Clarifying Board and Management Roles in Expansion/Relocation Projects

Many co-ops talk about the need to move or expand for years. Often it is all talk, with a few false starts and little formal planning or action. For other co-ops, an opportunity to move into the perfect site appears out of nowhere, requiring a decision by yesterday. Again the co-op is poorly prepared and thus unable to act.

In both cases, lack of progress is attributable in large part to confusion regarding roles: Who is responsible? What is the role of the board? Of management? Who will do all the work? Who has time and the necessary skills? Who will make the key and final decisions?

Planning and implementing an expansion/relocation project for a natural foods cooperative is an enormous undertaking filled with risk and challenge. While continuing to successfully operate your current store, you will need to devote significant resources to explore feasibility, develop your plan and carry it out. Working together effectively through this process within your cooperative requires a clear understanding of the roles of all the participants, especially at the leadership level. This article will examine the responsibilities of the board of directors and management during an expansion/relocation project. (The role of staff and of the membership also need clarity and definition, but that is beyond the scope of this article.)

Size of co-op

The current size of your co-op will have a lot to do with how you organize your project. Generally, the larger your co-op, the greater the role of management and the less of a "hands-on" role for the board. In a smaller cooperative, the manager is usually more consumed with the daily operation of the store and has less capacity to devote time for planning a new store. Thus the board steps in and takes on a more active role in pursuing and planning a new store. Note: I am not suggesting this is the best way or how it should be done, but merely commenting on the patterns I observe.

In a larger cooperative, the board is more likely to delegate and empower management to carry out the planning/implementation for a new store within certain parameters. The board's role becomes one of decision-making at key points, support of management, and monitoring. The board's "hands-on" role will be best focused on linkage with member/owners, including gaining member support, member loan drives, and member equity drives. Usually, a larger co-op was at one time a smaller co-op that now has the experience of growth and expansion. Its last move may have been anchored in sweat equity, volunteers, and a major "hands-on" role for the board, but with the growing complexity of the business, the co-op's leadership realizes that model will not work for the next expansion. A wise board, volunteer and lay based, will recognize their professional limitations and look much more strongly to their primary professional resource: the general manager. The board, without abdicating their responsibility, will look to management to carry out their plans and provide leadership for the project.

Small co-ops entering an expansion project should realize that they are in process of becoming a larger co-op; where possible, they should adopt the process and best practices used by a larger co-op that is pursuing an expansion. If the manager of a smaller co-op doesn't have the time or skills to take on the project management, how will that person be able to manage a business that is three times larger than the current store? An expansion project becomes an opportunity to practice and prepare for managing a more complex organization. It is a test, a useful hurdle to clear.

Development Timeline

Expansion/Relocation Projects

Stage I: Feasibility
    (3 months - 3 years)

Commitment and planning (initial contacts with lenders and designers)
Strengthening and positioning
Site search and securing
End of Stage I: sign lease or purchase agreement with contingencies

Stage II: Preparing for Leasehold Improvements or Construction
    (2-6 months)

Design, bids
End of Stage II: close on financing, remove contingencies, final decision point: no turning back

Stage III: Leasehold lmprovements or Construction
    (2-6 months)


Stage IV: Prepare for Opening
    (1 - 2 months)


The champion

Every successful project has a champion: someone who provides leadership in vision, planning, and action throughout the project and at least the initial transition period of operations. The champion will see the project through all the obstacles, including hell and high water. Who is the best person for this role in your cooperative? Will it be a board member? Will it be a member of the staff? Will it be a committee? I don't think so. The person best positioned to be the champion of your project is the general manager!

Board of directors

The board of directors plays a leading role in setting the vision mission and direction of the cooperative. Together with management, the board will determine strategic directions and develop a long-range plan (3-5 years). A component of this direction or plan might be an initial step or statement of commitment towards expansion/relocation. A major responsibility of the board is to nurture and build that commitment from its initial level level. A successful expansion project will require commitment that is continually increasing through all the stages of the project.

The board should develop an overview and understanding ofthe four stages of an expansion/relocation project, recognizing the board's critical role in the "commitment and planning" phase of the feasibility stage. Building increasing commitment requires an intentional focus and continuous action.

An initial commitment to expansion/relocation is not the final decision. There will be a series of decision points for the board during Stage I and Stage II of the project, leading up to the final decision at the end of Stage II. It is important to recognize where and when the final decision point will be, since that is the "no turning back" point. All the decision points leading up to that final decision point involve building commitment and committing resources at risk in order to explore the feasibility ofthe project. Committing additional resources at each decision point is a good test of the level of commitment to your expansion project.

