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CO-OPERATIVE MANAGEMENT
Co-operative Movement in India has grown up into a huge network of primary, cent:al, state and national as federal organisations covering the various facets of the economy viz, Banking, Agriculture, Supply, Distribution, Processing, Marketing, Housing, Transportation and Small Scale Industry. It means that it covered the entire sectors of the economy such as Primary, Secondary, and tertiary. But a notable feature is that most of the cooperatives in India are not efficiently working thereby they incur losses and have not achieved their goals. Lack of member awareness, vigilance and solidarity and the lack of professional management are some of the causes leading to dormancy or inefficiency of their performance. Cooperatives alone conform to the requirements of the new social order based on the values of socialism and democracy which is envisaged-in the constitution of India.
CONCEPT OF CO-OPERATIVE MANAGEMENT
Cooperation means living, thinking and working together. It denotes a special method of doing business. In reality, cooperation is as old as man itself Eg. Formation of social groups is the outcome of refleXive cooperation. Even in animal we can see that the life of ants, bees, wasps. Lens etc provides the best example of instinctive cooperation. The practice of the principle of cooperation contributed to the development of human race more than any other biological and social factor. Right from the hunting age upto the present day the progress and development of human beings, in all spheres, social, economic, religious and political is marked by a sense of thinking, working and living together.
Cooperation is thus, older than the cooperative movement. The cooperative movement is
only one example of human cooperation among others, eg., joint stock companies, cartels, trasts, etc, the term cooperation thus connotes several meanings and it is difficult to convey the correct meaning of cooperation, in its technical sense. Cooperation, thus, is a movement whose theory has evolved with times and experiences gained by the cooperators. There is no rigidity either in the concept or in the practice. It is the objective, ideal or the purpose which is to be achieved. The cooperation movement existed because
of its ideals and it is from the pursuits of these ideals that its principles are derived and
characteristic features determined.
DEFINITIONS:
According to one of the school of thoughts deriving its strengths from Schulze-Delitach, Hass, RaiMisen and Horrace Plunkett, 'A cooperative institution is a voluntary association of independent economic units, organized, capitalized and run by, and for its members, providing and/or marketing goods and services on cost-to-cost basis to their members. The chief aim underlying the organisation of such institutions is the advancement of economic interests of
members and protection and maintenance of the economic independence of small producers by making up the economic deficiency through pooling of resources and thus bringing to them the economics of large-scale production.'
The second school of thought drawing inspiration from growing socialis of the 101 century and from men like Robert Owen, Saint Simon, Charles Fourier, Louis Blunt, Caries Guide, Ferdinand Lassalle etc.. believes that 'cooperative institution should not be merely contented with, improving the economic position of the members witin the existing framework but also aims at eliminating the competitive, capitalistic system and replacing it by one, which is based on mutual cooperation.' The third and last school believes that cooperative movement can be an important instrument in furthering the socialist progress. This is based on Marxist-Leninlst theories that, cooperatives can help the transformation from capitalism and finally to communism. Accordingly, a cooperative society has been defined as an "economic and social organisation of the working people, serving not only interest of the members, but also social progress," which promotesI safeguards and realizes the interests and aspirations of the working people". In the words of H. Calvert, cooperation is, "a form of organisation-wherein persons voluntarily associate together as human beings on a basis of equality for the promotion of economic interest of themselves" (^) , • According to Herrick, it is "the act of poor persons voluntarily united for utilizing reciprocally their own forces, resources or both, under their mutual management to their common profit or loss". In the words of Horrace Plunkett, it is nothing but "self-help made effective by organisation." The International Labour Organisation has defined cooperative society as, "an association of persons varying in number, who are grappling with the same economic difficulties and who, voluntarily associate on a basis of equal rights and obligations,.endeavor to solve those difficulties, mainly by conducting at their own risk an undertaking to which they have transferred one or more of such of their economic functions as correspond to their common needs and by utilizing this undertaking in joint cooperation for their common material and moral benefits".
