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COCM 511- Management of Cooperatives

and Legal Systems

Course Material

Dr.G.Veerakumaran

ead of t!e Department

Department of Cooperatives

"a#ulty of Dryland $gri#ulture and %atural &esour#es

Mekelle 'niversity

(.O.) *+1

Mekelle, t!iopia

Mar#! */


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1) Course Title:Management of Cooperatives and Legal Systems

2) Course Code:COCM 531

3) Credit Hour0 3

4) Year & Semester:Year I/Semester I

5) Instructor: Dr.G.Veerakumaran

6) Methodology:ecture sess!ons" case stu#!es" ro$e%&$a'" sem!nars" ass!(nments.

7) Course Objectives:

o ena*$e stu#ents un#erstan# t+e !m&ortance o, mana(ement an# !ts ,unct!on to

&romote t+e coo&erat!-e or(an!at!on.

o !m&ro-e stu#ents tec+n!ca$ un#erstan#!n( o, &roc$amat!on 14/100" u$e o.16 /24 an# CC or(an!at!ona$ re(u$at!ons.

o acua!nt stu#ents 7!t+ coo&erat!-e $a7s !n ot+er countr!es

o ,am!$!ar!e t+e stu#ents 7!t+ ot+er $a7s re$ate# to coo&erat!-es

8) Course Content

(art Management

'nit Cooperative Management0 De,!n!t!on" O*8ect!-es" e$e-ance" an# 9n!ueness

'nit Cooperative Demo#ra#y0 Structure o, Coo&erat!-e Democrac'" Measures to

Make Democrat!c Contro$ ,,ect!-e" ;oar# < =ecut!-e e$at!ons+!&" unct!ons

o, t+e ;oar#" >o* Descr!&t!on o, a C+!e, =ecut!-e" Mem*er" D!rector" ?res!#ent"

Genera$ man(er.

'nit De#ision Making in Cooperatives0Conce&t" @!n#s" ?rocess an# ec+n!ues

'nit V Criteria for 2udging t!e Operational ffi#ien#y of Cooperatives0 Conce&t

o&erat!ona$ e,,!c!enc'" D!mens!ons o, o&erat!ona$ e,,!c!enc'" Cr!ter!a ,or

measur!n( o&erat!ona$ e,,!c!enc'" Measurement ?arameters o, o&erat!ona$

e,,!c!enc'" ?er,ormance a&&ra!sa$ an# @e' esu$t Areas !n Coo&erat!-es

'nit V 3raining Met!ods


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(art Cooperative La4

'nit "rame4ork for Cooperative La4

'nit 0 LO &e#ommendation 1+

'nit Salient "eatures of-Decree 44/!"#?roc$amat!on o 241/1066% ?roc$amat!on

o. 13/10% ?roc$amat!on o. 5/1005% ?roc$amat!on o. 14/100%

?roc$amat!on no 42/24. (Students Seminar topics- the source material would

be given to them and they need to summarize in relation to the current acts)

'nit V Cooperative So#ieties (ro#lamation %o. 167890 O*8ect!-es %,ormat!on an#

re(!strat!on% r!(+ts an# #ut!es o, mem*ers% mana(ement *o#!es% s&ec!a$

&r!nc!&$es% assets an# ,un#s% au#!t an# !ns&ect!on% #!str!*ut!on o, &ro,!t%

#!sso$ut!on an# $!u!#at!on% #!s&ute sett$ement% m!sce$$aneousB $ements o,Coo&erat!-e Soc!et!es ?roc$amat!on Amen#ment o. 42/24B $ements o,

Coo&erat!-e Soc!et!es e(u$at!on o. 16/24.

'nit V "ederal Cooperative Commission &egulations - Ot+er $a7s !ssue# *' t+e

,e#era$ an# re(!ona$ (o-ernments.

'nit V Cooperative La4s in ot!er Countries- A com&ar!son (Students Seminar

topics- the source material would be given to them and they need to summarize in

relation to Ethiopia)

'nit V $llied La4s0 Im&ortant ?ro-!s!ons !n t+e ot+er $a7s re$ate# to coo&erat!-e

market!n( (Students Seminar topics- the source material would be given to them

and they need to summarize in relation to the ooperative proclamation)

Sele#ted &eferen#es

1. Coo&erat!-e Mana(ement an# A#m!n!strat!on" IO/COO?" IS; 02%2%16310"

10.

2. V.@u$an#a!s7am'" e=t ;ook o, Coo&erat!-e Mana(ement" Aru#ra Aca#em'"

Co!m*atore" 22.

3. Coo&erat!-e Mana(ement" +tt&://777.rur#e-.us#a.(o-/r*s/&u*/c!r4/c!r4.+tm

4. A&&ra!s!n( Man(ers ?er,ormance"+tt&://777.rur#e-.us#a.(o-/r*s/&u*/rr136.,

5. a(en enr'" rame7ork ,or Coo&erat!-e e(!s$at!on" IO" 100
http://www.rurdev.usda.gov/rbs/pub/cir4/cir4.htmhttp://www.rurdev.usda.gov/rbs/pub/rr136.pdfhttp://www.rurdev.usda.gov/rbs/pub/rr136.pdfhttp://www.rurdev.usda.gov/rbs/pub/cir4/cir4.htmhttp://www.rurdev.usda.gov/rbs/pub/rr136.pdf


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6. ?romot!n( Coo&erat!-es%A (u!#e to IO ecommen#at!on 103" +tt&://777.co%

o&.ac.uk/#o7n$oa#s/?romot!n(2Co%o&erat!-es.,

. ;as!c ra!n!n( met+o#o$o('%Mater!a$s ,or ra!n!n( o, Coo&erat!-e ra!ners"

ra!ners Manua$" IO" 777.coo&neta$#!a.or(

. [email protected]+arma" Coo&erat!-e a7s !n As!a an# t+e ?ac!,!c" COO? IMS"

e7De$+!" 100.

0. +tt&://!$o.$a7.corne$$.e#u/&u*$!c/en($!s+/em&$o'ment/ent/coo&/$a7s/

1. t+!o&!an Commerc!a$ Co#e 106.

!ote: "he student is e#pected to re$er all the business relevant proclamations o$

Ethiopia%

Met!od of valuation

S$.o. Met+o# Ma=!mum

Marks

1 M!# term =am!nat!on 3

2 !na$ =am!nat!on 3

3 Ass!(nment 2E1 2

4 Stu#entFs Sem!nar 1

5 Grou& D!scuss!on 1

3otal 1
http://www.co-op.ac.uk/downloads/Promoting%20Co-operatives.pdfhttp://www.co-op.ac.uk/downloads/Promoting%20Co-operatives.pdfhttp://www.coopnetaldia.org/http://ilo.law.cornell.edu/public/english/employment/ent/coop/laws/http://www.co-op.ac.uk/downloads/Promoting%20Co-operatives.pdfhttp://www.co-op.ac.uk/downloads/Promoting%20Co-operatives.pdfhttp://www.coopnetaldia.org/http://ilo.law.cornell.edu/public/english/employment/ent/coop/laws/


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(art Management

'nit

Cooperative Management0 Definition, O:;e#tives, &elevan#e, and

'ni


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+e a*o-e #e,!n!t!ons *r!n( to ,ore t+e ,o$$o7!n( ,eatures o, coo&erat!-e mana(ement.

Coo&erat!-e mana(ement !s a com&$e= #ec!s!on mak!n( &rocess" an# #ec!s!ons

are ma#e at a$$ t+e t+ree $e-e$s o, mana(ement &'ram!#.

+e o-err!#!n( o*8ect!-e o, coo&erat!-e mana(ement !s to ser-e t+e nee#s o,

mem*ers.

+e con#uct o, a$$ t+e act!-!t!es must *e (o-erne# 8o!nt$' *' t+e t7o sets o,

&r!nc!&$es name$'" a) &r!nc!&$es o, mana(ement an# *) &r!nc!&$es o, coo&erat!on.

+e creat!on o, &ro&er *a$ance *et7een e,,orts a!m!n( at commerc!a$ success an#

t+ose a!me# at ma!nta!n!n( t+e !nst!tut!ona$ (oa$s o, t+e coo&erat!-e assoc!at!on.

!ke an' ot+er mana(ement" !t seeks to ac+!e-e !ts a!m *' means o, e,,ect!-e an#

e,,!c!ent use o, resources.

O:;e#tives of Cooperative Management0

Coo&erat!-e mana(ement +as t+e ,o$$o7!n( o*8ect!-es:

!rst$'" t+e !m&ro-ement o, t+e o&erat!ona$ e,,!c!enc' !s t+e ,ore%most concern o,

coo&erat!-e mana(ement" so t+at t+e or(an!at!on !s a*$e to com&ete e,,ect!-e$'. It must

acu!re ca&ac!t' to t+r!-e as a *us!ness !nst!tut!on !n !ts o7n r!(+t. Coo&erat!-e

mana(ement a!ms at e-o$-!n( met+o#s an# tec+n!ues on t+e *as!s o, t+e &r!nc!&$e o,

mana(ement" 7+!c+ 7!$$ +e$& t+e mana(ers to a-o!# m!stake an# !m&ro-e t+e!r &ract!ce.

Secon#$'" coo&erat!-e mana(ement a!ms at !m&ro-!n( t+e -!a*!$!t' o, t+e coo&erat!-e

soc!et'. +e soun#ness o, !ts stren(t+" (ro7t+ &otent!a$s an# t+e ua$!t' o, t+e ser-!ce

#e&en# on t+e -!a*!$!t'. +e or(an!at!ona$ e,,ect!-eness !s t+e #!rect resu$t o, t+e

-!a*!$!t'.

+!r#$'" coo&erat!-e mana(ement s+ou$# constant$' str!-e to ac+!e-e mem*ersat!s,act!on. ;' &ro-!#!n( e,,!c!ent ser-!ce to t+e &atron%mem*ers on econom!ca$ terms"

coo&erat!-e or(an!at!on can ac+!e-e eu!$!*r!um" an# #e-e$o&ment mem*er%$o'a$t' an#

(reater &atrona(e. +e e,,!c!enc' an# -!a*!$!t' o, a coo&erat!-e or(an!at!on +as no

mean!n( un$ess !t !s a*$e to coor#!nate t+e o*8ect!-es o, !ts mem*ers an# trans$ate t+e


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!n#!-!#ua$ o*8ect!-es !nto mean!n(,u$ rea$!t' an# make -!s!*$e !m&act on t+e &eo&$e 7+o

,rom t+e or(an!at!on.

ourt+$'" coo&erat!-e or(an!at!on must a$so str!-e ,or commun!t' acce&tance *'

carr'!n( out t+e soc!a$ res&ons!*!$!t!es e=&ecte# o, !t.

!,t+$'" coo&erat!-e mana(ement must a$so a!m at et+!ca$ an# mora$ #e-e$o&ment o, t+e

mem*ers. +e o*8ect o, coo&erat!-e or(an!at!on !s muc+ more t+an !m&ro-!n( t+e

mater!a$ stan#ar#s o, !ts mem*ers. 9$t!mate$' !t str!-es to $!,t t+em to +!(+er soc!a$ an#

mora$ stan#ar#s an# ena*$e t+em to rea$!e +!(+er s&!r!tua$ &otent!a$.

S!=t+$'" to ,u$,!$$ t+e a*o-e o*8ect!-e !t must #e-e$o& or(an!at!ona$ an# mana(ement

com&etence *' &ro,ess!ona$ s!n( mana(ement" an# *' tak!n( u& mana(ement

#e-e$o&ment &ro(ramme. +e task o, coo&erat!-e mana(ement !s t+ere,ore" to

un#erstan# t+e *as!c conce&ts" &r!nc!&$es an# tec+n!ues o, mana(ement an#

s'stemat!ca$$' a&&ra!se t+e!r re$e-ance !n t+e conte=t o, t+e!r s&ec!a$ (oa$s an# re

conce&tua$!e t+em so t+at tra!n!n( an# #e-e$o&ment can *e or(an!e# e,,ect!-e$'.

+e s'stem conce&t o, mana(ement !s more re$e-ant to coo&erat!-e mana(ement. A

coo&erat!-e soc!et' s+ou$# *e un#erstoo# as a su*%s'stem o, t+e $ar(er soc!o%econom!c

s'stem. It #ra7s resources an# !n&uts ,rom t+e en-!ronment" trans,orms t+em !nto

ser-!ce an# sen#s t+e (o#s an# ser-!ces !nto t+e s'stems. +ere !s constant !nteract!on

*et7een t+e coo&erat!-e soc!et' an# t+e $ar(er s'stem to 7+!c+ !t !s a &art. +e s'stem

a&&roac+ to coo&erat!-e mana(ement +as ,our *as!c !n(re#!ents.

+e' are:

A c$ear enunc!at!on o, t+e (oa$s" 7+!c+ can *e trans$ate# !n terms o,

&er,ormance measures.

A ,u$$ reco(n!t!on o, t+e soc!o%econom!c an# &o$!t!ca$ en-!ronment e=terna$ to

t+e coo&erat!-e s'stem *ut +a-!n( a *ear!n( on t+e &er,ormance o, t+e

coo&erat!-es.

I#ent!,!cat!on o, t+e #!,,erent com&onents o, coo&erat!-e structure an# t+e!r

-ar!ous attr!*utes an#

An !n-entor' o, t+e +uman an# mater!a$ resources a-a!$a*$e to t+e coo&erat!-e

s'stem.


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+elevance o, Coo-erative Manage.ent

;ot+ coo&erat!-e mo-ement an# t+e mo#ern mana(ement mo-ement emer(e# as *'

&ro#ucts o, In#ustr!a$ e-o$ut!on t+at took &$ace !n t+e m!##$e o, n!neteent+ centur'.

+e' (a!ne# momentum !n t+e *e(!nn!n( o, t+e 2t+ centur'. ar$' coo&erators an#

soc!a$ re,ormers $!ke o*ert O7en an# C+ar$es our!er +a# ma#e s!(n!,!cant

contr!*ut!ons to t+e mana(ement t+ou(+t. Outstan#!n( mana(ement t+!nkers $!ke ?..

