kk taimni-what is cooperative

8/11/2019 KK Taimni-What is Cooperative

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I R A 4/1 .7

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Inside this Issue

Liberalisation

and The Cooperative

Sector

Whither Agri-coops?

Explanation

and Interpretation

of the Statement et

Cooperative

Workshop on

Gender Issues

in Development

Policy. Planning

and Practice

How to Fight

Fires Without

Burning Bridges

One Source.

Endless Solutions:

The Year 2000

Problem from a CFOs

Perspective

Chief Editor:

Prof . C Balaj i

Editoria l Assistance:

M s. A rc h a na Burd e

Secretaria l Assistance:

S hr i V S B hadr in ath

La yo ut :

Sh ri Ha ro o n S h a r i f f

C Mal

Inst i tute of Rural Management

PB N o: 6 0 , Ar lan d - 3 8 8 0 0 1

Ph on e: ( 02692) 40177 , 40181 , 40186

Fax: (02692) 40188

Em a i l: c b@ fa c . irm.em et . in

IRMA 's W eb Site:

t t p

/

/ irma. irm.ernet . in

i l l cooperat ives survive or wi l l they per ish?

re coopera t ives m ore e f f ic ient th t in inves tor

n e d f i rm s o r n o t ? S h o u l d c o o p e r a t iv e s

i gorous l y p r omot e d and s a f e guar de d or

l i s at ion and g loba l i s a t ion? A ns w e r s

ed to b eco m e

ount a in o f w or ds; and t he m ount a in w i ll

g r o w . L i k e a t ru e c o i n , th e r e a r e ,

ec t a b l y , tw o s i d es t o t h e a n sw ers : t h ere

es" and there are "Nays". But un l ike

co in - how ever

ue one m ay be - the answ er lie s somew here

y e " a n d t h e " N a y " . T h e re i s

w i n - di m e n s i o n t o t h e s e a n s w e r s .

f i c " p re m i s e . W h i c h e v e r o f t h e s e

n e a scr ib es t o , th e a n sw ers t o

d t o s uppor t the

" A y e s " a n d "N a y s " . U l t im a t e ly , t h e s e t o f

ers one pre fers seem s to essent ia lly bo i l

n t o o n e f a i t h

ere a re t h ree a r t ic l e s i n t h i s i s su e w h i ch

e re la ted to ques t ions in the gen re of tho se

ofessor Khusro's

ress a t IR M A 's 15th A nnual Convocat ion

oint o f a scholar who h as herdia.

e r at iv e s . S h y l e n d ra 's s u m m a ry o f t h e

c" v i ew a n d , i n t h e

einforces the f orm er art i c le ' s v iew s on

S t a t e . T h e s e t w o a r ti c l e s

e n t g o o d s u m m a ri e s o f m u c h o f t h e

e s on t he r e l e v anc e o f c oops . Ta i mni ' s

t ( form ally dec lar ing the v a lues and

n c i p l e s o f c o o p s ) s h o w s t h a t th e c o o p

o v e m e n t i s n o t s t ag n a n t in i t s d o g m a s : it

responds to the changing eco nom ic, cul tural

l condi t ions (one does , how ever ;

i s h t h a t su c h r e s p o n s e s w e r e q u i c ke r a n d

r).

s w e p ro c e e d in t o t h e n e x t m i ll e n n iu m ,

i s sues regarding gender can be hardly given .

a t t e n t io n . I s n 't i t n i c e t o n o t e

t ha t I R M A has be gun addre s s i ng the ge nde r

i s sues in r ight earnes t , a lbe i t a bi t la te? A

m a jo r e f f o r t i n t h i s reg a rd w a s a wo rk sh o p

h e l d at I R M A . W e c a rr y a s h o rt re p o r t o n

t h i s w o rk sh o p , an d s i n cere ly h o p e t h a t t h e

m o m e n t u m g e n e ra te d b y t h i s e f f o r t o n l y

gains.

The w hole m ankind is l ikely to greet the dawn

o f t he 2 1s t c e n t ur y w i th gr e a t e x pe c t a ti ons

and joy. However, for those in the

i n f o r m a t i o n t e c h n o l o g y f i e l d, th e n i g h t o f

D e c e m be r 31 , 1999- January 1 , 2 000 w i ll be

e i t h e r a s le e p l e s s o n e o r o n e f i l le d w i t h

nigh tm ares ( i they a t a l l s leep). For; loom ing

large before them is the Y ear 2000

P robl e m" (o r s im p l y "Y 2 K ") . A s I brow s e d

t he i n t e rne t on t h i s , 1 c ame ac r os s a w ho l e

l o t o f i n f o r ma t i on on t h i s "doom " and hav e

b e e n r e qu e s t in g m a n y o f t h o s e w h o h a v e a

be t t e r know l e dge o f I T t o w r i t e a s um m ary

of the i ssues. I m ust admit wi th a heavy heart

t h a t a l l t h ese p eo p l e seem t o h a v e b een so

busy in the i r ow n af fa i rs that they co uld not

take t ime o f f tow r ite ap iece for the Ne tw ork

(Inc identa l ly , th is is a com m ent tha t one can

m ake regarding con tr ibut ions to the N etw ork

i n ge ne r a l ) S i nc e I be l i e v e d (and c on t i nue

to do so) that the problem i s l ike ly to a f f ec t

many of us, I considered it necessary to bring

t o t he a t te n t ion o f t h e N e tw or k re ade r s a

gl anc e at the Y 2 K pr ob l e m . Th e p i e c e t ha t

we c rry

in th is issue i s f rom the perspect ive

o f a F i nanc e M anage r; bu t any on e e l s e t oo

can ge t acquainted w i th the problem through

th is art ic le . M y su ggest ion /request to anyo ne

w ho e v e n v ague ly s u s pe c t s t ha t s/ he o r he r/

his organisat ion m ay be a f f ec ted by the Y 2K

problem is this: don t lake i t l ight, and consult

e x pe r ts . For al l y ou know , y o u m i gh t hav e

alread y missed t h e b u s an d m a y h a v e t o

c h a r te r a m o r e C o s t l y f l i g h t t o r e ac h t h e

destination of

the Y2K free computer

nvi ronm nt


2/16

LiberaliAat ion an d The Coo perat ive S ector*

In 1991, with much ado, India came to

adopt a liberlised policy of structural

reform. There are num erous areas, sectors

and sub-sectors in which liberalization has

not been adopted and the coop erative sector

is one of these areas which remains

subjected to over-regulation and in which

the rays of liberlised policy sunshine have

not been witnessed.

Cooperatives were conceived in this

country as the answer of the small man to

the moneylender-trader nexus and were

seen as an instrument of self-help among

the poorer segments of the population.

Other than the provision of economic

services, in terms of cheap availability of

goods to the cooperating community, the

cooperatives were conceived also as social

organisations which educated the people

in economic management and spread a

sense of togetherness among cooperators

and generated loyalty to the cooperative

movement.

One of the major recommendations of the

Rural Credit Survey Committee was that

as the cooperatives were unable to stand

on their own feet, the state should become

a partner in the cooperative system in order

to provide additional resources and to

strengthen the cooperative system.

Unfortunately, the effects of this seemingly

innocent recommendation turned out to

be disastrous for the independenbe and the

inner-resilience of the cooperative

movement. The cooperatives became

dependent exclusively on the crutches

provided by the state and lost their self-

resilience. The state, instead of being an

equal partner, came to dominate and dictate

terms. The best became the enemy of the

good. The Registrar of Cooperative

Societies in every state became the

dominant figure, over-controlling and

over-regulating the cooperative system -

although it must be admitted that there

have been many examples of really

dedicated and efficient Registrars in the

shape of ICS and IA S officers who tried to

sustain the cooperative movement. But,

on the whole, the domination of the

Cooperative Registrar did more harm than

good and curbed the inner-resilience of

the cooperative management. The other

serious negative develop ment was that on

the slightest pretext, the cooperative

organisations began to be superseded from

time to time and transferable and

bureaucratic officers began to be planted

in the movement to oversee and control it.

