TREATISE ON DUTIE5 OF DIRECI‘ORS AND "II-IE MANAGER OF A- MICHIGAN DAIRY PROCESSING COOPERATIVE Thom In tho M“ of M- 55- MICHIGAN STATE UNIVERSITY I.» Don Ad‘ami 1.961 *ocwm-r‘. .‘O'ON‘M'.‘Q‘MC.—~””O-O - H -' 1’ ' o-o‘og‘lot“, ”fiwv'wVV'Ivvv- wu'vv—vvwvvv-vvv '. H E815 LIBRARY Michigan State University TREATISE 0N DUTIES OF DIRECTORS AND THEIMANAGER OF A MICHIGAN DAIRI PROCESSING COOPERATIVE by lee Don Adami AN ABSTRACT Submitted to the College of Agriculture Michigan State University of Agriculture and Applied Science in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE Department of Food Science* 1961 Approved ‘__ . '- 0 e . . .. o a . C l! 0. V O J a}: o I a b o a . I t n o .9‘ A 4 \ ABSTRACT Lee Don Adami Increasing competition and lower operating margins along with increasing costs are causing a greater necessity for competently managed dairy processing cooperatives. Qualified board members are not necessarily sufficient. They must know their specific duties and perform them.in harmony with the manager and the membership of the cooperative. A check list type questionnaire was sent to a total of 54 presidents or secretaries of boards of directors and 26 managers. A return of 83.3 percent was received from directors, and 96.2 percent of the managers. Results of the questionnaire revealed the directors need a guideline of specific duties and a:more thorough knowledge of the fundamentals of business so they can evaluate the performance of management and their own policies. Sixtyefour percent of the direc- tors indicated they should evaluate a sales cost analysis study with the manager while fewer (44 percent) felt they should evaluate a more important report-the operating statement. Forty percent of the di- rectors indicated the manager'should employ the accountant for an audit at the end of the year while 56 percent of the managers dis- agreed, indicating this is a sole duty of the board of directors. Consistent replies by managers and directors indicated the board should make the final decision on issues of major'importance to the cooperative, for example large financial transactions, are pension programs and so forth. ABSTRACT lee Don Adami Managers and directors generally agreed that the mutual duties included: planning a lObyear member adult education program, deciding to enlarge the purchase services, planning growth goals and changing the objectives of the cooperative. Unanimously the managers and directors agreed that the direc- tors have no duties in the area of hiring, dismissing, evaluating or specifying duties of employees. The results revealed directors have little if any responsibility in the area of daybto-day operations. To assist the directors in understanding their duties a guide- line of duties for them and for the manager was prepared as well as for the membership. The recommendation to the cooperative members are: (a) select qualified directors, (b) require that directors know and perform the duties of their office and (c) vote on decisions of great importance to the welfare of the cooperative. The board of di- rector's duties are: (a) decide major policies, (b) select and sup- port a competent manager, (c) evaluate management's performance, (d) ascertain if objectives are being accomplished, (e) decide on large financial operations and (f) miscellaneous, such as hiring a consult- ant. Recommendations of mutual duties (board and manager) are: (a) planning and developing policies, (c) selecting an assistant manager and (c) promoting membership relations. The manager is responsible for: (a) executing policies dictated by the board, (b) directing and controlling daysto—day operations and (c) providing dynamic leader- ship. TREATISE OF DUTIES OF DIRECTORS AND THE MANAGER 0? A MICHIGAN DAIRY PROCESSING COOPERATIVE by lee Don Adami A THESIS Submitted to the College of Agriculture Michigan State university of Agriculture and Applied Science in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE Department of Food Science 1961 (2+ Ii/flf-(a b/M/b/ ACKNWIDGMENTS The author wishes to express his sincerest gratitude and ap- preciation to Dr. T. l. Hedrick, Professor of Food Science for his patient guidance, stimulation and constructive criticism during the preparation of this manuscript and throughout the entire graduate program. The author is most appreciative for the valuable experience he received while working at the Michigan State University Dairy Plant in the supervisory development program created and directed by Dr. Rodrick. The encouragemnt, assistance and stimulation provided by Dr. G. M. Trout, Professor of Food Science, and Mr. A. L. Rippen, Asso- ciate Professor of Food Science, during the author's study period is gratefully acknowledged and appreciated. Also aclmowledged is Dr. Pearl J. Aldrich's, Research Coordinator of the College of Home Eco- nomics, reading of the manuscript and serving as a member of the graduate committee. Assistance by Mr. F. M. Skiver, Chief, Department of Dairy of the Michigan Department of Agriculture, and Mr. L. A. Cheney, Secre- tary of the Michigan Association of Farmer Cooperatives, was appre— ciated. ' The kind participation by 25 managers and [.5 directors of Michigan dairy processing cooperatives in contributing their opinions for this study was instrumental and greatly appreciated. Without a doubt the assistance, encouragement, devotion and companionship of my wife, Bee, played a most influential role in the completion of this manuscript. ii TABLE OF CONTENTS meCTION O O O O O O O 0 O O O O O O O O O O O O O O O O 0 Importance of Cooperatives and Dairy Product Cooperatives “Fawneeeeeeeeeeeeeseeeeeee Definition of Tense . . . . . . . Agricultural Cooperatives . . Dairy Product Cooperatives . Administration of Cooperatives Management of Cooperatives . Duties and Responsibilities . . . The Need for This Study and Objectives mm mm. 0 O O O O O O O O O O 0 Characteristics of Agricultural Cooperatives Purpose of Agriculhiral Cooperatives . . . The lack of Corporate Management Stills The Modern Ihnagement Concept . . General Administration . . . . . . Duties of the Board of Directors . legal Responsibilities . . . Selection of the Manager . . Formulate Policies . . . . . Control of the Cooperative ' . Duties to the Embership . . iii \Dmmmbbwwum KISS 16 18 19 23 TABLE OF CONTENTS (Continued) Obligations to the Community iv Financial Administration Personnel Administration Plant Operations Duties of the mnager Inform the Board of Directors Managing the Cooperative mmmm O O O O O O O O O O O O O O 0 RESULTS AND DISCUSSION Maintenance of legal Entity Trustee of Membership's Interests Membership Relations . . . '. . . . Goals . . . . . . . . Measure and Control . Financial Pblicies . . Personnel Policies . . Production Policies . Marketing Policies . . Page 26 26 28 31 32 32 35 39 L9 50 53 56 57 59 61 E orgmut1°m18tNCMeeeeeeeeeeeee RECWED DUTIES FOR DIRECTORS, MANAGERS AND MERE» Outline of Duties O O O O O O O O O O O O Duties of the Membership Duties of the Board of Directors Mutual Duties of the Board TABLE or CONTENTS (Continued) Duties of the Manager SUMMARI AND CONCLUSIONS . . LITERATURE REFERENCES APPENDIX CITED 0 O O O O O O O Q of Directors and Manager Page 88 LIST OF TABLES mars ’ Page 1 Annual sales and membership of Michigan dairy processing cooperatives in 1959 . . . . . . . . . . 42 2 Summary of replies to the questionnaire sent 25 managers and 1.5 directors of Michigan dairy product coopera— t1” a O O O O O O O O O O O O O 0 O O O O O O O O O ‘4 vi APPENDIX II III VI VII VIII IX LIST OF APPENDICES Questionnaire................ Introductory letter to directors . . . . . . Introductory letter to managers . . . . . . . First follow-up letter sent to the managers . First follow-up letter sent to directors . . Second follow-up letter . . . -. . . . . . . . Thirdfollov—uplettsr . . . . . . . . . . . Replies to questionnaire on duties sent 25 managers and [.5 directors of Michigan dairy processing cooperatives.................. Selected sources of information for members, directorsandmanagers............. vii 112 116 117 118 119 120 121 128 INTRWUCTION mm 2:. mm and Pain ma 9.22m: 22 m Historical reports indicate the individuality of American famers in their organisation of agricultural cooperatives, and the significant economic role played by these cooperatives in the American dairy industry. By 1913’ the earliest available data, 3,099 coopera- tives had been organised, while by 1929-30 the largest number (12,000) was in existence. By 1954-55, reported Cessner (1958), a gradual de- cline to 9,887 occurred in the number of cooperatives. These had a gross business of $12,500,000,000 and although the masher continued to decrease to 9,872 by 1956-57, the business increased to $13,500,- 000,000. A still higher gross business of $14,005,716,000 was han- dled by the 9,716 cooperatives in the latest survey of 1957-58. Gessner (1960) explained that this decreased number should be expected since over a 30-year period from 1926 to 1956 the number of farms has decreased from 6,400,000 to 4,800,000. Significant, how- ever, is the membership of 7,700,000, an increase of 5,000,000, in this period. By 1956-57 membership had decreased to 7,671,730 and continued to decrease to 7,485,115 by 1957-58. But a comparison of the 1913 membership of 651,186 with the 1957-58 figure shows that the farmers have supported agricultural cooperatives. The mnber of Michigan agricultural cooperatives totalled 238 in 1956—57, reported Gessner (1960), and 230 were reported in 1957- 58. The membership decreased from 207,940 to 193,355. The not business by Michigan agricultural cooperatives vas $334,163,000 in 1956-57 and was $346,728,000 in 1957-58. Nationally, the dairy processing cooperatives retained the highest gross value of agricultural products marketed in 1958. Ges- sner (1960) reported 1,771 cooperatives handled dairy products; 18.2 percent of the total 9,716 cooperatives organised in 1957-58. The gross business by these cooperatives amounted to 33,490,673,000 for 1957-58, which was 24.9 percent of the total $14,005,716,000 gross business of all cooperatives. Ulrey and Rowland (1956) studied Michigan's dairy cooperatives in 1952-53 and reported 216 dairy cooperatives served 88,202 members and 88,115 patrons with annual sales of $134,600,w0. At this time 41 Michigan cooperatives operated dairy plants that handled products valued at $54,548,000. These cooperatives increased the value of products 22.6 percent, or $12,347,000. W 2: 19291 Agricultural Cooperatives. Legal birth of agricultural coop- eratives came from the February, 1922 enactment of the Capper-Volstead Act. Hulbert (1957) quoted a portion of the Act: "persons in the production of agricultural products as farmers...may act together in associations, corporate or‘otherwise, with or without capital stock, in collectively processing...and marketing in interstate and foreign commerce, such products of persons so engaged." Under the act such an association of farmers could have mar- keting agencies in con-ion where the cooperative and its members could make necessary contracts and agreements to accomplish their stated purposes. Enphasis was placed upon the provisions of mutual benefits for the members as the producers. The act also specified no member of a cooperative would be allowed more than one vote whether he owned large or small amunts of membership capital; the cooperative would not pay dividends on stock or membership capital in excess of 8 per- cent per year; the cooperative would not handle products from nonmem- bers in greater value than that handled from its manbers. Dairy Product Cooperatives. Dairy product cooperatives are de- fined in this thesis as the comercial dairy plants that are owned by an association of farmers to process and/or manufacture and market milk supplied by the farmers. Michigan statures require a 7 percent per year dividend restriction. Ulrey and Rowland (1956) found dairy cooperatives of Michigan conformed to this restriction and to the other two requirements of the Copper-Volstead Act. Administration of Cooperatives. Administration is the per- formance or discharge of the executive duties of a business. The term refers here to the combined actions of the board of directors and mana- ger. hnagement of Cooperatives. Management is the art of attaining objectives through other people. The manager and other supervisory personnel of lesser authority are responsible to perform this art. Duties and Responsibilities. The duties and responsibilities of a job are the tasks demanded of a job which are assigned to the person or persons fulfilling the job, making him or them accountable for the tasks. For easy reading, the term "duty" will refer to both duty and responsibility. mmmmnmagw active Surveys indicate directors and managers are not in agreement relative to the duties of one another. Ray (1951) reported 16 percent of the Indiana directors he interviewed felt the manager was making one or more decisions that were the responsibility of the board of directors. Rulbert 31 51. (1960) found 752 directors of regional co- operatives allowed the manager to make final decisions in only one phase in managing the cooperative. Bakken (1931) warned of rmclarity betwéen directing and manag- ing and Samuels (1958) asserted the need for a clear delineation of the duties of the board of directors and manager. Hulbert (1958a) and Gardner (1958) agreed directors must understand their duties better if the cooperative movement is to progress. Griffin e3; 31. (1955) and Gardner (1959:!) pointed out that increased complexity and inte- gration will require directors to effectively perform their duties. Therefore, the objectives of this study were to survey members of the boards of directors and managers of dairy product cooperatives for their opinions of the duties each should perform and to prepare a sound guideline of the duties of the board of directors and the tuna- 801'. LITERATURE REVIEW The literature pertaining to the duties of the administration of agricultural cooperatives is voluminous. Studies have covered such wide areas as the definitions that directors had of their role in decision.making, to a case study of actions and powers of a coop- erative administration. Publications of both an agricultural and non—agricultural nature have contained articles delineating the duties of the cooperative's administration. The wide coverage indicates the extent of the interest in the subject. Characteristics 9; Agricultural Coopgratives Garner (1944) implied the ownership of agricultural coOpera- tives is the greatest difference between farm cooperatives and private agencies since farmer'members must arrange for the initial capital. Adams (1960) denoted the significance of ownership in his assertion that a dissatisfied cooperative member is an unhappy owner. Earlier Bakken (1931) had insisted that the principles of cooperation demanded the farmer be owner. McBride gt 9;. (1926) and Garner (1944) referred to the owner- ship principle as the one-man, one-vote, or democratic control prin- ciple. Garner (1944) stressed that the principle is essential to a cooperative‘s success since the conception of cooperatives is based on each member having only one vote. Venues and Brinkley (1950) agreed, emphasizing the cooperative is an organization of users with democratic control as one of its main purposes. Hulbert Lt, 51.. (1960) stated the principle of democratic control dates back to the days of the Rochdale pioneers. Present day adherence to the principle is evident from reports by Ulrey and Rowland (1956) on Michigan dairy co— operatives and Hulbert gt 3;. (1960) on regional cooperatives. Fallon (1958) criticised the principle. Fe argued the farmer-member who does not patronize the cooperative 100 percent, but still has one vote, definitely has a different relationship with the cooperative than the farmer-member who has a large rigid contract agreement with the coop- erative. Other methods of control have been employed, Hulbert _e_t 5L. (1960) reported. They found the one-share, one vote; vote by tonnage; vote by dollar volume; vote by tonnage and dollar volume; and vote proportional to revolving fund inves’arent as methods in use. McBride 93, g. (1926) referred to a commodity control approach whereby the number of votes was determined by the amount of product from a member. This system of control, claimed Ulrey and Rowland (1956), did not ap- pear in conflict with the principle of democratic control. Because of the democratic control principle Bakken (1931) claimed the membership must be kept informed. Iewrie (1958) agreed this is vital, though she pointed out specific problems in informing members. Since not savings to be allocated and the patronage refunds to be distributed should be known to members, accurate and continuous information on operating costs is entailed in managing a cooperative. She stated this involves a more detailed cost accounting system than a comparable non-cooperative business would have in use. Though How (1950) agreed with the need to inform members, he explained a distinct advantage that cooperatives have over proprietary businesses in marketing their members' products. The advantage is the ability of the cooperative to attract patronage which develops from any action that improves the returns to members. He added the non- monetary values such as confidence in an organization by its owner- users also serve to attract members. Nelson (1959a) postulated that a large competitive advantage results from an active-attracted member; ship. He elucidated that this type of membership should elect an ac- tive and interested board of directors who officially represent the members and have the support of the membership. Re conceded this or- ganisational or competitive advantage can be tremendous, creating business and support, or it can be a hindrance, handicapping progres- sive plans and decisions as well as stifle cooperative management. Swanton (1959b) claimed that cooperatives represent to their members and patrons a personal business of the basic form. He sug- gested the cooperative's activities are, next to the member's own farming operation, close personal matters. He added that the coopera- tive members' economic status varies more than corporate investors. As a result of this, he explained, cleavage of interests and attitudes frequently generate conflicts within cooperatives that may be re- flected in the board. He asked these two factors be contrasted with the business activities of non-cooperative corporations that have little direct connection with the investor's personal business.. He pointed out that policies of cooperatives tend to develop more slowly and often are less clear. He claimed non-cooperative corporations gain from being.more impersonal and are divorced from emotion, so it is easier for them to be more practical and makes decisions quickly. 23223 g gg’égricultural Coopgratives Nourse (1957) defined the cooperative movement as the means of organizing members of an industry in order to conduct and adjust the industry‘s affairs in the common interest of the group. He strength- ened the membership orientation in asserting that "no amount of be- nevolent depotism or pure efficiency of a remote management will take the place of continuous, active, studious participation by members in the formulation and carrying out of plans and policies." MbBride gt a. (1926) and Cleveland (1959) agreed with Nourse, that a dis- tinguishing feature of cooperatives is the aim of rendering service, though they also included the purpose of securing savings for the members. However, Cleveland (1959) emphasized that these overall pur- poses occasionally are overlooked. Miller and Jensen (1947) and Mischler and Hulbert (1956) pointed out that the foundation of coop— eratives rest upon the psychological and economic needs of the members. voorhis (1957) enlarged upon the purpose of cooperatives by stating that their aim is "to secure for the farmer a fair price for his product, to protect both farmer and consumer by providing quality standards, and to enable the farmer to retain ownership over his crop through as many steps as practical as it flows toward the ultimate consumer." But, Stokdyk (1957) specified the primary purpose of co- operatives is economic. He explained the economic objective is re- lated to prices paid and received, quality of goods purchased and quality of services rendered, although he maintained that coopera~ tives aim to perform a given service or function at cost in order to increase the returns or profits of the membership. He further speci- fied that marketing cooperatives aim to reduce the margin between terminal market prices and return a higher net margin to the farmer through patronage refunds. Keller (1957) theorized that cooperatives in the American capi- talistic economy should strive to be competitive pacemakers and not monopolistic manipulators. Iowrie (1958) described ramifications of cooperative's purposes in their stabilizing effect on markets, and their cost-of-doing business principle which presupposes that cost of production.will be less or at least not more than the competitors. Egg‘gggk_2§ Corporate Management §§illg The history of cooperatives has shown, Crisp (1956) declared, that cooperatives possess one inherent weakness: no principle upon which they are founded assures that those who are elected to direct are possessed of sufficient know-how to direct successfully. Cooperap tives, asserted Miller and Jensen (1947) usually have a large propor- tion of members who know little about the actual operation of their joint business. The recognized members' attitudes toward management 10 are instrumental for cooperative success but that a lack of concept and appreciation of business principles may be derived from the "quasi- isolated farm life" of farmers. McKay (1958) pointed out that the absentee administration of cooperative boards is most unlike the cor- poration's executive board members. Gardner (1959b) and FunderBurk (1959) agreed that most direc- tors of farm cooperatives are capable and experienced men in their own fanm business, but they have had little experience in helping di- rect a cooperative business. Iowrie (1958) shared this belief, ex- plaining the business problems confronted by cooperatives may be new to farmerbboard members. Bakken (1931) explained that on short notice few persons are prepared to assume the responsibilities attached to the work of directing a cooperative or devote the time necessary to perform the tasks of the position. Mere specifically, How (1950) stated in his case studies of a group of milk marketing cooperatives of New York State that few directors had the training or experience necessary to capably analyze financial statements or thoroughly check on cooperative operations. He gave this lack of training and experi- ence as the cause of difficulties by cooperative directors to perform the duties that proprietary directors considered to be their respon— sibility. Egg Medern Management Concept Anonymous (1959) expressed a prevalent contemporary viewpoint in that modern business management is a profession just as much as the 11 practices of law and medicine. Hagan (1958) agreed "managing" has rapidly developed into a specialized function, while Hulbert (1959b) asserted that obviously the amateur managers are decreasing in num- bers since trained management has become a profession. Regan (1958) characterized professional management as becoming distinct from the various functions associated with producing and selling an organization's products, such as manufacturing, engineering, sales, accounting or personnel. Nelson (1959a) described the distinc- tiveness of management in three ways. First, he explained the tech. nical or specialized areas of managing such as selling, accounting, personnel or manufacturing. He argued any person could become an axe pert in several of these areas and still not be a good