Drucker" re(ar#e# t+em as (reat or(an!ers an# man(ers. ;ot+ t+e mana(ement

mo-ement an# t+e coo&erat!-e mo-ement +a-e s&rea# ra&!#$' an# +a-e un!-ersa$

re$e-ance an# co-era(e. +e coo&erat!-e mo-ement +as s&rea# to a$$ ,!e$#s o, econom!c

act!-!t!es suc+ as ;ank!n(" Market!n(" In#ustr!a$ ?ro#uct!on an# D!str!*ut!on. !ke7!se"

t+e mo#ern mana(ement tec+n!ues are re$e-ant to a$$ t'&e o, or(an!at!ons" !rres&ect!-e

o, s!e an# o7ners+!&. As +as *een state# *' ?.. Du*+as+!" +ere !s a k!n#re# k!ns+!&

*et7een mana(ement an# coo&erat!on. I, t+ere !s an't+!n( nearest to coo&erat!on" !t !s

Mana(ement *ecause" !s not t+e u$t!mate &ur&ose o, mana(ement &romot!on o,

coo&erat!-e e,,ortH

In s&!te o, t+!s mutua$ com&at!*!$!t' t+ere 7as -er' $!tt$e meet!n( (roun# *et7een t+ese

t7o mo-ements. ac+ e=c$u#e# t+e ot+er !n !ts #e-e$o&ment &rocess an# t+ere 7as no

!nteract!on *et7een t+em. +e ,o$$o7!n( 7ere t+e s!(n!,!cant ,actors" 7+!c+ create# a

c+asm *et7een t+e t7o.!rst$'" coo&erat!on or!(!nate# as a $a*our mo-ement" as a s+!e$# o, t+e 7eek an#

-u$nera*$eB 7+!$e t+e mo#ern mana(ement +a# !ts or!(!n !n ca&!ta$!sm.

Secon#$'" t+e coo&erators" ,or a -er' $on( t!me *e$!e-e# !n sma$$ soc!et' conce&t an#

stresse# t+e +onorar' mana(ement. It 7as *e$!e-e# t+at t+e !#eo$o(!ca$ su&remac' 7!$$

resu$t !n s&ontaneous an# natura$ (ro7t+ 7!t+out an' s&ec!a$ e,,ort ,or &romot!n(

e,,!c!enc'.

+!r#$'" t+e mana(ement t+!nkers com&$ete$' ne($ecte# t+e coo&erat!-e enter&r!se !n t+e

sc+eme o, ana$'s!s o, t+e mana(ement conce&ts" e=ce&t some ran#om re,erences ma#e

*' t+e aut+ors $!ke C+ester ;ernar# an# .A. S!mon an# t+at too !n a (enera$ sense rat+er

t+an !n a tec+n!ca$ sense.

+e contem&orar' coo&erat!-e mo-ement &art!cu$ar$' !n #e-e$o&!n( countr!es !s at cross

roa#s. +e' +a-e to #e-e$o& t+e!r or(an!at!ona$ com&etence an# o&erat!ona$ e,,!c!enc'"


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*' a#o&t!n( t+e mo#ern mana(ement tec+n!ues" 7+!c+ are un!-ersa$. +e mo#ern

conce&t o, coo&erat!on #oes not acce&t t+e e,,!cac' o, t+e Jsma$$ soc!et'K conce&t. G!ant

s!e or(an!at!ons are not uncommon !n coo&erat!-es. L+en t+e or(an!at!on (ro7s !n

s!e" t+e nee# ,or sc!ent!,!c mana(ement (ets (reater s!(n!,!cance. ;es!#es" t+e

coo&erat!-e sector !s ,ac!n( st!,, com&et!t!on ,rom ot+er sectors o, t+e econom'. +e

sur-!-a$ an# (ro7t+ o, coo&erat!-e sector $ar(e$' #e&en#s on t+e ua$!t' o, t+e!r

mana(ement. +e coo&erat!-e mo-ement +as *een (!-en !ncreas!n($' (reater ro$e !n t+e

econom!c &$ann!n( &art!cu$ar$' !n t+e #e-e$o&!n( countr!es. Greater e,,!c!enc' !s ca$$e#

,or on t+e &art o, t+e coo&erat!-es to ac+!e-e suc+ nat!ona$ (oa$s. As a resu$t o, a$$ t+ese

#e-e$o&ments t+ere +as *een a (ro7!n( a7areness amon( coo&erators re(ar#!n( t+e nee#

,or t+e a&&$!cat!on o, sc!ent!,!c mana(ement !n coo&erat!-es. On$' *' *r!#(!n( t+e

mana(ement (a& t+e coo&erat!-e sector can ,u$,!$$ t+e tasks ass!(ne# to !t.

Cooperative =usiness Compared 4it! nvestor O4ned =usiness

In or#er to +a-e a *etter un#erstan#!n( o, coo&erat!-e mana(ement" !t !s necessar' to

un#erstan# t+e #!st!nct ,eatures o, coo&erat!-e *us!ness.

+e coo&erat!-e *us!ness can *e #!st!n(u!s+e# ,orm !n-estor o7ne# *us!ness !n t+e

,o$$o7!n( res&ects:

1. A &r!-ate !n-estor o7ne# *us!ness !s essent!a$$' a un!on o, ca&!ta$B a coo&erat!-e

!s essent!a$$' a un!on o, &eo&$e.

2. +e ,ormer !s an or(an!at!on o, !n-estorsB t+e $atter !s an or(an!at!on o, users.

3. +e ,ormer !s or(an!e# *' entre&reneurs to attract an# ser-e customersB t+e $atter

*' &eo&$e to ser-e t+emse$-es.

4. +e ,ormer !s contro$$e# *' ma8or!t' o, s+aresB an# t+e $atter *' a ma8or!t' o,

&ersons 7+o are mem*ers.

5. In t+e ,ormer contro$ *' &ro=' !n common &a$ace" 7+ereas !n t+e $atter &ro='

-ot!n( !s rare an# ,oun# on$' !n t+ose or(an!at!on 7+ere !t !s reu!re# *' (enera$

$e(!s$at!on.


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6. In t+e ,ormer sur&$us earn!n(s or &ro,!ts are #!str!*ute# as #ec!#e# *' t+e *oar# o,

#!rectorsB !n t+e $atter t+e' *e$on( to user mem*ers an# are #!str!*ute# *' t+e

mem*ers+!& !n annua$ meet!n(" usua$$' as recommen#e# *' t+e *oar#.

. In t+e ,ormer !n-este# ca&!ta$ !s em&$o'e# !n t+ree 7a's: to earn !nterest" (a!n

&ro,!t an# e=erc!se contro$. L+!$e !n t+e $atter ca&!ta$ !s &erm!tte# on$' ,or t+e

,!rst ,unct!on.

. In t+e ,ormer &ar$!amentar' act!on an# constant -!(!$ance are nee#e# to &re-ent

,ore!(n #om!nat!on. +e $atter s'stem (uarantees nat!-e contro$ o, enter&r!se.

0. In t+e ,ormer eu!t' s+ares are (enera$$' tra#e# ,ree$' an# are &r!ce# at 7+ate-er

t+e market 7!$$ *r!n(B !n t+e $atter t+e' can *e re#eeme# on$' *' t+e &erm!ss!on o,

t+e *oar# an# at &ar -a$ue.

1. +e ,ormer !s a c$ose# s'stemB an# t+e $atter +as a $on( recor# o, o&enness an#

,ree#om o, access.

ni0ueness o, Coo-erative Manage.ent

L+!$e a&&$'!n( t+e &r!nc!&$es o, mana(ement o, one s+ou$# not !(nore t+e ,act t+at t+e

coo&erat!-e as a ,orm o, *us!ness or(an!at!on &ossesses -er' #!st!nct c+aracter!st!cs. It

#!,,ers ,un#amenta$$' !n -ar!ous ,acets o, !ts make u& as com&are# to t+e !n-estor o7ne#

*us!ness" !n t+e o*8ect!-es !n%&ut)" trans,ormat!on &rocess an# ser-!ces ren#ere#

out&ut).

+e &r!nc!&$es o, sc!ent!,!c mana(ement an# t+e e,,!c!enc' cr!ter!a common$' a#o&te# !n

8u#(!n( t+e *us!ness enter&r!ses suc+ as t+e e,,ect!-e use o, +uman an# ot+er resources"

t+e ua$!t' an# -a$ue o, t+e &ro#ucts an# ser-!ces su&&$!e#" -!a*!$!t'" sur&$us (enerate#"

t+e -a$ue a##e# to t+e assets" per se +a-e on$' a &art!a$ re$e-ance to t+e coo&erat!-e

enter&r!se. As Mr. Du*+as+! +as a&t$' remarke#" t+e &r!nc!&$e o, e,,!c!enc' !s -!ta$ !n

t+e coo&erat!-e sector a$so. ;ut !n so ,ar as t+e market mec+an!sm an# &r!-ate enter&r!se"

turns t+e &r!nc!&$e o, ma=!mum e,,!c!enc' !nto ma=!mum &ro,!t" !t *ecomes !ncom&at!*$e

7!t+ t+e coo&erat!-e mo-ement an# nee#s mo#!,!cat!onH.

?ro. Geor(e asserre +a# ma#e t+!s #!st!nct!on !n -er' c$ear terms. Coo&erat!-e cannot

s$a-!s+$' !m!tate ca&t!a$s!t enter&r!ses e-en t+e *est o, t+em. +e conce&t o, e,,!c!enc' as

a&&$!e# to t+e 7+o$e mana(ement" cannot *e t+e same" *ecause t+e a!m !s not t+e same.


11/140


12/140

a #!st!nct a!ms s'stem. +e a!ms s'stem !s st!$$ more com&$e= !n res&ect o, t+e

J!nte(rate# t'&e o, coo&erat!-es.K In suc+ !nte(rate# coo&erat!-es t+e !n#!-!#ua$ mem*er%

econom!es" 7+!c+ are u!te #!st!nct ,rom t+e coo&erat!-e enter&r!se" are or(an!ca$$'

$!nke# 7!t+ t+e $atter. +e a!ms s'stem o, suc+ a com&$e= coo&erat!-e com*!ne !nc$u#es

t+e ,o$$o7!n( #!-erse !n,$uence:

a) ?ersona$ !n#!-!#ua$ a!m s'stem o, e-er' mem*er

*) +e corres&on#!n( !n#!-!#ua$ o&erat!ona$ o*8ect!-es ,or t+e s!n($e mem*er

econom'

c) +e s'stem o, a!ms an# t+e o&erat!ona$ o*8ect!-es o, t+e coo&erat!-e (rou&

#) +e o&erat!ona$ o*8ect!-es o, t+e coo&erat!-e enter&r!se as suc+

e) ?ersona$ !n#!-!#ua$ a!ms o, t+e mana(ement

,) +e a!ms o, em&$o'ees an# 7orkers

() +e !n,$uence o, macro%&o$!c' on coo&erat!-e #e-e$o&ment

+) +e !n,$uence o, mana(ers ,rom secon#ar' an# tert!ar' *o#!es

!) Dec!s!on mak!n( &rocess a#o&te# 7!t+!n t+e coo&erat!-e enter&r!se

+e coo&erat!-e mana(ement +as t+e onerous task o, +armon!!n( t+e #!-erse !n,$uence

an# coor#!nat!on t+e com&$e= a!ms s'stem. +e a!ms o, t+ese #!st!nct !nterest (rou&s

+a-e to *e 7e$#e# to(et+er *' ,ormu$at!n( o-er a$$ a!ms s'stem an# e-o$-!n( o&era*$e

cr!ter!a ,or *us!ness #ec!s!on mak!n(. +e se-era$ a!ms s'stem $!nke# to(et+er 7!t+ one

anot+er makes t+e o&erat!ona$ o*8ect!-e an# #ec!s!on mak!n( &rocess +!(+$' com&$e=.

Superior Value Stru#ture0

A&art ,rom *e!n( an econom!c enter&r!se" a coo&erat!-e soc!et' !s an et+!ca$" soc!a$ an#

mora$ ent!t' as 7e$$. +e coo&erat!-e !#eo$o(' #ra7s !ts mora$ an# soc!a$ content ,rom

t+e re,orm!st #octr!ne o, o*ert O7en" t+e ,at+er o, coo&erat!on" 7+o a#-ocate# a Jne7

mora$ 7or$#K ,ree ,rom &ro,!t" com&et!t!on an# e=&$o!tat!on. +e C+r!st!an Soc!a$!sts too

(a-e an et+!ca$ or!entat!on to coo&erat!on so as to make !t an !nstrument o, soc!a$ et+!cs"

!.e. creat!on o, more c!-!$!e# soc!et' an# t+e sa$-at!on o, soc!a$ s!ns. ;es!#es

&romot!n( mater!a$ &ros&er!t' t+e coo&erat!-e mo-ement a!ms at e#ucat!ona$ *etterment"

t+r!,t an# mora$s" +onest'" !n#e&en#ence an# se$,%res&ect" #emocrac'" *rot+er+oo# an#

re$!(!on.H +us a coo&erat!-e soc!et' !s *ot+ an enter&r!se an# an assoc!at!on. o use

o'mon# ,!rt+Ks $an(ua(e" !t !s an econom!c or(an!at!on set !n a soc!a$ ,rame7ork.H


13/140

+!s #ua$ nature o, coo&erat!-e s'stem *e!n( at t+e same t!me an enter&r!se an# an

assoc!at!on ca$$s ,or ent!re$' a #!,,erent a&&roac+ to t+e mana(ement &rocess. It ,o$$o7s

t+at t+e success,u$ coo&erat!-e mana(ement must !n-o$-e *ot+ t+ese as&ects. It !s t+e

res&ons!*!$!t' o, coo&erat!-e mana(ement to a!m at success !n *ot+ ,!e$#s an# to &er,orm

t+e mana(ement ,unct!ons o, &$ann!n(" or(an!!n(" #!rect!n( an# contro$ !n suc+ a 7a'

t+at a ,a!r *a$ance *et7een t+ese t7o !s ac+!e-e#.

Distin#t #onomi# (ro#ess0

+e econom!c &rocess o, trans,orm!n( or(an!at!ona$ o*8ect!-es !nto &ro#uct an# ser-!ce

s&ec!,!cat!ons s!(n!,!cant$' #!,,ers !n coo&erat!-es as com&are# 7!t+ ot+er ,orms o,

*us!ness. In coo&erat!-es t+ere !s c$ose $!nka(e *et7een t+e o7ners+!&" contro$ an# use.

It !s a *us!ness or(an!at!on !n 7+!c+ t+e com&onents o, o7ners+!&" contro$ an# use are

!nte(rate# *' *e!n( a$$ -este# !n one *o#' o, &eo&$e" t+e mem*ers.H +!s sort o, o7ner%

s+!&%use%contro$ -este# 7!t+ one (rou& o, &ersons 7+o co$$ect!-e$' are t+e mem*ers

ren#ers t+e mana(er!a$ task o, ,u$,!$$!n( t+e as&!rat!ons o, suc+ a (rou& stu&en#ous. or"

t+e ser-!ces ren#ere# *' coo&erat!-e or(an!at!on !s on t+e an-!$ o, constant re-!e7 an#

an' $a&se !s &rone to +ars+ an# sens!t!-e cr!t!c!sm. urt+ermore t+e &ro#uct!on &rocess

a$so #!st!nct$' #!,,ers !n coo&erat!-e enter&r!se ,rom ot+er ,orms o, *us!ness. O, t+e t7o

*as!c &attern o, or(an!at!on o, &ro#ucerKs coo&erat!-e -!. coo&erat!-e &ro#uct!on

soc!et' an# coo&erat!-e ser-!ce soc!et'" t+e secon# t'&e +as certa!n un!ueness. In one

mem*ers are 7orkers an# s+are+o$#ers s!mu$taneous$'. In t+e ot+er case" t+e mem*ers

&ossess !n#!-!#ua$ enter&r!ses an# #e$e(ate one or more ,unct!ons to t+e coo&erat!-e

esta*$!s+ment 7+!c+ t+us *ecomes au=!$!ar' !n c+aracter.H In suc+ soc!et!es t+e

coo&erat!-e mana(ementKs tasks *ecomes com&$e=. +e mana(ement #ec!s!ons +a-e to

*e ma#e not on$' ,or mem*er econom!es a$so. Inte(rat!on o, mem*er econom!es 7!t+

t+e coo&erat!-e enter&r!se o*8ect!-es" &$ann!n( an# &ursu!n( a common o&erat!-e &o$!c'

an# a&&ra!sa$ o, t+e ac+!e-ement *' an a&&ro&r!ate ,ee#*ack s'stem t+us *ecomes t+e

cru= o, t+e coo&erat!-e mana(ement.

