Moncton 2012:Managing the Co-operative Difference.

Does the Co-operative Difference imply Different Managers as well as

Different Governance?By

Dr Peter Davis, Chartered FCIPD, AHEA

The Conference Themes which I want to prioritise today are:

1. The Global Context Today and Yesterday the lessons of history and the threats the contemporary context poses.

2. What is the Co-operative Difference and how to apply it operationally and strategically?

3. The Problem of Governance, Leadership, Engagement and Management

4. Performance measurement for co-operatives.

5. Brand Equity Youth Identity, the Co-operative Identity and the culture question

1.1 Globalisation & the Financial Crisis - The end of laissez a faire

1. The global crisis and the threats it poses

The state no longer regulates Capitalism

it is collaborating with it

400 live without civil rights50% of the working class earn less

that $2US per day

In the global village of 1000

1. The global crisis and the threats it poses. 1.2 Rising inequality and poverty

In the Global village of 100060 own 50% of all the wealth in the village600 live in shanty town level accommodation500 are Hungry300 are under or unemployedIn the poorest part of the village life expectancy is 36In the richest parts of the village the gap between rich and poor is the highest for 30 yearsRatio of top earner to bottom 1960 40 : 1in average corporation 2007 344 : 1

1. The global crisis and the threats it poses

1.3 The environmental and ecological crisisSpecies Depletion Pollution of air, sea and fresh water tablesDeforestation and lack of habitatOcean Dead Zones and acidity levels growingOzone depletion - increase in skin cancers

The built ugly dehumanised built environment

Climate Change and the food chain – signswine growing in southern Italy and Spain are starting to move north because the climate too hot

Resources Depletion - mineral hoarding and oil

Gore Point Alaska

The Trash VortexThe trash vortex is an area the size of Texas in the North Pacific in which an estimated six kilos of plastic for every kilo of natural plankton, along with other slow degrading garbage, swirls slowly around like a clock, choked with dead fish, marine mammals, and birds who get snared.

1. The global crisis and the threats it poses

The Industrial Revolution in the 1820s in England – the first globalisation1821Political repression: no democracy: No VoteTrade unions illegalThe six acts made public meetings and protest virtually impossible Newspapers heavily taxed Liberalisation of wage regulationTechnological change creating mass unemploymentStarvationUrbanisation /land clearancesChild labour Life expectancy 27 in the cities and 32 in the countrysideThe Ricardo Malthus Debate and technology

1. Robert Owen The Model Village 2. Association based on the Labour Theory of Value and incremental accumulation of capital owned by the community3. They reformed and democratised our society without a revolution or a civil war in a century4. By 1921One person one voteA mass Trade Union MovementA massive Co-operative SectorThe beginnings of the welfare state

HOW?The development of civil societyToday we must as a key strategydevelop the global civil society

1. The global crisis and the threats it poses

1.4 The Demographic explosion 9 billion by 2050

1.5 The Technological Threat

Bio genetic crop modification

Human genetics

Cloning

AI Artificial Intelligence

Robotics

What is it to be a human being?

2. What is the Co-operative Difference and how to

apply it operationally and strategically?1. It is a different ownership model based on

common community based ownership

2. Its purpose is to provide a) access to resources and leverage in markets to

empower individuals and communities.b) educate / develop the human capital in the

communityc) provide control of wealth to deliver a just

distributiond) to create solidarity and fraternity amongst the

members and their stakeholders

3. It achieves these purposes by providing a range of high

quality services desired by the members at prices that they can afford and permit just exchanges with suppliers and workers.

Owens answer to “ What is the purpose of

economics?” Character formation

Cuba. Human capital development a priority

This should be the priority for co-operative economic development

Why?

Because we must have a value change, a life style change, to meet the challenge of globalisation

2. How to apply it operationally and strategically?

But what is Human Capital Development ?

1.In the Catholic / Christian Tradition a human being is a composite of body and soul2.In social sciences we are seen as complex social beings and psychological beings3.There is a spiritual dimension to human development whether you believe in an immortal soul or not4.Justice and the common good require an authentic fraternity or unity5.Human development includes skill and knowledge6.But without character development it will always be incomplete and potentially dangerous to the person concerned.7.No authentic economic development without moral or ethical development

3. The Problem of Governance, Leadership, Engagement and Management

• Traditional Approaches to Governance– Legalism– Division of Power– The Democratic Principle– Standard Setting Monitoring– Reporting and Accounting

•The role of Culture and Values•The role of Modern Management Methodologies

Why co-operative leadership and governance is problematic?

• The problem of the leadership - followership gap (From Iron Law of Oligarchy- Roberto Michel's to Enron)

• Scale, technology, speed and globalisation

• Models of co-operative management

Models of Co-operative Management and Governance

• Charismatic Great Leader Model

• Collective Model

• Civil Service Model (CUs and most other Co-ops)

• Co-operative Value Based Model is a

Servant Leader Model?

Definition of Co-operative Management

Co-operative Management is conducted by men and women responsible for the stewardship of the co-operative community, values and assets.

