3.4.3.2 Stakeholders as decision-makers in the examined CICs

The board of directors of Breadshare was found to comprise four members, i.e. a founding member, a business development manager, an operations manager, and a volunteer coordinator who was also the education and network development officer. In the past, the board of directors comprised a larger body of seven or eight members. The current board members had an overlapping role at Breadshare as employees and thus operational managers. The management of the organisation also included a ‘quality and training manager’ who in the past served as a member of the board. As one interviewee said, ‘we tend to invite people who are involved from the community to be directors’ (A interview, 19 February 2016). The standard selection of the board members was based on the criteria of an active involvement in the company’s affairs, a constant participation and commitment in operations and an understanding of the ‘ethos’ that the company represents (B interview, 19 February 2016). The office of the director was a voluntary appointment at Breadshare. However, the four identified board members were also employed by the organisation.

In the case of Breadshare, there was no representative participation of community stakeholder groups in the decision-making processes, such as those undertaken in the general meeting or in the board of directors, for instance. Scholarship claims that community representative participation requires a ‘legitimate selection and training to build the capacities of beneficiaries to contribute to board deliberations’.1 However, Breadshare selected its board members from a broader stakeholder basis but on grounds, which were more related to performance, i.e. their active engagement and commitment in the company’s daily business affairs.

Although the majority of the board members were selected from a broader stakeholder basis following a stakeholder theory approach, community representation never took place in Breadshare.2 Breadshare strived to ‘achieve a balance’ between members who were experts and persons stemming from the stakeholder base. An interviewee mentioned that:

Indeed, as Breadshare grew and its entrepreneurial activities expanded, it sought financial sustainability through commercial and market activities, and entrepreneurial expertise became imperative in the CIC’s decision-making.

It is therefore understood, as Mason et al. and Low, have validly hypothesised,3 that there was a change of philosophy in the mind-set of Breadshare’s decision-makers. The change of philosophy in governance most likely resulted in the impulse of Breadshare’s decision-makers to seek business experts, i.e. following a stewardship governance model, rather than seeking representatives from the stakeholder basis, i.e. following a stakeholder and/or democratic model. An alternative was to seek persons who can combine both characteristics.

Additionally, the board meetings of Breadshare were private and their content was only known amongst the board members. They took place every four to six weeks and its composition varied in terms of membership over the years. For the meetings, the board members developed a standard agenda (C interview, 10 February 2016). Each director reported on specific core objectives against the overall performance of the CIC (C interview, 10 February 2016). No third parties or community representatives were invited to attend and to participate informally in the board meetings. Elaborating on the results of the decision- making powers awarded to third parties, one employee stated that ‘I think the strategic decisions should remain with the board. This is because everyone has an opinion concerning what it should be done. I think the risk to Breadshare is that everyone, anyone, can sort of decide’ (B interview, 19 February 2016). Neither the decisions made nor the meeting minutes were published or distributed amongst the CIC members. Where decisions involved employees, the board produced explanatory documents for all employees to understand why the decisions were made and how they were made in practice (A interview, 19 February 2016).

The board of directors of GTS Solutions comprised three directors. Government regulations stipulated a mandatory requirement for the selection of board members, namely that they have expertise in the security industry. The decision- making power was concentrated in the hands of the Director of Operations who had various overlapping roles in the organisation, i.e. as the CEO, the active shareholder and the founder of the social enterprise.

The active shareholder selected the other two directors, i.e. a legal expert and a financial expert, based on their expertise. Other than their expertise, the selection of the board members was based on their skill set and/or whether they had an acute interest and innovative outlook.

The foregoing characteristics demonstrated that the board of directors was most likely to apply the stewardship model in the governance of GTS Solutions. The decision-makers were selected based on their expertise for bringing value to decision-making. They were also selected to increase the company’s performance. They thereby acted more as trustful partners of the active shareholder rather than agents of the active shareholder or representatives of the stakeholders.4 Additionally, the board received advice of seven external advisors who were permitted to attend the board meetings but not to participate in voting. However, none of the advisors were stakeholders nor were they a community representative. They were all professionals who offered consulting and advice regarding the company’s affairs to the company’s active shareholder upon request. The board meetings were monthly and private. Stakeholders were allowed to attend board meetings only by invitation. The board meetings’ minutes were then produced and distributed among the board members. The decision-making process in the board meetings comprised a constructive dialogue with agreements and disagreements between the board members and the advisors. As one interviewee mentioned that ‘as the Director of Operations and CEO myself, I am there to oversee the day-to-day running, (…) the rest of the guys on the board they are experts in their own right and they will say yes you can do that, no you can’t do that and this is the reason why’ (E interview, 18 February 2016).

Other than the active shareholder who maintained his main decision-making power, it is apparent that the other board members and external advisors had mainly a counselling role in the decision-making processes of the board. Considering that the control and the decision-making power of the organisation were concentrated mainly in the hands of one person, it was in the active shareholder’s discretion to encourage participatory governance to (community) stakeholders. The discretion of the governing bodies to provide formal or informal participation opportunities to stakeholders is noted in scholarship regarding both the participatory governance of the CIC and of social enterprises in general.5