Management Of Co-Operatives


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PRACTICE OF MANAGEMENT IN COOPERATIVES

It's only when you drive it away from the forecourt that you realise you've never driven a car before and never had any proper lessons. Trying to manage a co-operative without members possessing co-operative skills can be like trying to drive a car without ever learning to drive — with the added complication of several of you trying to drive at once. Co-operative skills could be described as the understanding of how to work effectively with other people on an equal basis towards commonly held aims and objectives.

Legal structures and governance systems used by co-operatives are a technology. Like all technologies, you need to understand it to be able to use it effectively. I've heard people dismiss this approach, saying that it is just a governance issue and that the rules or articles of association are the "manual" but even the best governance framework or member handbook may not unlock the base level skills needed to interact with other people to achieve mutual benefit and put the "manual" into practice. Some technology — such as a smartphone — is iterative and application can be learned by experience or through use.

Like using a smartphone, co-operative skills can be learned through trial and error — and co-operating is a natural human behaviour with psychological and emotional benefits. The problem we face is that a certain amount of "relearning" may be required. People are taught at school to compete, have hierarchical approaches to work and management imposed on them, and in the schoolyard or workplace they have been taught to use power play to achieve individual success at all costs over mutual benefit.

A building block for all co-operative skills.

Cooperative Management

Again, the objectives for cooperative organizations differ form each other. Co-operative processing units like co- operative sugar factories, fertilizer units, rice mills, etc are run applying all modern management techniques. They naturally undertake all the functions of management.

For them planning has no significance in their working as they undertake the same function in a routine manner. Immediate objectives of co-operatives are laid down in their by-laws. These objectives in majority of the cases are uniform to a particular type of co-operative societies.

As the societies follow the model by laws during their registration, number of societies of a particular type follow uniform objectives. Though provision is there to amend the by- laws, very few co-operatives attempt to amend their by-laws. For examples, a village credit cooperative society has the objective of disbursing credit and undertaking non- credit services. These objectives are uniform for all credit societies in a state.

Some of the objectives laid down in the by-laws are not implemented at all. Though encouragement of thrift and self-help is considered as an important objective of a credit society, societies rarely encourage or attempt to achieve this objective. In addition to the objectives laid down in their by-laws, they frame practical objectives to face the changing environment.

They involve their managers and sectional heads for such activities. The Board of Directors takes the initiative for working out the plans. Ultimate Objectives: Ultimate objectives of co-operatives are long term objectives and they are not decided like immediate objectives. Achieving the immediate objectives may lead to the achieving of ultimate objectives. Ultimate objectives are a social process and they are intended to form part of social reform. These objectives are not confined to a particular co-operative.

The ultimate objectives are to be implemented by all co- operatives. These objectives are elimination of poverty and backwardness, avoiding exploitation in the society, ensuring social and economic justice bridging the gap between the rich and the poor. To achieve these ultimate objectives co-operatives follow the principles of co-operation laid down by the International co-operative Alliance as guidelines. These goals are to be achieved by joint effort undertaken by all types of co- operatives and by embracing the principle of co-operation among co-operatives.

Decision Making in Cooperatives Decision making stage is an important aspect of the process of planning. After deciding the alternative courses, the management has to choose a right course of action to achieve the goals. There are two aspects of decision making in the co-operatives. The role of the Board of Directors 2.

What Is The Cooperative Management?

The role of the external agencies. The Role of the Board: In a co-operative organization the Board takes the decision on behalf of its members. The chief executive representing the professional management is also taking part in the process of decision making. The chief executive must give alternatives to a plan and must place needed information before the Board. The Board takes the responsibility for the success or otherwise of a decision. It assigns necessary power to the chief executive and directs him towards the achievement of goal.

Another feature of co-operative institutions is that the federal structures for various co-operatives have been organized. The lower units of the federal structure are supervised by the apex societies and thereby they control the lower units. The above said agencies greatly influence the policies of co-operatives. Hence planning in an individual society is decided by weighing the controls, suggestions and policies given by the external agencies. In other words any internal plan of a co- operative society is influenced by external factors and the total plan must be based weighing these factors.

It is the same case with the decision making which is an important process of planning. In respect of reorganization and revitalization of primary agricultural credit societies an element of compulsion had been introduced. In very many case the Registrar imposes amendments to the by laws of various types of societies. Central Bank of the country and the monetary authority of the nation have statutory controls over co- operative banks. Policies and decisions relating to the rates of interest lending policies, repayment procedure, etc must be approved by it.

