Performance and pay reviews are rarely anyone’s favorite conversation. In cooperatives, they carry even more weight.
These talks aren’t just about money or results. They’re about accountability to member-owners, fairness to the community, and keeping the cooperative strong for the long run.
So how can boards and compensation committees approach them? These four practices make the biggest difference.
4 Ways Co-op Boards Impact Executive Performance and Pay
1. Keep Co-op Strategy and Mission Front and Center
Executive performance should be measured by how well leaders advance the co-op’s mission related to: growth, member value, financial stability, culture, and sustainability. Profit is part of the picture, but in cooperatives, success also means strong communities and lasting member value.
2. Use Balanced Measures of Performance
Financial results matter, but so do member satisfaction, employee engagement, succession planning, and community impact. Evaluating both hard numbers and cooperative values keeps the focus on what makes co-ops distinct.
3. Be Fair, Competitive and Transparent about Pay
Compensation must strike a balance. It’s got to be competitive enough to retain strong leaders but also reasonable in the eyes of member-owners. Clear benchmarking, strong documentation, and open communication about pay philosophy build the trust that cooperative leadership depends on.
4. Plan for the Future, While Protecting the Present
Boards should review how executives are developing future leaders and managing risk. Short-term performance is important, but so is planning for the future and managing long-term risk. Incentives should reward smart decisions that balance opportunity with stability, ensuring the cooperative is built to last.
How to Measure these Elements
Each cooperative is different in nature; however, there are key elements that are critical to performance success that can be measured. Below is a chart that provides examples of key metrics to include in goal setting and as a basis for compensation decisions for executives in your cooperative.
Example Executive Goals and Metrics
Why it Matters
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Member Accountability: Executives answer to member-elected boards, not outside investors. That calls for alignment with member priorities.
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Community Expectations: Co-ops are rooted in local economies. Pay that feels excessive can quickly erode trust.
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Long-term Focus: Knowing business cycles, co-ops can and should reward leaders for thinking generationally.
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Cultural Fit: Fairness, collaboration, and service are core cooperative values. Pay should reinforce, not undermine, that culture.
Bottom line: For cooperatives, performance and pay decisions are about steering with balance and integrity. When boards tie compensation to strategy, member trust, and long-term health, they keep the ship steady — ensuring progress for generations of member-owners.
Foundations Consulting provides executive compensation and performance management consulting to support your specific goals. Reach out to Beth Ostrem or Amy Ryan for more information.
