2
Point of Harmony
NOTES ON COOPERATIVE MANAGEMENT AND GOVERNANCE
Management by Values....Governance by Transparency
Point of Harmony is the second module in this proposed study corresponding to the second course listed in the CDA Standard Training Curricula. The title suggests a creative confrontation between opposing parties, each offering the other the handclasp of fellowship lest the tragedy of individualism and competition befall them both. This must be what The Co-op Idea is all about. In the words of Nelson Mandela, “I have cherished the ideal of a democratic and free society in which all persons live together in harmony and with equal opportunities.” (Rivonia Trial, Praetoria, South Africa, 20 April 1964)
Other famous leaders share the same idea -
Management means, in the last analysis, the substitution of thought for brawn and muscle, of knowledge for folklore and superstition, and of cooperation for force (Peter F. Drucker) ... A good manager is best when people barely know that he exists. Not so good when people obey and acclaim him. Worse when they despise him (Lao Tzu ) ... Good management is the art of making problems so interesting and their solutions so constructive that everyone wants to get to work and deal with them (Anonymous) ...
It is time for the world, the hemisphere and the region to make sure that relevant institutions of civil society and relevant laws are embedded in the mechanisms of governance (Baldwin Spencer )... Democracy, good governance and modernity cannot be imported or imposed from outside a country (Emile Lahud)... Corporate governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society (Sir Adrian Cadbury) ...
(Brainy Quotes, www.brainyquotes.com.,)
Cooperative Governance is a pure democratic self-governance system of managing a cooperative entity based on and in complying with the principles, values and philosophy of cooperation through the appropriate and effective organizational structure with conducive culture and ethical climate, organizational machinery that includes management and administrative professionals at various levels/layers of functioning within the parameters of legal provisions and policy framework of the government, keeping in view the prevailing socio-economic environment to change the administrative culture, management and control systems, and the mind-set and work culture of the members and work force of Cooperative enterprises. (Dr. M. Karthikeyan, Indicators of Good Governance Practices...Addis Ababa, Ethiopia)
Co-operative Management commonly refers to care and control of cooperative business operation and a domain delegated to the Manager while Co-operative Governance refers to the main function of the Board of Directors of general policy direction; development planning and oversight of all Co-operative affairs as prescribed by the By-laws and authorized by the General assembly.
I
MANAGEMENT BY VALUES
LO 4 APPLY THE PRINCIPLES OF MANAGEMENT IN THE COOPERATIVE
CONTENTS:
• Principles of Management
• Functions of Management
• Leadership and Management - Including DistinctionS between Leadership &
Management; and Leadership & Management Styles
• Strategic vs Operations Management (Framework & Application in Cooperatives)
• Balanced Score Card (An Overview)
It may seem superfluous to suggest 'Management by Values' as a cooperative management technique for an organization that has publicly declared its own distinctive identity based on self-identified sets of individual and collective values and self-formulated set of principles for its practice (see ICA Statement on the Co-operative Identity). Clearly, the CDA Standard Training Curricula Learning Outcome (LO4) : "Apply the Principles of Management in the Cooperative" for the course Management and Govevernance is an apt recognition of the observation that "although co-operatives have a strong social purpose, they are also enterprises with problems of size, structure, management and technical equipment - problems which they share with all other economic enterprises" (Co-operative Management and Administration, ILO, 1988).
What is surprising though, is that we are witnessing lately a trend among private businesses and corporate enterprises of adopting Co-operative values, principles and practices without going Co-operatives, ie., the ATM technology or shared use of Automated Tellering Machines and service facility. One literature we reviewed for this proposed study comes by the title of Managing By Values and includes the testimony of a relatively successful business leader who transformed his compny into a worker-owned cooperative enterprise patterned after the Mondragon Corporacion Cooperativa of Spain.
His story supports our belief that at some strategic point the true leader will choose harmony and cooperation over personal financial gain and competition -
The Balance of People and Profit...
Point of harmony finds similar support from the words of the authors of Managing By Values - Logically , capital tends to be attracted to where there are ideas, values, knowledge and opportunities for business. Yet, organizations are now being challenged to see beyond the bottom line and to create more humane work environments that also contribute to social good. This ideal organizational type my seem beyond the reach of even the most optimistic business/social visionary. Yet an example of one corporation, Mondragon Corporacion Cooperativa (MCC), is flourishing precisely because it has adhered to its core values centered on the intersection of business and society and the balance of people and profit.
Not just a piece of paper...
In 1986 two long–time employees of my small design/build firm, South Mountain Company, came to talk to me. They told me they wished to continue their careers within my company, but that they felt they needed a stake – something more than a wage. I thought about this, and it became clear to me that this situation would arise over and over again if we did our job well and maintained a good place of work. So began a journey of exploration.
In 1987 I restructured the company into a worker-owned cooperative business loosely modeled on the Mondragon Cooperatives in the Basque region of Spain. It was a dramatic hinge point in our history that changed the company in many ways.
