Co-operative Purpose, Values and Management into the 21st Century

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    This document has been made available in electronic format
         by the International Co-operative Alliance ICA 
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                         June 1995


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          Co-operative  Purpose, Values and Management
                    into the 21st Century
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                    by Dr Peter Davis* 


In all the discussion on co-operative values and the
difficulties of maintaining co-operative democracy  there has
been very little said about co-operative purpose. Yet I
believe that without  a clear definition of co-operative
purpose we will never be able to clearly differentiate
co-operative management culture from general management
culture. Co-operative purpose can provide a co-operative -
level performance criteria that will enhance the functional
level criteria related to the specific type of activity in
which the co-operative is engaged. This co-operative purpose
provides the basis for the development of  both a philosophy
of co-operative management development and a criterion for
judging co-operative management performance. Finally, I argue
that the analysis based upon a co-operative purpose  provides
the clue to the resolution of the tensions, already noted in
the literature, between professional management, the
increasing complexity of commercial decision-making, and
membership involvement and control of their co-operative
societies.

When our environment changes we may reasonably need to
reconsider our purpose and as part of this process review our
basic values and principles. All the serious literature
concerned with strategic environmental issues for co-operative
development recognises the growth in importance of management
professionalism for the success of the co-operative enterprise
and the tensions this creates for co-operative principles.
Both Sven Ake Book's book Co-operative Values in a Changing
World  and   recent papers by Ian MacPherson The Co-operative
Identity in the 21st Century  and  Reimer Volkers, Report on
Management Systems and Corporate Governance, stress the
turbulent and changing global environment and problems of
management loyalty to co-operative ideas as co-operatives
increase in size to meet the challenges.  
                         
In my  recent paper Co-operative Management and Organisational

Development for the Global Economy ,  I identified six key
environmental changes.  Firstly, the intensification of
competition and the growth in size and concentration of
capital-based businesses.  Secondly, a major shift towards
labour market de-regulation amongst the O.E.C.D. countries and
former Communist States.  Thirdly, the crisis for the
continued funding of  State welfare provisions  among the
O.E.C.D. countries and former Communist States. Fourthly, the
competitive pressures and lower labour costs of the newly
industrialising nations, particularly in the Pacific Ring. 
Fifthly, demographic change bringing an increasingly ageing
population in some of the worlds  key economies.  Lastly, I
noted as a major environmental change, the erosion and even
breakdown of community.   This breakdown of community can be
seen in both the decline in rural employment and community as
well as in the rise of homelessness, poverty, alienation and
crime in the worlds major cities.  The continuing population
transfer from countryside to town is leaving behind ageing and
declining rural communities whilst adding mounting pressures
to overcrowded urban centres.  Each of these environmental
factors have in different ways exacerbated the polarisation of
wealth and poverty in the world's economies as never before.

The impact on co-operative management and active membership of

these changes can be seen in their growing sense of cultural
isolation and uncertainty not to say downright demoralisation
and even the threat of subversion 1. We live in an age were
the  expansion of capital stock is seen as the legitimation
for managerial prerogative. Individualism has replaced
community and the philosophy of consumerism, which dominates
much co-operative management thinking in the UK, has little to
offer to counter the trend towards self interest and away from
mutual interest. 

Thus to the question "Why are we here?" the answer is blandly
left as  "a co-operative is an autonomous association of
persons united voluntarily to meet their common economic and
social needs through a jointly owned and democratically
controlled enterprise...."2 ( ICA draft Statement on
Co-operative Identity).  Exactly what are the common economic
and social needs to be met?  This is the hub of the matter for
it is only upon our clear understanding of the economic and
social purposes of co-operatives as co-operatives that we are
in a position to judge co-operative management performance. I
recognise of course that in the co-operative movement there
are a very wide range of commercial activities covering most
aspects of human social and economic life. All these
activities are conducted across a wide range of cultural and
technical contexts. 

But this is precisely why the overall issue of the unifying
co-operative purpose (or mission) with which I began is so
important. 