It used to give directions to co- operative banks which certainly influence the decision making process. In other words, decision making is thrusted over co-operatives in very many occasions. After the planning function of management is completed, objectives are established.

Central Management of All Cooperatives

To achieve these objectives the tasks are identified through the functions of organizations. Principles of Organization: Co-operatives which are different from other private enterprises must organize things differently to achieve the objective. Howard laid down the following principles of organization for co-operative. The work to be done set out in the objective of the plan, is analyzed and the specific tasks to be performed are identified and grouped.


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The numbers and kinds of position which will be needed are determined. An organizational chart is prepared, providing for maximum co-ordination of position and effective communication witin organizational structure. An objective is written for each position on the organization chart and in a few words the main purpose of the position why it exists on the chart is stated. Responsibilities and corresponding authority for each position are clearly written.

The span of control of each supervisory position is established to ensure that each such position has responsibility for an appropriate number of key result areas. It is to be noted that span of control refers to the number of key result areas for each for which a supervisor is responsible, and not the number of persons reporting to a supervisor. Unity of command is maintained, by ensuring that a person is not held accountable to more than one supervisor in the same key result area.

An employee, however may be accountable to two supervisors, if they are in different key result areas. Power of authority is to be decentralized in order to achieve the objectives and to reach the goal. One of the preconditions for the successful decentralization of authority is the availability of trained managers. Co-operatives are still searching to employ qualified and trained personnel.

Co-operative leaders lack knowledge relating to the scientific. They have a fear that sharing of authority with the professional management may undermine their importance. They want the chief executive to consult the president for each and very petty-things. This trend is widely prevalent in small co- operatives. Hence, an important factor in the decentralization of authority in co- operatives is the leadership and the attitude of the leaders to share authority. On the other hand, another extreme is prevalent in some co-operatives where directors and other leaders are not educated or enlightened about the management principles, the professional management exploits their ignorance and in very many cases misguides the leaders.

All the management functions starting from planning are undertaken by the professional management and they are approved by the Board because the directors are ignorant of the working of their co-operative so they not only decentralized authority completely but surrender themselves to the professional management. This trend should not be allowed to persist. As the processing co-operatives and consumer stores like super markets are employing skilled personnel, the decentralization of authority and delegation of power has not been a problem.

They are business organization run to compete with private organizations. The co-operative leaders share authority with their professional managers. Organizational Structure of a Co-operative The organizational structure of a co-operative is in a pyramidal form. The members who exercise the ultimate power stand at the top of the organization. They exercise their power through the general body which is convened whenever called by them.

These members elect the directors and make the Board of directors to act on behalf of them. The board of Directors frames the objectives of co-operative and lay down policies to achieve the objectives.

Cooperative Management

The president has to consult and convene the Board very often. The Board decides the powers to be delegated to the executive, who is usually called as general manager or secretary. While power is delegated, responsibility for performance is also fixed. The professional management is under the control of the chief executive. The chief executive in consultation with the Board decides the organizational set up for the staff.

Necessary powers are delegated to the section managers and responsibility is fixed. Control and communication systems are established. Performance is reviewed frequently and is reported to the Board. The organizational structure of a co-operative is shown in the following chart, which is in pyramidal form. But in small co-operatives and in agricultural credit co-operatives this function is not undertaken scientifically.

Because they employ few staff and their volume of transaction is also low. Staffing in Cooperatives: Staffing which may ultimately lead to Human Resource Development for the organization need inter alia include, initiating and implementing following action stages: i Systematic efforts to undertake manpower planning at unit level as also in respect of different levels and sectors of cooperative movement.

Cooperatives do need qualified and efficient staff to run their business successfully.

Diploma in Management of Co-operatives

They must forecast their staffing requirement and must select the needed staff. The recruitment and selection of staff are done by the Board of directors and the president is given powers to select candidates. The posts are usually advertised in newspapers. After the selection is over candidates are sent for training. Training differs from institution to institution. In may co- operatives newly recruited staff are asked to work with the regular staff.

When it is first set up, each co-operative defines the minimum amount each person will have to invest to become a member. This amount may correspond to one share or to several shares. Depending on the requirements of the federal or provincial legislation in question, this will be set out in the co-operative's by-laws or in the actual articles of association. Certain provincial legislation may decree that the value of a share is always the same -- such as, ten dollars.

