your area, can help with this. Or maybe a partnership with other local co-ops, to look at common issues?

Those are quick thoughts off the top of my head. I hope some of them are helpful to you!


Brett Fairbairn
Professor and Head, Department of History

Fellow in Co-operative Thought and Ideas
Centre for the Study of Co-operatives

University of Saskatchewan
9 Campus Drive
Saskatoon S7N 5A5 Canada

Tel. (306) 966-8505
Fax (306) 966-5852 or

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