It would have been understandable if a

particular cooperative society or a group

of societies in a given area became

inefficient or a scene of malpractice and

embezzlement and, therefore, had to be

superseded by the state bureaucracy. But,

it was totally obnoxious that cooperatives

in a whole state - which is a very large unit

- were superseded by the state

administration and put under the tutelage

and control of bureaucrats. Sometimes,

the period of supersession lasted too long

or was repeated again and again. And

during all these periods, the cooperative

partners had nothing to do and an excellent

opportunity for public education in

democratic management and economic

development of public institutions was

lost.

Another grievous outcome of the state

domination was that the state, far from

being an equal partner, became an

autocratic provider. As a major part of the

financial support began to com e from the

state, the cooperators felt that they were

not managing their own money but were

depending on government money. To the

rural folk, the Reserve B ank of India and

the NA BAR D are just other names for the

government. Thus, an attitude of

resignation and irresponsibility was bred

among the members of the cooperatives

and these members ceased to play their

role in guiding, questioning and

controlling the cooperative functionaries.

Economic liberalization is predicated

basically on three things: (i) a shift from

administratively controlled prices to free

market prices determined by demand and

supply, (ii) a shift from administered

quantities to market determined quantities

of demand and supply, and (iii) a shift from

bureaucratic decision-making by

officialdom to decision-making by the

economic agents, viz., the consumers, the

producers and the suppliers.

It is obvious that until the over-control and

intervention by governmental authorities

is removed and structural changes are

brought about in the cooperative system,

there would be no hope for substantial

progress. Luckily, it can be hoped that the

days of over-control are over and in the

new policy of liberalisation and structural

reform that India has adop ted since 1991,

the cooperative system may stand to benefit

from the provisions of the new policy, if

the freedoms and restoration of initiative's'

are applied to the cooperative aector as well.

To build a new resilience and resource

richness in the cooperative system, the first

essential is to remove the domination of

the government through its officialdom and

hand-over the decision-making to the

cooperative managers at various levels.

Secondly, in determining the price of the

produc ts, like fertilizers, foodgrains, cloth,

clothing and various other wares, the

cooperative system, regulated by its own

organisations at the apex level and the

middle level, should be able to determine

the product prices based on costs, intended

profitability and market conditions and

should be able to change the prices in

accordance with the demand and supply

conditions. Also, in terms of how much te

buy, how much to sell and how much to`

stock as well as how much to borrow, how

much to lend and what liquidity to

maintain, the cooperative institutions

should be the masters of their own business.

In a decontrolled and liberlised structure,

there should be no room for official control

and interference. However, it should be

noted and stressed that every civilised

market arrangement, howsoever

deregulated, requires an over-seeing and

regulation by a superior managing

authority. This managing and regulating

authority need not be and should not be a

government but a professional and

technical organisation with an information

system and regulatory apparatus of its own.

Thus, market freedom does not mean

*Excerpts from the Convocation Address delivered by Prof. AM Khusro at the 15th Annual C onvocation of IRMA held on April 12, 1996.

Vol 3 No 2


3/16

regulation but this regulation

rofessional bodies.

ear that the Indian cooperative

victim of old-time rules

future. The cooperative law and rules,

basically administered by the government

under the control of the Cooperative

Registrars,

overnment-appointed

Chairmen and Managing Directors of the

cooperative system and sub-systems, need to

be altered radically. But as government

bureaucracy is not an agent of dynamic

change, these rules and laws remain

unaltered or only marginally altersd. These

should now be revised radically and given a

direction required by the system.

Messages to the Graduating OYP 1995 and PRM 1994-96) Participants

Chairman s Mess age

What is happ ening around us must affect you in many different ways; it will open up new vistas for you; but it will also mean

that you will have to face new challenges and to face them you will have to make an d keep new promises to yourself and to

your country. I feel good about IRMA because I think it teaches students to place service to society over self-interest and

partnership over patriarchy; because it teaches that the true measure of achievement by which one judges oneself is not

merely the rewards and power one enjoys in the system but the contribution one makes to resolving critical anomalies in

one's social milieu.

I com mend to you to a life of action, initiative and responsibility over one of the p assivity and despond ency. In the arena of

human endeavour, the honours and rewards fall to those who show their good qualities in crisis and in action. You will do

well to remem ber that action springs not so much from thought as from the readiness to accept responsibility and to wield the

pow er that accompany respo nsibility with decency, dignity and decorum.

You will

no doubt experience, as we have done in our times, that every effective innovative attempt to reform generates

resistance from those who are hurt by the reform. Your biggest challenge will be to withstand such opposition and to turn

it into a source of internal strength. In this game, the best sailor is one who can steer closest to the wind and exact motive

power out of the greatest of obstacles.

So I adv ise you to persevere,

as

I have do ne for the last 45 years or so. For, success comes to only those who p ersevere, who

see their goal constantly and steadily and aim for it unswervingly; who persevere w ith dedication and faith the cause they are

fighting for. Faith in your cause, faith in your country and faith in yourself are of greatest importance in your profession.

True, you can do very little with faith alone, but you can do nothing without it.

Director s M essage

I would like to sound to you a note or two of caution. One, promoting sustainable and equitable rural development through

professional management is like a movem ent and wh en self-centered professionals jump on a mov ement, it loses its vigour,

its mission is side-tracked and it becomes like a rudderless boat. I can appreciate your desire to seek lucrative jobs in the

private and corporate enterprises and swim along with the main stream. But for a moment, think about the mission and

vision of IRMA articulated by its founding fathers and think about the problems of rural people and their institutions and

organisations and think about the gross misuse and mismanagement of India's natural resources of land, water, forests,

fisheries and so on an d so forth and then ask yourself this question: Where are m y services needed the most? The answer, I

am sure, w ill be : rural India and rural institutions and organisations. So I app eal to your conscience that you com mit a few

years of your service to help professionalise the management of rural institutions and organisations, rural resources, and

rural development projects and programmes. You owe this to your alma mater and to your society. In helping the rural

people realise their dreams, you may not get the best monetary rewards but you will certainly get the love and affection of

millions of them and the deep satisfaction that comes to only those who dedicate their lives to the cause of bettering the lives

of others, especially the poor and under-privileged.

Another important thing I would like to draw your attention to is the question of moral values and ethics in management.

There hav e been increasing violations of legal and ethical norms by business organisations, especially the big ones, all over

the world. For example, over the last ten years, two-thirds of America's five hundred largest corporations have been

involved in some type of illegal behaviour. Similarly, a survey of personnel Vice P residents across USA showed that one out

of every seven job candidates these days is likely to tell a lie about his or her background. Professionals once held in high

esteem by society are now blamed for abusing their autonomy and enriching themselves at the expense of their clients. In

face of m ounting scandals, corporations now are adopting codes of ethics, and business schools are developing ethics courses.

IRM A w ill start offering a course on "Ethics in M anagement" from the next academic session. It is my appeal to you all that

you follow legal and moral codes of ethics in whatever you do and wherever you work and uphold the values of integrity,

creativity and excellence throughout your careers an d in your lives.

W

ol 3 No 2


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W hither Ag ri-coops?

H S Shylendra , IRM A

This note is an attempted summary of

the book 'Agricultural Cooperatives in

Transition" which I reviewed recently for

a journal. I wish to share the insights I

gained from the book, about the recent

performance of agri-coops in different

parts of the world. The varied insights

on the agri-coops which are rare to come

by, seem to hold useful lessons for all those

who are interested in their progress. The

book edited by two eminent agricultural

economists (Csaba Csaki and Yoav Kislev)

is a collection of the papers presented at

a Symposium of the International

Association of Agricultural Economists

held in Israel during 1992 on the same

theme.

M a j o r Is s u e s

Some of the main issues addressed in the

book are: the recent political changes in

the socialist countries and their impact on

the progress of cooperatives; the reasons

for the failure of collectivisation; the

relative efficiency of cooperative farms/

firms vis-a-vis other forms of business

organisation; factors determining the

organisational structure and performance

of cooperatives; the strategies adopted by

the cooperatives under liberlised economic

policies and uncertainties; and the possible

just grounds on which the cooperatives

should continue to get the favourable

public policy support. The m ost enriching

aspect of the book is the

ttempt

o

address the above issues, in varying

degrees, under modern theoretical

paradigms/approaches

uch

s

institutional economics, coalition theory,

agency theory, etc. The outcome is further

confirmation of the limitations of the pure

neo-classical approach in analysing

cooperative behaviour and n ewer insights

into understanding the process of

cooperative decision making.