manager. Sec- ondly, the commodity or service approach of managing deals with the products managed, namely feed, ice cream, cheese, or insurance. The third way to manage, which is the essence of management according to Nelson, involves planning, organizing, directing, coordinating and control. Regan (1958) and Knapp (1958a) indicated that the influential cause of change in management is the industrial revolution in which businessmen, including farmers, find themselves. Ranney (1957) exe plained that new economic, social, and political forces are mounting at an almost "incomprehensible rate." An anonymous author (1957) in- dicated that "many forces are at work that when summed up cause a vastly more complex and vastly more involved business than ever be- for." Forces identified were population changes, customer buying habits, expanded marketing areas, increased costs and narrowing mare gins. He emphasized the trend of fewer fluid milk plants and the collorary trend of larger plants. Anonymous (1959) predicted that changes will continue to occur at breath taking speed. Hulhert (1959a) identified a change that has made management a distinctive function. He claimed that.market forces are tying up func- tions of production, processing, distribution and marketing closer and closer together which blurs the sharp line of demarcation between on- farm and the off-farm functions. Benham (1960) indicated the significance of management by as- serting that in order for cooperatives to grow larger and more effi- cient as marketers of farm products "men of high managerial acumen" will be needed. An anonymous author (1957) maintained that the exis- tence of small dairy plants depends largely upon the managerial skill of the men who manage them. Volkin and Griffin (1959) and Benson (1955) indicated the need for competent, well-trained management tal- ent. Ragan (1958) claimed managers of agricultural cooperatives, and those to whom administrators are accountable, need adequate knowl- edge and skill in principles, tools, and techniques of good manage- ment, just as managers of other types of business enterprises. General Administration Givens (1957) and fallon (1958) challenged cooperative admin- istrations to keep abreast of drastic shifts, developments and changes in organizational structure. later Givens (1958) and Manuel (1958) accused cooperative administrations of not setting the pace in 13 organizational structures. Givens (1958) charged cooperative adminis- trations with loosely organized, hastily thrown together organiza- tional setups. Therefore, he suggested that the administration of cooperatives develop an organizational structure that will compete in the growing American economy. He recommended that they: (a) clearly define authority and responsibility, (b) departmentalize sufficiently, (c) define employee patterns of progress, (d) provide a framework for an effective administration of a salaryewage scale and (a) provide a climate for effective teamwork. Iowrie (1958) explained that a flexible dynamic organization is needed in order for a good directorsmanager relationship to exist. She maintained that more than friendly feelings, good-will and mutual respect are involved. Hulbert (1959b) suggested directors lend guid- ance and leadership to hired management to accomplish this type rela- tionship. Nelson (1959a) charged directors to ask themselves why the cooperative is in business and than vocalize both the philosOphical and ethical viewpoints. He argued that directors must be active in long-range planning and providing qualified personnel and suitable working conditions. Knapp (1958b) asserted that if the cooperative administration is to’set the pace they must improve the quality of management and improve the quality and performance of boards of directors. Hulbert (1960) explained that the value and effectiveness of the board as a management resource depends upon: (a) the grasp of duties by board 14 members, (b) working harmoniously in groups and (c) hired management developing director's skills. Swanton (1959a) challenged cooperative administrations to be alert to great change and be determined to help themselves, for they can be masters, not victims of the confusion and conflict around tham-they can be "challengers, not the challenged." legal Responsibilities. Judge Morrison (1958) explained that directors occupy a fiduciary relationship to the cooperative, that is a position of trust. This relationship, be added, makes directors strictly accountable for their acts and the discharge of their duties. Bakkan (1931) explained that the board is delegated power and power implies a liability. He added that under the law the director is held personally liable for any damage or injuries that occur to the cooperative because of his negligence or failure to fulfill his office. He specified that if directors exceed their authority or violate the charter, bylaws or>marketing contracts they are subject to legal lia- ” bility. He continued that directors are not liable for losses due to dishonest officers or employees unless they selected or employed dis- honest men or retain them after dishonesty was known. losses due, he added, to misconduct of a fellow board member is not a director's liability providing the director is without fault. Ray (1951) found that only 25 percent of the directors he in- terviewed realized they could be held legally liable for mismanagement or dishonesty on the part of the manager. He forcefully stated that the position of director does carry considerable legal liability. 15 Meek (1958) assured directors their liability cannot be relieved by delegating management to someone else. Hulbert gt g: (1960) explained that legal liability may result from.the directors' failure to observe the bylaws. Swanton (1956) and Cleveland (1959) asserted directors have the duty to carry out the purposes and procedures outlined in the basic documents of the coop- erative, the articles and bylaws. Griffin (1959) and Irwin (1960) agreed directors are responsible to read and keep in.mind at all times the essential provisions of the articles and bylaws of the co- operative. Ray (1951) reported only 57 percent of the directors he interviewed had read the bylaws of their cooperative. Gardner (1959b) found 73 percent of the 752 directors surveyed had copies of their cooperative's bylaws. Though he expressed concern over the fact that only 64 percent of these 752 directors had an available copy of the current articles of incorporation. nelson (1959a) stated that the board has the duty of maintain. ing the legal entity of the cooperative but especially the board has the duty to establish and maintain the charter and bylaws. Cleveland (1959) stated the board may amend or rewrite the bylaws. However, Jaynas (1949) claimed the director's job is to suggest changes in by- laws if they become obsolete and remind the board it must not ignore the bylaws. Swanton (1956) indicated the directors, along with the manager, should review the articles and bylaws, suggesting amendments in line with organizational improvements. Recently Volkin.gtbgl. 16 (1960) reported bylaws of regional cooperatives had been written so that the board of directors had the duty of changing the bylaws. Hulbert gt 3;. (1960) recommended that directors set aside time to review the bylaws every year or two. Nelson (1959a) insisted that the board of directors retain the duty of making legal contracts. Bakkan (1931) warned that the coopera- tive has a right to recover from directors the monetary values realized in illegal contracts. Fraser (1958) specified the board of directors execute contracts though he did not explicitly state who makes the contracts. Bakkan (1931) and Cleveland (1959) charged directors with the duty of being familiar with the law and pertinent court decisions since the law describes the areas within which directors may safely act with- 'out personal liability. This aspect was illustrated by Gray (1960) in his description of the recent Supreme Court interpretation that agricultural cooperatives are not immune from antitrust acts. Selection of the Manager. Copeland and Towl (1947), How (1950), Ray (1951), Mischler and Hulbert (1956). Anonymous (1958a), McKay (1958), Cox (1958), Hulbert (1959b), and Volkin 23 31. (1960) agreed the board of directors are responsible to select and hire a competent manager and dismiss an incompetent one. Ray (1951) enlarged upon the duties by charging that directors should know how to get the most out of the manager's services and how to evaluate his services. Mischler and Hulbert (1956) specified the board of directors are responsible 17 to define the manager's duties, fix his compensation, and dismiss the manager with or without cause. Volkin gt,§l. (1960) found agreement with this in bylaws submitted by regional cooperatives. After the employment of the manager Copeland and Towl (1947), Miller and Jensen (1947), Swanton (1956), Anonymous (1958b) and Duggan (1958a) indicated the board of directors must avoid getting in— to the field of management. Copeland and Towl (1947) and Swanton (1956) argued that whenever the board or a member of the board meddles with management the welfare of the cooperative is menaced. Duggan (1958b) specified the directors should let the manager carry out the details of adopted policies and give him responsibility for the days to-day affairs of the cooperative. Miller and Jensen (1947) warned directors not to take over'management's perogatives. Copeland and Towl (1947) and Cleveland (1959) Pointed out that the directors are responsible not to act individually when dealing with management. They emphasised that directors have no legal power except at properly held board meetings. Bohnsack (1960) outlined the problem created by the board's encroachment upon the manager's duties. First, the board may make unsound technical decisions. Second, the board's meddling in the duties of the manager undermines the manager, making him more depend- ent upon.the board. Thirdly, the manager may then dodge his respon- sibilities and become discouraged. Finally, the board may neglect to discharge its own duties properly. 18 Formulate Policies. Bakkan (1931), Raper (1956), Swanton (1956), Abrahamsen (1957), Anowmous (1958a), Fraser (1958), )4ch (1958), Volkin (1958), Hulbert (1959b) and Brown (1960b) agreed that the formulation of policies is a major duty of the board of directors. Raper (1956) concluded that the opportunities of directors are prac- tically unlimited since the formulation of policy is their principle responsiblity. Swanton (1956) explained that directors should be looked upon as the cooperative 's legislative body which formulates ' policy. Volkin at .1. (1960) reported 1.2 percent of 752 directors mentioned most frequently the duty of formulating good policies. They qualified the duty by remarking that the policies formulated should be consistent with the cooperative's objectives, in order to guide the management of the cooperative. McBride gt 51. (1926) warned directors not to delegate the re- sponsibility of policy formulation to the manager. Ray (1951) and Cox (1958) asserted the general management policies should be deterb mined by the board of directors. Miller and Jensen (1957) and Duggan (1958a) emphasised a director has a responsibility to determine policies in conjunction with other directors of the board. Establishnent of policies is a duty according to Mace (191.8), Cleveland (1959), How (1950), Nervik and Gunderson (1951.) and Hardy (1959). Mace (191.3) Specified that establishent of policies deter- mines, among other things, the objectives, direction, nature and the character of the enterprise. How (1950) postulated the responsibility 19 of policy development may be assumed by either the manager, board, or members, depending upon the extent of active control by each. He added the board or membership may reserve the right to authorize the policy. Nervik and Gunderson (1954) argued the final decision to adopt major policies rests with the members. Lowrie (1958) asserted that directors, as policy makers, de- cide "what." Nelson (1959b) argued the board has to make the decisions and take the accountability for the policies that are made. Bakken (1931), How (1950), Ray (1951), Abrahamsen (1957), Anemone (1958a), Cox (1958), Fraser (1953) and Griffin (1959) agreed that once directors enunciate the policies they likewise have the duty to see that policies are executed. Control of the Cooperative. To discharge fully the duties the members have entrusted with directors, Bakken (1931), Garner (191.1.) and Anonymous (1958a) agreed the directors must attend all board meet- ings and.maintain a record of all actions. Anonymous (1958b) ad- vocated directors discuss problems of the board during meetings and not with individual board members to prevent "whisper campaigns." Swanton (1956) explained a problem encountered by most demo- cratic institutions, that is the organization's becoming a victim of internal politics. He continued that some directors are imbued with the dangerous notion that service on the board offers an opportunity to "feather their nests." He charged directors must carefully guard «against being a gossip-monger and discharge their duties of stopping 20 unfair criticism and correct misimpressions. Swanton (1959b) argued cooperatives should not have to suffer from the paralysis of internal politics, referring directly to cliques and selfish group action. Ray (1951) elucidated that the director's most important duty is understanding his job and the business with all its limitations and all its objectives. He insisted directors need not patronize his cooperative 100 percent, but he should decline the position when elected if he cannot do most of his buying and/or selling with the cooperative. Bakken (1931) and Abrahamsen (1957) charged that direc- tors should not become interested in another business that may be counter to his cooperative. Copeland and Towl (1947) and Mace (1948) elucidated that the continuity of the enterprise depends upon the existence of the board of directors. Copeland and Towl (1947) charged directors with the duties of providing spirit of enterprise and the realisation that the successors to top management do not come automatically. They warned _ against the one—man-shcw type enterprise. The greatest requirement of a director, claimed Ray (1951) is to evaluate his job, which is not an easy task. Garner (1944), Miller and Jensen (1948), Abrahamsen (1957) and Anonymous (1958b) agreed a director should not accept the director's Job to gain political, personal, business, social or re- ligious advantages. McBride 25,91, (1926) enumerated some "pitfalls" and “snares" directors should avoid: (a) assuming undue financial re- sponsibilitya-they cannot carry financial burdens personally, (b) the 21 lure of selfish gain-not wanted is one who directs for self interests and (c) cultivating political favors-the temptation to play politics can tear down a cooperative administration. Folkman (1958) reported that one-third of the 51 directors be surveyed in Arkansas defined their role as a "control function." He explained this function was expressed in two ways. First, as a rather "diffuse trustee function whereby the director was oriented to watch out for the general interests of the cooperative and/or its members." But more frequently the directors expressed the function as a specific policy function where they checked on the manager, finances and soap— erative aspects. Griffin (1959) charged directors must keep a watch— ful eye on all aspects of the cooperative to assure financial success and maintain the characteristics of the cooperative. Nelson (1959a) indicated the board, as trustees of the members' interest, guards the following: (a) soundness of investments, (b) security of assets, (c) continuity of enterprise, (d) quality of service, (e) prestige and goodwill and (f) character and personality of the organization. Garner (1944) claimed directors have the duty of making up budgets and seeing that they are followed. In relation to the control of the cooperative Copeland and Towl (1947) explained the "watch dog theory." They defined the theory as the policing of the executive officers' functions by the directors in order to watch the interests of the stockholders. Mace (1948) broadened the theory to mean that directors act in the interest of the organization as a whole with their actions accruing to the benefit 22 of all stockholders whether members of the majority or minority group. Copeland and Towl (1947) and How (1950) opposed the theory arguing it was negative in nature. Copeland and Towl (191.7) explained the theory implies that all executives are "rascals or irresponsible persons” that must be watched and curbed. They maintained that the theory is destructive to the spirit of enterprise. How (1950) stated the theory emphasises that directors have a duty to guard against fraud and ne- glect versus their duty to promote improvements and plans for the fu- ture. Hulbert (1958b) pointed out that there is no unanimity of opinion as to who makes the final decisions in cooperative management. McKay (1958) asserted the board has the duty of making the final de- cisions while Vennes and Brinkley (1950) argued the final decision rests with the manbers. How (1950) theorized the duty of final deci- sions varies between the board, manager and members depending upon who maintains the most active power. Polkman (1958) noted that the steps from the origination of an idea by a manager to the decision on the idea by the board was not imediate or clear. He found the ini- tiator of the idea (the manager) went through his own planning stage prior to presentation to the board. later the board would retrace the manager's stages. He claimed this "demonstrated the director's ac-‘ quiescence in a role involving merely acceptance or rejection of action proposed by the manager as opposed to initiation." Volkin 21 Q. (1960) asked regional cooperative directors, who in their judgment, 23 should assure the duty of decision-making in 21 different areas. The replies revealed that directors were willing to permit the manager full responsibility in very few areas. mties to the Membership. Jaynes (191.9) explained that the members adopt the articles of incorporation and bylaws that govern the cooperative. The real boss, claimed Swanton (1956), is the member- ship of the cooperative. A good director, he added, is a sort of hulnn antenna with himself and the rest of the board being the eyes and ears of the organisation that reflects the heartbeat of the mubership. The members expect directors, asserted Griffin (1959), to base their decisions on the best facts available, and members expect constant vigilance on the part of directors to minimise losses and maximise gains. Bakken (1931) and McKay (1958) insisted that directors, due to their strategic position in the cooperative, should be able to assist in developing a proper membership relation. Bakken (1931) quoted a manager as stating that the director's primary job is to develop con- fidence of the membership. Significance of this duty was expressed by Garner (1941.) when he claimed that members will give the coopera- tive their entire volume and confidence if they know: they can trust the organisation, that good results will be obtained and that busi- ness methods are sound. Kenning (1945) claimed members should ex— press their thought to the directors, the directors to the manager, and the manager should develOp his own solution. 21. Sane cooperatives fail, claimed Baughman and bankers (1942) because of the lack of membership understanding and loyalty which re- sulted from members not being adequately informed. They charged direc- tors with keeping the members informed of progress being made and ob- stacles standing in the way. Crisp (1956) explained that "an en- lightened membership is the only ultimate assurance that cooperative directors will be selected in accordance with those high qualifications necessary for best business direction." Members, claimed McBride st 31. (1926), are entitled to know the true condition of the business so the directors should keep them informed in order to maintain the mem- bers' trust and satisfaction. Jaynes (191.9) specified directors have the duty of informing members of the financial condition of the coop- erative at least once a year. Recently Volkin at 31. (1960) reported that 10.6 percent of 752 directors indicated the duty of keeping mem- bers and patrons informed was of the utmost importance. Earlier, Polkman (1958) found that no organized or formal attempt was made to inform members of a proposed physical expansion of the cosperative until the time came to approve the action. He indicated members did learn of the details of the proposal through informal channels. Venues and Brinkley (1950) argued, however, that cooperative officials and employees should never attempt to assume the sole duty of keeping the members well informed. Miller and Jensen (1947) asserted an inadequate program of rural education is one of the strong reasons cooperatives fail. The 25 important factor, they explained, is to have full distribution of ef5 fective and authentic information to the farmers. An anonymous author (1958a) advocated directors counsel members and strive to determine their needs. He argued the directors are responsible to keep the ore ganization.a member's cooperative and not a director's or'manager's cooperative. Bakken (1931) and Abrahamsen (1957) agreed directors should know the members' attitudes and their marketing needs, and then plan to meet their growing and changing needs. Abrahamsen (1957) specified the duty entails giving careful consideration to financial require- ments to meet facility and operating needs, good employee selection and development, and an effective information program. Volkin gt g. (1960) found directors frequently mentioned the duty of acting in the best interest of members and patrons and the need to be consistently alert to the members' changing needs. They expressed concern with the directors that showed a narrow interpretation of the duty of serving only members of the district from which they were elected. Irwin (1960) itemized the director's duties in the following manner: (a) take an active part in the board meetings, (b) know how the cooperative is organized, (c) set the example by buying and sell- ing everything possible through the cooperative along with speaking up for the cooperative and expecting no special deals, (d) know their cooperative’s service facilities and equipment, (e) have a knowledge of stock and financial structure and long term obligations and (f) 26 listen to members' suggestions and complaints and refer them to the board for action. Obligations to the Community. An anonymous author (1958a) as— serted that directors are responsible for representing the cooperative as a whole and not just one community. He added directors are also responsible for considering the welfare of the neighboring coopera- tives. Abrahamsen (1957) explained that cooperatives are continuously under scrutiny and directors can use this condition as an asset. He argued that furnishing the public with full and correct information about the cooperative could do much to dispel distrust and misunder- standing. He suggested cooperatives participate in civic affairs, encouraging employees to take part in community life and at the same time promote public relations by working harmoniously with research agencies, local universities and vocational-agricultural departments of high schools. Mace (1948) concluded boards of directors often neglect their duties to the community. He argued board members should consider the effect that each proposed policy will have upon the com- munity. Financial Administration. Duggan (1958a) stated directors are responsible for establishing fiscal and financial operations. Cope- land and Towl (1947) maintained the board of directors is responsible for the proper utilization of the financial resources of its enterb prise. How (1950) observed that the financial factors of the coopera- tive were given.more attention than were the physical factors in the plant operations. 