The management functions of directors 

are often defined as planning, organizing, 

directing, coordinating, and controlling 

(PODCC). The functions of hired management may be identified as planning, organizing, motivating, and controlling (POMC).

Director Functions

The board of directors provides direction to 

the affairs of the business to ensure development and growth in products, markets, 

and positive financial results. Five functions 

are generally recognized—planning, organizing, directing, coordinating, and controlling to fulfill this purpose.

Planning

Planning is the decisionmaking function of 

management and requires sound judgement. Collecting information concerning 

business alternatives, synthesizing the 

information, and evaluating it are important 

parts of decisionmaking. Planning involves 

deciding when, where, and how to take 

action and projecting anticipated results.

The board is responsible for determining 

and systematically arranging all the main 

Working in concert, both have the same 

overall objective but each has separate 

and divisible functions. Conflict within the 

management team arises when either 

doesn’t know, or fails to recognize the division of functions.

Relationships

The elected board is the governing body of 

the cooperative. It has certain legal responsibilities to the members and others like 

financiers, and holders of marketing, supply, or service contracts. The hired manager reports to the board and is 

responsible for the cooperative’s day-today operations.

Management Functions

Functions are actions or activities needed 

to perform a particular role. The management functions of elected directors and 

hired management may appear similar, but 

because of different levels of authority and 

responsibility, the directors and manager 

have different activities and roles for the 

same function.

1

Understanding Cooperatives:

Cooperative Business 

Management Functions

Cooperative Information Report 45, Section 11

Business management is the process of getting things done by and 

through others. In cooperatives, the 

management team consists of two 

distinct entities—

the board of directors elected by the 

members and a professional business manager hired by the board.

United States

Department of

Agriculture

Rural Development

Rural Business

and Cooperative

Service

March 1995

B

o

a

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d o f Dir ect

o r s

M a n a g er
factors to achieve the goals and objectives 

of the business. The planning function by 

directors is usually considered long-term 

and broad in scope. Strategic planning and 

preparation of a capital budget are specific 

examples.

Organizing

When the planning is completed, all of the 

cooperative’s resources, both physical and 

human, must be grouped according to 

function. Organizing involves arranging all 

of the groups so the business operates as 

a productive unit. The group needing the 

most consideration is human resources. 

People are an important part of successful 

cooperative operations.

The board’s role in human resource activities is hiring a competent manager and 

designing the overall organizational structure. Board approval of a competitive wage 

and salary plan plus a benefits package is 

a necessary component. The manager 

hires, trains, and makes work assignments 

for the employees.

The nature and location of the business 

plus the services owner-members want 

determine how physical assets will be 

grouped. 

Directing

The planning and organizing functions 

must be accomplished for the directing 

activity to be effective. Effective directing 

requires setting well-defined, clearly understood, and consistently administered policies. For the manager to function 

effectively, the directors must delegate 

responsibility with the appropriate authority 

and predetermined measures of accountability. Directors engage in contract negotiations, approve membership applications, 

and make recommendations on day2

to-day operations. Directors focus on 

approving short- and medium-term plans 

of the manager, reviewing reports, and 

making decisions about long-term plans. 

Coordinating

Directors coordinate all phases of the business so that each supports the other. The 

use of physical and financial assets and 

personnel activities must 

be integrated to accomplish predetermined 

goals and objectives. Specific examples 

include overseeing facility use, arranging 

timely financing, preparing the manager’s 

job description, and purchasing and selling 

assets to meet members’ needs.

Controlling

Directors exercise control of the cooperative by keeping themselves informed of the 

progress of the business, assuring acceptable performance in all phases of the business. They interpret trends and results and 

know when to initiate corrective action. 

Directors are responsible for preventing 

unauthorized actions and keeping members informed of the cooperative’s progress. Accepting and approving 

management reports, reviewing financial 

statements, and reviewing physical facilities 

are specific examples of director control. 

Manager Functions

With certain given resources, the manager 

has the responsibility for organizing and 

operating the cooperative in a way that will 

optimize the benefits members desire. 

Resources are the manager’s capabilities, 

physical facilities, employees, and the net 

worth of the business. Four functions are 

recognized for management to meet this 

responsibility—planning, organizing, motivating, and controlling. 

The board is responsible for determining 

and systematically 

arranging all the main 

factors to achieve the 

goals and objectives of 

the business. 