UNIQUENESS OF COOPERATION
I. Co-operation is based on the principal of self-help through mutual help, abolition of profits and service above self. In cooperation, individual freedom occupies a very important position. The principles of 'voluntary association' and 'democratic management', are the guidelines for the cooperative movement. Cooperation eliminates the employers and provides independence to the workers. A cooperative society is a union of vleak and needy individuals who have equal rights and has brie vote irrespective of the number of shares held by him.
and cistributing net margins. Likewise, it may succeed for a while as r cooperative, but fail as a sound business institution. Managing a cooperative is challenging and difficult. It involves not only managing resources and business operations, as other businesses, but also dealing with problems stemming from the cooperative's distinctive characteristics. Because the cooperative's 'members are both ownsts and patrons, special relationships and problems arise concerning member and board of direcnr roles and responsibilities. Seemingly conflicting answers to quedtions arise. What's (Fiftieth in managing a cooperative from any other type of business? The ansvrers can range from "all the difference in the world" to "none at all." I , (^) In reality, managing a cooperative is different from other types of business as 'Decision-
makiag techniques are identical, but the cooperative's objectives are different: therefore, the manager's conclusions will be different'.
Cooperative principles and objectives present a distinctly different managerial premise. That premise is revealed in more detail through the following perspectives an executive must acquire to be goird cooperative manager:
Adjusting decision-making to a business where the customers are also the owners. In a
- supply purchasing cooperative, the manager of an investor-owned firm (I0F) may discover :hat many of the successful techniques associated with developing a saleable and satisfactory product (for the customer) and achieving maximum return on capital (for the owner) no longer apply. A cooperative manager has to adjust priorities and objectives to the realization that what's best for the customer (also the owner)really is best for the cooperative. This realization may explain why some low- or no-margin services continue to be provided and why certain related and perhaps high-margin activities tire not considered ii a cooperative. The manager of a marketing cooperative must understand why the
- cooperative often is obligated to take all of the members' products and attempt to find a market for them. The manager is not at liberty to pick and choose among such product suppliers and cut off marketing when inventories build up. And certainly to allow the member-producer to dictate the terms on which the cooperative business should receive the peoduct would be a situation foreign to non-cooperative managers. Dealing with complex issues of equitable treatment of owner-patrons, the manager of an SOF will discover that distributing the net earnings of a cooperative is much more ccmplicated than declaring a dividend on capital stock. The standard cooperative practice of distributing net earnings on the basis of individual member volume, such as units marketed or quantity of supplies purchased, also will be new should he/she become a cooperative via:lager. For larger cooperatives that handle many products and involve value-added activities, the issue of equitable treatment of member owners can be complex. Another concept new to an IOF manager now heading a cooperatives the requirement that member- owners share equitably in financing the cooperative, and that management communicates that responsibility to them and develops financing programs they'll accept. Working in a service-oriented organization is a spotlighted atmosphere. The manager of a typical cooperative will find that members formed it to provide a needed marketing or purchasing servicer both. Hence, every time they use the cooperative they evaluate the service performed by its employees. Often, members may wish to express their views directly to the manager or to get management advice about supplies to use or when to market their products.
Therefore, a cooperative manager may feel that he/she is operating in an enclosed environment, compared with the manager of an 10F whose only interface with most stockholders occurs at annual meetings when they want an accounting of why there were changes in the market value of their stock or in the dividends declared on it. Even in the day-to-day routine of a large cooperative, the new cooperative manager may encounter a different working environment. Senior manager of a regional cooperative once observed, "A major change I had to face was what! call working under a spotlight."Soon after joining the cooperative, found that the half-million farmers who owned our member cooperatives wanted to know what I was doing. Their interest was genuine. Thousands toured the cooperative each year and some wished to meet the executives and professionals. They were important to: us and not just ordinary visitors. Rather, they were managers of local cooperatives that owned the regional, or farmers who owned the locals."He concluded, "an executive or professional joining a cooperative must adapt himself to the publicity surrounding his work."
- Cooperatives have unique management implications of business ownership and control. Managers perform under the influence of various motivational factors-pay, power, prestige, and a place M history. Not all are fully transferable from an investor-oriented business to a member-user oriented cooperative. An example concerns the ownership and control of the business. An investor-oriented business executive or manager looking for a company to "gain control of either by outstanding performance, political maneuver, or eventual ownership will be surprised if the company is a cooperative. A cooperative manager can never acquire "ownership rights," and must become resolved to always being an employee. Further, the manager will discover it necessary to deliberately involve a majority of the member-owners, not just a few principal stockholders, in major decisions affecting cooperative policy and its business objectives. The prospective cooperative manager, therefore, needs to carefully assess whether his/her management style and personal performance motives and ambitions are compatible with the constraints of a cooperative owned and democratically controlled by member-users.
RESOURCES TO MANAGE
Like any other business, three major types of resources must be managed in a cooperative - people, capital, and facilities.
