Co-operatives and Co-operation:
Causes of Failure, Guidelines for
Success
by Manfred Davidmann
CONTENTS
Scope of Report
Purpose of Co-operatives
Different Needs, Different Co-ops
Co-operatives and Mutual Societies
Allocating Profits and Ownership of Reserves
Co-operation Between Partners
Ownership and Control
Style of Management, Decision-taking and Management
Performance
Motivation of Directors and Managers
Work and Pay
Aims and Fundamentals
Conclusions and Recommendations
Notes <..> and References {..}
More Detailed List of Contents
Relevant Current and Associated Works
Relevant Subject Index Pages and Site Overview
SCOPE OF REPORT
This report looks at why members of established co-ops are dissatisfied
with what they are getting from their co-ops, why mutual societies and
building societies are converting to public limited companies, why
there is so little appreciation of what co-operators aim to achieve.
The report is based on a series of eight studies of co-operatives and
mutual societies <9> which were undertaken to determine causes of
failure and reasons for success, to see how these enterprises were
controlled and managed, to learn from their mistakes.
Its conclusions and recommendations are relevant and cover
fundamental and practical problems of co-ops and mutual societies, of
members, of direction, management and control.
PURPOSE OF CO-OPERATIVES
When people are exploited and oppressed they co-operate with each
other to escape from poverty, to overcome exploitation and oppression.
As do people wishing to improve working conditions and the quality of
their lives. They get together and form co-operatives. {12-13}
Different forms of co-operatives tackle different kinds of problems.
What they have in common is that they serve their members and the
community, aiming to improve the quality of life for their members.
On the other hand companies (corporations) are controlled by directors
on behalf of owners whose main objective is to maximise profits.
Profits increase when labour costs (wages, salaries, pension and social
security payments) are reduced and also when operating costs are
passed on to the community. So profits can be increased by reducing
pay, by reducing the quality of life of the workforce, and at the expense
of the community. {01-02}
Profits are generated by the joint efforts of capital and labour. But
directors acting for owners aim to maximise profits and labour
struggles to achieve some kind of reasonable existence.
Co-operative enterprises, however, are owned by their members and
such conflicts are either much reduced or disappear.
Producer co-operatives of all kinds enable producers (workers) to
control their working conditions. So it is not surprising that cooperative enterprises (co-ops) are opposed by those who prefer to
exploit their workforce and who dislike co-operative principles of
service to members and community. Co-ops are opposed by those
whose power and riches depend on underpaying and exploiting
employees and on overcharging customers.
Co-operative enterprises can be more effective and successful than
companies (or corporations). Those who oppose co-ops are generally
well aware of this.
In the U.K., for example, co-operatives have an annual turnover of
GBP 13 billion and employ 120,000 people in production and retailing.
Co-operative enterprises also cover housing, banking and insurance,
and more.
And consider also the well-known Spanish Mondragon group of cooperatives 'Mondragon Corporacion Cooperativa' with profits of GBP
17.8 mill. Mondragon is changing, not necessarily for the better, as we
shall see.
DIFFERENT NEEDS, DIFFERENT COOPS
What distinguishes one co-op from another is the kind of problem it
aims to overcome, who owns the co-op and who decides its policies,
who manages and directs its operations, and last but not least who
benefits and how.
In such matters there are differences between one co-op and another.
Important and often conflicting considerations are whether a surplus
should be paid out to members or whether it should be re-invested in
the co-op for growth and a more secure future.
What follows is a summary of the key characteristics of different types
of co-ops <2> and information about the real-life case studies which
illustrate the problems met by co-ops. The case-studies were used to
analyse basic causes with often surprising results.
Consider people in need, in poverty, hungry, earning only enough to
exist, to keep alive. Unable to afford medical help, adequate housing,
in severe hardship when ill or old. Exploited by being paid too little
and by having to pay too much for what has to be bought.
The greater a person's need, the easier is it to exploit him, the easier is
it to force him to work for less. When traders' foods all include
extortionate markups (profit margins), one either pays or starves.
So it was 150 years ago when co-ops became popular. And so it is
today as unemployment bites, the poor get poorer and the rich get
richer, with massive deprivation and suffering all over the planet.
First came self-help groups, mutual societies, aiming to ease
deprivation and suffering and to enable people to insure against illness
and the effects of old age.
And co-operative societies, building societies, to help with housing.
And co-operative savings and lending societies such as credit unions,
to overcome exploitation through extortionate interest rates demanded
from those in need by money lenders and loan sharks.
In addition there are consumer co-ops aiming to reduce the cost of
purchases such as food and household goods by cutting out middlemen.
And producer (worker) co-ops which belong to those who work in
them. Here worker-owners benefit both as workers and as owners from
the added value, from the surplus, they create.
So there are different co-ops to satisfy different needs:
Mutual Societies
Building Societies
Credit Unions
Consumer Co-ops
Producer (worker) Co-ops
Another key distinguishing feature is to whom the co-op belongs.
A co-op is sometimes owned collectively by its members, belonging to
its members as a group. The group changes as members leave or new
members join. Examples are the kibbutzim.
Others are wholly or in part owned by members as individuals.
Mondragon co-ops are in part owned by their worker-owners.
Also important is the extent to which a co-op serves its members and
the community as compared with profit maximising for the sake of
profit maximising.
The examples in the following sections are discussed in detail in the
individual case studies {03-10}.
MUTUAL SOCIETIES
Mutual Societies, often called Friendly Societies, are societies in which
people get together to help each other in times of need. A Mutual
Society belongs to its members and is controlled by its members for the
benefit of its members. A mutual life assurance company's funds, for
example, come from members' contributions and premium payments
and, after paying the society's running costs, are used to benefit
members.
As all assets are owned jointly by members, they share in the losses as
well as in the gains.
In 1993 the British 'Registry of Friendly Societies' reported that funds
in friendly societies had reached GBP 6.8 billion.
Trustee Savings Bank
The UK's Trustee Savings Banks {03} have been collecting and
looking after the working population's small savings for about 200
years. They were formed 'for the safe custody, and increase of small
earnings belonging to the labouring and industrious classes'.
The Trustee Savings Bank was run entirely for the benefit of its
depositors. Well known for friendly and effective service, the TSB had
more branches than Barclays and was considered to be better managed
than the big clearing banks.
Until quite recently when it was turned into a profit-maximising
company, a bank just like any other. How this was done, and what
happened, is almost unbelievable. See the case study.
Credit Unions
A credit union {04} is owned by its individual members and is run for
the benefit of its members. It is a financial co-operative, a kind of
community bank.
Credit unions provide funds at below-market rates. For those in need,
for those who need to borrow small amounts till the next payment
arrives. For buying cars or paying for holidays.
Many are small but some, particularly in Canada and the USA, are very
large.
Building Societies
Building societies {05} take in deposits and provide capital for buying
houses, provide mortgages at what should be favourable rates of
interest.
Those who deposit their savings are members as are those who borrow
from the society.
And building societies are owned by their members for the benefit of
both borrowing and lending members.
Net Profits of UK building societies amount to about GBP 1 billion.
For many years they retained surplus funds and so built up massive
reserves.
Successful, big, powerful, they should be doing well and should be
doing much for their members and the community. But building
societies have been merging, have been taken over by banks and have
turned themselves into banks.
Which would seem to have little to do with serving one's members and
the community and the case-study {05} takes a close look at what is
going on.
CONSUMER CO-OPS
Consumer co-ops belong to, and are run for the benefit of, their
customers.
Co-operative Retail Services Ltd
The Co-operative Retail Services (CRS) co-op is owned by its
members, that is its customers. {06}
It is big with a 1995 turnover of GBP 1.3 billion. And it looks as if
performance ought to be better than it is. However, its 'Directors'
Report & Financial Statements' are clear and to the point and one has
the impression they are having a go at forging ahead in innovative
ways.
Co-operative Wholesale Society Ltd (and its subsidiaries Cooperative Bank PLC and Co-operative Insurance Society Ltd)
The Co-operative Wholesale Society (CWS) is a co-op {07} whose
founder members were retail co-ops. It was formed to buy in bulk for
member co-ops. It also farms and manufactures goods for retail co-ops.
Its profits are shared out among its member retail co-ops in proportion
to their purchases from CWS.
But CWS now has a big retail division selling directly to many
individual customers.
And it has two wholly owned major subsidiaries, namely 'The Cooperative Bank PLC' and 'Co-operative Insurance Society Ltd'.
It is big with a 1995 turnover of GBP 3 billion. It does much and has
achieved a lot but to me it seems that its performance should be better
than it is. This is discussed in the case study.
Co-operative Bank PLC {07} is a publicly quoted limited liability
company. It is a fully owned subsidiary of CWS and CWS is
apparently the only shareholder.
It is an innovative bank which is owned by a co-operative. The bank
seems to put people first and provide good service.
Co-operative Insurance Society Ltd is one of Britain's largest
insurers {07} and one of its top five providers of personal pensions. It
insures 3.5 million families. Its profits are used for the benefit of
policyholders and the amount allocated to them for 1995/96 is GBP
581 million.
But it is a wholly owned subsidiary of the Co-operative Wholesale
Society (CWS). So it belongs to the CWS which seems to be the only
shareholder, and it pays interest on its share capital.
Eroski
Eroski is an outstandingly successful retail co-operative.
By comparison, British consumer co-ops are running as fast as they can
only to be standing still.
Eroski is one of the Mondragon group of co-ops and there is much to
be learned from its success.
PRODUCER (WORKER) CO-OPS
Producer co-ops belong to, and are run for the benefit of, those who
work in them.
Mondragon Co-operatives (Mondragon Corporacion Cooperativa)
These co-ops {09} are owned by their members. Each member
contributes to the co-op's capital when he becomes a member and
individually owns a share of his co-op.
What stands out is that the group of Mondragon co-operatives
succeeded in creating for their members and for the local communities
a good way of life, a good standard of living and a high degree of job
and social security.
My own impression is that much of this is coming under threat from
within. So the case-study {09} looks at ingredients of success as well
as at underlying weaknesses.