27 Griffin (1959) lpocified that the payment of patronage refunds is the board's duty. Volkin gt. 5;. (1960) found that regional cooperap tive bylaws indicated directors should determine the manner, form and amount of patronage refunds as well as declare dividends on stock. However, How ( 1950) stated that the final authority in the allocation and sharing of revenue and expense items rests with the members. Tet, Hay (1951) reported directors and managers agreed the board should make the decision on the distribution of savings accrued at the year's end. An anonymous author (1958a) claimed the directors must analyse and interpret financial statements. He implied an inadequacy in as- serting that directors need to learn how to analyze and interpret financial statements properly. Seventy-three of 752 directors reply- ing to Volkin's g_t_ g. (1960) questionnaire indicated they believe the review and study of the operating and financial statements is of the utmost importance. These same directors also indicated they should keep a close check on expenses, credit extension, collection policies, budgeting and the securing of operating and seasonal financing. Griffin (1959) enlarged the director's financial duty to in- clude the responsibility for the extent and type of indebtedness. Volkin L". 3;. (1960) reported that the borrowing of money and issuing evidence of indebtedness were frequently mentioned duties for direc- tors in regional cooperative bylaws. Garner (1914) indicated the directors should perform the duty of selecting the depository for the cooperative's funds. E added, 28 and How (1950) agreed, that the directors are responsible to desig- nate the person who shall have authority to sign checks. Mischler and Hulbert (1956) specified the board shall have the power to determine the manner of receiving, depositing and disbursing of the funds. They maintain the board should have the power to change banks and person or persons. signing checks at will. Ray (1951) reported considerable disagreement as to who should determine the credit policy in the Indiana cooperatives he studied. Fifty percent of the managers thought they should make the decisions pertaining to general credit policy while only 11 percent of the di- rectors agreed this was the manager's decision to make. McBride 91 g. (1926) implied the directors are responsible for credit policies in stating that one of the problems of the board is the extension of credit. They explained that the day-to—day extension of credit is the duty of the manager though a credit committee can be appointed to help the manager. Volkin gt ,4. (1960) found in regional cooperativeihylaws the written duty that directors provide for installation of an accounting system. Garner (1941.). Jaynes (1949) and Mischler and Hulbert (1956) agreed the directors must require that proper records be kept of all business transactions. They likewise agreed that the directors are responsible to secure a competent public auditor to carefully check the cooperative's books at least once a year. Personnel Administration. Ray (1951) maintained that the board of directors should formulate the personnel policies. McKay (1958 ) stand that the adoption of policies concerning. hiring of employees, their duties and rate of pay may he a board of director's duty. How- ever, Anonymous (1958s) stated the manager should be allowed to employ all personnel and Cleveland (1959) asserted the directors should not interview employees although they are responsible to see that no co- ercion occurs from individual board members. )hce (1948) found cen- fusion and uncertainty resulted when board members and employees had business relationships. Cox (1958) explained that the manager and other employees legally have no authority other than that delegated to them by the board of directors. Abrahamsen (1957 ) charged directors with the duty of providing employees with: (a) suitable working conditions which included sanita— tion and safety precautions, retirement, group insurance, and incen- tive pay plan as well as a realistic salary program and (b) clear-cut rules for guidance of employees. Garner (1941.) implied directors are responsible to see that employees understand (a) the cooperative's principles, (h) the operation of the cooperative, (c) the aims or goals, (d) the general organization of the cooperative and reason for important actions, (e) the benefits the members receive from the co- operative and (f) the revolving capital plan. Jaynes (191.9) and Griffin (1959) stated the directors must see that the required bond coverage is maintained on responsible personal. Garner (1944) expressed the significance of employee bondage in his assertion that directors may be liable if persons handling money and property are not bonded by the board of directors. Volkin gt .1. 30 (1960) found written in the bylaws of regional cooperatives the di- rector's duty ”to determine what employees are to be bonded and fix the amount of their bonds.“ Ray (1951) reported conflict of opinions between directors and managers on who would hire the assistant manager. Trusty-five percent of the directors indicated the manager should perform this duty while 6/. percent of the directors indicated this is the board's decision. maven percent indicated the duty is mutual. He reported 69 percent of the managers said they should hire the assistant manager while 31 percent said the directors should make the decision. None of the managers indicated this duty is shared. Garner (1944) stated direc- tors should allow the manager to select his assistants. Garner (191.1.) also charged directors with the duty of setting reasonable and adequate salaries for the nnager and employees. Griffin (1959) asserted directors are responsible for employee incen- tives. Brown (l960e) explained the board should: (a) set the salary policies, (b) review and approve the manager‘s salary and wage pro- gram, (c) review proposed exceptions to wage policies and wage scales and (e) review periodic salary and wage reports from the manager on the program. Samuels (1958) challenged cooperative administrations to over- come shortcomings of personnel through better planning. He charged guidance could be provided to the manager, employees and the board of directors if policies and plans of the organization, both short and 31 long term, and the duties of each employee were written out and avail- able to all those involved. Givens (1957) concluded that the greatest resource cooperative managements have is the human resource, and the future of agricultural cooperatives rests upon management's ability to mobilize these resources in such a manner as to achieve the results which come from proficiency in any field of endeavor. Mischler and Hulbert (1956) claimed the board of directors shall have power to employ or authorize the employment of such em- ployees, agencies or consultants deemed necessary from time to time, prescribing their duties and fixing their compensation. Volkin gt a}. (1960) reported directors indicated the employment of professional consultants is a joint duty with the manager. Plant Operations. lice (191.8) and Morrison (1958) stated di— rectors should not concern themselves with the details of operations. They explained these details rest with the executive officers. Mor- rison (1958) cautioned against directors' neglecting their obligations in this respect, for directors are liable and stockholders, members or the cooperative can instigate legal proceedings enforcing the lia- bility. How (1950) concluded from his case study of selected New York dairy coOperatives that the routine duties involved in plant op- erations did not appear to be a type of responsibility directors should accept. McBride g_t_ g. (1926) maintained the directors have the respon- sibility to determine the cooperative's field of operation, especially 32 upon conception of the cooperative. Garner (19M) claimed the board and manager should Jointly work out the plan of operation in keeping with the member's wishes. He added the directors have a duty to keep posted on the operations of their cooperative. Polkman (1958) ob- served the board of directors during board meetings concerned them- selves with the "minutiae of imediate operations” and short-range rather than long—range planning. Be theorized that the definition directors had of their role as directors was influential here. Estias.2£.tha.hasasaz Inform the Board of Directors. Reel (1953). Cleveland (1959) and Swanton (1959c) agreed the manager must fully inform the board of directors of both good and bad factors. Beal (1958) emphasised that the manager gathers facts and then tranmnits the facts clearly and promptly to board members. Miller and Jensen (191.7) and Nelson (1959a) shared the viewpoint that the manager should advise the board pref- erably through attendance at regular board meetings. Iewrie (1958) reasoned that the manager should strive to inform directors of all factors needed to qualify the directors as policymakers. Brunkow (1958), manager of an agricultural cooperative, stated he advises the board in developing policies, sound objectives and programs. McKay (1958) charged the manager with furnishing the necessary information to directors so they can analyse the progress of the co- operative and the results of the policies adopted. Mischler and Hulbert (1956) wrote in their model cooperative bylaws the duty that 33 the manager shall render annual and periodical statements in the form and the manner prescribed by the board. Garner (191.1.) and heal (1958) asserted the keeping of adequate records is imperative if he is to prepare the annual meeting reports besides the regular board reports. Brunkcw (1958) stated he sulmits monthly reports on his cocperative's operations and the financial situation. Cleveland (1959) added the duty of preparing budgets belongs to the manager and his assistants. Adams (1960) explained the duty of keeping directors informed involves keeping all records common to any comparable business besides addi- tional records necessary for the equitable allocation of savings to patrons and proof of such allocation to local, state and federal gov- erning agencies. Volkin gt a1. (1960) reported 60 percent of the 752 directors surveyed indicated the manager is responsible to make the annual re— port to the members that shows the conditions of the cooperative's property business and finances for the fiscal year. They found this area to be the only decision area where directors permitted managers full authority. Eidam (1960) asserted the planning and presentation of various alternatives for decisions by the board is a duty of the manager. Baker (1960) disagreed, indicating the planning involved in studying alternative plans or uses of resources and the presentation of these alternatives to the entire board is a duty of a cosmittee composed of directors. Meek (1958) specified that the manager should provide di- rectors with new projects in detailed written form including both 3/. advantages and disadvantages of the project. Lowrie (1958) maintaired the manager should outline alternate policies for director's considera- tion. Meek (1958) advocated managers should help directors all they can since the compensation for the time directors devote to the coop- erative is small. Hulbert (1960) agreed and recommended that managers perform the task of developing directors, recognizing director's po- tentials and utilizing their experience, background and capabilities. Crisp ( 1956) charged managers with the continuous duty of recommending ways and means directors can educate themselves on affairs responsible to them. Cleveland (1959) challenged managers to look upon the regu- lar board meetings as an opportunity rather than an evil where the experience and advice of the directors may be utilised. To adequately perform the duty of informing members, Jaynes (191.9) asserted the manager will have to have first hand knowledge of the thinking and discussion of the board. He implied that the manager attend board meetings though McBride 93, pl. (1926) advocated that the manager not become a member of the board. In this advocation they ermmerated three dangers for the manager to avoid: (a) becoming a "rubber stamp" for the directors, (b) poor administration deprives the manager of power needed to decide factors relative to operations besides places unwarranted details on directors and (c) attempting to function as both manager and board. 35, Managing the Cooperative. Swanton ( 1956) called the manager the executive department of the cooperative. The manager's job, he continued is to administer. How (1950) explained the manager generally has authority to initiate action in routine or the less important mat- ters. HcKay (1958) maintained that the authority of the manager should be supreme, even beyond the limits of power granted the president and other board officers. He qualified his statement to the extent that the board should only intervene when matters of policy are involved or where incompetence in management is obvious. Bohnsack (1960) helped clarify the manager's position in stating the effects of the manager's handling the board's duties. First, he pointed out, the group deci- sion is lost, in essence less objectivity. Secondly, the board be- comes apathetic leaving things to the manager which results in the manager losing the backing of the board and the good board member be- comes discouraged and makes poor decisions. in important part of the manager's responsibilities, claimed McKay (1958), involves: (a) selection of capable employees, (b) as- sigment of duties, (c) establishesnt of work standards and (d) the building of morale and effective teamwork. Mischler and Hulbert (1956) wrote in their model bylaws for cooperatives that subject to the approval of the board of directors, the manager shall employ, supervise and dismiss any or all employees of the association. Garner (191.1.) stated besides employing and discharging employees the manager should select his own assistants. Brunkow (1953) stressed the 36 significance of the manager's job in his assertion that the manager has the responsibility of getting much of the work done through others. Ray (1951), after finding only 38 percent of the managers in- terviewed in Indians were training a replacement for their positions, advocated that the manager train another employee to perfbrm the mana- gerial duties if necessary. Bakken (1931) advised managers to adhere to the proper divi- sions of corporate functions which are conducive to business success. He explained the manager's duties are to make decisions upon questions where policy had already been established, guide the course of action charted by directors and legislate details to expedite business. He felt the duties involved here were the coordination and supervision of several departments and as the organisation grows in size, delegate responsibility. Nelson (1959a) asserted the manager is responsible to plan, organize, direct, coordinate and control. He emphasized the manager's responsibility to direct the operations of the association. in effective manager, claimed Volkin and Griffin (1959). is involved in all four fundamental processes, namely planning, organising, exe- cuting and evaluating. They stressed organizing and executing. A different viewpoint was offered by Brown (1960c). He maintained that managers should adapt policies, adapt the form of organization, adapt services, adapt management practices to contemporary changes striving to attain those practices that are ahead of trends. Iewrie (1958) asserted the manager decides "when" and "how." Hulbert (1958b) agreed though he qualified his statement some in asserting that in an action program involving decisions of when and how to do the job, the decision would belong to the manager exclu— sively. Volkin and Griffin (1959) suggested a delineation between administrative responsibilities of managers and planning responsibili- ties of the directors when they recomended the rule that the decision of "what" to do belongs to the directors while the decision of "when" and ”how" belongs to the manager. Garner (1941.) maintained the manager's duties include having) a workable plan of operations approved by the board of directors and helping directors plan for growth of the association. Brinkley (1958) charged cooperative management must keep up with research and changes in the industry, leading in as new ways as possible. Brunkow (1958), manager of a cooperative, explained portions of his time are devoted to planning both present and future programs such as sales and ser— vices. Inventories of products must be maintained, he argued, as well as purchasing, pricing and distribution. Be included maintenance, insurance and repairs of all properties as responsibilities of the manager. In preparation of model cooperative bylaw provisions, Mischler and Hulbert (1956) organized the manager's job as illustrated in the following excerpt: "Under the direction of the board, the manager shall have general charge of the ordinary and usual business operations of the association, including purchasing, marketing and han- dling of all products and supplies of the association; he 38 shall, so far as practicable, endeavor to conduct the busi- ness in such a manner that the members and patrons will re- ceive just and fair treatment; he shall deposit all money belonging to the association which comes into his possession in the name of the association in.a bank selected by the board, and if authorised to do so by the board he shall mks all disbursements by check therefrom for the ordinary and necessary expenses of the business in the manner and form prescribed by the board of directors; he shall be required to maintain his records and accounts in such a manner that the true and correct condition of the business may be as- certained therefrom at my time; he shall carefully perserve all books, documents, correspondence, and records of what— ever kind pertaining to the business which may come into his possession.” PROCEDURE A list of operating dairy product cooperatives and their ad- ministrations was obtained from Howlend's W 21: m Coopggatives _ig Michigan 5; 2; 5931; ;, 1.252, Food Science Department and Extension Service at Michigan State University, Division of Dairy of the Michigan Department of Agriculture and the Michigan Association of Farmer Cooperatives. The president and secretary of the board of directors and the manager of each Michigan dairy processing coopermp tive were sent a check-list type questionnaire (Appendix I). They‘ were asked to complete the questionnaire and return it immediately. Preparation of the questionnaire was based on personal discus- sion in interviews with dairy officials interested in the study and from reports in the literature. The questionnaire had three main sections. First, the goals and terms used in the study were defined. In the second section duties were listed that were believed to repre- sent most phases of’management. The duties were carefully worded for clarity and elimination of generalities. An attempt was made to be as specific as possible. Within the second section four areas were covered; namely, the major organisational duties and responsibilities followed by less important duties in personnel, finance, and produc- tion and sales. These sections provided information for ten signifi- cant areas in cooperative administration: maintenance of legal entity personnel policies trustee of'membership's interests financial policies membership relations production policies goals marketing measure and control organisational structure The contents of the questionnaire were such that the recipient only needed to read the duty and indicate who is responsible by checking the appropriate column headed by "manager," "board of directors," "both" or "no opinion." The final section of the questionnaire was entitled "Additional Relevant Information." Some details of the co- operative were asked and space was provided for the recipient to add his comments regarding important duties he believed were not included in the questionnaire. Explanatory letters, one for directors and another for managers (Appendices II and III, respeCtively), were written and sent with the questionnaire. Emphasis was placed upon the recipient's answering the questionnaire according to his personal opinion which.may not coincide with the practices of his cooperative. After the recipient completed the questionnaire he was asked to enclose it in a return addressed envelope (postage provided) by an indicated date. The enclosed en- velope was coded to facilitate classification of data. One, two and three weeks following the requested return date, followaup letters (Appendices IV, V, VI and VII) accompanied by a duplicate question» naire, were sent managers and directors who had not returned or acknowledged receiving the prior'questionnaire. Upon return the questionnaires were classified according to the annual dollar sales suhnitted by the recipients. The duties within the questionnaire were numbered and grouped according to the ten.maJor areas listed above. Tabulation of the replies provided a comparison of the opinions, expressed in percent. A tabulation of the questions . are presented in Appendix‘VIII. A recommended guideline of duties section was prepared from results of the questionnaire as well as the opinion of authorities expressed personally and in the literature and the profbund thoughts of the author. RESULTS AND DISCUSSION Twenty-seven dairy processing cooperatives of Michigan partici- pated in this study. The annual sales volume in dollars and the mem- bership of these cooperatives are presented in Table 1. Table 1. Annual sales and membership of Michigan dairy processing cooperatives in 1959 Annual sales range Number of Number of Ember of (dollars) cooperatives' members cooperatives" 100,000 to 399,999 6 o to 499 13 400,000 to 699,999 4 500 to 999 5 700,000 to 999,999 2 1,000 to 191599 3 1,000,000 to 3,999,999 8 1,500 to 1,999 1 4,000,000 to 6,999,999 4 2,000 to 2,499 1 7,000,000 and over 3 i 2,500 to 2,999 l I 3,000 and over 1 Way-seven cooperatives reported sales and 25 reported mberehip. Six ranges, on a basis of dollar-sales categorized the dairy product cooperatives. Six cooperatives reported annual dollar-sales in the range from $100,000 to $399,999 and four reported a $400,000 to $699,999 annual dollar-sales. Two cooperatives were in the $700,000 to $999,999 annual sales range and eight cooperatives had annual sales of from $1,000,000 to $3,999,999. Four cooperatives reported annual sales in the ranges from $4,000,000 to $6,999,999 and three coopera- tives of $7,000,000 and over. Minstion of Table 1 shows that 44.5 43 percent of the 27 cooperatives had annual sales below $999,999 while 55.5 percent had an annual dollar sales volme from $1,000,000 or over. Membership of 25 cooperatives is shown in Table 1. Thirteen cooperatives reported membership in the range from O to [.99. Five and three cooperatives indicated membership in the 500 to 999 and 1,000 to 1,499 ranges, respectively. Hence, 21 of the 25 cooperatives that submitted membership figures have 1,499 members or less. 0f the four remaining cooperatives there was one c00perative in each of the fol- lowing membership ranges: l,500 to 1,999; 2,000 to 2,499; 2,500 to 2,999; and 3,000 or over. A total of 80 participants (54 directors and 26 managers“) was sent the questionnaire (see Appendix I). The return of 70 of these questionnaires, an 87.5 percent return, reflected excellent cooperan- tion and interest of directors and managers. Forty-five directors or 83.3 percent of the total 54 surveyed returned the completed question- naires and 25 managers, representing 96.2 percent of the 26 contacted, answered and returned the questionnaire. Data from 70 questionnaires provided the tabulations presented in Table 2. To present the results, each item will be discussed with a comparison of the replies from each item. The colunn headed with the letter "C" in Table 2 designates the combined replies from mana- gers and directors while the columns headed with "M" and "D” refer to the replies from managers and directors, respectively. *Cme manager managed two cooperative associations. .oouaaoa condnsoo psoonoa on» on anemon assaoo c on» use .oeooooude scan ooaaaoa psoouoa on» on enouon menace n «onomonos sonu aoanaou encouoa on» on oeouou assHoo.zae nemaneax no onoaoouae me one anemones mw anon endssnoaaooso on» on oouaaon uo hue-saw oe>wosuonooo voscoaa Auden .AHHH> Mama—omen 5 consasnochoEeo on .