Cooperative management

Meaning, benefits, functions, and structure in Rwanda of cooperative management.

1. Cooperative Management

2. MEANING Cooperative management , also co- management , tries to achieve more effective and equitable systems of resource  management . In  cooperative management , representatives of user groups, the scientific community, and government agencies should share knowledge, power, and responsibility.

3. Continue The universal definition of management is equally applicable to the co-operative management. The survival and growth of a cooperative organization depends largely on the competence and character of its management . Co-operative management is the dynamic life giving element in every cooperative organization.

4. Benefit of Cooperative Management ( i ) To achieve group goals, (ii) To utilize resources, (iii) To fulfill social obligations, (iv) To maintain economic growth, (v) To ensure the survival of a co-operative society in a fast changing environment,

5. Continue ( vi) To improve the personality and caliber of people to raise their efficiency and productivity, (vii) To meet the challenge of change .

6. Functions of Cooperatives Management Functions are actions or activities needed to perform a particular role. The management functions of elected directors are: planning, organizing, directing, coordinating, and controlling

7. 1. Planning Planning is the decision making function of management and requires sound judgment. Collecting information concerning business alternatives, synthesizing the information, and evaluating it are important parts of decision making. Planning involves deciding when, where, and how to take action and projecting anticipated results. The board is responsible for determining and systematically arranging all the main

8. Continue factors to achieve the goals and objectives of the business. The planning function by directors is usually considered long-term and broad in scope. Strategic planning and preparation of a capital budget are specific examples.

9. 2. Organizing When the planning is completed, all of the cooperative’s resources, both physical and human, must be grouped according to function. Organizing involves arranging all of the groups so the business operates as a productive unit. The group needing the most consideration is human resources. People are an important part of successful cooperative operations.

10. Continue The board’s role in human resource activities is hiring a competent manager and designing the overall organizational structure. Board approval of a competitive wage and salary plan plus a benefits package is a necessary component. The manager hires, trains, and makes work assignments for the employees.

11. 3. Directing The planning and organizing functions must be accomplished for the directing activity to be effective. Effective directing requires setting well-defined, clearly understood, and consistently administered policies. For the manager to function effectively, the directors must delegate responsibility with the appropriate authority and predetermined measures of accountability.

12. Continue Directors engage in contract negotiations, approve membership applications, and make recommendations on day to-day operations. Directors focus on approving short- and medium-term plans of the manager, reviewing reports, and making decisions about long-term plans.

13. 4. Coordinating Directors coordinate all phases of the business so that each supports the other. The use of physical and financial assets and personnel activities must be integrated to accomplish predetermined goals and objectives. Specific examples include overseeing facility use, arranging timely financing, preparing the manager’s job description, and purchasing and selling assets to meet members’ needs.

14. 5. Controlling Directors exercise control of the cooperative by keeping themselves informed of the progress of the business, assuring acceptable performance in all phases of the business. They interpret trends and results and know when to initiate corrective action.

15. Continue Directors are responsible for preventing unauthorized actions and keeping members informed of the cooperative’s progress. Accepting and approving management reports, reviewing financial statements, and reviewing physical facilities are specific examples of director control.

16. Cooperative Structure in Rwanda The cooperative organizations may constitute among themselves unions, federations and confederation for the better management of their property and the defense of their common interests.

17. 1. Primary cooperatives This is a primary basic type of a cooperative where members voluntarily decide to gather their thoughts, strengths and assets with the common purpose of maximizing profit through providing any activity.

18. 2. Unions Three (3) or more primary cooperatives may join together to form a cooperative Union. Such a Cooperative Organization shall be referred to as a secondary Cooperative Organization. Only primary Cooperative Organizations may be members of a cooperative union. No primary Cooperative Organization shall be a member of two (2) cooperative unions at the same time.  Cooperative union by-laws shall provide for a delegate representation and the mode of voting in a General Assembly meeting.  A cooperative union may carry out complementary economic and service activities to those of its affiliates.

19. 3. Federation Three or more cooperative unions may join together to form a cooperative Federation at national level. Such a cooperative federation shall be referred to as a tertiary cooperative organization.

20. 4. Confederation   Three or more cooperative federations may join together to form a cooperative confederation at the national level. Such a cooperative confederation shall be referred to as the APEX cooperative organizations at the national level. Below is a diagram that reflects how primary coops lead to unions, then federations and finally confederations.

21. Cooperative Management Tools Cooperative Management uses a number of tools to carry out its functions-accounting system, control reports, security and safety, training and evaluation, incentive programs, communications, and strategic planning.

22. 1. Accounting System A complete and accurate accounting system is vital for effective management. It must produce several financial statements needed in planning and controlling, such as: (1) monthly and annual balance sheets and operating statements; (2) functional or enterprise accounts pertaining to departments or specific lines of business; and (3) special accounts such as patronage records, accounts receivable aging, member equity, and patron financing.

23. Continue An independent auditor periodically verifies the accuracy of the cooperative’s business records. This is especially useful to directors in performing their controlling and planning functions. It helps the board determine the extent to which the manager has followed financial policies, and evaluate how the cooperative is accomplishing its basic objectives. The external audit is primarily a board tool.

24. Continue Larger cooperatives also use internal audit reports. The internal auditor’s primary duty is to monitor the cooperative’s accounting policy. The auditor checks the cost of prescribed procedures, including their effect on patrons and personnel, and suggests ways to prevent errors. Usually, the auditor reports to the chief accounting officer, but sometimes to the general manager or even to the board of directors. Internal audits are primarily manager tools.

25. 2. Control Reports Credit and inventory analysis include a monthly aging of accounts and notes receivable; selected financial and operating ratios; and a monthly accounting of selected inventories, including shrinkage reports.

26. 3. Security and Safety To protect the cooperative, the board is responsible for adequately insuring employees and assets. Employees handling funds should be bonded. Facilities need to be appraised and arranged internally and fenced to minimize pilferage. The board should adopt programs to protect the health and safety of employees and patrons and measures to comply with environmental protection standards.

27. 4. Evaluation and Training Management will be evaluated even if the process is not formally planned. Member-owners continually evaluate their hired management in terms of how well the cooperative is serving members. Regardless of cooperative size, supervisory personnel are evaluated on the basis of how they perform day-to-day.

28. Continue Larger cooperatives use professional management consulting firms to assess whether the cooperative’s management structure is efficient, locate weaknesses and strengths, and suggest what types of management training are needed. A cooperative of any size can lay a fundamental basis for evaluating its management. The essential requirement is to develop an evaluation plan and then follow it