Demo#rati# Control0

+e #emocrac' !s t+e corner stone o, coo&erat!-e mana(ement. +ou(+ !t !s an !#ea$$'

su!te# ,orm o, mana(ement ,or ensur!n( mem*er &art!c!&at!on an# mot!-at!on" !t !s *eset

7!t+ &ract!ca$ $!m!tat!on. +e coo&erat!-e man(ers nee# to !n-o$-e more (rou& o, &eo&$e


14/140

!n t+e #ec!s!on &rocess. As a resu$t t+e #ec!s!on mak!n( &rocess ten#s to *ecome

7aste,u$ an# -e=at!ous. +ere,ore coo&erat!-e mana(er +as to #e-e$o& met+o#s an#

tec+n!ues to !n-o$-e $ar(e num*er o, &eo&$e 7!t+out #ecreas!n( e,,!c!enc'. Anot+er

+an#!ca& !n t+e coo&erat!-e mana(ement !s t+at t+e ;oar# o, D!rectors o, t+e Coo&erat!-e

u!te o,ten $acks &ro&er &erce&t!on o, t+e!r &rec!se ro$e. As a resu$t t+e ;oar# e!t+er

!nter,eres 7!t+ t+e e=ecut!-e mana(ement" or &er,orms on$' t+e 7atc+#o( ,unct!on o,

-o!c!n( t+e mem*erKs (r!e-ances or ,r!tters a7a' t+e t!me an# ener(' !n tr!-!a$!t!es.

As!#e t+!s" 7+ere-er t+e ;oar# !s &$!a*$e !t *ecomes a +an#ma!# o, t+e c+!e, e=ecut!-e

$ea#!n( to ua(m!re o, contro$. In suc+ s!tuat!ons t+e ro$e o, t+e ;oar# *ecomes

ne*u$ous an# counter%&ro#uct!-e.

+e coo&erat!-e mana(ers +a-e t+e onerous res&ons!*!$!t' o, e#ucat!n( t+e $ea#ers !n t+e

mana(ement #ec!s!on mak!n( &rocess an# e-o$-!n( met+o#s to com*!ne #emocrat!c

contro$ 7!t+ mana(er!a$ e,,!c!enc'. +e success o, coo&erat!-e mana(ement t+us $!es !n

mak!n( t+e #emocrat!c contro$ co!nc!#e 7!t+ e,,!c!enc' *' s'nt+es!!n( t+e &r!nc!&$es o,

mana(ement o, cor&orate *us!ness an# t+e (oa$s o, econom!c #emocrac' an# soc!a$

o7ners+!&B an# mak!n( t+e #ec!s!on &rocess #'nam!c *' a c$ear #emarcat!on o, t+e

&o7ers an# ,unct!ons o, t+e C+!e,%=ecut!-e.

armony 4it! Ma#ro-(oli#y of State0

Coo&erat!on !s an !nstrument o, state &o$!c' an# &$ann!n( !n most o, t+e #e-e$o&!n(

countr!es" 7+ere t+e state ,or(es a s'm*!ot!c re$at!ons+!& 7!t+ coo&erat!-es *' e=ten#!n(

,!nanc!a$ an# a#m!n!strat!-e ass!stance an# at t+e same t!me ut!$!!n( coo&erat!-e

!n,rastructure ,or ac+!e-!n( #e-e$o&ment tar(ets. ?er,orce" t+!s mutua$ &rocess reu!res

t+e +armon!at!on o, t+e macro%&o$!c' o, t+e coo&erat!-e (rou&s. Suc+ !nte(rat!on

!m&oses certa!n se-ere constra!nts on t+e mana(ement o, coo&erat!-es. Con,$!ct *et7een

t+e o*8ect!-es o, mem*er (rou&s an# t+e macro%o*8ect!-es an# t+e sacr!,!ce o, t+e ,ormer

,or t+e sake o, $atter !s not uncommon !n coo&erat!-es.

+e ,ore(o!n( ana$'s!s +!(+$!(+ts t+e nee# ,or #e-e$o&!n( a mana(ement s'stem

a&&ro&r!ate to coo&erat!-es *' a#8ust!n( t+e mana(ement s'stem to t+e coo&erat!-e

or(an!at!ona$ s!tuat!on rat+er t+an a#8ust!n( t+e coo&erat!-es to so&+!st!cate# mo#ern

mana(ement.


15/140

'nit

Coo&erat!-e Democrac': Structure o, Coo&erat!-e Democrac'" Measures to

Make Democrat!c Contro$ ,,ect!-e" ;oar# < =ecut!-e e$at!ons+!&"

unct!ons o, t+e ;oar#" >o* Descr!&t!on o, a C+!e, =ecut!-e" Mem*er"

D!rector" ?res!#ent" Genera$ man(er

Cooperative Demo#ra#y

Coo&erat!on !s a &eo&$e centere# or(an!at!on. As suc+ t+e conce&t o, #emocrac' !s

centra$ to coo&erat!-e &+!$oso&+'. Democrac' !s a &ro#uct o, mo#ern c!-!$!at!on. It ,!rst

emer(e# !n t+e &o$!t!ca$ ,!e$# !n t+e ,orm o, C+art!st mo-ement !n n($an# aroun# 36"

7+!c+ so7e# t+e see# o, &o$!t!ca$ re,orms. +e #eman# ,or t+e &eo&$eKs c+arter came

,rom t+e 7ork!n( c$ass &eo&$e 7+o *e$!e-e# t+at t+e 7ork!n( c$ass con#!t!on cou$# *e

!m&ro-e# on$' *' a &ar$!ament e$ecte# *' un!-ersa$ a#u$t ,ranc+!se. A$most at t+e same

t!me t+e renc+ e-o$ut!on *rou(+t a*out ,ar%reac+!n( soc!a$ re,orms an# e=ten#e# t+e

#emocrat!c conce&t to soc!a$ ,!e$#s *' &ro&oun#!n( t+e &r!nc!&$es o, !*ert'" ua$!t'

an# ratern!t'.

+e oc+#a$e ?!oneers took u& t+e &r!nc!&$e o, un!-ersa$ su,,ra(e ,rom C+art!st

Mo-ement an# a&&$!e# to our econom!c s!tuat!on. +us t+e coo&erat!-e #emocrac' !s

essent!a$$' an econom!c #emocrac'. +e &r!nc!&$es o, ,ree#om o, assoc!at!on" eua$!t'

7!t+!n t+e or(an!at!on an# &art!c!&at!on !n t+e or(an!at!on &rocess are t+e ,oun#at!on o,

coo&erat!-e #emocrac'. Accor#!n( to ?au$ am*ert: In t+e *roa#est sense econom!c

#emocrac' !s &artak!n( o, &ersons concerne# !n t+e #e$!*erat!ons an# #ec!s!ons !n t+e

econom!c s&+eres. conom!c #emocrac' 7+en !t !s &ure" com&$ete$' e=c$u#es ca&!ta$ as

a source o, aut+or!t'B #ec!s!ons are taken *' &ersons concerne# or t+e re&resentat!-es t+at

t+e' +a-e #es!(nate#" a$$ +a-!n( t+e same r!(+t. Coo&erat!-e Democrac' +as t7o as&ects

!) Structura$ an# !!) O&erat!ona$.


16/140

1tructure o, Coo-erative De.ocracy

Democrat!c contro$ !n coo&erat!-es !s e=erc!se# at t+ree $e-e$s name$': t+e Genera$

;o#'" ;oar# o, D!rectors an# C+!e, =ecut!-e. +e (enera$ *o#' o, mem*ers !s t+e

u$t!mate an# su&reme aut+or!t' an# su&reme aut+or!t' !n t+e matters concern!n( t+esoc!et'. It !s con-ene# at $east once !n a 'ear. +e (enera$ *o#' meet!n( concentrates on

t+ree ma!n !tems o, *us!ness: 1) to rece!-e an a&&ro-e a re&ort o, t+e 'earKs 7ork"

accom&an!e# *' ,!nanc!a$ statementsB 2) to #ec!#e on +o7 an' sur&$us o, t+e 'earKs 7ork

can *e use#B an# 3) to e$ect a comm!ttee to #!rect t+e a,,a!rs o, t+e soc!et'. ;es!#es t+e

a*o-e rout!ne matters" ot+er ma8or c+an(es $!ke amen#ment o, *'%$a7s" #!-!s!on an#

ama$(amat!on etc." must *e a&&ro-e# *' t+e (enera$ *o#'. +e re&orts an# statements

&resente# !n t+e (enera$ *o#' s+ou$# *e *roa# an# s!m&$e" so t+at e-en t+e or#!nar'

mem*ers un#erstan# t+em. +e' s+ou$# not conta!n tec+n!ca$ #eta!$s an# ,u$$ ,acts.

+ere must *e (reater sco&e ,or #!scuss!on an# cr!t!c!sm.

or a#m!n!strat!-e con-en!ence an# e,,ect!-e contro$ t+e (enera$ *o#' e$ects a ;oar# o,

D!rectors. +e ;oar# o, D!rectors #er!-es su*stant!a$ &o7ers ,or #!rect!on" su&er-!s!on

an# contro$ o, coo&erat!-es. +e t7o%sta(es contro$ mac+!ner' !s create# to e=erc!se

e,,ect!-e contro$" 7+!$e at t+e same t!me kee&!n( t+e or(an!at!on at a$$ t!mes !n t+e +an#s

o, mem*er%&atrons. +e ;oar# o, D!rectors at t+e same t!me nee# not take #eta!$e#

o&erat!n( #ec!s!ons. +e' can $ea-e t+e #a'%to%#a' a#m!n!strat!on to t+e C+!e, =ecut!-e

an# +!s ass!stants an# re,ra!n ,rom !nter,er!n( !n t+e!r 7ork. In or#er to ensure soun#

,unct!on!n( t+e ;oar# can re-!e7 t+e &ro(ress &er!o#!ca$$'. +e ;oar# o, D!rectors

#er!-es &o7ers an# aut+or!t' ,rom (enera$ *o#' on t+e one +an# an# #e$e(ates &o7ers to

a $ar(e e=tent to t+e c+!e,%e=ecut!-e. +e c+!e,%e=ecut!-e" *e!n( t+e e=ecut!-e +ea# !s

res&ons!*$e ,or (u!#!n( t+e o&erat!ons an# $ea#!n( t+e or(an!at!on to success. +e

structure o, coo&erat!-e mana(ement ma' *e &!cture# $!ke a +our ($ass as s+o7n !n t+e

#!a(ram.


17/140

Management Stru#ture of Cooperatives

$ut!ority $##ounta:ilityMem:ers=oard of Dire#tors

Middle-Level

mployees

C!ief >e#utive


18/140

Stru#ture of t!e Organi?ation

;oar# o, #!rectors

Genera$ *o#'

Mem*ers+!& e$ects

A&&o!nts

Genera$ mana(er

Mana(er o,#e&artment

Man(er o,#e&artment

Sta,, sta,,

"un#tions

Sets t+e soc!et'Ks o*8ect!-es:

#ec!#es *'$a7s: e=erc!ses o7ners+!&

contro$ o-er t+e soc!et'Ks (ro7t+.

Inter&rets o*8ect!-es !n s&ec!,!c

#eta!$s: ,ormu$ates s&ec!,!c &o$!c!es

to ac+!e-e o*8ect!-es: stu#!esmana(ement re&orts an# e-a$uates

&ro(ress: &ro-!#es $ea#ers+!& to

mana(ement an# mem*ers+!&:

a&&ro-es sa$ar' ran(es ,or 8o*s at a$$$e-e$s.

As c+a!r&erson o, t+e *oar# an# e=

o,,!c!o mem*er o, a$$ comm!ttees"&ro-!#es t+e $!nk *et7een *oar# an#

mana(ement.

Mana(es t+e *us!ness !n $!ne 7!t+*oar# &o$!c!esB esta*$!s+es o&erat!n(

&roce#uresB sets out 8o*s to *e #oneB

en(a(es" su&er-!ses an# tra!ns sta,,B

,!=es sa$ar!es 7!t+!n ran(esesta*$!s+e# *' t+e *oar#.

Mana(es t+e #e&artmentB &ro-!#es

s&ec!a$!e# tec+n!ca$ kno7%+o7 ,ort+e #e&artmentB su&er-!ses an#

tra!ns sta,,B en,orces o&erat!n(

&roce#ures ,or t+e #e&artment.

?ro-!#es ser-!ces to t+e coo&erat!-e

!n t+e $!ne 7!t+ esta*$!s+e# &o$!c!es

an# o&erat!n( &ract!ces.

&esponsi:ilities

9ses t+e ser-!ces o, t+e

coo&erat!-eB e$ects ca&a*$e

#!rectorsB &ro-!#es ca&!ta$ ,oro&erat!on an# e=&ans!onB stu#!es

*oar#Ks an# au#!torKs re&orts.

$ects &res!#ent an# a&&o!ntsmana(erB !s res&ons!*$e to

mem*ers+!& ,or resu$ts o,

o&erat!onB o&erates 7!t+!n t+e *'%

$a7s o, t+e soc!et' an# a*!#es *'!ts o7n &o$!c!es.

as t+e res&ons!*!$!t' o,

en,orc!n( *oar# &o$!c!es an#&ro-!#!n( (u!#ance to t+e (enera$

man(er *et7een *oar# meet!n(sB

!s res&ons!*$e to t+e *oar# ,or a$$

act!ons.

es&ons!*$e to t+e &res!#ent

*et7een *oar# meet!n(sB re&orts

to t+e *oar# at meet!n(sB &ro-!#es,actua$ !n,ormat!on so t+at t+e

*oar# can make &o$!c' #ec!s!ons.

es&ons!*$e to t+e (enera$mana(er ,or #e&artmenta$

o&erat!ons.

es&ons!*$e to t+e man(er o, t+e#e&artmentB +as to acu!re

un#erstan#!n( o, t+e soc!et' an#tec+n!ca$ kno7%+o7 !n t+e

#e&artment.


