· caribbean cooperative management training programmes 1 purpose of this module the purpose of this...

www.ilo.org/caribbean

Caribbean Cooperative Management Training Programme

COOPERATIVE ORGANIZATIONAND MANAGEMENTFor the English-speaking Caribbean

In preparing this training module, several ILO training packages were used, including My.COOP (Managing your Agricultural Cooperatives), SYB (Start Your Business) and SIYB (Start and Improve Your Business).

Caribbean Cooperative Management Training Programmes

iv

Copyright © International Labour Organization 2017First published 2018

Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to ILO Publications (Rights and Licensing), International Labour Office, CH-1211 Geneva 22, Switzerland, or by email: [email protected]. The International Labour Office welcomes such applications.

Libraries, institutions and other users registered with a reproduction rights organization may make copies in accordance with the licences issued to them for this purpose. Visit www.ifrro.org to find the reproduction rights organization in your country.

Caribbean Cooperative Management Training Programmes: Cooperative Organization and Management/International Labour Organization, Office for the Caribbean - Port of Spain: ILO, 2017

English edition ISBN: 978-92-2-131557-5 (print) 978-92-2-131558-2 (web pdf)

ILO DWT and Office for the Caribbean

The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers.

The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in them.

Reference to names of firms and commercial products and processes does not imply their endorsement by the International Labour Office, and any failure to mention a particular firm, commercial product or process is not a sign of disapproval.

ILO publications and digital products can be obtained through major booksellers and digital distribution platforms, or ordered directly from [email protected]. For more information, visit our website:www.ilo.org/publns or contact [email protected].

Visit the ILO Office for the Caribbean’s webpage: www.ilo.org/caribbean

Design: Simone Rudder (DPI)

COOPERATIVE ORGANIZATION AND MANAGEMENT

i

TABLE OF CONTENTS i

GLOSSARY OF TERMS iii

1.0 PURPOSE OF THIS MODULE 1

2.0 INTRODUCTION TO COOPERATIVE ORGANIZATION 3 MANAGEMENT

2.1 Responsibilities 4

2.2 Major organizational tasks – a checklist 6

2.2.1 Plans and programmes 7

2.2.2 Financial management 7

2.2.3 Bookkeeping and accounting 8

2.2.4 Office management 9

2.2.5 Meetings 10

2.2.6 Staff management 11

2.2.7 Member education and information 12

2.2.8 Training and development 13

2.2.9 Share capital, savings/deposits and loans and collections 14

2.2.10 Risk management 16

2.2.11 Financial statements 16

2.2.12 Strategic management and planning 19

2.2.13 Rights and powers of members 19

2.3 Example: typical activities of a producer cooperative 20

3.0 BOARD AND MANAGEMENT 24

3.1 Tasks of board and manager 24

3.2 Decision areas 24

3.3 Roles, skills and training 24

3.4 Responsibilities and skills of board members 25

3.5 Board assessment 29

3.6 Fit and proper to serve 30

TABLE OFCONTENTS


ii

4.0 MEETING OF MEMBERS 31

4.1 Laws governing meetings 32

4.2 Planning general meetings 33

4.3 Notice of meeting 33

4.4 Agenda 33

4.5 Procedures 35

4.6 Role of the chairperson 36

4.7 Role of the secretary and treasurer 37

4.8 Guidelines for a good meeting 38

5.0 ESSENTIALS OF A MODEL COOPERATIVE 39

TEST YOUR KNOWLEDGE 43

BIBLIOGRAPHY 48


GLOSSARYOF TERMS

Annual budget – the amount of money required as determined on each year based on needs Annual General Meeting - commonly abbreviated as AGM is a meeting of the general membership of an organization.

Audited statements – the examination of an entity's financial statements and accompanying disclosures by an independent auditor. The result of this examination is a report by the auditor, attesting to the fairness of presentation of the financial statements and related disclosures.

Balance Sheet – a statement of the assets, liabilities, and capital of a business or other organization at a particular point in time, detailing the balance of income and expenditure over the preceding period.

Ballots – a process of voting, in writing and typically in secret.

Bank Reconciliation – the action of making financial accounts or banking transactions consistent and accurate.

Bonds – a certificate issued by a government or a public company promising to repay borrowed money at a fixed rate of interest at a specified time.

Budget – the amount of money that you have available to spend. The budget for something is the amount of money that a person, organization, or country has available to spend on it

Bye-laws – a rule made by a company or society to control the actions of its members.

Capital – money, property, etc. used to start a business.

Default – fail to fulfill an obligation, especially to repay a loan.

Democratic – based on a form of government in which the people choose leaders by voting: of or relating to democracy).

Depreciation – a reduction in the value of an asset (eg. vehicle, equipment) with the passage of time, due in particular to wear and tear.

Dividend – an amount of profits paid out to people who have ownership (shares) in a company.

Equity – the value of the shares issued by a company.

Fixed Asset – assets that are purchased for long-term use and are not likely to be converted quickly into cash, such as land, buildings, and equipment.

Inventory – the entire stock of a business, including materials, components, work in progress, and finished products.

iii


iv

Ledger – a book or other collection of financial accounts of a particular type.

Liquidity – the availability of liquid assets (eg. cash) to a market or company.

Minutes – a summarized record of the proceedings at a meeting.

Quorum – the minimum number of members of an assembly or society that must be present at any of its meetings to make the proceedings of that meeting valid.

Regulations – a rule or directive made and maintained by an authority.

Shares – one of the equal parts into which a company's capital is divided, entitling the holder to a proportion of the profits

Statement of Cash flows – is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities.

Strategic planning – an organizational management activity that is used to set priorities, focus energy and resources, strengthen operations, ensure that employees and other stakeholders are working toward common goals, establish agreement around intended outcomes/results, and assess and adjust the organization's direction in response to a changing environment.

Trading account – is similar to a traditional bank account, holding cash, securities, or products and is administered by an agent selling goods and services.

Trial Balance – a statement of all debits and credits in a double-entry account book, with any disagreement indicating an error.

Vouchers – a small printed piece of paper that entitles the holder to a discount or that may be exchanged for goods or services.

Working capital – money which is available for use immediately, rather than money which is invested in land or equipment.


1

1PURPOSE OFTHIS MODULE


PURPOSE OF THIS MODULE1

The purpose of this module is to help you understand the way a cooperative needs to be organized and managed. It follows from the Module 2: Starting a Cooperative Enterprise and is designed specifically for staff, committee and board members, cooperative development technical field staff from government and/or national cooperative leagues.

If you use this Module properly you will be able to: • Identify the tasks that need to be carried out by the cooperative;• Understand the basic structure and purpose of the primary financial statements used by cooperatives;

• Explain the responsibilities of board members, chairperson and manager;

• Ensure that the organization is well managed;

• Understands the elements of an Organizational Task Checklist;

• Ensure that meetings of the cooperative are prepared and conducted efficiently.

2


3

2INTRODUCTION

TO COOPERATIVEORGANIZATIONMANAGEMENT


In a cooperative, the members have the first and last say, in that they define the by-laws, they vote in the board members and they approve the overall policies and internal controls of the cooperative. In the ordinary operations, the members except perhaps in very small cooperatives must leave the decisions to the board and staff must be competent, adequately compensated and suitably motivated to provide excellent service to the management and members of the organization. It is important to note that the board, manager, staff and members must have defined roles and responsibilities, in order for the cooperative to operate efficiently and successfully.

In some cooperatives the organization may not be in a position to compensate a suitably qualified and experienced manager. In such a situation, the cooperative may have to be managed by volunteers, a less qualified person, or on a part-time basis, by the preferred manager. However, as long as the officer-in-charge is honest, hardworking, trainable and open-minded, he/she should be able to manage the cooperative, especially if supported by the local cooperative officer or the apex association or league.