Co-operative managers provide leadership, policy development options and operational control for the co-operative associations business based upon professional training and co-operative vocation and service.

Co-operative management is that part of the co-operative community professionally engaged to support the whole co-operative membership in the achievement of the co-operative purpose.

Operational Principles for Co-operative Leadership, Governance and

Management?

• Davis & Donaldson propose seven?1. Pluralism

2. Mutuality

3. Individual Autonomy

4. Distributive Justice

5. Natural Justice

6. People Centeredness

7. The multiple roles of work and labour

The evolution of management in four broad phases

• Scientific Management - Engineering led

• Human Relations Theories – Organisation led

• Contingency Theories – Environment led

• Value Based Management – Values and Culture led integration

Co-operative Value Synergies with Modern Management

• Mission and Culture Management

• HRM

• TQM / WCM / Customer Care

• Brand Recognition and Lifestyle

• Relationship Management/JIT/ Supply

• Market Research and Promotion

• Ethical Consumers

Value Based Management –culture is more critical than rules and systems

• Values help us to understand our environment

• Values help to shape management and organisational culture

• Values gives a shared sense of solidarity and belonging

• Values determine our sense of purpose and objectives

• Values help us to relate to all our stakeholders

• Values help us adopt appropriate strategies, policies and procedures

• Our values help to differentiate our brand in the marketplace as long as we live up to them

• Values underpin standards and behaviour and provide an additional criteria by which to evaluate management

Co-operative Values as Competitive Advantage

• Holistic approach to customer means we can reinforce the offer with social value – added.

• Differentiation in terms of values and ownership appealing in the modern context

• Social values integration with the business values gives added meaning and satisfaction for employees and possibly suppliers.

Co-operative Value Based Management as an additional

tool for governance• Management methodologies can empower

membership and employees.• Co-operative values and purposes can cement

stakeholder relationships.• Influence management culture.• Encourage transparency.• Creates a listening and responding management.

Managers Lead – Boards Govern

We will attract the right people when we have a strong unified

brandWe can select the best people

when we develop modern selection tools to help us

The cycle of democratic member and stakeholder engagement

Reporting using multi media saturation methods

Conducted using modern market research tools

4. Performance Measurement forCo-operatives.

1.Performance on operational KPIsCostsInventoriesQuality AssuranceEmployee productivityEmployee behavioursWaste ManagementHealth and Safety etc.

2. Performance on stakeholder added value

4 Stakeholder Performance Indicators

How do we engage stakeholders / members in in the project of lifestyle change i.e. lowering consumption?

Money Economy

Domestic Economy

Capital dominated relationships in the outer circle

Labour dominated relationships in the inner circle

Big Business

Banking and Finance

SMEs

Communities

Families

Individuals

Public Sector

Associations

Micro Finance & Domestic Labour

5. Brand Equity, Youth Identity, Co-operative Identity and the culture question

Build the Brand to match the segments your aiming to attract

Target the segments with appropriate vision and message

Use appropriate media

Offer appropriate activities

Recognise young people need to have fun and have peer based activities

Facilitate and support but delegate control and reporting

Towards A New Economics

Co-operative Value Based Managers

A Movement of Voluntary Democratic Associations of Members

In their communities

UN's Intergovernmental Panel on Climate Change Final Report 2007

"What is an extremely powerful message in this report is the need for human society as a whole to start looking at changes in lifestyle and consumption patterns," Rajendra Pachauri, the panel's chair, said at a press conference today

Teds 15 minutes silenceThe essential basis for

activismBecause to change society

we must start with ourselves.

Question: “How is what I am doing fitting into the bigger picture and changing it for the better?”

Davis P and Donaldson John, Co-operative Management. A Philosophy for Business,New Harmony Press, Cheltenham.

International Journal for Co-operative ManagementVol.1. Number 1 to Vol. 6. Number 1 Open Access atwww.le.ac.uk/ulsm/umbo

AlsoFrom ILO Coop Branch Geneva Davis , P(1999) Managing the Co-operative Difference.Davis, P (2004) HRM in the Co-operative Context

The UK Co-operative Bank plcCase Study

• It started out as another UK post war co-op failure (<3% market share, facing the big four 80%+ of retail banking market

• Strengths in Local Government, reputation for integrity.

• Market Research led Holistic Marketing• Segmentation , target market and positioning

strategy based on economics and ideals• Marketing led organisational development • Product innovation, cost reduction, re-branding

• Ist UK Bank to offer free cheque • Ist UK Bank to offer interest on current

account• 1st UK Bank to offer a charge free gold

card• Leveraged IBM to offer best ATM service• Leveraged Sky BT to offer 1st TV Screen

based assess to accounts• Smile internet banking brand • Established an ethical banking code • Established a customer led CSR programme

Results

1. The first positive national brand the co-operative movement has developed since the war

2. Record profits year on year to 2007.

3. Established or helped to develop new communities of concerned people who want to make a difference to society

4. Transformed management and staff morale

5. Engaged customers : clearly differentiated brand