of four elements — members (owners), 

board of directors (elected), the manager 

(hired), and other responsible employees 

(paid). Each part of the team has its own 

distinctive duties and responsibilities for 

performing management functions in a 

cooperative. This allows them definite, 

reserved rights in the ownership and control of the business. These important rights 

give them the privilege of taking an active 

part in the management of the business. To 

be effective, each must exercise these 

rights; otherwise they will have no voice in 

management.

Successful management of a cooperative, 

therefore, is based on intelligent and active 

cooperation of the members with the board 

and with the manager/employees, each 

group shouldering its own responsibilities 

to the best of its ability.

Board/Manager Relationship

This section now specifically discusses the 

responsibilities of the hired management 

and employees. (Sections describing the 

responsibilities of the members and the 

board of directors are numbers 4 and 5, 

respectively.)

Cooperatives, as a form of business owned 

and controlled by the people who use it, 

can be compared to buying a car, in that 

several parts must come together to make 

it right. The most essential one is the people:

u Members, as the owner-users;

u Board of Directors, as the policymaking 

body;

u Hired Management, as the supervisor; 

and

u Employees, as the work force.

Each has specific roles and responsibilities 

in the overall operation of a cooperative.

Cooperative Management

Management of a cooperative is often 

incorrectly thought of as including only the 

hired manager and his key staff. This is far 

from the truth. Cooperative management 

should be regarded as a team consisting 

1

Understanding Cooperatives:

Who Runs the Cooperative Business?

General Manager and Employees 

Cooperative Information Report 45, Section 6

When you buy a car, there are key 

considerations in doing so — the 

right vehicle (make, price, options, 

and color), the right financing 

(affordability, interest rate, terms, 

and length), and the right sales job 

(sales person’s honesty, believability, and pressure). When the parts all 

come together, it’s the right time to 

buy.

United States

Department of

Agriculture

Rural Development

Rural Business

and Cooperative

Service

January 1995
The working relationship between a cooperative’s board of directors and general 

manager is one requiring respect and an 

understanding of each other’s responsibilities for it to function properly. The manager 

is an employee of the board and accountable to them for his/her actions. He/she 

should therefore not be a part of the board 

that hires or sets the salary for the position. 

The manager should be required to attend 

all board meetings though, and be an 

active, nonvoting participant.

The manager is responsible for the overall 

operation of the cooperative, as delegated 

by the board, relating to the management 

functions of planning, organizing, directing, 

coordinating, and controlling. This includes 

such operating decisions as planning the 

co-op’s day-to-day activities, directing personnel, and coordinating operations.

Responsibilities of General 

Manager

In a cooperative, the board of directors 

decides what the cooperative will do; the 

general manager and immediate staff 

decide how it can best be done — subject 

to board review — so as to achieve the 

basic objective of serving members effectively.

Under ideal conditions, the general manager’s principal tasks are planning, reporting to the board of directors, conferring 

with key supervisors, maintaining good 

organizational relations, and controlling the 

cooperative’s operations.

Responsibilities of the general manager 

are:

u Supervises and coordinates, under 

board direction, the business activities of 

the co-op by managing the people, capital, 

and physical resources. 

u Oversees the detailed operations of the 

cooperative, within the policies established 

2

by the board of directors, and recommends changes and additions to the board 

when necessary. Management’s job is to 

implement those policies, for example, the 

purchase of inventory and sale of commodities, the general appearance of the 

co-op, and employees of the cooperative.

u Hires, trains, supervises, and sets compensation for employees. He/she also 

needs to review their performance, and 

replace those employees not meeting 

acceptable performance levels. This reinforces the need for having clear job 

descriptions for all employees. Development and additional training of employees 

also should be provided as an opportunity 

for personnel to acquire new skills and 

qualify for added responsibilities.

u Maintains, and revises as necessary, an 

adequate bookkeeping and accounting 

system; develops for board approval a 

financial budget annually; prepares proper 

financial reports regularly for board review; 

and presents to the cooperative membership at the regular annual meeting, a report 

of the cooperative’s operational highlights.

u Furnishes information needed for longrange planning. This will bring matters, 

such as fixed asset additions or revisions, 

to the board’s attention for review. He/she 

also should make recommendations that 

will assist in reviewing the 

organization’s objectives and goals in 

establishing policies, regulations, and 

programs, and making related plans. 

Based on those objectives, the manager 

sets goals and makes short-range plans 

involving the daily business of the co-op, 

subject to board approval.

u Represents the cooperative and portrays 

a positive image to members and others in 

the community. He/she needs to 1) encourage membership and active 

patronage; 2) communicate developments 

Manager

The working relationship between a cooperative’s board of 

directors and general 

manager is one requiring respect and an 

understanding of each 

other’s responsibilities 

for it to function properly.
of the cooperative with members; 3) educate the general public about the cooperative and its activities; and 4) keep current 

on issues, local, State, and Federal regulations, and pending legislation affecting 

cooperatives.