The Failure of Collectivisation

To the q uestion

as

to w hy collectivisation

failed in socialist countries and why the

cooperative farming was inefficient, there

are some revealing answers. As regards

the former, the main reason ascribed is

the administrative command system in

these countries which did not allow the

emergence of true cooperatives

(Epshtein).

This is found true even in a

non-socialist country like Tanzania

(Kashuliza and Ngailo). The high

transaction cost of

roducers'

cooperatives in terms of decision making

vis-a-vis the hierarchical family farms

(Schmitt) and lack of proper incentive

system for the individual labour effort

(Lin) were the factors found responsible

for the inefficiency and the inevitable

collapse of cooperative farming. Does this

mean that reaping economies of large

scale agriculture is alw ays constrained by

the above factors? The Honduras and

Nicaragua case, however, suggests that

producers' cooperatives can operate

equally efficiently as comp ared to private

farms when organised voluntarily (Sanjak

and Luz).

The Puzzle of Reluctance

To the utter surprise of the western

economists, despite the failure of

collectivisation and the fall of communist

regime, the members were found not fully

inclined to quit the collective farms and

take up private farming. Unlike in China

where there was a rapid switch over to

private farming in the aftermath of the

disbanding of the collective farms, in the

former socialist countries

here was a

tendency to form new cooperatives. The

papers which have examined this puzzle

attribute it largely to the phenomenon of

market failure. The prevailing risk and

uncertainty outside the collective system,

due to the absence of any other

institutional mechanisms to meet the

inputs and other needs, have been found

largely responsible for the members'

reluctance to quit collective farms

(Machnes and Schnytzer).

t the same

time, sheer logistical difficulties involved

in distributing land to the respective

owners or to the new aspirants has also

come in the way of rapid privatisation

(Sebestyen). If anything, the puzzle seems

to suggest that a period of growing

uncertainty and perceived market failure

is also the most opportune time for the

emergence of true cooperatives.

The Lessons from Market

Economies

As compared to socialist countries, the

performance of cooperatives functioning

in other countries, particularly where they

are the result of voluntary c reation, though

not dismal, too is not without problems.

The cooperatives even in the market

oriented economies face certain theoretical

limitations to become fully efficient.

These limitations arise because of the

principal-agent problem which poses

difficulties in monitoring the managerial

performance or due to the horizon

problem leading to equity starvation and__

under investment. However, there arc.

many instances where agri-coops have

successfully overcome these limitations.

In the U SA, as per the available evidence,

the dairy cooperatives which are the most

widely studied were found to be no less

efficient than the for-profit firms (Sexton

and Iskow). Also, there is no evidence to

suggest that the successful cooperatives in

the USA survive only on government

support. For that matter, as against the

theoretical expectation, regional

agricultural cooperatives had not

borrowed more than the comparable

investor owned firms (IOFs) (Lerman and

Parliament). Further, in the USA there is

also the evidence of the success of

cooperatives dealing with some perennial

crops like tart cherries, almonds ands

raisins. These cooperatives, aided by the

federal marketing orders (which enable a

cooperative to act as a monopsony buyer),

had overcome to a great extent the

problem of imbalance by adopting an

effective dem and and supply coordination

strategy (Hinman and Ricks).

Outside the USA, in the Latin American

country of Argentina, the cooperatives

functioning in the grain marketing system

have been able to effectively cope with

the liberalised economic environment

through diversified vertical integration

mechanism (Guiguet and Campbell): a

strategy which certainly holds useful

lessons for the Indian cooperatives. On

the other hand, Moshavim and Kibbutzim

(once considered to be successful

I

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5/16

Though the crisis was

subsidies in credit had played

ithical attitude of the cooperative

embers. Cooperatives being 'high

of the corresponding

ethics (Oved), at the same time it

becomes necessary for the cooperatives to

follow appropriate policies which can

ensure members' commitment to the

ethical norms. For example, from the

equity point of view, it is important that

the producers' cooperatives should try to

ensure fairness in their income allocation

policies towards their members. In this

regard, one of the papers suggests a

method for multi-product cooperatives to

allocate net returns among members

without any cross subsidisation (Buccola

and Stokstad). The usefulness of this

method (which tries to identify the

marginal implicit contribution of each

member to net returns through hedonic

analysis), however, is constrained by the

availability of reliable data on revenue

and costs.

C o m p e t it i ve Y a r d s t ic k

Another issue which comes

ut

prominently is the need for identifying

valid grounds on w hich the public policy

support to cooperatives, be it tax

concessions or cheap credit or immunity

from anti-trust laws, is to continue. This

is an issue which has assumed

significance even in the USA particularly

in the light of arguments for curtailing

the favourable treatment to cooperatives

on the grounds of inefficiency. On

efficiency count, there is still not much

of evidence to prove the superiority or

otherwise of cooperatives vis-a-vis IOFs.

However, at least on competitive yardstick

function there appea rs to be a fairly strong

theoretical and empirical basis for

continuing such support.

he

cooperatives having the policy of open

membership seem to have induced IOFs

to behave more competitively to the

benefit of the farming comm unity (Sexton

and Iskow). If the competitive yardstick

function is indeed such a strong reason

for policy support, the performance of

dairy and other cooperatives in India too

need to be assessed afresh from their

angle, particularly in the context of the

ongoing liberalisation.

New Hopes for Cooperative

E n d u r a n c e ?

Though the failure of collectivisation in

the socialist countries was a set-back

for the agri-coops, the fall out of the same,

however, seems to hold new hopes for the

rise of true cooperatives. Besides,

he

record of survival and the resilience of

cooperatives in other parts of the world

is certainly also a redeeming feature.

f

the experience documented in the book

is any lesson, then the key to

he

endurance of the agri-coops (or for that

matter all cooperatives) lies in limiting

the state intervention to an optimal level

and in promoting flexible institutional

structure with strong cooperative ethics.

0

I. Agricultural

ooperatives

n

Transition, edited by Csaba Csaki

and Yoav Kislev, Westview Press,

Boulder, 1993. pp. xi+411, ($ 6230)

2.Because of limitation of space, the

papers in the book are referred only

by the name of the authors.

MENTOR

vs SUPERVISOR

Mentoring is fast catching up as an important role of organisational superiors, as organisations increasingly attend to

enculturing their employees. How does a "Mentor" differ from a "Supervisor"?

Mentor

+ counselor and confidant

+ has a developmental relationship with a longer

time reference and is future oriented

advising, coaching, and teaching by a mentor

is directed toward generic skills

+ affords opportunities for taking risks without

penalty

Supervisor

+ judge of performance

+ focused on current job requirements and the

pragmatic, direct management of tasks

+ advising, coaching and teaching by a supervisor

is directed toward imm ediate job

concerned with immediate job performance and

results

Based on an article in a discussion group in the intemet

C

Vol 3 No 2


6/16

E x pl a n a t io n a n d I n t e r pr e t a ti o n o f t h e S t a t e m e n t o f C o o p e r a t iv e

KK Ta imni

E d i t o r' s n o t e : I n V o l 2 N o 4 of t h e N e t w o r k

we had carried the statement on the new

cooperative identity approved in ICA's

Manchester Conference in September

1 9 9 5 . In t h e f o l l o w i n g a rt ic l e , K K T a i m n i

provides some explanation about the

various pans of t h e i d e n t it y s t a t e m e n t a n d

gives his interpretation

A few preliminary remarks on the

statement will be in order here.

- The Statement of Coop erative Identity is

an attempt to reinterpret and explain the

core values, principles, essence and

traditions of cooperatives to relate

cooperatives to the contemporary context.

The Statement formally affirms and

welcomes as

equal all the traditions of

cooperatives,

ike consumers'

cooperatives, credit cooperatives,

agricultural cooperatives, workers

cooperatives, and service cooperatives

such as housing and health cooperatives.