More than a decade later I spent four days in Mondragon learning first hand about the remarkable network of cooperatives that has thrived there since the 1950s, managing by values and transforming a community in the process. It was thrilling to experience the undertaking that had been the model for our business. In early 2006 Bonnie Richley contacted me to interview me about my Mondragon perspectives for her dissertation...She sent some chapters of this book and asked me to write this foreword. I was pleased to have the opportunity...
We all know it at some level , but when we get down to business it is all too easy to forget : using money as the sole measure of prosperity fails to recognize that people have lives, families, and communities. Many people value the quality of their work environment as much as, or more than, the size of their paycheck. In addition to making a reasonably good living, we need to be satisfied by our work. We need the pleasure of good service, the joy of humor, the treasure of strong relationships, the fulfilment of collaboration, and the security of stability and longetivity. Our enterprise must create sufficient profit to be able to serve all these worthy ends, but profit is simply the engine that drives a bottom line comprised of many parts.
Managing by Values. Is there any other way? We all manage by values, in some way, but our values diverge widely. This book is a lucid description of a set of values that is quite different from the norm, but that we may find is becoming the norm, and that will be the norm...
The prescription put forth by the authors is the antidote to the traditional stifling command-and-control model : they describe a collaborative, people-centered, respectful form of leadership that unleashes creative potential. This book is a practical manual to help business leaders navigate the appropriate channels to substantive and successful company cultural change. Managing by Values is a tool that works in service to that goal. It makes the distinction between instructions (the tool of bosses), objectives (the tool of administrators) and values (the tool of leaders). It suggests that leaders who put values in front are more likely to be successful.
My experience suggests the same. The fifteen owners of South Mountain Company and our non-owner employees who are on a path to ownership, practice our craft, run our business, and base our decisions primarily on values and only peripherally on profit. Profit is a tool to serve our expectation that we can, over time, be a restorative force, at least in some modest way. The essential values which guide us are shared ownership and workplace democracy, limited growth by intention rather than response to demand, commitment to place, and long-term thinking in the pursuit of craftmanship and service of the highest quality...
Since our restructuring, ownership has become available to all employees, enabling people to own and guide their workplace. The responsibility, the power, and the profits all belong to the group of owners. There are no outside investors and no non-employee owners. We decide what kind of business ours will be. The decision is partly economic and partly philosophical, and the people making them have well-aligned interests...
John Abrams, Foreword, Managing By Values, Simon Dolan, Salvador Garcia and Bonnie Richly,2006
MONDRAGON CORPORACION COOPERATIVA : A MODEL OF SHARED VALUES
Tucked in the beautiful green hills of the Basque country, about one hour outside of Bilbao, Spain, resides Mondragon Corporacion Cooperativa (MCC) believed to be the largest and most successful cooperative in history. What began as a ‘social experiment’ with only a handful of people is today an international cooperative corporation with approximately 70,000 worker-owners. The corporation is comprised of 168 enterprises including MCC Worldwide (ie., 7 corporate offices and 38 plants) and a yearly revenue of eight billion dollars. MCC is especially significant however not only because of its cooperative business structure, which may seem at odds with a world dominated by competition, but because of its success at enacting a shared mission focused on both people and profit.
Unlike most corporations, MCC does not subordinate people to capital gain, instead MCC expresses their philosophy of balancing human, business and societal needs through its corporate value, specifically, co-operation, participation, social commitment and innovation. The corporation’s values are concretely expressed through its focus on developing people by providing work opportunities, career advancement through democratic processes and ongoing education.
One person at MCC’s corporate headquarters succinctly defined the cooperative’s concept of values. He stated , “Values are things to put into practice, not to talk about. They should not be just a piece of paper you put on a wall.” (Bonnie Richley, A Study of Mondragon Corporacion Cooperativa and its Influence as an Exemplary Business/Social Model, 2006)
Principles of Management - There must be as many definitions and sets of principles of management as there are acclaimed and self-proclaimed management gurus, experts and authors. We choose Peter Drucker's as we find them closest to our choice of Management by Values approach to Co-operative management.
3. Integrating people in a common venture by thinking through, setting and exemplifying the
4. Enabling the enterprise and its members to grow and develop through training, developing and
5. Ensuring everyone knows what needs to be accomplished, what they can expect of you, and what is
Management allows us to coordinate hundreds or thousands of people with different skills and knowledge to achieve common goals.
Not to innovate is the single largest reason for the decline of existing organizations. Not to know how to manage is the single largest reason for the failure of new ventures (including the introduction of new products)
Peter Drucker's 5 point definition of management,
Posted by Grant Attwood, http://www.grantattwood.com
The only choice for an institution is between management and mismanagement… Whether it is being done right or not will determine largely whether the enterprise will survive and prosper or decline and ultimately fail. - Peter F. Drucker
It should now be clear that, although co-operatives have a strong social purpose, they are also enterprises with problems of size, structures, management and technical equipment - problems which they share with all other economic enterprises. This has sometimes been recognized with reluctance within the co-operative movement itself, where it is quite often felt that the fundamental justice of co-operative principles can bring success regardless of management skill or even that such skill is only needed in a system based on improper motives, such as private profit-making and cut-throat competition. This is not, however, true, for experience shows that even the most admirable slogans (such as “production for use and not for profit”) have not prevented co-operatives from failing because of bad direction, plain mismanagement or defective supervision. Direction, professional management and supervision should therefore be subjects of study in the co-operative movement, even if this also means studying the methods of private business.