People The most important resource in a cooperative is people. The success of all phases of the business depends on competent personnel working together smoothly and efficiently. In a 1994 study conducted by Janice Dresbach, Ohio State University, cooperative mangers said training was highly important in the areas of improving customer relations, educating members about the cooperative way of doing business, working effectively with a board of directors, identifying member needs. In an earlier study, managers cited the ability to deal effectively with people was the qualification most important to the success of the best manager they had ever knoWn. Ability to size up a situation and act accordingly was ranked next in importance. Qualifications considered. least important were ability to keep pressure on until the job is done and technical knowledge of supplies handled. Personnel management thus is a critical phase of business management. It begins with the selection of personnel, followed by training and evaluation. Much depends on personnel
IndiVect Democracy: Since the modern states are much larger in size and population, it is not possible for all the citizens to participate directly in the affairs of the state; indirect democracy has been established in almost all the modem stats. Under this system, people elect their representatives for a period who run the administration. If they do not work according to the wishes of the people and for their welfare, they are changed at the time of next elections. People do not directly take part in the affairs of the state. They elect their represeniatives who conduct the affairs of the state. Indirect democracy exists in India, England, U.S.A. and France etc.
Democracy in Cooperatives Aside from the public sphere, similar democratic principles and mechanisms of voting and representation have been used to govern other kinds of groups. Many non-governmental organisations decide policy and leadership by voting. Most trade unions and cooperatives are governed by democratic elections. Corporations are controlled by shareholders on the principle of one share, one vote. Cooperatives are democratic enterprises where both ownership and decision-making power are democratically shared. As a result, they keep money and power in the hands of the community. Each member has a share of the organization, which makes them co-owneis of the cooperative When decisions need to be made that affect the group, each member has one vote to say how the cooperative is run — a mix of direct democracy and representational structures
Decision Making A co-operatives' future will be determined by the goals the members of the cooperatives set and how effectively they make decisions and solve problems as a group. Establishing commoa personal, business and social goals right from the start, and sticking to them, can help this proce immensely. 'fhis not only,keeps their debisions focused, but also helps to avoid misunderstandings that can lead to conflict. Then the decision making process is one of identifying the specific goal Cr problem to be addressed, gathering the best available information on theciptions and their outcomes and risks and making the choice with the best chance of providing an effective solution. Easily said, but challenging to do! Within the worker cooperative society, specific decisions are in the hands of the general assembly. The Cooperative society Acts provide the foundation for this authority by law, however the cooperative society's bylaws may also provide that specific policy decisions, such as wage rates. may require approval by the members' meeting. Importantly the bylaws of the cooperative society, which regulate the life of the cooperative society, must be approved by the members and can only be changed by a meeting of the members. One of the key legal responsibilities of the members is to elect the board of directors of the cooperative society. The bylaws will specify the number of directors, their qualification and length of terms. Directors, by law, are responsible for the affairs of the co-operative. Their duty is always to make decisions in the best interests of the cooperative society as a whole. The directors, once elected, in turn elect officers like president, vice-president, secretary and treasurer. These officers of the cooperative society will have specific duties outlined in the bylaws. In small cooperative societies, members often serve' in more than one capacity and oftenall members are also directors.
Good collective decisions require well-researched information and good communidations between the board of directors, manager and membership. Cooperative societies may operate demozratically, but you can't stop in the middle of the workday to discuss eery decision which must be made. The directors are responsible to ensure that an effective operational structure is in place that it is supported by the members. This may take many forms, depending upon the desires of the members and on the type of enterprise that the cooperative society operates. Within most cooperative societies the following structures are usually in place and are the forum for the following types of decisions.
ANNUAL GENERAL MEETING (AGM).
- The board of directors reports to membership, reviewing the past business year and the year's financial statements. (^2) The board seeks approval of its recommendations for surplus allocation. 3 The Husinees plan and budgets for the coming year are presented for discussion and approval. 4 An auditor is appointed. 5, Membership elects a new board. Other membership decisions specified in the bylaws are made.
BOARD OF DIRECTORS MEETING
The manager(s) reports to the board, which in turn provides direction to the manager(s). The key function here is for the board to hold those in charge of making decisions on behalf of the cooperative society accountable for the outcomes of those decisions. This would also inclide evaluating the organizational structure used to make these decisions. The board evaluates the cooperative society's financial position to determine whether or not be budgeted objectives are being met and what actions should be taken to improve the situation. The board makes or changes policies as required, or recommends a policy to the membership if only the membership has the authority in a particular area. Board members discuss long-term goals and strategy and ensure that a good planning p:ocess is in place to guide the cooperative society in the coming year(s). The board approves new members or terminates a person's membership.