«o ooaanoe .opmauofltse o5 one onnea own» 30.5 @33an 9 1+1 4. .mm W R 3 W m. «N - «NW 0. 8. 5 mm 33 3338.. no 8383 one _ W «AW W W no.“ n31?” fin. sedenS 8.5%.! 8. 2 <.Hm on on Q o W m.~< on em amsac W . Hsoaohnn one no noaomoaxo on» mean o9 a «AN R e m. 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Iona nounmsaopo oohoanao no nnaanuvno ow on 1: «a m m.~ o o «.3 8 .3 5.588 3888» 03885 5 3:83 8. on - A1389 33:8 and“ o a z o a z o n : codpoooa .oz naoouom an «Haom aaoouoa ad «Hmom acoonoa nu «Hana hvsu hvsw know endow a.uoaoon«n n.uomuamz 308333 .N 8m: m.fi 3 Wm fin o .\ «i. S .3 uoflpnfifimaaua rfioafiugoo 3:8 m one no nogwuundmuooa 93 3393 8. Mn 5.3 3 2a 93 3 o Qua 8. fl. uofiadflmnoaua Ragga M loo madam 05 3.33308 3 0303 on. mm v.3 an 0H «3 < e. m.$ no ow onufiuoaoo madam 05 mo 3.33.3 428%?“ no noggdawwuoon 33509 on. Hm iguana. a. m. Hualdialllwfllwmwmpg o n z o a z o n 2 8333 .02 £80.39 a.“ magma 33qu a.“ manna aaoaoa 5 hanom .36 3% .38 930». 3.39033 Snowman: 3053.303 .N Manda l‘?.‘.a.L»EE‘ .. n‘ 4 49 mamas-am Analysis of the replies to the first question in Table 2 re- vealed managers and directors agree they both are responsible to see that the charter and bylaws are observed. Seventybsix percent of the managers and 60 percent of the directors indicated they share this re- sponsibility. Thirtyhsix percent of the directors and 16 percent of the managers indicated the board has sole responsibility for this duty while fewer'managers (8 percent) and directors (4 Percent) placed the responsibility solely on the manager. The indication here of joint re- sponsibility in observing documentary papers suggests the directors and managers recognise that their directives in administration of the cooperative are included in these papers. Presentation of amendments to the bylaws at annual meetings ap- pears to be a board of director's duty. Seventy-six percent of the directors and 64 percent of the managers indicated the board has sole responsibility to perform this duty. A small percentage of the manap gers (8 percent) and directors (11 percent) gave the duty to the mana- ger and a few of the directors (13 percent) and managers (28 percent) indicated the duty is shared. These results suggest that a revision to the documentary papers follows the channel from the originator (member, director, manager) to the board before it is presented to the annual meeting for decision. Over half the managers (52 percent) and directors (6i percent) indicated the duty of making a contract with a bulk tank route driver belongs to the manager. Twenty and 24 percent of the managers and 5O directors, respectively, agree this duty is shared while only 12 and 9 percent of the managers and directors, respectively, indicated the board has the duty. One manager commented that this duty rests Jointly with the manager and a hauling committee from the board of directors. These results do not agree with assertions made by Fraser (1958) and nelson (1959s). They explicitly stated the board of directors are re- sponsible to make legal contracts. nggteg 9g,Memhership'g lgtggggtg There are indications from the results in Table 2 that the board of directors is responsible to make the final decision to pur- chase additional land. Managers unanimously agreed they should not decide while only 2 percent of the directors indicated the manager should make the decision. Seventybsix percent of the managers and 87 percent of the directors selected the board of directors to be respon- sible here. Shmilar results were obtained from the question asking who is responsible to decide to expand the plant. Eighty percent of the managers and 84 percent of the directors indicated the board should make the decision. In this case, 4 percent of the managers indicated they should have responsibility in this area while the directors unanimously agreed the manager has no responsibility here. These data clearly suggest the board of directors make the final decision in these two important areas; plant expansion and pure chase of additional land. One director, a president, cemented that the '...major policy decisions relative to expansion" should be left :h‘i; 51 to the board of directors, though the manager should advise the board relative to this matter." Another president stated he thinks ”the board should insist on having the final decision on important issues." A third question in this area is, who is responsible to de- cide that the cooperative is to merge with another processing coopera- tive. Again the replies from managers and directors revealed the board of directors have the responsibility here. Sixty and 61. per- cent of the managers and directors, respectively, indicated this re- sponse, yet 32 and 31 percent of the managers and directors, respec- tively, selected this as a joint responsibility. A president and secretary from the same cooperative board pointed out the final de- cision of whether to merge or not rests with the membership of the cooperative. This same attitude may be the explanation for the per- centage of replies in the joint duty area, because directors' and managers' checking the joint duty may reflect their opinion that mem- bers should be consulted in deciding upon a merger. Over half the managers and directors agreed the responsibility of selecting the bank for the cooperati‘ve belongs to the board of di- rectors. Forty percent of the managers, however, felt they should share this responsibility while only 1. percent indicated they should bear the sole responsibility. Over a fourth of the directors (29 per- cent) agreed that the responsibility is Joint, though a substantially larger number (66 percent) indicated the board has sole responsibility. The consistency of the replies to Questions 1., 5, 6 and 7 is to be noted. All three questions reveal a decision needs to be made and 52 all four were found to have over half the responses indicating the de- cision should be made by the board of directors, while not more than 1. percent of the responses indicated the manager should have sole re— sponsibility. These questions were dispersed in the questionnaire rather than grouped as they are illustrated in Table 2. Hhile the final decision to expand the plant was revealed here to be invested in the board, the duty of initiating the ideas for ex- pansion of the plant was unanimously indicated by the directors to be a manager's duty. Only 8 percent of the managers indicated the board should perform this duty. Eighty-four and 68 percent of the managers and directors, respectively, choose the manager as the responsible per- son to initiate the ideas. However, the planning of expansion is not as clearly defined. Over half the managers (56 percent) indicated they have sole responsibility, while 57 percent of the directors felt the duty should be shared. This divided opinion was displayed also in the 36 percent of the directors who believe the manager should perform this task and the 36 percent of the managers that replied the duty should be shared. The discrepancy between the duty of initiating the ideas of expansion and planning the expansion is confusing. Although initiation and planning the idea may be separate, realistically the two processes may occur simultaneously with the initiation being sup- ported by plane. A final question considered under the area of trustee of mem- bership's interests remains unclear. To negotiate a contract with a 53 realtor for the purchase of additional land was not indicated to belong to either the board, manager or be shared. As the results reveal in Table 2, no substantial percent of the participants in the survey in»- dicated the responsible group. The postulation is offered that the question was confusing or background for making a decision was lack- ing. Eberghip Relation_s Managers indicated the planning of a lO-year member adult edu- cation program is a duty of both the manager and board of directors. less than half the directors (48 Percent) agreed with this opinion, but this still represents twice as may directors (20 percent) who in- dicated the managers have sole responsibility. Thirteen percent of the directors felt the board of directors have sole responsibility, yet only 1. percent of the managers agreed with this opinion. Although the decision as to who should plan the adult member education program is not clear, the duty to adopt such a program is even less clear. Fifty-one percent of the directors as compared to 28 percent of the managers indicated this decision belongs to the board of directors. The reverse was revealed in the preference of a Joint duty, with 56 percent of the managers versus 27 percent of the directors indicating the decision is shared. A smaller percent, 12 and l. of the managers and directors, reépectively, felt the manager has this responsibility. One postulation may be that planning of an educational program for the members will require both the manager and 54 the board in order to adapt the program to the membership. Another interpretation of the data might be that the percent of the managers who indicated a Joint responsibility wished to share in the consulta— tion. The question of who is responsible to review and decide on changes in the services performed for the members of the cooperative was asked. The results were not clear regarding the responsibility to review the marketing services performed for the cooperative's members. As shown in Table 2, fortyafour percent of both the managers and di- rectors felt this responsibility should be shared while 32 and 17 per» cent of the managers and directors, respectively, indicated the board has this responsibility. Twenty and 38 percent of the managers and directors, respectively, indicated the manager'has sole responsibility. The decision to change marketing services provided for members was indicated by 53 percent of the directors and 40 percent of the managers should belong to the board of directors. waever, the de- cision to enlarge purchasing services for the members was indicated by 60 percent of the directors and 44 percent of the managers to be a Joint duty. Twentyseight percent of the managers indicated they should make this decision. An interpretation of this data may be that the significance of the decision to change marketing services is greater, thus the reason for the board's having this decision, while the en- largement of purchasing services is more of an internal decision and should be shared. 55 A question that illustrated the responsibility for a minor policy formulation revealed that 76 percent of the managers and 42 percent of the directors felt this should be the manager's. The final decision to purchase washing compounds for members would establish a policy and perform a purchasing service for the members. Pbssibly the reason for these results is that the decision to purchase washing comp pounds belongs to the manager, while the decision to enlarge purchas- ing services, more of a policy formulation, belongs to the board and manager Jointly. The managers and directors agreed (Table 2) that the managers should prepare the financial report. This is in agreement with a re- cently reported study by Volkin gt gl. (1960). In fact, the prepara- tion of the annual financial and business reports was the only decision area where the 752 directors surveyed in Volkin's gt 5;. (1960) study that gave full responsibility to the manager. Two other communication forms, a cooperative publication for members and the annual meeting of members, were thought to be Joint responsibilities. Fortybfour percent of the managers indicated the responsibility to decide to hare a publication and the responsibility and duty to plan the annual meet- ing is Jointly shared and performed by the board and manager. Over half the directors, 53 percent, agreed the decision to have a publi- cation is shared and 68 percent felt the planning of the annual meet— ing is shared. Two managers emphasized the responsibility the board of direc- tors has in the area of membership relations. One stated: "A 56 cooperative board is vastly different than a non-cooperative board. The cooperative board members must be a strong link in securing mem_ bership loyalty and support. A coop must have this; a stock corpora- tion does not need the loyalty and support of the stockholders as long as it can pay a satisfactory dividend." The second manager asserted the membership relations work is in the board member's neighborhood. A president of the board commented that the board of directors "... should be a 'go between' of the management and the membership..." which may be interpreted to mean the board has a liaison capacity as was found in the study reported by Volkin g; L. (1960). anls Establishment of a 5-year goal was revealed to be a Joint re- sponsibility with 64 and 73 percent of the managers and directors, respectively, indicating they both are responsible. Few of the mana- gers (8 percent) and directors (4 percent) felt the board has sole re- sponsibility while a larger percent of the managers (24) and directors (16) indicated the manager has sole responsibility. Managers and directors agreed the responsibility to review and change the cooperative's obJectives should be shared. wasver, 36 percent of the managers and 21. percent of the directors felt the board has sole responsibility here. The results show that few managers and directors felt the manager has sole responsibility. Nearly the same percentages of managers and directors indicated a Joint responsibility in the establishment and review of goals, which 57 indicates consistency of replies in this area. The implications of these data are that the board as well as the manager will need to be vigilant to numerous factors influencing established goals for the future. The postulation.can be made that the board of directors will need to supply a quantity of the facts and ideas that may influence the planning of goals for the next five years. jugggggg’ggg'Control Managers and directors agreed, as shown in Table 2, that the manager is responsible to plan the cooperative’s yearly budget. Howe ever, 36 percent of the managers and 44 percent of the directors in— dicated this duty should be shared. The data clearly indicate the board should not perform this duty alone. The acceptance of this pro- posed yearly budget is on the other hand the board of director's duty as shown by the 76 and 84 percent of the managers' and directors' re- plies, respectivelya These data suggest the manager*prepares and plans the yearly budget and presents the proposal to the board for its approval, thus exercising control over financial budgeting. Responses from Question 21, to evaluate the monthly profit and loss statement, did not clearly indicate who should be responsible. Identically the same percentages of managers and directors (44) in- dicated this is a Joint responsibility and that they both should evaluate the statement. Although the percent of opinions is not high, this would agree with general authoritative management recommenda- tiOm e 58 A division of opinions between managers and directors was re- vealed upon analysis of the replies from.Question.22. Fifty-two percent of the managers indicated they have sole responsibility to evaluate the results of a sales cost analysis study while 64.percent of the directors indicated the responsibility is shared. A sub- stantially smaller number of the directors (11 percent) agreed this is the manager's sole responsibility as compared to the percent of managers (32 percent) that indicated both should evaluate the study. The author is concerned.with the results of the two proceeding questions. More replies were offered by the managers and the direc- tors for the responsibility of evaluating a cost study than.a profit and loss statement. A.profit and loss statement provides a means for measuring and control, and should be more significant than the sales cost study. However, the results do not show a definite trend of opinions from the managers and directors. The implication is not that a sales study is not important; on the contrary it also offers valuable information. But, the usefulness of the profit and loss statement should be more valuable for general control. Fifty-six percent of the managers indicated the board is re- sponsible to secure an auditor to perform the yearhend audit. Forty percent of the directors indicated the manager has this responsibility. Two recent studies by the Farmer Cooperative Service do not agree with the director's opinions reported here. Volkin gt 3;. (1960) reported that most of the bylaws submitted by regional cooperatives revealed {ii a the directors have the duty to employ an auditor, and 47.9 percent of 752 directors indicated the engaging of an auditor is a primary board responsibility. The responsibility to employ a competent business consultant to resolve major problems was indicated by over half the managers (52 percent) and nearly half the directors (47 percent) to be a joint re- sponsibility. This would be in agreement with the results of a study by volkin gt 31, (1960) whereby 58.6 percent of the 752 directors sur- veyed indicated the board and manager share this responsibility. Financial Policies Indications are in the area of financial decisions that the manager has little, if any, sole responsibility. There was unanimous agreement by managers and directors that the manager has no responsi— bility in making the decision in regard to nonamembers receiving dividends. The replies of 72 and 71 percent of the managers and di- rectors, respectively, clearly indicated that the board of directors 'make this decision. One manager emphasized that the nonbmembers must be treated the same as members while a second manager stated this duty belongs to the common stockholders and the means of handling depends upon the bylaws. Managers unanimously agreed they have no responsibility in de- ciding the amount of current earnings to be distributed to members. IMore than half the managers (52 percent) indicated the board should decide the amount of earning the members should receive. However, 48 percent of the managers indicated the decision should be shared. Sixty percent of the directors indicated the board is responsible for this decision. Data in Table 2 show the responsibility for obtaining a loan is not the manager's duty. Fiftybsixzpercent of the managers and 44 per- cent of the directors replied that this is a joint responsibility, although 40 and 49 percent of the managers and directors, respectively, indicated this is the board's responsibility solely. The question of who decides to set aside a financial reserve nor future expansion revealed unanimous agreement by managers and di- rectors that the manager should not have sole responsibility. Sixty percent of the managers, however, indicated the decision is a joint duty. This suggests thatrmanagers desire to counsel on this matter. Consultation prior to setting aside a financial reserve would seem logical since definite facts, such as trends and internal operational details will influence the decision. However, over half the directors (56 percent) indicated the board should make this decision while con- siderably less than half (4!. percent) of the directors replied that the decision should be shared. 1 similar question concerning who decides the amount or number of revolving fund certificates to retire in 20 years revealed that the directors unanimously agreed the manager has no responsibility. Twelve percent of the managers disagreed, however, replying they have sole responsibility. Forty—four percent of the managers and directors 61 alike indicated the duty‘should be shared, while 40 and 56 percent of the managers and directors, respectively, indicated the board should be responsible. Pgrggnnel Policies Replies to the questions dealing with personnel administration revealed that the manager should have full responsibility. Ninety- six percent of the managers and directors, agreed the manager should hire or dismiss any plant employee other than the assistant manager. The managers unanimously agreed the board has no responsibility and only 2 percentof the directors disagreed. Similarly, 92 and 96 per cent of the managers and directors, respectively, indicated the mana- ger must specify the duties of the employee operating a pasteurizer. Directors and managers were in complete agreement that the board has no duty in this area. The conduction of an employee training program clearly belongs to the manager as indicated by 84 and 80 percent of the managers and directors, respectively. The duty of establishment of an employee evaluation program likewise belongs to the manager, since 84 percent of the managers and 64 percent of the directors were in agreement. The twenty-six percent of the directors that indicated they should share in the establishment of an evaluation program for employees thereby revealed a tendency to interfere in an area that should be directed by the manager entirely. Specification of the assistant manager's duties should be done by the manager according to the results obtained here. Although 13 percent of the directors and 12 percent of the managers indicated the board should specify the assistant manager's duties, 80 percent of the managers and 60 percent of the directors agreed the manager should perform this task. Nearly one-fourth of the directors (24 percent) felt the duty should be accomplished jointly. The duty of deciding to provide employees with plant clothing E1 or to have the employee furnish his own was not distinctly indicated I by the replies. Forty percent of the managers indicated the manager should have the responsibility while 42 percent of the directors re- sponded the responsibility is joint. The duty of formulating policy has been shown in other’studies and the literature to be the board's responsibility although only 37 percent of the managers and 28 percent of the directors surveyed in this study would agree. One interpreta- tion of the results may be that this is a minor policy and thus worth less of the board's time. Negotiation of the labor union contract was indicated to be a joint responsibility according to 56 and 65 percent of the managers and directors. A much smaller percentage of the managers and direc- tors (8 and 15, respectively) indicated this was a board's responp sibility. Griffin gt,al. (1960) found in their study of committees in regional cooperatives that a labor relations committee composed of directors was common for bargaining with the union. Production Policies Managers and directors (92 and 93 percent, respectively) agreed the responsibility to counsel a patron who consistently has a high 63 bacterial count rests with the manager. There was unanimous agreement from both groups that the board has no responsibility. This can be interpreted to mean the manager is responsible for the production of a high quality raw product. This responsibility has numerous ramifi- cations in that the manager will be responsible for enforcement of the rules upon his bosses in order to have an effective program that insures a high quality raw milk or cream. The replies from Question 42 (to decide to adopt a new butter- fat testing procedure) indicate divided opinion. A substantial perb centage of the managers (60 percent) felt they have sole responsibility with a third of the directors agreeing, yet 44.percent of the direc- tors indicated the decision should be made jointly. The results reveal that the board has little sole responsibility. Perhaps the directors wish to be informed of the idea since the membership is sensitive about fat testing and possibly make the final decision, on the basis of the manager's explanation. The final decision to purchase a new homogenizer was revealed to be the responsibility of the board of directors. Eighty percent of the directors and 44 percent of the managers agreed the board has sole responsibility. Directors agreed unanimously that the manager should not have sole responsibility while 24 percent of the managers believed they should make the decision. These data are in agreement with other questions in this study where a final decision of similar importance occurs. 