2.1 Responsibilities It is the responsibility of the board and manager to make sure that all the necessary tasks are carried out so that the cooperative functions efficiently for the benefit of the members and the success of the business.

To be effective, board members should possess qualities such as, honesty, empathy, prudence, eloquence, sound judgment and transparency. These qualities are absolutely necessary for good cooperative leadership. Moreover, board members will need to have some skills in risk management, interpretation of financial statements, budgeting, planning and must possess knowledge of the business of their cooperative. Of course, for a new, small cooperative it is difficult to have people within the membership having all those skills. These are developed over time as Board members gain hands-on experience. However, efforts should be made when the cooperative is being organized to elect people who have at least some rudiments of these skills or who can easily acquire them through specially tailored crash training programmes during and after formation of the cooperative. The following diagram gives a visual image of the cooperative structure.

(Source: British Columbia Cooperative Association) 1

INTRODUCTION TO COOPERATIVE ORGANIZATION MANAGEMENT

2

4

1 British Columbia Cooperative Association - http://bcca.coop/content/co-op-structure

Members

Members

Elects

Hires

Hires

Serves

Reports to

Reports to

Reports to

BOARD OF DIRECTORS

MANAGEMENT

STAFF


The structure shown works like this:

Step 1 – Members collectively elect the Board of Directors, and may individ- ually stand for election themselves. Step 2 – The Board of Directors is responsible for governing the co-op, which which includes setting its direction and hiring senior management (for instance, the Executive Director, CEO, etc.). The Board is accountable to the membership, and reports to them on an annual basis at a minimum. Step 3 – Senior management is responsible for operating the co-op, which includes hiring staff, program/business development, administration administration, etc. Senior management is accountable to the Board, and reports to the Directors at board meetings.

Let’s look more closely at the responsibilities of each of those that make up the cooperative structure.

The Board has the responsibilities for: • Setting the strategic directions and policies for the cooperative; • Monitoring the implementation of those directions through questioning and asking for appropriate information from the manager; • Appointing and directing the manager and appraising his/her performance; • Reporting to the members and seeking their approval for the general directions and policies of the cooperative, but not necessarily the specific steps that need to be followed to achieve the general directions; and • Making representation to the government, private sector and other external bodies.

The Manager has responsibilities for: • Supervising the staff and controlling the resources of the cooperative so as to achieve the strategic directions and policies set out by the board; • Providing the board with the necessary information about the operations of the cooperative so that the board can monitor implementation of the strategic directions and policies that have been agree; • Implementing all necessary controls and policies for the safety, soundness and and competitive growth of the cooperative; and • Ensuring that operations generate competitive returns to the shareholders after capital adequacy requirements has been satisfied.

5

INTRODUCTION TO COOPERATIVEORGANIZTION MANAGEMENT


6

The Staff has responsibilities for: • Assisting the manager in carrying out his/her duties; • Providing the manager with information and data in order to make informed decisions; • Ensuring that the cooperative policies, procedures and processes are adhered to, when discharging functions;• Being involved in the day-to-day operations of the cooperative to ensure its effectiveness and efficiency in order to satisfy members’ needs;• Providing reliable information and excellent service to all members and potential members, irrespective of class, color, creed or political affiliation; • Every director, manager and staffer is obligated to be knowledgeable of the Acts, regulations and bylaws that govern his/her cooperative, starting with: o The rights and powers of member; and o The rights and powers of the board of directors.

2.2 Major Organizational Tasks – A Checklist This section of the module gives you a checklist so that you can ensure all the necessary work that pertains to one’s organizational responsibilities is being done. You should tailor this list to the particular needs of your cooperative.

The tasks have been listed under the following main headings: • Plans and Programmes • Financial Management • Book-keeping and Accounting• Office Management • Meetings• Staff Management• Member Education and Information• Training and Development• Share Capital, Savings / Deposits and Loans and Collections• Risk Management• Financial Statements• Strategic Management and Planning

To deepen your understanding of the application of these functions to everyday operations, an example of typical activities of producer and service cooperatives is shown Sec. 2.3 (Pg.28).


2.2.1 Plans and programmes Adherence to a thorough and integrated planning process enables the Board, management and staff to perform better in serving the members and achieving business growth. The Board’s and the Manager’s roles differ but are complementary:

a) Determination of objectives and policies – The Board • Formulate long and short-term objectives for the cooperative; • Decide on general policies in the society's various fields of operation; and • Strategic planning, tactical planning, action planning and contingency planning.

b) Planning cooperative activities – Manager • Plan the cooperative’s trading operations and prepare staff and facilities for these operations; • Prepare plans for projects outside the routine operations of the cooperative and assess their feasibility; • Decide on the implementation of new projects.

2.2.2 Financial Management Disciplined management of the financial resources of the cooperative is essential to business survival and healthy growth. Key components of this function are:

a) Management of working capital – Treasurer and Finance Manager • Determine the need for working capital; • Identify internal and external sources of funds; • Prepare annual budgets; • Approve the budgets. Follow up by comparing budgeted and actual results monthly; and • Take remedial action and revise budgets as necessary.

b) Management of cash – Senior Teller and Finance Manager • Estimate the need for cash and prepare cash budgets; and • Follow-up on cash budget continually, taking remedial action when necessary.

7



8

c) Management of fixed assets – Accountant /Finance Manager • Estimate the total requirement for different sorts of fixed assets according to the volume and structure of business; • Acquire the fixed assets needed; • Utilize the fixed assets for the maximum benefit of the society; • Maintain and repair fixed assets as needed; • Plan and implement replacement of fixed assets; • Keep a register and depreciation schedule of fixed assets.

d) Cost control – Accountant /Finance Manager • Design and put into practice a system of cost accounting for selected operations and products; • Identify excessive costs and take any necessary action for cost reduction.

2.2.3 Bookkeeping and Accounting In the absence of accurate and up-to-date accounting records, planning and financial management will become guesswork. The following tasks are repetitive and crucial:

a) Preparation of accounts – Accountant • Maintain account books daily; • Issue receipts for money received; • Deposit money received at the bank; • Verify claims and invoices before paying; • Ensure payments are budgeted for; • Prepare vouchers; • Ensure all source documents are attached to payment vouchers; • Ensure payment voucher is checked and countersigned by the Chairperson or an appropriate officer of the cooperative; • Make ledger postings; • Ensure all documents are filed; • Prepare and reconcile accounts periodically; • Prepare trial balances as required; • Prepare receipt and payment account; • Prepare half-yearly and yearly final accounts: trading account/profit and loss account, balance sheet.


b) Auditing – Treasurer and Accountant • Prepare bank reconciliation statements; • Make all books of accounts and other records available to external auditors as requested.

2.2.4 Office Management Effective office administration is a major pillar for high employee productivity. The Manager is directly accountable to the Board and the Members for efficient office management. This entails:

a) Organization of office work • Obtain suitable office equipment; • Maintain the office equipment; • Plan the work to be done, delegate specific tasks to office staff and supervise their implementation; • Keep the office clean; • Keep the society's books in safe custody.

b) Record keeping • Prepare reports as required in bye-laws and regulations; • Maintain required records of shares, bonds, mail, inventory, etc.

9



c) Filing • Set up and maintain a suitable filing system; • File correspondence, reports, staff records, minutes, etc.

2.2.5 Meetings The Chairperson, Board Secretary and Manager share collective responsibility for the efficient conduct and meaningful results from the many meetings held by the organization. These are core tasks requiring individual proficiency: a) Board meetings

10

BEFORE and DURING the meeting: • Decide on the timing of the monthly Board meeting – (Chairperson in consultation with Secretary and other board members);• Prepare an agenda for the meeting; • Notify Board members as to date, time and place of meeting; • Prepare all relevant reports for Board members; • Prepare venue; • Conduct the meeting; • Take minutes of the meeting; • Record all decisions taken.