Kibbutzim (Plural of 'kibbutz')
A kibbutz {10} is an agricultural co-operative community. Land,
factories, buildings and equipment are owned jointly (collectively) by
the community. There is no private wealth and members transfer all
their assets (but not personal belongings) to the community when
joining. The kibbutz looks after all the needs of its members and their
families.
Three per cent of Israel's population, about 125,000 people, live in 270
kibbutzim ranging in size from say 200 to 2,000 members. They
produce something like 50 per cent of Israel's agricultural produce and
about 9 per cent of its industrial goods.
Successfully providing members with a high and secure standard of
living and quality of life. But younger members leave for a better life
outside. The case-study {10} looks in some detail at what has been
going wrong and what can be done about it. The lessons learned are of
value to all co-operators.
CO-OPERATIVES AND MUTUAL
SOCIETIES
The case studies tell us much about co-operatives and mutual societies.
There seem to be many different kinds and we are here trying to see
what they have in common and what distinguishes them from public
limited companies.
Credit unions are financial co-operatives. The owners of a credit union
are its individual members and it is run for the benefit of its members.
Its members save regularly and pool their savings to provide loans at
favourable rates of interest to members. {04}
A building society is a mutual society owned by its members. Both
depositors (lenders) and borrowers are members. The mutual interest
between lenders and borrowers is that profits are shared out between
them. Compared with banks, the lender gets more and the borrower
pays less. {05}
A consumer co-operative belonging to its members who are customers.
One becomes a member by opening a share account and paying a small
amount of money. The more one buys the greater is one's share of the
co-ops surplus (profit).
Each producer co-op is owned by its members and all who work in it
must be members. Directors are elected by and from members. Each
member of the co-op has one vote regardless of the size of his capital
account. It is owned by its workers and run by its workers for their own
benefit. {09}
Within the kibbutz all are equal, all share to the same extent. Some are
more able than others, some do more than others, but all are paid the
same. Earnings are pooled and divided equally. A kibbutz belongs to
its members and they decide policy. The members benefit equally and
voting is democratic. {10}
What all co-ops <2> have in common is that they belong to their
members and that they exist for the benefit of their members, just like
companies which belong to their shareholders and exist for the benefit
of their shareholders.
However, a co-op's shares cannot be bought and sold by the general
public, are not quoted on the stock exchange. And co-ops also differ
from shareholder owned companies in one essential aspect. Members
have one vote per person regardless of the amount saved, deposited,
borrowed, bought or work done.
The intention is to ensure democratic deciding of policy and control of
the co-op by its members.
So a co-operative is an enterprise which is owned and run jointly by its
members as individuals for the benefit of its members.
And in the following sections we look at the extent to which members
benefit (Allocating Profits) and at democratic control (Ownership and
Control).
ALLOCATING PROFITS AND
OWNERSHIP OF RESERVES
Shareholders of companies benefit from profits in two ways. Firstly,
some of their profits are paid out each year as dividends. Secondly, the
remaining profits which are retained by the company increase the value
of their shares correspondingly and this capital gain is realised when
the shares are sold. {19}
Important is that all the profits belong to the shareholders. Any profits
which the company retains, which the company adds to its reserves,
remain the property of its shareholders. An individual shareholder can
convert his share of retained profits into cash at any time by selling his
shares.
Similarly, and as a matter of principle, all profits (surplus) made by a
co-operative or mutual society <2> belongs to its members as
individuals. Any profit which is retained and added to reserves is the
total of amounts which in effect were deducted from the profit share of
each individual member.
But surprisingly the case studies show that co-ops and mutual societies
retain much of the profits and that members cease to be entitled to
them.
This is perhaps the most important single finding of this report.
A company is entitled to accumulate reserves from profits and there are
good reasons for doing so, the company using its reserves on behalf of
its shareholders to whom the reserves belong. Co-ops and mutual
societies also accumulate reserves from profits but then hang on to
them for no apparent valid reason. A member who leaves does not get
back the moneys deducted by the enterprise from that member's share
of the profits.
The extent to which owners' money has been held back by co-ops can
be seen from the following figures:
For each employee or owner:
Mondragon Co-operatives: About GBP 11,900 belongs to each
owner but the co-ops' reserves amount to GBP 21,000 per
owner. This would seem to indicate that Mondragon
corporation has accumulated big reserves at the expense of its
owners. {09}
John Lewis: Net assets per employee are GBP 30,700. {08}
For the enterprise as a whole:
Mondragon Co-operatives: Reserves are GBP 585.92 mill (Ptas
110,739 mill) {09}
Co-operative Retail Services Ltd (CRS): Net assets are GBP
491.957 mill. {06}
Co-operative Wholesale Society Ltd (CWS): Worth of CWS to
owners GBP 590.7 mill. {07}
John Lewis: Net assets are GBP 952 mill. {08}
So there are co-ops and mutual societies which have accumulated
massive funds which are under their control but which belong to
members as a whole rather than to the individuals from whom they
were taken. And this explains some of the odd things which are taking
place such as
Buyers of the Trustee Savings Bank receiving not only
ownership of the bank but also the money they bought it with.
{03}
Lloyds Bank in effect using C&G Building Society's reserves to
persuade C&G's members, both depositors and borrowers, into
voting their mutual self-aid society out of existence. {05}
Abbey National apparently using N&P Building Society's
reserves to persuade N&P's members, to hand over the society
in return for share or cash payments drawn in effect mainly or
completely from their own reserves, from their own capital.
{05}
And now we have a look at what the case studies indicate about how
profits were divided between members and their enterprise and about
benefits received by members.
Mutual Societies
Credit union members get some immediate benefit when borrowing
costs less and deposits earn more compared with commercial banks.
Immediate benefits correspond to dividends received by shareholders.
But each year something like 10 to 20 per cent of the surplus (profit) is
retained and added to reserves. Credit unions are accumulating reserves
and massive reserves at that. {04}
Building society members ought to be getting an immediate benefit as
borrowing should cost less and deposits earn more compared with
commercial banks. In practice their interest rates hardly differ from
those of the banks. Building societies are retaining and adding to
reserves most of their surpluses and have also built up massive
reserves. {05}
Consumer Co-ops
A consumer co-operative is supposed to be run for the benefit of its
members who are its customers. After paying expenses, its surplus is
divided and paid to members in proportion to their purchases. The
more you spend in the co-op, the greater your share of the surplus. The
money you receive is your dividend, your 'divi'. That was the intention,
that is how it was. But the divi, the immediate benefit, has almost
disappeared.
Take CRS. Some members do get a discount. 42,000 members (out of
1,485,000) who invest at least GBP 50 in the co-op get a 5 per cent
discount but only in non-food stores which account for 17 per cent of
CRS sales. {06}
What stands out is that members (customers) receive little direct
benefit. Most of the surplus (profit) is retained and added to reserves.
Producer (Worker) Co-ops
Take the Mondragon co-ops. Each member's capital account is credited
each year with his share of the co-op's profits. Each member also
receives each year interest at up to 6 per cent on the balance of his
capital account. This is added to his capital account. Capital accounts
are regularly increased in value in line with inflation to maintain their
purchasing power. The capital has to be withdrawn when a member
leaves the co-op.
But only about 20 per cent of the profit is allocated to owners' capital
accounts while about 75 per cent is retained by the co-ops and added to
reserves. {09}
Within a kibbutz all are equal, all share to the same extent. Earnings
are pooled and divided equally. Members can vote themselves
increased benefits in cash or kind at any time. {10}
Summarising
So we see that 1995/96 surpluses were divided between members and
reserves as follows {06-09}:
Consumer Co-ops
Co-operative Retail Services
Co-operative Wholesale
Society
Producer (Worker) Co-ops
Mondragon Co-operatives
John Lewis Partnership
To Members
(Per cent of
Total)
To Reserves
(Per cent of
Total)
8
77
25
75
20
47
75
53
Consumer co-ops retain about 75 per cent of the surplus and add this to
reserves. CRS also donates 15 per cent of the surplus to various causes
so members only get 8 per cent.
Members of UK consumer co-ops gain little direct benefit. Most of the
surplus is retained by the co-op.
We can also compare these consumer co-ops with John Lewis by
estimating the amount received by members out of each GBP 100 of
sales, as follows:
Profit (GBP) Per cent of
Amount (GBP)
from Sales Profit Given to Received by
of GBP 100
Members
Members from
<1>
Sales of GBP
100
CRS
CWS
John
Lewis
1.72
1.95
5.33
8
25
47
0.14
0.49
2.51
The figures, rough as they are, speak for themselves. Members of
consumer co-ops receive little because the co-ops are keeping most of
the profits and because the co-ops are much less profitable. The profit
available for allocating is taken after expenses and a contributing factor
may be that these co-ops are spending too much money on expenses.
A key difference is that John Lewis' employees receive their bonus as
cash each year while Mondragon owners' share of profits is credited to
their capital accounts which are only realised when the owner leaves
the co-op. But in each case what is allocated is the direct benefit which
corresponds to a shareholder's dividend.
A kibbutz's surplus belongs to its members. But as far as I am aware, a
kibbutz member leaving a kibbutz does not get his share of the
kibbutz's assets or wealth but may at times get some cash from the
kibbutz. {10}
Co-ops <2>, their directors and managers, appear to be saying to co-op
members:
Every year you are with us we keep 75 per cent of your share of
the profits.
We will give you 25 per cent of the profits we make from using
the money we kept back.
When you leave we stop giving this to you.
The money we kept back from you each year will not be
returned to you when you leave or (in some cases) if the co-op
should be dissolved.
Requirements
Hence what is required is a capital account for each member for
accumulating his capital holding, its starting balance being the amount
he has invested in the enterprise.
The whole profit should then be divided and allocated each year to
members in two ways:
Firstly as a profit sharing bonus which is paid out once each
year as a cash payment. (As is done by John Lewis Partnership)
Secondly, the remaining profit is retained in the enterprise and
each member's share of this retained profit is credited to that
member's capital account with the co-op. Capital accounts
would also need to be increased each year for inflation as the
enterprise revalues its assets. A member's capital account could
also be debited with that member's share of the co-op's losses.