OPERATIONAL MEETINGS
Consultation and decision-making about daily activities takes place between members and management. These meetings, and who participates, will vary from co-operative to co-operative depending upon the organizational structures that have been approved by the membership and/or the board of directors.
Those who have not attended this inaugural meeting will have to be approved as members according to the stipulations lay down by the law and the bylaws regarding acceptance of new members to the cooperative. The inaugural general meeting takes place only once.
- An Annual General Meeting I. (^) An annual general meeting convenes once a year on a date fixed by the bylaws of the cooperative but, not later than three months after the end of the financial year. The annual general meeting will assess all aspects of the previous year's activities from the reports of the president, the secretary general, the treasurer, the audit control and that of the control committee. They will examine, approve or adjust elements and give or refuse the cooperative's authorities the final confirmation. III Will approve the financial, social, and development plans for the following year. IV (^) Will elect the managerial units of the cooperative and the control committee for the following year. V. Will fix the authorized maximum amount of debts that the cooperative soeiety May contract with any credit supply organization. • V: (^) Will fix the investment and deposit ceilings above which decisions must be taken by a special general meeting. VII The annual general meeting will be convened and presided over by a special AD-HOC committee created by the annual general meeting for that purpose. The ?annual general meeting will never be convened and presided over by the outgoing or incoming' management of the cooperative.
(^3) Extraordinary General Meetings This meeting will be called only when the following matters are considered: Amendments to the bylaws Acceptance of new members
- Expulsion of members Dissolution of ih cooperative ccisions thereof require a special majority of all the members present at the meeting.
4 Special or Ordinary General Meetings
This meeting may be called at any time during the year whenever necessary. It may be summoned at the insistence of the management committee, the audit or the control committee, the registrar of cooperatives. or at the request of at least ten percent (10%) of all the members of the cooperatiit.
CONDITIONS PERTAINING FOR ALL GENERAL MEETINGS REGARDLESS OF TYPE
E. (^) A general meeting may be convened only when a quorum is present. A quorum should be one person more than 50% of all members of the cooperative. If there is no quorum the meeting will be postponed to no earlier than one hour later, and no more than one month later. Any number of members present in the latter case would then consist of a legal quorum (^2) Members must be informed about the date, time and place, as well as the proposed agenda of the general meeting well in advance up to two months prior to the date of the general meeting. Where it is possible written notice must be. sent to all members at their official addresses at least one month prior to annual and extraordinary general meetings. When ordinary general meetings are concerned the notice should be sent as early as possible. The notice should include the date of the alternative general meeting to be called if a quorum is not reached.
THE STEPS IN DECISION MAKING PROCESS The following steps can be adapted in decision making process. Step I Identifying/clarifying the decision to be made. If the decision has not yet been isolated, it should be identified as a first step.The decision-making process begins when a manager identifies the real problem. The accurate definition of the problem affects all the steps that follow; if the problem is inaccurately defined, every step in the decision-making process will be based on an incorrect starting point. One way that a manager can help determines the true problem in a situation is by identifying the problem separately from its symptoms. Step 2 Identifying possible decision options. The next step requires the decision maker to spell out, as clearly as possible, just what the decision alternatives really are. In fact, the more ideas that " comes up, the better. In other words, there are no bad ideas. Encouragement of the group to freely offer all thoughts on the subject is important. Participants should be encouraged to present ideas no matter how ridiculous they seem, because such ideas may spark a creative thought on the part of someone else. Step 3 Gathering /processing information and analyze the alternatives. N (^) Next, the decision maker collects or processes information that can help guide the decision. If cx1 such information is already at hand, then it simply needs to be processed; that is, studied and = (^) understood by the decision maker. If there is no relevant information available, or if there is co
. (^) insufficient information, then such information must be collected so it can be processed. The ot ei• purpose of this step is to decide the relative merits of each idea. Managers must identify the
en advantages and disadvantages of each alternative solution before making a final
ct,tzt (^) decision.Evaluating the alternatives can be done in numerous ways, Here are a few possibilities: tn •tr --1 1. Determine the pros and cons of each alternative. , cr. r- 2. Perform a cost-benefit analysis for each alternative. N 0 ...I 3. Weight each factor important in the decision, ranking each alternative relative to its ability Pm (^) to meet each factor, and then multiply by a probability factor to provide a final value for C.) each alternative.
- Regardless of the method used, a manager needs to evaluate each alternative in terms of its Feasibility - can it be done? Effectiveness - How well does it resolve the problem
