By now, probably most co-op boards of directors have a policy on conflicts of interest. For example, when a board member has a financial stake in a company that potentially or actually competes or does business with the co-op, this information is revealed to the board, and the affected board member may be barred from voting on certain matters. The issue is straightforward enough that a board member who works for a co-op vendor, or who owns property the co-op might purchase, is not likely to take offense when the subject of conflict of interest is broached.
But what about emotional conflicts of interest? Ponder the following scenarios, all of which have occurred in co-ops, with some of the identifying details changed.
Scenario 1: The Protective Parent
The board president’s daughter is a co-op employee. After she is denied a raise of the size she had expected, her father begins bringing up concerns at board meetings about the fairness of the pay raise system and staff turnover due to low pay. When the general manager provides a monitoring report on staff compensation, the board president antagonistically questions the validity of the general manager’s interpretation. The other board members know the intensity of the president’s opposition is due to his daughter’s experience, but none of them feels comfortable pointing this out.
Scenario 2: The Ex-Employee’s Revenge
An employee serving on the board reports directly to the general manager. The general manager fires this employee for poor performance halfway through his board term. The ex-employee stays on the board, but now he is motivated by revenge. Outside of board meetings he lobbies his fellow board members to terminate the general manager when her contract comes up for renewal at the end of the year. He cites noncompliance on several financial condition monitoring reports from earlier in the year, although by now the variances have been corrected. But more importantly, he argues to his colleagues, the general manager is “just not a good fit” with the culture of the co-op. And some board members are getting swayed. The general manager does have a rather prickly personality. Other board members can see through the ex-employee’s motivation, but they don’t know how to address his behind-the-scenes maneuvers.
Scenario 3: Pillow Talk
A board member is married to an employee. The general manager’s compensation has been a hot topic among some staff and members who are demanding to find out just how much she gets paid. However, the board has steadfastly maintained that, like all individual employee pay rates, the general manager’s is a confidential personnel matter. In an executive session for the general manager’s annual performance review, the board decides on a pay increase and bonus. Somehow, the next day the word spreads among the employees and from them to certain co-op members about the exact amount of the general manager’s salary, raise, and bonus. The other board members have their suspicions about how this information leaked out, but they shrink from the prospect of accusing the board member married to the employee. And what if she flatly denies she told her spouse?
Scenario 4: The General Manager’s Romance
The general manager is dating the grocery manager, who reports directly to him. Some board members get calls at home from employees, and eventually the board receives a petition asking them to instate a grievance procedure that allows staff to go directly to the board. The current procedure requires employees to bring their concern first to their own manager and then to the general manager. The grocery staff feel they have no recourse because the general manager is dating their supervisor. In his most recent monitoring report on staff treatment, the general manager claimed compliance with the policy to “Provide for a fair and thorough review of any grievance by means of a known procedure that can be used without bias.” The board accepted his interpretation, but that was before they heard through the grapevine that he was dating the grocery manager.
What makes situations like these so difficult to address is the emotional intensity of relationships between lovers, spouses, parents, and children. To even raise the possibility that a fellow board member or manager might be biased due to a special relationship can strain the collegiality of board and management. All too often, the person in the relationship reacts as if his or her personal integrity were under attack.
And when it comes to those we love, we can be amazingly blind. Once, a general manager asked me in bewilderment, “Why don’t the employees feel they can come to me if they’re having a problem with
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