Q&A: Defining co-op values in the current environment

We speak to Dolly Goh from SNCF, Murray Fulton from the Centre for the Study of Co-operatives and former Co-operative College principal Mervyn Wilson

Dolly Goh – chief executive of Singapore National Federation of Co-operatives (SNCF)

What are co-op values?

Co-ops are part of a movement sharing a set of global values and principles. Members believe in the ethical values of honesty, openness, social responsibility and caring for others.

Can we still refer to universal co-operative values?

We can, although some regions/sectors may use different words to describe them, or customise them for local application. For example, at SNCF, our co-operative values are co-operation, self-help, mutual help, equality and care for the community. These values do correspond with the universal set of values.

Do they vary depending on sector or region? Have they evolved?

The primary role of co-ops is to meet their members’ needs. The values are implemented throughout the process of delivering benefit to members and ensuring their needs are met. While the values may be phrased differently by sector or region, the DNA of co-ops remains unchanged: to do good and to do well.

What challenges do big co-ops face when putting these values at the centre of their activity?

It depends on whether you see the cup half full or half empty. Some see challenges while others see opportunities. Most important is to remember the co-operative DNA which is core to co-operative existence and that is to do good and to do well. For example, one may see the large membership base of a big co-operative as a key challenge – the difficulty of managing many stakeholders with diversified views.

Dolly Goh

But from another perspective, a large membership base could be seen as a large number of people who are there to support their very own business, where they will all benefit besides helping others in the community. The big co-operatives have a ready customer base. It is important to remember the co-operative DNA and the values that co-operatives are founded on – and to work from there.

How do you measure a co-op’s adherence to values, and their impact on the business?

There is no standard tool to measure the results derived from adopting the values. However, if sustainability and loyalty of members – especially in a crisis – are a measure of success, then co-ops have done well based on the values.

How are values and governance interconnected?

Values define one’s DNA, your roots on which your strategy, directions, and policies are based. Governance ensures these values stay at the core of the co-operative’s heartbeat.

Murray Fulton – director and fellow in co-operatives and public policy, Centre for the Study of Co-operatives

What are co-op values? Do they vary depending on sector or  region? Have they changed?

For me, co-op values are the norms and beliefs that guide the behaviour of co-op members, leaders (elected and non-elected) and employees. While co-op values are not the same as the ICA principles, the principles do share some of the core elements of the values.

Co-op values contain a sense of reciprocity – the sense that the actions of each person will be reciprocated by others, be it the board, management, employees or other members.

Murray Fulton (Photo: David Stobbe)

Co-op values also contain a sense of identity: they reflect concern for the wellbeing of an identified group (often understood as the membership, but sometimes extending beyond that to the community). Within this group, however, there is a belief and an expectation that individuals will flourish – the purpose of the group is to assist the individual members in some way. These three elements are brought together by a sense of fairness that is understood in proportional terms – that benefits and costs are allocated in proportion to the effort exerted or the resources committed, and by a sense of independence. Then the members get to decide the rules by which they abide.

While the expression of these values has changed over time, I think the underlying elements have been a part of co-ops since they were first formalised. I believe co-op values are applicable to most settings and most co-ops.

What challenges do big co-ops face when putting these values at the centre of their activity?

The big challenge faced by co-ops, big or small, is to ensure that the values inform and permeate the decisions made on a daily basis. In smaller co-ops it is sometimes easier to make sure the values are in place, although there is no guarantee that these co-ops won’t suffer the loss of one or more of the values – i.e., that the sense of fairness is violated or that the reciprocal nature of relationships is no longer recognised. Perhaps the difference is that when the values break down in small co-ops, the cause is often linked to particular personalities while when values break down in large co-ops the cause is often linked to policy decisions made by leaders.

Related: Can big co-ops live up to the movement’s values and principles?

The key challenge is that the values will often conflict with particular objectives the co-op has at a particular point in time. These objectives are often very important – economic survival – and need to be addressed. But in doing so, it is critical that co-op leaders don’t dispense with the core values. To take an example, in a time of rapid economic change, co-op leaders may feel compelled to impose new decision-making rules or a new organisational structure; such moves can undermine the sense of independence that members feel should be present in the co-op.

The core of the problem in these conflicts is that the co-op did not set the stage for dealing with them. Co-ops can deal with rapid economic change, but the process has to be worked on in advance by, for instance, making sure they have kept their decision-making processes updated and their members engaged so that changes can be made quickly. In other words, conflicts will always arise – they key is to recognise this and plan accordingly, with the values firmly in mind.

How do you measure a co-op’s adherence to values, and their impact on the business?

Since values are associated with beliefs, they are inherently difficult to measure. Even if a co-opasks its members about their identity with the co-op and whether they feel its policies are fair, members may not truthfully respond. Furthermore, the beliefs may be simply present or not present. If this is the case, then a decline in a belief cannot be used to signal trouble in the future; instead, the belief may simply collapse after some tipping point is reached, taking with it member commitment.