We acknowledge common values, and as Sven Ake Book has
already pointed out 3, it is vital that co-operative
management is committed to them.   The question really becomes
how to direct those values and principles in such a way that
enables us to articulate a specifically co-operative
management philosophy and practice that enables and empowers
co-operative management to lead and direct co-operative
enterprises in the modern world. It is precisely here in terms
of  a statement of  the primary overarching co-operative
purpose that I believe we can  provide such a framework.  Such
a definition  also  provides  co-operative members with a
clearer understanding of the general as well as the particular
purposes of co-operatives and gives members a criterion for
evaluating management's co-operative performance alongside
their commercial performance. Thus there is improved potential
for the members' involvement and democratic control of their
co-operative enterprise.  This is I believe a fundamental
issue to be resolved in the discussions that are taking place
concerning the co-operative identity into the 21st century. So
what is this overarching co-operative purpose?

The common economic and social need which runs throughout all
co-operative enterprise - the purpose for co-operation itself
- is to redress the increasing imbalance in market power
through enhancing both collective and  individual ownership of
capital resources by its members. This was the case starting
with Owen, King and Raiffeisen and as we consider the
continuing polarisation of economic power within the global
economy today we can see that this overarching purpose is
still valid.  It may be that the co-operative is a worker
co-operative bringing people together to create secure and
satisfying employment that  cannot be found on the open labour
market, or that the co-operative has members who are small
farmers seeking to get greater leverage in the sale of their
produce to an increasingly concentrated and powerful
distribution system.  The co-operative could be a group of
people who are unable to get sensible credit arrangements or
who are unable to purchase or acquire housing at a reasonable
price or for rent through the existing market system. The
co-operative might be  one of consumers who are anxious to be
able to purchase at the right price  products meeting ethical
as well as other criteria. These co-operators all have in
common their individual vulnerability and powerlessness in the
marketplace and the inadequacy of their personal wealth to
meet their needs for subsistence and welfare. 

Secondly, for association to be practised people must first
and foremost be encouraged to act together.  It is this acting
together in unity that is the essence of association.  All
successful co-operatives, therefore, unite and involve their
members  in an  economic and social community. From the
earliest times co-operation has been about how  to exercise
power and how  to live. Hence the concentration on education
as such an important component in the co-operative programme.
Morality was always an important component in the programme of
co-operative education. The call to "love thy neighbour as
thyself" underpins the practice of fraternity even if many of
those who espouse the concept of fraternity within the
co-operative  perspective may do so from the stand-point of a
secular humanism rather than the Gospels. There can be little
doubt that "empowerment" as an objective or goal for humanity
in its own right is deeply unsatisfactory and can lead to
individualism, selfishness, greed and ultimately to fascism.
In the context of mutual association, however, empowerment can
only be experienced on the basis of unity and fraternity. 

In human terms the unity and fraternity that lies at the very
heart of the co-operative purpose can only be fully
experienced if  under-pinned by a community based on love. All
successful human communities are founded on this principle. 

The degeneration of so many well- intentioned efforts on
behalf of the oppressed into sectarianism, and that excessive
zeal concerning rights which gives little thought for
responsibilities  (including many religious zealots )  can be
traced to this lack of love as a guiding principle. It is not
a case , as with the popular song, of "All you need is love" -
co-operatives need a lot more besides - but I am arguing,
alongside all those going back to St Paul, that without love
all our efforts towards building  community within and between
our associations will come to nothing. Co-operative rules,
organisation and principles must be more than an outward
framework. 

Some of our founding fathers at least (King, Raiffeisen,
Ludlow, and many others down the last century and up to today)
recognised the fact that if co-operative solutions are to be
brought to fruition then what is required is co-operative
relationships and a spirit of co-operation within the
association itself. It is arising out of this idea of love in
community as being a human end in itself with its own
intrinsic value that we can identify community building as
providing a central purpose for  co-operative associations. 

An amended version of the ICA draft statement on  Co-operative
Identity 4 that addresses the question of co-operative purpose
would, therefore,  read as follows:

Definition

"A co-operative is a voluntary, democratic, autonomous
association of persons , whose purpose is to encourage 
members to grow in community and to act collectively both for
the intrinsic value of being part of a living community and to
overcome their problems of economic dependency and  need by
providing access to, and ownership of the means of subsistence
and welfare.
     
Co-operatives as they grow develop managerial strategies,
structures and policies that enhance their ability  to meet
these co-operative purposes ".

These  changes to the draft definition of co-operative
identity enables a much sharper evaluation of the
effectiveness of co-operative management. It implies three
clear co-operative criteria upon which management performance
can be judged in the co-operative context. 

a)   The first criterion being the strengthening of unity,
     involvement and community within co-operative membership.
     

b)   The second being the accumulation of collective and
     individual economic resources  by members.  

c)   The third and final primary  criterion being the extent
     of democratic control exercised by members. 