Board of Directors
Planning

Managers assist the directors in developing 

the overall goals and objectives of the business. They are an essential part of the 

decisionmaking process. Managers set 

goals and objectives for day-to-day operations, design operating procedures and 

methods, and make financial projections. 

Managers are primarily responsible for 

making yearly plans and projections. They 

must plan and implement the tasks that 

accomplish the goals and objectives established by the board. Managers also make 

annual projections of balance sheets and 

operating and cashflow statements. 

Organizing

Managers are responsible for grouping 

operational processes, assets, and personnel and establishing their relationships for 

efficient day-to-day business operations. 

Developing personnel organization charts 

which show employee relationships, writing 

job descriptions, and establishing acceptable levels of performance are manager 

responsibilities. Manufacturing processes, 

sales programs, and service schedule relationships also must be organized to meet 

the cooperative’s goals. 

Motivating

Coaching and leading the cooperative’s 

employees, members, and customers are 

essential functions of the manager. The 

manager must create positive employee 

working conditions and act as a liaison and 

spokesperson for the business, its owners, 

and other stakeholders. Managers are 

responsible for staffing, training, and mobilizing the personnel under their supervision. 

Responsibility for internal and external interpersonal relationships places a heavy time 

demand on managers.

3

Controlling 

The supervisory function assures 

satisfactory performance in all phases of 

business. Measuring and evaluating the 

results of employee performance, executing 

board policies, and overseeing physical 

assets are critical to accomplishing the 

cooperative’s goals and objectives. The last 

phase of the control function concerns 

unmet goals and objectives and decisions 

of how, when, and what corrective action is 

needed.

Interrelationships—Manager and 

Directors

The manager and directors have different 

roles within the same management function. 

They function as a team to reach the same 

goals and objectives established for the 

business. To avoid conflict they should:

u Know the differences in the roles each 

plays,

u Respect each other’s different role,

u Recognize how the separate roles interact,

u Acknowledge how the same function 

relates to separate groups in the cooperative structure, and

u Relate and accept each other’s independent role and judgement in the same function.

Harmonizing Director and Manager 

Roles

A harmonious management team starts with 

well defined and documented organizational charts. Members, employees, financiers, 

and holders of other contractual agreements with the cooperative are able to recognize the point of authority or decision for 

business actions. Frequent and open communication between the board and the 

manager helps to resolve small problems 

The manager and directors have different roles 

within the same management function.

Manager
This circular is one of a continuing series that provides training information and presentations for education 

resource persons who may or may not be familiar with the cooperative form of business. This series provides the 

basic background material they need and in a form that can be readily adapted, with limited preparation time, to a 

lecture or other presentation.

The U.S. Department of Agriculture (USDA) prohibits discrimination in all of its programs and activities on the basis 

of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental 

status, religion, sexual orientation, political beliefs, genetic information, reprisal, or because all or part of an individual's income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) 

Persons with disabilities who require alternative means for communication of program information (Braille, large 

print, audiotape, etc.) should contact USDA's TARGET Center at (202) 720-2600 (voice and TDD).

To file a complaint of discrimination, write to USDA, Assistant Secretary for Civil Rights, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue, S.W., Stop 9410, Washington, DC 20250-9410, or call toll-free 

at (866) 632-9992 (English) or (800) 877-8339 (TDD) or (866) 377-8642 (English Federal-relay) or (800) 845-6136 

(Spanish Federal-relay). USDA is an equal opportunity provider and employer. 

tion sessions also permit the manager to 

express views on board operations and 

decisions in a neutral setting.

Cooperative management is complex. It 

often involves managing the affairs of several unlike businesses under one structure. 

Adding to the complexity, the user-owner 

cooperative business must satisfy the 

majority of the customers. All have different 

needs depending upon how they are interacting with the business. This is not a small 

or easy task in any management arena. n

before they become complex or a source of 

irritation. 

The use of an executive committee from 

the board will reduce the time and complexity of solving problems and speed up 

the decisionmaking process. Formal and 

written evaluations of a manager’s performance on an annual or more frequent basis 

provide guidelines for making corrections or 

adjustments desired by the board. Written 

recommendations and agreed upon changes with target dates are desirable. Evalua4

In a cooperative, the 

board is responsible to 

its members as users 

rather than to investors 

whose first objective is 

to maximize profits. 

To see this and 

other USDA cooperative publications online, visit: 

http://www.rurdev.

usda.gov/rbs/pub/

cooprpts.htm 

To order hard copies, e-mail: 

coopinfo@wdc.

usda.gov

or telephone:

1-800-670-6553.