International Labor Organization, Cooperative Management
and Administration
Management is a universal phenomenon. It is a very popular and widely used term. All organizations - business, political, cultural or social are involved in management because it is the management which helps and directs the various efforts towards a definite purpose. According to Harold Koontz, “Management is an art of getting things done through and with the people in formally organized groups. It is an art of creating an environment in which people can perform and individuals and can co-operate towards attainment of group goals”.
Scientific Management is an art of knowing exactly what you want your men to do and seeing that they do it in the best and cheapest way – Fredrick Winslow Taylor. In Taylors view, if a work is analysed scientifically it will be possible to find one best way to do it. Hence scientific management is a thoughtful, organized, dual approach towards the job of management against hit or miss or Rule of Thumb.
According to Drucker, “The cost of scientific management is the organized study of work, the analysis of work into simplest element & systematic management of worker’s performance of each element”.
Functions of Management
In achieving its set goals and objectives, it needs to implement core management concepts. This necessitates that the four management functions - planning, organizing, directing and controlling be precisely understood. This article is aimed at providing a brief overview of the same.
Any organization, whether new or old, whether small or big, needs to run smoothly and achieve the goals and objectives, which it has set forth for itself. For this to happen, they must develop and implement their own management concepts. There are basically four management concepts that allow any organization to take control of its destiny. These four concepts of management, translated into functions lead to the creation of a cohesive organization, which smoothly achieves its objectives. The four functions of management are:
The base function is to: Plan
It is the foundation pillar of management. It is the base upon which the all other areas of management are built. Planning requires administration to assess where the company presently is and where it would be in the upcoming years. From there, an appropriate course of action is determined and implemented to attain the company's goals and objectives.
Planning is an unending course of action. There may be sudden strategies, required to be implemented, when facing a crisis. There are external factors that constantly affect a company, both positively and negatively. Depending on the conditions, a company may have to alter its course of action in accomplishing certain goals. This kind of preparation or arrangement is known as strategic planning. In strategic planning, management analyzes internal and external factors, that may affect the company, its objectives and goals. Here they should engage in a study of strengths, weaknesses, opportunities and threats (SWOT analysis). For management to do this efficiently, it has to be very practical and focused.
The subsequent function is to: Organize
The second function of the management is getting prepared and getting organized. Management must organize all its resources beforehand, to put into practice, the course of action, which has been decided upon in the base function of planning. Through this process, management will now determine the inside directorial configuration; establish and maintain relationships and also assign required resources.
While determining the inside directorial configuration, management ought to look at the different divisions or departments. They must also ensure the harmonization of staff, and try to find out the best way to handle the important tasks and reduce unnecessary expenditure within the company. Management determines the division of work according to its need. It also has to decide for suitable departments to hand over authority and responsibilities.
The third function is to: Lead/Direct
Directing or leading is the third function of management. Working under this function helps the management in controlling and supervising the actions of staff. This helps them in assisting the staff, to achieve the company's goals and also accomplish their personal or career goals, which can be powered by motivation, communication, department dynamics, and department leadership.
The employees who are highly encouraged and motivated, generally surpass expectations in their job performance and also play an important role in achieving the company's goal. This is the reason why managers focus on motivating their employees. Managers come up with prize and incentive programs, based on job performance and tend to be geared to meet employee requirements.
It is very important to maintain a productive working environment, build positive interpersonal relationships and engage in problem solving. This can only be done effectively, with proper communication. Understanding the communication process and working on areas that need improvement, helps managers become more effective communicators. The finest technique of finding the areas that requires improvement is to ask themselves and others at regular intervals, how well they are doing. Such introspection leads to better relationships and helps the managers in directing plans.
The final function is to: Control
Control - the last of four functions of management, includes establishing performance standards, which are aligned to the company's objectives. It also involves evaluation and reporting of actual job performance. When these points are studied by the management, it is necessary to compare both these things. This study or comparison leads to further corrective and preventive actions.
In an effort to solve performance problems, management should set high standards. They should clearly speak to the employee or department which has a problem. On the contrary, if there are inadequate resources or other external factors, which prevent high standards from being attained, management has to lower their standards as per requirement. The controlling processes, in comparison with other three, is a continuous process. With this function, management can anticipate any future problems. It helps them in taking necessary preventive measures, against the consequences. Management can also recognize any further developing problems that need corrective actions.
Effective and efficient management leads to success, which is the attainment of objectives and goals, that an organization sets for itself. Of course, for achieving the ultimate goal, management needs to work creatively in problem solving and execute all the four functions. Management not only has to see goals accomplished, but also see to it that the strategy adopted is feasible for the company.
By Jayashree Pakhare, http://www.buzzle.com, Last Updated: 12/5/2011
Management By Values (MBV) can be defined as both managerial philosophy and practice whereby focus is concurrently maintained on an organization’s core values and aligned with its strategic objectives. This approach focuses on three value-based domains : (1) Economical-Pragmatic; (2) Ethical-Social; and (3) Emotional-Developmental.