The Statement makes a clear distinction

between cooperative values (which are

absolute and must be adhered to by all

cooperatives) and cooperative principles

(which are in the nature of operating

rules, and therefore must be so framed

by each tradition/sector of the movem ent

as to demonstrate what the general

principles (as given in the statement)

mean for its operations, particularly in

the light of contemporary circumstances).

The Statement also attempts to capture

the enormous diversity of cooperatives

operating in all kinds of economic,

social and political circumstances. To

that extent, it is somewhat broad and

general in character and scope.

1. The D efinition of a Cooperative

This is for the first time that IC A has com e

out with a definition of a cooperative.

Earlier, definitions given by scholars and

others had often been used. The definition

given in the Identity Statement reads :

A

cooperative is

n autonomous

a s s o c i a t io n o f p e r s o n s u n i t e d v o l u n t a r i ly

t o m e e t t h e i r c o m m o n e c o n o m i c , s o c i a l

and cultural needs and aspirations

through a jointly owned and

d e m o c r a t i c a l l y c o n t r o l l e d e n t e r p r i s e .

The definition emphasises the following

characteristics:

The coop erative is 'autonomous'. That

is, it is as independent of government

and private firms as possible. The

autonomous feature of a cooperative

has come to be included because of

widespread

nterference

y

governments, particularly in the

developing countries inhe

managementnd working

f

cooperatives.

It is 'an association of persons'. Here,

a person may include a legal person,

including another cooperative, or a

company. The membership of the

cooperative should be free to decide

how it wishes to deal with this issue.

Generally, at the primary level only

individuals have been eligible for

membership, but now, this may change.

(c)The persons are united 'voluntarily'.

This means, membership of cooperative

should not be compulsory.

(d)Members of a cooperative 'meet their

common economic, social and cultural

needs'. Here the emphasis is on the

members' needs, for, satisfying such

needs is the central purpose for which

a cooperative exists. These needs may

be econom ic, or social or even cultural

or a com bination of these.

(e)The cooperative is 'a jointly-owned and

democratically controlled enterprise'.

There are two parts in this. The first

part ('jointly owned and democratically

controlled' ) makes it clear that

cooperatives are jointly owned by their

members, but at the same time these

are dem ocratically controlled - a clear

distinction from a public enterprise,

which m ay be jointly owned bu t is not

democratically controlled. The second

part ('an enterprise') implies that a

cooperative has to operate in the market

place and hence to be successful, it

must strive to serve its members

efficiently and effectively.

2. Values

This part of the statement although also

new, is really the core of the statement. It

draws its inspiration from the debate

initiated by Lars Marcus and Sven Ake

Book during the past 7 years or so. Thus

far, these values were assumed ; now they

are explicitly stated.

The first sentence on values reads:

C o o p e r a t i v e s a r e b a s e d o n t h e v a l u e s o f

self-help, democracy, equality, equity

a n d s o l i d a r i t y .

Self-help is based on the belief that all

people can and should strive to control

their own destiny. It emphasises that first,

each individual is responsible for his/her

own destiny, and second, each individual

must control his/her own destiny.

However, as an individual, one is limited

in what one can try to do, what one can

achieve; but through joint action and

mutual responsibility, one can achieve

more. Cooperatives also provide

opportunities to individuals to develop

themselves - hone their skills, improve

their understanding and continue the

process of their education.

Democracy is the very essence of

cooperatives; it means that cooperative's'

are, above all, governed on the basis

of

one-mem ber one-vote. But it also implies

that a cooperative provides op portunity to

its members to influence its direction, its

actions and its operations.

n a

cooperative, democracy is measured by

involvement of mem bers as well as by the

counting of votes.

A cooperative is based on

equality

-

equality of members, who are its basic

units. This basis in human personality is

one of the main features distinguishing a

cooperative from firms controlled

primarily in the interest of capital.

Members have rights of participation, a

right to be informed, a right to be heard,

and a right to be involved in making

decisions. Members should be associated


7/16

ed equitably in how they are rewarded

on in the cooperatives,

erative is more than an association

bers have the responsibility to ensure

of members. In

in

the ethical values of

ethical values emanate from the

very purpose for which the Rochdale

Pioneers had set up their cooperative. These

values distinguish as well as underpin the

working and operations of cooperatives.

These values underscore the point that

cooperatives have a special tradition of

honesty and openness; cooperatives have

always aspired to have honest dealings with

their members, which in turn has led to

honest dealings with non-members.

It can be argued that honesty, openness,

social responsibility and caring for others

are values which can be found in all kinds

of organisations. But, these are particularly

cogent and undeniable within cooperative

enterprises.

Some scholars have raised the issue of

Oriental values v/s Western values in the

context

of defining the basic values of

cooperatives. Ki-Won Suh for instance, has

argued that there are marked differences

between the Western Society and the Asian

Society and thus the values each society

believes in, cherishes and upholds varies.

For instance, he claims that the human

factors are emphasised even in economic

activities in the Asian countries. This is,

however, an area which has yet to be fully

explored.

3. Principles

A few preliminary remarks need to be

made here.

The principles are not independent of

each other. They are subtly linked;

when one is ignored, all are diminished.

Cooperatives should not be judged

exclusively on the basis of any one

principle, rather, they should be

evaluated on how well they adhere to

the principles in entirety.

Of the seven principles, the first 3

essentially address the internal

dynamics typical of any cooperative;

while the last 4 affect the internal

operation and the e xternal relationships

of cooperatives.

The principles should be seen as

empowering frameworks - energising

agents - through which cooperatives

can grasp the future. These are not a

stale list to be reviewed periodically and

ritualistically. The vision and the

inspiration that each p rinciple provides

must be ingrained in the daily activities

of the cooperatives.

The 1st principle: Voluntary and

O pe n M e m b e r s h i p

This principle forms a part of the previous

six principles, and affirms the fundamental

importance of people choosing voluntarily

to make a commitment to their

cooperatives.

This principle also affirms a general

commitment basic to cooperatives since

their emergence: a commitment to

recognising the fundam ental dignity of all

individuals. It also acknowledges that

cooperatives are organised for specific

purposes, in many instance, they can only

effectively serve a certain kind or number

of memb ers. In other words, a cooperative

may impose a limit on membership.

Members, in turn, have obligations to their

cooperative. Such obligations, which may

vary, include exercising voting rights,

participating in meetings, using the

cooperative's services, and providing

equity as the need arises.

And, cooperatives should do ev erything to

encourage women to join as members; and

cooperatives do not discriminate, while

admitting members, on the basis of social,

cultural and racial basis. But, at the same

time, cooperatives based on ethnic (or

religious) considerations have every right

to exist as long as they do not impede

organisation of like cooperatives among

other cultural groups;

as long as they do

not exploit non-members in their

communities, and as long as they accept

their responsibilities for fostering the

development of the cooperative movem ent

of their areas.

The 2nd Principle: The Democratic

M e m b e r C o n t r ol

The principle stresses that members

ultimately control their cooperatives, it also

emphasises that they do so in a democratic

manner. It also affirms the right of

members to be actively involved in setting

policies and making key decisions.

This principle also reminds elected

representatives that they hold their offices

in trust for the immediate and long-term

benefits of members. Coop eratives do not

'belong' to elected officials any more than

they 'belong' to the employees w ho report

to those officials. They belong to the

members, and all elected officials are

accountable, at election time and

throughout their mandate, for their actions

to the membership.

That a primary cooperative should be

governed on the basis of one-member one-

vote is self-evident and has been

customary. But, in many secondary and

tertiary cooperatives, systems of

proportional voting have been adopted so

as to reflect the diversity of interest, the

size of membership in associated

cooperatives and the commitment among

the cooperatives involved. But care should

be exercised so that smaller cooperatives

are not pushed to the periphery.

The 3rd Principle: Member

E c o n o m i c P a r t i c ip a t io n

This principle was the most difficult to

evolve and finalise. It was in fact finalised

by the ICA Executive Comm ittee just five

days before its final approval. It com bines

nig

Vol 3 No 2


8/16

the third and fourth principles of the

previous six principles.

The principle underlines the fact that

cooperatives operate so that capital is the

servant, not the master of the organisation.