These three criteria are in addition to, not in place of,
existing functional level criteria. The functional level 
performance criteria will  remain as important as ever and of
course depend on the specific nature of the service or
function that the co-operative enterprise is providing. 
               
We can now turn to the development of the ICA draft statement
of values and  principles in order to provide for a
co-operative management that is differentiated from capital
based management.  A  management truly reflecting co-operative
values and culture and that can more effectively lead and
develop co-operative associations in competition with  capital
based corporations and smaller firms. 

Reviewing the historic sweep of co-operation across the world
over the last 150 years, one cannot but acknowledge that a key
value within the co-operative enterprise has always been that
of service. Service fundamentally and ultimately to the
membership and service to the wider community. The collective
element within all co-operative associations encouraging the
collective growth of capital under democratic control has
extended the concept of service to include and incorporate the
value and practice of stewardship.  Stewardship of the
members' property has always been understood as a key
responsibility for co-operative management and lay leadership
alike.  In the modern world, it is equally clear that
co-operative service to the community leads to co-operative
stewardship of the environment as well as the material
possessions of the co-operative enterprise itself.  The values
of service and stewardship are not yet clearly enough
articulated in the current statement of co-operative values.  

If we link the idea of association as "a community acting
together" to the values of self-help, mutuality, equality and
equity, and adding in those of service and stewardship, we can
see that association involves members not only working
together, but working for each other as well as for their
wider society or community.   Self-help and self-interest are
tempered by the recognition of mutual interests and the
practical fact of the need to help each other and to serve the
common good. 

There is one other value that is not new to co-operative
culture and purpose that can be found from the earliest times
under-pinning co-operative activity and that is the commitment
to quality.  From the first attempts to sell unadulterated
bread in Rochdale in 1844 the co-operative movement has
aspired to and often delivered the leading edge of quality in
product and service to its members and customers. It is a
value that we should give greater emphasis to in our modern 
context.  Not least because it has become something of a "buzz
word" which needs to be rescued and placed at the very centre
of our ethical and environmental  concern and purpose as we
develop co-operative membership, management and business. The
idea of quality as customer-driven is a basically shallow
misrepresentation of the concept.  There is no true quality
without mutuality. That is the recognition of the  process of
production, distribution and consumption as being a united
whole. For example, we cannot accept a carpet, however low
priced and however well made, if the labour was that of a
child. Consumers and producers have mutual responsibilities 
for quality to each other and for the environment upon which
we all ultimately depend for life itself. The co-operative
value of quality is informed and defined by the co-operative
value of mutuality and it is when we deliver on these
principles and ensure their recognition in the market place
that the co-operative difference and purpose will be most
readily understood by  the general public.  

For the redressing of the economic balance of power  and the
enrichment of our members is as a result of our united
efforts, not the exploitation of the weak, vulnerable
andill-informed either through poor working conditions or poor
quality products or services. For these reasons  I would argue
that the ICA draft statement of co-operative values should
read:

Values

"Co-operatives are based on the values of community,
self-help, mutual responsibility, quality, equity, service and
stewardship.  They practise honesty, openness and social
responsibility in all their activities." 5

These additional values of community, mutuality, quality,
stewardship and service to others can hardly be said to be
new. Their re-emphasis now, however, is particularly important
and relevant. It  enables us to better define the principles
governing co-operative management practice and culture and
suggests the inclusion of  a further key principle into the
existing ICA draft statement. I would suggest that under the
principle of Democracy, the words from "Men and women
responsible for the administration of co-operatives..."6 to
the end of the para be deleted, and that the rest of the
paragraph stands as it is written. 
                         
I urge that instead of this rather weak generalisation, that I
have just suggested we delete, should come a further new 
co-operative principle  under the heading 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. They provide  leadership and policy
development options  for  the co-operative association 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."  

Co-operative management is based not on the exercise of
authority but by encouraging involvement and participation as
part of the co-operative community itself.  Their professional
practice is based on the ethical values of community, quality,
service, stewardship, honesty, openness and social
responsibility.  Their prime function is to provide 
co-operative leadership for the lay-membership and its elected
leaders in the development of policies and strategies that
will empower the association in pursuit of the realisation of
the co-operative purpose.
                         
