Governance of Community Food Enterprises

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Community Food Enterprise

Good Governance Report 2009

Cover image created using http://www.wordle.net/


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The governance of community food enterprises

This report is overview of the typical governance problems of community food enterprisestogether with strategies to avoid them and deal with them as they arise.

The report is based on a series of governance workshops run by Co-operativesUKs Good FoodGood Governance strand as part of the Making Local Food Work project, Participants in the

workshop were development workers and members of community food enterprises. They wereasked to work in groups and list typical governance issues they had encountered within their workwith or as a member of a community food enterprise.

The definition of community food enterprises has been limited here to mean businesses which arecontrolled by a community membership - the members of the organisation, be they customers,employees or simply members of the community are the people who own and ultimately controlthe organisation. Larger organisations of this type will typically have a governing body elected by,separate to and responsible to the wider membership and we will see that the typical governanceproblems will mostly relate to this governing body and how it itself relates to that wider

membership.

It is accepted that some organisations which describe themselves as community enterprises byvirtue of their benefit to the community, will not fit the above restricted definition and they havenot been included here as they will have different governance issues.

The groups came up with 12 different typical governance issues:

1. Mistakes at start-up2. Inflexible structures and systems3. Poor clarity of roles4. Cannot recruit to governing body5. Poor accountability to stakeholders6. Poorly informed and trained governing body7. Poorly performing governing body8. Poor membership participation9. Ineffective meetings10.Mission drift11.Founder syndrome12.Conflict

In the workshops, the participants were then split into groups of, each group being asked tosuggest strategies to avoid the governance problems. The strategies were then fed back by thegroups to the whole group as a catalyst for further discussion.

The following report collates and expands on the responses of the workshop participants. Eachgovernance issue is displayed as a mind map of the responses together with a commentary on theissue and the suggested strategies.


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Governance problems and solutions

1. Mistakes at start-upMany governance problems listed in this report have their roots in mistakes made at start-up. In

the excitement of creating the organisation, or the rush to submit a funding application, theprocess is often poorly planned and uninformed decisions are made which hamstring the futureprogress of the organisation.

The suggested strategies to avoid mistakes at start-up can be summarised as a combination ofthorough, participatory planning, involving all potential members, but taking advice from otherorganisations be they support organisations or other organisations undertaking similar enterprises.


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2. Inflexible structures and systemsThe decision as to which structure to adopt often stalls the development of an organisation. Thisis a reflection of both the complexity of the choices available and the importance of making thecorrect decision. Organisations often set up with inappropriate structures, which limit what they

can do or even prevent access to sources of funding which they had intended to use. Converselyit is equally possible to create an organisation, which whilst it is attractive to funders, isinappropriate for the aims and aspirations of the members.

In addition, the applicability, suitability and use of charitable status are often poorly understood inrelation to the organisations objectives and legal structure. The financial advantages of charitablestatus whilst attractive may be incompatible with the way the organisation will be run or itsactivities.

Even when organisations are set up with appropriate structures, there are often misconceptionsand ignorance amongst members, staff, committee members etc. as to what the structure is andthe implications thereof.

The suggested strategies to avoid problems relating to structure can be summarised as acombination of effective planning, with external help where appropriate, in the initial stages to

ensure that the organisational structure is both appropriate and flexible. There is then a role forthe governing body in ensuring that the governing documents and associated policies areaccessible and regularly reviewed.


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3. Poor clarity of roles

This issue can arise from of a lack of written policies, for instance grievance, disciplinary, memberagreements, job descriptions etc. As a result, people dont know where they stand and the limitof their roles and responsibilities. Where there is such a situation, there is a tendency forunspoken rules and custom and practice to fill the vacuum, leading to further confusion.Different people within the organisation operate different systems and new people become

confused and disheartened.

In a flat non-hierarchical organisation roles and responsibilities are harder to define than in a moretraditional hierarchical organisation. Responsibility is often shared and there is then a tendency forindividuals failing to take responsibility, as they know others will take up the slack. There is also atendency to try and involve the entire organisation in decision-making. Whilst this is fine in a smallorganisation, there comes a point when as an organisation grows, some decision-making must bedelegated.

The solution to the problem of poor role clarity is (surprise, surprise) clarity of roles. Roles needto be appropriate, easy to understand, well communicated and reviewed regularly with inductionof new people into roles being an ideal opportunity for role review - giving ownership of the roleto the new incumbent.


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4. Cannot recruit to governing body

This issue is closely related to the ineffective meetings problem (see no. 9) - who wants to takepart in a democratic process that they perceive as inefficient or a stressful and large additionalworkload. Potential board members may also be unsure of exactly what it entails to be a boardmember.

Poor recruitment can lead to founder syndrome (see no. 11), as existing board members areforced to remain in position. The board can also become distant from the membership and lessaccountable as a result.

Strategies to improve recruitment to the governing body are a mix mostly of carrot strategieswith a smattering of sticks. Membership of the governing body can be encouraged by actuallymaking it more of an attractive proposition or by demystifying it and making it seem less of achore. Alternatively elements of compulsion can be used - i.e. everyone has to serve on thegoverning body at some point.


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5. Poor accountability to stakeholders

When the governing body do not represent the membership effectively and/or the membershiphave little or no idea what the governing body is doing in their name and how they are arriving attheir decisions, this can lead to a them and us perception with all the associated knock-onadverse effects.

Solutions here boil down to effective communication and networking across the organisation,facilitated by an effective, informed and trained governing body in touch with an informed andengaged wider membership.


