I attended the International Co-operative Governance Conference at St. Mary's University in Halifax, Nova Scotia in early September. I was there with my Mount Lehman Credit Union Board Chair hat on and ready to soak up different perspectives and new ways of thinking about governance.
There were presenters, panelists and attendees from Albania, Argentina, Canada, Congo, Ethiopia, Finland, France, Gambia, Ghana, India, Jamaica, Nigeria, Pakistan, Palestine, Poland, Qatar, Sri Lanka, Switzerland, Trinidad and Tobago, the United Kingdom and the United States representing all aspects of the co-operative sector including co-operative banks, credit unions, consumer co-ops, worker co-ops, agricultural co-ops and more. There were academics, practitioners, legislators, regulators and historians on stage and in the audience. It was a real melting pot of co-operative enterprises at an event singularly focussed on co-operative governance.
Among so many other things, I learned that the number-one goal of the International Co-operative Alliance (ICA) in its new Blueprint for a Co-operative Decade is to elevate participation within membership and governance to a new level. It was pretty clear in listening to all of the experts that participation within our democratically controlled co-operative enterprises is extremely low. In fact, less than 2% of all members in the entire co-operative sector participate in the democratic process by voting with an even smaller portion actually attending annual general meetings.
Does democracy equal participation?
On the surface, this lack of participation sounds troubling, but it made me question what participation means within credit unions and how it is being measured. In a perfect scenario, we imagine a fully engaged membership that see themselves as owners, not just customers. These engaged members are interested in how their financial institution is run, perhaps they have an interest in serving on the board or a committee and they fully understand how their credit union impacts their lives and the communities that they live in. And, maybe, just maybe, they are politically engaged and are working in the trenches to make sure that credit unions are being heard in Washington (or in Ottawa).
The reality is that most credit union members just want good service, sound advice, competitive products and useful technology. They don't see themselves as owners and many see ownership as a responsibility that they don't want. On top of that, many members don't understand how a co-operative financial institution differs from the community bank across the street. What's wrong with that? Does being a bum in an AGM seat mean that you are participating more than someone who uses the credit union as their primary financial institution? Will you be more of an advocate if you are engaged in the democratic process compared to someone who had an amazing experience getting a car loan or a mortgage from the credit union?
Are voting and AGM attendance the best measures of participation? I would argue that the simple act of being a credit union member is a form of participation, albeit a passive form. Actually using your credit union on a regular basis is an engaged form of participation. If you pull out your credit union credit or debit card before that other bank card in your wallet, this is participation that will translate into success for the credit union. Obviously, voting and AGM attendance are very measurable forms of participation, but the act of actually using the credit union's products and services is arguably a stronger indicator of participation.
Taking governance to a new level
In theory, governance should be happening at all levels of the organization. This includes our members, our board, our CEO and our staff. According to the ICA, “Democratic member participation is the best-known feature of the co-operative way of doing business, and a major part of what characterizes a co-operative in contrast to investor-owned businesses. The individual member has a role to play in a co-operative which goes beyond the basic economic relationship of customer, worker or producer. Collectively members own their co-operative, and through democratic arrangements they participate in its governance. Individually they have a right to information, a voice, and representation. The word 'participation' is used as shorthand to refer to this bundle of rights.”
In practice though, this governance or participation is an abstraction that is relegated to a small handful of people who meet behind closed doors throughout the year and a slightly larger group that participates in the election of that board.
Since joining my credit union's board and getting active within the larger Canadian credit union system on the governance side of things, I've noticed that there are two distinct groups working in parallel, but not necessarily together. Group one is the employees that are grinding every day within the credit union. They are seeing the real challenges and looking into members' eyes and finding solutions to real problems. Group two is a board of directors who have the institution's best interest in mind as they guide big-picture strategy and work to mitigate risk and future-proofing the credit union. These two groups work separately and typically only touch through a single point—the CEO—and there is very little collaboration between these two groups. The board is tasked with hiring (and sometimes firing) that CEO and overseeing the succession planning of that position. The management of the credit union, including hiring and managing the staff is left entirely to that CEO to oversee. The CEO is also tasked with ensuring employees know the board's vision and what it means for the credit union. This is a time-tested best practice. It's believed that any communication from the board directly leads to confusion.
I believe that to take governance to the next level, we need to breakdown these barriers, be more transparent and encourage participation between all levels of our organizations. This is a messy and chaotic notion, but as I listened to cautionary tales of massive agricultural co-ops demutualizing, Michels' Iron Law of Oligarchy and the potential positive role of anarchy within a networked governance model, it became apparent to me that traditional thinking about governance and participation is not the way forward for co-operatives and credit unions. This may be idealistic. It would only work if the board is completely aligned, using the same language and actually engaged enough to participate to that level with staff and members.
I came away from the conference with a lot to think about. What do you think? Is there a crisis of participation at your credit union or are traditional measures of participation within co-operatives and credit unions outdated? Is it time to rethink the age-old governance models and practices or should we stick to the status quo?
Tim McAlpine lives in Chilliwack, British Columbia, Canada. He is the President and Creative Director of Currency Marketing, an integrated marketing agency specializing in helping credit unions attract the next generation of members. Tim is best known as the creator of Young & Free and CUES Next Top Credit Union Exec, and co-creator of the CU Water Cooler.