The decision points will be different for each co-op and with each project, but they can be illustrated in your customized timeline developed around the basic four stages. Typically, there might be one to four decision points in Stage I and one or two decision points in Stage II. If you make it to the final decision point, there is a good chance that you will then have all the pieces in place to proceed, and the final decision will be "go." But remember, if a deal can in some way fall apart, it will do its best to do so up to that final "no turning back" decision point.

Additionally, the board is responsible for providing leadership for organizational alignment, including building a shared vision that is clear throughout the cooperative. Developing an effective board/management relationship that is anchored in the board's support ofmanagement is an initial step in organizational alignment and shared vision.

The role of the hoard of directors is more completely outlined in the accompanying chart.

Management, project management

In the larger picture, the role of management can he viewed as:

  1. managing the current store and building profitability;
  2. planning for the new store;
  3. managing the actual timeline, including "sources and uses" budget and financing plan.

Effectively, this triples a manager's job and will be a good test of that person's ability to manage a new store that will be much larger in size and complexity. While we are not looking for "Super Person," the general manager will have to determine the most effective way to organize and achieve the goals of the project within the parameters and policy provided by the board. This will involve building and supervising a strong team that includes people within and outside of the co-op.

Internally, this will include board, staff, and members. Externally, it will include consultants, professional and technical resources (attorneys, designers, architects, contractors), and community resources (including banks, government, property owners, and resources from other cooperatives). The general manager as champion will have the skill to facilitate this team, provide effective leadership, and build enthusiasm for and further commitment to the project.

The board of directors will provide support and hold the general manager accountable by requiring regular reportmg. The policies and parameters set by the board, along with a "sources and uses" budget and the project timeline, provide a basis for management reporting and accountability to the board.

The general manager will begin to shift her or his time from "operations" to "project," initially at a point where 25% of time is devoted to the project and 75% to operations. As time goes on, the percentage of time devoted to the project will increase to 80% and the time devoted to operations diminish to 20%. In order to mike this shift, the general manager will need to plan for a management team which will assume greater responsibility for the current store and/or to hire an assistant manager who will focus primarily on the current store operation. Again, this is a good test for the general manager and for the organization as a whole. If the general manager or organization lacks the capacity to make this shift, it is a very good indication that they lack the capacity to manage a store that is much larger than the current one.

Board of Directors' Role

Expansion/Relocation Projects

1. Decide to expansion/relocation. Initial and increasing commitment to the project.

2. Provide leadership for organizational alignment. Provide clear vision.

3. Develop supportive and supervisory relationship with management, being clear on roles, responsibility, authority, andaccountability.

4. Participate in planning by providing broad guidance and delegating to management and/or specially authorized committee. Review, critique, and approve final plan.

5. Communicate with and represent members in the project through newsletter, mailings, informational meetings, membership and member equity drives, member loan programs, and community relations/events.

6. Uphold accountability through regular reporting and monitoring of plans including timeline, budget, design, and projections. Review worst-case scenarios.

7. Approve major contracts: leases, purchase agreements, financing agreements, contractor and architect agreements.

8. Honor and respect all requirements for confidentiality related to real estate issues, executive personnel issues, and competitive marketplace issues.

9. Develop a strong board and governance system, with leadership and empowerment skills, through recruitment and training.

10. Set the tone for commitment, focus, empowerment, leadership, and fun.

The general manager may wish to hire expertise and/or an assistant to help with the project management. This person would report directly to the general manager, rather than to the board. It is, of course, a challenge to find the person who will be a match for your project, with the right set of skills, available at the time of your project, and affordable. However, there are numerous ways that this project manager or assistant project manager position can be structured, including by contract or as an employee, full-time or part-time, and technically oriented vs. organizationally/process oriented. The person will assist and report to the general manager. The hired project manager will not assume responsibility for the entire project (that remains with the general manager), but rather a portion ofthe project (e.g., construction oversight, the new store set, or financing/fund-raising). The earlier in the project that professional project management can be secured, the greater the opportunity for proper planning and cost savings to be realized, especially with regard to design and pre-construction planning.

In conclusion, the general manager, as champion of the project, and the board of directors form the core leadership. A board that carries out its role and provides strong support and empowerment to its manager, while holding her or him accountable, sets the tone for the entire organization. Board and management working together effectively, with clarity of roles, is strong preparation for a successful project.

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