This principle reinforces both the need for

mem bers to contribute capital to their

cooperative and for them to do so in an

equitable fashion. Generally, interest on

capital contributed by members, is very

limited, if any. But, when a cooperative

has to raise capital from members for

special investments in the future, it will

be app ropriate to pay interest on such

investments at a 'fair' rate - normal bank

interest rate. Members have the right to

own at least part of their capital

collectively, a reflection of what they have

accomplished as a collectivity.

When activities of cooperatives create

surpluses, members have the right and

obligation to decide h ow those surpluses

should be allotted; but a part of these

surpluses must be allotted to comm on

indivisible fund.

The 4th P rinciple: Autonom y and

I n d e p e n d e n c e

This is a new principle; and in a way

underscores a p art of the definition of

cooperatives explained earlier. The

principle has been included to clearly

emphasise the d istinctive character of a

cooperative vis-a-vis. the government.

In referring to 'other organisations', this

principle acknowledges the fact that

cooperatives are entering into joint

projects with private sector firms. The

principle stresses, however, how

important it is that cooperatives retain

their freedom ultimately to co ntrol their

own destiny whenever they enter such

agreements.

The 5 th Pr inc ip le : Edu cat ion ,

T r a i n in g a n d I n f o r m a t io n

This is also an old principle; it

underscores the cooperative movement's

long-standing and distinguished

commitment to education. Education

here transcends the usual concept of

transmittal of knowledge; it means

engaging the minds of members, elected

leaders, manager and employees to

comp rehend fully the complexity and

richness of cooperative thought and

action. Training means making sure that

all those who are associated with

cooperatives have the skills they require

in order to carry out their responsibilities

effectively. The principle also stresses

that cooperatives have a responsibility to

inform young people and opinion leaders

(politicians, public servants, media

representatives and educators) about the

nature and benefits of cooperation.

The 6th Pr inciple: Cooperat ion

A m o n g C o o p e r a t i v e s

This is also an old principle. If

cooperatives are to achieve their full

potential, they can do so only through

practical, rigorous collaboration.

Cooperatives around the world must

recognise more frequently the possibilities

of more joint business ventures. They

must enter into them in a practical

manner, ca refully protecting the interest

of members even as they enhance them.

Cooperatives must also recognise, even

more than in the past, the necessity of

strengthening their support organisations

and activities. This principle underscores

all these aspects.

The 7th Pr inciple: Concern for

C o m m u n i t y

This is also a new principle; and partly

redeems the relative neglect of general

social and community issues. The

principle emphasises that although

cooperatives primarily exist for their

members, they are also often closely tied

to their communities. They have a special

responsibility to ensure that the

development of their communities -

economically, socially, and culturally - is

sustained. They have a responsibility to

work steadily for the environmental

protection of those communities.

C o n c l u d in g . r e m a r k s

The new statement provides the necessary

framework for cooperatives to move into

the 21st century with a purpose and

direction. The cooperative principles

cumulatively are the life blood of the"

moveme nt; these, therefore, need to be

reviewed, expande d, and related to the

contemporary challenges and conditions.

The new statement precisely does so. The

new set of seven principles provide the

guidelines through which cooperatives

should strive to develop their cooperative

organisations. These principles are

inherently practical principles, fashioned

as much by generations of experience as

by philosophical thought. The p rinciples

are elastic, applicable with different

degrees of detail to different kinds of

cooperative in different kinds of situations.

The identity statement, on the whole,

embodies the essential qualities that make

cooperatives effective, distinct and

valuable. The statement also facilitates the`

positioning of cooperatives in the emerging

daunting, uncertain and competitive

environments of the 21st century.

IRMA is designing an integrated Programm e in Rural Management

leading to

Certificate in Rural Manageme nt for those who successfully complete the first year

and

Post-Graduate Diploma in Rural Management for those who successfully complete the two years

During the second year, alongwith specialisation in Cooperative Management, participants can

specialise in one

of

these streams:

Agri-business Management

Rural Development Management

N atural Resources and Environment Management

Details regarding this programme are being worked out and are likely to be firmed up shortly

Vol 3 No 2

Him.


9/16

a t el an d S a r a A h m e d

ever, despite

situation of the vast majority

in rural and urban areas

ically changed. Deteriorating

al adjustment programmes hav e

-:ontext, mainstreaming gender in

en participate in and benefit from

Gender

logical techniques to devise

projects.

and

A during. April

1-19, 1996. It was jointly sponsored by

ind social justice in rural society by

oting partnership between rural

ly aware of the need to address

gender concerns in rural development.

This is gradually being reflected in its

teaching, training and research and also

at the organisational level, with the

members and women students.

The Gender W orkshop can be seen within

this broader context of institutionalising

gender concerns at IRMA. It is an attempt

to synthesize the insights gained from our

teaching, training and research work, and

to build upon them in terms of developing

further case studies, tools for analysis and

integrative conceptual framew orks so as

to further our understanding of gender

roles in sustainable developm ent. The

Workshop was also undertaken to assist

us in the future to organise short duration

MDPs and gender training programmes

for development planners and

practitioners.

Objectives

To broaden the conceptual

understanding about gender issues in

development.

To develop analytical skills for

designing and evaluating gender

sensitive p rojects and programmes.

lb provide space for reflection on ones's

attitudes, values and behaviour from a

gender perspective and exp lore the

meaning of gender sensitiveness at a

personal level.

Part ic ipants

The Workshop was planned for

developm ent professionals from non-

governmental organisations, development

organisations and international donor

agencies, which were committed to

integrating gender concerns in their work.

Specifically, participants of the Workshop

were development planners and

practitioners who were engaged in

planning, designing and implementing

development programm es and projects

whether for both women and men or

women only in rural areas.

Twenty-two participants (five men and 17

women) from B angladesh, Nepal and

India attended the Workshop for the entire

duration. There were six participants from

Bangladesh, two from Nepal and the

remaining 14 from I ndia. Participants

represented 16 organisations: Community

Development Centre (Chittagong),

Department of Women's Affairs (Dhaka),

Gonoshasthaya Kendra (Dhaka),

Mymensingh Aqua Culture Extension

Project

Mymensingh),

ural

Reconstruction Nepal (Kathmandu),

Dastkar (New Delhi), M. Venkata-

raganaiya Foundation (Secunderabad),

Prepare (Madras), Rural Development

Trust (Anantapur), Sampark (Bangalore),

Tangkhul Theological Association

(Manipur), Utthan Trust (Ahmedabad),

Women's Studies Research Centre, M.S.

University (Baroda), the National Dairy

Development Board (New Delhi), Swiss

Red Cross Programme C oaching Unit

(Patna), and United Nations Development

Programme (New Delhi). In addition, four

participants from the National Dairy

Development Board and one p articipant

from Tribhuvandas Foundation attended

the Workshop for a short duration.

R e s o u r ce P e r s o n s

Apart from the workshop coordinators,

teaching was shared by three IRMA faculty

(Prof. P. Thomas, Prof Sukhpal Singh and

Prof. Hitesh Ellett) and nine resource persons

from academic institutes and nongovernment

organisations. These included Ms. Nandita

Gandhi (Akshara, Bombay), Prof. Indira

Hirway (Gandhi Labour Institute,

Ahmedabad), Dr. Anita Dighe (National

Institute of Adult Education, New Delhi),

Dr. Leela Visaria (G ujarat Institute of

Development Research), Dr. Achyut Yagnik

(SEW , Ahmedabad), Ms. Nafisa Barot

(Utthan Mahiti Trust, Ahmedabad) and Dr.

Dipti Shethi (Janvikas). In addition, Ms.

Ranjani K. Murthy (Consultant, Madras) and

Ms.NityaRao(FredrickEbert Stifttmg,New

Delhi), both ex-IRMAN s, also lent their

whole hearted supp ort to teaching in the

Workshop.

P e d a g o g y

The Workshop wa s conducted in English

through lectures, small group discussions,

case study analysis and simulated

exercises. It was aided by the use of videos.

Pa rticipants were also taken to field trips

to a

dairy cooperative and IRNL k's Bidaj

Model Village Project to study how gender

concerns were being addressed in

development projects.

