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Globalisation, Corporate Governance WITH BUSINESS EFFICIENCY AND ROLE OF PUBLIC RELATIONS IN COOPERATIVES

 

B D SHARMA
SENIOR CONSULTANT
ICA DOMUS TRUST
NEW DELHI

CONTEXTUAL ISSUES FACING COOPERATIVES

  • GLOBALISATION OF NATIONAL ECONOMY
  • DEREGULATION OF FINANCIAL MARKETS
  • GROWING COMPETITION AT MARKET PLACE: BALANCING MEMBERS’ NEEDS AND MARKET NEEDS
  • EMERGENCE OF NEW PRODUCTS, SERVICES, PROCESSES
  • DECLINING INTEREST AND SUPPORT OF THE GOVERNMENT
  • PARADIGM SHIFT IN AGRICULTURE: NEED TO EXPAND INVESTMENT IN AGRICULTURE
  • INCREASED USE OF INFORMATION TECHNOLOGY

POSITIVE AND NEGATIVE ASPECTS OF GLOBALISATION
POSITIVE:

  • INCREASED OPPORTUNITIES DUE TO OPENING OF OVERSEA MARKET
  • • INCREASED FDIs
  • HIGHER ECONOMIC GROWTH
  • INCREASED PROFESSIONALISM AND INFORMATION TECHNOLOGY
  • CROSS CULTURAL INTERACTIONS

NEGATIVE:

  • BREAK-UP OF TRADITIONAL VALUES
  • DOMINANCE OF FOREIGN CAPITAL IN CAPITAL MARKETS
  • LOSS OF JOBS
  • ADVERSE IMPACT ON AGRICULTURE
  • LESS CONCERN FOR SOCIAL JUSTICE: ALIENATION OF THE POOR

COOPERATIVES AND GLOBALISATION CHALLENGES:

  • HOW TO MODERNISE MANAGEMENT SYSTEMS
  • HOW TO MARKET “COOP-ADVANTAGE”
  • HOW TO BE COMPETITIVE AND SIMULTANEOUSLY MAINTAIN COOPERATIVE IDENTITY: HOW TO BALANCE MEMBERS’ EXPECTATIONS AND MARKET NEEDS
  • HOW TO HARNESS TECHNOLOGY AND RESOURCES, BOTH HUMAN AS WELL AS FINANCIAL
  • HOW TO SAFEGUARD AGAINST ONSLAUGHTS OF CORPORATISATION

COOPERATIVES AND GLOBALISATION
OPPORTUNITIES:

  • NEW MARKETS: ACCESS TO OVERSEA MARKET
  • NEW STRATEGIC ALLIANCES
  • ACCESS TO TECHNOLOGY AND RESOURCES
  • DECLINING DEPENDENCE ON GOVERNMENT
  • INNOVATION- ENTRY INTO SOCIAL SECTOR; DEVELOPMENT OF NEW GENERATION COOPERATIVES

TO MEET THESE CHALLENGES AND TAKE ADVANTAGE OF THESE EMERGING OPPORTUNITIES, COOPS HAVE TO IMPROVE THEIR GOVERNANCE TO BECOME EFFICIENT BUSINESS ENTERPRISES; CHANGE THEIR PERCEPTIONS; THINK OUT OF THE BOX AND GEAR UP THEIR MANAGEMENT SYSTEMS AND PRACTICES

CORPORATE GOVERNANCE

  • VARIOUS DEFINITIONS: OECD, CADBURY COMMITTEE OF UK; CII COMMITTEE; KUMAR MANGLAM BIRLA COMMITTEE; NARAYAN MURTHY COMMITTEE