64 Distinctly divided opinions were held in regard to who is re- sponsible to change a package design or color. Sixty-four percent of the managers indicated they should have this responsibility while 67 percent of the directors felt the change should be a joint considera- tion. The results show the board should have little sole responsi- bility for this. A difference of opinion was revealed in the replies to the question of initiating a product development or research program. Fortyasix percent of the directors indicated the manager is respon~ sible and an identical percentage indicated both the board and manager are responsible. The directors agreed unanimously that the board does not have sole responsibility. The managers' opinion was divided with 40 percent indicating both are responsible while LL percent felt they are solely responsible to start the program. Marketing Policies * Marketing here refers to the wide range of activities involved in distributing, selling, advertising of the concern's products. The replies revealed the manager is responsible to plan programs in this area. Seventybsix and 77 percent of the managers and directors, re- spectively, indicated the manager should plan a sales cost analysis study. The two groups agreed unanimously that the board has no re- sponsibility here. Planning a sales promotion program was considered by the managers to be their responsibility with 46 percent of the di- rectors agreeing but 44 percent indicating the planning should be 65 done jointly. The directors agreed unanimously that they do not have sole responsibility and only 4 percent of the managers felt the board was exclusively responsible. Over half the managers and directors designated the manager to plan a market research program to determine potential sales. The managers agreed unanimously that the board should not be solely responsible. Only 2 percent of the directors indicated the board should have the responsibility. The trend continued in the responses to the duty of setting a five-year sales quota. However, 64 percent of the directors and 36 percent of the managers indicated this goal should be set by both manager and the board. On the other hand, LL percent of the managers and 22 percent of the directors felt the manager should set this goal. This, too, is planning although the importance may be reflected here in that a larger percent of the directors felt they should share this goal setting as compared to planning programs to sell or determine costs and potentials in the market. Included in the area of marketing was the decision to increase or decrease the product line, or the number of products manufactured and sold. Sixtyuseven percent of the directors and 48 percent of the managers indicated the decision to change products manufactured and sold should be handled jointly. Twelve percent of the managers and 22 percent of the directors, indicated the board should make the de- cision. A considerably smaller percent (8) of the directors felt the manager should make this decision while 40 percent of the directors indicated they should make the decision. Qgganizational.fiflaggggygg Alteration of the internal structure of the organization was revealed to be the manager's responsibility. Reviewing the reorgani- sation of duties of the sales department was indicated by 80 and 62 percent of the managers and directors, respectively, to be the mana- ger's responsibility. Seventybsix percent of the managers indicated they should likewise make the decision to reorganize the duties of the sales department and 84 percent of the managers felt they should exe- cute the change. Directors' replies were divided as to who should decide on the change with 40 percent indicating the managers should, yet 42 percent felt the decision should be made jointly. Sixty-seven percent of the directors indicated the manager should execute the Chang, e RECOMMENDEI’DUTIES FOR DIRECTORS, MANAGERS AND MEMBERS Economic, social and political pressures cause the need for directors and managers to effectively perform their duties. A pre- requisite for good performance by the directors and managers of coop- eratives is their recognition and understanding of general and specific duties. The administration of a cooperative must review and measure the cooperative's operations if the objectives are to be realized. This should indicate the effectiveness of the perfbrmance of the duties by the administration. To provide a guide for board members, especially'new’members, general and specific duties and responsibilities will be delineated in this section. Also included are the cooperative membership's duties and the duties of the manager. Recommendations also are presented that will assist directors to train themselves in the fundamentals of dairy business, particularly the evaluation of financial activities. Conscientious application of this guide and adoption of the subsequent recommendations will assist the cooperative's administration, espe- cially the board, to discharge its duties more effectively. (hutline g; Qgtigg A. Duties of the membership 1. Select qualified directors 2. Require each director to know and perform the duties of his office 67 B. 3. Vote on decisions of great importance to welfare of cooperative Duties of the board of directors 1. Decide major policies 2. Select and support a competent manager 3. ENaluate management's performance a. Hire certified public accountant b. Evaluate financial statements c. Conduct a financial ratio analysis d. Review sales volumes and trends e. Evaluate processing indexes_ f. Consider public relations 4. Ascertain if objectives are being accomplished 5. Decide major financial actions 6. Miscellaneous Mutual duties of the board of directors and manager 1. Plan and develop policies a. Review policies b. long-range planning 2. Select assistant manager 3. Membership relations a. Infom members of operations b. Provide desired services c. Provide educational program 69 D. Duties of the manager 1. Enecute policies dictated by the board 2. Direct cooperative's operations ‘ 3. Perform short-range planning 4. Provide dynamic leadership Ms 9i its. __.:__2}bmbe 8111 Members entrust their board with the authority to preserve and guard memberships' interests in the cooperative. Therefbre, the most important duty of the members of dairy processing cooperatives is their selection of well Qualified directors. Members must require that directors possess certain essential qualifications. One is the willingness to devote the necessary time that will be required, especially the time to acquire the essential background desired of a director. Personal sacrifices will have to be made. hit his willingness to make the sacrifices indicates his enthusiasm and his desire to serve the cooperative. A second essential of unquestionable value is knowledge of his job as director and sufficient technical information in business prin— ciples and dairy product manufacturing and marketing to fulfill the requirements adequately. The members' insistence that directors learn the duties of their job within the first six months of their tenure as director will insure a knowledgeable board as well as hasten the transition from the role of member to the role of director. Methods for members to enforce this requirement are mentioned under the next duty of the members. 70 Another qualification that members should consider in their selection of a director is his loyalty to the cooperative. Candidates should have a good record of utilizing the services of the cooperative, preferably 100 percent participation. Associated with loyalty is the sincere belief in the principle of cooperationp-acceptance of the philosophy that joint effort by a group will accomplish more than the individual. Another essential should be the candidateh demonstrated suc- cess on his own farm. An efficiently operated farm indicates techni- cal farmppractice knowledge and its application. Members should be able to recognize this qualification and should feel reassured to en- trust the duties of the directorship to a fellow member with this at- tribute. Certain.personal characteristics should be possessed by'a di- rector or candidate. One is the director's ability to think analyti- cally, utilizing systematic reasoning, yet retaining an open mind. Secondly, the ability to express his beliefs, balanced with the philosophy of supporting the decision of the majority. Thirdly, the possession of initiative, energy, and persistence are valuable chars acteristics for a director. Demonstration of integrity by the di- rectors in personal and business matters is of major importance. His combining originality, practicality and resourcefulness with experi- ence should make the trait of sound Judgment pronounced. Mental alertness and sensitivity to situations, changes and his environment in general, would enhance the director's ability to serve capably. Another duty of the members is the arrangement of’means for checking on the directors' performnce and replacement of directors when necessary for the good of the organization. The membership must resist apathy which can be ccmbatted by appraisal of the prospective or present board members. One possibility members have is the engaging of a disinterested expert, such as a member from a.nanagement consulting firm or the state university. This consultant can assist members in enforcing the criteria of new or inexperienced directors. The consultant could likewise assist the members in scrutinizing the directors' performp ance. One method could be for the members to appoint or select a separate committee, composed of past board members or’members of the cooperative, that performs the fUnctions of evaluating and teaching directors their responsibilities. This committee, delegated its duties by the membership, could ascertain whether or not the director possesses the desired qualification and evaluate the director's perk formance. If the director is deficient, the committee should take the necessary corrective action. Members have a responsibility to be loyal to their cooperative. Continuation of the cooperative is dependent upon.members' support. ‘Hembers should not expect the cOOperative's administration to carry all the burdens of the organisations to make the cooperative a success. IExpression of needs and services is a ramification of this duty for‘ the members. The third major duty of the membership is its responsibility to vote on matters of great importance to the welfare of the coopera- tive. Prerequisites to performing this duty are the members' attend— ance at annual and special meetings and demonstrated willingness to take initiative in becoming informed about issues by reading reports and publications from the cooperative's administration. The members' reasonable inquisitiveness and awareness of the course of business of the cooperative and of the industry (sources of assistance in this area are presented in Appendix II) will likewise help in fulfilling this duty. Decisions such as merging with another cooperative, changing objectives, altering bylaws, taking on huge financial obligations, should have the vote of every member. This duty should not be dele- gated because of the probable effects of the decision upon each mem- ber. Duties 9; 3213, Board 9_f_’_ Director; The board of directors decides all of the major policies that are not handled directly by the membership. A policy is a statement of intention that commits the administration to a general course of action which then will guide and direct the operating management. Emamples of major policies which the board might decide may be the following: (a) provide members (and nonmembers) through the cooperative another’method of distribution, (b) provide members (and nonmembers) a new service, (c) secure new markets, (d) establish 73 better public relations, (a) process and distribute other feed prod- ucts, (f) improve morale of cooperative employees and (g) develop an international market for the products. A second major duty of the board of directors, that is of great importance yet seldom performed, is the selection of a com- petent manager. The unquestionable importance of this duty demands that the board he prepared to select and replace the manager. Pres- ent trends indicate more and more the need for a competent manager in dairy plants for survival as well as success. Therefore, it is the board's duty to have a good idea of the qualifications a manager should possess. The board must subsequently recognize the importance of establishing a selection procedure that can be initiated with little loss of time. In the event of a crisis the succession of competent management would be assured. Frequently when the board fails to insure continuity of management costly errors and unnecessary expenses result. The board also has the duty of specifying in general terms the duties of the manager. Emphasis should be placed upon general terms because of the ease of directors' neglecting their own duties and en- croaching upon the manager's duties. The directors' indication of their expectations of the manager will give him direction and purpose and, most important, assist him in carrying on the operations of the cooperative. 74 The third major duty of the board of directors is their evalua- tion of management's performance. This duty represents a very hm- portant phase in the preservation and guardianship of the membership's interests. A specific detail of evaluating management's perfOrmance is the hiring of a competent public accountant fer a yearly audit of the ac— counting records. The directors should review specific details of the audit (explained in detail later in this manuscript) in order to judge the business health of the cooperative. They should read the accountant's report, recommendations and opinions of the audit. If certain factors are not understood the board should request the ac- countant to explain his audit at a board meeting. The manager should be directed to follow the auditor's suggestions. One of the reports consists of a balance sheet. The directors in studying the balance sheet should notice the cash on hand and in the bank, the amount of accounts receivable, the current liabilities which mature within the year and the amount in the revolving fund reserve which may be distributed to members. Similarly the operating statement should be reviewed carefully. The net sales, gross margin on sales and net margin are a few of the important items. The di- rectors should understand specific factors, namely the working capi- tal, the common expenses, extraordinary expenses and the other an- tries on the balance sheet. 75 The board is responsible for noticing the auditor's statements relating to the consistent application of properly accredited account- ing principles. Consistency is important from the standpoint that, without it, the financial statements and the yearly comparison have less or little value between two accounting systems although both may be accredited. This is not to suggest that accounting methods cannot be changed; but if they are changed the effect of the change upon the financial statements must be disclosed by the auditor. Also the auditor should state whether he approves of this change or not. Once a year, or more often, the balance sheet should be pre— pared. A sample copy is illustrated on page 76. The balance sheet itemizes the assets which are owned by the cooperative or that are due the business from others. Land, buildings, inventory and equip— ment are assets owned by the cooperative. These items should be checked to ascertain if a fair value has been assigned. Accounts re- ceivable and prepaid expenses such as insurance are assets. A second section of the balance sheet is the liabilities and capital equities section which equals the total assets. Liabilities are the items which the cooperative owes, such as accounts payable, notes or mortgage payables. The capital equities represent the amount of ownership held by stockholders in capital stock, and also includes capital reserves for the membership's revolving fund or future expansion. One analysis of the balance sheet that the board should para form is the ratio that current and fixed assets are to total assets. 76 Balance Sheet for JulyaDecember, 1960 Famers' Cooperative Association Any Town, Michigan (Sample Illustration) ASSETS Current Assets (Rapidly converted to cash in normal course of business) Cash (On hand and in the bank) $15,000 Accounts Receivable (Owed to coopera- tive by customers) $40,000 Less Reserve for Bad Debts 3,000 37,000 Inventories (Stocks of merchandise on hand) 40,000 Total Current Assets 892,000 Fixed Assets (All land, buildings and equipment owned) Cost Value (All items at original cost) 40,000 Less Reserve for Depreciation (A charge made against past operations) 28,000 let Book Vhlua (Remaining value to be charged against future - operations) 12,000 Other Assets Investments in Other Cooperatives (Patronage refunds received in stock) 40,000 Prepaid Expenses (Expense items paid up ahead) _Z;QQQ Total Other Assets 52,000 TOTAL ASSETS M LIABILITIES Current Liabilities (Debts due in one Year) Accounts Payable (Due suppliers for pur- chases and services) 13,000 Accrued ses (Expenses due but not yet paid 2,000 Total Current Liabilities 15,000 Long-Term Liabilities Notes Payable (Debts of longer duration than one year) 20,000 CAPITAL EQUITIES (Amount owned by stockholders) Common Stock 95,000 Patronage Refunds Payable 6,000 Capital Reserves M Total Capital Equities 111,000 TOTAL LIABILITIES AND CAPITAL EQUITIES i;§6.000 The computation involves dividing the amount of total assets into the items that constitute the current assets (see sample balance sheet on page 76) and similarly the items in the fixed assets. This divi- sion.will indicate the distribution of capital in the total assets of the cooperative and may assist directors in.making a more objective analysis of the business conditions. For example, a relationship of 120.4 between total and fixed assets is suggested as a standard. A higher relationship may indicate that the amount of capital tied up in fixed assets is larger than necessary and unavailable, while a lower relationship may indicate additional fixed assets are needed. The second financial statement which the board is responsible for evaluating is the monthly operating statement (sample copy on page 78) which indicates the results of business operations of the cooperative for a specific period, usually a month, but.may be a quarter. Actually the operating statement itemises the earnings of the period and also the expenses incurred; the difference between these two items is the profit margin. The operating statement is composed of the gross sales from which merchandise returns and allowances are subtracted (illustrated by $2,300 in the sample copy) to indicate the net sales of $l08,700. Accordingly, the gross margin on sales of $30,634 shown in the sample copy is derived by subtracting the cost of materials sold from the net sales. The beginning product inventory plus the raw'milk and cream purchased, ingredients used such as chocolate powder, finished Operating Statement for December, 1960 Farmers' Cooperative Association Any Town, Michigan (Sample Illustration) Sales: Retail Wholesale Miscellaneous Total Gross Sales Less Merchandise Returns and Allowances Net Sales Cost of Materials Sold: Beginning Product Inventory Raw Products Purchased Ingredients Used 9,800.00 73,524.00 750.00 Finished Dairy Products Purchased 1,500.00 Other Products Purchased Total Cost Less Ending Product Inventory Total Cost of Phterials Sold Gross krgin on Sales Processing Expenses: Salaries and Wages Fringe Benefits Containers Operating applies Repairs Taxes Insurance Depreciation Rentals of Equipaent Services Purchased Advertising General Expenses Total Processing Expenses Sales and Administration Expenses: Delivery and Sales Administration Total Sales and Administrap- tion Expenses Total Operating Expenses Net Profit 11,475.07 2,185.73 1.793 .90 680.16 194.60 397.10 875.63 2,823.13 1.75 .66 553.03 1,170.59 851,000.00 55,000.00 Jim-92 22,768.00 $111,000.00 I] 2,300.00 ‘- 3108,700.00 . A - __.. .. It... 78,066,Q $30,634.00 828,569,00 i 2,174,00 ._.. 79 ‘products purchased such as ice cream novelties, and other products purchased for resale such as ice, minus the ending product inventory make up the cost of materials sold. Itemized operating expenses (listed in the sample operating statement on page 78) are then sub- tracted from the gross margin on sales as are the sales and adminis- trative expenses to give the net margin for the operating period. Comparative analysis of the operating statement should help the board become aware of changes which can be investigated if de- sirable. One is the comparison of last month's operations with the present month's operations. Likewise the board should compare the present month with the same month last year and possible the monthly average of the last five years. A A second comparative analysis that may be performed on the op- erating statement is the percentage difference that each item in the statement is of net sales. For example, in the sample copy on page 78 the gross margin on sales is 28.18 percent of net sales (computed by dividing 830,634 by the net sales of $108,700). The percent that net margin is of net sales definitely should be calculated which in the sample copy is 2.00 percent. This type of analysis will provide such information as the percentage change in gross margin, expenses and net margins as well as indicate sales volume change. One caution is that the percents computed be studied carefully and not held as conclusive. The fact must be made clear that a change in the percent 80 that one item is of another can be caused by either or both the fig- ures. The significant question is, was the change in one figure Justified by the change in the other. Another opportunity of the board of directors in their evalua- ting financial statements is the use of ratios. A ratio means a computation expressing the numerical relationship between two figures. Analysis by ratio is the process of determining and presenting the relationship of items and groups of items so as to reveal favorable or unfavorable conditions and trends. Although technically not a ratio, the working capital is men. tioned here since two of the ratios that will be discussed are based on the items which give the working capital. The computation of the working capital involves subtracting the current liabilities from the current assets (balance sheet). Current assets are those items that are or can be converted to cash in the normal course of business and current liabilities are these short term obligations that are due or will be paid within the period of the statement. The current ratio reflects the working capital of the business and is one the board should know especially. It is derived by divid- ing current liabilities into current assets. A suggested rule of thumb for the ratio is 2:1, that is the current assets should be double the current liabilities. A lower ratio suggests the coopera- tive may have difficulty meeting financial obligations because of slow sales and/or collections while a higher ratio suggests extra funds are available for use. 81 Several factors should be considered in studying this ratio; one is the dairy product inventories, which if excessive could cause a 2:1 ratio, but actually the cooperative financial position may not be good since high inventories may be caused by many factors, for ex- ample slow movement of product and overstocking. Secondly, accounts receivables, if high, could cause a 2:1 ratio but again the financial position.may not be favorable. Thirdly, a large idle cash balance could give the favorable ratio. This fact would indicate the re- sources are not being used gainfully. Supplementary to the current ratio is the relationship between the sum of current liabilities and the amount of cash and accounts re-- ceivable of a buSiness. ‘Dividing the current liabilities into the sum of cash and accounts receivables is called the acid-test ratio which checks the adequacy of the current ratio. The amount of avail- able cash and the capital closest to cash are likewise indicated. A desirable acid-test ratio is 1:1. The turnover of the accounts receivable is important. It is computed by dividing annual sales, preferably credit sales, by the average or yearbend trade accounts receivable. The liquidity of the accounts receivable is measured by this turnover. An annual turnover of six means that today's receivables will on the average be collected in two months or if the turnover is four the return of receivables- will be within three months. An exceptionally high receivables turn- over ratio, for example over 12, might indicate a tight credit policy that may be hurting sales by discouraging slower paying customers. 