The modern cooperative movement began in Rochdale, England at the end of 1844 as a way for workers to help themselves out of poverty and provide a future for their communities. Since that time, cooperatives have spread throughout the world and continue to promote sustainable economic and social growth. Globally, co-ops have more than 800 million members. They employ in addition 100 million people across more than 130 countries. The estimated economic contribution of the top 300 co-ops globally in 2006 was almost 1 trillion $US. To put this in perspective, this is about equivalent to GDP of the world’s 9th largest economy, Canada.
The top co-ops are some of the most successful large organisations globally, and provide their members with a level of economic and social support they would be unlikely to receive without them. Although cooperatives can be big business players, cooperatives also exist at the other end of the economic scale, acting as the financial lifeline for many third world people struggling to make a living. Regardless of their size, cooperatives play an important part in the world’s economies and support many people. The number of people who are benefitting from cooperatives is significant enough for the United Nations to assert in 1995 that, “Cooperatives contribute directly to improve the standards of living of half the world’s population.”
Cooperative structures vary in size and complexity, but here in New Zealand they are essentially formed by a group of smaller businesses or sole traders who identify a common need they have when operating in a larger market. Private businesses will sometimes come about to meet this same need, usually when an individual identifies this need as an opportunity to make money from others, or when the business community involved is not willing to participate cooperatively. As co-ops are formed to serve members’ needs, cooperatives have to be owned entirely by their members because any profit a cooperative makes is distributed back to its members and their communities, instead of going to outside investors who often have little or no connection to the community the co-op serves.
Regardless of the size or complexity of the cooperative, voting and the election of directors is usually conducted on the basis of one member one vote. This is because it is believed that all members play an important role in the overall success of the business, and therefore are entitled to an equal say. When a single member holds a larger financial investment in the co-op they should engage and communicate actively with the co-op to ensure their needs are addressed; not look to control the co-op with a dominating voting right.
Unlike shares in private business, the value of the membership share is usually fixed. In addition, these shares need to be withdrawable as membership to the cooperative should be voluntary. A successful cooperative should value the importance of membership and be continually responding to members’ desires to become involved in their business. The complexity of some cooperative structures comes about from a need to balance members’ rights to withdraw form the co-op and redeem their membership while providing the cooperative with some longer term capital to offer some financial stability.
As cooperatives are groups of people working together for their collective good, it is important that a strong and clearly defined set of values binds them together in a unified direction. How these values are implemented is up to individual cooperatives, but their existence should be at the bedrock of the organisation and underpin any activity of the cooperative.
The core cooperative values are:
Self-help: working together for a mutual benefit.
Self-responsibility: acting responsibly and playing a full part.
Democracy: where members control the organisation.
Equality: where members have equal rights, and according to their contribution have equal benefits.
Equity: treating people justly and fairly.
Solidarity: supporting each other and other cooperatives.
Cooperatives also hold a strong set of ethical values which should extend through the membership to it employee, suppliers, customers and the wider community. They are:
Honesty
Openness
Social responsibility
Caring for others
Strong cooperative and ethical values have lead to a set of cooperative principles that all cooperatives should hold. These principles flow from the values, the primary motivation of co-ops, and their unique operating structures. Following these values and principles should drive the way cooperatives approach business and if applied properly will promote the health of the cooperative, as well as offering guidance and direction for the cooperative members and its governors.
The seven principles of cooperatives are:
à 1st Principle: Voluntary and open membership
à 2nd Principle: Democratic member control
à 3rd Principle: Member economic participation
à 4th Principle: Autonomy and independence
à 5th Principle: Education, training and information
à 6th Principle: Cooperation among cooperatives
à 7th Principle: Concern for community
These cooperative principles are not only important in guiding the development and growth of cooperatives, they are also important in assessing the soundness of a cooperative and its chances of success. In 1999 Sir Graham Melmoth, the former Chief Executive of the UK Co-operative Group stated that, “Most failed Cooperative Societies over the last twenty years failed not only commercially but democratically as well.” His comments come about because democracy, the second principle, is seen as pivotal to the effectiveness of a cooperative and is the key indicator for assessing cooperative health. Ways of a measuring the vibrancy of the cooperative’s democracy are the voter turn-out, the number of contested elections, the average term length of directors, and how current directors support succession planning and emergent leadership. Are all members able to participate equitably and fairly, and how effectively are the values and principles of the co-op communicated to members, employees, customers and the wider community?
Cooperatives should have a strong value system and set of principles, a complex mission and operating structure, unique governance structures, and a requirement for different leadership skills from traditional private businesses. These unique qualities of a cooperative are there to serve its members and, if harnessed properly, provide a distinct competitive advantage.
Successful cooperatives are those that truly embrace their cooperative difference. They work towards meeting their cooperative and ethical values and strongly adhere to the cooperative principles. By doing this they effectively work for their members, through their members. Successful cooperatives see the importance of a strong and active membership and engage in activities that promote and enhance this. Cooperatives that fail do so because they lose sight of what it is that brings them together. They are unable to clearly see their cooperative competitive advantage and as a result start to act like a clumsy private company. What makes a cooperative fail is simply a failure to be a cooperative.
No comments:
Post a Comment