AFTER the meeting: • Execute any decisions taken by the Board; • After the meeting, follow-up on decisions and actions taken; • Submit minutes to Board members and others as required; • Follow-up on the decisions of the previous meeting and actions taken.


11

b) General meetings

Preparation BEFORE the meeting; • Decide on the date and place of the meeting; • Prepare an agenda; • Publish notice of meeting notifying members as to its date, time and place; • Prepare meeting by: o Ensuring member registers are prepared; o Selecting a returning officer usually a Cooperative Officer; o Preparing venue of the meeting; o Inviting speakers and other guests (where necessary); o Preparing ballots and ballot boxes if necessary (usually done for cooperatives with many members). • Receive and sign off on audited accounts; • Prepare reports for the annual general meeting.

Activities DURING the meeting: • Make sure there is a quorum in accordance with the by-laws; • Conduct the meeting; • Take minutes of the meeting; • Ensure a fair nomination process is adhered to; • Follow the standing orders to guide the meeting; • Ensure that members participate freely at meetings.

Activities immediately AFTER the meeting: • Produce minutes and distribute to all the relevant parties as required; • Execute all decisions taken by the general and board meetings; • Carry out a post-event analysis to identify ways of improving future meetings.

2.2.6 Staff Management Board and Committee members should never become involved in the direct supervision or direction of staff. The Manager is responsible to the Board of Directors for the performance of all employees. The following three major functions apply:

a) Recruitment and appointment • Decide on the categories and number of staff needed to carry out the services oofered by the cooperative • Prepare job descriptions for each post. • Prepare staff regulations (larger cooperatives only). • Determine the wages for all posts.



12

• Recruit, appoint and dismiss staff according to regulations and Industrial Relations Act.

b) Supervision and training • Arrange orientation programmes and on-the-job training for new staff. • Send staff members to suitable training courses. • Guide and encourage staff members in their work. • Develop a system of internal staff assessment, giving due recognition and taking corrective action as needed. • Keep staff informed about the society's performance, progress and problems (through staff meetings and briefing sessions).

c) Administration • Keep staff records regarding wages and benefits, deductions, leaves of absence, vacations, etc. • Pay wages. • Keep all staff files current.

2.2.7 Member Education and Information The Education Committee and the Manager share responsibility for improving members’ understanding and the general public’s knowledge of the role, purpose, challenges and achievements of the cooperative. A regular interface with government and private sector officials is also pursued under this component. In larger cooperatives, a Member Development or Member Relations Officer is employed to drive this core function and to serve as the full-time resource person for the volunteer Committee.

a) Member education • Ensure the Members’ Register and electronic Database is maintained in keeping with AML/CFT requirements and facilitates easy access to key sub-groups, demographics. • Determine education requirements of the membership through social research e.g. demand and opinion surveys. • Update the profile of each member with incoming verifiable information. • Plan suitable and impactful cooperative education activities for each year. • Prepare relevant educational material for members. • Implement the education programmes. • Keep members and potential members informed of the society’s performance. • Recruit new members for the cooperative.


b) Information and communication • Determine an information strategy and develop communication policies. • The information strategy should incorporate: Who, Why, Where, What, When and How – relative to communication. • Decide on the competencies and skills need for the persons responsible for information gathering, validation and dissemination. • Determine the mode and frequency of communication both internally to staff and externally to members.

2.2.8 Training and Development Training and development opportunities must be made available to all staff members, senior management, elected officials and other volunteers. The Education Committee and the Manager share this responsibility.

• In consultation with cooperative training institutions or competent trainers, design a training programme that responds suitably to identify needs.

• Involve the Board and Management in finalizing the training programme.

• Secure adequate internal and external financing for the budget.

• Ensure that programme includes all aspects of the roles and tasks to be performed and future activities of the cooperative.

• For training programmes conducted by the local cooperative, organize venue, transport and physical facilities.

• Brief resource personnel on the training needs identified and their expected functions /output levels.

• Implement the training programme.

• Evaluate the training programme.

13



14

• Monitor post-training performance of those already trained and provide feedback

• Design and implement follow-up actions.

• Ensure the development programme adopts other methods such as study visits, study circles, peer training and self-study materials, in addition to formal seminars and workshops.

2.2.9 Share Capital, Savings/Deposits and Loans and Collections Every cooperative needs a strategy to improve and expand its sources of financing. They all rely on paid-up capital from their members as their base equity; but producer and service cooperatives generate revenue from the sale of goods and services, while credit unions traditionally grow by intermediating savings mobilization with credit administration. Youth savings cooperatives are essentially savings and withdrawal operations.

The prevailing legislation in Barbados, the OECS Member States, Jamaica and The Bahamas prohibits producer and service cooperatives from issuing loans and accepting deposits.

The key functions of each component are described below, with the persons or bodies responsible headlined. Achieving the expected outcomes is premised on the President and the Manager of each society ensuring that all directors and committee members have received training in interpreting the contents of the Act and Regulations, as part of their formal orientation.

Related to Financial Cooperatives (Credit Unions)

a) Share capital – Members and the Board • Determine the price / worth of each share. • Determine the maximum number of shares to be issued by the cooperative. • Determine minimum number of qualifying shares to be purchased per member. • Decide on frequency and lump sum deposit policy to purchase shares. • Determine share rules and guidelines for elected officials and senior management. • Determine the withdrawal, transfer and redemption policy for share capital. • Dividend policy should be determined for ordinary vs. preference shares. • Maintain the Members' Share Register in sync with Anti-Money Laundering Law. • Ensure the Register is always available for inspection by the Regulator. • Develop and implement procedures for issuance and tracking of share certificates.

b) Savings and deposits – Credit Union Members and Board of Directors • Determine the savings/deposit maximum liability. • Determine different types of savings and deposit accounts. • Determine the interest rate policy for these accounts.


15

c) Loans and collections – Credit Union Members, Board, Loan Manager • Formulate a Loans Policy (Board) and elect a Credit Committee (Members). • Develop a Collections and Recovery Policy (Board). • Determine the interest rates, fees and penalties for loans (Board). • Prepare and maintain a stock of loan application forms and loan agree- ments, and other loan documents/forms (Loans Manager). • Ensure loan products are consistent with the demands of the Members (Manager). • Ensure all mortgage related documents, bills of sale and instruments of charge are duly registered (Loans Manager). • Ensure all credit loan forms are duly signed, dated and stored (Loans Manager). • Assess and evaluate each loan in accordance with the Credit Policy and by-law provisions (Loans Manager). • Inform the member of the approved or rejected status of his/her loan application (Loans Manager). • Ensure all loan repayments are credited to the relevant loans and interest accounts (Loans Manager). • Design and implement an effective system to track and follow up all loans in arrears (Loans Manager). • Ensure all loan documents are adequately completed, stored and re- trievable as evidence to settle queries and collections litigation (Loans Manager). • Before disposing of a member’s assets, seek to negotiate or restructure the member’s loan (Loans Manager). • Without undue delay, sell or dispose of assets pledged/assigned against each loan in arrears, to improve the credit union’s loan recovery rate and minimize losses borne by the owners-shareholders (Credit Commi- ttee, Manager, Loans Manager).

• Where necessary, ensure Anti-Money Laundering (AML) procedures are followed for source of funds disclosure. • Ensure Asset-Liability Management (ALM) systems are in place to manage sources and applications of deposits received.



16

2.2.10 Risk Management Risk management is very important to a cooperative. Risk management can be described as a process of identifying, quantifying and managing the risks that an organization faces. It involves identifying the types of risks, examining strategies to manage risks, determining the impact of risks on the cooperative, and who is responsible for risk mitigation. Every cooperative must engage itself in an enterprise wide risk management practice.