As members are owners it seems no interest should be paid on the
balance of their capital accounts as long as balances are adjusted each
year for inflation.
When a member leaves he should have to take his capital with him and
his account is closed.
Co-ops should acknowledge that their assets belong to individual
members by opening a capital account for each member and by
dividing ownership rights among them, making reasonable efforts to
contact those who left or the descendants of those who died. If a coop's constitution says otherwise, if members originally agreed to donate
funds regularly, then such matters can be brought up and put to
members at a General Meeting.
Members can similarly ask their co-op to reassign ownership rights to
members, discussing and deciding this at a General Meeting. If the coop is unwilling then a last resort is to start proceedings for dissolving
the co-op as the assets would then have to be realised and divided
among members. This is what in effect has been happening to building
societies {05}. But some co-ops, some credit unions for example, have
rules which prevent members from recovering ownership rights in this
way, the rules stipulating that assets on dissolution have to be given to
another credit union or placed elsewhere, instead of being returned to
members.
Shareholders can vote with their feet by selling their shares which at
the same time converts their capital gains into cash. Co-op members
should be able to do the same. And this means that co-op members
should be able to dissolve their co-op by a majority vote and that the
co-op's assets should then be realised and distributed among its
members.
This is a means of last resort which shifts the balance of authority back
towards the members. Members can in this way hold their co-op's
directors and executives to account if the need arises. A badly managed
co-op would be unable to continue indefinitely simply by retaining
most of the profits. A well managed co-op serves its members well and
would welcome such rules.
I would suggest members should request their co-op to return
ownership rights to its members. The amounts per member can be
considerable and if the co-op fails to do so, if ownership rights cannot
be restored, then I would suggest forming and supporting co-ops which
operate under fairer rules.
In concluding this section, let me emphasise again the kind of rules
which are required:
A capital account for each member for accumulating his capital
holding.
An agreed part of the total profit to be paid out once each year
as a profit sharing bonus, as a cash payment.
The remaining profit is retained in the enterprise. Each
member's share of this is credited to that member's capital
account. Capital accounts to be increased each year for
inflation. Capital accounts also to be debited with a co-op's
losses.
When a member leaves he should have to take his capital with
him and his account is closed.
Members may dissolve the enterprise by a majority vote in
favour, of at least say 75 per cent of those voting or else of at
least 70 per cent of the membership, either one or the other.
When the co-op is dissolved for any reason, any remaining
assets are to be distributed among its members at that time.
It may be possible to include some rules about how much is to be paid
to members as cash profit sharing bonus and how much can be retained
in the business, specifying some range round about the 50:50 mark to
begin with, asking for approval by General Meeting if the proportion is
to be changed either way.
What has been said here about co-ops and members applies to all types
including consumer co-ops, credit unions and other mutual societies.
Back to Contents list
CO-OPERATION BETWEEN PARTNERS
BETWEEN PRODUCERS AND CUSTOMERS
There is a mutuality of interest, a partnership, between producers and
customers which has to be taken into account when deciding policies
(what is to be done and how it is to be done), when electing directors
and when sharing out profits. A co-op's success depends on this.
Producer and Consumer Co-ops
Let me illustrate this for both producer and consumer co-ops. The
producer co-op is owned by its members, namely those who work in it.
The consumer co-op is owned by its members, namely its customers.
Now consider a retailing co-op. This can be owned either by its
workers or by its customers, can be either a producer or a consumer coop, as follows:
PRODUCER CO-OP
Owners
(Workers)
Pay
Market rate
Profit Share
Annual Cash Bonus
Capital Gains
CONSUMER CO-OP
Customers
Yes
Yes
Reduced prices
Owners
(Customers)
Employees
Pay
Profit Share
Annual Cash Bonus Reduced prices
Capital Gains
Yes
Market rate
Yes
The mutuality of interest between them is that profits are shared
between workers and customers in a mutually acceptable way. In each
case the owner benefits from retained profits.
The case studies {06-07} indicate that these consumer co-ops are far
from successful. Democratic control by members appears inadequate
and customers gain little from co-op membership.
But retailing producer co-ops can be and are successful when they
acknowledge the partnership between producers and customers. John
Lewis Partnership with its policy of 'never knowingly undersold' is
very successful {08}. Eroski's success is outstanding and it has been
expanding rapidly as a result of sharing its profits not only among its
worker owners but also with its customers by reducing prices {09}.
General Meeting and Board of Directors
Mutuality of interest, that is partnership, can be reflected by the
composition of a General Meeting as well as that of a Board of
Directors.
Among the Mondragon co-ops, for example, is the Caja Laboral
Popular, Caja for short. As a savings bank it provided capital as well as
management services for new and existing co-ops. During the early
stages of development of these co-ops it had considerable impact
spreading the benefits of co-operation in its local community.
Ultimate control of the bank rested with the general assembly of
'members'. In the early stages this comprised the staff of the bank plus
representatives of member co-operatives as follows {09: MON 01}:
(rep=representative)
Industrial co-ops
1 rep per 20 employees
Consumer and agricultural co-ops 1 rep per 200 members
Educational and housing co-ops 1 rep per co-op
Savers
1 rep per 1,000 savers
It seems that the general assembly elected the board of directors. This
apparently consisted of four directors elected from among themselves
by its own staff and of eight directors from associated (customer) coops <5>. Each staff member received a share of the bank's profits
which was a sum equal to the average distributed in the co-operative
group as a whole.
Consumers are also represented on Eroski's board of directors.
BETWEEN CO-OPS
There is also a mutuality of interest, a partnership, between co-ops and
more particularly between co-ops of different kinds, between co-ops
co-operating, supporting and advising each other, and the co-operative
movement's ability to achieve its aims and to prosper depends on
taking this into account.
Co-ops <2> need to co-operate with co-ops while acknowledging the
mutuality of interest between them. This applies to all, to those
providing capital, management services, raw materials, components,
sub-assemblies, products, installations, insurance, retail goods and
services alike.
Each benefits. Each obtains goods and services at preferential rates,
each sells for less and becomes more competitive.
To a considerable extent the success of Mondragon's co-ops resulted
from the way they co-operated with each other in providing for the
needs of their local community. Mondragon's key supporting co-ops,
for example, were an insurance co-op (Lagun-Aro) which provided
social security and pensions, a medical and hospital services co-op, and
a research and development co-op (Ikerlan). Mondragon's key advising
co-op was the banking co-op (Caja Laboral Popular).
But a mutual interest, a partnership, can exist only between co-ops
which apply similar benevolent rules, does not exist with a consumer
co-op, for example, which exploits its employees and customers.
Co-operating with Each Other
Co-operation has to be direct between co-ops without use of
intermediaries. External co-ordinating structures place themselves
between co-ops who should be working together. Co-ordinators appear
when teamwork is ineffective and make matters worse. In the end coordinators are likely to take authority over those they co-ordinate, are
likely to take away decision-taking from individual co-ops and their
members. That such processes are at work in co-ops just as in
companies would seem to be indicated by the case studies.
The importance of co-ops of all kinds co-operating with each other
cannot be stressed too much at this point. But the way in which
supporting and advising co-ops and managers team up with those
engaged in direct work (such as production) is one of the least
understood aspects of general management, of enabling people to cooperate with each other in teams. However, there is a concise, clear and
relevant discussion of how to obtain effective co-operation and
teamwork in 'Organising' {14} <4>.
ALLOCATING SURPLUSES (PROFITS) BETWEEN
PARTNERS
To be decided is how profits are to be shared out between cash profitshare payments and how much is to be retained in the enterprise and
added to individual capital accounts.
And then how the profit-share payments are to be divided between
owners and partners.
BETWEEN OWNERS AND EMPLOYEES
All worker-owners are members and all workers in a producer co-op
need to be members.
This is so because a producer co-op which employs workers is in effect
exploiting them as it is retaining the employees' share of the profits
they helped to produce. I would suggest not more than 5 per cent of
workforce should consist of employees at any one time. Any employee
would be employed for a period of say not exceeding one year, this
being a trial period before applying or being admitted as worker-owner.
During this trial period, that is while employed, the employee should
receive a share of the cash profit share.
Similarly employees of other kinds of co-ops should receive their share
of the cash profit share.
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OWNERSHIP AND CONTROL
Members decide policy and elect directors whose role is to ensure that
policy is put into effect. If the members are dissatisfied with what
directors are doing then they replace the directors.
Directors in turn appoint the General Manager and senior managers to
put the agreed policy into effect and to deal with day-to-day problems.
If the directors are dissatisfied with what the managers are doing, then
they replace the managers.
Members decide policy and elect directors at a general meeting. When
the total number of members is reasonably small then all can attend,
have their say, vote.
When numbers are large, as in a consumer co-op, then delegates need
to be elected on the basis of each delegate representing about the same
number of individual members.
A key issue to be decided is by what proportions those having a mutual
interest, partners, should be represented in a general meeting or by
directors. In a Mondragon student co-op, for example, both students
and lecturers as well as producer co-ops (customers) were represented
by directors.
DEMOCRATIC POLICY DECIDING AND CONTROL
Companies {19} are in effect owned and controlled by their majority
shareholders, as follows:
One vote per share.
Majority shareholders are in control and elect directors (can
appoint themselves or nominees).
Majority shareholders can use company as if it were their own
and decide what is to be done.
Ownership means control. It is the owner who decides what is to be
done, it is the owner who decides policy. Majority shareholders in
effect take over ownership from the other shareholders. What is left for
these other shareholders to decide is whether to sell their shares or buy
more.
For co-ops <2> the corresponding basic system is very different:
One vote per member.
Majority vote decides policy.
Majority vote elects directors.
The decisive difference in comparison with companies is that share
ownership in a co-op establishes a voting right of one vote per member,
establishes a democratic basis for the control of the co-op. In this way
each member has one vote regardless of the amount of money he may
have put into the co-op, regardless of the amount purchased.
Ownership means deciding policy. And democratic deciding of policy,
that is democratic control of a co-op, is intended to ensure that co-ops
are run for the benefit of their owners, that is of producers, customers
and the community as a whole.