82 In contrast, an unusually low ratio would indicate a build-up of funds in the receivables assets indicating that the flow of funds has been cut down. The application of the receivables turnover must be considered in respect to seasonal sales. If cash sales increased markedly at the end of the year, the accounts receivables would reflect this increase and could be misleading. Therefore, comparison of credit sales with an average monthly accounts receivables balance or an average balance of the beginning and ending of the year is warranted. The average collection period which can be expected for the average credit sales should be calculated. The average daily credit sales divided into the accounts receivable gives the average collec- tion period. An average collection period of 30 days or less should be the goal. Besides the receivable turnover the receivables should be ''aged," especially those due over the 30-day collection period. Aging of receivables involves classifying the accounts according to the length of time outstanding. A 30bday aging period should be the first classification with additional less desirable classes as 30 to 60 days, 60 to 90 days and over 90 days. unfortunately a complete awareness by the board of the magni- tude of the debt in relation to changing operations is not always true. A ratio that shows the dollars that the cooperative's creditors have loaned in relation to the owners' investment is the debt to net worth. .~‘ . - - I N s ‘14- 1.2”. 83 The division of the total debt by the tangible net worth* gives this ratio. If the ratio is 1:1 the assets of the cooperative may decline 50 percent in value before threatening the actual solvency of the business. Although when a 2:1 (debt to net worth) ratio occurs only one-third of the asset value could be lost before causing insolvency. More and more investment ratios are becoming the efficiency index of the financial aspects of management. Several of the ratios in this area are the investment turnover, earning rate and the return on investment. ' The investment turnover is the ratio of net sales to investment by members that measures the degree of utilization of the resources. Computation of the ratio involves dividing the sum of the investments into the net sales for the year. A second investment ratio is the earning rats which provides another>measure of how efficiently the plant was operated. This ratio is computed by dividing net margin by not sales for the period. The dairy industry currently has an average return of 2.1 percent on sales. The return on investment is the ratio of the net.margin to the total assets. This ratio indicates the efficiency of the plant by showing the level of utilization of the assets. *Tangible net worth, according to Sanzo (1958) is, "The worth of a business minus any intangible items in the assets such as good will, trademarks, patents, copyrights and leaseholds. The tangible net worth would consist of the sum of all outstanding capital stock and surplus minus the intangibles.I 8A A study of trends in sales volume to spot weaknesses, and thus the deficient sales activities, may be beneficial. A comparison of the total sales volume to the total sales force will indicate the general effectiveness of the sales department. Accordingly the de- termination of the cost of selling per 100 pounds of product will provide a guide and a more objective standard upon which to establish goals. More significant is a comparison of the sales volume per sales- man. An analysis of the individual salesman's records may point to weaknesses. The board should recognize that several factors influence sales volume, namely, economic conditions, credit policy changes, management policies, price changes or amount of sales promotion and advertising. An analytical comparison of the volume of sales to the market price of products will inform the board of the selling practices of the management. Especially in manufactumed products such as natural cheeses, butter and dried milk products there is little need for the sales price to be below the government support price for these prod- ‘ucts. Evidence of selling below the support price or market price would indicate a need to study the actual reasons. The board should assess the sales volume in relation to the potential market in both local and state markets if of sufficient size. This is not to imply that cooperatives serving only local markets should not compare its sales on the state basis for a guide may de- velop from doing this. Likewise, knowledge of the present sales of 85 the cooperative with the industry‘s national sales figures indicates trends and may help guide the board in its evaluation of sales. To conclude the discussion on ratios, the fact must be empha- sized that they are not a panacea for business ills but if properly used they provide valuable information. Similarly, ratios present a hazard of being used as ends in themselves while actually they should act mainly as rules-ofethumb and be used with sound Judgment. The directors must review proposed budgets of the cooperative in detail since they provide a simplified means of control over fi- nancial transactions for each activity. Budgets help to force manage- ment to plan and coordinate activities of the various sections of the entire operation as well as clarify programs and delineate responsi- bilities. An understanding of the budgetary program will better pre- pare them to make evaluations of management's aims and later the progress that was accomplished. The board should insist onimanagement setting goals for major operations, for example sales, sales margin, efficiency of processing, quality improvement, reduction of losses, etc. A review of previous goals and the establishment of realistic goals for the next year will stimulate and direct management. The board should know processing efficiency indexes and their value. One index is the pounds or gallons of product processed per man-hour worked. The computation involves dividing the plant process- ing volume by the total number of manphours worked in the plant. The goal is for an index characterized by a large volume of product processed per few number of employee hours worked. Nationally in 1959 the average gallons of milk processed per man-hour was 53 and 125 was the best reported. A realistic goal should be set above the average and a little higher than the present yearly average of the cooperative. Further sources of information along this line can be found in Appen- dix Ix. Shrinkage reports serve a useful purpose by indicating product loss. A true report reflects the difference in both fat and solids- not-fat purchased and the amount that was sold. One guide is the 2 percent loss allowed by Federal Milk Marketing Orders which is liberal for a fluid milk operation. One percent or less would be more of a challenge. All phases of the operation are potential loss points. Consequently, the more products processed and the more steps involved inevitably the higher the shrinkage that results. Although directors are not involved directly in employee rela— tions they should be interested in general morale. One measure of morals is the labor turnover, which is computed by determining the average amber of employees and dividing that figure into the total number of separations for the month and multiplying by 100 (rats in percent). The United States Department of labor (1961) reported the average labor turnover for the Food industry for 1959 and 1958 was 4.0 and 3.8 per 100 employees, respectively. Directors should be concerned with accident frequency and acci- dent severity rates. The accident frequency rate is computed by multiplying the mnber of injuries by 1,000,000 and dividing the product by the total man-hours worked. An average frequency rate for all industrial mam1facturing industries was 13.5 per year in 1959. The accident severity rate measures the number of days lost through injuries per 1,000 man-hours worked. The umber of days lost through injuries is multiplied by 1,000 and the product 13 divided by the '1 number of man-hours worked. The board should check on the upkeep and improvement of the physical facilities. The maintenance of equipnent is important, as . well as the upkeep and improvement of plant and premises. Some directors may fail to appreciate the full value of the cooperative's public relations. Included are customers, general pub- lic, competitors, supply representatives, newspaper men, farmers (especially members) and employees. The board should encourage. management's participation in civic affairs as a means of promoting better relations with the general public. The fourth major duty of the board of directors outlined in this section is ascertaining the accomplishment of the objec- tives of the cooperative. This may include simply the greatest re- turn to the producer or also it may involve conveniences and extra services at the least cost to the producers. Directors have the duty of making final decisions on major fi- nancial expenditures of the cooperative. The board may establish a maximum expenditure level above which the manager must obtain approval by the board. This may be based on a percentage of’monthly income. The amount allowed the manager should be realistic for the size of the organization. An arbitrary figure set many years ago that bears little relationship to current total income or expense is a handicap to efficient management. The board may engage a consultant to assist in evaluating or resolving major problans. Consultants can provide a valuable aid for the board in guarding and preserving members' interests. Their broad knowledge, yet specialized talents, can provide solutions, corrections and viewpoints that may readily solve difficult problems. The cost of a consultant is usually a good investment for these occasions. Finally'every'member’of the board of directors should keep him- self informed on current dairy business trends and developments. In fact, a self-improvement program is imperative. In Appendix II a list of suggested readings and other aids is presented that will assist a director in keeping informed as well as broaden his knowledge and perk spective. ".2201 Duties 0.; _the. _Board a: Li‘s—.221 etc an}. m Jointly the board of directors and manager have essential duties to perform. (he of these is the planning and developing of policies. Jointly the board and manager should work together in planning and developing policies with the final decision invested in the board. Joint consultation is imperative since the jobs of the directors and manager pertain to different tasks and each will need to contribute 89 facts and viewpoints that may influence the planning and developrent of policies. The establishment of a policy to promote and sell the cooperative's products in a larger market area would require both the board and manager to provide information and ideas. Hence, a ramification of this duty is the requirement that both the board and manager review the documentary papers (articles of in- corporation, bylaws end charter) of the cooperative in light or cur— rent conditions. Although these provisions are relatively stable, their revision is conceivable in view of the rapid change of busi- nesses to meet business conditions. Therefore, it is the duty of the board and manager to review the domentary papers every 2 or 3 years. The planning and developing of long-range goals is difficult but essential for good administration. These are best attained as mutual endeavors. Specifically the board and manager must define and qualify the long-range goal. Secondly, assunptions relative to the plan must be established such as estimates of financial needs, lon- gevity of the plan, influence of competition, transportation aspects and others. These premises guide and provide a foundation for the plan. Thirdly, information should be obtained relative to the plan, both within and outside the organization, such as needs in the way of facilities, consultation with authorities and others. The information should be obtained, studied, analyzed and classified so discussions relative to costs and benefits will be possible. next a mutual de- cision on the goal and course of action stimulates the best use of labor, management and capital in the accomplishments. A systanatic plan that helps chart the future in view of changing economic condi- tions and desire for growth will add confidence. A board's concern should be with the succession of the manager in case a replacement becomes necessary. Consequently, the second “I mutual duty (board and manager) is the selection of an assistant manager. Jointly they should review the candidates' qualifications and agree upon the person. * mice a selection is made, the assistant manager must be responsible to the manager although the board has an interest in the training of the assistant through the manager. A qualified assistant is the best insurance against delays and losses whenever a change of the manager takes place. The third mutual duty of the board of directors and manager is membership relations. This covers a wide realm of activities; the major one is keeping the membership well informed of the business by communications through cooperative publications, reports, special bul- letins and other media. Annual and special meeting dates, as well as advanced information on factors requiring decisions at these meetings, should be conveyed to members well in advance. Comunicative channels from the members back to the board should be effective. The feed-back of numbers ' views is often neglected and consequently public relations is less than optimum. A well informed membership is a step towards the elimination of apathy. 7 91 mun 2:. 29. m The major duties of the manager are: (a) execute the policies dictated by the board, (b) direct the day-to—dsy operations, (c) make short-range plans and (d )' provide dynamic leadership for the co- operative. In executing policies dictated by the board the manager spe- cifically puts into effect procedures that follow the course of action outlined to him. For example, if a policy adopted by the board was to process a new product from milk, the manager would plan a program to develop and evaluate a potential new product. In the achievement of this the manager has executed the policy. Essentially the manager plans, organizes, directs, coordinates and controls the daily activities of the cooperative. Included in this wide realm of daily activities are the ”grants that overlap all phases of the operations. One activity is the budget preparation. The mana- ger should plan a budget that predicts the income and expenses by departments of the entire operation for the next fiscal year. It is imperative that the budget be reviewed periodically (usually quarterly) in light of changing conditions or expected changes in the imediate future. Accordingly, adjustments should be made if necessary in order to coordinate with the changes as they occur. The manager must main- tain adequate, working capital for the normal operating expenses. The manager should be responsible for the financial activities under the policies established by the board. Financial records 92 adequate to meet the requirements of good accounting are his responsi- bility. He must direct the preparation of the balance sheet, operating statement and special reports. Effective labor utilization is a responsibility of the manager. Control of personnel programs in selection, training, working, evalua- tion and safety of the employees is under his supervision. The em- r1 ployee morale is his responsibility. Morale is influenced by job I “1 descriptions, work standards, incentives, working conditions, salaries ( and wages and fringe benefits. The manager is also responsible for efficiency in all phases of the Operation. Knowledge of the outputs of labor and machines is imperative for the manager so that he can immediately determine the degree of efficiency of operations. Comparison of operations in the past and with comparable sized operations provides guides in re- spect to efficiency of the operation. (Sources of information for guides on efficiency are presented in Appendix II.) Establishment of realistic short-term goals for all phases of the operation which are reviewed and revised yearly may provide direction and incentives. The internal organizational structure is an aspect that in— fluences the efficiency of all operations. A well managed organiza- tion has a current chain of comnand and each employee knows his duties and responsibilities under normal and emergency conditions. Flexi- bility in organizational structure is desirable to meet rapidly changing conditions. 93 The manager is responsible for an effective public relations program involving customers, members, employees, competitors, news reporters, civic and private groups, suppliers, farmers and officials of the local, state and possibly national governments. A favorable image can be obtained only by an effective, continuous program. The manager controls usually by indirect means the procurement ’1 program of the raw milk supply. The program should have its basis in accurate, sanitary and low cost handling of all the milk supplied by members and other patrons. ‘ The manager is responsible for directing the purchase of sup- EH plies, product ingredients and the selection of equipment. Direction of all processing is a duty of the manager. Coordinap tion of methods, men, materials and machines should lead toward an effective operation. Evaluation of processing methods aids in attain- ing simplification and quality at minimum expense. Good direction of a maintenance and engineering program in the processing operation is imperative for keeping the equipment in a satisfactory condition and maintaining the physical facilities as a whole. Another major operation which the manager is responsible for directing is composition and quality control which are vital to the business. A well balanced program includes realistic standards for the chemical and microbiological quality of the product during pro- curement, processing, packaging, storing and distributing. The manager usually delegates to the laboratory personnel the responsi- bility for research and development. With the present competitive 9!. circumstances, improvement or creation of products will help guard against lower margins and provide improved or new outlets for milk. The third major operation directed by the manager is the sales and distribution of the dairy products. Particularly significant is his responsibility for an aggressive sales department that plainly reflects a desire to serve the customers. Establishing and continuing an effective promotional advertising program rests with the manager; such a program should add impetus to the sales effort and create a favorable image of the cooperative. These efforts could be in vain unless an adequate distribution program is in effect. Continual study of new distribution channels besides improvement of present methods is warranted. Carefully structured communication channels in the area of sales and distribution will assist the manager in making decisions more readily and objectively. Application of marketing research tech.- niques will help the manager to keep informed of the customers' de- sires as well as provide a channel of communication. The third major duty of the manager is making short-range plans. for the immediate future period of six months to a year. Forecasts and data from other analyses are instruments for short-range planning. The benefit of short-range plans is more efficient plant operations. Better coordination is assured where the future plans and finances, supplies, labor and other phases are studied and plans made for their efficient utilization. Plans for emergencies can be made whereby steps of action could be initiated in order to cope with sudden de- mands. Vision of the future demands helps the manager to adapt to 95 changing circumstances caused by economic conditions, future produc— tion demands and trends. Discussions in preceding paragraphs have assumed that the manager possesses a most important qualification, namely leadership ability. The manager is responsible to provide dynamic leadership. His role in leading the cooperative should center around a philosophy of how he can serve his cooperative. Creativity plays a role in his serving as the leader of the cooperative. Continually he must assrme challenges, especially to improve managanent. . The manager should provide leadership in civic affairs by par- ticipating in comunity functions that demonstrate his desire to serve his fellow man, community, state and nation. His encouragement of employees, manbers and board members to participate will prove beneficial to the cooperative. Also important is the manager's duty to protect the members' interests politically. He must keep abreast of local and state political activities in order to inform members of legislation which they may wish to support or oppose. In conclusion, the manager is responsible for an adequate net profit under the prevailing business conditions. The record of the manager in this area is constantly under examination by members. His leadership and managanent ability in all phases of the operation will determine the success of business in fulfilling the objectives. SW AND CONCLUSIONS Replies from a questionnaire to managers and boards of direc- tors of Michigan dairy processing cooperatives showed that members of the board need their specific duties delineated and need a more thorough knowledge of the fundamentals of business so they can evalu- ate more thoroughly the cooperative ' s operations. Sixty-four percent of the directors indicated they jointly should evaluate a sales cost analysis study with the manager while less (1.1. percent) indicated they should jointly evaluate a more important report—the operating statement. Forty percent of the directors indicated the manager should secure the accountant to perform the audit at the end of the year while 56 percent of the managers felt this duty is solely the board of director's. Managers and directors consistently agreed that the board of directors should make the final decision on major issues. Consistency was noted in the replies in the area of personnel policies. lbnagers and directors unanimously agree that the board has no responsibility in hiring, dismissing, evaluating or specifying duties to employees. Results indicate both the manager and directors share duties in manhership relations. Sixty and 1.8 percent of the managers and directors, respectively, indicated they jointly should plan a lO-year member adult education program. Forty-four and 60 percent of the managers and directors, respectively, indicated that the decision to 96 enlarge purchasing services for members should be made jointly. Planning the annual meeting was indicated by 44 percent of managers and 68 percent of the directors to he a mutual duty. The establishment of 5-year goals was indicated by 64 and 73 percent of the managers and directors to be a.mutual duty as was the review and change of objectives by 60 and 69 percent of the managers - .