Cooperatives are exposed to different types of risk. Some of which are: • Governance Risk – the risk of loss to the cooperative through failure of elected officers/ volunteers and management to adhere to their fiduciary responsibilities.• Credit Risk – the risk of loss due to a borrower’s non-payment of a loan or other credit facility. Default risk, which is associated with credit risk, is the risk that the borrower will not pay his / her loan. • Liquidity Risk – the risk that a cooperative will be unable to meet its commitment(s) as they fall due leading to insolvency or bankruptcy. • Interest Rate Risk – the exposure risk of a cooperative’s financial condition to movements in interest rates.• Currency Risk – the form of risk that arises from the change in the price of one currency against another. • Reputation Risk – the risk to the image of the cooperative from negative public opinion, whatever the cause may be.• Employee Risk – the risk to the cooperative due to adverse employee actions negatively impacting the timely achievements of goals.• Legislative / Compliance Risk – the risk of possible loss of earnings and capital arising from non-compliance or violation of laws, regulations, guidelines, procedures and the code of ethics.

The onus is on the Board of Directors and the manager of the cooperative to studiously employ mitigation measures to avoid or minimize the above-mentioned risks.

2.2.11 Financial Statements Financial statements are important for any type of business enterprise. This is more so in cooperatives as the directors and elected officers have to account for their stewardship for the period to which the financial statements relate. Financial statements will differ depending on the type of cooperative but typically financial statements in a cooperative include:

I. A statement of comprehensive income (Income and expenditure);

II. A statement of financial position (Assets and liabilities);

III. A statement of cash flow;

IV. Treatment of Capital.

Responsibility for the preparation of the financial statements lies with the Board’s Treasurer who directs management to undertake the required tasks. Larger cooperatives employ an accountant or an accounting officer to support the manager with this responsibility. The external auditor will express an opinion on the basis of financial statements prepared by the cooperative.


17

a) Statement of comprehensive income This statement examines the performance of the cooperative over a period of time; that is, it can be prepared for a day, week, month or quarter and certainly for the entire year. The Statement of Comprehensive Income varies per type of cooperative. It records all the expenses during the reporting period for which the statement is being prepared. In a producer society, it includes the cost of goods sold; in a financial cooperative it includes all interest-related expenses.

Where income exceeds expenses, the cooperative will reflect a surplus or profit. The annual surplus, once audited, should allow for statutory appropriations such as General Reserves and the Education and Development Fund, in keeping with the Cooperative Societies Act and Regulations. The yearend surplus of the cooperative should also cater for payment of a dividend or other forms of distribution such as a patronage refund or a bonus. The residual surplus should then be placed in other types of reserves and in retained earnings (i.e. undistributed surplus).

Where expenses exceed income, the cooperative will reflect a loss. This situation may take place in the early years of the cooperative but at all times management must try to reach breakeven or generate a surplus or profit.

b) Statement of Financial position (Balance sheet) This statement presents the financial picture or state of affairs of the cooperative at a particular point in time. It will therefore reflect the value the assets, liabilities and capital of the cooperative ‘as T’ September 30th or December 31st 2014, for instance.

One side of the “balance sheet” will show a listing of all the assets of the cooperative – cash, investments, fixed assets, loans granted, inventory and receivables. These are items that the cooperative owns. On the other side of the balance sheet will be a listing of all the liabilities – members’ savings and deposits, reserves, retained earnings, loans from banks and payables. These are items owed by the cooperative. This side also captures as capital the shares bought by the members as their equity in the business and the institutional capital generated by the cooperative (Reserves, Retained Earnings and Funds set aside).

c) Statement of Cash flow

This is a statement which reflects all the cash transactions of the cooperative during a period of time. Unlike the profit and loss accounts which may have cash and non-cash items, the statement of cash flows reflects only cash items – that is all external cash and cheque receipts and all actual cash and cheque payments.

This statement accounts for: • Cash generated through the operations of the cooperative; • Cash used in investing activities like funds used to buy assets;



18

• Cash generated from financing activities like shares, deposits and loans; • Cash resources at the start of the period; and • Cash resources at the end of the period.

d) The Treatment of capital statement This section of the financial statement records the movement of all capital items.

In a cooperative, there might be various reserve accounts such as the statutory or general reserve, building fund, technology reserve, revaluation reserve, education fund and retained earning accounts. Generally, funds going into these reserve accounts would come from appropriations from the cooperative’s annual surplus.

Education and building funds, being set aside for special purposes and the revaluation reserve, being difficult to enact within a year, are not included in the calculation of a cooperative’s Institutional Capital.

Equity or permanent shares bought by the members and donations made donor agencies or government are reflected as member capital. Movements in the capital items – reserves, shares and donations – from the beginning to the end of the year are recorded in the treatment of capital statement.


19

2.2.12 Strategic Management and Planning This connotes the process by which the cooperative determines its purpose, objectives and desired levels of attainment, decides on actions for achieving those objectives in an appropriate time-frame, implements the actions, and assesses progress and results.

It is a major activity that should engage the Board of Directors and management in deciding on the strategic direction of the cooperative so that the organization can remain relevant in an ever-changing dynamic environment.

Strategic management and planning seeks to answer three main questions for the organization: 1. Where are we now? 2. Where are we going? 3. How are we going to get there?

The strategic planning process answers these questions by undertaking key activities: • Situation assessment – internal and external assessment. • Clarification of vision, mission and objectives.• Crafting strategies. • Determining type of resources and organizational structure.• Implementation of plans.• Monitoring progress. • Making adjustments to plans where necessary.

2.2.13 Rights and Powers of Members As mentioned earlier, since the ultimate ownership risk lies with members of the cooperative, it is extremely important that they are enlightened and that all other functionaries – the Board, Committees, Manager and staff are fully aware of the extent of the members’ rights and powers.

Rights - Members of a cooperative have the following rights:

• To be invited at all general and special meetings of the cooperative; • To be heard at all general meetings; • To participate in the decision making process of the cooperative; • To vote at all general meetings; • To enjoy all the benefits and privileges extended to other members; and • To be elected on the board or other committees, provided that the member is not a minor and complies with all the other ‘fit and proper’ stipulations in the Act and Regulations.



20

Power - Members can exercise the following powers: • To elect, remove or suspend a director or other elected official; • To vote on the dividend or other forms of distribution for the members; • To vote on any decision (motion or resolution) brought before a constituted general meeting, e.g. o appointment of the external auditor, o setting the maximum borrowing limit, o approving a merger or amalgamation proposal, and o adoption of the minutes of a previous general meeting.

Purchase of Farm Supplies • Decide on the pros and cons of selling supplies to members on credit; • If credit is to be offered, devise efficient methods of providing/recovering credit and discuss with members; • Determine the best possible selection of farm inputs to be stocked by the coop; • Set up adequate storage facilities for farm supplies; • Decide on transportation arrangements; • Select suitable suppliers according to the procurement policy of the cooperative; • Design and put into practice a suitable system for ordering economic quantities, receiving and inspecting goods and paying the suppliers; and • Establish appropriate systems for inventory (stock) control and accounting.

Sale of Farm Supplies • Plan and implement a sales promotion programme to encourage members to purchase their farm requirements from the cooperative; • Organize a credit sales system if necessary; and • Sell farm inputs (cash or credit)

Collecting and Receiving Produce - Planning for payment of produce • Sustain members’ loyalty by devising ways of ensuring that they patronize the services of their cooperative when marketing or disposing their farm produce; • Estimate costs of handling and transporting the produce, probable shrinkage and leakage, storage and other overhead costs; • Estimate the selling price; • Decide on the price to be paid to members upon delivery of produce; and • Ensure that cash is available when produce is delivered, keeping it safe.

2.3 Example: Typical activities of a producer cooperative


21

Storage - Estimating the need for storage

• Select the most suitable type of storage;• Calculate cost of storage; • Determine the most economic quantity to be stored and assess the total storage space required; • Ensure that the needed storage capacity is available; • Ensure a central place for the storage facility. Preparing the storehouse; • Clean the storehouse; • Ensure proper temperature and ventilation; and • Protect against insects and rodents (pest control).