MBV acknowledges that the essence of true leadership has always been marked by human values. A leader’s job is to compel the organization to move in alignment with its strategic direction and its core values. This done by creating a share culture of value creation that implicitly and explicitly guides the daily activities of employees at all levels and in all functions. By ‘humanizing’ its basic strategic vision, a firm can nurture its own survival and growth, maximizing economic returns by establishing buy-in among both internal and external stakeholders.
I have often revisited the sensibilities of the Rochdale Pioneers as they created the first modern co-operative. Their philosophy and practice set in motion standards that apply today. The Rochdale Pioneers tapped into the twin virtues of community and commerce, which, when successfully combined, led to progress and equitable environment for all. Without that harmony, the world is cast into the haves and the have-nots and an unceasing struggle for domination. - David J. Thompson, Weavers of Dreams, 1994
Leadership and Management
“Management is doing things right; leadership is doing the right things.” - Peter Drucker
Distinction between Leadership & Management
What is the difference between management and leadership? It is a question that has been asked more than once and also answered in different ways. The biggest difference between managers and leaders is the way they motivate the people who work or follow them, and this sets the tone for most other aspects of what they do.
Many people, by the way, are both. They have management jobs, but they realize that you cannot buy hearts, especially to follow them down a difficult path, and so act as leaders too.
Managers have subordinates
By definition, managers have subordinates - unless their title is honorary and given as a mark of seniority, in which case the title is a misnomer and their power over others is other than formal authority.
Authoritarian, transactional style
Managers have a position of authority vested in them by the company, and their subordinates work for them and largely do as they are told. Management style is transactional, in that the manager tells the subordinate what to do, and the subordinate does this not because they are a blind robot, but because they have been promised a reward (at minimum their salary) for doing so.
Work focus
Managers are paid to get things done (they are subordinates too), often within tight constraints of time and money. They thus naturally pass on this work focus to their subordinates.
Seek comfort
An interesting research finding about managers is that they tend to come from stable home backgrounds and led relatively normal and comfortable lives. This leads them to be relatively risk-averse and they will seek to avoid conflict where possible. In terms of people, they generally like to run a 'happy ship'.
Leaders have followers
Leaders do not have subordinates - at least not when they are leading. Many organizational leaders do have subordinates, but only because they are also managers. But when they want to lead, they have to give up formal authoritarian control, because to lead is to have followers, and following is always a voluntary activity.
Charismatic, transformational style
Telling people what to do does not inspire them to follow you. You have to appeal to them, showing how following them will lead to their hearts' desire. They must want to follow you enough to stop what they are doing and perhaps walk into danger and situations that they would not normally consider risking.
Leaders with a stronger charisma find it easier to attract people to their cause. As a part of their persuasion they typically promise transformational benefits, such that their followers will not just receive extrinsic rewards but will somehow become better people.
People focus
Although many leaders have a charismatic style to some extent, this does not require a loud personality. They are always good with people, and quiet styles that give credit to others (and takes blame on themselves) are very effective at creating the loyalty that great leaders engender.
Although leaders are good with people, this does not mean they are friendly with them. In order to keep the mystique of leadership, they often retain a degree of separation and aloofness.
This does not mean that leaders do not pay attention to tasks - in fact they are often very achievement-focused. What they do realize, however, is the importance of enthusing others to work towards their vision.
Seek risk
In the same study that showed managers as risk-averse, leaders appeared as risk-seeking, although they are not blind thrill-seekers. When pursuing their vision, they consider it natural to encounter problems and hurdles that must be overcome along the way. They are thus comfortable with risk and will see routes that others avoid as potential opportunities for advantage and will happily break rules in order to get things done.
A surprising number of these leaders had some form of handicap in their lives which they had to overcome. Some had traumatic childhoods, some had problems such as dyslexia, others were shorter than average. This perhaps taught them the independence of mind that is needed to go out on a limb and not worry about what others are thinking about you.
In summary
This table summarizes the above (and more) and gives a sense of the differences between being a leader and being a manager. This is, of course, an illustrative characterization, and there is a whole spectrum between either ends of these scales along which each role can range. And many people lead and manage at the same time, and so may display a combination of behaviors.
|
Subject |
Leader |
Manager |
|
Essence |
Change |
Stability |
|
Focus |
Leading people |
Managing work |
|
Have |
Followers |
Subordinates |
|
Horizon |
Long-term |
Short-term |
|
Seeks |
Vision |
Objectives |
|
Approach |
Sets direction |
Plans detail |
|
Decision |
Facilitates |
Makes |
|
Power |
Personal charisma |
Formal authority |
|
Energy |
Passion |
Control |
|
Persuasion |
Sell |
Tell |
|
Wants |
Achievement |
Results |
|
Risk |
Takes |
Minimizes |
|
Rules |
Breaks |
Makes |
|
Conflict |
Uses |
Avoids |
SOURCE : Changing Minds.org, http://changingminds.org
Leadership Styles
1. Coercive:
§ Modus operandi: Demands immediate compliance
§ The style in a phrase: “Do what I tell you.”