  • INSTITUTE OF COMPANY SECRETARIES GIVES APPROPRIATE DEFINITION: “CORPORATE GOVERNANCE IS THE APPLICATION OF BEST MANAGEMENT PRACTICES, COMPLIANCE OF LAW IN TRUE LETTER AND SPIRIT AND ADHERENCE TO ETHICAL STANDARDS FOR EFFECTIVE MANAGEMENT AND DISTRIBUTION OF WEALTH AND DISCHARGE OF SOCIAL RESPONSIBILITY FOR SUSTAINABLE DEVELOPMENT OF ALL STAKE HOLDERS”

PRINCIPLES OF CORPORATE GOVERNANCE

  • TRANSPARENCY IN BOARD PROCESSES AND INDEPENDENCE IN BOARD FUNCTIONING
  • EFFECTIVE LEADERSHIP OF BOARD TO THE MANAGEMENT UNIT
  • ACCOUNTABILITY TO STAKEHOLDERS
  • FAIRNESS TO ALL STAKE HOLDERS
  • SOCIAL, REGULATORY AND ENVIRONMENTAL CONCERN

IMPORTANT FACTORS INFLUENCING GOOD GOVERNANCE

  • INTEGRITY AND COMMITMENT OF THE BOARD AND MANAGEMENT
  • ABILITY OF THE BOARD
  • EFFECTIVENESS OF THE PROCESSES
  • QUALITY OF REPORTING
  • PARTICIPATION OF STAKEHOLDERS IN MANAGEMENT DECISIONS

IMPORTANCE OF GOOD GOVERNANCE

  • FOR STABILITY AND GROWTH
  • FOR BUILDING CONFIDENCE AMONG STAKE HOLDERS
  • FOR MINIMISATION OF RISKS
  • FOR ACHIEVING “EXCELLENCE IN BUSINESS”
  • FOR IMAGE BUILDING
  • FOR BUILDING LONG TERM RELATIONSHIP WITH STAKE HOLDERS
  • FOR ATTRACTING POTENTIAL STAKE HOLDERS

IMPORTANCE OF GOOD GOVERNANCE IN COOPERATIVES
SOME IMPORTANT PROBLEMS:

  • GROWING SIZE OF COOPERATIVES
  • POOR MEMBER PARTICIPATION
  • MANAGEMENT MAY BECOME TOO SELF CENTERED
  • RISK OF BEING “CLOSED” TOWARDS EXTERNAL WORLD
  • POLITICISATION AND BUREAUCRATISATION

VIEWED IN THE BACKDROP OF SUCH PROBLEMS GOOD GOVERNANCE IN COOPS BECOMES IMPORTANT TO:

  • STRENGTHEN SELF REGULATION
  • PROJECT “COOPERATIVE DIFFERENCE AT MARKET PLACE”
  • ENSURE TRANSPARENT AND ACCOUNTABLE DEMOCRATIC MANAGEMENT OF COOPS

BUSINESS EFFICIENCY OF COOPERATIVES
VIS-À-VIS
GOOD CORPORATE GOVERNANCE

  • INDICATORS OF BUSINESS EFFICIENCY IN COOPS:
  • ADDING VALUE TO MEMBERS
  • RETURN ON CAPITAL
  • CAPITAL FORMATION
  • SAFEGUARDING INTERESTS OF ALL STAKE HOLDERS
  • LEAD TO INCREASED MEMBER ECONOMIC PARTICIPATION

2. TO ACHIEVE BUSINESS EFFICIENCY GOVERNANCE SHOULD BE CONSISTENT WITH COOPERATIVE VALUES; PRICIPLES AND MISSION OF THE ORGANISATION

 
PRACTICAL IMPLICATIONS OF COOPERATIVE VALUES IN MANAGEMENT OF COOPERATIVES
  COOPERATIVE VALUE   ROLE OF MANAGEMENT
  SELF HELP   CAPACITY BUILDING OF THE MEMBERS TO SERVE   COMMUNITY BETTER
  SELF RESPONSIBILTY   MOTIVATE MEMBERS TO BE ACTIVE AND INVOLVED   IN COOP MATTERS
  SOLIDARITY   MAKE MEMBERS REALISE SIGNIFICANCE OF MUTUAL   CONNECTIVITY
  EQUALITY   ALL MEMBERS ARE EQUAL. ENSURE PROPER   REPRESENTATION OF ALL SECTIONS IN   MANAGEMENT
  EQUITY   EACH MEMBER IRRESPECTIVE OF HIS/HER FINANCIAL   STATUS/ SOCIAL STANDING IS ENTITLED TO BE   HEARD
   