It is by the incorporation of co-operative management as part
of our co-operative community and as representing an important
principle of co-operation itself that we can work out the
tension produced through increasing scale between  management
and  democracy within the co-operative enterprise.  The
establishment of a principle of co-operative management
enables the co-operative enterprise to be managed
professionally and co-operatively in such a way that member
involvement and democracy will remain key aspects of
co-operative practice.

By having the principle of co-operative management we also lay
the basis for a criterion upon which co-operative management 
training and development can be judged and a criterion by
which management performance in the co-operative context can
itself  be judged.  The exercise of ultimate control by the
lay-membership can only be effective when we have in place a
clear and undisputed co-operative purpose giving members a
clear criterion by which to judge co-operative management
performance.  At the same time, without a clear criterion, we
cannot expect co-operative management itself to rise to the
challenges of the 21st century  and to be confident in the
exercise of their leadership roles and responsibilities within
the co-operative enterprise.  It is not just the membership
that we need to empower as we face the challenges of the 21st
century.  We must also empower co-operative management by
giving it the value base, and the principles upon which to
develop its practice and the confidence to know how it can act
and why it is acting. For there is a clear ethical  basis for
the co-operative purpose as I have defined it above in terms
of providing for the individuals' independence from the rich
and powerful and in the provision of distributive justice
through the countervailing people's power of co-operative
associations.  The statement of co-operative management
principles will, I am certain, encourage many top quality
professional managers to enter co-operative service in the
pursuit of not only personal career advancement but also for
the  satisfaction of being part of a community engaged in an
enterprise whose purpose is to improve the quality of life of
its members and that of the wider society.  

Co-operative management must, therefore,  be a profession in
the truest and best sense of that word.  There is no
profession worth the name that is not based on clear ethical
principles and values, including the value of service to those
to whom the profession is responsible, whether these are
patients, business clients, litigants or in our case
co-operative members.  Co-operation to succeed needs the best
management. We need a confident management and one that can be
trusted with the many  complex and difficult decisions that
require their  specific professional expertise.  The growing
dependency on managerial knowledge and expertise by
lay-members must be accompanied by a growth in the
professional and ethical standards of co-operative management.

The myth of co-operative managers as civil servants carrying
out the policies of the  elected board must be replaced by a
new reality of a co-operative professional management that is
a part of the co-operative community it serves. A management
leading from the front, committed to the realisation of the
co-operative purpose, guided by co-operative values and
principles and, in partnership with the elected directors,
ultimately answerable to an informed and involved membership.
It was the late Will Watkins who wrote that  for Co-operatives
the principle of Unity is more important  than Democracy7.  

Without  a living co-operative community we will have neither
unity nor democracy. A principle of co-operative management
that reflects the underlying purpose of all co-operatives will
enable and maintain the co-operative direction of the
co-operative enterprise towards the ever greater realisation
of  the co-operative community.                   
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References

1    Volkers, Reimer, "Report on Management Systems and
     Corporate Governance", Review of International
     Co-operation, Vol. 87, No. 3, Geneva, 1994, p45.

2    ICA "Draft  Statement on Co-operative Identity, in Review
     of International Co-operation, Vol. 87, No. 3, Geneva,
     1994,  p25.

3    Book, Sven Ake, Co-operative Values in a Changing
     World.Report to the ICA Congress, Tokyo, October, 1992,
     ICA, Geneva, 1992, p197.

4    ICA "Draft  Statement on Co-operative Identity, in Review
     of International Co-operation, Vol. 87, No. 3, Geneva,
     1994,  p25.

5    ibid.

6    ibid.

7    Watkins, W. P., Co-operative Principles Today and
     Tomorrow, Holyoake Books, Manchester, 1986,  p19.      

For a fuller treatment of these matters readers may write to
Dr Peter Davis c/o Management Centre, University of Leicester,
Leicester, LE1 7RH enclosing a s.a.e. requesting copies of his
two recent management discussion papers, Co-operative
Management and Organisational Development for the Global
Economy (1994) and Co-operative Management and Co-operative 

Purpose: Values, Principles and Objectives into the 21st
Century, (1995). Price 2.00 each. Cheques  payable to 
University of Leicester.
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* Dr  Davis, B.A. (Hons, Sussex), M.Phil. (with Distinction),
Phd. ( Leicester), M.I.P.D. is the Course Leader for the
M.A./LL.M. Law and Employment Relations course at Leicester
University.