What is co-operative corporate governance?
- GOOD CORPORATE GOVERNANCE
Corporate governance takes into account public policy, national values and ethics. It covers systems by which the individual corporations regulates itself for competitiveness and sustainability through practices and procedures for supervising, monitoring, regulating and controlling its affairs. Regulatory authorities, national trade and business associations, professional bodies and societies should all practice good corporate governance.
Co-operative corporate governance is about the use of power in co-operative organizations. It is concerned with the leaders who are the people who govern, that is, direct and control co-operatives.
Co-operative corporate governance also targets members of co-operatives. These are the main stakeholders. They are the people whose money is invested in the organization. They are the ultimate beneficiaries of well run co-operatives and the ultimate losers of badly run organizations and for this reason, they are the supreme authority.
For co-operatives to be efficient and productive, they must apply good corporate governance practices that seek to ensure that the power of the organization is used in a manner that ensures:
- effectiveness-that the co-operative society abides by and achieves the objects for which it exists.
- efficiency-that the undertaking of the organization are honest and have integrity.
- fairness-that the organization treats all its shareholders and the community in which it operates in reasonably and justly.
- transparency-that the organization is open about its activities and that it meets that information needs of all its stakeholders.
- discipline-that the organization complies with all the laws of the country, its by-laws and that it exercises self-control in all its dealings.
- accountability-that the organization is answerable to and satisfactorily explains its actions to its members/stakeholders.
- responsibility-that the organization exercises good judgment. That is able to make informed and astute decisions, act accordingly and accept the consequences of its actions, taking remedial actions where necessary.
- independence-that the organization acts of its free will, in its best interests and with the consideration for all its stakeholders and not according to the dictates of external interests.
- social responsibility-that the organization is sensitive to and that it responds to the needs of the members/society, for example by improving its products or where necessary developing new ones.
Why Good Corporate Governance
- Money can't buy happiness, however it can rent it :-)
Good corporate governance can greatly enhance effectiveness, competitiveness and sustainability of the organization. This is important in the highly competitive global market. Members must demand good governance of their co-operative to ensure:
- that the organization achieve the objective for which they exist.
- that the organization are effective and make good returns on members’ investments.
- that the organization are innovative by improving on their products and introducing new ones.
- that the organizations are credible so that they can attract more members and savings.
- that the organizations are sustainable and continue to exist and be effective for a long time.
- that the organizations use resources efficiently and with due regard to the needs of future generations.
- that the organizations are responsible and that they contribute to well-being of the community in which they exist.
Authority and Duties of the Members as Stakeholders
Shareholders in the co-operative society must play their role in ensuring that their organizations are well-governed. In order to do this, they must keep themselves informed about their co-operative societies so as to be in a position to make independent and informed decisions on all issues on they are called upon to make decisions. Shareholders should ensure that they clearly understand the objects for which their co-operative are formed so that they can effectively hold directors they elect to account.
Shareholders have a duty to ensure that only competent and reliable persons, who can add value, are elected to the board of directors. They must also ensure that the board is constantly held accountable and responsible for the efficient and effective governance of the co-operative society so as to achieve corporate objectives, prosperity and sustainability.
- BOARD OF DIRECTOS
Every co-operative should be led by an effective board which exercises leadership, enterprise, integrity and judgment in directing the co-operative society and which acts in the best interest of the co-operative in a transparent, accountable and responsible manner.
Accountability and Transparency
To enhance accountability and transparency in co-operative organizations, the leaders have to observe and adhere to the co-operative values of honesty, openness, social responsibility and caring for others. These values may be exercised while performing various activities of the co-operative organization as follows:
- meetings-convene and conduct co-operative meetings as specified in the Act and Rule and the co-operative by-laws.
- elections of leaders-have regular and timely elections and allow members to participate without interference such as rigging and other forms of influence.
- accounts and audit-maintain up to date an accurate records of the organization and ensure audited accounts are presented and read to members in time and members allowed to deliberate and resolve on them.
- budgeting procedures-budgeting for the organization should be participatory, with members originating ideas and giving final approval.
- recruiting of personnel-co-operative leaders should source personnel from open market and should avoid nepotism.
- code of conduct for leaders-co-operative societies should develop code of conduct and best practice for their leaders.
- delegation of duties-to enhance transparency and accountability, each co-operative should recruit experienced and professional persons to avoid board members acting as executives. Clear job description should be prepared for every position.
- training-training can do a lot to enhance transparency and accountability. It should be done in a participatory and leaner centered manner and be geared towards change.
- tendering and procurement-tendering should be done according to the provisions of the Public Procurement and Disposal Act and Regulations. Always seek for quality goods and services.EXCERPT FROM: Savings and Credit Co-operative Societies; Start-up Kit (Swiss Contact and Department of Co-operatives).