- a'--' ,K and directors. 3 On the basis of the questionnaire replies, personal interviews . with authorities, literature review and personal convictions of the ! author, the principal duties and responsibilities are designated as follows: It is the responsibility of the members of a cooperative to: (a) select qualified directors, (b) require that each director know and perform.the duties of his office and (c) vote on decisions of great.importanee to the welfare of the cooperative. Major duties of 'the board of directors are to: (a) decide major policies, (b) select and support a competent manager, (c) evaluate management's performance, (d) ascertain whether or not the objectives are being accomplished, (e) decide major financial operations and (f) miscellaneous, such as hiring a consultant. Mutual duties (directors and manager) are to: (a) plan and develop policies, (h) select an assistant manager and (c) promote membership relations. The manager is responsible for: (a) executing policies dictated by the board, (b) directing dayato-day operations, (c) perfonm short-range planning and (d) providing dynamic leadership. 98 In conclusion the careful adherence to the recomndations for the discharging of duties and responsibilities should result in an improved administration of the Michigan dairy processing cooperative. 1. 2. 3. L. 5. 9. 10. 13. LITERATURE CITED Abrahamsen, M. A. (1957) Co-op directors, take stock of your- selves. lews Farmer Coop. 24(3):L, IAPIS. Adams, B. (1960) local co-op manager, an important man. News Farmer Coop. 27(3) :19. Anonymous (1957) Is management doing its job? Am. Milk Rev. 19(3):2!.. Anonymous (1958a) Responsibilities of directors. p. 19. News Farmer Coop., Reprint 2, Section B, U. S. Dept. of Agr., Farmer Cooperative Service, Hashington. 19 pp. Anonymous (1958b) Why be quite contrary? p. 11. News Farmer Coop., Reprint 2, Section B, U. 8. Dept. of Agr., Farmer Cooperative Service, Hashington. 19 pp. Anonymous (1959) Gearing cooperatives to serve modern agricul- ture, AIC theme. News Farmer Coop. 26(7):3-4. Bakken, H. H. (1931) Directors of farm cooperatives-their duties and responsibilities. His. Agr. Ext. Cir. 245. 16 pp. Baughman, E. and W. H. Bankers (1942) Know your cooperative. Minn. Agr. Ext. Bul. 232. 16 pp. Beal, S. H. (1958) Developing director and member responsi- bility. News Farmer Coop. 25(1):7-8, 20-21. Benham, S. B. (1960) Will farmerhowned rocessing facilities hurt the industry? Am. Milk Rev. 22(3 :46, 48, 133-134. Benson, E. T. (1955) Foreword. p. 1. ‘Essentials of good management: Better public service through better'management. G. E. Hilbert, ed. U. 8. Dept. of Agr. Mgt. Bul. 1. 35 pp. Bohnsack, R. (1960) The twofold responsibility of the co-op manager. Abst. material presented at the Management Institute for Board of Directors, Michigan Association of Farmer Co- operatives. Lansing, Michigan, Jan. 18, 19. Brinkley, H. L. (1958) Joint responsibilities essential for co-op success. News Farmer Coop. 24(12):4, 12-14. 11.. 15. 16. 17. 18. 19. 20. 21. 22. 23. 100 Brown, D. L. (1960a) Board responsibility in salary and wage administration. Abst. material presented at the mnagement Institute for Board of Directors, Michigan Association of Farmer Cooperatives. Iansing, Michigan, Jan. 18, 19. Brown, D. L. (1960b) Policies—Why are they important to the board? Abst. material presented at the thnagement Institute for Board of Directors, Michigan Association of Fhrmer Coop- eratives. Lansing, Michigan, Jan. 18, 19. Brown, D. L. (1960c) Why should cooperative directors study management? Abst. material presented at the Management In- stitute for Board of Directors, Michigan Association of Farmer Cooperatives. lensing, Michigan, Jan. l8, l9. Brunkow, V. (1958) Cooperatives need leadership. Ibard's Dairyman 103(13):708. Cleveland, H. s. (1959) Duties and responsibilities of co-op directories. pp. 11.1-11.7. American W Am. Inst. of Coop., Washington 6, D. C. 66!. pp. Copeland, M. T. and A. R. Towl (1947) 1‘12 Board of W m Businegg PM. Boston Div. Fbs., Grad. Sch. Bus. Adm., Harvard University, Boston. 202 pp. Cox, C. B. (1958) Selecting and electing directors. p. 12. News Farmer Coop., Reprint 2, Section B, U. 8. Dept. of Agr., Farmer Cooperative Service, Washington. 19 pp. Crisp, W. ‘1‘. (1956) Director's responsibilities and opportuni- ties. pp. 26—27. Coongtiog Am. Inst. of Coop. Washington 6, D. c. 254 pp. ' ' Duggan, I. W. (1958a) Director's responsibilities are many and important. pp. 13, 22. News Farmer Coop., Reprint 2, Section A, U. S. Dept. of Agr., Farmer Cooperative Service, Washington. 28 pp. Duggan, I. W. (1958b) Searching questions from directors keep co-ops on the beam. p. 2. News Farmer Coop., Reprint 2, Section A, U. 8. Dept. of Agr., Farmer Cooperative Service, Washington. 28 pp. Ecker, H. J. (1960) Management's responsibilities for business planning and goal establishment. Talk presented at the Annual Meeting Michigan Association of Farmer Cooperatives, Oct. 18. 101 25. Eadam, J. E. (1960) Why we need management training. Hews Farmer Coop. 27(1):4, 16. 26. Fallon, a. a. (1958) The challenge of change. pp. 135-140. American Coo ration, Am. Inst. of Coop., Washington 6, D. C. 755 pp. 27. Folkman,‘W. S. (1958) Board members as decision makers in farmer cooperatives. Rural Sociol. 23(9):239—252. 28. Fraser, 8. D. (1958) Directors balance wheel for water'mutual. pp. 14, 17-18. News Farmer Coop., Reprint 2, Section B, U. 8. Dept. of Agr., Farmer Cooperative Service, Weshington. 19 pp. 29. FunderBurk, c. a. (1959) CPA's five approaches to director education. News Farmer Coop. 26(5):4, 18. 30. Gardner, K. B. (1958) Management services from F.S.C. Mews Farmer Coop. 24(10):12. 31. Gardner, K. B. (1959a) Management yardsticks. News Farmer Coop. 25(9):l9. 32. Gardner, K. B. (1959b) Progress report on our study of direc- tors. pp. 271—277. rican Coopgggtion, Am. Inst. of Coop., Washington 6, De Co to PP. 33. Garner, C. G. (1944) Making co—ops succeed. Ga. Agr. Ext. Bul. 498. 16 pp. 34. Gessner, A. L. (1958) Record of progress in self help. News Farmer Coop. 24(10)315, 28. 35. Gessner, A. L. (1960) Upward trend continues in dollar volume. News Farmer Coop. 27(1):6—7, 14~15. 36. Givens, J. E. (1957) The challenge to management in organisa- tion. pp. 19-24. American Coopggation, Am. Inst. of Coop., Washington 6, D. C. 737 pp. 37. Givens, J. E. (1958) Who's running things around here, and how? News Banner Coop. 25(4):8, 12. 38. Gray, A. W. (1960) Supreme court rules on issues of cooperatives and the antitrust laws. Am. Milk Rev. 22(6):55, 58. 39. 1.0. 1.1. 42. 1.3. 1.5. 1.6- 1.7. 1.8. 1.9. 50. 51. 102 Griffin, N. (1959) How one director keeps his records. News Farmer Coop. 26(9)310, 18. Griffin, N., H. H. Hulbert, and D. Volkin (1960) Director committees of farmer cooperatives. U. S. Dept. of Agr., Farmer Cooperative Service, Gen. Rept. 85. 26 pp. Griffin, N., H. N. weigsndt and x. B. Gardner (1955) Selecting and electing directors of farmer cooperatives. U. S. Dept. of Agr., Farmer Cooperative Service, Gen. Rept. 11.. 33 pp. Hardy, c. a. (1959) iModern.mana ement institute discusses policies. News Farmer Coop. 26 2):11, 20. Kenning, G. F. (191.5) Responsibilities of cooperatives. pp. 83-85. (bio Agr. Expt. Sta. Bimonthly Bul. 233. 86 pp. Row, R. B. ' (1950) The boards of directors of local milk market- ing cooperatives. Thesis for degree of Ph.D., Cornell Univer- sity, Ithaca, New York. (Unpublished). Rulbert, H. H. (1958a) Sane needs of farmer cooperatives. News Farmer Coop. 24(10):ll.. Hulbert, H. H. (1958b) Where do we go from here? pp. 151-155. Amgrifl Coogration, Am. Inst. of Coop., Washington 6, D. C. 755 pp. Rulbert, R. H. (1959a) Pacing financing in new ways. News Farmer Coop. 26(1):L, 17. Hulbert, H. H. (195%) Men in co—ops. News Farmer Coop. 25(9):l9-20. Rulhert, R. H. (1960) Meeting members' needs and wants. News Farmer Coop. 26(10):l.—-5, 25-26. Hulhert, H. H., D. Volkin and N. Griffin (1960) Erica pro- visions for selecting directors of major regional farmer co- operatives. U. S. Dept. of Agr., Farmer Cooperative Service, can. Rept. 78s ‘0 ppe Hulbert, L. s. (1957) —CapperbVolstead Act: Co-op Magna Charts but not special privilege. pp. 245-251. gricultural Coopera- tion, Selgcted Readiggg, M. A. Abrahamsen and C. L. Scroggs, ed. Univ. of Minnesota Press, Minneapolis. 576 pp. 52. 53. 51.. 55. 57. 58. 59. 60. 61. 62. 63. 64. 103 Irwin, M. P. (1960) Major responsibilities and functions of the board of directors. Abst. material presented at the Manage- ment Institute for Board of Directors, Michigan Association of Farmer Cooperatives. lensing, Michigan, Jan. 18, 19. Jaynes, M. C. (191.9) Handbook for directors of farmer coopera- tives. Tex. Agr. Ext. Bul. 170. 35 pp. Knapp, J. G. (1958a) Cooperatives-—tools for self help. News Farmer Coop. 24(10):3. Knapp, J. G. (1958b) Co-op musts: To set the pace. News Farmer Coop. 25(5):5. Roller, E. F. (1957) Cooperatives in a capitalistic economy. pp. 65-68. Aggicultml Coopggtion: Selecgg 3229.989 M. A. Abrahamsen and C. L. Scroggs, ed. Univ. of Minnesota Press, Minneapolis. 576 pp. lowrie A. W. (1958) Cooperative dynamics. News Farmer Coops. 25(2$:3. 12-13. Mace, L. M. (1948) _Th_e Board a; Director; in Snell Comogg. tions. Div. Pes., Grad. Sch. Bus. Adm. , Harvard University, Boston. 92 pp. Manuel, M. L. (1958) Cooperative mergers and research needs. Jour. Farm Econ. I.0(12):181.6-18L9. McBride, C. G., B. A. Wallace and C. W. Hammans (1926) Duties of members, directors, and managers of cooperative associap tions. mic Agr. Ext. Bul. 52. 15 pp. McKay, A. w. (1958) Now shout our new board. pp. 14-15, 26- 27. News Farmer Coop., Reprint 2, Section A, U. S. Dept. of Agr., Farmer Cooperative Service, Washington. 28 pp. . Meek, S. B., Jr. (1958) What it takes to be a good director. pp. 2, 15. News Farmer Coop., Reprint 2, Section B, U. S. Dept. of Agr., Farmer Cooperative Service, Washington. 19 pp. Miller, R. W. and A. L. Jensen (191.7) Failures of farmer co- operatives. Harv. Bus. Rev. 25(2):213-226. Mischler, R. J. end H. H. Hulbert (1956) Organising a farmer cooperative. U. S. Dept. of Agr., Farmer Cooperative Service Cir. 18. 29 pp. 65. 67. 72. 73. 7A. 75. 76. 104 Morrison, W. I. (1958) A director has many legal responsibili- ties. pp. 10-12. News Fhrmer Coop. Reprint 2, Section A, U. S. Dept. of Agr., Farmer Cooperative Service, thhington. 28 pp- Nelson, T. R. (1959a) Directors' responsibilities. pp. 278- 284. rican Coo ration, Am. Inst. of Coop., thhington 6, I)e Ce pp. Nelson, T. R. (1959b) Organizational planning to meet tomorb row‘s needs. pp. 25—34. ric Coopgration, Am. Inst. of Coop., Washington 6, D. C. pp. Nervik, 0. and R. Gunderson (1954) Financing cooperatives. S. D. Agr. Exp. Bul. 434. 31 pp. Nourse, E. G. (1957) The evolving idea of cooperation in the United States. pp. 58-62. Aggieultgga; Coogggtion: Selected ' Readipgs, M. A. Abrahamsen and C. L. Scroggs, ed. Univ. of Minnesota Press, Minneapolis. 576 pp. Regan, P. R. (1958) Effective co-o management vital in chang- ing times. News Farmer Coop. 25(9 :5, l6. Ranney, W. A. (1957) The lO-m's of cooperative management. pp. 13-18. American Coopgration, Am. Inst. of Coop., Washing- ton 6, D. C. 737 pp. Raper, L. E. (1956) Directors' responsibilities and opportuni- ties. p. 26. Ameriggp Cogpgration, Am. Inst. of Coop., Washington 6, D. c. 60/. pp. Ray, 0. M. (1951) Selection and responsibilities of cooperap tive directors. Thesis for degree of M.S., Purdue University, lefayette, Indiana. (Unpublished). Samuels, J. K. (1958) Meeting major co—op management problems. pp. 6-7, 16. News Farmer Coop., Reprint 2, Section B, U. S. Dept. of Agr., Farmer Cooperative Service, Washington. 19 pp. Sanzo, R. (1957) Ratio analysis for small business. Small Bus. Mgt. Ser. No. 20. U. s. Govt. Printing ore, Washington. 55 pp. Stokdyk, E. A. (1957) Co-op's economic objectives. pp. 68-73. Agricultural Cooperation: Selected Readings, M. A. Abrahamsen and C. L. Scroggs, ed. Univ. of Minnesota Press, Minneapolis. 576 pp. '78. '79. 80. 81. 83. 84,. E35. 86, 105 Swanton M. K. (1956) Director's opportunities and responsi- bilit es. pp. 27-29. _At_n:erican Cooperation, Am. Inst. of Coop., Washington 6, D. C. 601. pp. Svanton, M. K. (1959a) Reevaluation of cooperatives. News Farmer Coop. 26(9):1.. Sitanton, M. K. (1959b) Seek co-op statesmen for directors. News Farmer Coop. 26(3):1., 16. Ulrey, 0. and A. Rowland (1956) Cooperative and non-profit dairy associations in Michigan. Mich. Agr. Exp. Spec. fill. 404. 59 pp. U. S. Department of labor (1961) Monthly labor review. U. S. Dept. of labor, Bur. labor Stat. 84(2):207. Vennes, L. A. and W. C. Brinkley (1950) Farmer Cooperatives; some questions and answers on their formation, functions, or- ganization, and operations. Ky. Agr. Ext. Cir. 1.81.. 38 pp. Volkin, D. (1958) Policy formation via the balance sheet. News Farmer Coop. 25(6):3, 16—17. Volkin, D. and N. Griffin (1959) mnagement training among farmer cooperatives. U. S. Dept. of Agr., Farmer Cooperative Service, Gen. Rapt. 65. 81. pp. Volkin, D., N. 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Printing 0ff., Washington. 596 pp. Mischler, R. J. (1960) A co—op lawyer looks ahead. News Farmer Coop. 26(10):23. Nelson, T. H. (1958) Five essentials of programs in the midst of change. pp. 141-147. Aggriggg Cooperation, Am. Inst. of Coops., Washington 6, D. C. 755 pp. Phillips, R. (1953) Economic nature of the cooperative associap tion. Jour. Farm Econ. 35(1):74-87. Ranney, W. A. (1956) The man in management. pp. 373-381. American Coopgration, Am. Inst. of Coop., Washington 6, D. C. 604 pp. Ranney, W. A. (1957) Awareness and flexibility. pp. 424-426. American Coo eration, Am. Inst. of Coop., Washington 6, D. 0,. 737 PP - Rust, I. W. (1958) Should coops rotate directors? pp. 10—11. News Farmer Coop., Reprint 2, Section B, U. S. Dept. of Agr., Farmer Cooperative Service, Washington. 19 pp. Rust, 1. W. (1959) Need changed focus to reach members. News Farmer Coop. 25(10):21, 32. Rust, I. W. (1960) Strong member relations-prerequisite to success. News Farmer Coop. 26(10):5-6, 28. Searles, A., Jr. (1950) Monthly cost profit report for better dairy management. Milk Plant Mb. 39(3):?0-72. Severson, A. W. (1958) Coordinating our efforts to do a better job. pp. 148-150. American Coogeration, Am. Inst. of Coop., Washington 6, D. C. 755 pp. Sorenson, V. L. (1955) long range financial planning by local farmers' cooperatives. Mich. Agr. Expt. Spec. Bul. 398. 24 pp. 56. 5'7. 58. 59. 61. 62. 63. 64. 110 Stanton, B. (1959) Annual reports perennial problems. News Farmer Coop. 26(8):6-7, 18. Still, N. A. (1960) How to improve co-op image. News Farmer Coop. 26(12):6, 14-15. Svanton, M. K. (1958) Co-op directors honorary, ornery, or otherwise. pp. 156-160. American Cooperation, Am. Inst. of Coop., Washington 6, D. C. 755 pp. Volkin, D. (1960) Costs of lease financing versus direct debt financing...a closer look. News Farmer Coop. 27(1):8-9, 14. White, N. E. (1957) Management-decal cooperatives; intro- ductory statement. pp. 401-407. American Coopgmtion, Am. Inst. of Coop., Washington 6, D. C. 737 pp. Wilcox, F. R. (1957) The challenge to management in research. pp. 36-38. American Cooperation, Am. Inst. of Coop., Wash. ington 6, new We Wills, W. J. (1958) Meeting explores directors' duties. News Farmer Coop. 26(9):5, 14. Winters, S. R. (1928) Cooperative creamery organisation. Board '3 Dairyman 73(7) : 362-363 . Zeddies, M. D. (1957) The challenge to cooperative management in finance. pp. 28-35. American Cooperation, Am. Inst. of Coop., Washington 6, De Co 737 ppe APPENDIX 111 112 APPENDIX 1. Questionnaire PURPOSE of this study is to compile your present opinions on duties and responsibilities of Boards of Directors and Managers of dairy plant cooperatives. It is the goal of the study to summarize your opinions so to establish sound managerial recommendations which should assist directors and managements in dairy plant administra- tion. A DUTY is the expected tasks performed by a person to fulfill the de- mands of his job A RESPONSIBIIJTT'implies one is answerable or accountable for things or tasks that one person, or a group, has delegated to him. $1.... check who, in.your personal opinion, should be responsible for the following to have consistent, sound administrative practices in dairy cooperatives: MAJOR ORGANIZATIONAL RESPONSIBILITIES Board of no AND DUTIES Manager Directors Both Opinion To be sure the charter and bylaws are oboomd............ () () ()() To present amendments on the bylaws at annual meetings . . . . . . . ( ) ( ) ( ) ( ) To make contracts with bulk tank routedrivers.........o () () ()() To negotiate contract with realtor for the purchase of additional land.............. () () ()() To make the final decision to pur- chase additional land . . . . . . ( ) ( ) ( ) ( ) To initiate the ideas for expansion of the physical plant . . . . . . ( ) ( ) ( ) ( ) To make the final decision to ex- Mthoplanteeeeeeeee () () ()() To plan the expansion of the physi- calplant.............() () ()() To plan a lO-year'member adult edu- “tionpmgm eeeeeeeee () () ()() Tb decide on the adoption of a new adult education.program.. . . . . ( ) ( ) ( ) ( ) To review the marketing services performed for'members . . . . . . ( ) ( ) ( ) ( ) To decide to change marketing sore duswrfomeeeeeeeee () () ()() 113 APPENDIX I. (Continued) Board of No Manager Directors Both gainion To decide to merger with another pro- ductioncooperative........() () ()() To employ competent business consul- tantstoresolve major problems . . ( ) ( ) ( ) ( ) To secure an external accounting con- cern to perform the year-end audit ( ) ( ) ( ) ( ) To establish the cooperative 's growth goalsforthecoming5mrs () () ()() To decide the amount or number of re- volving fund certificates to re- tirein20years.........() () ()() To prepare the financial report for members....... ...... .() () ()() To plan the annual meeting of members ( ) ( ) ( To decide the amount of current earn- v A V ings to be distributed to members . ( ) ( ) ( ) ( ) To decide if non-members shall re- ceivsdividends..........() () ()() To decide to have a publication for ”br‘eeeeeeeeeeeeee() () ()() To decide to enlarge purchasing ser- ficoaformur'eeeeeeeee() () ()() To make the final decision to purchase washing compound for members . . . ( ) ( ) ( ) ( ) To review and change the cooperative's ObJOCtin'eeeeeeeeeeee() () ()() a To hire or dismiss a plant anployee other than manager or assistant wreeeeeeeeeeeeee() () ()() To specify the assistant manager's “$1.. 0 O O O O O O 0 O O O 0 0 ( ) ( ) ( ) ( ) To specify the duties of the em- ployee(s) operating a pasteuriser . ( ) ( ) ( ) ( ) To establish an employee evaluation pm‘m O O O O O I O O O O O O O O ( ) ( ) ( ) ( ) To conduct an usployee training pro- s". O O O O O O O O 0 O O O O O O ( ) ( ) ( ) ( ) To decide if employees provide their own plant clothing or if the co- opomtinmouldeeeeeeeee() () ()() To negotiate the labor union contract ( ) ( ) ( ) ( ) 114 APPENDIX I. (Continued) Board of No Manager Directors Both Opinion £1sassa= To select the cooperative's bank . . . ( ) ( ) ( ) ( ) Toobtainaloanfromthebank.... () () ()() To decide to set aside a financial re- serve for future expansion . . . . ( ) ( ) ( ) ( ) To decide to apply to the Bureau of Internal Revenue for income tax exemption . ........... . ( ) ( ) ( ) ( ) To plan the cooperative 's yearly bud- get . .............. . ( ) ( ) ( ) ( ) To accept the proposed yearly budget . ( ) ( ) ( ) ( ) mggction and M: To evaluate the monthly profit and 10.8 aument e e e e e eeeee ( ) ( ) ( ) ( ) To start a product development pro- gram . . ............. ( ) ( ) ( ) ( ) To change the product design or pack- age color . . ........... ( ) ( ) ( ) ( ) To make the final decision to purchase a new halogeniser . ...... . . ( ) ( ) ( ) ( ) To decide to increase or decrease the number of products manufactured and ”ldeeeeeeoeeeeeeee() () ()() To decide to adopt a new butterfat testingprocedure.........() () ()() To counsel a patron who consistently has a high bacterial count . . . . ( ) ( ) ( ) ( ) To review reorganization of responsi- bilities of the sales department . ( ) ( ) ( ) ( ) To decide to reorganize the sales de- partmsnt's responsibilities . . . . ( ) ( ) ( ) ( ) To execute the reorganization of the sales department's responsibilities ( ) ( ) ( ) ( ) Toplanasalescostanalysis .... () () ()() To evaluate the results of a sales costanalysisstudy........() () ()() To planasales promotion program . . ( ) ( ) ( ) ( ) To plan a market research program to determinepotentialsales.....() () ()() To set a five-year sales quota . . . . A V A V A v A V II" (lid-Ill“! lll.‘ . II It]: Jill-II All-ll) 115 APPENDIX 1. (Continued) ADDITIONAL REIEVANT IKFOIMATIOH Please check or reply to the following questions as you personally be- lieve they should be handled: Md the masher of board members vary with the size of the coopera- tive's membership? Ies __ No __ What masher would you recommend as the ideal size board? Number of directors on your present board Total membership of cooperative Gross sales per year 8 Pounds, gallons or units of Product sold per year What should be the maximum dollar expenditure by the manager without the Board of Director's approval Please list important duties and responsibilities for the Board of Directors not mentioned above. Please list an important manager's duties and responsibilities not mentioned above. 