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BOARD REPORT
Policy Governance-Amended for a Growing Co-op

The pitfalls of policy governance
Willy Street Co-op, like many other food co-ops and non-profit organizations, operates using a system known as policy governance. This means that the Board of Directors, with input from member/owners, writes high-level policies that define the Co-op’s organizational purposes, or Ends. The Board also hires the General Manager (GM), and it’s the General Manager’s job to interpret these polices and use them to guide the day-to-day operations of the Co-op. You’ve probably heard this a million times already, but don’t stop reading yet!

There are a couple of practical problems with using the policy governance system. First, it’s hard to separate policies and procedures—almost everyone misuses the word “policy” all the time! We all say things like, “We have a store policy that if the line at any register is more then three customers, we open another register”—well, that’s not really a policy, at least not in policy governance terms—it’s an operational procedure.

Second, policy governance may actually work better for organizations with a narrower scope than a grocery co-op typically has. All the policies are important, worthwhile directions for the Co-op to be going, but they add up to a lot of directions, all at once. Willy Street has roughly 30 policies, including policies on member/owner education, community linkage, on arts, and on being green. All of these policies are good things for the Co-op to be doing, which makes it quite difficult, to say the least, to prioritize. The GM is directly responsible for reporting on how well over half of these 30 policies are being carried out. All this reporting places a heavy burden on the GM, as well as on the Board. This can lead to General Manager burnout, particularly at a time like the present, as Willy Street Co-op is growing and opening another store.

Help on the way
In late September, the Willy Street Co-op Board met with Pam Mehnert, General Manager at Outpost Natural Foods in Milwaukee, and Outpost’s Board President, Heather Albinger. We had heard that Outpost had streamlined their policies and come up with some more effective means of prioritizing, all of which worked better for their multi-site operation. Outpost has three stores as well as a commissary or production facility that’s similar to Willy Street’s Off-Site Kitchen but is located at one of the stores.

At this meeting, we learned that Outpost had reduced its more than 50-page policy register down to something less than 10. (“It’s actually only seven pages; you don’t have to count the title page and introduction,” Heather Albinger pointed out.)

Perfect policy governance separates Ends (or broad purposes—the true stuff of policy) and Means (or operational issues). As I said at the beginning, it’s easy to get these confused. To ease this confusion, Outpost also adopted a more rigorous method of writing true Ends policies. Each Ends policy is written in the form of WHO gets WHAT. For example, Outpost rewrote one of their Ends polices, that originally stated that one of the Ends of the co-op was a flourishing cooperative community. The current, rewritten policy reads: “The cooperative infrastructure is supported” or (WHO [the cooperative infrastructure] gets WHAT [supported].)
Heather Albinger said, “So, rather than stating that our end community is defined by the means of flourishing cooperative commerce, we are stating that our organization exists, in part, so that the cooperative infrastructure is supported.”

In addition to reducing the number of policies they must operate under, and taking a rigorous approach to writing policies, Outpost came up with another innovation. Outpost’s Board and general manager, with input from the owners, uses the Ends policies themselves to come up with two to three strategic initiatives for any given year. This helps them prioritize to avoid creating an impossible-to-achieve list of goals for a year. For example, Heather Albinger says, “Our Ends statements include ‘owners having a diverse community’ and ‘owners having a sense of belonging.’ Our board has spent a significant amount of time this past year discussing what it means for our cooperative to be a diverse community and what a diverse community does to cultivate a sense of belonging. One conclusion from these visioning conversations has been that our staff needs to be (more) diverse. Therefore, we established a strategic initiative with our general manager this year to ‘implement initiatives that will diversify the staff at all levels of the organization.’”

Let it grow
The Willy Street Co-op Board of Directors who attended the meeting with Outpost’s GM and Board president came away excited and energized. We felt that we were hearing about techniques that Outpost’s Board and GM used to better govern their co-op, and we were hearing these ideas at just the right time to put them to use at Willy Street. Outpost began putting this modified version of policy governance into place at a time of growth for their co-op, when Outpost’s situation was very much like ours right now. The other striking point of similarity between our two co-ops is our long-tenured general managers, who have been with their respective co-ops for more than twenty years apiece. The Willy Street Co-op Board is looking forward to using what we’ve learned from this new take on policy governance to better lead our Co-op as we grow, as well as to working hard and continuing our good relationships with our GM and member/owners.