MANAGEMENT SYSTEMS - Cooperative Principles PLUS

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A management system is the framework of processes and procedures used to ensure that an organization can fulfil all tasks required to achieve its objectives. Co-ops using management systems specifically designed for commercial businesses invariably run serious risks of failing to achieve their purpose.

It needs to be realised that where executives have not been provided with specific training in the cooperative enterprise model they will inevitably revert to the systems with which they are familiar - systems that could be entirely inappropriate for use within a cooperative. This is especially true in respect of marketing systems designed to exploit the market that are not at all suitable in a cooperative. Whilst it may be feasible to adapt systems developed for commercial businesses for use in co-ops, it needs to be understood that there are significant dangers in directly adopting inappropriate systems.

For example, very specific systems are required in cooperatives in respect of:

  • Strategic planning systems, which in co-ops must be focused upon the membership. The system in a co-op needs to address the threats, opportunities, strengths and weaknesses of the members in the context of the marketplace in which it operates. Also, the system must fully involve the membership in the planning process.

  • Reward systems must be designed to incentivise managers and staff to achieve the purpose of the co-op whilst optimising the use of available resources, whereas most commercial systems are designed to achieve profit maximisation.  

  • The executive and staff development system must ensure that all employees undertake induction and refresher programmes, so that they fully understand the cooperative enterprise model; the more senior the executive the more important is the need.

  • The accounting system in a cooperative must do much more than account for the financial aspects of the enterprise. It must also provide details of the benefits that have been provided to the members as a result of the co-ops intervention in the marketplace, and measure efficiency in respect of all the resources deployed in the process.

Solar Energy
Design Coop
Housing coop

Co-ops often 'buy-in executives' from commercial businesses only to find that within a few years their co-op has either ceased to be a co-op or has run into financial difficulties. Why so many co-op directors come to believe that if they pay a big enough salary then they will somehow get a person, having no understanding of the cooperative enterprise model or of the specific management systems needed, believing that they will be able to run a successful cooperative. Of course, it could be that they too fail to properly understand the cooperative enterprise model. We need to pay executives a competitive rate for the job we want them to do, and for that matter we need to similarly reward our directors. However, they must deliver what the members want and not just perpetuate the shoddy tricks and marketing ploys that are the currency of many of the other players in the marketplace.

September 2014 © Edgar Parnell 2014

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