Preparing for Collection of Produce • Review yearly the location of collection points, modifying the system if necessary; • Plan and implement a suitable system for provision of containers for the produce; • Prepare the facilities at the collection centres; • Plan transport arrangements and ensure that the requisite vehicles are ready during collecting season; • Make certain that sufficient vouchers, produce receipts and other essential types of stationery available;• Prepare the staff for the work of collecting, hiring and training extra personnel as needed.

Receiving the Produce • Check the quality and grade the produce accordingly; • Weigh the produce; and • Record the relevant details systematically.

Paying for the Produce • Calculate the amount due; • Pay for the produce or accept it as recovery for a loan; • Record all payments and loan repayments.

Maintaining Stock Control • Provide adequate safe storage for the produce, inspecting regularly; • Keep a running record of the stock; • Record temperature and moisture content regularly; and • Improve ventilation and pest control when necessary.



22

Marketing - Identifying marketing possibilities

• Explore marketing possibilities; and • Decide on marketing strategy, selecting the most suitable buyer(s) and time for selling.

Negotiating • Prepare an offer including price, delivery times, transport conditions and payment conditions; and • Present the offer to the buyer, negotiate and reach an agreement, and set up a contract accordingly.

Delivering and Collecting Payment • Deliver produce to buyers as agreed; • Issue delivery notes; and • Send invoices and ensure payment is received as agreed.

Maintaining Vehicles • Formulate a policy for maintenance of vehicles; • Decide and establish the necessary vehicle maintenance facilities for the coop; and • Organize and implement a programme for regular inspection and servicing of vehicle

Transport - Selecting a system for transport • Calculate the costs of owning and operating various means of transport, and compare with costs of hiring out• Determine the form of transport most suitable for the cooperative

Purchasing, Owning and Replacing Vehicles • Obtain the requisite information for purchase of a new vehicle; • Compare the costs of different forms of financing the purchase; • Calculate the costs and compare the merits of various vehicles, choosing the most suitable model i.e. cost and availability for spare parts and resale value must be taken into consideration; • Comply with regulations concerning licenses, insurance and testing of vehicles; • Calculate the proper time for replacement of vehicles; • Allocating, scheduling and controlling transport; • Design and put into practice an effective system for allocating and controlling transport services; and • Prepare daily and weekly transport schedules


23

DIFFERENT TYPES OF COOPERATIVES

3BOARD AND

MANAGEMENT


24

This section addresses the roles and responsibilities, rights and powers of the Board of Directors and the Manager of the cooperative. It discusses the expected relationships between them both, in the best interests of the organization and its members.

3.1 Tasks of board and manager Both the Board and the Manager are part of the overall management of the cooperative. However they are separate and complementary parts of the overall management structure. For each to be effective they must understand their own role and responsibility and that of the other party and should not interfere in each other’s areas of decision-making.

3.2 Decision areas In addition to what is provided in Section 2 above, the following is a table which distinguishes the responsibilities between the Board and the Manager.

Because of the growth of cooperatives today, these enterprises are becoming very complex to operate and manage and as such require people who subscribe to sound governance practices. As a consequence, government agencies are now imposing fit and proper conditionality for elected officers and management to follow when managing a cooperative. Section 3.5 outlines fit and proper criteria that a cooperative may wish to consider.

3.3 Roles, skills and training Proper fulfillment of the roles of Manager and Board members are crucial to the success of the cooperative. For that reason they should all recognize that they have major responsibilities to ensure success of the cooperative.

Each Director should have a brief description of his/her job, just like a staff member. When a new person joins the Board, he or she should be oriented to his/her responsibilities just as any new staff member. It is the responsibility of the Chairperson to see that this is done.

A Board member and a Manager require particular skills. It should never be assumed that either one comes to the helm of the cooperative with the necessary skills set. If external training is not possible, then advice should be sought from experienced persons, either former Board members of the cooperative or people who have profound understanding of how a Board of a cooperative works. To effectively operate and manage a cooperative, Board and Committee members and senior management should seek to acquire or develop the following skill set:

• Credit risk management; • Investment management; • HR Management; • Operations Management; • Accounting; • Marketing and Sales; • Governance;

BOARD AND MANAGEMENT 3


25

BOARD AND MANAGEMENT

• Risk management; • Communication; and • Leadership skills.

3.4 Responsibilities and Skills of Board Members a) Sample position description for cooperative director responsibilities As a member of the Board, a director is responsible for the management of the affairs of the cooperative by doing the following:

• Ensuring the organization’s financial viability; • Articulating the mission, vision and values; • Setting the strategic direction; • Setting overall direction of the cooperative and approving the policy guidelines to be observed by management; • Approving the Annual Work Plan, Budget and Organization Chart of the cooperative; • Ensuring that competent and appropriately qualified people are appointed as managers and that they are adequately instructed about the overall directions and guidelines fixed by the Board; • Ensuring that the cooperative is properly managed by monitoring management actions and keeping up-to-date with the cooperative’s affairs; • Attending regular Board meetings and contributing to the Board’s deliberations; • Facilitating a cordial relationship between the cooperative and the Regulator; • Being able to read and interpret / analyze financial statements; and • Identifying and strengthening the skills section that needs to be developed.

Monitoring Function

• Ensuring the cooperative is able to meet liabilities; • Following up on decisions taken; • Ensuring that adequate financial control systems are in place; • Ensuring legal requirements are met (including Annual Reports, maintenance of records, Audited accounts); • Establishing that proper reporting and accounting standards are adopted; • Assessing and monitor management performance against demanding standards; • Confirming that members are properly informed; and • Ensure cooperative is meeting expectations of other interest groups


26

Monitoring Function

• Ensuring the cooperative is able to meet liabilities; • Following up on decisions taken; • Ensuring that adequate financial control systems are in place; • Ensuring legal requirements are met (including Annual Reports, maintenance of records, Audited accounts); • Establishing that proper reporting and accounting standards are adopted; • Assessing and monitor management performance against demanding standards; • Confirming that members are properly informed; and • Ensure cooperative is meeting expectations of other interest groups

Contribute to cooperative performance • Appoint and replace senior management; • Ensure a management succession plan is in place; • Contribute skills, experience and knowledge to Board and cooperative; • Help bring the cooperative into contact with wider networks; • Maintain good relations with members and the community; • Contribute to results-based strategic planning ; • Provide an objective view of proposals and plans; • Help management to identify opportunities, anticipate problems and develop strategies; • Criticize constructively to ensure full debate of issues affecting the cooperative; • Question and challenge management and Board when necessary; • Serve as an active team member – involved, informed, interested, loyal and committed; and • Continually learn and improve

Protect members’ interests • Ensure that money is managed prudently by providing proper guidelines and limitations • Balance appropriate levels of risk and caution • Take care to ensure that cooperative activities increase and grow funds rather than diminish them; and • Ensure two way communications with members so that the Board is always aware of changing member needs and priorities (make no assumptions!)


27


b) Questions a Board member should be asking: • Is this proposal in the best interests of the cooperative as a whole? • What do our members need and expect from the cooperative - have needs changed? • Do we have the best people we can get to manage the cooperative? o Are we paying enough to attract the best talent? • Do we have the skills and expertise around the table to make effective decisions? • Can we afford to pay our debts? • Do I need additional information/input in order to make a decision on this issue? • Do I have a conflict of interest on this issue? • Is the Board fully aware of its legal duties and obligations on this issue? o Can we access expert opinion? • What are the risks and what are the benefits of this proposal? • Does this proposal help the cooperative meet long term objectives? • Why is this proposal recommended? • Does the Board need to take action on this issue? • Can I have additional information? • What potential issues or problems may arise? • How can we find a solution to these problems? • How can I help? • Have we met all our legal obligations?

