Gentle Reminder on Some Downsides in Cooperatives

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In our previous columns I had written some of the strong points of cooperative operations. However, I firmly believe that knowing the downsides of cooperative operations can help guide some of our reader practitioners avoid such. Pitfalls in my simple understanding and knowledge can be caused by lack of planning, hasty decisions, failures to recognize the need for change and probably attitude.

In almost all management books and presentations I had encountered the significance of planning constantly appear as an ingredient to successful business or any undertaking. Some cooperatives fail to recognize this on the assumption that officers and management lack the needed skills to do such. In some instances cooperative officers prepare plans but were not presented to the General Assembly for consideration and worst remain in closets usually opened or visited once in a while. Further, some cooperative officers and staff sent to training on strategic planning fail to echo, present or attempt to encourage enhancement of their outputs by their respective cooperatives.

Another issue at hand is that some cooperative leaders take it for granted and assume that the review of the development plans by members of the Board of Directors is sufficient to consider it approved. This practice is contrary to the provisions of the Code and cooperative bylaws that require approval of the General Assembly. Basic among cooperatives with crafted development plans is the practice that it must be presented to the General Assembly for approval to ensure support of members. Some cooperative leaders often reason out that they cannot manage to prepare strategic plans by themselves. In this case cooperative officers and staff can employ the services of their apex organizations like federations, unions and local government unit cooperative development councils. I highly recommend affiliation and linkages as important activities of cooperatives. In the choice for affiliation, quality and relevance of offered services rendered by the apex organization should be primary considerations in joining.

Another factor why some cooperatives encounter organizational challenges is the fact that officers erred in their decision-making. This is unacceptable on the part of the members as it could compromise organizational concerns. Often emphasized to all organizations is the need to anchor decisions based on organizational vision, mission, goals and existing protocols or ethical standards. Deviations from these considerations with the possibility of entertaining personal agenda can ruin smooth flow of business operations. As a standard operating procedure, I believe this should be one of the focuses of Board of Directors during their meetings. Periodic assessment of undertakings based on established metrics must be employed to draw conclusions as inputs to re-entry planning. Risky decisions can be corrected with proper monitoring and implementation of policies and instituting corrective measures upon notice.

Equally important is the recognition that some cooperatives hesitate to leave their comfort zones and explore other opportunities. Their hesitance to accept changes as dictated by various socio-economic factors hinder innovations within the organization. Current market trends require management and officers’ willingness to learn new ideas to be at par with businesses offering similar services. Failure on the part of cooperatives to adopt new technologies may lead to stagnation or worst closure of business as a result of delayed reaction to required modernizations. Being too traditional can result to loss or transfer of clients to other entities with fast, reliable and innovative services.

Believe it or not but it is already happening among cooperatives in the country. Some aggressive cooperatives experience financial distress and sought help from other big cooperatives. Also, extra care should be observed by those intending to institute reforms or new ideas. Overexpansion can cause fiscal trouble. This ordinary writer believes that feasibility study and careful decision-making can help in the identification of potential threats of innovative ideas. Gradual shifts and calculated risks may benefit cooperatives willing to introduce new technologies. I guess some cooperative leaders should mature and learn the art of risk-taking unless they decide to be left out.

Further, cooperatives cannot advance if there is attitude problem within the organization. Unreconciled issues and concerns brought to the attention of external persons can harm relationships within an institution. The best way to resolve is through constant dialogue among officers, staff and members in cases wherein some problems occur. It might be easier said than done but the will to confine the issues within the organization is the best strategy for conflict management. Involving external parties can severe ties among those involved in the conflict when not handled properly. We have heard and read instances of labor related cases that were decided in favor of dismissed employees. The attitude problem of some officers toward its employees caused damage to the institution that they claim to love and protect. Worst some officers did not learn from their mistakes and incur similar decision to the detriment of the cooperative. Unknown to investors due to attitude problems of officers on non-disclosure on real status of the organization, greater budget is allotted to expenses and lower interest rates on share capital or none at all is experienced by some cooperatives. It would be pleasing to the ears if those who erred in their decisions will pay the cost on damages claimed by dismissed employees.

Finally, the essence of fairness, accountability, integrity, trust and humility as espoused by the late Senator Agapito “Butz” Aquino comes to mind as we touch the downsides of cooperative operations. Officers and management staff as vanguards of members hard earned resources need to understand provisions of the Philippine Cooperative Code and its Implementing Rules and Regulations, adherence to provisions of Articles of Cooperation and by-laws, Manuals of Polices/Operations, established Governance and Ethical Standards can deter these downsides. This piece might not be an accurate portrayal of the realities in all cooperatives but hopefully some can relate and institute innovations.

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