Deciding Policy
Basic is that key decisions have to be taken by the people and not by
those in the hierarchy, have to be taken by the members.
Policies have to be decided by members at general meetings held at
regular intervals. Its agenda, the subjects of individual proposals to be
decided and their wording would need to be set by the members. For
example, come up from branches.
Agreed policies have to be mandatory, have to be put into effect. The
role of directors is to have these policies put into effect by the
managers and to deal with policy questions in between general
meetings.
The process of deciding policy should be independent from a co-op's
officials and managers. But an input is required from them before
objectives are decided. It should be possible for them to comment in
clear factual terms on specific proposals before a vote is taken.
Stating Aims and Objectives
Policy may take the form of aims (general statements of intent, timed if
possible) and objectives (quantified and timed). It is comparatively
easy to put together warm-sounding heart-warming aims which are
meaningless in practice. Aims need to be converted into objectives so
that directors and executives can plan and control the achievement of
these objectives {16}, so that the co-op's progress and the performance
of its directors and managers can be assessed against the objectives
which were to have been achieved.
Setting objectives is common practice in general management and is
effective. Stating 'sales should be improved' is fairly meaningless.
'Sales need to be improved within 12 months' is only a little more
meaningful. But saying 'sales were 10 units per week on 1 Jan 96 and
need to be increased to 15 units per week by 1 Jan 97' is a meaningful
objective which enables progress to be planned, measured and
controlled, and which also enables performance to be assessed <6>. A
key point is that social and community objectives can be similarly
quantified and timed.
ROLE OF DIRECTORS
We have seen already that members decide policy and elect directors
whose role is to ensure that what was decided at a General Meeting by
the members is put into effect, is done and is achieved.
In the period between general meetings, directors deal with unexpected
matters from the point of view of putting the policies into effect, are
responsible for making such decisions. They are accountable to the
members for what they decided or failed to decide and need to get the
members' approval of what they did or did not do, by reporting to the
members before the next general meeting. Members can then discuss
and approve the report at that meeting.
Directors appoint the General Manager and senior managers to have
the decisions carried out and have to ensure that the co-op's General
Manager puts into effect the policies decided by the general meeting.
Directors need to ensure the co-op is managed participatively. Which
means that organisation has to be functional, that the style of
management is participative and that managers understand how this
affects how they manage. Such aspects are discussed in more detail in
the next section.
The annual report from directors to members should state in concrete
terms what progress has been made by the co-op in achieving peopleorientated and community-orientated co-op aims.
Members need to be aware that the role of directors is to have carried
out the mandatory policy decisions taken by members at general
meetings, to achieve the mandatory aims and objectives set by
members at general meetings.
ROTATION OF DIRECTORS
The number of directors on a board of directors varies from 2 or 3
upwards. Some boards in the case studies have between 12 and 30
directors. Smaller boards find it more difficult to take balanced and
appropriate decisions. Larger boards have communication difficulties
as there just is not enough time for all to contribute their knowledge
and experience. The most effective boards consist of about 6 directors,
say up to 8.
Directors are generally elected for a period not exceeding 2 or at most
3 years. And no director should serve for more than two terms of
office.
If elected for 3 years, then rotation of directors can be specified by
stating that one-third of the directors should resign each year, in turn.
These can be re-elected as long as they have only served one term of
office.
If there are 6 directors (A-F), then A+B retire at end of first year, C+D
retire at end of second year, E+F retire at end of third year. If A+B
were re-elected at end of first year, they retire at end of fourth year.
And so on.
This process ensures that directors can be replaced by the members at
regular intervals and that continuity is maintained as only a few (not
more than one-third of the directors in the example above) would be
elected for the first time, would be inexperienced.
INFORMATION FOR DIRECTORS AND MEMBERS
Accounts
It is quite usual for an enterprise's annual statements of accounts to be
presented to directors and members in stylised format and legalistic
language which can be fairly meaningless to non-expert directors and
members. These statements are then nodded through, accepted without
question.
Accounts indicate performance and should be stated or summarised in
easily understood form showing source and application of funds,
analysing expenses including overheads, stating which groups or
causes were supported and by how much.
A separate summary report could be prepared by a group of interested
members acting as an independent committee of the general meeting.
Independent, that is, of the co-op's hierarchy, with committee members
unrelated and unconnected to the hierarchy.
Performance
Directors and members need factual information about co-op
performance. A standard system and format should be used for
reporting performance and accounts, doing so from the point of view of
co-op members.
The information and methods used in the case-studies associated with
this report are good starting points. Including, for example:
Members and employees (full-time and part-time).
Pay (all levels and average).
Sales, expenses, donations.
Remaining profit and how divided between member's cash and
capital accounts.
Members' funds (Net Assets; Share Capital + Reserves).
Extent to which co-op aims and objectives achieved.
The Right to Know
Each member as owner has the right to know. This applies to all co-ops
and to all co-op matters.
The right to know is heartily disliked by authoritarian managers who
believe in obeying and giving orders and by empire builders.
All information should be available to all when requested, no matter
whether technical, organisational, accounting or financial. Included
would be information like salaries and wages but not private and
personal information about individuals.
As part of the right to know, meetings of directors and committees
should be publicised in advance and open to any member wishing to
attend as an observer.
But at Mondragon, for example, the General Manager attends board
meetings without having a vote, to give expert advice {09}. Here
directors are not only owners but also employees and discussing co-op
performance could be more difficult with the General Manager present.
EXCHANGE OF INFORMATION BETWEEN CO-OPS
Information compiled about co-op performance of the kind suggested
above under 'Performance' is of interest also to other co-ops. Included
should be a short description of what the co-op does and any special
circumstances which may be relevant.
There is much to be said for establishing an independent grassroots
channel of information exchange and discussion, as suggested here.
And 'grassroots' means independent of existing established institutions
which are likely to have their own agenda forced upon them by
financial pressures.
A successful co-op is an example to others, one with problems could be
inviting helpful comments. Performance information enables one co-op
to compare its performance with other similar co-ops, an invaluable
source of important information.
All that is needed is for co-ops to co-operate with each other by posting
the information to an internet newsgroup which is completely
independent and open to all.
OPEN DISCUSSION BETWEEN MEMBERS
The case-studies indicate that members feel disregarded and apathetic.
So there is also a need for a completely independent grassroots
discussion forum for members.
Here also members could be exchanging information and discussing
matters of concern to them in their co-ops with others. I again suggest
posting to an internet newsgroup as this is open to all and completely
independent.
Access to co-op internet discussion groups could perhaps be made
available to members on co-op premises.
Such access could also be used by members for freely making available
to other members material such as grassroots co-op election proposals
and canvassing material.
BACKUP FOR DIRECTORS
Directors should be able to draw on independent advice as and when
required.
To me it seems that management consultants serving companies are too
deeply involved in the ideology of profit maximising for them to be
able to offer useful or effective advice to co-ops. The strength of the
Caja's banking and managerial advice to Mondragon's producer co-ops
{09} was derived from its co-operative background, its weakness was
its preoccupation with accumulating reserves.
Much knowledge and expertise will be available from a co-op's
members and in the local community. It can be tapped via the
communication channels already suggested such as a magazine of
some sort or access terminals on co-op premises.
COMMITTEES
There is a place for independent committees elected from members at
general meetings for doing specific tasks, for reporting findings to
members before a general meeting, for making available the knowledge
and experience of committee members to co-op members and directors,
for recommending courses of action.
Such committees should be independent of the co-op's officials,
directors and managers and these should not be committee members.
But committee members should have access to whatever information is
required by them for their committee work.
Committee members should be rotated as described earlier for
directors. But committees should not be self-perpetuating and should
be kept in existence only as long as required.
Suitable tasks could be
Collating proposals from members or branches into an agenda
for the general meeting.
Preparing a summary report of the co-op's annual accounts in
easily understood language while drawing attention to any
figures which seem important.
Preparing and arranging for distribution of a co-op magazine.
Reporting on spending from a co-op's community development
fund in relation to co-op aims and objectives.
A certain proportion of the co-op's surplus should be made available to
the general meeting for expenses connected with the work of its
committees.
Committees do not decide, they advise and recommend. But
committees can provide a wide range of opportunities for members to
participate in the control and management of the co-op, particularly
when formed in response to members' expressed needs in relation to
the co-op's activities.
STYLE OF MANAGEMENT, DECISIONTAKING AND MANAGEMENT
PERFORMANCE
DECISION-TAKING
Directors are responsible to and thus accountable to the members for
putting into effect policies set by members.
The General Manager is responsible to and thus accountable to the
directors for putting into effect policies set by directors.
And in this section we look at ways of ensuring that within the co-op
we have effective management and decision-taking which serves the
interests of the membership and of the community.
What stands out is that a co-op's management is responsible and
accountable to members who are workers, 'employees' and customers.
So that in a producer co-op top level managers are accountable for
what they do and omit to do, to directors who work in the organisation
and have first-hand knowledge about what is taking place within, of
actual results and management performance.
And it is individuals who take decisions, who are responsible for taking
them and thus accountable for the consequences of the decisions they
take or fail to take.
MANAGEMENT ACTIVITIES
What managers do is to
Plan ahead and set objectives.
Organise to achieve the objectives. The organisation needs to be
functional and results depend on the style of management.
Measure progress and take appropriate action.
Compare results obtained with those aimed at and feed back
lessons learned and experience gained.
For more information about corporate planning, setting objectives and
evaluating performance, as well as on appraisal of managers, see
'Directing and Managing Change' {16}.
STATING OBJECTIVES
We already saw in the previous section that objectives need to be
quantified and timed:
Stating 'sales should be improved' is fairly meaningless. 'Sales
need to be improved within 12 months' is only a little more
meaningful. But saying 'sales were 10 units per week on 1 Jan
96 and need to be increased to 15 units per week by 1 Jan 97' is
a meaningful objective which enables progress to be planned,
measured and controlled, and which also enables performance
to be assessed.
Social and community objectives can be similarly quantified
and timed.
FUNCTIONAL ORGANISATION
An understanding of functional organisation and functional
relationships is just as necessary between front-line and supporting and
advising work units such as departments as it is necessary between coops.