19/140

Measures to Make Demo#rati# Control ffe#tive

+e #emocrat!c contro$ 7!$$ *e e,,ect!-e on$' 7+en t+ere !s act!-e &art!c!&at!on o,

mem*ers. +e act!-e &art!c!&at!on o, mem*er < &atrons !n t+e contro$ an# mana(ement

!s -er' essent!a$ ,or e,,!c!ent ,unct!on!n( o, coo&erat!-es. Mem*ers actua$ &art!c!&at!on

!n t+e contro$ o, coo&erat!-es !nc$u#e atten#!n( an# &art!c!&at!n( !n mem*ers+!&

meet!n(s" tak!n( &art !n -ot!n(" contest!n( !n e$ect!on" ser-!n( !n one or more comm!ttees"

care,u$ stu#' o, t+e re&orts &resente#" e=ten#!n( cont!nuous su&&ort an# s+o7!n( (enu!ne

!nterest !n t+e a,,a!rs o, coo&erat!-es. Se-era$ stu#!es con#ucte# !n In#!a an# a*roa#

re-ea$ t+at t+e mem*ersK &art!c!&at!on +as #ec$!ne# to a (reat e=tent &art!cu$ar$' !n $ar(e

coo&erat!-es. +e ,actors res&ons!*$e ,or &oor &art!c!&at!on o, mem*ers !nc$u#e:

!$$!terac' an# !(norance" $ack o, $o'a$t'" !ne,,ect!-e $ea#ers+!&" !na&&ro&r!ate s'stem o,

commun!cat!on" mem*ers a&at+' an# #om!nat!on o, -este# !nterests. In or#er to !m&ro-e

t+e mem*er &art!c!&at!on an# !n-o$-ement an# to stren(t+ t+en t+e #emocrac' ,o$$o7!n(

measures +a-e *een su((este# *' erman am.

2ocal 1ub#+egional Me.bers Meetings:

L+en t+e or(an!at!on !s too $ar(e t+e mem*ers+!& meet!n(s ten# to *ecome un7!e$#'.

In or#er to make t+e #emocrat!c contro$ 7orka*$e !t *ecomes necessar' to or(an!e

se&arate mem*ers+!& meet!n(s !n t+e su*%re(!ons o, t+e soc!et'. +ese meet!n(s s+ou$#

!n &r!nc!&$e #!scuss a$$ t+e !m&ortant su*8ects meant ,or t+e ,!na$ (enera$ assem*$'. +e

su*%re(!ona$ meet!n( s+ou$# not &ass or re8ect re&orts an# &ro&osa$s *ut on$' con-e' to

t+e Genera$ meet!n( t+e o&!n!on o, t+e $oca$ mem*ers. In t+e su*%re(!ona$ meet!n(s t+e

mem*ers s+ou$# e$ect re&resentat!-es to t+e (enera$ assem*$' an# a$so t+e $oca$ a#-!sor'

comm!ttee 7+o !nter$!nk t+e mem*ers an# t+e centra$ ;oar#.

3 2ocal dvisory Co..ittee in the 1ub#+egion:

L+en t+e coo&erat!-e soc!et' +as se-era$ *ranc+es" ,ormat!on o, $oca$ comm!ttees 7!$$

+e$& to make #emocrat!c contro$ more e,,ect!-e. +e Comm!ttee s+ou$# meet re(u$ar$'

an# summar!se t+e resu$ts o, t+e soc!et' ,rom t+e $oca$ mem*ers+!& &o!nt o, -!e7. It !s


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a$so t+e res&ons!*!$!t' o, t+e $oca$ comm!ttee to can-ass ,or more mem*ers+!&" or(an!e

mem*er e#ucat!on &ro(rammes an# re&resent t+e &ro*$ems o, mem*ers to t+e ;oar#.

5 (lection o, 6oard Me.bers:

$ect!ons to t+e ;oar# must *e con#ucte# re(u$ar$'. e&resentat!on must *e (!-en to a$$

sect!ons an# re(!ons !n t+e ;oar#. +e *'%$a7s must *e ,ormu$ate# so as to a-o!#

unnecessar' &o$!t!ca$ !nter,erence an# -este# !nterests. +ose 7+o +a-e ser-e# !n t+e

$oca$ comm!ttees an# t+ose 7+o +a-e taken &art !n e#ucat!ona$ an# tra!n!n( &ro(rammes

s+ou$# *e (!-en (reater o&&ortun!t' !n t+e e$ect!ons.

4 1ub#Co..ittee:

L+en t+e ;oar# !s $ar(e" !t !s con-en!ent to #!-!#e t+e ;oar# !nto #!,,erent su*%

comm!ttees ,or e,,ect!-e contro$. +!s (!-es a sort o, s&ec!a$!at!on as eac+ comm!ttee

#ea$s 7!t+ one su*8ect. +e' make t+e task o, t+e ;oar# eas'. +ou(+ t+e su*%

comm!ttee s+ou$# not take #ec!s!on on !ts o7n" t+e' +a-e t+e r!(+t to contro$ suc+ as&ects

o, t+e 7ork!n( o, t+e soc!et' o-er 7+!c+ t+e' +a-e aut+or!t'.

Control Co..ittees:

In eac+ soc!et' !t !s necessar' to ,orm a contro$ comm!ttee ,rom amon( t+e mem*ers o,t+e ;oar#. +e contro$ comm!ttee 7!$$ +a-e to contro$ t+e accounts an# sa,e(uar# t+e

assets o, t+e soc!et' an# to see t+at t+e ;oar# !s 7ork!n( e,,!c!ent$' !n t+e !nterests o,

mem*ers. +e' +a-e t+e r!(+t to uest!on t+e act!ons o, t+e ;oar# an# t+e' s+ou$# a$so

co$$a*orate 7!t+ t+e e=terna$ or (o-ernment au#!tors !n t+e!r au#!t 7ork.

" Me.ber (ducation:

Democrat!c contro$ can 7ork 7e$$ on$' 7+en mem*ers are en$!(+tene#. Mem*er

e#ucat!on &ro(rammes must *e !m&$emente# e,,ect!-e$'.

Mont!ly &eports

+e mont+$' re&ort &resente# *' t+e mana(er to t+e ;oar# meet!n( +e$# &er!o#!ca$$' !s

t+e &r!nc!&a$ too$ o, #emocrat!c contro$. Suc+ re&orts are cruc!a$ !n e=erc!s!n( e,,ect!-e

a#m!n!strat!-e contro$. +e s!(n!,!cance o, t+e ,!(ures &resente# !n t+e re&orts must *e


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#!scusse# an# -ar!ous measure to *e taken ,or !m&ro-!n( t+e *us!ness ma' *e su((este#

on t+e *as!s o, suc+ re&orts. +e ;oar# can e=erc!se contro$ t+rou(+ t+e ,o$$o7!n(

statements an# re&orts.

+ecei-ts and Disburse.ent 1tate.ent:

+e ece!&ts an# D!s*ursement statement &re&are# mont+$' (!-es a *roa# out$!ne o, t+e

o&erat!ons o, t+e or(an!at!on #ur!n( a &art!cu$ar mont+. It !s an accurate an# re$!a*$e

statement" 7+!c+ ser-es as t+e *as!s ,or &re&ar!n( t+e *a$ance s+eet" est!mat!n( (ross

mar(!n" o&erat!n( e=&enses etc. It (!-es a tota$ &!cture an# !t ena*$es t+e man(er an# t+e

;oar# o, D!rectors to kee& t+e *us!ness 7e$$ un#er contro$.

3 O-erations ,or the .onth:

A mont+$' statement o, sa$e" &ro#uct!on or ot+er ke' o&erat!ons o, t+e coo&erat!-es !s

necessar' contro$ #e-!ce. +ese ou(+t to *e com&are# 7!t+ t+e &re-!ous mont+Ks

&er,ormance an# 7!t+ t+e corres&on#!n( mont+ o, t+e &re-!ous 'ear. I, t+e &er,ormance

!s $o7er t+an t+e &re-!ous mont+ t+e ;oar# s+ou$# take ste&s to reme#' t+e s!tuat!on.

5 ccounts +eceivable:

+e mana(er must *e reu!re# to &re&are t+e 7+o$e $!st o, accounts rece!-a*$e once !n a

mont+ an# &resent !t to t+e ;oar#. +e mana(er s+ou$# a$so *e reu!re# to c$ass!,' t+e

accounts rece!-a*$e !nto t+ree or more (rou&s on t+e *as!s o, t+e!r #urat!ons: ,or !nstance

a) accounts rece!-a*$e o, $ess t+an t+ree mont+ o$#B *) a*o-e t+ree mont+ an# $ess t+an 6

mont+ o$#B an# c) accounts more t+an 6 mont+ o$#. +e mana(er must a$so re&ort eac+

mont+ +o7 muc+ account rece!-a*$e +as *een re#uce# or !ncrease# #ur!n( t+e mont+ an#

7+at e,,orts +a-e *een ma#e to co$$ect t+e accounts #ue ,or $on(.

4 ccounts ayable:

;' kee&!n( an e'e on t+!s !tem" ,rom mont+ to mont+" *oar# mem*ers 7!$$ (et an !#ea o,

+o7 t+e mana(ement !s tak!n( care o, current o*$!(at!ons. I, t+e current &a'a*$e s+o7 a

ten#enc' to !ncrease" !t ma' *e ,or t+e ,o$$o7!n( reasons: 1) t+e accounts rece!-a*$e ma'

*e !ncreas!n( 2) t+e *us!ness ma' *e o&erate# at $oss or 3) t+e *us!ness ma' *e

e=&an#e#. +e ;oar# s+ou$# !#ent!,' t+e reasons ,or !ncrease !n t+e account rece!-a*$e

an# take ste&s to cur* t+!s ten#enc'.


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Control Co..ittees:

A statement o, *a# #e*ts an# o-er#ue accounts 7!$$ (!-e a (enera$ !#ea a*out +o7 muc+

o, t+e account rece!-a*$e +a-e *ecome *a# #e*ts an# +o7 muc+ o, t+e #ou*t,u$ #e*ts

+a-e *een co$$ete# an# 7+at ste&s +a-e *een taken to co$$ect. S!m!$ar$' o-er#ue $oans

must *e care,u$$' 7atc+e#. Statement o, o-er#ue accounts s+ou$# !n#!cate t+e num*er o,

accounts o-er#ue" amount o, o-er#ue an# t+e &er!o# ,or 7+!c+ t+e' are o-er#ue.

=oard @ >e#utive &elations!ip

+e re$at!ons+!& *et7een ;oar# o, D!rectors an# C+!e,%=ecut!-e o, coo&erat!-es !s a

-!ta$ !ssue !n t+e coo&erat!-e mana(ement. oster!n( a +ea$t+' an# construct!-e

re$at!ons+!& !s essent!a$ ,or t+e success o, coo&erat!-e #emocrac'. +ere !s constant

!nteract!on *et7een ;oar# o, D!rectors an# C+!e,%=ecut!-e" t+e ,ormer as &o$!c'%

mark!n( *o#' an# t+e $ater as e=ecut!-e +ea#. C$ear #emarcat!on o, t+e!r ,unct!ons an#

res&ons!*!$!t!es !s a &re%reu!s!te ,or smoot+ ,unct!on!n( o, coo&erat!-e #emocrac'.

o$$o7!n( are t+e res&ect!-e &o7ers an# ,unct!ons o, t+e ;oar# o, D!rectors an# C+!e,%

=ecut!-es.

=oard of Dire#tors @ 3!eir "un#tions

+e' are a (rou& o, &ersons" #emocrat!ca$$' e$ecte#" re&resent!n( t+e (enera$

mem*ers+!&. +e' #er!-e &o7ers ,rom mem*ers an# are accounta*$e to t+em. +e' are

res&ons!*$e ,or sa,e(uar#!n( t+e !nterests o, mem*ers" ma!nta!n!n( t+e assets an#

e=erc!s!n( o-era$$ aut+or!t' !n t+e or(an!at!on. +e ;oar# o, D!rectors !n Coo&erat!-es

are re&resentat!-es o, mem*er%users rat+er t+an *!( ,!nanc!a$ !n-estors. +ere,ore" t+e'

are se$#om tra!ne# !n *us!ness matters. +e ;oar# !s em&o7ere# to #e$e(ate t+e

mana(er!a$ res&ons!*!$!t' to com&etent" &ro,ess!ona$$' ua$!,!e# mana(ers. +ou(+ t+e'

#e$e(ate t+e &o7ers" t+e u$t!mate res&ons!*!$!t' rests 7!t+ t+em. +e' const!tute a *r!#(e

*et7een mem*ers an# t+e man(ers. It !s o,ten c+aracter!e# as e=erc!s!n( *roa#

su&er-!s!on rat+er t+an e=ecut!n( #eta!$sB sett!n( o*8ect!-es rat+er t+an &$ann!n( +o7 t+e'

s+ou$# *e ac+!e-e#B esta*$!s+!n( &o$!c' rat+er t+an a#m!n!ster!n(B a&&ra!s!n( rat+er t+an

contro$$!n(.H


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1etting u- o, organi%ational 9oals:

+e ;oar# !s res&ons!*$e ,or sett!n( u& or(an!at!ona$ (oa$s meant ,or ac+!e-!n( s&ec!,!c

o*8ect!-es" an# !nter&ret!n( t+e o*8ect!-es. It !s a$so res&ons!*$e ,or mak!n( reu!re#

c+an(e !n t+e $on( term o*8ect!-es.

3 (stablishing olicies and rogra..es:

+e ;oar# !n !ts meet!n( s+ou$# cons!#er !m&ortant &o$!c!es an# $on(%term &ro(rammes

!n-o$-!n( -!ta$ matters an# a&&ro-e t+em. It s+ou$# a$so &ro-!#e a ,rame%7ork 7!t+!n

7+!c+ t+ese &o$!c!es an# &ro(rammes cou$# *e carr!e# out *' mana(ers an# #ec!#e on t+e

ma!n$!nes o, act!-!t!es.

5 Delegation o, uthority and +es-onsibility:

+e ;oar# s+ou$# *e care,u$ !n c+oos!n( mana(ers 7!t+ reu!re# kno7$e#(e an#

e=&ert!se s!nce t+e ;oar# mem*ers are $ack!n( !n kno7$e#(e a*out *us!ness an#

cor&orate a,,a!rs. +e ;oar# s+ou$# rea$!e t+e necess!t' o, #e$e(at!n( res&ons!*!$!t!es as

7e$$ as aut+or!t' to t+e mana(ers. One cannot *e +e$# res&ons!*$e 7!t+out *e!n( arme#

7!t+ a#euate &o7ers to make oneKs o7n #ec!s!on.