§ Underlying emotional intelligence: Drive to achieve, initiate, self-control
§ When style works best: In a crisis, to kick start a turnaround, or with problem
employees
§ Overall impact on climate: Negative
2. Authoritative:
§ Modus operandi: Mobilizes people toward a vision
§ The style in a phrase: “Come with me.”
§ Underlying emotional intelligence: Self-confidence, empathy, change catalyst
§ When style works best: When changes require a new vision, or a clear direction is needed
§ Overall impact on climate: Most strongly positive
3. Democratic:
§ Modus operandi: Forges consensus through participation
§ The style in a phrase: “What do you think?”
§ Underlying emotional intelligence: Collaboration, team leadership, communication
§ When style works best: To build buy-in or consensus, or to get input from valuable employees
§ Overall impact on climate: Positive
4. Affiliative:
§ Modus operandi: Creates harmony and builds emotional bonds
§ The style in a phrase: “People come first.”
§ Underlying emotional intelligence: Empathy, building relationships, communication
§ When style works best: To heal rifts in a team or to motivate people during stressful circumstances
§ Overall impact on climate: Positive
5. Pacesetting:
§ Modus operandi: Sets high standard of performance
§ The style in a phrase: “Do as I do, now.”
§ Underlying emotional intelligence: Conscientiousness, drive to achieve, initiative
§ When style works best: To get quick results from a highly motivated and competent team
§ Overall impact on climate: Negative
6. Coaching:
§ Modus operandi: Develops people for the future.
§ The style in a phrase: “Try this.”
§ Underlying emotional intelligence: Developing others, empathy, self-awareness
§ When style works best: To help employee improve performance or develop long-term strengths
§ Overall impact on climate: Positive
SOURCE : http://www.google.ph
Management Styles are characteristic ways of making decisions and relating to subordinates. Management styles can be categorized into two main contrasting styles, autocratic and permissive. Management styles are also divided in the main categories of autocratic, paternalistic, and democratic. This idea was further developed by Robert Tannenbaum and Warren H. Schmidt (1958, 1973), who argued that the style of leadership is dependent upon the prevailing circumstance; therefore leaders should exercise a range of management styles and should deploy them as appropriate.
Autocratic - An autocratic management style is one where the manager makes decisions unilaterally, and without much regard for subordinates. As a result, decisions will reflect the opinions and personality of the manager, which in turn can project an image of a confident, well managed business. On the other hand, strong and competent subordinates may chafe because of limits on decision-making freedom, the organization will get limited initiatives from those "on the front lines", and turnover among the best subordinates will be higher.
There are two types of autocratic leaders:
- a directive autocrat makes decisions unilaterally and closely supervises subordinates.
- a permissive autocrat makes decisions unilaterally, but gives subordinates latitude in carrying out their work.
Consultative - more paternalistic form is also essentially dictatorial. However, decisions take into account the best interests of the employees as well as the business. Communication is again generally downward, but feedback to the management is encouraged to maintain morale. This style can be highly advantageous when it engenders loyalty from the employees, leading to a lower labor turnover, thanks to the emphasis on social needs. On the other hand for an autocratic management style the lack of worker motivation can be typical if no loyal connection is established between the manager and the people who are managed. It shares disadvantages with an autocratic style, such as employees becoming dependent on the leader.
A good example of this would be David Brent or Michael Scott running the fictional business in the television show The Office.
Persuasive - A persuasive management style involves the manager sharing some characteristics with that of an autocratic manager. The most important aspect of a persuasive manager is that they maintain control over the entire decision making process. The most prominent difference here is that the persuasive manager will spend more time working with their subordinates in order to try to convince them of the benefits of the decision that have been made. A persuasive manager is more aware of their employees, but it wouldn't be correct to say that the persuasive style of management is more inclusive of employees.
Just as there are occasions where the use of an autocratic management style would be appropriate, there are also instances where a company will benefit from a persuasive management style. For example, if a task that needs to be completed but it is slightly complicated it may be necessary to rely upon input from an expert. In such a situation, the expert may take to time to explain to others why events are happening in the order in which they will occur, but ultimately the way in which things are done will be that person's responsibility. In those circumstances, they are highly unlikely to delegate any part of the decision making process to those who are lower down in the hierarchy.
Democratic - In a democratic style, the manager allows the employees to take part in decision-making: therefore everything is agreed upon by the majority. The communication is extensive in both directions (from employees to leaders and vice-versa). This style can be particularly useful when complex decisions need to be made that require a range of specialist skills: for example, when a new ICT system needs to be put in place, and the upper management of the business is computer-illiterate. From the overall business's point of view, job satisfaction and quality of work will improve, and participatory contributions from subordinates will be much higher. However, the decision-making process could be severely slowed down unless decision processes are streamlined. The need for consensus may avoid taking the 'best' decision for the business unless it is managed or limited. As with the autocratic leaders, democratic leaders are also two types i.e. permissive and directive.