The importance of all work groups co-operating with each other cannot
be stressed too much. There is a concise, clear and relevant discussion
of how to obtain effective co-operation and teamwork in 'Organising'
{14} <4>.
So directors need to ensure that organisation is functional and that
managers are aware of how this affects what they do and how they do
it, as well as decision-taking.
But directors need also to ensure that the co-op is managed
participatively, that is that the style of management is participative
{11} and that managers understand how this affects how they manage
{15}. Style of management and participative management are
discussed in the following sections.
AUTHORITARIAN STYLE OF MANAGEMENT
In an authoritarian system those at the top, their establishment and their
experts, tell people what they have to do. An authoritarian manager
expects to be told what to do, to be given an order, and to pass this on
by way of instructions to his subordinates. The process, and the
problems which arise, have been described elsewhere {11, 15}.
Here is an example. It is difficult to tell one's manager that he is to
blame for what happened, that it was caused by something he did or
omitted to do. That he could have prevented it. The higher up you go in
the hierarchy, the more difficult it gets to criticise one's manager.
So people near or at the top are mostly not told when it is they who are
responsible, when it is they who should be held to account. They are
likely to be told that what happened was caused by someone else, by
faulty organisation, by circumstances outside one's control.
The result is they can begin to see themselves as being always right. If
something goes wrong it is because someone else did not do what he
had been told to do. They can lose touch with reality.
The greater is the extent to which authority is unchecked, the more
authoritarian is the style of management, the greater is the likely
damage to the organisation (business, political, private, enterprise,
country, people, club, whatever).
The authoritarian mind, however, continually attempts to bypass and
negate socially responsible democratic decision-taking and to replace it
with self-interested direct rule from above, regardless of the
consequences to the organisation and those in it.
What could be indications of such processes taking place could be that
pay differentials increase between top and bottom with pay advancing
much more quickly at the top. Or pressure for such increases, for new
salary structures. Or proposals for 'vertical' restructuring, for
'centralising' decision-taking. And 'empire building'. Or distancing
policy setting and management control away from members, an
example being the forming of subsidiary companies. Or mutual
societies converting to companies or allowing themselves to be taken
over by companies {05}. And co-ordinating structures which are likely
to result in 'co-ordinators' taking over management functions and then
gaining control over those who allowed themselves to be 'co-ordinated'
in the first place.
SOCIAL RESPONSIBILITY, PROFITS AND SOCIAL
ACCOUNTABILITY
It is some years since the report 'Social Responsibility, Profits and
Social Accountability' {02} called for
Open decision-taking at all levels of government, business and
local government levels.
Free access to all relevant information.
Establishing ways of what has since been called whistleblowing, of being able to inform the community of decisions
and all matters which are taking place and which are against the
public interest. And also of establishing ways of protecting,
supporting and providing back-up for whistle-blowers.
The same report also stated that
As far as management is concerned it seems that one should
find practical ways within the company to let employees (at all
levels) express themselves without endangering their position
or prospects.
There is the problem of how to prevent a self- perpetuating elite
being formed which in due course again attempts to take over
the people so as to exploit them.
One essential requirement is that democratic forms of decisiontaking are used, such as secret voting at committee meetings,
and that they cannot be bypassed or changed by the
authoritarian mind.
Much has been achieved since then, much is being done, more remains
to be achieved. People are struggling to achieve these objectives.
But within enterprises there are solutions which work well and which
should do even better in co-ops. And these are discussed in the
following sections.
THE RIGHT TO BE HEARD
A monthly magazine, or its equivalent, needs to be produced to keep
members informed and for publishing reports to members. But its key
purpose is communication between members, and between members
and management.
All worker owners and employees should have the right to write a
letter, either signed or anonymously, to the magazine on any matter
affecting the co-op or management, and to complain. Such letters must
be published unless publication could harm the co-op. Anonymity must
be protected. All letters have to be answered honestly by those
concerned, including the General Manager and the directors.
This simple provision gives worker owners and employees an effective
influence and control over the style of management. It works well and
is effective. {08}
A good manager welcomes helpful criticism, no matter where it comes
from. But many managers dislike being criticised. This is a
characteristic failing of authoritarian managers and authoritarian
organisations. {11}
An important element of effective management is to inspire staff, to
motivate towards working well and towards working well together in
teams {12-13, 15}. So public criticism can be seen as an indication of
how inadequate a manager is in this and in other aspects of his work.
Managers at all levels will carefully examine the magazine to see who
and what is mentioned as well as the honest replies which must be
given.
Public criticism of any aspect of a manager's work can affect job and
promotion prospects. And so can public praise.
Criticism from within one's own group, from below, can be stifled,
discredited, eliminated. Anonymous public criticism cannot be dealt
with like this. An employee's right to criticise anonymously in public
any aspect of management in a way which can be seen by all is most
potent motivation towards good and effective management at all levels.
THE RIGHT TO KNOW
It follows that with the right to be heard goes the right to know. They
complement and reinforce each other.
Empire building and co-ordinating depend to a large extent on
information being held back, regarded perhaps like private property,
possibly increasing job security.
Not so under modern conditions and certainly not so in a co-op. All
information should be available to all when requested. And this
includes the co-op's accounts, salaries and wages, expenses and
donations.
PARTICIPATIVE STYLE OF MANAGEMENT; ROLE
OF MANAGER
How managers are expected to behave within a participative style of
management has been described and discussed {11, 15}. Perhaps the
key points are that work is done, that responsibility is carried, at the
lowest level it can be done and that the role of the manager is to clear
difficulties out of the path of those whose work the manager coordinates.
DECISION-TAKING BY THOSE WHO DO THE WORK
Participation in decision-taking does not mean being asked for an
opinion. It means that decisions about work should be taken by those
doing the work or close to the doing of the work.
And clearly in a co-op matters to be decided by those doing the work
includes conditions of employment such as flexitime working, paid
holidays, capital expenditure on new equipment, production methods,
modernising showrooms.
APPRAISAL OF MANAGERS
Supervisors, managers, officials at all levels including the General
Manager should be evaluated regularly much the same as in
companies. While appraisals are carried out either once or twice a year,
I prefer twice a year.
The essential difference, however, is that in a co-op the appraisal
should be carried out by those working for the person being appraised.
Each subordinate receives a standard form with carefully prepared
standard questions, marks each question on a five-point scale and posts
it completely anonymously.
The overall score is translated into an easily understood figure such as
a percentage rating between 0 and 100 per cent. The results are then
published within the co-op, within the workforce, on a public
noticeboard likely to be seen by all such as outside a canteen or an
office entrance. The system works and works well. It does
systematically what takes place in a kibbutz general assembly when
considering allocation of work and responsibilities {10}.
But questions on the form used for appraising need to be well thought
out and be co-op orientated as well as management orientated. For
example, one may wish to assess the extent to which the manager being
appraised encourages teamwork.
APPOINTING MANAGERS
We have seen that work is being done at the lowest level it can be
done, and that responsibility for the way it is done rests with those
doing it. We have also seen that a key part of a manager's work is to
clear difficulties out of the path of those whose work he is coordinating.
And there are good reasons for promoting or appointing managers from
within the enterprise.
It follows that managers should be selected by those whose work they
would be co-ordinating. This is obviously so within a producer
(worker-owned) co-op but applies equally well elsewhere.
In a kibbutz, for example, all share equally in the work to be done and
the general assembly of members elects managers. A managers is
elected to be responsible for part of the work to be done, for a limited
period of say two years. Following this he or she can be elected to
manage another part of the work. This has worked well. {10}
MANAGERS AND CO-OP VALUES
A co-op needs to ensure that its managers believe in, and work to apply
and advance, co-operative aims and practice.
Mondragon co-ops' managers during early stages were younger, more
non-materialistic, more motivated by co-operative ideology. {09}
So what is needed are more idealistic upcoming managers. And
younger managers growing through work experience and job rotation.
Combined with education and training to develop managers to the full,
paid for by the co-op in return for commitment to co-operative aims
and to the co-op. {12, 10}
Including education in co-operative aims and practices, in the
application of co-operative ideology within the community.
MOTIVATION OF DIRECTORS AND
MANAGERS
Pay is pay, no matter what it is called. There is no difference between
pay, remuneration or emoluments as long as we include all direct and
indirect pre-tax payments and services received from the employer.
Company directors <8> are motivated by pay in its various forms, by
greater wealth and by greater influence, patronage, power. {12-13, 05}
Pay for managing directors (chief executives) and directors depends on
performance and performance is assessed by criteria such as profit
generated, turnover, deposits.
And so company directors aim to expand the enterprise they control by
diversifying into other related areas, by taking over other enterprises,
and aim to improve profit performance.
But for some time now pay of directors has been what the market will
bear, what controlling shareholders will not object to in the light of
dividends they receive and the increase in the value of the shares they
own, what owners decide to pay themselves.
And this applies equally well within co-ops when the pay of General
Manager and managers is seen by them to depend only on commercial
performance and not on achieving of people-orientated and
community-orientated aims and objectives <7>.
Co-ops of all kinds have accumulated assets which can be massive.
Higher pay and increased status, power, influence and patronage can
come from being in control of the application of such funds.
So managers of co-ops can be motivated by the prospect of higher pay
to expand the enterprise they control, by diversifying into other related
areas, by taking over other enterprises, to increase profit performance
by charging more, by paying lower wages, by giving less to members.
Managers can then see democratic policy-setting by members, and by
directors elected by members, as interfering with profit-maximising
goals, with decision-taking. And managers may then strive to weaken
and bypass democratic policy setting and decision-taking.
An example being the statement that 'member-democracy should not be
exercised at the expense of a society's efficiency'. Which, translating
into basic English, presumably means that democratic processes should
not interfere with decision-taking by chief executives (general
managers). {05}
Concentrating on increasing of profit performance, on expanding the
enterprise, has been accompanied by a loss of mutuality and neglect of
co-operative people-orientated and community-orientated objectives.
The objectives of larger co-ops are now barely distinguishable from
those of companies, of commercial banks. {04-07}
Co-op directors do not get paid for what they do as directors, are
generally unpaid volunteers. Some directors receive a shop discount,
others have approved expenses repaid.