4 1yste.atic --raisal o, O-erations:

S'stemat!c a&&ra!sa$ o, t+e o&erat!ons o, t+e or(an!at!on !s anot+er res&ons!*!$!t' o, t+e

;oar#. It s+ou$# ca$$ ,or &er!o#!ca$ re&orts an# statements 7+!c+ 7ou$# re-ea$ t+em t+e

resu$ts o, t+e o&erat!ons an# t+e e=tent to 7+!c+ t+e or(an!at!ona$ (oa$s +a-e *een

ac+!e-e#. L!t+ suc+ a&&ra!sa$s t+e ;oar# 7!$$ *e a*$e to e=erc!se o-era$$ contro$ o-er t+e

mana(ement.

Maintain ublic/Me.ber +elation:

It !s t+e res&ons!*!$!t' o, ;oar# o, *u!$# a *r!#(e *et7een (enera$ mem*ers+!& an# &a!#

sta,,. +e ;oar# a$7a's re&resents mem*ersK !nterest as 7e$$ as t+e or(an!at!on to t+e

&u*$!c" *' means o, (oo# &u*$!c re$at!on.


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C!ief >e#utive @ is "un#tions

+e C+!e, =ecut!-e !s a ke' ,!(ure !n t+e mana(ement structure o, coo&erat!-es. e !s

em&$o'e# *' t+e ;oar# an# !s accounta*$e to !t. e !s -ar!ous$' ca$$e# as : Secretar'" G.

M." M. D." !n #!,,erent !nst!tut!ons. e t+ere,ore s+ou$# cons!#er ;oar# as +!s em&$o'er

an# reco(n!e t+!s ,act !n mak!n( a$$ #ea$!n(s 7!t+ !t. +e mana(er (u!#es t+e a,,a!rs o,

t+e or(an!at!on !n !ts #a'%to%#a' 7orks. e coor#!nates t+e #!-erse !n,$uences e=erte#

*' mem*ers" em&$o'ees" customers" &u*$!c an# Go-ernment. e !s utmost !m&ortant ,or

coo&erat!-es. +e success o, t+e coo&erat!-e !nst!tut!on -er' muc+ #e&en#s on t+e

!n!t!at!-eB #r!-e an# e,,ect!-eness o, t+e mana(er. o$$o7!n( are t+e ,unct!ons o, C+!e,

=ecut!-e.

(ecuting olicies:

Mana(er !s res&ons!*$e ,or e=ecut!n( &o$!c!es an# accom&$!s+!n( (oa$s an# o*8ect!-es set

u& *' t+e ;oar#. e !s res&ons!*$e ,or &$ann!n(" or(an!!n(" #!rect!on" coor#!nat!on an#

contro$. In (enera$ +e +as to take a$$ ste&s necessar' ,or carr'!n( out t+e &ro(rammes o,

t+e or(an!at!on.

3 (.-loying ersonnel and Delegating o&ers:

Se$ect!on o, su!ta*$e &ersonne$ ,or #!,,erent ca#res !s t+e res&ons!*!$!t' o, t+e man(er.

e #e,!nes t+e!r ,unct!ons an# res&ons!*!$!t!es an# #e$e(ates &o7ers t+at are necessar' ,or

t+e e=ecut!on o, t+e res&ons!*!$!t!es ass!(ne# to +!s su*or#!nates.

5 ;urnishing


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a &os!t!on to (u!#e an# a#-!ce t+e ;oar# s!nce +e +as ,!rst +an# kno7$e#(e a*out t+e

a,,a!rs o, t+e or(an!at!on.

rom t+e ,ore(o!n(" ana$'s!s certa!n conc$us!ons can *e #ra7n an# on t+e *as!s o, 7+!c+

(u!#e%$!ne can *e (!-en to t+e ;oar# o, D!rectors an# =ecut!-es. +ese (u!#e$!nes or t+eco#es o, con#uct" !, a#+ere# to k 7!$$ (o a $on( 7a' !n esta*$!s+!n( +ea$t+' mana(ement

tra#!t!ons an# mean!n(,u$ re$at!ons+!& *et7een ;oar# an# t+e =ecut!-es. o$$o7!n( are

t+e measures su((este#.

1. +ere s+ou$# *e a &er,ect un#erstan#!n( *et7een *oar# an# e=ecut!-es. +e'

s+ou$# a$so un#erstan# t+e!r res&ect!-e ro$es an# re,ra!n ,rom !nter,er!n( !n t+e

s&+eres o, act!-!t!es 7+!c+ ,a$$ outs!#e oneKs sco&e o, aut+or!t'. +at means t+e

*oar# s+ou$# con,!ne !tse$, to *roa# &o$!c' mak!n( ,unct!on $ea-!n( t+e

!m&$ementat!on to t+e mana(ers" 7+o s+ou$# *e (!-en su,,!c!ent ,ree#om to

com&$ete t+e task.

2. +e ;oar# mem*ers s+ou$# rea$!e t+at t+e' acu!re &o7er on$' 7+en t+e' are

assem*$e# !s a ,orma$ meet!n(. In#!-!#ua$ mem*er can +a-e no &o7er un$ess

suc+ &o7ers are #e$e(ate# to +!m. Soun# ;oar# =ecut!-e re$at!ons+!& 7!$$ *e

#estro'e# !, t+e *oar# mem*ers !n#!-!#ua$$' #!ctate terms to mana(er or ot+er

&ersonne$.

3. ;oar# meet!n( con#ucte# at &er!o#!c !nter-a$s" !s a$so a ,actor 7+!c+ &romote#

+ea$t+' re$at!ons+!& *et7een ;oar# an# =ecut!-es. +e &resence o, C+!e,%

=ecut!-e !s essent!a$ !n a$$ suc+ meet!n(s an# #!scuss!ons re$at!n( to *us!ness.

4. +e *oar# mem*ers s+ou$# rea$!e t+e!r res&ons!*!$!t' an# t+e' s+ou$# not use t+e

coo&erat!-e soc!et' ,or t+e!r &ersonne$ &ro(ress or ,or an' &o$!t!ca$ (a!ns.

5. or smoot+ ,unct!on!n( o, t+e coo&erat!-es" t+e ;oar# mem*ers s+ou$# 7ork as a

team an# t+e' s+ou$# not a$$o7 t+e (rou&!sm to #e-e$o& amon( t+emse$-es.

6. +e mana(er an# ot+er &ersonne$ s+ou$# kee& t+emse$-es a7a' ,rom t+e (rou&

r!-a$r!es amon( ;oar# an# t+e' s+ou$# not take &art !n e$ect!ons.


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2o: Des#ription of a Mem:er

3itle Mem*er

Core fun#tion o &art!c!&ate !n t+e o7ners+!&" contro$ an# &atrona(e o, t+e

coo&erat!-e to t+e en# t+at !t e,,ect!-e$' ,u$,!$s !ts &ur&oses !.e.

meets t+e nee#s o, t+e mem*ers)

&esponsi:ilities D!,,erent mem*ers 7!$$ +a-e a -ar!et' o, !nterests !n t+e!r

coo&erat!-e. o7e-er" ,or t+e coo&erat!-e to ,unct!on e,,ect!-e$'

as a coo&erat!-e" eac+ mem*er s+ou$# carr' out t+e ma8or!t' o, t+e

,o$$o7!n( res&ons!*!$!t!es:

?atron!e t+e coo&erat!-e.

?art!c!&ate !n e$ect!n( an# a&&ra!s!n( t+e &er,ormance o, t+e #!rectors.

A&&ro-e o-era$$ o*8ect!-es an# &o$!c!es o, t+e coo&erat!-e.

Assess t+e &er,ormance o, t+e or(an!at!on < e=am!ne au#!ts.

Commun!cate com&$a!nts" su((est!ons" comments an# nee#s to t+e coo&erat!-e.

Ass!st !n amen#!n( t+e *'%$a7s.

e$& ,!nance t+e coo&erat!-e.

?art!c!&ate !n t+e act!-!t!es o, t+e coo&erat!-e.

=&$a!n or #!scuss t+e coo&erat!-e 7!t+ ot+er mem*ers an# &otent!a$ mem*ers.

A&&o!nt au#!tors.

2o: Des#ription of a Dire#tor

3itle D!rector

$##ounta:le to Mem*ers o, t+e coo&erat!-e

Core fun#tion o &art!c!&ate 7!t+ t+e ot+er #!rectors !n #!rect!n( t+e a,,a!rs o,

t+e coo&erat!-e" (u!#e# *' t+e Coo&erat!-e Soc!et!es Act" *'%$a7s

an# *oar# &o$!c!es" so t+at !t e,,ect!-e$' mo-es to 7ar#s ac+!e-!n(

t+e o*8ect!-es o, t+e or(an!at!on.


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&elations!ips to

Mem*ers < $ea#ers+!& ro$e" &ro-!#!n( an e=am&$e an# !nter&ret!n( -!e7s an# nee#s o,

mem*ers.

D!rectors < acts as a team 7!t+ t+e ot+er #!rectorsB +as aut+or!t' as a #!rector on$' !n

*oar# meet!n(s an# as #e$e(ate# *' t+e *oar#" ,or e=am&$e on comm!ttees.

Genera$ mana(er < at *oar# meet!n(s t+e (enera$ mana(er !s a ke' resource an# &art

o, t+e o-era$$ mana(ement teamB *et7een *oar# meet!n(s t+e re$at!ons+!& !s t+e same

as ,or ot+er mem*ers.

Sta,, < no s&ec!a$ status *e'on# t+at o, an !n,orme# mem*er.

o &art!c!&ate;ointly an# not to act !n#!-!#ua$$') 7!t+ t+e ot+er mem*ers o, t+e *oar# o,

#!rectors !n carr'!n( out t+e ,o$$o7!n( res&ons!*!$!t!es o, t+e *oar#:

&esponsi:ilities

sta*$!s+ t+e o-era$$ (oa$s an# &o$!c!es" ,or t+e #!rect!on o, t+e coo&erat!-e.

sta*$!s+ t+e or(an!at!on o, t+e *oar#" !nc$u#!n( t+e a&&o!ntment o, comm!ttees" an#

c$ear$' #e,!ne t+e res&ons!*!$!t!es an# t+e aut+or!t' ass!(ne#.

Determ!ne t+e 8o* #escr!&t!on" esta*$!s+ t+e sa$ar' ran(e an# a&&o!nt t+e (enera$

mana(erB set t+e sa$ar' an# a&&ra!se t+e &er,ormance o, t+e (enera$ mana(er.

A&&ro-e t+e or(an!at!on structure an# sa$ar' sc+e#u$es ,or a$$ $e-e$s o, t+e structureB

an# &ersonne$ &o$!c!es an# &ro(rammes ,or t+e or(an!at!on.

A&&ro-e ma8or &$ans an# &ro(rammes an# ca&!ta$ an# o&erat!n( *u#(ets.

Ana$'e an# a&&ra!se &ro(ress !n ac+!e-!n( o*8ect!-es an# (oa$s.

Aut+or!e c+an(es !n t+e assets o, t+e or(an!at!on.

ecommen# an' *'%$a7 amen#ments.

Dea$ 7!t+ a&&$!cat!ons ,or mem*ers+!&.

ecommen# sc+e#u$e o, &atrona(e re,un#s !n accor#ance 7!t+ t+e *'%$a7.


28/140

Aut+or!e re&a'ment o, mem*er eu!t!es.

sta*$!s+ an# a#m!n!ster contro$s an# re(u$at!ons ,or t+e &rotect!on o, mem*ers an#

cre#!tors.

?ro-!#e ,or e,,ect!-e commun!cat!ons" an# mem*ers+!& an# &u*$!c re$at!ons ,or t+e

or(an!at!on.

?ro-!#e &o$!c!es an# &ro(rammes ,or t+e ma!ntenance o, a 7e$$%!n,orme#" e,,ect!-e

*oar# o, #!rectors.

?ro-!#e ,or e,,ect!-e re$at!ons an# coor#!nat!on 7!t+ ot+er coo&erat!-es ser-!n( t+e

area.

Su&&ort t+e coo&erat!-e.

2o: Des#ription of t!e (resident

3itle ?res!#ent

$##ounta:le to +e *oar# o, #!rectors

Core fun#tion o ser-e as t+e sen!or o,,!ce%*earer o, t+e coo&erat!-e"

coor#!nat!n( t+e act!-!t!es o, an# (!-!n( $ea#ers+!& to t+e

*oar# o, #!rectors" $!a!s!n( 7!t+ t+e (enera$ mana(er an#

*oar# o, #!rectors" an# en(a(!n( !n commun!cat!on 7!t+ t+e

mem*ers" ot+er coo&erat!-es" $oca$ or(an!at!ons an#

(o-ernment.

&esponsi:ilities

Act as c+a!r&erson o, meet!n(s o, t+e *oar# an# o, t+e e=ecut!-e comm!ttee.

;e e= o,,!c!o mem*er o, a$$ *oar# comm!ttee < rece!-e re&orts an# m!nutes" *ut not

necessar!$' atten#.

Ass!st !n t+e &re&arat!on o, t+e a(en#a ,or *oar# an# e=ecut!-e comm!ttee meet!n(s

an# ensure t+at a#euate !n,ormat!on !s a-a!$a*$e ,or stu#' *' t+e *oar#B a$so" (!-e

$ea#ers+!& !n &$ann!n( t+e 'earKs a(en#a o, s&ec!a$ !tems.

?er,orm t+e task o, s!(n!n( o,,!cer ,or t+e coo&erat!-e a$on( 7!t+ ot+er a&&o!nte# *'

t+e *oar#.

Inter&ret an# c$ar!,' &o$!c!es an# #ec!s!ons o, t+e *oar#.


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Ma!nta!n e,,ect!-e $!a!son 7!t+ t+e (enera$ mana(er an# t+e *oar# o, #!rectors.

e&ort to t+e mem*ers on *e+a$, o, t+e *oar# o, #!rectors.

e&resent t+e coo&erat!-e an# e=&$a!n &$ans" &o$!c!es an# &ro(rammes" 7+en t+!s +as

not *een ot+er7!se #e$e(ate# *' t+e *oar#.

?$a' a $ea#ers+!& ro$e 7!t+ ot+er coo&erat!-es an# !n t+e commun!t' on *e+a$, o, t+e

coo&erat!-e.

G!-e $ea#ers+!& to t+e *oar# !nc$u#!n( encoura(ement ,or *oar# tra!n!n(.

Or!ent ne7 *oar# mem*ers ,or e,,ect!-e &art!c!&at!on.

2o: Des#ription of t!e General Manager

3itle Genera$ mana(er

$##ounta:le to +e *oar# o, #!rectors

Core fun#tion o mana(e t+e o&erat!ons o, t+e coo&erat!-e !n accor#ance 7!t+

t+e (u!#e$!nes esta*$!s+e# *' t+e *oar#

&esponsi:ilities

A#-!se an# ass!st t+e *oar# !n esta*$!s+!n( o*8ect!-es" &o$!c!es an# (oa$s ,or t+e

coo&erat!-e.

cont!nuous$' stu#' tren#s an# &ro-!#e t+e *oar# 7!t+ !n,ormat!on reu!re# ,or

&$ann!n(.

