Inhouse Corporation Insights

Conflict: When a cooperative divides.

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SOME SHAREHOLDERS ALSO FEEL THEY DON’T NEED TRAINING, after all they just need to pay occupancy charges on time and comply with the cooperative documents, right? No … not exactly.

While its true occupancy/ maintenance charges must be paid and there must be compliance with the cooperative documents, our work shows most shareholders either have little specific knowledge of those documents or forgot what they contain. The cooperative certificate of incorporation, bylaws, rules and regulations and occupancy agreements (proprietary leases) are often an unread series of mysteries.

Of course, we are not suggesting shareholders have intimate knowledge of every last detail in that paperwork, especially since it can be overwhelmingly voluminous. But at a minimum they should have a basic, if imprecise, understanding and familiarity with the documents sufficient to optimistically search for and locate relevant passages that address particular cooperative situations as needed.

Knowing the ropes can alleviate a sense of helplessness shareholders sometimes experience. Not knowing why certain tasks and responsibilities are necessary or the reasons for board actions can make them feel, rightly or wrongly, that they deliberately are kept in the dark. Moreover, if there is a lack of adequate communication between the board and shareholders that feeling can substantially magnify. Circumstances may veer out of control when shareholders perceive themselves as powerless and having  little to lose by venting their frustration as board meeting disruptions or circulating unverified rumors and allegations that can be hurtful to the cooperative, other shareholders and/or board members.

Such an environment is fertilizer for shareholder discontent and turmoil despite the fact that shareholders as a group typically hold the real power within a cooperative—and shareholders can exercise that power when they correctly employ the appropriate procedures usually provided within the cooperative structure. If a board overtly or covertly believes there is a benefit to have shareholders floundering in their efforts to make changes or have grievances redressed, that board should quickly reconsider that position. A suitably trained board would realize a cooperative is designed to be a democratically run organization in which every shareholder in good standing has a voice, a vote and energetically participates in the efficient operations of the cooperative.

Ironically, we find the more stable cooperatives are those that adhere to cooperative principles, are transparent and aggressively ensure continual communication with shareholders. Those boards proactively seek ways to create incentives that encourage shareholder participation at all meetings, on committees and at social events. Such activities boost shareholders’ realization that they truly have a stake in their cooperatives’ success which, in turn, fosters an ownership interest in the cooperative and thereby aids in dispelling the harmful “landlord versus tenant” temperament that too many mistakenly embrace in the co-op setting.

Moreover, filling a seat on the board should not be a lifetime activity for any person. Ideally every shareholder should serve on the board of directors at some point. This would give each of them the hands-on experience of knowing the challenging difficulties a board encounters and strives to deal with on a regular basis … hopefully portraying the board and shareholders are on the same side.

Consequently, appropriate shareholder training would impart or restore the basic understanding of a cooperative, explain the gains derived from participation in all activities and show shareholders how to responsibly and respectfully employ such authorities as are given them in the cooperative documents. It would also help them understand their obligations as well as those of the board. All of which often quells or reduces the conflicts, disagreements and organizational gridlock that can grip less transparent co-ops.

All in all, effective training establishes the platform on which a successful co-op can be built.

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Need coaching, training or problem troubleshooting? Visit us at the Inhouse Corporation website or contact us at inhouseco@aol.com

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Blog Terms of Use and Disclaimer: The purpose of this blog is to promote awareness and general discussion of the presented topic. Use of this blog shall be the reader’s agreement this blog is not a substitute for the advice of a qualified professional and each action that may be taken shall be under the specific guidance and oversight and/or performance of a professional qualified in the subject matter. If you have a question or want assistance with a featured or related matter please contact us at InhouseCo@aol.com (include the blog article title on the subject line). Links, references and credits in this blog are for convenience only and are not endorsements by the author or Inhouse Corporation.

Tags: board, co-op, conflict, cooperative, Inhouse Corporation, shareholder

This entry was posted on February 15, 2014 at 20:43 and is filed under Cooperative, Property Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.