Kibbutz experience showed that members acting as directors or
managers gained much from doing so. There is the knowledge that one
is applying one's abilities and skills to the full in meeting the
challenges which arise. And the satisfaction of knowing that other
members of the co-op are aware of the work one is doing and of its
contribution to the common good. {12-13}
Directors represent and act for all the members, have to ensure that
members' interests and members' ownership rights are respected.
Directors have to ensure that member and community interests, that cooperative ideology, override the pressure, the push, for less democratic
policy setting or for greater profits. They have to do so regardless of
how plausible-sounding the arguments put forward by managers.
So directors need independent backup as and when required. Best
provided by and through independent committees of the General
Meeting.
It is the directors who should decide and control the application of a
co-op's assets as well as how surplus (profit) should be divided
between cash profit-share payouts and capital gains (surplus retained to
be added to reserves).
We need to ensure that those running our organisations are peopleorientated and imbued with the spirit of co-operation, with a sense of
social responsibility.
WORK AND PAY
The National Remuneration Pattern {01} is a precise pictorial record of
the differentials within a country, and between countries, from top to
bottom, from young to old. It shows the relative value placed on
different kinds of work. At the top are the owners or those who work
directly for them, at the bottom is the mass of wage-earners.
The pattern of differentials shows that what is rewarded is service to
the owners and their directors (establishment) rather than ability and
service to the community. {01}
To owners and employers the worth of a job is what has to be paid to
get it done. They want work to be done at the lowest rate at which they
can get it done.
What stands out is that the whole system rewards service to owners,
directors and general managers. So when Mondragon worker owners
and co-op managers are paid according to market rates, their pay is
compared with and determined by a scale which rewards service to
those in authority. To those in authority who often expect people to
maximise profits regardless of other considerations such as cost to the
community.
What the case studies indicate is that one of the early symptoms of a
managerial hierarchy's actions weakening democratic processes is
pressure to introduce and increase pay differentials. Increasing pay at
the top, bigger rewards for doing as told by superiors, with reward
linked to results, to contribution to profits. Plus introduction of chains
of command, of rigid organisational structures.
However, people should be rewarded in accordance with the benefits
which result to the community. When it comes to incomes and wealth
one should at least limit differentials. {17}
But then one has to consider just what sort of differential would be
both fair and appropriate. {01}
At Mondragon, for example, each member is paid the local going rate
for the work he does. But the before-tax differential between the lowest
paid and the highest paid is limited to three. And directors receive no
extra pay for the work they do as directors. {09}
A maximum differential of two, the maximum gross earnings being
twice the minimum earnings, both within and between countries, would
seem a reasonable target to achieve under present more extreme
circumstances. {01}
It would seem reasonable to link reward to results achieved by
increasing the income received by already well-paid levels while
maintaining the differential. But only after the income of the lowest
paid has increased and then only corresponding to the increase at the
lowest level. {01}
The existing pattern of differentials rewards service to company
owners and their establishment instead of service to the community.
The nurse, the fireman, the policeman and the teacher are at present
paid comparatively little for the work they do.
What is the value of one person's work when compared with another?
How do you assess the value to the community of the work of a nurse,
teacher, manual worker, musician or manager? How does one decide or
how can one determine what should be the differential (if any) between
the value of a nurse's work compared with that of a tractor driver at
harvest time and in winter? {01}
It is not easy to assess the relative service rendered to the community
by people in different positions bearing in mind also that a
community's needs may change with time. {01}
We are now so organised and inter-dependent that it is common for the
whole community to be inconvenienced whenever there is a local
disruption of some service. Which emphasises that each activity is
essential for the welfare of the community and leads one to consider
whether there should not be a common wage for all. {11}
Within a kibbutz all are equal, all share to the same extent. Some are
more able than others, some do more than others, but all are paid the
same. Earnings are pooled and divided equally. The success of the
kibbutzim is well known. {10}
Mondragon co-ops succeeded in spreading the benefits of co-operation
within their local community. Kibbutzim achieved a good and secure
life of high quality for their members.
And local work-exchange currency systems apply a constant rate of
pay per hour, valuing a person's work as the time in hours taken to
complete it. It is hours of work which are being exchanged, all
receiving the same currency rate per hour.
Co-ops should limit differentials step by step, starting with limiting
differentials to 2 and then working to reduce them by increasing lower
level pay. Doing this is likely to discourage those more interested in
money for its own sake than in co-op values. One should decide at the
beginning by what date the process is to be completed.
AIMS AND FUNDAMENTALS
AIMS
To end people being exploited and enslaved because of their need and
by excessive prices, starvation wages, extortionate interest rates and
oppression.
To provide a good life of high quality including free education and full
social security against unemployment, illness and adverse effects of old
age.
Responsible leadership aims to eliminate need so as to eliminate
exploitation because of need, wants to eliminate exploitation by high
prices, low wages and high interest rates, wants the highest possible
standard of living, social security and quality of life for the people.
{02}
The purpose of any enterprise is to satisfy a community's needs by
providing high quality goods and services at reasonable prices {17}.
The real profit or gain any enterprise achieves is the gain which the
community obtains as a result of the enterprise's operations {02}.
RIGHT TO OWNERSHIP
Ownership {19} is the right to possess something and to decide what is
to be done with it. If I own something it belongs to me and I decide
what is to be done with it. An example would be owning a house.
Possession is having something in one's custody as distinct from
owning it. If I possess something it belongs to another but I can decide
how to use it. An example would be renting a house.
Another example would be deciding what to do with my money
(ownership) or deciding and controlling the use of money belonging to
someone else (possession).
And considering the right to ownership, two questions need to be
considered. Namely where does the right come from and how is it
exercised.
The right to own property varies among societies. Ownership rights are
based on man-made laws and there has been little, if any, grassroots
community-orientated participation in their drafting.
Ownership of land and means of production, of funds and wealth, has
always been accumulated at someone else's expense. All belonged to
the community, belonged to all alike.
The source of profit (surplus) is someone else's money. Hence the need
to spread excess (beyond reasonable) benefits of co-operation to others,
to the community, so that those who have less can catch up. The
individual supports the community and in return is supported by the
community.
The community supports the individual but only if the individual in
turn supports the community. Those supported by the community are
under obligation to support others in need of support, in due course and
when able to do so, to spread the application of co-operative principles,
to share with others who are in need. Where need includes the need for
capital to secure their operation, to achieve the general standard of
living and quality of life.
A human right is a something one may legally or morally claim, is the
state of being entitled to a privilege or immunity or authority to act.
Human rights are those held to be claimable by any living person.
Human rights apply to all living people. Every living person is entitled
to them.
We saw above that ownership of land and means of production, of
funds and wealth, rightfully belongs to the community, belongs to all
alike, is a human right. Those who have accumulated them have only
possession, which means they can decide how to use them.
We have the use of possessions as long as we use them to provide a
good living for our family, and beyond that for the benefit of the
community. For the benefit of others less able or fortunate, for the
benefit of the community around us and then for the benefit of
communities abroad. But only supporting those who genuinely support
our co-operative ideals and principles and their application and who
themselves live and act accordingly.
CONCLUSIONS AND
RECOMMENDATIONS
The case studies show that co-ops and mutual societies retain most of
the profits and that members cease to be entitled to them. A member
who leaves does not get back the moneys deducted by the enterprise
from that member's share of the profits.
So what emerged from this work is a picture of a fundamentally flawed
(faulty) system in which co-op members are much worse off than
company shareholders.
This is perhaps the most important single finding of this report.
The figures, rough as they are, speak for themselves. Members of
consumer co-ops receive little because the co-ops are not as profitable
as they should be and because the co-ops are keeping most of the
profits. The profit available for allocating is taken after expenses and a
contributing factor may be that these co-ops are spending too much
money on expenses.
The objectives of larger co-ops are barely distinguishable from those of
companies, of banks.
ALLOCATING PROFITS; OWNERSHIP OF
RESERVES.
Important is that all profits belong to the owners, to the members. A
co-op's reserves consist of retained profits and belong to its members.
Each year a co-op holds back profits belonging to its members and
adds them to the co-op's reserves. At present any claim a member may
have to money held back by his co-op is ignored when a member
leaves and then forgotten by the co-op. And we saw that some co-ops
<2> have in this way accumulated massive reserves.
A co-op's reserves belong to its members and this has to be stated
openly. And co-ops need to acknowledge that their assets belong to
individual members by opening a capital account for each member and
by dividing ownership of assets among them.
The balance in each member's capital account would then be the money
value of his share of the co-op's reserves plus whatever he paid to the
co-op on becoming a member.
Each year the whole profit has to be divided and allocated to members
in two ways:
Firstly as a profit-sharing dividend which is paid out once each
year as a cash payment.
Secondly, the remaining profit is retained in the enterprise and
each member's share of this is credited to that member's capital
account.
A mutual society would need to state clearly each year to each member
the amount assigned to the member and its basis for calculating the
amount assigned.
Shareholders of companies can vote with their feet by selling their
shares which at the same time converts their capital gains (which
include retained profits) into cash. Co-op members should be able to do
the same.
If a member leaves he ceases to be an owner, ceases to be entitled to
any share of the co-op's profits. So he should be able to, and should
have to, take his accumulated capital with him and his capital account
should then be closed.
What is said in this report about co-ops applies to all types including
consumer co-ops, credit unions and other mutual societies.
Some co-ops have rules which in effect prevent their members
(owners) from dissolving the co-op. And other rules sometimes state
that a co-op's reserves are not to be distributed among its members
when a co-op is dissolved, that their money would then be given to
others.
A majority of members should always have the right to dissolve their
co-op. A badly managed co-op should not be able to continue
indefinitely simply by retaining most of the profits. And in the event of
a co-op being dissolved, a co-op's assets (including its reserves) should
then have to be distributed among its members.
I suggest members request their co-ops to return the ownership of
reserves to its members. The amounts per member can be considerable
and if the co-op fails to restore ownership to members, then I would
suggest forming and supporting co-ops which operate under fairer
rules.