Selecting a General Manager 

Selecting a qualified and imaginative manager is the most important single act of the 

cooperative’s board of directors. The success of the cooperative depends more on 

the manager than on any other individual. It 

is the manager who directs the day-to-day 

operations, the one in charge full time.

There are not necessarily any behavioral, 

physical, educational, age, or gender standards that assure success as a manager. 

The men and women who move businesses forward successfully come from a wide 

variety of backgrounds. Some of the leadership skills and qualities important to the 

business they serve include:

u experience as a manager and leader;

u ability to convey ideas and communicate 

effectively;

u genuine interest and belief in the cooperative system;

u a desire to succeed and continually 

improve performance;

u ability to carry forward the details of 

operating the business;

u ability to recognize differences in people 

and be flexible in dealing 

with them; and

u good oral and written communication 

skills.

Responsibilities of Employees

1. Understand the purpose and objectives 

of the cooperative. Employees need to 

know what cooperatives are and how they 

compare with other methods of doing busi3

ness. By understanding cooperative purposes, objectives, operations, and their role 

as employees, they can help improve member relations, the cooperative’s image, and 

the general public’s understanding of cooperatives.

Management can inform employees 

about the cooperative through staff meetings, training programs, and printed materials. Many employees may be hired right out 

of high school or college and have received 

little or no education about the cooperative 

form of business before employment. This 

means that while employees are the ones 

responsible for understanding the purpose 

and objectives of cooperatives, management must pay particular attention to providing this type of employee education and 

training program.

2. Fully perform duties. In many cooperatives, like other business firms, the largest 

operating expense is for personnel. In addition to salaries and wages paid, these costs 

include interviewing, hiring, training, and 

fringe benefits. Training and developing 

employees, both formally and informally, 

must be the result of planned conscious 

efforts. It is a continuing process and may 

include on-the-job and programmed outside training. This requires sizable investment in employees to help them become 

productive.

Cooperatives, like other business firms, 

expect fully performed duties for the invested training, compensation, and benefits 

provided. Cooperative managers know they 

must pay competitive salaries and provide 

comparable benefits if they expect to recruit 

and hold qualified employees.

While the cooperative has responsibility 

for recruiting and providing training situations, the employee is responsible for using 

these opportunities to better perform service to members.

Employees

Selecting a qualified 

and imaginative manager is the most important single act of the 

cooperative’s board of 

directors. 
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. 

sure equipment and service tools are operating; serve members pleasantly, promptly, 

and in the order promised; and take an 

extra step to give members satisfactory service.

Employees, within limits of cooperative policy and like their manager, can be community boosters by taking part in religious, 

school, or community affairs. Their efforts 

can positively affect the cooperative image 

held by members, the general public, and 

other businesses.

Conclusion

In the cooperative organization, the people 

involved — members, directors, management, and employees — must:

1. Understand their responsibilities in the 

organization;

2. Understand the roles of the others 

involved; and

3. Be motivated to help the organization 

function effectively.

Understanding the uniqueness of the relationship between the cooperative business 

and the people who own it provides an 

opportunity for the manager and employees 

to develop and maintain positive public and 

member relations. All will help contribute 

towards a successful organization for a 

cooperative’s members, directors, manager 

and employees, and the community it 

serves. n

3. Understand the relationship to memberowners. In a small local cooperative, the 

manager can maintain good relations 

between the cooperative organization and 

its members. That personal contact keeps 

the members informed of their cooperative’s activities. Immediate feedback from 

members is encouraged to keep the manager informed of problems, needs, and 

evaluation of services.

Situations can be quite different in larger 

cooperatives. Personnel hired by regional 

cooperatives may have sole responsibility 

for building cooperative image as they 

serve members. The only cooperative 

employees that members may encounter 

regularly from annual meeting to annual 

meeting may be the individual pumping the 

gas, the person answering the telephone, 

the truck driver picking up their milk, or the 

cashier. To the average member, they are 

the voice of the cooperative. 

Employees, as representatives of the cooperative, must understand the relationship of 

the business to the member-owners. They 

must realize the members, not employees 

or the manager, own the cooperative, and 

that services provided are the primary function of the cooperative. 

4. Favorably represent the cooperative. 

Employees help build the cooperative’s 

image as they serve members and the 

community — both on and off the cooperative’s premises. Employees should keep 

the premises clean and attractive; make 

4

Employees, as representatives of the cooperative, must 

understand the relationship of the business 

to the member-owners.

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.