The questions will change according to the issue, but at all times, Directors need to be mindful that it is their responsibility to think ahead, to anticipate, to challenge and, finally, to make a decision. c) What things get in the way of good performance?

Even with the best of intentions Directors can make mistakes, especially if they have inadequate experience and lack proper training in their cooperative functions. It is not enough that they are honest, hardworking and committed to the development of their cooperative – all necessary attributes for cooperative leaders. However, it is also important that the cooperative helps them improve their skills and advance their knowledge through regular education and training programmes tailored to their needs and circumstances.

Directors must ensure that they devote adequate time to serving and looking after the affairs of the cooperative on behalf of the members. While Directors are expected to function as a Team, an individual Director may express an opinion different from that of other Directors if he/she strongly believes that it is in the interest of the cooperative as a whole. Even if colleagues on the Board may disagree with him/her and his/her point is ruled out, he/she should still insist that the dissenting opinion be recorded in the minutes.

Some common behaviors that inhibit the efficient performance of a Director: • Failure to get an overview of the cooperative’s objectives, organization and functions; • Becoming over involved in management issues; • Spending too much time on minor issues better left to management (for example interference with the technical aspects of the Managers work);


28

• Not doing one’s homework or agreed actions (being unreliable);

• Not observing the proper procedures and etiquette of the Board;

• Acting as an individual instead of a member of a team;

• Not making any effort to resolve conflicts when they occur within the cooperative or between the cooperative and other parties; • Feeling too shy to speak out or air disagreement; • Being intimidated by a strong-willed and vocal Board member, Chairperson or Manager; • Letting personal interests interfere with good judgment on cooperative issues; • Underestimating the skill required to manage the cooperative and not being willing to pay for those skills even when the cooperative is able to do so;

• Pretending to understand or grasp a concept or issue when he/she does not making, including not making the effort to find out more about an issue; • Not listening; • Thinking that members do not or cannot understand Board decisions; • Not 'selling' the cooperative; and • Not willing to learn and improve.

d) Some of the common dilemmas for Directors • Incurring debts that the cooperative cannot pay because the Board does not understand financial management; • Not managing the finances well to ensure that assets are protected, suitably controlled and that they grow; • Not declaring or avoiding conflicts of interest; • Not able to interpret information from management and failing to ask for explanations; • Not able to interpret financial statements/records; • Not preparing oneself for Board meetings; • Not asking questions when unsure or not communicating with members, Managers, other Directors, and stakeholders; • Interfering with the manager's work; and • Not reading reports and minutes.

A board member needs to be alert to these dilemmas and pitfalls. Self-assessment is desirable to ensure that he/she has the skills and the support to serve on the Board effectively

e) Responsibilities of the Chairperson

Primary Function The Chairperson of the Board of a cooperative is primarily responsible for the leadership of the Board of Directors.


29


Key Result Areas:

• Shows a high level of commitment to the cooperative and to the philosophy and values of cooperatives.

• Leads the Board in such a manner as to ensure a high level of morale and commitment.

• Being in control of all meeting procedures and processes, as well as in guiding discussion and decision-making in a democratic manner.

• Leads and motivates the Chief Executive Officer and senior management

• Enhances relations with members, staff and the community.

• Keeps up-to-date with all issues affecting the performance of the cooperative as well as the financial, statutory, and compliance responsibilities of Directors such as the Co-operate Societies Act.

• Demonstrates the appropriate personal and interpersonal skills that contribute to Board success.

3.5 Board Assessment Building an effective cooperative board is a continuous process of recruiting, training and self-assessment. The most effective boards are: • Those whose members are deeply committed to the cooperative’s mission; • Members who bring expertise in key areas; • Members who represent diverse points of view; • Evolve over time through careful planning. Board building is a dynamic process and can involve the following areas: • Identify the needs of the board: the skills, knowledge, perspectives; • Cultivate potential board members; • Recruit prospects to stand for election; • Orient new Board members; • Engage all Board members • Educate the Board by providing pertinent information; • Rotate Board members – establish term limits; and • Evaluate the Board as a whole and on an individual level.

However, in order to be effective, it is advisable that the cooperative Board conduct an assessment which would redound to the benefit of the organization: • Refresh the Board’s understanding of its role and responsibilities; • Identify important areas of board operation that need attention or improvement; • Measure progress toward existing plans, goals and objectives; and


30

• Shape the future structure and operations of the Board. • Define the criteria for an effective and successful Board; • Board/committee to reflect on and assess areas of strength and weakness; • Opportunity to prioritize activities for the future; • Serve as an educational and consensus-building function; • Clarifying standards of performance - Board / Committees; • Reflection on Board’s accomplishment; • Determines focus areas of the Board – Goals / Objectives; and • Ascertain Management effectiveness

Board assessment can take many forms. The cooperative can use any one of the following to conduct the assessment: • Board’s self-evaluation: All board members participate; • Peer evaluation; • A committee of the board; • A non-board committee; and • Outside consultant.

3.6 Fit and Proper to serveCooperatives are mutual organizations in that they are run and managed by members on behalf of members. Notwithstanding the mutuality concept, Board and Management operate a fiduciary role to seek after the interest of the cooperative. This ensures that people who have been entrusted with leadership roles in the cooperative must be fit and proper to hold the particular positions.

In determining whether an individual is a fit and proper person to hold office, the cooperative may give regard to the individual’s probity, competence, diligence and soundness of judgment for discharging the responsibilities of the office holder, and to whether members’ interest will be at risk if the individual holds a particular office.

Specifically, the cooperative may wish to consider the following in determining fitness and propriety of the person: • Previous conduct and activities with his business or financial affairs; • Whether the person has been convicted of an offence involving fraud or other dishonest act; • Whether the person has been convicted for violence; • Whether the person is delinquent with his financial obligations, bankrupt; • Whether the person is in involved in unscrupulous business ventures; • Dishonest employment track record; and • Consideration of information that would cast doubt as to one’s competence and soundness of judgment


31

DIFFERENT TYPES OF COOPERATIVES

4MEETINGS

OF MEMBERS


32

Meetings are the lifeblood of any organization. They are especially important in cooperatives because of the emphasis cooperatives place on democratic control and participation. Meetings are the main way in which people exercise their democratic control and participation.

The supreme decision-making authority of a cooperative is the General Meeting, of which there are two types:

1. Annual General Meeting (AGM) which is held every year as soon as possible after the end of the financial year; and 2. Special General Meeting (SGM) which is conducted on similar lines as an Annual General Meeting but usually when there are urgent matters to be discussed or decisions to be taken that cannot wait for an AGM.

There should also be other less formal meetings to inform, educate and consult with members.

4.1 Laws governing meetings There are laws and by-laws governing the conduct of the annual meeting. These are designed to safeguard members’ rights to: • Be informed about the meeting and its purpose in good time; • Approve an accurate record of the findings, decisions and recommendations of the previous General Meeting; • Attend the meeting and vote on matters that affect them and their cooperative.

The bylaws are designed to prevent any individual or a small group from hijacking the meeting and making decisions in their own favour thus compromising the interests of the majority of the members.

MEETINGS OF MEMBERS4


33

MEETINGS OF MEMBERS

4.2 Planning General Meetings In view of its importance, some attention should be given by the Board of Directors and management to making every Annual General Meeting appear to be a special occasion. It is a once-a-year event when the cooperative reviews its performance, congratulates itself on its successes or has a careful and sober look at where it has not been successful.

Sometimes it is not easy to attract interest, and some effort has to be made to make the event interesting - for instance by inviting a special guest-speaker, giving awards to members or organizing some entertainment or meal after the meeting if the cooperative can afford it.

