Understanding the Difference Between Manager-Managed and Member-Managed Cooperatives

Cooperatives are a unique type of business organization that is owned and controlled by its members. There are two main types of cooperatives: manager-managed and member-managed. The main difference between these two types lies in the level of control and decision-making authority held by the members. In a manager-managed cooperative, the members elect a board of directors who are responsible for making decisions on behalf of the cooperative. The board of directors then hires a manager to oversee the day-to-day operations of the cooperative. In a member-managed cooperative, the members themselves make decisions and take an active role in the management of the cooperative. This type of cooperative is often referred to as a 'democratic' cooperative because it is owned and controlled by its members. One of the key benefits of a member-managed cooperative is that it allows members to have a direct say in the decision-making process and to be more involved in the management of the cooperative. This can lead to a greater sense of ownership and commitment among members. Another benefit of a member-managed cooperative is that it can be more responsive to the needs and concerns of its members. In a manager-managed cooperative, the board of directors may not always be aware of the needs and concerns of the members, which can lead to decisions that are not in the best interests of the cooperative. In a member-managed cooperative, the members themselves are responsible for making decisions, which means that they are more likely to be aware of the needs and concerns of the members. One of the main challenges of a member-managed cooperative is that it can be more time-consuming and require more effort from members. This is because members are responsible for making decisions and taking an active role in the management of the cooperative. However, many cooperatives have found that the benefits of a member-managed cooperative outweigh the challenges. In conclusion, the main difference between manager-managed and member-managed cooperatives lies in the level of control and decision-making authority held by the members. Member-managed cooperatives are often referred to as 'democratic' cooperatives because they are owned and controlled by their members. While manager-managed cooperatives can be more efficient and require less effort from members, member-managed cooperatives can be more responsive to the needs and concerns of its members.