Laissez-faire - In a laissez-faire leadership style, the leader's role is as a mentor and stimulator, and staff manage their own areas of the business. Thus it is only successful with 1] inspirational leadership that understands the different areas of initiative being taken by subordinates, and 2] strong and creative subordinates who share the same vision throughout the organization. It is a style that is best for strong, entrepreneurial subordinates in an organization with dynamic growth in multiple directions. This style brings out the best in highly professional and creative groups of employees; however in cases where the leader does not have broad expertise and ability to communicate a strong vision, it can degenerate into disparate and conflicting activities. Lacking a strong maestro as leader, there is a risk in both focus and direction.
MBWA - Management by Walking Around (MBWA) is a classic technique used by managers who are proactive listeners. Managers using this style gather as much information as possible so that a challenging situation doesn't turn into a bigger problem. Listening carefully to employees' suggestions and concerns will help evade potential crises. MBWA benefits managers by providing unfiltered, real-time information about processes and policies that is often left out of formal communication channels. By walking around, management gets an idea of the level of morale in the organization and can offer help if there is trouble.
A potential concern of MBWA is that the manager will second-guess employees' decisions. The manager must maintain his or her role as coach and counselor, not director. By leaving decision-making responsibilities with the employees, managers can be assured of the fastest possible response time.
One downside is that MBWA poses the threat of the manager losing authority as the employees feel that they can run the business.
Paternalistic - An autocratic style means that the manager makes decisions unilaterally, and without much regard for subordinates. As a result, decisions will reflect the opinions and personality of the manager; this in turn can project an image of a confident, well managed business. On the other hand, strong and competent subordinates may chafe because of limits on decision-making freedom, the organization will get limited initiatives from those "on the front lines", and turnover among the best subordinates will be higher.
Asian paternalistic - Like consultative and easily confused with autocratic and dictatorial; however, decisions take into account the best interests of the employees as well as the business, often more so than interests of the individual manager. Communication is downward. Feedback and questioning authority are absent as respect to superiors and group harmony are central characteristics within the culture. This style demands loyalty from the employees, often more than to societies' rules in general. Staff turnover is discouraged and rare. Worker motivation is the status quo with East Asians often having the world's highest numbers of hours worked per week, due to a sense of family duty with the manager being the father, and staff being obedient children, all striving for harmony, and other related Confucian characteristics. Most aspects of work are done with a highly collectivist orientation. It shares disadvantages with an autocratic style, such as employees becoming dependent on the leader, and related issues with seniority based systems.
An Asian Paternalistic style means that the manager makes decisions from a solid understanding of what is desired and best by both consumers and staff. Managers must appear confident, with all answers, and promote growth with harmony, often even if hiding harmful or sad news is required.
SOURCE : Management Styles, http://en.wikipedia.org
Strategic vs. Operations Management
(Framework & Application in Cooperatives)
Strategic management is the process of understanding the business environment, developing the desired state of performance and implementing strategies to achieve it. Operations management involves executing the strategy on the day to day basis to achieve the desired performance in the long run.
The difference between strategic management and operations management can be described as follows:
§ Strategic management is an organizational wide activity where the operations, sales and finance are concerned from the top level to the bottom level of the organization. In other words strategic management is concerned about all the activities in the organization as a whole. The operations management is concerned of operations as in production function of the organization at the operations/manufacturing floor level of the organization.
§ Strategic management is a long term process where it identifies the long term desired level of performance and try to achieve it. Operations management is short term focused and handles day to day operations of an entity.
§ The strategic management process involves a non routinized task where there is very ambiguous and dynamic nature. The operations management involves day to day activities of a business organization at the operations level which is very routinized and mechanical. It does not involve any ambiguity.
§ Strategic management is a complex process which requires heavy management skills to handle. Operations management is a fairly simple process and a manager with average skills can handle the daily operations of the organization.
§ Survival of an organization is directly linked to strategic management process as it manages critical success factors of an organization. It identifies the factors that has direct link to the survival of an organization and manage them to optimize performance. Operation management is not directly related to the survival of the organization rather it indirectly influences the survival through cumulative performance on a day to day basis.
Balanced Score Card (An Overview)
The balanced scorecard (BSC) is a strategic management tool that views the organization from different perspectives, usually the following:
§ Financial: The perspective of your shareholders
§ Customer: What your customers experience and perceive
§ Business Process: The key processes you use to meet and exceed customer and shareholder requirements
Learning and Growth: How you foster ongoing change and continuous improvement
For each of these perspectives, the balanced scorecard prompts you to develop metrics, set performance targets and collect and analyze data. Your scorecard thus offers an efficient mechanism for reviewing strategy implementation based on measurement.
Benefits of a Measurement–Based System
A balanced scorecard can help your organization both articulate and act upon your vision and strategy. Use it to take these actions.
§ Facilitate effective and consistent communication because everyone speaks a shared language of metrics.
§ Drive focus around key requirements.
§ Facilitate reviews on a regular basis.
§ Ensure organizational alignment.
More than Financials
Developed by Robert Kaplan and David Norton in the early 1990s, the balanced scorecard is more than a measurement system. It is a management system. By bringing together measures around internal processes and external outcomes, a balanced scorecard supports continuous improvement at the level of strategic performance and results.
In their book The Balanced Scorecard: Translating Strategy into Action, Kaplan and Norton describe the balanced scorecard as a necessary move away from overreliance on financial measures. According to Kaplan and Norton, because financial measures report on the past, they offer “an adequate story for industrial age companies” but not “information age companies.” In the information age, organizations must “create future value through investment in customers, suppliers, employees, processes, technology, and innovation.”