CO-OPERATION BETWEEN PARTNERS
There is a mutuality of interest, a partnership, between worker-owners
(members) and their customers, between customer-owners (members)
and employees, between co-op and co-op.
The mutuality of interest between them is that partners co-operate with
each other and that profits are shared between partners in a mutually
acceptable way. But in each case only owner-members benefit from
retained profits.
We saw mutuality of interest, that is partnership, reflected by the
composition both of the General Meeting and of the Board of
Directors.
Co-ops <2> need to co-operate with co-ops while acknowledging the
mutuality of interest, the partnership, between them. This applies to all
alike, no matter whether they provide capital, management services,
raw materials, components, sub-assemblies, products, installations,
insurance, retail goods, services, and so on.
Each benefits. Each obtains goods and services at preferential rates,
each sells for less and becomes more competitive. To me it seems that
the co-operative movement's ability to achieve its aims and prosperity
under modern conditions depends on taking this into account.
But a mutual interest, a partnership, can exist only between co-ops
which apply similar benevolent rules, does not exist with a consumer
co-op, for example, which exploits its employees and customers.
And co-operation should be direct between co-ops, without use of
intermediaries. External co-ordinating structures would place
themselves between co-ops who should be working together.
Producer Co-ops with Employees
Producer co-ops are formed to overcome exploitation of workers by
employers and co-ops may not profit from exploiting others.
A producer co-op which employs workers is in effect exploiting them
as it is retaining their share of the profits they helped to produce.
So all worker-owners are members and all workers in a producer co-op
need to be members, except when employed for a trial period.
There is a mutuality of interest, a partnership, between employer and
worker and one is as important as the other. The surplus they create
should be shared between them in a specified way.
I would suggest that the number of employees be limited to not more
than 5 per cent of workforce at any one time. Any employee to be
employed for a period not exceeding one year, this being a trial period
before applying or being considered for membership.
During this trial period, that is while employed, the employee should
receive his share of the cash profit share.
DECIDING POLICY
A co-operative <2> is an enterprise which is owned by its members as
individuals and is run jointly by them. It is run first for the benefit of its
members and then for the benefit of the community.
Co-operatives are based on the principle of 'one person, one vote'
regardless of the amount saved, deposited, borrowed, bought or
policies taken out.
The intention is to ensure democratic deciding of policy and control of
the co-op by its members.
What is at stake is ownership of means of production, of the co-op, of
an independent source of income. What is also at stake is freedom from
exploitation and from oppression through need.
Whoever takes the policy decisions, deciding what has to be done and
what is to be achieved, controls the co-op. If co-op members wish to
retain ownership then it is the members who must take the policy
decisions, who must decide what has to be done and what has to be
achieved.
Basic is that key decisions have to be taken by the people and not by
those in the hierarchy, have to be taken by the members.
So policies have to be decided by members at general meetings held at
regular intervals. It is the General Meeting which decides policy by a
majority of all members. Policies agreed by members at a General
Meeting have to be mandatory, have to be put into effect.
Agendas, the subjects of individual proposals to be decided and their
wording, would need to be set by the members. For example, come up
from branches.
There is a place for independent committees elected from members at
general meetings for doing specific tasks such as preparing the agenda
for the next general meeting, for reporting findings to members before
a general meeting, for making available the knowledge and experience
of committee members to directors, for recommending courses of
action. Independent, that is, of the co-op's hierarchy, with committee
members unrelated and unconnected to the hierarchy. These are
committees of the General Meeting and they report back to the General
Meeting. Committees do not decide. They report, conclude, advise,
recommend.
Directors need independent backup as and when required and this
could also be provided by and through independent committees of the
General Meeting. For example, a separate summary report on co-op
performance and accounts could be prepared by a group of interested
members acting as an independent committee of the general meeting.
A certain proportion of the co-op's surplus could be made available to
the general meeting for expenses connected with the work of its
committees.
Directors have to be democratically elected by and from the members
of the General Meeting. Role of directors is to put into effect policies
decided at a General Meeting, to have these policies put into effect by
the managers and to deal with policy questions in between general
meetings.
Directors represent and act for all the members, have to ensure that
members' interests and members' ownership rights are respected.
Directors have to ensure that member and community interests, that cooperative ideology, override the pressure, the push, for less democratic
policy setting or for greater profits for the sake of greater profits.
Directors need to ensure the co-op is managed participatively. Which
means that organisation has to be functional, that the style of
management is participative that managers understand how this affects
how they manage.
FUNCTIONAL ORGANISATION
An understanding of functional organisation and functional
relationships is just as necessary between front-line and supporting and
advising work units such as departments as it is necessary between coops.
So directors need to ensure that organisation is functional and that
managers are aware of how this affects what they do and how they do
it, as well as decision-taking.
THE RIGHT TO BE HEARD
The greater is the extent to which authority is unchecked, the more
authoritarian is the style of management, the greater is the likely
damage to the organisation.
All worker owners and employees should have the right to write a
letter, either signed or anonymously, to a co-op magazine on any
matter affecting the co-op or management, and to complain. Such
letters must be published unless publication could harm the co-op.
Anonymity must be protected. All letters have to be answered honestly
by those concerned, including the General Manager and the directors.
This simple provision gives worker owners and employees an effective
influence and control over the style of management. It works well and
is effective.
An employee's right to criticise anonymously in public any aspect of
management in a way which can be seen by all is most potent
motivation towards good and effective management at all levels.
THE RIGHT TO KNOW
With the right to be heard goes the right to know. They complement
and reinforce each other. And each member as owner has the right to
know. This applies to all co-ops and to all co-op matters.
All information should be available to any member or employee, no
matter whether technical, organisational, accounting or financial.
Included would be information like salaries and wages, expenses and
donations, but not private and personal information about individuals.
PARTICIPATIVE STYLE OF MANAGEMENT; ROLE
OF MANAGER
Directors need also to ensure that the co-op is managed participatively,
that is that the style of management is participative and that managers
understand how this affects how they manage.
How managers are expected to behave within a participative style of
management has been described already. Perhaps the key points are
that work is done, that responsibility is carried, at the lowest level it
can be done and that the role of the manager is to clear difficulties out
of the path of those whose work the manager co-ordinates.
DECISION-TAKING BY THOSE WHO DO THE WORK
Participation in decision-taking does not mean being asked for an
opinion. It means that decisions about work should be taken by those
doing the work or close to the doing of the work.
APPRAISAL OF MANAGERS
Supervisors, managers, officials at all levels including the General
Manager should be evaluated regularly, much the same as in
companies. While appraisals are carried out either once or twice a year,
I prefer twice a year.
The essential difference, however, is that in a co-op the appraisal
should be carried out by those working for the person being appraised.
APPOINTING MANAGERS
And there are good reasons for promoting or appointing from within
the enterprise.
It follows that managers should be selected by those whose work they
would be co-ordinating. This is obviously so within a producer
(worker-owned) co-op but applies equally well elsewhere.
MANAGERS AND CO-OP VALUES
A co-op needs to ensure that its managers believe in, and work to apply
and advance, co-operative aims and practice.
So what is needed are more idealistic upcoming managers imbued with
the spirit of co-operation and a sense of social responsibility. And
younger managers growing through work experience and job rotation.
Combined with education and training to develop managers to the full,
paid for by the co-op in return for commitment to co-operative aims
and to the co-op.
PAY DIFFERENTIALS
A maximum differential of two, the maximum gross earnings being
twice the minimum earnings, would seem a reasonable target to
achieve under present more extreme circumstances. Doing this is likely
to discourage those more interested in money for its own sake than in
co-op values.
Comparing different kinds of work and activities leads one to consider
whether there should not be a common wage for all.
So co-ops should start by limiting differentials to two and then work to
reduce them by increasing lower level pay in relation to top level pay.
One should decide at the beginning the date by which the process is to
be completed.
SOCIAL SECURITY FOR PEOPLE; CAPITAL FOR COOPS
We need to provide full social security against unemployment, illness
and adverse effects of old age which includes pensions.
We also need to make capital available for new and existing co-ops, for
capital-intensive production, for larger projects.
So what we need are banking and insurance co-ops which are
genuinely owned and controlled by their individual customers in
partnership with their employees.
It is the members who have to decide and control policies and this
applies particularly to investment policies.
Such co-ops would enable us to mobilise the community's many small
savings, pension contributions and premium payments for the benefit
of customers, the community and the co-operative movement. Offering
a better deal to customers and the community than could be offered by
profit-maximising financial institutions. Able to provide funds to the
co-op movement and as well as the expertise for using such funds well
and securely.
SABBATICAL YEAR
Worker-owners and employees of co-ops should be entitled to a
sabbatical year every seventh year. This amounts to using some of coop's surplus for providing worker-owners and employees with
something exceptionally valuable while at the same time reducing local
unemployment.
Academics already enjoy regular sabbatical years. During this period
they are paid their salaries. If such a large and well paid section of the
community regularly enjoy their sabbatical years, then co-operators
should benefit from the same.
Consider what sabbatical years would mean. For you and for others
who would during such a year be free to do as they pleased. Free to
travel, train for more skilled or better work, update knowledge, study,
gain greater understanding, qualify.
We could have much more satisfying lives, we could do much for our
own communities, could do much for those in need, for those who are
underdeveloped and unable to afford our own expert skills.
Those on a sabbatical must not work for pay, or produce to sell, during
that year but are paid the average pay for the enterprise. They are
entitled to the sabbatical year regardless of the work they do or the
level at which they worked during the previous six years.
COMMUNITY FUND
Every co-op should set up a Community Fund and pay into this each
year 10 per cent of the surplus available for distribution, for the benefit
of the community and the co-operative movement.
Spending money in and on community should be politically neutral,
but could be used for teaching and spreading co-operative principles
and practice.
Community Fund spending needs to be reported in detail to members
and to be approved by them. Simply not good enough to see a single
line somewhere saying a certain amount has been spent on donations.
Again probably best dealt with by a committee of the General Meeting
reporting directly to the General Meeting. The General Meeting should
approve spending guidelines for this committee and members should
be rotated in the usual way.