  DEMOCRACY   ENSURE: RIGHT OF PARTICIPATION; RIGHT OF   INFORMATION; RIGHT OF VOTE; RIGHT TO SHARE   BENEFITS
  HONESTY   REFLECT CARE AND INTEGRITY IN OPERATIONS
  OPENNESS   ESTABLISH TRANSPARENCY THROUGH SOCIAL AUDIT
SOCIAL RESPONSIBILTY   ESTABLISH MECHANISM FOR EVALUATING SUCCESS   OF COOPERATIVE ON THE BASIS OF ITS   CONTRIBUTION TO SUSTAINABLE DEVELOPMENT OF   COMMUNITY
  CARING FOR OTHERS   FORMULATE BUSINESS PLAN BASED ON WELL BEING   OF ALL

CASE FOR VALUE BASED MANAGEMENT IN COOPERATIVES

  •  “TO TAKE REEPOSIBILTY FOR LEADING AND BUILDING WHOLE COMMUNITY OF MEMBERS AND EMPLOYEES INTO A SOCIAL AND VALUE BASED BUSINESS SEEKING THE FULFILMENT OF COOPERATIVE PURPOSE”

 

•  PRINCIPLES OF VALUE BASED MANAGEMENT: (PETER DAVIS)

  1. PLURALISM
  2. MUTUALITY; AUTONOMY
  3. INDIVIDUAL AUTONOMY
  4. DISTRIBUTIVE JUSTICE
  5. NATURAL JUSTICE
  6. PEOPLE CENTEREDNESS
  7. MULTIPLE ROLE OF WORKER AND LABOUR

CASE FOR VALUE BASED MANAGEMENT IN COOPERATIVES
•  CALLS FOR INCLUSIVE PARTNERSHIP APPROACH TO BUSINESS BY:

  1. CLEAR IDENTIFICATION OF STAKE HOLDERS' NEEDS ie. A) MEMBERS; B) STAFF AND THEIR FAMILIES; C) SUPPLIERS; D) LOCAL COMMUNITIES; E) PAST AND FUTURE GENERATION OF COOPERATORS; F) GOVERNMENT; G) CIVIL SOCIETY
  2. FULFILING THE NEEDS OF STAKE HOLDERS
  3. OBJECTIVE EVALUTION OF PERFORMANCE OF COOPERATIVES
  4. SOCIAL AUDITING/ REPORTING

STEPS REQUIRED

  • UPDATE MISSION STATEMENT/CHARTER OF VALUES OF COOPERATIVE
  • ADOPT CODE OF BUSINESS ETHICS
  • ESTABLISH INDICATORS FOR COOPERATIVE VALUES AND PRINCIPLES
  • ENHANCE MEMBER PARTICIPATION AND STAKE HOLDER INTERACTION
  • IMPROVED DIVISION OF FUNCTIONS BETWEEN PROFESSIONAL MANGER AND BOARD
  • ENCOURAGE PARTICIPATION OF AND CONSULTATION WITH EMPLOYEES
  • CONTINOUS TRAINING OF BOARD MEMBERS AND MANAGERS
  • INTRODUCE SYSTEM OF SOCIAL REPORTING/ SOCIAL AUDITING

ROLE OF PUBLIC RELATIONS

  • PROJECTION COOP ADVANTAGE/ DIFFERENCE
  • LINK BETWEEN COOPERATIVE AND THE PUBLIC
  • FEED BACK TO MANAGEMENT
  • IMAGE BUILDING OF COOPERATIVES
 
 
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