Cooperatives are vital entities to the Canadian economy. There are over 9,000 cooperative organizations serving 18 million Canadians in the country, with the majority in the province of Québec. Desjardins, a group of financial companies in Québec, defines a cooperative as “a group of people who get together to meet their own needs at the lowest possible cost by forming a group where power is exercised democratically.” Canadian cooperatives provide a wide variety of products and services to members, including work opportunities in production and manufacturing; groceries and other goods; products and services for farmers; apartments and other forms of housing; child care; and banking, insurance, or investment services.

Cooperatives are similar in business organization to corporations in that they have limited liability, unlimited lifespan, managerial and administrative staff, and an elected board of directors. However, they are different in that they provide different kinds of opportunities to members, and they have a different voting structure and a unique philosophy. At annual meetings of cooperatives, voting takes place on the basis of one member, one vote rather than on the basis of the number of shares owned. Many cooperatives offer employment to their members and directors, and financial returns to members based on the work that they perform for the organization. The philosophy of cooperatives is different from most corporations since cooperatives are rooted in the idea of continuous service to their members, not just wealth accumulation. Monique Leroux has been Chair of the Board and CEO of the Desjardins Financial Group, one of Québec’s most powerful cooperative organizations, since 2008. She explains, “Our purpose is not growth for the sake of growth, or to drive up the share price; it’s to provide long-term benefits to members.”

The Desjardins Financial Group is the sixth largest deposit institution in Canada. It is a web of caisse de dépôt et placement (people’s banks); credit unions; and insurance, mortgage, and investment companies. A recent evaluation showed Desjardins to have $191 billion in overall assets, $13.2 billion in annual revenue, and 5.6 million members in Québec alone. It engages in substantial profit sharing with Québec communities, particularly students. Canadian Business recognized the firm, Québec’s largest private employer, as one of Canada’s best places to work, particularly because of a low-stress, yet productive, environment. Bloomberg Finance rated Desjardins as the second strongest bank in the world.

Why has this financial company performed so well in Québec? Part of the explanation lies in the Québec banking environment, which has been friendly to cooperative banking since Alphonse Desjardins established the first credit union over 100 years ago. But a major explanation for today’s successes lies in the drive, passion, and philosophy of Monique Leroux. Since the financial crisis of 2008–09, she has worked with her associates to create what has become a “slow growth” plan for acquisitions in Canada and alliances overseas. Leroux is a consultative innovator. She met with over 2,000 of her stakeholders to discuss expansion of the firm across Canada. Ninety percent of the stakeholders agreed with her. The expansion started with a 2011 acquisition of Calgary-based Western Financial Group. She then developed an agreement with France’s Crédit Mutuel, through which the two groups will represent each other’s interests in the other country, and work on developing new technologies. Recently, Desjardins acquired the Canadian operations of State Farm, with Desjardins Group becoming the second largest property and casualty insurer in Canada. Leroux describes her kind of preferred growth as “slow, sure, and seeking partnerships.” In 2008, she refused to join some of the Canadian chartered banks in investing in risky asset-backed commercial paper investments such as sub-prime mortgages, which wiped out the assets of a group of U.S. banks.

Another explanation for Leroux’s success lies in her willingness to connect directly with her officers and employees on a regular basis, sometimes on Skype. She believes that being able to speak with the CEO is a positive and motivating experience for many employees.

Leroux thinks that capitalist institutions are creating too much inequality in democratic societies. A recent Oxfam survey of wealth around the world showed that in 2016, 1 percent of the earth’s population will have more wealth than the other 99 percent. A Canadian Business study showed that the average CEO in Canada was paid $9.2 million in 2014. One CEO, Nadir Mohammed at Rogers, was paid $23.8 million. Leroux thinks that people need to be better educated on economic issues in democratic societies. “A business is not just to make a profit; it is there to bring value to society,” she says.

QUESTION:

1. What are some of the aspects of the Desjardins “slow growth” strategy, developed by CEO Monique Leroux for the organization?