De-e$o& s+ort% an# $on(%term &$ans an# &ro(rammes 7!t+ su&&ort!n( *u#(et

est!mates an# ot+er (oa$s ,or su*m!ss!on to t+e *oar# ,or #ec!s!on.

Inter&ret an# a#m!n!ster &o$!c!es esta*$!s+e# *' t+e *oar# an# !ssue &roce#ures to

ensure un!,orm !nter&retat!on.

A&&o!nt an# su&er-!se !mme#!ate su*or#!natesB seek a&&ro-a$ o, t+e *oar# o,

#!rectors ,or to& mana(ement a&&o!ntments. Ma!nta!n an e,,ect!-e or(an!at!on structure" 7!t+ a#euate sta,,!n( an# &ro-!s!on ,or

sta,, #e-e$o&ment.

nsure t+at t+e ,!nances" ,ac!$!t!es an# ot+er &ro&ert' o, t+e soc!et' are &ro&er$'

sa,e(uar#e#" !nsure# an# a#m!n!stere#.

ake #!rect act!on to ac+!e-e (oa$s !n a$$ as&ects o, t+e o&erat!on.


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@ee&. +e *oar# !n,orme# o, &ro(ress an# o, resu$ts !n com&ar!son 7!t+ (oa$s !n a$$

areas.

Ma!nta!n e,,ect!-e re$at!ons 7!t+ mem*ers an# (enera$ &u*$!c.

?art!c!&ate !n" an# coo&erate an# coor#!nate e,,ect!-e$' 7!t+" ot+er coo&erat!-es !n t+e

commun!t'.

?$an ,or &ersonne$ #e-e$o&ment as reu!re# to mana(e t+e soc!et'.

Ma!nta!n $!a!son 7!t+ t+e &res!#ent.

?ro-!#e $ea#ers+!& an# #!rect!on to a$$ sta,, mem*ers.

'nit

De#ision Making in Cooperatives0 Con#ept, Ainds, (ro#ess and3e#!ni


31/140

$e-e$s o, #ec!s!on. . Du$,er +as c$ass!,!e# t+e #ec!s!on mak!n( !n coo&erat!-e on t+e

*as!s o, t+e $e-e$s.

Aind of Managerial De#ision Level $ut!ori?ed to Make De#ision

Goa$ Dec!s!on

L+at !s to *e reac+e#)

Means #ec!s!ons

;' 7+at means)

Act!on #ec!s!on

o7)

9&&er mana(ement $e-e$

M!##$e mana(ement $e-e$

o7er mana(ement $e-e$

Mana(er!a$ #ec!s!ons ma' a$so *e su*%#!-!#e# !nto strate(!c #ec!s!on an# tact!ca$

#ec!s!ons. Strate(!c #ec!s!ons +a-e $on( % term !m&ortance an# a com&$e= c+aracter. +e'

are (oa$ #ec!s!ons an# *r!n( a*out ,un#amenta$ c+an(es. +e' are #!recte# an#

coor#!nate# at t+e +!(+er $e-e$s o, t+e enter&r!se. act!ca$ #ec!s!ons are rout!ne #ec!s!on"

7+!c+ are #!recte# at t+e re(u$at!on o, $!m!te# ,!e$#s o, act!-!t' or s+orter &er!o#s. +e'

are *ase# on strate(!c #ec!s!ons an# a!m at t+e!r !m&$ementat!on. +e tact!ca$ #ec!s!ons

are t+e task o, m!##$e an# $o7er $e-e$ mana(ement.

9&&er Mana(ement e-e$

M!##$e Mana(ement e-e$

o7er Mana(ement e-e$

=tent o, Dec!s!ons


32/140

Strate(!c Dec!s!on act!ca$ Dec!s!on

On t+e *as!s o, t+e met+o#" t+e #ec!s!on mak!n(" ma' *e c$ass!,!e# as &ro(ramme# an#

un&ro(ramme# #ec!s!ons. ?ro(ramme# #ec!s!ons are rout!ne re&et!t!-e #ec!s!ons. It

!n-o$-es $ess r!sk an# ma' *e #e$e(ate# eas!$'. +e uant!tat!-e nature o, t+ese #ec!s!ons

,ac!$!tates com&uter &ro(ramm!n( o, t+ese #ec!s!on. 9n&ro(ramme# #ec!s!ons are non%

re&et!t!-e. +e' cannot *e assesse# !n uant!tat!-e terms an# !n-o$-e (reater r!sk.

;ase# on t+e &erson mak!n( t+e #ec!s!on" t+e #ec!s!on%mak!n( ma' *e c$ass!,!e# as

!n#!-!#ua$ #ec!s!on an# (rou& #ec!s!on. In#!-!#ua$ #ec!s!on%mak!n( !s use# !n sma$$

or(an!at!ons at t!mes o, emer(enc' an# !n c!rcumstances 7+ere t+e (rou& +as $!tt$e

kno7$e#(e. +e &rest!(e" &o7er an# t+e e=&ert!se en8o'e# *' t+e !n#!-!#ua$s 7+o make

#ec!s!on are t+e ,actors" 7+!c+ contr!*ute to !n#!-!#ua$ #ec!s!on%mak!n(. Grou& #ec!s!on%

mak!n( !s &art!c!&at!-e #ec!s!on mak!n(. It makes use o, co$$ect!-e 7!s#om o, se-era$

!n#!-!#ua$s. +e mem*ers o, t+e (rou& (et a c+ance to -o!ce t+e!r o&!n!on. +e tec+n!ca$

ser-!ce o, e=&erts ma' a$so *e ma#e a-a!$a*$e. +e (rou& #ec!s!on ma' take e!t+er o, t+e

t7o ,orms: Grou& a#-!sor' or Grou& #eterm!n!st!c.

(ro#ess of De#ision Making

+e #ec!s!on%mak!n( !n-o$-es $o(!ca$ an# seuent!a$ ste&s" 7+!c+ +a-e to *e ,o$$o7e# !n

an' sc!ent!,!c #ec!s!on%mak!n( &rocess. Accor#!n( to ?.. Drucker" Nt+e #ec!s!on mak!n(

+a-e ,!-e #!st!nct sta(es: #e,!n!n( t+e &ro*$emB ana$'s!n( t+e &ro*$em" #e-e$o&!n(

a$ternat!-e so$ut!onsB #ec!#!n( u&on t+e *est so$ut!onsB con-ert!n( t+e #ec!s!on !nto

e,,ect!-e act!on.N

1. Developing t!e (ro:lem

A mana(er must cont!nuous$' scan t+e en-!ronment to !#ent!,' an# &erce!-e t+e &ro*$ems

o, #e-e$o&ment. In a coo&erat!-e or(an!at!on a mana(er can (et ne7 &ro*$ems ,rom t+e

or#ers o, su&er!ors" #!rect!on !ssue# *' ;oar# o, D!rectors" su((est!ons ,rom mem*ers

an# em&$o'ees or *' ana$'!n( t+e s'stem o, o&erat!on an# account!n(. +e common


33/140

&ro*$em areas !n mana(ement" 7+!c+ !n-o$-e cruc!a$ #ec!s!ons" are: tomorro7

=tens!on o, t+e ne7 s&+ere o, act!-!t' or ne7 $!ne o, *us!ness

Increas!n( t+e -o$ume o, *us!ness

ak!n( measures ,or u!ck an# &os!t!-e #e-e$o&ment o, t+e enter&r!se

I#ent!,'!n( t+e $!m!t!n( ,actors 7+!c+ s$o7 #o7n #e-e$o&ment an# measures to

o-ercome t+em.

A,ter t+e &erce&t!on o, t+e &ro*$em t+e a!m or o*8ect!-e o, #ec!s!on must *e ,ormu$ate#.

-er' #ec!s!on must contr!*ute to s&ec!,!c (oa$" ,or e=am&$e/!ncreas!n( t+e turn o-er.

Suc+ (oa$s make t+e #ec!s!on &ur&ose,u$. +e o*8ect!-es o, #ec!s!on%mak!n( must *e

s&ec!,!e# as e=act$' as &oss!*$e. It must *e &ract!ca*$e or a&&$!ca*$e to t+e &ro*$em

s!tuat!on.

*. $naly?ing t!e (ro:lem

,,ect!-e #ec!s!on%mak!n( #e&en#s $ar(e$' on t+e a-a!$a*!$!t' an# usa*!$!t' o, ,acts.

L+!$e #ec!s!on mak!n( 7e +a-e to cons!#er a$$ cr!t!ca$ ,actors" tan(!*$e as 7e$$ as

!ntan(!*$e" !nterna$ as 7e$$ as en-!ronmenta$ mana(er!a$ or tec+n!ca$. Suc+ ,acts an#

!n,ormat!on are &art!cu$ar$' nee#e#

,or ,!=!n( t+e o*8ect!-es

to *e a*$e to 7ork to atta!n t+e o*8ect!-es

to measure t+e resu$ts o, t+e enter&r!se act!-!t'

+e !n,ormat!on an# #ata o*ta!ne# must *e ana$'se# $o(!ca$$'. +e' s+ou$# not *e too

s!m&$!,!e#. A$$ t+e -ar!et' o, ,actors an# s!tuat!ons must *e taken !nto account an# t+e!r

com&$e= ram!,!cat!on must *e un#erstoo#. +e re$e-ant an# !n,$uent!a$ ,actors must *e

#!st!n(u!s+e# ,rom ot+er ,actors" *ecause cons!#er!n( too man' ,actors $ea#s on$' to

con,us!on. Ne 7+o cons!#ers too muc+ 7!$$ &er,orm too $!tt$eN" !s t+e sa'!n(. Suc+

#!sentan($ement o, &ert!nent ,actors !s necessar' to kee& t+e t!me an# cost ,actors 7!t+!n


34/140

t+e $!m!ts. or !nstance !, t+e mana(ement #ec!s!on%mak!n( &erta!ns to !ncrease !n

turno-er" a$$ re$ate# ,actors suc+ as #eman#" &r!ce" &urc+as!n( &o7er" #!str!*ut!on s'stem

an# &romot!on strate(' etc. +a-e to *e ana$'se#.

+. Developing alternative Solutions

or reac+!n( t+e #ec!s!on (oa$s" t+ere must a$7a's *e more t+an one c+o!ce. +e rea$!t'

o, t+e (oa$ $ar(e$' #e&en#s on t+e a-a!$a*$e means. De-e$o&ment o, t+e a$ternat!-e 7a's

!s *ase# on t+e ,actors suc+ as mater!a$" mone'" man&o7er" tec+no$o('" etc." 7+!c+ !s

a-a!$a*$e to a coo&erat!-e or(an!at!on. +e c+o!ce o, a course o, act!on #e&en#s on t+at

,actors 7+!c+ !s cons!#ere# cr!t!ca$. +e e,,!c!enc' o, t+e mana(er!a$ #ec!s!on%mak!n(

$!es !n #e-e$o&!n( as man' a$ternat!-e so$ut!ons as &oss!*$e. I, t+ere !s on$' one course o,

act!on ,or a &art!cu$ar (oa$" t+at course !s &ro*a*$' 7ron(.

6. De#iding upon t!e =est Solution

+e a$ternat!-e courses o, act!on must *e c$ass!,!e#" com&are# an# ana$'se#. -er'

course o, act!on must *e 8u#(e# on t+e *as!s o, t+e cost an# r!sk !n-o$-e#. +e ,utur!t' o,

t+e #ec!s!on an# !ts re$at!on to -ar!ous as&ects o, *us!ness must *e assesse# &ro&er$'. +e

mana(er!a$ ana$'s!s an# cost *ene,!t ana$'s!s must *e ma#e to #eterm!ne t+e uant!tat!-e

outcome o, t+e #ec!s!on. +e uant!tat!-e as&ects o, t+e #ec!s!on must a$so *e assesse#.

or ,ac!$!tat!n( t+e o*8ect!-e #ec!s!on%mak!n( !n a coo&erat!-e or(an!at!on" . Du$,ar +as

su((este# t+e ,o$$o7!n( #ec!s!on" cr!ter!a.

!ne-!ta*$e nat!ona$ econom!c necess!t!esB

t+e necessar' s&ee# !n so$-!n( t+e &ro*$emB

econom!c cr!ter!a" ,or e=am&$e" 7!t+ re(ar# to e=&en#!ture an# resu$tB

uant!tat!-e c+aracters 7+!c+ are to *e atta!ne#B

soc!a$ cr!ter!aB ,or e=am&$e" t+e necess!t' o, ma!ntenance o, 7ork &$acesB

econom!c" &o$!t!ca$ o*8ect!-es o, su&eror#!nate *o#!es

;ase# on t+e a*o-e cr!ter!a t+e #ec!s!on must *e arr!-e# at *' com&etent *o#!es

&art!cu$ar$' !n res&ect o, coo&erat!-e or(an!at!ons" 7+ere !nner #emocrac' +as to *e


35/140

&reser-e#. -er' #ec!s!on must +a-e t+e #emocrat!c sanct!on.

5. Converting t!e De#ision into ffe#tive $#tion

+!s !s a cruc!a$ sta(e" 7+!c+ trans,orms t+e menta$ act!on !nto &+'s!ca$ act!on. Dec!s!ons

are ma#e e,,ect!-e on$' *' t+e!r !m&$ementat!on. +e mana(ers must ensure t+at t+e

#ec!s!ons are carr!e# out. In t+e &rocess o, !m&$ementat!on t+e &oss!*$e errors must *e

(au(e#" an# reme#!a$ act!ons an# correct!-e measures must *e taken as u!ck$' as

&oss!*$e. +e man(ers must reco(n!e t+e c+a!n react!on !n t+e #ec!s!on%mak!n(" as one

#ec!s!on !s $!ke$' to $ea# to a ser!es o, #ec!s!ons. urt+ermore eac+ #ec!s!on !s !nter%

re$ate# to ot+er as&ects an# e=ten#s *e'on# t+e *oun#ar!es o, one #e&artment or sect!on.

+e t!me ,actor must a$so *e taken !nto account !n t+e !m&$ementat!on. ac+ #ec!s!on" to

*e e,,ect!-e" must *e !m&$emente# 7!t+!n t+e s&ec!,!e# t!me.

3e#!ni


36/140

!n-entor' most &ro,!ta*$'. It !s a sc!ent!,!c met+o# *ase# on t+e uant!tat!-e #ata an#

#eterm!nes t+e o&t!mum means to reac+ t+e (oa$.

Linear (rogramming

It !s a mat+emat!ca$ tec+n!ue" 7+!c+ cons!sts o, e=&ress!n( t+e o&erat!ons o, a (rou& o,

com&$e= !nter#e&en#ent -ar!a*$es *' #e-e$o&!n( mat+emat!ca$ ,ormu$ae. It can *e use#

7+en a$$ t+e re$at!ons+!&s are $!near" t+at !s 7+en t+e cost o, &ro#uc!n( one or more un!ts

!s #!rect$' &ro&ort!ona$ to t+e &resent cost o, &ro#uct!on. It !s use,u$ !n t+e se$ect!on o,

one a$ternat!-e course amon( man'" 7+!c+ (!-es t+e +!(+est &ro,!t. !near &ro(ramm!n(

!s a&&$!e# to &ro*$ems o, &ro#uct!on &$ann!n(" sc+e#u$!n(" resource a$$ocat!on an#

#!str!*ut!on an# cost ana$'s!s. !near &ro(ramm!n( can *e use# on$' 7!t+ t+e a!# o,

com&uters.