A strictly financial approach for managing organizations is not complete, as it doesn’t capture the landscape of the business and isn’t an indicator of the future. Evaluating organizational performance in a balanced manner on the parameters that influence your business becomes crucial for better management.
SOURCE : http://asq.org/learn-about-quality/balanced- scorecard/overview
Good Governance
“The traditions and institutions by which authority in a country is exercised.”
Kaufman et al
Good governance has 8 major characteristics. It is participatory, consensus oriented, accountable, transparent, responsive, effective and efficient, equitable and inclusive and follows the rule of law. It assures that corruption is minimized, the views of minorities are taken into account and that the voices of the most vulnerable in society are heard in decision-making. It is also responsive to the present and future needs of society.
It is “…among other things participatory, transparent and accountable. It is also effective and equitable. And it promotes the rule of law.” - UNDP
Co-operative Governance
Co-operative governance regulates the relationship between members of co-operatives, the Board of representatives of members (that advises management on behalf of members) and management (that has the care and control of the co-operative).
BENEFITS:
The benefits to a cooperative of practicing good governance are now well known. It can raise capital more cheaply in a world where capital is a scarce resource; when it has a downturn it will have support from its members in its turnaround attempt; its business will be more sustainable; when the board makes a wrong business judgment call – and dealing with uncertain future events it will do so – it will not be seen as a scandal but as a consequence of the risk/reward ratio involved in equity investment; and its reputation is enhanced.
Some cooperatives have even appointed compliance officers to tick off the cooperatives compliance with the guidelines. The compliance officer reports to the board that there has been compliance. This evidences a lack of application of mind by the board as to whether it is governing in an acceptable manner.
When all is said and done the market place is the ultimate compliance officer. That is why in several jurisdictions the route has been chosen of “comply or explain” in regard to how a company is governed rather than “comply or else”. In a regime of comply or explain the directors are duty bound to apply their minds as to the guidelines which are most suited for the business of the cooperatives. If they believe that non-compliance with a guideline is in the interest of the cooperatives and they explain it the true test will be whether the market accepts that explanation or whether members flee the cooperatives. If non-members and other members continue to support the cooperative then the question answers itself.
The strategic or business plans developed by a board involve dealing with uncertain future events. It is not a science and none of us is prescient. The governance of a cooperative is a process so that, inter alia, outsiders looking into the organization can assess whether the cooperative is being well governed. But it does not follow that if there has been a pure quantitative compliance with a code’s guidelines that the cooperative is being well governed. Witness Enron with all its trappings of good governance and yet it was dysfunctional.
In the end it is the evaluation of the quality of the governance by the cooperative’s ultimate compliance officer, the market place, which is important.
SOURCE: http://www.cpp.org
CHARACTERISTICS OF GOOD GOVERNANCE
1. Participation -- Participation by both men and women is a key cornerstone of good governance. Participation could be either direct or through legitimate intermediate institutions or representatives. It is important to point out that representative democracy does not necessarily mean that the concerns of the most vulnerable in society would be taken into consideration in decision making. Participation needs to be informed and organized. This means freedom of association and expression on the one hand and an organized civil society on the other hand.
2. Rule of law -- Good governance requires fair legal frameworks that are enforced impartially. It also requires full protection of human rights, particularly those of minorities. Impartial enforcement of laws requires an independent judiciary and an impartial and incorruptible police force.
3. Transparency -- Transparency means that decisions taken and their enforcement are done in a manner that follows rules and regulations. It also means that information is freely available and directly accessible to those who will be affected by such decisions and their enforcement. It also means that enough information is provided and that it is provided in easily understandable forms and media.
4. Responsiveness -- Good governance requires that institutions and processes try to serve all stakeholders within a reasonable timeframe.
5. Consensus oriented -- There are several actors and as many viewpoints in a given society. Good governance requires mediation of the different interests in society to reach a broad consensus in society on what is in the best interest of the whole community and how this can be achieved. It also requires a broad and long-term perspective on what is needed for sustainable human development and how to achieve the goals of such development. This can only result from an understanding of the historical, cultural and social contexts of a given society or community.
6. Equity and inclusiveness -- A society’s well-being depends on ensuring that all its members feel that they have a stake in it and do not feel excluded from the mainstream of society. This requires all groups, but particularly the most vulnerable, have opportunities to improve or maintain their well-being.
7. Effectiveness and efficiency -- Good governance means that processes and institutions produce results that meet the needs of society while making the best use of resources at their disposal. The concept of efficiency in the context of good governance also covers the sustainable use of natural resources and the protection of the environment.
8. Accountability -- Accountability is a key requirement of good governance. Not only governmental institutions but also the private sector and civil society organizations must be accountable to the public and to their institutional stakeholders. Who is accountable to who varies depending on whether decisions or actions taken are internal or external to an organization or institution. In general an organization or an institution is accountable to those who will be affected by its decisions or actions. Accountability cannot be enforced without transparency and the rule of law.
