Case Study: Strong GM-BOD Relationship Promotes Co-op Growth

River Market
Stillwater, MN
Year founded: 1979
Member equity requirement: $80
Number of members: 4,300
Number of staff: 53
Retail square feet: 5,300

River Market is located in Stillwater, MN, an idyllic town on the St. Croix River that attracts many tourists and outdoor enthusiasts. The food co-op has been a strong presence in the community since its founding, and many people rely on it as the place to get high quality groceries in the area. The co-op has done well, but for a period of years it had also been challenged by one thing. It couldn’t attract and keep a good general manager. The reasons varied: lackluster talent on the management side and ineffective board leadership on the other.

mead-stone-quote_vMead Stone, the co-op’s current general manager, has been in the role for the last 12 years. Before his employment, the co-op had been through four general managers in less than 4 years. The board visionaries who had supported the co-op’s previous expansion had moved on without adequately educating and transitioning new board members. Perhaps to compensate for their inexperience, the new board members were haphazard in their decision-making, and at times unreasonable in their expectations. They put forth edicts and were critical of operations. “It was a tumultuous time,” Stone recollected. The co-op’s general manager position became a revolving door.

Stone was determined to stop the cycle of negativity and distrust that had developed during those years, but it took a long time. Stone believes the turning point came when the board decided to adopt the system of Policy Governance®. “With policy governance you begin to build in an organizational memory. It was really helpful in terms of going through the cycle of board elections and bringing in new people.” As the board gained greater consistency and systems in its decision-making role, and the general manager got clarity regarding the board’s expectations of him, their relationship greatly improved and became more mutual. “I know my boundaries and I’m held accountable to them,” Stone said. Another result is of the system is that the board has been successful at attracting smart, committed people to run for the co-op’s board.

River Market is also part of the CBLD program, and Stone believes that this assistance has also meant that with Accountable Empowerment in place (see feature article on the 4 Pillars of Cooperative Governance), they’ve been able to effectively enact Strategic Leadership on behalf of the co-op. They’ve brought in people as experts and guest speakers to help educate the board on topics specific to the co-op’s growth. The board approved a $1 million dollar plan to renovate the co-op (concluded this fall) and during the process they also conducted “safe conversations” wherein they could talk about relevant operational issues. “Everything went really smoothly,” Stone said of the remodel decision-making process.

The results of this strong general manager-board relationship are certainly compelling, all the way to the bottom line. The remodel has propelled double-digit sales growth and pushed the co-op into a new size bracket. New members are signing up almost daily. As part of the operational changes, River Market also instituted a round-up donation program at the cash register that is having a huge impact on the community. “We used to have donation cups where we’d get maybe $4 to $9 dollars a week. Now we’re bringing in $60 a day,” Stone said.

“As your co-op grows its operational systems to change, the same has to happen on the board level,” he said. He credits the board’s commitment to doing that as part of River Market’s new dynamism and growth. “We’re in a different place today than we were even five years ago.”

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