&isk $nalysis

-er' ma8or #ec!s!on t+at a mana(er makes !s *ase# on ,orecast. -er' ,orecast !s $!ke$'

to *e !naccurate 7+en !t !ncor&orates t+e !nteract!on o, a num*er o, cr!t!ca$ -ar!a*$es. In

c+oos!n( eac+ course o, act!on" certa!n amount o, r!sk an# uncerta!nt' !s !n-o$-e#. It !s

t+ere,ore 7!se to e-a$uate +o7 ser!ous$' t+e #ec!s!on !s at r!sk ,rom suc+ errors" *e,ore

comm!tt!n( t+e com&an' to a $on(%term ca&!ta$ e=&en#!ture. +e &ro*a*!$!t' o, t+e ran(e

o, errors !s use# to ca$cu$ate t+e r!sk &ro,!$e o, t+e &ro8ect. ;ase# on t+!s t+e &ro*a*!$!t'

o, ac+!e-!n( a (!-en return on ca&!ta$ !s est!mate#. or e=am&$e" sa$es mana(er ma' *e

aske# to est!mate t+e &ro*a*!$!t' o, returns *' a#o&t!n( a sa$e &r!ceB or t+e &ro#uct!on

mana(er ma' *e aske# to est!mate t+e &ro*a*!$!t' o, t+e rate o, returns t+at t+e com&an'

ma' +o&e to earn *' means o, a ne7 !n-estment.

De#ision 3ree

One o, t+e *est 7a's to ana$'e a #ec!s!on !s to -!sua$!e a$$ &oss!*$e #!rect!ons t+at

act!ons ma' *e taken ,rom a #ec!s!on &o!nt. +!s tec+n!ue !s kno7n as F#ec!s!on treeF.

+e tec+n!ue cons!sts o, #ra7!n( a *ranc+!n( net7ork #!a(ram s+o7!n( -ar!ous

#ec!s!ons an# t+e!r &ro*a*$e outcomes an# ca$cu$at!n( t+e net &resent -a$ue. +at *ranc+

7+!c+ &ro-!#es +!(+est net returns 7!t+ $o7est cost !s c+osen as t+e course o, act!on to

a#o&t. o (!-e a s!m&$e e=am&$e" !n or#er to !ncrease &ro#uct!on !t !s &oss!*$e to #ec!#e


37/140

*et7een a##!n( ne7 mac+!ner' or +a-!n( a##!t!ona$ s+!,ts o, &ro#uct!on *' en(a(!n(

a##!t!ona$ $a*our.

Cost =enefit $nalysis

It !s t+e s'stemat!c com&ar!son *et7een cost o, carr'!n( out a ser-!ce or act!-!t' an# t+e

-a$ue o, t+e ser-!ce or act!-!t' *' uant!,'!n( as ,ar as &oss!*$e a$$ costs an# *ene,!ts. In

ca&!ta$ &ro8ect e-a$uat!on one assesses a$$ t+e e=&ecte# cas+ out,$o7s an# !n,$o7s ,or a

&ro8ect" an# on t+at *as!s t+e rate o, return t+e &ro8ect can (enerate !s arr!-e# at. ;ut t+e

one ma8or $!m!tat!on !n t+!s t'&e o, ana$'s!s !s t+at not a$7a's t+e *ene,!ts ,$o7 ,rom a

&ro8ect can *e measure#. +ere are se-era$ !ntan(!*$e *ene,!ts suc+ as +!(+er mora$e" $ess

&o$$ut!on etc. Suc+ !ntan(!*$e ,actors ten# to *e !(nore# !n t+e cost *ene,!t ana$'s!s.

'nit V

Criteria for 2udging t!e Operational ffi#ien#y Of Cooperatives,

(erforman#e appraisal and Aey &esult $reas in Cooperatives

Con#ept0

,,!c!enc' !s t+e 7atc+7or# o, mo#ern mana(ement. It !s o, s&ec!a$ !m&ortance to

coo&erat!-es *ecause o, t+e!r t7!n e$ements !n t+e!r o*8ect!-es an# o&erat!on" name$'"

Assoc!at!on an# nter&r!seB an# t+e nee# to ac+!e-e a *$en# o, success !n *ot+. +e

JO&erat!ona$ ,,!c!enc'K !s an e$us!-e conce&t" 7+!c+ +as se-era$ connotat!ons. +!s

a&art" o&erat!on e,,!c!enc' !s or(an!at!on s&ec!,!c. An um*re$$a conce&t" 7+!c+ !(nores

t+e nature" s!e an# o&erat!on o, t+e s&ec!,!c coo&erat!-e or(an!at!on" ma' &ro-e to *ene*u$ous. It !s t+ere,ore necessar' to un#erstan# certa!n *roa# cr!ter!a ,or measur!n( t+e

o&erat!ona$ e,,!c!enc' o, coo&erat!-e or(an!at!ons.

+e nc'c$o&e#!a o, Soc!a$ Sc!ences +as out$!ne#" ,,!c!enc'H as t+e rat!o *et7een

!n&ut an# out&ut" e,,orts an# resu$ts" e=&en#!ture an# !ncome" cost an# t+e resu$t!n(


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&$easure.H +e D!ct!onar' o, Soc!a$ Sc!ences +as #e,!ne# O&erat!ona$ e,,!c!enc' as t+e

a*!$!t' to ac+!e-e t+e #es!re# (oa$ 7!t+ econom' o, t!me an# e,,ort !n re$at!on to t+e

amount o, 7ork accom&$!s+e#.H Accor#!n( to t+!s #e,!n!t!on o&erat!ona$ e,,!c!enc'

means t+e ac+!e-ement o, t+e tar(et s&ec!,!e# *' m!n!mum t!me an# e,,ort. In ot+er

7or#s" !t !s t+e rat!o *et7een !n&ut an# out&ut. +e cr!ter!on o, e,,!c!enc' #!ctates t+e

c+o!ce o, t+at a$ternat!-e 7+!c+ &ro#uces t+e $ar(est resu$t ,or t+e (!-en a&&$!cat!on o,

resources.

Dr.>es#an7+$$a +as #e,!ne# O&erat!ona$ ,,!c!enc' as" t+e e,,ect!-eness or com&etence

7!t+ 7+!c+ a structure &er,orms !ts #es!re# ,unct!ons.H Accor#!n( to t+e a*o-e #e,!n!t!on"

t+e conce&t o, e,,!c!enc' !nc$u#es t+e e,,ect!-eness. L+!$e or(an!at!ona$ e,,!c!enc' !n a

narro7 sense" !s concerne# 7!t+ +o7 7e$$ an or(an!at!on &er,orms a (!-en tec+no$o('"

7+!$e !n a *roa#er sense !t !nc$u#es or(an!at!ona$ e,,ect!-eness" 7+!c+ !s a measure o,

t+e ua$!t' o, re$at!ons+!& an or(an!at!on +as 7!t+ !ts en-!ronment. +us t+e e,,!c!enc'

!n t+e *roa#er sense !nc$u#es not on$' t+e e,,!c!enc' !n t+e trans,ormat!on &rocess *ut

a$so t+e e,,!c!enc' as rea$!e# !n t+e en-!ronment. It !s !n t+!s sense t+e conce&t o,

e,,!c!enc' must *e un#erstoo# !n soc!a$ or(an!at!ons $!ke coo&erat!-es.

Dimensions of Operational ffi#ien#y

L+en 7e c$ose$' e=am!ne t+e conce&t o, o&erat!ona$ e,,!c!enc' !n t+e conte=t o, a

coo&erat!-e or(an!at!on" 7e ma' arr!-e at ,our #!st!nct as&ects o, t+e conce&t.

$. 3e#!ni#al ffi#ien#y0

ec+n!ca$ e,,!c!enc' &erta!ns to tec+n!ca$ com&etence o, an or(an!at!on. In ot+er 7or#s

tec+n!ca$ e,,!c!enc' re$ates to suc+ matters" 7+!c+ are concerne# 7!t+ t+e s&ec!a$!e#

tec+n!ca$ kno7 +o7 !n t+e res&ect!-e ,!e$# o, act!-!t'. It ma' re$ate to t+e !m&ro-!n(

&ro#uct!-!t' o, !n#ustr!a$ 7ork &rocess suc+ as mec+an!at!on" rat!ona$!at!on etc.

S!m!$ar$' !n eac+ area o, s&ec!a$!at!on" !m&ro-!n( ec+n!ca$ ,,!c!enc' can !ncrease

&ro#uct!-!t'. or t+!s &ur&ose norms +a-e to *e e-o$-e# !n eac+ tec+n!ca$ as&ect ,or

!m&ro-!n( ec+n!ca$ ,,!c!enc'.

=. #onomi# ffi#ien#y0


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+e conom!c ,,!c!enc' on t+e ot+er +an# !m&$!es t+e rea$!at!on o, ma=!mum out&ut

,rom (!-en resources. A$ternat!-e$' !t a$so !m&$!es m!n!m!at!on o, !n&uts reu!re# ,or

rea$!!n( a (!-en out&ut o, (oo#s or ser-!ces. It !n-o$-es t+e e$!m!nat!on o, 7aste an#

re#uct!on !n +!(+ cost. In s+ort econom!c e,,!c!enc' $!es !n 8u#!c!ous use o, ,!nanc!a$ an#

ot+er resources an# #e-!s!n( cost e,,ect!-e met+o#s o, o&erat!on.

C. "un#tional ffi#ien#y0

It !s t+e resu$tant e,,!c!enc' rea$!e# ,rom t+e ,!rst t7o as&ects o, o&erat!ona$ e,,!c!enc'.

+e &er,ormance or resu$ts are a(a!n #eterm!ne# *' ,unct!ona$ &er,ormance suc+ as

,!nanc!a$ &er,ormance" &ro#uct!on &er,ormance" market!n( &er,ormance etc. It re,$ects

t+e mana(er!a$ an# or(an!at!ona$ e,,!c!enc' more c$ear$' !n terms o, resu$ts an#

&er,ormance.

D. So#ial ffi#ien#y0

-er' or(an!at!on !s a &art o, $ar(er en-!ronmenta$ s'stem. O,ten t+e (oa$s o, an

or(an!at!on e=ten# *e'on# !tse$, +a-!n( en-!ronmenta$ !m&$!cat!on. In ot+er 7or#s t+e

a*!$!t' o, an or(an!at!on to *r!n( a*out #es!re# c+an(es !n t+e en-!ronment !s one more

#!mens!on o, t+e conce&t.

In t+e coo&erat!-e or(an!at!on t+e conce&t o, e,,!c!enc' s+ou$# *e un#erstoo# more ,rom

t+e non%&ro,!t &o!nt o, -!e7. In t+e o&!n!on o, .A. S!mon" t+e cr!ter!a o, e,,!c!enc' are

more com&$!cate# !n !ts a&&$!cat!on to non%commerc!a$ t+an to commerc!a$ or(an!at!ons.

+ere,ore" o&erat!ona$ e,,!c!enc' !n coo&erat!-es s+ou$# not *e -!e7e# !n t+e restr!cte#

sense o, econom!c an# tec+n!ca$ as&ects. In coo&erat!-es t+e o&erat!ona$ e,,!c!enc' !s

*etter 8u#(e# e=terna$$'. rom t+!s an($e t7o more as&ects o, e,,!c!enc' s+ou$# *e

!nc$u#e# as ,ar as coo&erat!-es are concerne#.

E$$iciency with e$erence to 'embers: It !s an attem&t to measure e,,!c!enc'

,rom one *as!c cr!ter!on: to 7+at e=tent t+e mem*ers +a-e *een *ene,!te# ,rom

t+e coo&erat!-e an# to 7+at e=tent mem*ersK as&!rat!ons an# nee#s +a-e *een

met A coo&erat!-e cannot c$a!m to +a-e atta!ne# e,,!c!enc' un$ess !t ,u$,!$s t+e

a*o-e cr!ter!on.


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E$$iciency with e$erence to Society: ,,!c!enc' !n t+e *roa#er sense !s t+e

measure o, ua$!t' o, re$at!ons+!& an or(an!at!on +as 7!t+ en-!ronment. In

(enera$ t+e e=tent to 7+!c+ $ar(er soc!a$ &ur&ose !s ac+!e-e# t+rou(+ t+e

or(an!at!on suc+ as &r!ce contro$" ,a!r #!str!*ut!on etc." 7!$$ !n#!cate t+e soc!a$

res&ons!*!$!t' o, an or(an!at!on. Its !m&act !n t+e en-!ronment suc+ as 7aste

rec'c$e an# &o$$ut!on contro$ 7!$$ re,$ect !ts en-!ronmenta$ ,r!en#$' c+aracter.

Criteria for Measuring Operational ffi#ien#y of Cooperatives

rom t+e a*o-e ana$'s!s s&ec!,!c cr!ter!a ma' *e !#ent!,!e# ,or measur!n( t+e O&erat!ona$

,,!c!enc' o, coo&erat!-e enter&r!ses.

1. A*!$!t' to ac+!e-e tec+n!ca$ e,,!c!enc' an# econom!c &er,ormance

2. A*!$!t' o, t+e coo&erat!-e to ma!nta!n t+e coo&erat!-e c+aracter *' o*ser-!n(

coo&erat!-e -a$ues suc+ as #emocrac'" autonom' etc.