Depending on investment or start-up requirements, a co-operative will define the number of ten-dollar shares a person must purchase to become a member:. All must have the minimum number of co-op shares and preferred shares defined by the co-operative in order to be eligible for membership, but some members may decide to invest more and to buy more than this minimum number.

This does not give them greater rights in the co-operative, because the rule of one person, one vote applies regardless of the number of shares a member has. The amount members must invest in co-op shares and preferred shares may vary greatly from one co-operative to another. It depends on the enterprise's capital requirements.

Normally, only members may invest in a co-operative. Given the size of investment necessary to start up or develop an enterprise in certain economic sectors, however, some legislation authorizes the issue of preferred shares to non-members. This is not obligatory. It may sometimes be the case in very small co-operatives, such as co-operatives composed only of professionals. Generally, however, a co-operative must adapt its salary policies particularly its salary scale to the practices in effect in the sector in which it is operating. Otherwise, it runs the danger of having production costs that are too high to be competitive in the marketplace.

If salaries are too low, on the other hand, the co-operative may face difficulty hiring or retaining experienced workers. It may perform a great deal better, particularly in the case of worker co-operatives. Some studies comparing the performance of these co-operatives with private enterprises operating in the same economic sector have demonstrated their superiority in two ways:.

This is the result of the high motivation of workers. They know that the business belongs to them. They know that the better their work, and the greater the surplus the enterprise generates at the end of the year, the more they can increase their income through returns. The co-operative model is also particularly well suited to new methods of participatory management being increasingly adopted by enterprises wishing to maximize their performance and the quality of their client services.

In fact, through its democratic management philosophy and its work team approach, a worker co-operative can function like a natural quality circle. This democratic management approach is particularly important in highly skilled sectors. By its nature, a worker co-operative has the potential to be an "intelligent" operation in which all workers contribute their intelligence and skills to collective decision-making for the benefit of the enterprise.

The International Labour Organization is the UN specialized agency which seeks the promotion of social justice and internationally recognized human and labour rights. It was founded in and is the only surviving major creation of the Treaty of Versailles, which brought the League of Nations into being, and it became the first specialized agency of the UN in The ILO formulates international labour standards in the form of Conventions and Recommendations setting minimum standards of basic labour rights: freedom of association, the right to organize, collective bargaining, abolition of forced labour, equality of opportunity and treatment, and other standards regulating conditions across the entire spectrum of work related issues.

It provides technical assistance primarily in the fields of vocational training and vocational rehabilitation; employment policy; labour administration; labour law and industrial relations; working conditions; management development; co-operatives; social security; labour statistics and occupational safety and health.

It promotes the development of independent employers' and workers' organizations and provides training and advisory services to those organizations. Within the UN system, the ILO has a unique tripartite structure with workers and employers participating as equal partners with governments in the work of its governing organs. For a detailed discussion of the labour standards, their history and method of enforcement, along with relevant recent examples of their application, visit the International Labour Standards page of the ILO website. Eryk Martin Robin Puga. Nicole Chaland Jill Kelly.

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  • What types of Co-operatives are there? Common types of co-operatives include: Retail Co-operatives , whose members are, more often than not, the very patrons of their establishment, buying a share in the co-op as a prerequisite to shopping. These co-operatives tend to be governed by a board of directors elected by the membership annually or bi-annually. Credit Unions , whose members similarly invest in a share in the organization as a prerequisite of participation, and generally elect a board of directors.

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    In these instances, direct democracy is usually the prevalent method of decision-making. Housing Co-operatives often spring up in areas where residential costs are high and offer a method for increasing living standards, one's sense of community, and safety. These co-ops' work similarly to Service Provider Co-ops in that they are usually directed by first-person democratic exchange; often they work on the consensus model.

    Co-operative Principles The hub of the global co-operative movement, the International Co-operative Alliance, has accepted seven principles that guide all co-operative organizations: Voluntary and open membership Democratic member control Member economic participation Autonomy and independence Education, Training and Information Co-operation among Co-operatives Concern for community For more information, see the ICA's Statement on the Co-operative Identity. The International Co-operative Alliance Another milestone in the continued expansion of the co-operative movement came only 51 years later with the establishment of the International Co-operative Alliance ICA in For more information, please see our International Movement Section Frequently Asked Questions Does a co-operative follow a basic organizational structure?

    What is the general assembly?

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