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6. Poorly informed and trained governing body

The governing body of many organisations does not having the range of skills to effectively carryout the strategic management role required of it. The governing body members should have abasic level of financial and business acumen in order to be able to scrutinise financial reports anddetermine whether the organisation is on course and compliant with relevant legislation.

Members of a governing body should also be aware of their own duties and legal responsibilities.

Again the solution is simply down to effective, planning and review, with a commitment to trainingand recruitment to ensure a balanced and well trained governing body.


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7. Poorly performing governing body

This is a common governance problem, closely related to the Founder Syndrome issue listedbelow - The governing body is unfit for purpose, poorly informed, and doesnt contain people withthe right balance of skills. Unfortunately as it is ineffective, the governing body will find it difficultto recognise the organisations predicament and resolve the problem.

The running of the enterprise can also become so time-consuming that the strategic overview getslost. As well as time constraints, there may be confusion with regard to roles - the governingbody are unclear as to their responsibilities.

We are now starting to see recurring themes:This problem can be avoided by good intra-organisation communication and review ofperformance and systems and even reviews of organisational structure.


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8. Poor membership participation

Member apathy can be, by default, a problem for any member-based organisation and also a threatto its continued existence.

Membership apathy arises in two main ways:1. Poor governance (as detailed in the issues raised by this work) leads to a disempowered

and undervalued membership who may continue to receive any membership benefits, butdisengages from any democratic involvement with the organisation- leaving the governingbody to soldier on alone.

2. During the initial set-up a democratic organisation based on membership participationmay be created for altruistic reasons, but in practice it may fail because the members joinfor the benefits but have no interest in controlling the organisation or for other reasonslack of time/geographical distance from meetings are unable to participate.

Its seen as good practice to investigate why there is poor membership participation and thenaddress that problem. Again there are mixtures of carrot and stick strategies, together withgeneral good governance practice (particularly open and honest communication) which will lead toa more empowered membership anyway.

Again there remains the ultimate solution of restructuring where it is found that there isnt amembership which wants to engage with the governance of the organisation.


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9. Ineffective meetings

Meetings which are too long, are indecisive, or leave attendees feeling that they have not had theirsay, are very disempowering. As well as reducing the efficiency of the organisation at that meetingand resulting in poor planning and decision-making, they also make attendance at future meetingsless likely.

Poor attendance can also mean that meetings are inquorate and unable to take legitimatedecisions.

Participants suggested a simple combination of clear responsibilities, good planning and crucially,effective facilitation, together with a willingness to try alternative ways of decision-making.

There was also a lot of consideration given to making meetings more attractive with regard tovenue and timing as well as their process.


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10. Mission drift

You often find that an organisations mission and activities are not reflected in its aims andobjectives as defined in its governing document. In some cases the organisation is acting outsideof its powers, with possible legal ramifications and is open to challenge with regard to decisionsmade in the past.

For a combination of reasons, many members of organisations are ignorant of the structure oftheir member-based organisation and may never even have seen the governing document.

Workshop participants suggested a range of preventive strategies, characterised by goodcommunication and good start-up governance with a commitment to review of the organisation asit and its environment grows and evolves. Legislation also changes and may need to be reflected inthe governing document.

At the very least all new members need a copy of the governing document, preferably as part of a

structured induction to the organisation.


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11. Founder syndrome

This issue is closely related to the previous poor performing governing body issue.

Often the governing body has long-standing members who are, or are perceived to be, entrenchedand hold a great deal of influence. This founder syndrome as it is known may also be the result

of the unwillingness of newer members to get involved, especially if they perceive that the existingmembers of the governing body dont need their help.

All the above contributes to the poor change management - the organisation can maybe cope withstanding still but cannot plan for and manage change.

As can be seen above, suggested strategies included a range of preventive and remedial, creatingan organisational structure which is open and where roles are clearly defined. New members andmembers of the governing body need thorough induction to empower them to get involved in theorganisations governance.


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12. Conflict

This is probably the category that elicited the greatest response in the workshops. It should beborne in mind that conflict, in itself, is not necessarily the problem, but it is rather the poorhandling of conflict that can lead to difficult situations. Decisions often get made by groups ofpeople on the basis that they are the least controversial, generating the least amount of conflict,

rather than they are the most appropriate course of action. It may be that conflict can be positiveand a catalyst for innovative thinking. The key to any conflict resolution is perception - twopeople can be looking at the same scenario with very different outlooks. Try to put yourself inthe position of the other in the conflict and this is no bad way of working in committee ingeneral.


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Conflict (continued)

The suggested strategies range from having effective meetings with clear ground rules, through thetraining of members, ultimately to having and implementing effective grievance and disciplinary

procedures. All of this has to operate within an appropriate structure with clear governingdocuments - much conflict arises within organisations where there is confusion about the internalgovernance and roles and responsibilities.

Some Common themes

Documentation and written policies - have them, review them and communicate

them.

Communication and openness - do it and believe in it.

Clarity of common purpose - have it and review it.

Skills of board - address them, assess them, review them and commit to training.

Training and Induction - for all.

Review and revisit all aspects of governance - do it.

Willingness to change - have it.

Fun, and not least

Co-operation.


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This report was compiled by:

The Good Food good Governance team at Co-operativesUK

Holyoake HouseHanover St.

ManchesterM60 0AS

www.cooperatives-uk.coopwww.makinglocalfoodwork.co.uk/governance/

[email protected]

Governance helpline0161 246 2907

Governance of Community Food Enterprises

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