116 APPENDIX II. Introductory letter to directors MICHIGAN sum unmeasm East lensing Department of Food Science . Dairy Plant Mr. John Doe, President (or Secretary) Parmers' Cooperative Association Any Town, Michigan Dear Mr. Doe: What, in your opinion, are the specific duties the Board of Directors should perform to effectively direct its cooperative dairy plant? Tour enumeration of director's duties will be valuable to a study be- ing conducted to establish the general opinions of the duties of the Board of Directors of dairy plant cooperatives. The survey is impon tent because responsibilities between the manager and the Board are not at all times specific, which may cause inefficiencies in the plant operations. Your assistance will help establish specific reconnenda- tions for present Board members, and inexperienced new Board members, so they may serve more effectively. Please check or reply to questions on the attached sheets according to your m gpini g. This does not have to be consistent with the practice in your cooperative dairy plant, but should be indicative of an administrative practice which you believe will be most effec- tive. Feel assm'ed, Mr. Doe, the information which you provide will be used for research purposes, and handled in whatever degree of con- fidence you specify. Please enclose the answered questions in the return addressed en- velope by August 19. Your answers will be immediately compiled with others and made available if you wish. Cordially yours, Iee D. Adami Dairy Plant Management Michigan State University LDArmba Emc.:Question sheets Return addressed envelope 117 APPENDIX III. Introductory letter to managers MICHIGAN sun: surmsm East Lansing Department of Food Science . Dairy Plant Mr. John Doe, Manager Farmers ' Cooperative Association Any Town, Michigan Dear Mr. Doe: Usually new Board members of dairy plant cooperatives have little pre- vious business experience in dairy plant administration. Some regular directors have misconceptions of their duties. These deficiencies and the lack of defined areas of responsibilities between the Board and the hnager can cause misunderstandings and a decrease in the effec- tiveness of the plant Operations. Your suggestions for a study to establish specific duties of the Board members will be valuable. Summarised opinions will constitute recommendations for directors who can then execute their obligations without interferring with the manager's duties. The aim of the study is to increase the effectiveness of management and particularly in- crease the understanding and cooperation between the Board and their hunger. Please check or reply to questions on the attached sheets according to your pgrsonal opinion. This does not have to be consistent with the practice in your cooperative dairy plant, but should be indicative of an administrative practice which you believe would be most effec- tive. Feel assured, Mr. Doe, the information which you provide will be used for research purpose, and handled in whatever degree of con- fidence you specify. Please enclose the answered questions in the return addressed en- velope by August 19. Your answers will be immediately compiled with others and made available if you wish. Cordme yours, LeeD. Adami Dairy Plant Managmaent Michigan State University IDArmba he. :Question sheets Return addressed envelope 118 APPENDIX IV. First follow-up letter sent to managers MICHIGAN STATE UNIVERSITY East lensing Department of Food Science . Dairy Plant Mr. John Doe, Manager Farmers' Cooperative Association Any Town, Michigan Dear Mr. Doe: We have not received your reply to the recent questionnaire. But your reply is valuable, therefore, we would appreciate your im- mediate attention in checking the enclosed duplicate questionnaire and returning it in the addressed envelope by September 8. If you have returned the first questionnaire after August 25, please ignore this letter. A summary and results of the study will be available if you desire them. lee D. Adami Dairy Plant Management Michigan State university LDArmba Enc.:Questionnaire . Return addressed envelope 119 APPENDIX V. First follow-up letter sent to directors MICHIGAN STATE UNIVERSIT! East lensing Department of Food Science . Dairy Plant Mr. John Doe, President (or Secretary) Famers' Cooperative Association Arw Town, Michigan Dear Mr. Doe: Your knowledge of the duties and responsibilities the Board of Directors perform is too important to be overlooked in any valid research study. Probably because of vacations or the pressure of this busy time of the year your reply to the study being conducted to delineate the duties and responsibilities of the Board of Directors has not been received by August 25, so I have enclosed a second questionnaire. To emphasize as I did in the first letter, zgur M o inion, though not necessarily consistent with your cooperative's practices, will be valuable. Feel assured your suggestions will be used for re- search only and handled in whatever degree of confidence you specify. For your convenience enclose the checked questionnaire in the return addressed envelope by Septanber 8. As soon as the results have been compiled, you who have contributed will receive a reprint of my tabu- lated findings. Cordially yours, Lee D. Adami Dairy Plant Managemnt Michigan State University LDAmbe he. :Questionnaire Return addressed envelope 120 APPENDIX VI. Second follow-up letter MICHIGAN STATE UNIVERSITY East lensing Department of Food Science - Dairy Plant Mr. John Doe, Manager (President or Secretary) Farmers' Cooperative Association Any Town, Michigan Dear Mr. Doe: The absence of your answers to the recent question- nair sent you is detaining the completion of a study for cooperatives and delaying the progress of a required thesis project. Your opinions are needed, so we would appreciate your checking the enclosed duplicate questionnaire im- mediately and returning it to me by September 28. Cordially'yours, lee D. Adami Dairy Plant Management Nachigan State University lDAsmba Enc.:Questionnaire Return addressed envelope 121 APPENDIX VII. Third follow-up letter RICHIE“ STATE WIT! East lensing Department of Food Science - Dairy Plant Mr. John Doe, meager (President or Secretary) Pamers ' Cooperative Association in Town, Michigan Dear Mr. Doe: Your answers to the recent questionnaire sent to cooperative nanagenents is needed so that a complete over-all coverage of opinions is obtained of cooperative management's Job. However, you are one of the ten persons from whom I have not received answers. The lack of your answers has detained the completion of the study and the progress of a thesis project. We would ap- preciate your checking the enclosed duplicate questionnaire inediately. Please mail no your answers in the provided return addressed envelope or may I hear from you soon. Cordially yours, Lee D. Ada-i Dairy Plant Mamgsment Michigan State University Immba he. : Questionnaire Return addressed envelope 122 APPENDIX VIII. Raplies to questionnaire on duties sent to 25 managers t -..-... 1P“...— 7— I Managers ' replies é No ‘ 1" Board ; Both inion Questions ; Noj x 1' 301%! so] a: No 1 To be sure the charter and bylaws are , ; g s I 1 g Obufledeeeeeeeeeeeee 2‘8g41619g76 0’0 To present amendments on the bylaws at ; § ; E annualneetings.......... 2 8116;61. 728 0‘0 To make contracts with bulk tank route 5 i l f ; drivers e e e e e e e e e e e e e e 13 52: 3'12 5'20 4:16 To negotiate contract with realtor for i, F the purchase of additional land . . 7 23 I 6 24 n 1.1.: 1 1. To take the final decision to purchase 3 additional 18nd e e e e e e e e e e 0' o 19 76 5 20 1 I. To initiate the ideas for expansion of the physical plant . . . . . . . . 21i84 2 8 l 1.} 1 I. To make the final decision to expand . ' theplant............. 1420180 1.16! o‘o To plan the expansion of the physical ¥ ; plateeeeeeeeeeeeeee 14:56 010 93612‘8 To plan a lO-year member adult educa- i g f tionprogran ........... 6.2!. 1;]. 15603 3212 To decide on the adoption of a new - i g 1 adult education program . . . . . . 3312 7 5'28 1!. 56 l I. To review the marketing services per- i g l ; [ formedforthenenbers * 5}20;'8’32 111.1. 111. To decide to change marketing services 1 I I ; ”fiomOGeeeeeeeeeeeee 3;]2'10é401144 134 To decide to merger with another ; g . processing cooperative e e e e e e 1 [“15f60 8 32? 1' A To employ competent business consultants ; .: g . ‘ r to resolve major problems . . . . . 5 5'20‘ 7128 13 52 of 0 To secure an external accounting concern j ; ‘ ; to perform the year—end audit . . e ; 4‘16 ’ 11.; 56 7? 28 0' 0 To establish the cooperative's growth , ’ « j ‘ goals for the coming 5 years . . . j 6 2!. 2l 8 16; 6!. 1| 1. To decide the amount or number of re- ' ' i I volving fund certificates to retire ; l 2 mzoyearaeeeeeeeeeeee :312104011344 1". To prepare the financial report for t ‘ mhrseeeeeeeeeeeeee I2181s 2'8280 To plan the annual meeting of men:- I mmeeeeeeeeeeeeeee 832 62414400 Directors ' replies 123 APPENDIX VIII and [.5 directors of Michigan dairy processing cooperatives Combined replies Ti W ManagerT Board Both TOpizion ManagerT Board Both TOprnion 32:2T3215J“ NoJTJ'No-S 86.585.512.521 2T “.4 16 35 5 27T60. 0 0i 0 4% 5.7T20T28.5.46 65.7 0T 0 5T11.1'34T.75. 5 6T13. .3; 0T 0 .< 7T10.0 50T71.4 13 18.51 0: 0 , 29‘64.4 4T 8. 8 11 T24 4T1: 2.2 Ti 42 60.0 7 10.0.16 . 5; 7'1. 21,46.6 10T22. .2 14 31.1T 0T 0 T; T28T40.0,16T22.8T25 35. 7T 1T 1.4 : 1T 2.2 39T86.6. 5T11.1T 0: 0 T: 1 1.4T58_82. BT10 14.2 T 1; 1.4 g 31T68.8 0' 0 147'. 31. .1T 0f 0 :5 52 74.2 2 2. 8 i15T21 .4T 1T 1.4 T 0; 0 38 84.4 6 13. 3 1; 2.2 TT 1 1.4 58 82. 8 10i14.2‘ 1; 1.4 ‘ m3252T2425721T22T 3ou8 1123622 3V4.3 9T20.0 6 13.3 22 48.4 817.7 ' 15 21.4 7T10.0 37 52. 8 11 15.7 2T 4.4 2312521312266~ 8T17.7 T 5 7.1 30 42. 8 26 37.1 9 T.12 8 ; 17 37.7 8 17.7320344.4 0T 0 TT 22 31.4 T16T22. 8T31§T 44.2 1: 1.4 T 6T13. 3T 24 53.3 14:31.1 1; 2.2 i 9T12. 8 34T48. 5! 25635. 7 2' 2.8 T 1 2.2 29 64.4 14331.1! 1T 2.2 2 2 .8T44T& &.8T22331.4T 2} 2.8. ue66n26m6ay4680‘0 T 172.219mnp4w5'8 0! 18T40.0 17:37.7T10T 22.2 0 0 22 31.4T31 44.2T17 24.2 01 0 T 7 15.5 2 4.4T33l73.3 3 6.6 13 18.5T 4s 5.7T49 70.0 4 5.7 f T - T ' ; o o 25 55.5T20T44.4 o o 3 4.2T32 45.7 34 48.5 1 1.4 5 W8L21 2%61231 22 58$3T342 sun 114 7 15.5 5 11.1T 31 68.8 2 4.4 15 21.4T11115.7 42 60.0 2 2.8 APPENDIX VIII. (Continued) Mmagers' replies ' 2 No Lnaggr Beardl Both 1 Opinion Questions No $11.04 1 No; 1 N04 5 To decide the amount of current earn— T T ings to be distributed to members . O O .13 52 12 [.8 O 0 To decide if non-members shall receive . T ’ ' d171denio........o..o. 00T1872-28 520 To decide to have a publication for T u q ' 5 ubeuWHH... 3126241252 312 To decide to enlarge purchasing eer- T ‘ 9 T vicesfornenbers ......... 7:28T624,11?u471 I. To make the final decision to purchase T T a I ‘ washing compounds for where . . . 19 '76 3 12: 2f 8‘ l I. To review and change the cooperative 'e T ObJOCti-useeeeeeeeeeeee 14936156000 To hire or dismiss a plant employee ; ‘ other than manager or assistant . wreeeeeeeeeeeeee 24960014-00 To specify the assistant manager's I ‘ ant-1°. O O O O O O O O O O O O O O O 20 80 I 3 12‘ 2 8 O o 1 To specify the duties of the employee ‘ . , ' operating & ”Smut e e e e e e 23 92 0 OT 1 L 1 4 . To establish an employee evaluation T T ’ MEMeeeeeeeeeeeeee 21T8414T2T8T14 To conduct an employee training pro- ' T T . meeeeeeeeeeeeeeee 21T&00T2.'8'28 To decide if employees provide their T T . T own plant clothing or if the coop- , T ‘ T anti-0n Chould e e e e e e e e e e e lOTAO 7 28' 7T28' 1 ‘ 1'0 negotiate the labor union contract . 6121. 2 8; 14; 56 3 12 To select the cooperative's bank . . . 1T 4 11+ 56 1040' O O I. Chum C 10“ from th. M e e e e 1T 4 10 40 u 56 O 0 To decide to set aside a financial re- ; serve for future expansion . . . . . OT O 10 [.0 15 60. O 0 To decide to apply to the Bureau of T ; Internal Revenue for income tax T . T omption e e e e e e e e e e e e e 520 9 36 IOTLOT 1 4 1'0 plan the cooperative'e yearly budget 1!. 56 2 8 9T 36 O 0 9‘1‘0 accept the proposed yearly budget . 1 I. 19 76 AT 16 l I. To evaluate the monthly profit and less T ' .umenteeeeeeeeeeeee 62‘ 728113441‘. To start a product developent progra- ll [.4 3 12 10. [.0 l I. To change the package design or color . 16 64 l l. 128 l 4 f 125 APPEEDIX‘VIII. (Continued) Directora' replica E Combined replies ‘ E 3N0' E » THO: Manager Board: Both ‘LQpinion. , thgger Board Both Qp1niog¥ 3Ex§mixfm;%uo.$ minimzmxfi E 3 2E 4.4 27El' 60.0E15 33.3 IE 2.2 0E 0 :32 71.1E1124.4E 2E 4.1. E 4 8816‘35524533 1E 2.2 E ' "‘___.__:i“" . 2E 2. 8 40E 57.1 ET27E38.5 1; 1.4 E E 0E 0 E50E 71.4E 13E18. .5 710.0; 7E10. 0;? 22 :31°"E 37 52.8 4' 5.7 E 4E 8.8E12; 26. 6 27 60. 0 .2E 4.4 E 11E15. 7 18 25.7 38E54.2. 3‘ 4.2 1 2.2E11E24.4 31 68.8E 2! 4.4 2 2.8 20:28.5 46565.7E. 2' 2.8 1 l E E E E E . 3 . E f I E f E ; E I f : 43 95.5; 11 2.2 1 2. 2 0; 0 E 67 95.7 1; 1.41' 2E 2.8' 0 0 27 60.05 6E 13 3 11 24.21EE 2.2 E 47 67.1 9;12.8 13E18.5 1 1.4 43 . E 0E o 2 4.4E 0i 0 E 6694.2; 0E 0E 3E4.21‘1.4 . e ..i = 29 64.4E 3E 6.612 26.6; 1‘ 2.2 EE so 71.4E 4 5. 14E20.0 2! 2.8 36 80.0E 2; 4.4 6E13.3E 1 2.2 E 57 81.4' 2E 2. .BE 8E11.4 3E 4.2 I f ' , : f s * » I ‘ ' E V " ' E; E ' E 8E17.7E 17E 37.7‘ 1942.2: 1 2.2 E 18E25.7 24,342. 26E 37.1 2: 2.8 75.15 5 7 15.5: 29 64.4E 2 4.4 E 135 18.6 9 12.8E 43E61.4 5; 7.1 2 4.4E 30 66. 6‘ 13. 28 8‘. 0 0 E 3E 4.2 44 62.8 23E32.8 0; 0 3 6. 6E 22E 48.8E 20E44.4E' o 0 E 4 5.7 32 45.7 34E 48. 0; 0 . E z ? E 0: 0 25E 55.5 20E 44.4E 0 0 E of 0 35 50.0 35E 50 0E 0? 0 E . i : : 13E28.8 12. 26.6 16 35.5; I. 8.8 i 21‘ 30.0 18 25.7 26 37.1I 5' 7.1 2551.1 2E 4.4‘ 20 44.4 0 0 38E 54.2- 3 4.2 29 41.4? cl 0 ' 1’ 2.2 38E84.4. 5 11.1 1 2.2 2‘ 2.8 57 81.4 9 12.8. 2* 2.8. 8 17.7 16E 35.5 2044.4 1 2. 2 20.0 23 32.8 31 44.2; 2 2.8 ; 21 1.6.6 0; 0 2146.6 3 6.6 3 45.7 3 4.231442 4 5.7 126 . —-~-. -‘mE”-— —_"—-" ‘ F «...—..-”. APPENDIX VIII. (Continued) Menagers' replies No . Mans er Board Both (pinio 9,9“qu No x M x 1 To make the final decision to purchase a nevhonogenizer.......... 6241141. 728 1 To decide to increase or decrease the mnher of products manufactured and sold..............._101.0312121.80’0 To decide to adopt a new butterfat _ testingprocedure......... 1560 1!. 93600 To counsel a patron who consistently baamghbacumcomteeeee 2392 00 28 00 To review reorganization of responsi- bilities of the sales department . . 20 80 ,1 lo I. 16 O 0 To decide to reorganize the sales de- WMt'B responaibint198 e e e e 19 76 O O 6 24 O 0 To execute the reorganization of the sales departnent's responsibilities 21 81. 1 I. 2 8 1 I. . Toplanaula. coatmlyaise eeee 1976 O 0 520 1 A To evaluate the results of a sales ”atmIYSiBBt‘dyeeeeeeoe 1352 312 832 1‘ To plan a sales promotion program . . . 18 72 1 I. l. 16 2 8 To plan a market research program to deteminepotentialsales..... 11.56 00 832 312 Tosetafive-yearsalesquota .... 1144 14 936 416 LPPENDIX'VIII. (Continued) Directora' replies 127 Combined replies No No : Mangger Board Both Opinion Hana or Board Both Opinionf "iaznaxmznax 338.336.5383; , . '7 0 0 36 80.0 920.01 0 0 6 8.5 1.7 67.1 16 22.3 1 1.1.: 1. 8.81022.2 3066.6 1 2.2 1420.013185’42 60.0 1 1.2.5 15 33.3 715.5 20 44.1. 3 6.6 30 1.2.8 811429418 3 4.2 4293.3 0 0 2 4.1. 1‘2.2 65 92.3 0 0 t. 5.7 1 1.4 28 62.2 2 (”41431.1 1 2.2 4868.5 3 4.2 18 25.7 1 1.1 1840.0 715.51942.2 1 2.2 3752.8 710.0|25 35.7 1 1.1. 3168.3 3 6.6 715.5 I. 8.3 52 74.2 4 5.719128 5 7.1 511.1 817.7296“. 3 6.6 13 25.71115.7371528 I. 5.7 21 1.6.6 0 0 20 1.4.1. I. 8.3 3955.7 1 1.1.21. 34.2 6 8.5 23 51.1 1 2.2 19 1.2.2 2 4.1. 37 52.8 1 1.1. 27 38.5 5 7.1 10 22.2 2 4.429644 1. 8.8 2130.0 3 4.2 38 54.2 811.1‘ 11 128 APPENDIX II. Selected sources of information for members, directors and Lmanagers Professional and Trade Associations: American fitter Institute. 110 North Franklin Street. Chicago 6, Illinois American Dairy Association of Michigan. 3000 Vine Street. Lansing, Michigan American Dairy Science Association. 32 Ridgevay Circle. White Plains, Nev York American Dry Milk Institute, Inc. 221 North IaSalle Street. Chicago 1, Illinois American Cottage Cheese Institute. Post Office Box 393. Ithaca, New York American Institute of Cooperation. 1616 B Street, NJ. "Camuston 6' De Ce American Public Health Association. 1790 Broadway. New York, New York . Cooperative league of the U.S.A. 31.3 South Dearborn. Chicago, Illinois Dairy Industries Supply Association, Inc. 111.5 19th Street, NJ. Washington 6, D. C. Dairy Products Improvement Institute, Inc. 302 East State Street. Ithaca, New York Evaporated Milk Association. 228 North IaSa11e Street. Chicago 1, Illinois Food and Allied Industries Division of the American Society for Quality Control. Tentative Address: he Goodwin Tarver, Continental Can Company, Inc. 1350 West 76th Street, Chicago 20, Illinois International Association of Ice Cream Manufacturers. 1105 Barr Building. Washington 6, D. C. Michigan Association of Farmer Cooperatives. 4000 North Grand River Avenue. Iansing, Michigan 129 APPENDIX IX. (Continued) Michigan Dairy Products Association. 3030 Vine Street. lensing, Michigan Mil: Industry Foundation. 111.5 19th Street, NJ. Washington , D. 0. National Council of Farmer Cooperatives. 71.1. Jackson Place, NJI. Washington 6, D. C. National Dairy Council. 111 North Canal Street. Chicago, Illinois National Milk Producers Federation. 1731 Eye Street, NJ. Mashington 6, D. C. Periodicals: American Milk Review. Monthly. Urner-Barry (b. 92 Warren Stmte kw York 7, k" York Agricultural Marketing. Monthly. Agricultural Phrketing Service. Superintendent of Documents. Government Print- ing Office. washington 25, D. C. Cooperative Digest. Monthly. Roy N. Park, Inc. East State Street. Ithaca, New York Dairy Record. weekly. 396 Minneapolis Street. St. Paul, Minnesota Dairy-en's Price Reporter. Manthly. The Dairyman Cooperative Sales Association. The Dodge Publishing Compaq, Inc. 1023 East State Street. Salem, mic Dun's Review and Modern Industry. Monthly. Dun and Bradstreet Publications Corp. 300 West Adams Street. Chicago, Illinois Food Business. Monthly. Putnan Publishing Compaxw. 111 East Delaware Place. Chicago 11, Illinois Food Engineering. Monthly. Chilton Company. Chestnut and 56th Streets . Philadelphia 39 , Pennsylvania Food Processing. Monthly. Putman Publishing Company. 111 East Delaware Place. Chicago 11, Illinois 130 APPENDIX :1. (Continued) Ice Cream Field. Monthly. Ice Cream Field Publishing Co. , Inc. 3110 Elm Avenue. Baltimore 11, Maryland Ice Cream Review. Monthly. The Olsen Publishing Company. 1445 North 5th at West Cherry. Milwaukee 12, Wisconsin Inter-State Milk Producers lbview. Monthly. Inter-State Milk Producers' Cooperative, Inc. Philadelphia 8, Pennsylvania Milk Dealer. Monthly. The Olsen Publishing Company. 1445 North 5th at West Cherry. Milwaukee 12, Wisconsin Milk Distributors Sales and Costs. Quarterly, Agric‘fltuml Marketing Service. U. S. Department of Agriculture. Washington 25, D. C. Milk Product Journal. Monthly. The Olsen Publishing Company. 1445 North 5th at West Cherry. Milwaukee 12, Wisconsin Nation's Easiness. Monthly. 1615 H Street, N.W. Washington 6, D. C. News for Farmer Cooperatives. Monthly. Farmer Cooperative Service. I]. S. Department of Agriculture. Washington 25, D. 0. Sales Management. First and Third Friday of every month. Bill Brothers Publications Corporation. 630 3rd Avenue. New York 17, New York St. Paul Bank for Cooperatives' News. Monthly. Farm Credit M8 or Ste P3111. Ste Paul 1, Mimmta Aids in Economic Forecasting Agricultural Outlook Digest. Agricultural Marketing Service. 0. S. Department of Agriculture. Washington 25, D. C. Dairy Situation. Agricultural Marketing Service. U. S. Department of Agriculture. Washington 25, D. C. Fem Business Service. National Agricultural Research, Inc. 1616 B Street, N.W. Washington 6, D. C. 131 APPENDIX IX. (Continued) Kipplinger Agricultural letter. 1729 H Street, N.W. Washing- ton 6, D. C. Letter from American Institute of Cooperation. 1616 N Street, N.W. Washington 6, D. 0. Consultants Dr. A. B. Bayer. Consultant to the Dairy Industry. Wendell Avenue . Schenectady, New York Cooperative Extension Service. College of Agriculture. Michigan State University. East lensing, Michigan Edward B. McClain. Accounting Consultants to the Milk In- dustry. Post Office Box 5921. 11 North Montgonery Street. Memphis, Tennessee Farmer Cooperative Service. U. S. Department of Agriculture. Washington 25, D. C. ' G. P. Gundlach and Compaq. 1201-1207 West Eighth Street. Post Office Box A. Cincinnati 3, (bio Michigan Association of Farmer Cooperatives. 4000 North Grand River Avenue. Iansing, Michigan Paul Potter and Associates. Deerfield, Illinois Ramsey laboratories. Cleveland 4, (bio W. M. Sprinkman Corporation. 4975 North Santa Monica Boulevard. Milwaukee 17, Wisconsin Dairy Technological Societies Central Michigan Technological Society. Mr. J. L. Jensen, Secretary. Food Science Department, Michigan State Uni- versity. East lensing, Michigan Detroit Technological Society. Dr. L. 0. Hanson, Secretary. Food Science Department, Michigan State University. East lensing, Michigan 132 APPENDIX 11. (Continued) Western Michigan Technological Society. Mr. D. L. Murray, Secretary. Dairy Department, Michigan State University. East lensing, Michigan Newspapers local newspapers Barron's National Business and Financial Weekly. Barron Publishing Co. , Inc. 388 Newbury Street. Boston 15, Mssachusetts The Journal of Cmmerce. Twin Coast Newspapers, Inc. 80 Varick Street. New York 13, New York The Wall Street Journal. Dow Jones and Compaq, Inc. 711 West Monroe Street. Chicago 90, Illinois Annual Conferences in the State Michigan Association of Famer Cooperatives' Annual Meeting in conjunction with St. Paul Bank for Cooperatives Agricultural Marketing Clinic. Held in the month of March. Sponsor: Agricultural Economics Department, Michigan State University, East Lansing, Michigan National Dairy Engineering Conference. Held in the month of February. Sponsors: Agricultural Engineering and Food Science Department, Michigan State University, East Lansing, Michigan Dairy Marmfacturing Conference. Held in the month of November. Sponsor: Food Science Department, Michigan State University, East lensing, Michigan Farmer Cooperative Service Publications Estimating the "Market Value" of a Milk Distributing Elsiness. D. E. Hirsch. U. S. Dept. of Agr., Farmer Cooperative Service Gen. Rept. 3. April, 1951.. 36 pp. 133 APPENDIX IX. (Contimled) Selling Milk Ideas for Cooperative Managements. D. B. Hirsch. U. S. Dept. of Agr., Farmer Cooperative Service Gen. Rept. 20s OCDO'bor, 19550 44 PP. Farmer Cooperatives in the United States. U. S. Dept. of Agr., Famer Cooperative Service Bul. 1. December, 1955. 252 pp. Meeting Seasonal Problems of Dairy Cooperative Through Educa- tion. S. F. Krause. U. S. Dept. of Agr., Farmer Coopera- tive Service Bul. 9. June, 1956. 42 pp. hployee Incentive Plans in Famer Cooperatives. U. S. Dept. of Agr., Famer Cooperative Service Gen. Rept. 62. June, 1959. 33 PP. legal Phases of Farmer Cooperatives. L. S. Mulbert and R. J. Mildllor. Us Se Mte or me, tamer coopmtiv. $1.710. Me 10s mus“, Jam”, 1958. 376 pp. Revolving Fund Method of Financing Farmer Cooperatives. H. H. mutt, N. Griffin, Ks Be mrdmre Us Se Dept. Of Agr., Farmer Cooperative Service Gen. Rept. 41. lurch, 1958. 60pp. Seasonal Milk Pricing Plans. S. F. Krause. U. 3. Dept. of Agr., firmer Cooperative Service Bul. 12. November, 1958. Farmer Co-op Publications: List of Magazines, Newspapers and Newsletters. U. S. Dept. of Agr., Famer Cooperative Service Information 9. June, 1958. 98 pp. Multiquart Containers—Their Significance in Dairy Coopera- tives. W. J. Monroe. U. S. Dept. of Agr., Farmer Co- operative Service Gen. Rept. 54. January, 1959. 16 pp. Grade A Milk Marketing by Manufacturing Co-ops. Findings in Minnesota, Wisconsin, and Iowa. D. R. Davidson. U. 8. Dept. of Agr., Famer Cooperative Service Gen. Rept. 56. May, 1959. 1.6 pp. Integrated Dairy Operations Through Farmer Cooperatives. A. L. Gessner. U. S. Dept. of Agr., Farmer Cooperative Service Gen. Rept. 69. November, 1959. 39 pp. 131. APPENDIX 11!. (Continued) Number of Full-time Enployees of Famer Cooperatives. N. Griffin. U. S. Dept. of Agr., Farmer Cooperative Service Gen. Rept. 73. January, 1960. 21 pp. Statistics of Famer Cooperatives, 1957-58. A. L. Gessner. U. S. Dept. of Agr., Famer Cooperative Service Gen. lbpt. 76. June, 1960. 83 pp. Milk Receiving Costs During Shift from Gen to 311k. J. B. Roof. U. S. Dept. of Agr., Farmer Cooperative Service Gen. Rept. 77. July, 1960. 27 pp. List of Publications. R. A. Esposito. U. S. Dept. of Agr., Farmer Cooperative Service Information 1.. Revised July, 1960. 73 pp. Mbership Practices of local Cooperatives. O. R. leBeau. U. 3. Dept. of Agr., Famer Cooperative Service Gen. Rept. 81. July, 1960. 26 pp. Bylaw Provisions for Selecting Directors of Major Regional Farmer Cooperative. H. H. Hulhert, D. Volkin, N. Griffin. U. S. Dept. of Agr., Farmer Cooperative Service Gen. Rept. 78. July, 1960. 40 pp. Directors of Regional Famer Cooperatives—Selection, Duties malifications, Performance. D. Volkin, N. Griffin, and H. N. Rulbert. U. S. Dept. of Agr., Famer Cooperative Service Gen. Rept. 83. August, 1960. 40 pp. Director Committees of Farmer Cooperatives. N. Griffin, H. B. Hulbert, and D. Volkin. U. 8. Dept. of Agr., Farmer Cooperative Service Gen. Rept. 85. November, 1960. 26 pp. R025!) 115?. 03‘.“ ’3 ' 7"? a— .. - ,. _‘_,_._ 5' _.i .. 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