W o r k s h o p D e s i g n

The Workshop w as structured around five

thematic modules of varying lengths. Each

module consisted of a set of learning

objectives with recomm ended readings

and teaching notes.

a

Vol 9 No 2


10/16

Module 1: Conceptual Overview

( A p r i l 1 - 3 , 1 9 9 6 )

The Workshop began with an overview

of key conceptual frameworks for

understanding gender issues in

development. First, it traced the shifts in

thinking from "women" as a category in

development to the concept of gender,

which seeks to situate women and men

in the context of their social relations.

Second it examined a range of

interdependent institutions which

determine the social construction of

gender relations: the state ( legal,

administrative and political systems), the

market (national and international), the

household (gender division of labour),

and community (class, caste and culture).

Finally, we looked at the conceptual and

analytical tools for understanding intra-

and inter-household gender relations,

defining women's practical needs and

strategic interests in development work

and understanding gender indicators to

assess the impact of social and economic

changes on men and women at macro-

and micro-levels.

Module 2: Gender Issues in

Development Sectors April 4-9,

1 9 9 6 )

This module traced gender concerns in a

range of development sectors such as

natural resources m anagement, livelihood

systems, literacy and reproductive health/

population. In each sector, we looked at

the interplay between different actors (the

state, non-government organisations and

intended beneficiaries) in the context of

changing socio-economic policies (SAP,

GATT, etc.). The issues examined were

women's access to and control over

critical resources, for their participation

in decision-making and for the

sustainability of the development

initiatives. Significant issues in this

module were illustrated through case

studies and videos.

Module 3: Gender Policy and

Planning Framework April 1 0 - 1 4 ,

1 9 9 6 )

The third module discussed the gender

planning frameworks (Harvard Case

Study Method, Moser Method, Gender

Analysis Matrix, and Social Relations

Framework), which are currently used as

gender sensitising tools for designing,

implementing,

onitoring

nd

evaluating development projects and

programmes. A critical analysis of each

of these frameworks was undertaken

through their application to specific

cases In addition, participatory research

methods were discussed to identify their

usefulness in gender planning. A one-day

field work at IRMA's Bidaj Model

Village Project enabled the participants

to get practical experience in using

gender planning frameworks and to

understand o rganisational and field-level

constraints in applying them. This

module also discussed key gender issues

in the project cycle.

Module

4:

Project Management

and Evaluation April 15-17, 1996)

The participants were introduced in this

module to the general principles and

techniques of project management that

can be applied in the context of

management of

ender sensitive

development projects. This module also

familiarised the p articipants w ith the key

concepts of the Logical Framework

App roach (LFA) in project identification,

evaluation, selection, implementation and

review and gave the participants a first

hand experience in using LFA through a

simulated group exercise.

Module 5: Managing Change

( A p r i l 1 8 , 1 9 9 6 )

In the last module, we attempted to

synthesize gender issues in development

planning and practice. Participants

examined gender concerns in their

organisations and work, and identified

ways of strengthening their skills and

capabilities in undertaking gender-

conscious work. We also discussed how

to create mutually enriching spaces

within the organisation to ensure more

participatory

nd

ustainable

development interventions and to

influence the direction of development

policy in order to attain the goal of

gender equality.

Feedback

The last day of the Workshop was spent on

the evaluation of the Workshop. Extensive

evaluation questionnaire and open feedback

session suggest that on the whole

participants were satisfied with the

Workshop. The range of topics covering

theory and practice along with a

comprehensive set of reading m aterials and

a fairly interactive pedagogy were

appreciated. Most of the participants felt

that they were going away with a clear

perspective on gender issues as well as the

ability to connect theory to practice and

relate it to their own lives and work

environments. Some hoped to pass on the

skills acquired to other colleagues in their

organisations through workshops and

group discussions or apply them in the

context of project design and evaluation.

They were aw are that they may encounter

constraints because of essentially

patriarchal structure of most organisations

and traditional values held on to by families

and other social groups. For some of the

participants, political barriers were equally

important, for example, the presence of

security personnel in Manipur which

hindered positive interaction.

On the other h and, participants felt that the).-

would have liked more time for the group

sharing of experiences andmutual learning.

Though there were several late evening

informal sessions, they we re not adeq uate.

Some felt that the Workshop was too

structured and that it was not flexible

enough to respond to needs and priorities

of a divergent group of p articipants. On the

whole, however, the participants concluded

that the Workshop was an important

beginning and that IRMA should continue

to offer similar short-term and long-term

programmes and orient them to specific

needs of different groups of participants.

As coordinators we were encouraged by the

responsiveness and interest of the

participants and their bonding as friends

and learners in this three weeks period.

I R M A I N TE R N E T U P DA T E

Hi folks This is your webman of the

IRM A H omePage cal ling

The IRMA HomePage is now on the

intemet You are most welcome to view

it. Don't forget to comment on it after

you have had a good look at it. Your

comments and suggestions will be

valuable for making the contents and

presentation better. Please note that

these pages have been constructed by a

few of us who are total amateurs and

we keep experimenting and learning all

the time. So these pages will keep

getting changed Get going to visit the

page at:

http://irmairm.emetin

(OR)

http:1/202.141.92.37

Vol 3 No 2 m


11/16

to Fight Fires W ithout Bu rning B ridges

hen a couple began to occupy the

was nothing to lose and everything to gain.

It was in the husband's interest to sit in a

roomier, more comfortable seat. And I

was able to figure out that the flight

attendant had an interest as well; unless

she could get Bill in a seat, the plane could

not take off. It took a little work, but I

was able to convince the flight attendant

to move Bill into the only empty seat in

first class. No one lost face, everyone's

interest had been considered, and the

negotiation worked well for all.

s a

provider of negotiation training for

corporate clients, I felt pleased to see

benefits resulting from some of the

techniques I teach.

Resolving,

anaging,

nd

Preventing Conflicts

Whether you find yourself stressed out by

the direction to "never lose a deal because

of the price", department chiefs are

contending over budget issues, or changed

specifications or standards may threaten

relationships, the use of good negotiation

skills can resolve conflicts, manage

conflicts, and most importantly, prevent

conflicts.

According to the Rolling Stones, "You

can't always get what you want." The

question becomes; How many of the

stakeholders can get what is in their

interests? If a business is to succeed in

today's climate, everyone must be prepared

to negotiate to arrive at favourable results.

P i l la r s o f N e g o t ia t i o n a l W i sd o m

Negotiating is an art practised by virtually

everyone; it is a craft practised by a few .

There are many techniques to make

negotiation work. If you pay careful

attention to the following factors, which I

call the Eight Pillars of Negotiational

Wisdom, you should find that negotiating

with all the stakeholders clamouring for

your attention w ill yield m ore efficiency,

less stress, and greater long-term success.

1 Be conscious of the difference

between positions and interests. If

you can figure out why you want

something -- and why others want their

solution -- then you are looking at

interests. Interests are the building

blocks of agreements that last.

2 Be creative. Anyone can do things the

same old way; but using brainstorming

techniques, listening to outlandish

proposals, opening up to unanticipated

possibilities expands agreement

opportunities. If you respond with new

ideas, if you do the unexpected, you can

open doors to far greater gains than

when you behave predictably.

Creativity can make everyone look

good, and with all those stakeholders

looking over your shoulder, that can

make a big difference.

3 Be fair. If people feel the process is fair,

they are more likely to make real

commitments. They're not going to

walk away grumbling after the

negotiation is completed, planning to

find ways to wriggle out of the

agreement. Sometimes things are

helped when a neutral, external

authority is used to measure fairness:

a dictionary definition, a lab test, an

academic article.

4 Be prepared to commit. You cannot

make a commitment unless you can

fulfill it. And your commitment isn't

worth much unless the parties to the

negotiation are Drop-Dead Decision-

Makers. Moreover, commitment is not

likely to result unless the parties all feel

that the process has been fair.

5 Be

n

ctive

istener.

Communication takes place when

information passes from a source to a

receiver. If you spend all of your

listening time planning how you're

going to zing' the other party when

they finally stop talking, you're not

hearing them -- and they know it. Focus

on what others are saying, both the

words and the underlying meanings. It

will help you really understand the

interests upon w hich agreement can be

based. When your response makes it

clear that you've really been listening,

and the other party gets over his/her

shock, they may also be more prepared

to listen to you. Active listening can

change the rules of the game and raise

the level of civility in the negotiation.