One way for a co-op to take co-op values into account in the decisions it makes is to engage in organisational learning. Instead of spending most of its resources on getting messages out to members and other stakeholders, co-ops should allocate some of those resources to actively listening to what members, employees and the community are saying. Active listening requires an openness to alternative perspectives and a commitment to respond appropriately. In short, taking account of co-op values means practising them on a daily basis. Organisational listening is key (see s.coop/2aj29 for more details).

How are values and governance interconnected?

Closely. Governance is the set of formal and informal arrangements by which power is allocated and exercised in any system with interdependent actors. Governance is thus the set of formal and informal arrangements that determines whose (and, by extension, which) information is privileged, which individuals and stakeholder groups define and shape the organisation’s values and strategy, and who or what shapes the incentives and norms that focus behaviours. The co-op values outlined above form a key part of governance, since they are a critical part of the norms that determine how power is allocated and exercised in a co-operative.

Governance – and hence co-op values – affect the core elements necessary for the financial and organisational success of the co-operative. Governance determines how well the various groups in the co-op are able to solve the myriad of co-operation and coordination problems that are critical for strong performance. It also determines how the co-op views and plans for the future – determining what is going to be focused on and how this focus is to occur. Finally, governance determines the extent to which the various groups and individuals in the co-op view its policies and procedures as being legitimate.

Co-op values help address all three of these challenges – they create the conditions for co-operation and coordination, they provide buy-in by members for the direction that is taken, and they underpin legitimacy.

Mervyn Wilson – former principal of the Co-op College and member of the ICA Principles Committee that developed the Guidance Notes

We see co-ops not calling themselves co-operatives and co-ops placing a stronger emphasis on ethical credentials and social responsibility. Are we witnessing a shift from traditional co-operative values and the principle of benefiting members towards modern ethical values? 

This is a new problem that the movement has faced for many years, best described as the denial of our co-operative identity. In the 1970s and 80s – when the movement was fast losing market share to the rapidly growing multiples, mergers were too often reluctantly entered when bankruptcy was the alternative, and new trading names flourished along with management think – the public perception of co-operatives was defined by the worse examples.

Mervyn Wilson

This was also the era of the management mantra “We need customers not members”. That led to the erosion of member benefits and a cataclysmic collapse in member recruitment – something only reversed when boards and management recognised the vulnerability of societies created by decades of neglect of the membership function in the face of the demutualisations in the building society sector and the attempts of speculators to gain control of the CWS. In addition, governance failings in the sector led to recognition that an active and engaged membership was key to improving governance.

Key to the renaissance of co-operatives in the noughties was the adoption of the Statement on the Co-operative Identity in 1995. By providing a clear and succinct definition, the ICA secured policy support from the UN, followed by the International Labour Organization. 2012 as UN International Year of Co-operatives could never have happened without this process.

Related: Could better governance have saved co-ops in the past?

Some found the six co-op values challenging, preferring to leave them unmentioned, focusing instead on the social values. The problem with this approach is straightforward: any organisation can, and most do, claim to embrace them. What organisation doesn’t want to be seen as socially responsible, honest, open and caring? It’s the co-operative values that differentiate co-ops. It’s not a pick and mix list – it is the set of values that makes co-operatives what they are.

Can we still refer to universal co-operative values?

The Statement on the Co-operative Identity was adopted after a global consultation lasting several years. The Co-operative College arranged workshops throughout the UK. They were seized upon by members who identified with the issues arising from the movement’s responses to rapid economic and social change. Workshops on the various drafts of the statement were similarly enthusiastically supported with passionate debate, leading to the unanimous adoption of the statement at the ICA Congress.

That was why the ICA Congress in 2011 passed a resolution to ensure that any changes to the statement would be subject to a similar global consultation. The movement recognised that the globally agreed values are too important to be tampered with.

What affects a co-op’s ability to pursue these values and principles?

Leadership and ownership of the process from the top – the board and senior management. Shortly after Sir Graham Melmoth was appointed chief executive of the CWS [in 1996] he approached the College to develop and run a programme on the Co-operative Values and Principles. He recognised that in the decades of the movement’s retreat it had stopped telling its managers and employees of its character and values and their role in implementing them. That programme, delivered first to the management executive, then to the 200 most senior managers in two-day programmes followed by one-day workshops for the next 1,000, had enormous impact. But, with personnel changes it was taken in house and steadily eroded. You cannot blame managers and colleagues for not knowing what they have never been told – so a simple check is to ask: “What training in our co-operative identity do all new staff receive?”. And perhaps adding: “Does the appraisal and reward system provide opportunities to explore how the appraisee has implemented our co-operative values? Are we rewarding co-operative success?”

How do you measure a co-op’s adherence to values, and their impact on the business?

Many co-operatives produce some form of social report but these would benefit from greater work to report against our globally agreed values alongside the appropriate social reporting standards.

Can failure to understand and implement co-op values lead to co-op failure?

Many governance failings in recent decades can be described as failure to apply the values. How many boards have actively encouraged contested elections, vibrant challenge at members meetings and seen such challenge as a reflection of success in building an active and involved membership, rather than a threat to their personal hold on power? Are members being properly informed of setbacks as well as successes in reporting?

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