EXCHANGE OF INFORMATION BETWEEN CO-OPS
There is much to be said for establishing an independent grassroots
channel of information exchange and discussion, as suggested here.
And 'grassroots' means independent of existing established institutions
which are likely to have their own agenda forced upon them by
financial pressures.
All that is needed is for co-ops to co-operate with each other by posting
the information to an internet newsgroup which is completely
independent and open to all.
Information about how individual co-ops perform, for example, is
important to all co-ops as a measure of their own performance. A
standard system and format should be used for reporting performance
and accounts, doing so in compact, clear and factual terms from point
of view of co-op members. Included should be a short description of
what the co-op does and any special circumstances which may be
relevant.
OPEN DISCUSSION BETWEEN MEMBERS
Here also members could be exchanging information and discussing
matters of concern to them in their co-ops with others. I again suggest
posting to an internet newsgroup as this is open to all and completely
independent.
Back to Contents list
NOTES AND REFERENCES
NOTES
<1> See 'Performance' in case-studies {06-08}
<2> The term 'co-op' or 'co-operative' in this report
includes the different types such as mutual
societies, credit unions, consumer and producer coops. And when I say 'co-ops and mutual societies',
for example, it is to emphasise that what is being
said also applies to mutual societies.
<3> See {19} 'Companies and Shareholders, Directors
and Community'
<4> See {14} on 'Functional Organisation'
<5> It seems that this boardroom representation was
intended to ensure that the bank could not take
over any of the co-ops they had financed.
However, there are indications that the individual
co-ops restructured themselves into a kind of
corporation and the bank may now be subordinate
to the co-ops within the corporate structure.
<6> See also section 'Style of Management, Decisiontaking and Management Performance:
Management Activities'.
<7> See section on 'Aims'.
<8> See {19} on 'Motivation and Pay of Directors'
<9> Associated Case Studies
Mutual Societies
Trustee Savings Bank
Credit Unions
Building Societies
Consumer Co-ops
Co-operative Retail Services Ltd
Co-operative Wholesale Society Ltd
The Co-operative Bank PLC
Co-operative Insurance Society Ltd
Producer (Worker) Co-ops and Others
John Lewis Partnership plc
Mondragon Co-operatives
Kibbutzim (Plural of 'kibbutz')
REFERENCES
Can also be downloaded from
http://www.solbaram.org/
{01} Work and Pay
{02} Social Responsibility, Profits and Social
Accountability
{03} Co-op Study 1: The Trustee Savings Bank GiveAway
{04} Co-op Study 2: Credit Unions
{05} Co-op Study 3: Building Societies
{06} Co-op Study 4: Co-operative Retail Services Ltd
{07} Co-op Study 5:
(1) Co-operative Wholesale Society Ltd
(2) Co-operative Bank PLC
(3) Co-operative Insurance Society Limited
{08} Co-op Study 6: John Lewis Partnership PLC
{09} Co-op Study 7: Mondragon Co-operatives
(Mondragon Corporacion Cooperativa)
{10} Co-op Study 8: Kibbutzim
{11} Style of Management and Leadership
{12} Motivation Summary
{13} The Will to Work: What People Struggle to
Achieve
{14} Organising
{15} Role of Managers Under Different Styles of
Management
{16} Directing and Managing Change
{17} Community Economics: Principles
{18} Ownership and Limited Liability
{19} Companies and Shareholders, Directors and
Community
MORE DETAILED LIST OF CONTENTS
Scope of Report
Purpose of Co-operatives
Different Needs, Different Co-ops
Mutual Societies
Consumer Co-ops
Producer (Worker) Co-ops
Co-operatives and Mutual Societies
Allocating Profits and Ownership of Reserves
Co-operation Between Partners
Between Producers and Customers
Between Co-ops
Allocating Surpluses (Profits) Between Partners
Between Owners and Employees
Ownership and Control
Democratic Policy Deciding and Control
Deciding Policy
Stating Aims and Objectives
Role of Directors
Rotation of Directors
Information for Directors and Members
Accounts
Performance
The Right to Know
Exchange of Information Between Co-ops
Open Discussion Between Members
Backup for Directors
Committees
Style of Management, Decision-taking and Management
Performance
Decision-taking
Management Activities
Stating Objectives
Functional Organisation
Authoritarian Style of Management
Social Responsibility, Profits and Social Accountability
The Right to be Heard
The Right to Know
Participative Style of Management; Role of Managers
Decision-taking by Those Who Do the Work
Appraisal of Managers
Appointing Managers
Managers and Co-op Values
Motivation of Directors and Managers
Work and Pay
Aims and Fundamentals
Aims
Right to Ownership
Conclusions and Recommendations
Allocating Profits; Ownership of Reserves
Co-operation Between Partners
Producer Co-ops with Employees
Deciding Policy
Functional Organisation
The Right to be Heard
The Right to Know
Participative Style of Management; Role of Manager
Decision-taking by Those Who Do the Work
Appraisal of Managers
Appointing Managers
Managers and Co-op Values
Pay Differentials
Social Security for People; Capital for Co-ops
Sabbatical Year
Community Fund
Exchange of Information Between Co-ops
Open Discussion Between Members
Notes, References and Links
More Detailed List of Contents
Associated Case Studies
Mutual Societies
Trustee Savings Bank
Credit Unions
Building Societies
Consumer Co-ops
Co-operative Retail Services Ltd
Co-operative Wholesale Society Ltd
The Co-operative Bank PLC
Co-operative Insurance Society Ltd
Producer (Worker) Co-ops and Others
John Lewis Partnership plc
Mondragon Co-operatives
Kibbutzim (Plural of 'kibbutz')
Relevant Current and Associated Works
A list of other relevant current and associated reports by
Manfred Davidmann on leadership and management.
Title
Description
Directing and
Managing Change
How to plan ahead, find best strategies,
decide and implement, agree targets and
objectives, monitor and control
progress, evaluate performance, carry
out appraisal and target-setting
interviews. Describes proved, practical
and effective techniques.
Style of Management Major review and analysis of the style
of management and its effect on
and Leadership
management effectiveness, decision
taking and standard of living. Measures
of style of management and
government. Overcoming problems of
size. Management effectiveness can be
increased by 20-30 percent.
Role of Managers
Under Different
Styles of
Management
Short summary of the role of managers
under authoritarian and participative
styles of management. Also covers
decision making and the basic
characteristics of each style.
Organising
Comprehensive review. Outstanding is
the section on functional relationships.
Shows how to improve co-ordination,
teamwork and co-operation. Discusses
the role and responsibilities of managers
in different circumstances.
Work and Pay
Major review and analysis of work and
pay in relation to employer, employee
and community. Provides the underlying
knowledge and understanding for
scientific determination and prediction
of rates of pay, remuneration and
differentials, of National Remuneration
Scales and of the National
Remuneration Pattern of pay and
differentials.
Work and Pay:
Summary
Concise summary review of whole
subject of work and pay, in clear
language. Covers pay, incomes and
differentials and the interests and
requirements of owners and employers,
of the individual and his family, and of
the community.
Social
Responsibility,
Profits and Social
Accountability
Incidents, disasters and catastrophes are
here put together as individual case
studies and reviewed as a whole. We are
facing a sequence of events which are
increasing in frequency, severity and
extent. There are sections about what
can be done about this, on community
aims and community leadership, on the
world-wide struggle for social
accountability.
Social Responsibility
and Accountability:
Summary
Outlines basic causes of socially
irresponsible behaviour and ways of
solving the problem. Statement of aims.
Public demonstrations and protests as
essential survival mechanisms. Whistleblowing. Worldwide struggle to achieve
social accountability.
Motivation Summary Reviews and summarises past work in
Motivation. Provides a clear definition
of 'motivation', of the factors which
motivate and of what people are striving
to achieve.
The Will to Work:
What People
Struggle to Achieve
Major review, analysis and report about
motivation and motivating. Covers
remuneration and job satisfaction as
well as the factors which motivate.
Develops a clear definition of
'motivation'. Lists what people are
striving and struggling to achieve, and
progress made, in corporations,
communities, countries.
What People are
Report of study undertaken to find out
Struggling Against:
How Society is
Organised for
Controlling and
Exploiting People
why people have to struggle throughout
their adult lives, in all countries,
organisations and levels, to maintain
and improve their standard of living and
quality of life. Reviews what people are
struggling against.
Community and
Public Ownership
This report objectively evaluates
community ownership and reviews the
reasons both for nationalising and for
privatising. Performance, control and
accountability of community-owned
enterprises and industries are discussed.
Points made are illustrated by a number
of striking case-studies.
Ownership and
Limited Liability
Discusses different types of enterprises
and the extent to which owners are
responsible for repaying the debts of
their enterprise. Also discussed are
disadvantages, difficulties and abuses
associated with the system of Limited
Liability, and their implications for
customers, suppliers and employees.
Ownership and
Deciding Policy:
Companies,
Shareholders,
Directors and
Community
A short statement which describes the
system by which a company's majority
shareholders decide policy and control
the company.
Ownership:
Summary
Ownership means control, means
decision-taking. This short review
covers where the right to ownership
comes from and how it is exercised.
Ownership of land, means of
production, and wealth. Ownership in
relation to incomes, need, and human
rights.
The Right to Strike
Discusses and defines the right to strike,
the extent to which people can strike
and what this implies. Also discussed
are aspects of current problems such as
part-time work and home working,
Works Councils, uses and misuses of
linking pay to a cost-of-living index,
participation in decision-taking, upward
redistribution of income and wealth.
Using Words to
Communicate
Shows how to communicate more
effectively, covering aspects of
Effectively
thinking, writing, speaking and listening
as well as formal and informal
communications. Consists of guidelines
found useful by university students and
practising middle and senior managers.
Back to Contents list
Relevant Subject Index Pages and Site
Overview



General Management
Community
Economics
The Site Overview page has links to all individual Subject Index Pages
which between them list the works by Manfred Davidmann which are
available on the Internet, with short descriptions and links for
downloading.
To see the Site Overview page, click Overview
Back to Contents list
Copyright © Manfred Davidmann
All rights reserved.
History
06/12/96 Completed
17/03/97 To Website
1996