6 B e

conscious of the importance of the

relationship. Most of your negotiation

is with 'repeaters', people you run

across time after time. Your spouse and

kids are people with whom you will

probably always negotiate. The same

is true for service chiefs, third party

payers, and representatives of affiliated

institutions.

f you understand the

relative priority of the

r e l a t i o n s h i p , it

can be easier to know w hen 'giving' on

a particular point may mean short term

costs yielding long term gains.

7 B e

aware of BATNAs. BATNA stands

for the

Best

Alternative To a

Negotiated Agreement

Your BATNA

is the situation you want to improve by

negotiating w ith a given party or set of

parties. If you can improve things on

your own, you don't need to negotiate

with them. Your BATNA is not your

bottom line; it is a measure of the

relative value of negotiating a particular

issue with a particular party -- or

whether you can fall back on better

alternatives.

Source: Internet; reproduced with the permission oldie author.

Vol 3 No 2


12/16

8

Be prepared.

In order to negotiate

effectively, efficiently, and wisely, it is

crucial to prepare. Your job is not to

outline a perfect total solution; that

would be a positional approach.

Preparation means studying the interests

and BATN As of every possible party. It

means understanding the short- and

long-term consequences o f the process

you use and the substantive results you

pursue.

Doing your homework can help

you save lots of time.

Enhancing Negotiation Skills

Enhancing your negotiation skills is an

important element of personal and

professional development. It will save

time, reduce stress, and increase

productivity. The growing number of

entitled-feeling stakeholders means that

successfully negotiating the minefields of

business can be crucial for your own

health.

As you consider the brief lessons contained

here, it makes sense to remember the old

story about the tourist in New York. She

asked a passerby, "How do I get to Carnegie

Hall?" The response was very simple:

"Practice. Practice. Practice."

IRM A Announces its fifth VOLAG -MAP

M A N A G E M E N T A P P R E C IA T IO N P R O G R A M M E

for Senior Personnel from Voluntary Organisations

(August 19, 1996 to September 28, 1996)

The programme aims to:

provide a conceptual overview on the changing nature of development praxis;

ntroduce the participants to the principles and techniques of managem ent, which can be ap plied in the

context of management of a development organisation;

xpose the participants to a v ariety of ways in w hich development m anagers have tried to handle

various situations in different contexts; and

elp participants develop some skills, which are often required for the effective management of these

organisations.

Coordinators: Professor Sara Ahmed, (email: s a r a @ f a c k m . e r n e l i n ) and Professor Debiprasad Mishra

(email

dpm @ facirntemet.in)

IRM A Ann ounces its Third Programme on

M AN AG E M E N T O F AG R I -BU S I N E S S C O O P E R ATIV E S

for Chief Executives and Senior Managers from D eveloping Countries

(January 06

1997

to February 14, 1997) l

The programme aims to-

develop sensitivity to emerging challenges and opportunities for agri-business cooperatives;

update knowledge of various management tools and techniques for better decision-making;

uild societal, general management perspectives relevant for managing large-scale agri-business co-

operatives; and

nhance effectiveness in the work environment through better appreciation and awareness of one's

style of functioning

Coordinator: Professor Sukhpal Singh, (email: [email protected])

For further information about these programm es, please write to:

Programmes Officer

Institute of Rural Manag ement

PB 60 Arland 388 001

India

Fax: +91 2692 4 0188

_A

Vol 3 No 2 I


13/16

One So urce, Endless S olut ions:

The Year 2000 P roblem f rom a CFO s Perspect ive

Many CFOs are unaware of the Year 200 0

risk to their company and have

underestimated their own fiduciary

danger.

As Chief Financial Officer of your

company, whether your business is in

banking, insurance, transportation or

manufacturing, you need to be concerned

about the upcoming century turnover.

Rather than a graceful transition into

another century, the year 2000 represents

the first automated date change in history,

and will adversely impact a society that

has pervasive two-digit date fields

throughout all of its information systems.

Any activities that rely on dates, such as

forecasting, insurance policies, train/

airplane schedules, retirement benefits,

etc., will be calculated incorrectly because

most of the current systems can only

accommodate date fields based on the

1900s. The year 2010, for example, will

be read as 1910. Consequently, your

fiduciary responsibilities to your CEO,

your employees, and ultimately your

stockholders demands that you take a

closer look at the im plications of this date

change on all aspects of your business. Not

just an internal application issue, the year

2000 needs to be evaluated from the

perspective of your suppliers and vendors

as well - all will have a pervasive impact

on your day-to-day business. Are you really

prepared?

What Exactly IS the Year 2000

Problem?

Most critical business applications rely

heavily on date-based calculations: loan

calculations, business forecasting,

insurance policies, retirement benefits, etc.

How ever, most business applications have

a 2-digit "year" field- "95" to refer to 1995,

for example. A calculation is accurate,

therefore, as long as the years fall between

1900 and 1999. The year 2000, which will

be entered as "00", will be interpreted as

1900. Therefore, a loan that starts in 1996

and ends in 2000 will be calculated as a -

96-year loan (00 minus 96) instead of a 4-

year loan, resulting in incorrect interest

and principle calculations.

T h e P r o b le m W o n ' t Go A w a y

There are many reasons why the year

200 0 problem has not been a major focus

of companies until now. Some Chief

Information Officers (CIOs) assumed that

by the century turnover date they would

either be retired, or at a different company.

Others underestimated the issue and

viewed it as a simple problem to solve -

merely changing a few subroutines. And

a few years ago, there was the prevalent

feeling that the mainframe would go

away, to be replaced by newer, client/

server systems. Thus, it was assumed, the

problem might be fixed in the normal

course of system development.

Today, however, we realise that many of

the same personnel will still be employed

by 2000, not retired, and will face the

problem regardless of which company

they work for We realise that the

mainframe is not going to go away

because there is intrinsic value in legacy

systems which can be re-used as part of a

smooth transition to new architectures. As

many client/server systems have not yet

proved to be the silver bullet, the problem

of how to deal with the date change

remains to be addressed.

Despite the realization that mainframes

will still be in op eration through the next

century, CIOs have found the topic a

difficult one to bring up with

management. Imagine that you are the

CIO, and you realise you have a $10

million problem. Furthermore, the

situation after you spend $10 million

doesn't significantly advance your cause

- it just means that you are able to

continue to operate the way you do today.

It's understandable that your inclination

may v ery well be to refrain from bringing

up the subject at all. It's admittedly not

the easiest message to deliver to a CEO,

CFO or board of directors. With January

1, 2000 rapidly approaching, however,

CIOs are beginning to realise that it's

better to break the bad news sooner rather

than later, to allow sufficient time to deal

with it. Has your company's CIO raised

this issue with you yet?

Why Should CFOs and

Professionals Care?

Why is this issue important to a CFO as

well as a CIO? In addition to the need to

budget dollars and personnel for the man-

years required to correct the date fields,

there is the inherent fiduciary

responsibility of a Chief Financial Officer.

If a comp any is not operational in the year

2000, or if its intrinsic value has severely

declined because of a failure to adequately

address the year 2000 problem, there's the

strong likelihood of significant lawsuits

from shareholders or other financial

suppliers to whom the company provides

services.

Capers Jones, Chairman of Software

Productivity Research, concurs

"Companies whose software does not

safely cross the boundary between the

years 1999 and 2000 can anticipate the

prospect of several kinds of possible

lawsuits. Two are particularly significant:

Lawsuits for damages by clients whose

accounts or business records have b een

affected adv ersely;

Lawsuits by shareholders of

companies whose software fails to

make the transition to the year 2000.

Either kind of lawsuit can damage a

company and the careers of its

executives. Either kind can also spell

potential bankruptcy. The worst

nightmare would be simultaneous

lawsuits of both kinds. Executives

whose fiduciary duties involve the

accuracy of software-related

information are well advised to exp lore

the impact of the year 2000 problem

long before it actually occurs."

A CFO needs to evaluate whether the

magnitude of the company's problem

requires disclosure in SEC filings to

minimize company and personal risk.

Unfortunately, many CFOs are unaware

of the risk to their company and may hav e

underestimated their own fiduciary

danger. It 's a risk that increases with each

passing year.