3. A*!$!t' o, t+e coo&erat!-e to sat!s,' t+e mem*ersK as&!rat!ons *' mean!n(,u$$'

re$at!n( t+e enter&r!se o*8ect!-es 7!t+ !n#!-!#ua$ (oa$s

4. A*!$!t' o, t+e coo&erat!-e to en$!st t+e &art!c!&at!on o, mem*ers !n suc+ as&ects

as eu!t'" *us!ness &ro,!t s+ar!n( an# #emocrat!c contro$

5. A*!$!t' o, t+e coo&erat!-e to ac+!e-e $ar(er soc!a$ (oa$s $!ke &romot!n(

em&$o'ment" (enerat!n( !ncome an# !m&ro-!n( t+e stan#ar# o, $!-!n( !n t+e

$ar(er commun!t'6. A*!$!t' o, t+e coo&erat!-e to !m&ro-e t+e mana(er!a$ e,,!c!enc' *' sett!n(

rea$!st!c (oa$s" e-o$-!n( strate(!es" ,ormu$at!n( &ro(rammes an# e=erc!s!n(

e,,ect!-e contro$

Measurement (arameters of Operational ffi#ien#y

+e cr!ter!a o, O&erat!ona$ ,,!c!enc' #!scusse# so ,ar can *e con-erte# !nto a set

o, measurement &arameters an# rat!os" 7+!c+ +a-e *een #e-e$o&e# ,or &rec!se

measurement an# e-a$uat!on. +e' are:

1. ,,!c!enc' !n Out&ut: a) Ac+!e-ement o, ar(et

*) In&ut%out&ut rat!o

c) Ca&ac!t' ut!$!at!on

#) Va$ue a##!t!on


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2. ,,!c!enc' !n Cost: a) O&erat!ona$ cost as to sa$e)

*) 9n!t cost

c) Stan#ar# cost

3. ?ro,!ta*!$!t' : a) eturn on sa$e

*) eturn on !n-estment

c) ?ercenta(e o, (ross &ro,!t to sa$es

#) ?ercenta(e o, net &ro,!t to sa$es

4. !u!#!t' estes at!os): a) Current assets: Current !a*!$!t!es

*) !u!# Assets: Current !a*!$!t!es

c) ?ercenta(e o, rece!-a*$es to assets

#) ?ercenta(e o, rece!-a*$es

5. So$-enc' ests : a) De*t%eu!t' rat!o

*) O7n eu!t' to tota$ Ca&!ta$!at!on

c) Co-era(e rat!o

!.e." O&erat!n( ?ro,!t

Interest on .. !a*!$!t!es

/. Servi#e to Mem:ers0

a) Mem*er urno-er

o. o, mem*ers 8o!n!n( P o. o, Mem*ers ea-!n( Q 1

o. o, Mem*ers at t+e *e(!nn!n( P at t+e en#/2

*) Dro& out


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o. o, ?eo&$e $ea-!n( Q 1

o. o, Mem*ers at t+e *e(!nn!n( P at t+e en#/2

c) Ser-!ce Sur&$us

A-era(e &r!ce #!,,erent!a$s Q ota$ Vo$ume o, ;us!ness #one 7!t+ mem*ers

#) ?atrona(e e,un#

? Q MV;

M? R

V;

M? R Annua$ ?atrona(e e,un# #ue to a Mem*er

? R ota$ amount A$$ocate# to ?atrona(e e,un#

V; R ota$ Vo$ume o, ;us!ness

MV; RVo$ume o, ;us!ness Contr!*ute# *' a Mem*er

(erforman#e appraisal and Aey &esult $reas in Cooperatives

+e (oa$s o, e-er' or(an!at!on are rea$!e# *' means o, &er,ormance an# resu$ts. -er'

or(an!at!on on one +an# mo*!$!es !n&uts an# resources $!ke mone'" mater!a$ an#

man&o7er an# em&$o'ees t+em !n t+e &ro#uct!on o, certa!n ser-!ces an# out&uts. On t+e

ot+er +an# e-er' or(an!at!on &er,orms t+e or(an!at!ona$ ,unct!ons suc+ as o&erat!on"

,!nance" market!n( etc." &er,ormance esta*$!s+es t+e $!nk *et7een t+e t7o. +e

mana(ement" 7+!c+ !s res&ons!*$e ,or &er,ormance !n #!,,erent ,unct!ona$ areas" !s t+e

ke' ,or success or ,a!$ure o, an' or(an!at!on. +ere are #!,,erent k!n#s o, a&&ra!sa$

7+!c+ are #!scusse# *e$o7:

1. &esult $ppraisal


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9sua$$' t+e resu$t ac+!e-e# !s t+e *as!s o, a&&ra!sa$. It !s assess!n( t+e net outcome o, t+e

*us!ness. +!s k!n# o, a&&ra!sa$ !s kno7n as resu$t or!ente# a&&ra!sa$. A(a!n t+e resu$t%

or!ente# a&&ra!sa$ +as t+ree as&ects:

a) ro$it ppraisal: +e +!(+est ,orm o, resu$t !n an' *us!ness !s t+e atta!nment o,

&ro,!t o*8ect!-es. ?ro,!t *ecomes t+e 'ar#st!ck o, t+e o&erat!ona$ e,,!c!enc' o,

,!nance" &ro#uct!on an# market!n(. On$' *' means o, &ro,!t an or(an!at!on can

ser-e s+are+o$#ers !nterest" enter&r!se !nterest an# nat!ona$ !nterest. +ere,ore"

t+e ac!# test o, e=ecut!-e &er,ormance !s t+e &ro,!t.

b) ost ppraisal: ook!n( *ack7ar#s t+e ne=t $e-e$ o, a&&ra!sa$ !s t+e

measurement o, cost at -ar!ous cost centers o, *us!ness. Cost centers are

com&ara*$e to &ro,!t an# $oss centers. In most or(an!at!ons &ro#uct!on an#

market!n( are t+e !m&ortant cost centersB 7+ereas !n some ot+er or(an!at!ons"

*ranc+es or t+e re(!ona$ o,,!ces are t+e cost centers. +e cost centere# a&&ra!sa$

!s more un!-ersa$$' a&&$!e# t+an t+e &ro,!t%centere# a&&ra!sa$. *eing non-pro$it

organization where in pro$it cannot be the right basis o$ appraisal+ cost appraisal

has special signi$icance to cooperatives% +e cost centere# a&&ra!sa$ !s c$ose$'

re$ate# to cost stan#ar# an# &er,ormance stan#ar# e-o$-e# !n #!,,erent o&erat!ons

$!ke ,!nance" &ro#uct!on an# market!n(.

c) ,bective entered ppraisal: +e ne=t $e-e$ o, resu$ts !s t+at 7+!c+ measures

t+e ac+!e-ement o, o*8ect!-es. L+et+er t+e ne7 &ro#ucts +a-e *een $aunc+e# !n

t!me Las tra!n!n( &ro(ramme success,u$$' com&$ete# *' &ersonne$ #e&artment

+ese are t+e e=am&$es o, o*8ect!-e centere# a&&ra!sa$. +e o*8ect!-e centere#

a&&ra!sa$ !s *ase# on t+e &r!or esta*$!s+ment o, -ar!ous ac+!e-ement (oa$s. or

mak!n( t+e o*8ect!-e centere# a&&ra!sa$ a success" !t !s necessar' to set

mean!n(,u$ an# c$ear o*8ect!-es !n a#-ance" 7+!c+ !s t+e res&ons!*!$!t' o,

su&er!ors. L+!$e sett!n( o*8ect!-es !t must *e ensure# 7+et+er t+e o*8ect!-es are

&ract!ca$ an# atta!na*$e Are t+e' com&at!*$e 7!t+ t+e o-era$$ o*8ect!-es an#

&$ans o, t+e com&an' Are t+e' measura*$e

*. Met!od $ppraisal


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It !s t+e most common$' use# ,orm o, a&&ra!sa$. It ,ocuses on t+e met+o#s em&$o'e# !n

mana(ement. Met+o#s are t+e means ,or ac+!e-!n( t+e (oa$s o, an or(an!at!on. +e

resu$ts are o,ten $on( term 7+!$e t+e met+o#s a&&$!e# are s+ort term. Met+o#s are t+e

#!rect means o, ac+!e-!n( o, resu$ts. Met+o# a&&ra!sa$ !s necessar' ,or 8u#(!n( t+e

&er,ormance ,rom t+e mana(ement &rocess a#o&te# an# tec+n!ues use#. +e met+o#

a&&ra!sa$ 7!$$ +a-e to e=am!ne t+e ,o$$o7!n(:

Does t+e mana(er use com&an' &o$!c' as a *as!s o, #ec!s!on%mak!n(

L+et+er t+ere +as *een &ro&er #e$e(at!on o, aut+or!t'

L+et+er t+ere +as *een consu$tat!on an# team7ork

L+et+er r!(+t &roce#ures +a-e *een esta*$!s+e#

L+et+er t+e #ec!s!on mak!n( &rocess !s soun#

As ,ar as coo&erat!-es are concerne# t+e met+o# a&&ra!sa$ +as (reater s!(n!,!cance an# !t

+as to *e e=am!ne# 7+et+er t+e #emocrat!c an# &art!c!&at!-e &rocess +a-e *een ,o$$o7e#.

L+!$e e-a$uat!n( t+e met+o#s" !t !s #!,,!cu$t to se&arate met+o#s ,rom sk!$$ an# 7ork

+a*!ts. +e' a$$ (o +an# !n +an#.

+. (ersonality $ppraisal

Somet!mes !t !s ca$$e# *e+a-!or a&&ra!sa$. +!s !s t+e most #!,,!cu$t as&ect o, a&&ra!sa$.

?ersona$!t' !s t+e sum o, !n#!-!#ua$ tra!ts an# *e+a-!or an# !s more com&re+ens!-e !n

c+aracter t+ere,ore" !n 8u#(!n( oneKs &ersona$!t' one +as to cons!#er man' !m&ortant

#es!ra*$e ua$!t!es $!ke ent+us!asm" mot!-at!on" mora$e" !n!t!at!-e an# se$,%con,!#ence.

or mean!n(,u$ a&&ra!sa$ o, &ersona$!t' t+e ,o$$o7!n( ,actors are to *e taken !nto

cons!#erat!on.

!rst o, a$$ #es!ra*$e ua$!t!es o, oneKs &ersona$!t' re$e-ant to t+e 8o* +as to *e $!ste#.

Secon#$' a&&ra!sa$ +as to *e #one *' e=am!n!n( 7+et+er !n#!-!#ua$ man(er &ossesses

t+ese ua$!t!es. L+!$e mak!n( &ersona$!t' a&&ra!sa$" !t !s necessar' to take !nto account

on$' e=ce&t!ona$ ua$!t!es" 7+!c+ are rea$ stren(t+ or 7eakness o, oneKs &ersona$!t' an#

rate t+em. In ot+er 7or#s" !, a$$ t+e ua$!t!es" re$e-ant or !rre$e-ant are taken !nto


45/140

cons!#erat!on ,or rat!n(" t+e a-era(e rat!n( ma' concea$ man' s!(n!,!cant ua$!t!es.

+ere,ore" a &attern o, #es!re# mana(er!a$ ua$!t!es +as to *e #eterm!ne# ,!rst.

?ersona$!t' a&&ra!sa$ +as to *e #one *' means o, a&&ra!sa$ !nter-!e7s an# o*8ect!-e

ana$'s!s o, success an# ,a!$ures. +e a&&ra!sa$ must *e &os!t!-e !n t+e sense !t mustre-ea$ t+e stren(t+ an# !n+erent &otent!a$ rat+er t+an &o!nt!n( out 7eakness. It s+ou$#

a!m at ca&!ta$!!n( t+e stren(t+ an# !(nore 7eakness.

6. Management :y >#eption

+e &er,ormance a&&ra!sa$ must necessar!$' a#o&t t+e &r!nc!&$e o, e=ce&t!on. +e

success o, a&&ra!sa$ $!es !n !#ent!,!cat!on an# se$ect!on o, cr!t!ca$ s&ots an# ,ocus!n(

attent!on on t+em. It a-o!#s man(ers *e!n( o-er7+e$me# 7!t+ &ro*$ems an# tr!-!a$

matters. It a!ms at !so$at!n( t+ose areas" 7+!c+ nee# s&ec!a$ attent!on. It rat+er s!m&$!,!es

t+e mana(ement &rocess. It &erm!ts a man(er to ,!n# so$ut!ons to &ro*$ems t+at nee# +!s

act!on an# a-o!# #ea$!n( 7!t+ t+ose matters t+at are +an#$e# *' su*or#!nates.

@e' resu$t areas +a-e to *e !#ent!,!e#" t+e &er,ormance o, 7+!c+ !s essent!a$ ,or ac+!e-!n(

t+e (oa$s o, t+e or(an!at!on. Cr!t!ca$ areas 7+ere o,ten t+e ,a!$ure !s cause# or &ro*$em

areas" 7+!c+ a#-erse$' a,,ect t+e resu$ts o, t+e or(an!at!on" +a-e to *e s&otte# out. V!ta$

-a$ue areas !n 7+!c+ certa!n -!ta$ -a$ue #ec!s!ons $!ke ua$!t'" t!me" &er,ormance etc." are

!n-o$-e# +a-e a$so to *e note#.

$ppraisal of Cooperatives

A coo&erat!-e or(an!at!on !s an !nte(rate# s'stem. +e &er,ormance o, coo&erat!-es

s+ou$# *e e-a$uate# *ase# on t+e !nterna$ &$ann!n( an# contro$ mec+an!sms $!ke *u#(et"

cost stan#ar# etc. =terna$ s!tuat!ons" o&&ortun!t!es an# c+a$$en(es an# t+e a*!$!t' o, t+e

or(an!at!on to co&e u& 7!t+ t+e en-!ronmenta$ c+an(es s+ou$# *e taken !nto

cons!#erat!on !n t+e a&&ra!sa$ o, coo&erat!-es. urt+er t+e a*!$!t' o, coo&erat!-es to

#e-e$o& t+e mem*ers !s anot+er -!ta$ as&ect o, e-o$ut!on. -a$uat!on o, an' coo&erat!-e"

accor#!n( to Gu&ta an# Ga!k7a#" s+ou$# e=am!ne t+e ,o$$o7!n( !ssues:

+e ,!rst an# most cruc!a$ uest!on !s 7+et+er t+e net incomeo, t+e mem*ers

!ncrease# o-er t+e &er!o# o, o&erat!on I, so 7+at !s t+e ma(n!tu#e o, !ncrease


46/140

an# 7+at !s t+e contr!*ut!on o, coo&erat!-es *' means o, t+e!r act!-!t!es an#

&ro(rammes to t+e !ncrease

+e secon# uest!on !s to 7+at e=tent t+e mem*er resources +as *een mo*!$!e#

!n terms o, +uman mater!a$ an# ,!nanc!a$ resources

+e t+!r# uest!on !s 7+et+er t+e act!-!t!es o, t+e coo&erat!-es 7ere rea$$'

!nte(rate# 7!t+ t+e nee# structure o, mem*ers o 7+at e=tent t+e coo&erat!-es

mo-e# a7a' ,rom &ure mercant!$e a&&roac+ to t+e a#-ance# !nte(rate# a&&roac+

+e ,ourt+ uest!on !s +o7 e,,ect!-e$' t+e *oar# o, #!rectors &$a's !ts ro$e !n

&o$!c' ,ormu$at!on" &$ann!n( an# contro$ An# to 7+at e=tent a sense o,

res&ons!*!$!t' an# accounta*!$!t' +a-e *een cu$t!-ate# !n t+em

+e ,!,t+ uest!on !s to 7+at e=tent t+e &o$!c' o, (o-ernment on coo&erat!-es

+a-e c+an(e# An# to 7+at e=tent -ar!ous 7e$,are &ro(rammes an# sectora$

#e-e$o&ment &ro(rammes +a-e *een +e$&,u$ to t+e coo&erat!-es an# t+e!r

mem*ers

+e s!=t+ uest!on !s 7+at !s t+e ne7 tec+no$o(

ammanagement of cooperatives and legal systems

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