At other times, members may be very concerned about certain issues and may attend the meeting to voice their concerns. Such a meeting needs an effective Chairperson who is aware of proper meeting procedure and who is well informed on the ‘burning matters’ and their ramifications, so that the discussion is orderly and its outcome is useful rather than harmful to the organization.

The knowledge and skill of the chairperson in meeting procedures is critical to achieving control and managing the affairs of the meeting. An essential feature is the adoption of the Standing Orders by the membership before the meeting is started. The skill, effort and time invested in preparing the Notice and all the related reports before the meeting are also of paramount importance. 4.3 Notice of meeting All members of the cooperative must be informed in keeping with the legal requirement for advance notice for a meeting: at least eight days in some jurisdictions, up to fourteen days in others. The notice of the meeting should show: • The date of the meeting; • The time of the meeting; • The place of the meeting (venue); and • The Agenda for the meeting.

4.4 Agenda The agenda states the purpose of the meeting and specifies the tasks to be completed at the meeting. The bylaws and often the Regulations would stipulate: • Chairman’s report; • Minutes of the last meeting; • Board of Directors’ report; • Other Statutory Committee reports; • Audited financial statements; • Election of officers; • Setting the maximum borrowing limits; and • Resolutions (e.g. dividend, appointment of Auditor).

Other Business The bylaws prescribe those items that must be included in the agenda but the Board may add others. For example the cooperative may need to amend its by-laws, in which case a Resolution must be tabled to authorize those amendments for the consideration of the Regulator.

“Other business” may also include discussion of an upcoming event (e.g. the anniversary of the cooperative’s founding, International Cooperative Day).


34

The agenda should be made known to members well ahead of the meeting so that they will have time to think through the issues, conduct their own research and prepare themselves before coming for the meeting. Also they need to have an idea as to how long each item should take and ensure that the items are completed within that time. Members should have access to the minutes of the last meeting to review in advance of the next general meeting.

Here again, preparation and presentation of the required contents are critical to the outcome(s) intended.

Below is a typical agenda for a financial cooperative:

XYZ COOPERATIVE SOCIETY LIMITED48TH ANNUAL GENERAL MEETING

Call to Order

National Anthem

1. Invocation a) Credential Report b) Notice of Meeting c) Standing Orders/Adoption of Standing Orders

2. President’s Address

3. Minutes of the 47th Annual General Meeting

4. Business Arising from the Minutes

5. Reports: a) Board of Directors b) Credit Committee c) Supervisory Committee d) Education Committee e) Senior Management f) Auditors

6 Resolutions

7. Maximum Liability

8. Nomination Committee Report

9. Elections

10. Election Results: a) Supervisory Committee b) Credit Committee c) Board of Directors

11. ANY OTHER BUSINESS

12. CLOSING REMARKS By Order of the Board Secretary Date:


35

4.5 Procedures The following is a suggested simple procedure for conducting a meeting:

a) Opening • Ascertain the quorum; • Bring the meeting to order – welcome everyone – with special welcome to guests e.g. the Auditor, Minister, Registrar and Speaker; • Read out or highlight the Meeting Agenda; • Mention any apologies which have been received and take any apologies that are passed on by persons at the meeting; • Deal with any correspondence that has to be brought to the attention of the general meeting ; and • Any announcements to be made should be brief and to the point.

b) Minutes • Bring the Meeting’s attention to the pre-circulated minutes of the previous general meeting and ask for any errors or omissions; • If someone points out any mistakes in the minutes, they should be corrected; • Ask a member from the meeting to move that the minutes of the last General Meeting be adopted and another to second it, as amended; and • Then put the motion that the minutes be approved and take a vote if necessary.

Excessive details should be avoided in writing the minutes; the main points discussed, observations and recommendations made and the decisions reached are vital. Reading out the minutes is likewise time-consuming.

c) Reports • The Board should submit a report on the work done by the directorate and the management team during the last year. While the Board Report should focus on the work done since the last general meeting, this should be linked to the results anticipated in the Annual Work Plan and Budget and will help the members assess the performance of Board when they vote on their re-election later. • The financial reports of the cooperative should be presented by the treasurer, who (assisted by the Manager as necessary) should answer any questions posed. This should be an informative but concise presentation. • The adoption of the Board and Financial Reports should be moved and seconded by members.

MEETINGS OF MEMBERS


36

d) Items • Go through the items in the agenda and deal with them one by one; • Remember that every decision has to be reached by a motion: i.e. it is moved and seconded, discussed and then the motion is put to the vote; • If amendments to the motion are proposed: they are also moved and seconded and then voted on. Once that happens, the amendment becomes part of the main motion, which is then voted on as amended.

e) Elections • Follow the election procedures as set out in the by-laws; • This is a matter that is sometimes very important to people, so the procedures should be followed carefully and fairly; and • Effective use of the Nominations Committee, advance profiling of the candidates for election and use of available telecommunication can reduce the time traditionally consumed by the election of officials, without curtailing the democratic rights of members to propose and cast ballots.

f) Closure • Try to end the meeting without giving the impression that you want to end it prematurely. The length of the meeting will depend on the size of the agenda and the matters to be discussed. • Try to finish the meeting on time; and • Long meetings tend to lead to boredom and persons would leave before it concludes, endangering the quorum.

4.6 Role of the Chairperson The Chairperson is the pivotal player as far as the conduct of and results from meetings are concerned. The Chairperson guides the meeting, safeguards the rights of people to speak and be heard, and controls those who may get out of order. The Standing Orders and the Meeting Agenda are his vital tools.

The Chairperson should be more of a facilitator than a dictator, allowing participation by the members but keeping them to the point. It is a good idea to announce a time limit per item so that the speakers know how long they should speak; but an advance signal from the Chair of the closing time for the meeting helps to frame the need for the proceedings to be business-like.

Here are some best practice guidelines for the Chairperson: • Prepare for the meeting well in advance and be well informed on all key issues. Think ahead of the things that might arise and be prepared for them;


37

• Get the meeting started on time and make people feel welcome and motivated to participate; • Keep reports and discussions concise and within time limits; • It helps if the Chairperson can summarize the conclusion reached at the end of every item so that everyone understands what is happening;

• It sometimes helps to allow people to get their fears and concerns out in the open, so that they can have confidence in the organization;

• Help everyone share in the discussion, encourage the silent to participate and ask the over-talkative to allow others a chance to speak;

• Ask people to stop having “small meetings” of their own during the main meeting. and

• When there is conflict, calm people down and encourage them to think of fresh solutions

• Be watchful of people’s moods and expressions. Pay attention to non-verbal communication- the body language – such as people yawning, reading or being inattentive. It is then time to hurry things along to a conclusion.

4.7 Role of the Secretary and Treasurer a) Secretary The Secretary keeps accurate and reliable business Minutes. The minutes should contain the account of the decisions taken, the tasks allotted and the people responsible for carrying them out. It provides a way of checking back to see if the decisions taken at previous meetings were implemented or the tasks accomplished.

Sometimes a Manager or an employee may be delegated to perform the role of the recording secretary. A special Minutes book or electronic file for General Meetings should be maintained. Another separate record is kept for Board meetings, in keeping with the Law.

It is the duty of the Secretary to ensure that the minutes of the meetings are properly written in a timely manner and are a reliable record of the cooperative’s decisions. When in doubt about a decision, the Secretary should check it with the Chairperson.

b) Treasurer One of the executive officers in a cooperative is called the Treasurer. The Treasurer shall be responsible to the Board of Directors for the financial affairs of the organization, including;

• Presentation of monthly financial statements, cash flow statement, and other information as the Board may deem fit. • Annual Budget. • Ensuring that there are adequate financial controls to protect the records and assets of the cooperative.

• The safe keeping of all books, accounts and registers of the cooperative.

• Any other functions that may be assigned to the Treasurer by the Directors in keeping with the office.