Source: VIASOFT Inc; sourced from the Internet and reproduced with permission of VIA SOFT, Inc.


14/16

Accounting firms are just beginning to

focus on the year 2000 issue as an

emerging b usiness

risk. Some

of

their

concerns will be:

Is the company going

to resolve

this

problem? Will it be a going

concern in the year 2000? Will the

company be able to continue to meet its

required financial ratios? Are there

adequate funding and pe rsonnel resources

to beat the deadline? Will the company's

key suppliers survive the transition? If

not, they need to be aw are of those issues

early in order to evaluate the need to

disclose them.

There is also the matter of suppliers.

While some companies' attention to the

year 200 0 transition has focused primarily

internally, in reality the issue is much

broader. If your company relies heavily on

vendors, strategic partners, or suppliers

who haven't yet solved their individual

year 2000 problems, eventually their

problem will become your problem. Their

loss of ability to supply product or serv ices

will have a critical and perhaps extremely

negative impact on your business. Is your

company beginning to assess the ability

of its strategic partners and vendors to

respond to meet the year 2000 challenge?

If not, have you overlooked a critical

component of your business?

W h a t S h o u ld Y o u D o ?

Now that you're aware of the problem,

what should you do? The keys are

communication, partnership, and

planning. Because it is an IS issue at the

core, you need to work closely with your

information services department. The year

2000 is not necessarily a complicated

issue, but it is a very large, time-critical

one that requires extensive planning and

manual effort. You should be thinking

about the source of funding to solve the

problem. Will the funding come from

internal cash flow or additional

borrowings? Over how many years? Other

factors to consider include looking within

your comp any's IS department to identify

productivity improvements to dev ote more

personnel resources to the manual effort.

For example, your company may be able

to improve its maintenance and

development processes in such a way that

it will free up budget dollars, personnel

resources, or both, that in turn can be

devoted to solving the problem - a problem

that could easily take two to three years

to fix.

The Future Need Not e leak

The bright side to the equation is that

you're not alone - hundreds

of

thousands

o

other businesses worldwide are facing

the same challenge. d

hoc user's groups

around the U.S. are forming in order to

address the problem. In St. Louis, for

example, Maritz has taken the initiative

to organise a Midwest 2000 Support

Group to share experiences across

different industries on how to approach

the year 2000 problem. The group meets

regularly to compare notes on their

progress and to choose representatives to

send to educational seminars and trade

shows. Like this group's members, you

may realise that CFOs can help each other

through the incredible task of facing the

century turnover, now less than 1,000

working days away.

Here in VIASOFT's own backyard,

banking leader First Interstate is already

aware of and working on the problem.

According to Regional Chairman and

Chief Executive Officer (CEO) John

Lewis:

"The year 2000 represents a significant

challenge to us as we work with our

customers, suppliers, and emp loyees. We

have built into our business and lending

practices a strategy to increase awareness

of the year 2000 issue, both with our

employees and our customers. Part of the

value we bring to customer relationships

is our ability to help customers identify

risks early in a transaction. This enables

them to strengthen their position which

in turn minimizes risk to our

organisation."

As a leading accounting and consulting

firm, Arthur Andersen has identified the

topic as an emerging issue for CFOs, top-

level management, and boards of

directors. M ichelle A xelson, Partner w ith

Arthur Andersen and their National

Software Industry D irector, notes that:

"It's an issue that's been in the backroom

for several years, and is only just now

beginning to come to the attention of

CFOs. Today, it's a budgeting and

resource issue for CFOs, but could become

a potential disclosure issue. Therefore, it

needs to be addressed early. Companies

need to look at the year 2000 issue with

the same sense of urgency and

thoroughness that they address capital

budgeting, and business acquisitions and

dispositions. If they don't, companies

could end

up

facing an enormous problem

with too little lime to solve it."

Make the

Decision to Outsource

E a r l y

You may want to consider outsourcing

some or all of the process. If you do, make

sure that you choose a company that is

knowledgeable about the year 2000

problem, has hands-on experience in

solving it, and has the technical and

financial resources available to assure you,

the CFO, that they can

g e t the job done.

Work with your vendor as a partner

throughout the process. Above all, make

sure that you choose your partner in

sufficient time to add ress the problem. The

available external resources are limited,

so if you do not address the problem early,.

you may find that there isn't anyone,

available with the knowledge or resources

to help you solve your problem in a timely

fashion, despite your best intentions.

SPR's Jones predicts that "the number of

COBOL programmers is still very large,

but may be decreasing in the United States

by about 1% per year. Other programming

languages such as Visual Basic, Ada95,

C++, and Smalltalk are on a fast growth

path, and many COBOL programmers are

moving toward other languages."

As we ap proach the year 2000, the number

of COBOL programmers will decrease

sharply. If you choose a year 2000 partner

early and wisely, you will have made a

solid fiduciary choice and a good business.,

decision which w ill help assure the future

integrity of your data and your company's

day-to-day operations.

Ideally, the year 2000 conversion effort

should be completed by January 1, 1999.

It is in your company's best interest to

have ev erything in place by then, allowing

you a full year to complete final testing

and provide adequate cushion to handle

unforeseen problems or issues. We have

found in typical projects that the average

number of programmes to be affected by

the date change is 85-90%, and that the

conversion effort requires approximately

200-300 staff months to complete. One

VIASOFT customer, for example, had

nearly 12 million lines of code, of which

it was determined that 82% of the

programmes would be affected by the date-

4 - H

- 7 c m t m i g i g g i


15/16

cost to modify a

aster files. Clearly, the major pitfall to

Vho would have thought that the

uter systems? It is an issue that until

a timely plan of action to manage and

monitorthe progress of your company, your

customers, and your suppliers over the next

three years.

CFO Checkl ist for the Year 2000

To ensure that your business is on stable

ground for the century turnover, ask the

following questions of your CIO, your

outside suppliers and strategic partners,

and anyone else critical to your business's

daily operations in the year 2000 :

I What is my company doing

internally?

2 Hav e they begun to estimate the extent

of the problem?

3 Howmanyman-yearsisitgoingtotake?

4 What is the estimated amount of

dollars involved?

5 What is the plan for budgeting?

6 Where will the money come from?

7 What can be done internally to

provide resources without incurring

additional cost?

8 What can we do to streamline

the

development process to devote

resources to addressing the problem?

9 Should we outsource the process?

10 If we partner with someone outside,

do we know who they are, their

reputation, knowledge base and

financial strength?

11 Do we

have a plan in place to conduct

periodic, mini assessments of our

partners/suppliers?

12 What are the partners/suppliers

doing?

13 How are they looking at the issue?

14 Do they have a plan to solve the

problem?

15 Will we need to take steps to make

sure they are operational in the year

2 0 0 0 ?

16 Will we/they be completed by

January 1, 1999, leaving a full year

cushion to work out any bugs?

*

** *

SET S.M.A.R.T. GOA LS

W ayne R M orrison offered this simple but v ery effective recomm endation to set goals: "Set S.M.A.R.T. goals."

S.M.A.R.T. goals are those which are:

S

pecific and Simple

M

easurable and M eaningful to the one who sets the goal

chievable and As if N ow (i.e., stated in the present tense)

R

ealistic and Responsible

T

imed and Toward w hat the goal-setter wants (not what s/he does not want)

You can set S.M.A .R.T. goals not only in your w ork or career, but also in every other wa lk of your life

Based on Wayne Morrison's "Smart Goals" in the Tips from the Top feature of

S u c c e s s E x p r e s s J o u r n a l,

Vol

4 N o 4, 1996 (found in the intemet)

Vol 3 No 2


16/16

Abs tract of Recent COR P AS P ublications

STRUCTURE, ACTION, OR GANI -

S A T I O N S

W P N O . 9 8

ash N Pandey

The paper tries to recapitulate the problem

of structure and human action as

confronted in organisation paradigms. It

questions the positivist reduction of

physical law-like relation between structure

and social action and the idealist rejection

of material relations altogether. Instead,

based on realist formulation of causality the

paper argues that the human action and

material conditions both make

organisations dialectically emergent

phenomena.

D I V E R G E N C E S W IT H

kk taimni-what is cooperative

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