MEETINGS OF MEMBERS


38

4.8 Guidelines for a Good Meeting Stay focused, be prepared, Directors may wish to use a standard set of questions to frame all board discussion and decisions. These questions may also provide an outline for all written proposals for action included in the board packet.

a) Take a break Have a break for 5 to 10 minutes. This enables members to stretch themselves, go to the washrooms, have tea or coffee and chat with each other. It also helps to break the tension if there is any.

b) Seating and comfort Ensure that members are comfortable. It helps that all are seated in a way that they can see each other. Seating could be arranged in semicircular or curved rows. This helps ensure that no one feels left out.

c) Conflict Conflicts can often arise at meetings. Manage such conflict constructively. Avoid personal conflicts. If there are differences of opinion on certain matters, ask for other views and fresh solutions. Another way is to postpone the discussion on that particular topic and take up the other items. Then return to it.

d) Decision-making The most important part of any meeting is decision-making. It is unfair to expect members to take a decision on a matter for which they lack the necessary information. So make sure the necessary information is provided on time.

Voting is probably the simplest way to arrive at a decision, though it may not be the best. A popular decision may not necessarily be the best decision. However, a majority vote may be necessary so the cooperative is not paralyzed. An effective Chairperson would read the mood of the meeting and determine whether there is consensus on a matter, thus leading to a unanimous decision (voting not needed) or whether the timing to call for a vote has not yet been reached.

e) Conclusion Always seek to end on a happy note: say a few words and then having the social gathering. Encourage ownership by members – it is their meeting and their cooperative.

If your organization has decided to be a cooperative then you may as well find out all you can about what that means, and put it into practice. Otherwise you should perhaps go for a company.


1 http://stories.coop/stories/traditional-art-at-fair-prices/

39

WOMEN AND COOPERATIVES

5ESSENTIALSOF A MODEL

COOPERATIVE


40

A cooperative is a member-driven organization committed to the well-being of its members through self-help. This means the Board members, Manager and staff should help members feel that they really are the owners of the cooperative. They should treat them with the respect that owners deserve and yet made aware of the responsibilities that go with ownership. The Board and management of the cooperative have an obligation to keep the members informed of the affairs of the cooperative, and the members have a corresponding responsibility to inform themselves and contribute to the major discussions affecting the cooperative.

These discussions should take place in annual meetings or special general meetings or even in special education, information and consultation meetings of members. It is often difficult to interest members in these things but that is a challenge to the skills of the Board and management. If the cooperative is listening to the needs and concerns of its members the leaders will find ways to develop new services for their members and to interest them in these developments.

If the current activities and services of the cooperative are no longer serving the real needs of its members, then maybe it is time to think about winding up some activities. But to do this, the Board will first need to consult with members to find out what their changing needs and concerns are, then seek their approval, usually at a general meeting, to discontinue those activities. If the core services of the cooperative are still relevant to the Members then that should be a stimulus to make sure those services are well delivered, perhaps with innovation.

By the same token the members have responsibilities to fulfill. The bye-laws and the decisions of general meetings should contain these. If members fail to fulfill their responsibilities they might lose their membership: the bye-laws stipulate measures to be taken against a member who does not discharge his/her responsibilities towards the cooperative.

ESSENTIALS OF AMODEL COOPERATIVE

5


41

It is extremely important that the Board, members and employees always function in a manner consistent with the cooperative principles and values. The responsibilities of the Board and those of the members, as stipulated in the bye-laws, must be objectively discharged without discretion, fear or favour.

Newsletters, local notice boards and even radio messages can keep members aware of developments in their cooperative. Education and communication have always been an important but under-resourced aspect of the work of a cooperative. If the cooperative plays an active role in the community, such as sponsoring sports and school activities or discussions about matters of community concern, it will be seen as playing an important community investment role and will retain not only the goodwill and support of the community, but the loyalty of its members as well.

Ideally the Board and Manager should put aside a day each year to do serious planning for the future of the cooperative. Both the economic and social wellbeing of the members should be reviewed and new directions planned as necessary. Sometimes a respected and skilled person may be invited to come in as an external facilitator of this planning day. Consultation with members should ideally precede and follow such a planning day.

Finally, members will not appreciate the benefits or their responsibilities as members of a cooperative unless they are educated in these matters. The Board and management should therefore ensure that they first educate themselves in the meaning of cooperation and then carry out their responsibility of educating their members. Development of a cadre of leaders – through ongoing education, information sharing and training – is therefore a vital succession obligation of each Board, so that the directorate of the organization is constantly refreshed.

ESSENTIALS OF A MODEL COOPERATIVE


42


43

TESTYOUR

KNOWLEDGE


44

1. Why is good management important for cooperatives?

2. Describe three financial statements of a cooperative?

3. Describe at least five major responsibilities of:

a) The Board of a cooperative


45

TEST YOUR KNOWLEDGE

b) The Manager of a cooperative

4. What are the duties of a Board member that fall under its monitoring function?

5. What are some of the questions an effective Board member should be asking with regard to leadership and management of his/her cooperative?


46

6. List eight common shortcomings of directors?

7. The Chairperson of a cooperative plays a very important role. List at least four of his/her responsibilities.

8. With regard to members’ meetings in a cooperative, what do you understand by the following acronyms: AGM and SGM?


47

9. List at least four (4) items that must appear in the agenda of a general meeting.

10. What is the role of the Secretary in connection with the meetings of a cooperative?

TEST YOUR KNOWLEDGE


48

BIBLIOGRAPHY

Business Focus No. 27. Antigua and Barbuda. May/June 2009. Community First Celebrates 50th Anniversary.

Caribbean Confederation of Credit Unions (CCCU). 1996. Prudential Standards Manual.

Caribbean HRD Programme for Economic Competitiveness (CPEC). 2002. OECS Credit Union Modernisation Project 250-001 – Best Practices Enhancement.

Cedric S. Mc Culloch. June 1998. Cooperatives in the Caribbean – A Collection of Articles. International Labour Organisation (ILO).

CUNA Caribbean Insurance Society. November 1991. One Strong Resource Partner for Credit Union People Across the Caribbean.

G. William Demas. May 1987. Agricultural Diversification in the Caribbean Community: Some Issues. Caribbean Development Bank.

John McFadzean & John Smith. Glasgow. 2011. The Co-operators – A History of the Fenwick Weavers. www.co-operative.coop.

K. Dwight Venner. July 1996. Surmounting the Barriers to Development. ECCB.

K. Dwight Venner. June 1996. If Only We Were United. ECCB.

Kenneth A. Richards. Dominica. 1997. People Who Helped People.

Larry P. Watson. Vienna, Virginia 2008. Basic Money Management – The Key to a Financially Secure Future. OAS Staff Federal Credit Union, DC.

MATCOM; 1996 http://staging.ilo.org/public/libdoc/ilo/1986/86B09_394_engl.pdf

Melvin R. Edwards. 2008. Credit Union Growth and Development in a Hostile Environment. Address to the St. Vincent and the Grenadines Credit Union League.

National Union of Co-operative Societies (NUCS). Jamaica, 1994. Co-operatives in the Caribbean: An Introduction. CUSO & JCCUL.

Patrick Develterre. Belgium. 1994. Co-operation and Development: With Special Reference to the Experience of the Commonwealth Caribbean. ACCO.

Paul Moses. Dominica. 1998. The Credit Union Movement - A Need for Adaptation.

Thomas M. Saunders J.P. November 1994. Reflections on the Beginning of the Co-operative Movement in St. Vincent and the Grenadines. GECCU.

W. Arthur Lewis. 1966. Development Planning - The Essentials of Economic Policy. George Allen & Unwin.

William G. Demas. 1965. The Economics of Development in Small Countries – With Special Reference to the Caribbean. McGill University Press.

www.ilo.org/caribbean

· caribbean cooperative management training programmes 1 purpose of this module the purpose of this...

Documents