SOURCE : http://reform.gov.bb
II
GOVERNANCE BY TRANSPARENCY
LO1: Adhere to Good Governance Principles and Practices
PRINCIPLES & PRACTICES OF GOOD GOVERNANCE IN COOPERATIVES
DEFINITION :
Governance
The concept of "governance" is not new. It is as old as human civilization. Simply put "governance" means: the process of decision-making and the process by which decisions are implemented (or not implemented). Governance can be used in several contexts such as corporate governance, international governance, national governance and local governance.
Since governance is the process of decision-making and the process by which decisions are implemented, an analysis of governance focuses on the formal and informal actors involved in decision-making and implementing the decisions made and the formal and informal structures that have been set in place to arrive at and implement the decision.
Government is one of the actors in governance. Other actors involved in governance vary depending on the level of government that is under discussion. In rural areas, for example, other actors may include influential land lords, associations of peasant farmers, cooperatives, NGOs, research institutes, religious leaders, finance institutions political parties, the military etc. The situation in urban areas is much more complex. Figure 1 provides the interconnections between actors involved in urban governance. At the national level, in addition to the above actors, media, lobbyists, international donors, multi-national corporations, etc. may play a role in decision-making or in influencing the decision-making process.
All actors other than government and the military are grouped together as part of the "civil society." In some countries in addition to the civil society, organized crime syndicates also influence decision-making, particularly in urban areas and at the national level.
Similarly formal government structures are one means by which decisions are arrived at and implemented. At the national level, informal decision-making structures, such as "kitchen cabinets" or informal advisors may exist. In urban areas, organized crime syndicates such as the "land Mafia" may influence decision-making. In some rural areas locally powerful families may make or influence decision-making. Such, informal decision-making is often the result of corrupt practices or leads to corrupt practices.
SOURCE : United Nation ESCAP, http://www.unescap
DUTIES, RESPONSIBILITIES AND ACCOUNTABILITY OF A DIRECTOR
“A man sooner or later discovers that he is the master-gardener of his soul, the director of his life.” James Allen
The Board of Directors shall have the following functions and responsibilities :
- ·provide general policy directiom
- formulate the strategic development plan;
- · determine and prescribe the organizational and operational structure;
- · review the Annual Plan and Budget and recommend for the approval of the GA;
- ·establish policies and procedures for the effective operation and ensure proper implementation of such;
- evaluate the capability and qualification and recommend to the GA the engagement of the services of the External Auditor;
- appoint the members of the Mediation/ Conciliation and Ethics Committees and other Officers as specified in the Code and cooperative By-laws;
- ·declare the members entitled to vote;
- · decide election related cases involving the Election Committee and its members;
- act on the recommendation of the Ethics Committee on cases involving violations of Code of Governance and Ethical Standards; and
- Perform such other functions as may be prescribed in the By-laws or authorized by the GA.
- Accountability of a Director
The Board of Directors shall be responsible for the strategic planning, direction-setting and policy-formulating activities of the cooperatives. . Provided further that any members of the board shall not hold any other position directly involved in the day-to-day operation and management of the cooperative.
DUTIES, RESPONSIBILITIES AND ACCOUNTABILITY OF A MANAGER
“Responsibility's like a string we can only see the middle of. Both ends are out of sight.”
William McFee, Casuals of the Sea, 1916
The General Manager shall have the following functions and responsibilities:
· Over all in-charge of all the phases of the business operations of the Cooperative, subject to the policies and guidelines set by the board of directors and the general assembly.
· Responsible in maintaining records and accounts of the Cooperative in such manner that the true condition of its business may be ascertained there from at any time.
· Render reports monthly, annually or as may be required by the Board of Directors or the general assembly, and preserve the books, documents, correspondence and records of whatever nature concerning the operations of the Cooperative which may come into his possession;
· Subject to the policies set by the Board of Directors, employ, supervise and/or dismiss any agent or employee in the management staff; and\
· Perform such other duties as the Board of Directors may prescribe and turn over to his successor all properties belonging to the Cooperative in his possession or over which he has control upon the expiration/termination of his services.
Accountability of a Manager
· Oversee the overall day to day business operations of the cooperative by providing general direction, supervision, management and administrative control over all the operating departments subject to such limitations as may be set forth by the BOD or the GA;
· Formulate and recommend in coordination with the operating departments under his/her supervision, the Coops Annual and Medium Term Development. Plan, programs and projects, for approval of the BOD, and ratification of GA;
· Implement the duly approved plans and programs of the cooperative and any other directive or instruction of the BODs;
· Provide and submit to the BODs monthly reports on the status of the coop’s operation vis-a-vis its target and recommend appropriate policy or operational changes, if necessary;
· Represent the cooperative in any agreement, contract, business dealings, and in any other official business transaction as may be authorized by the BODs;
· Ensure compliance with all administrative and other requirements of regulatory bodies; and
Perform such other functions as may be prescribed in the By-laws or authorized by the GA.
SOURCE : http://www.slideshare.com
BOARD-MANAGER RELATIONSHIP
I think you have to work with people, and when I talk about managing relationships, don’t think the derogatory ‘‘managed relationships’’. It is a question of sharing emotion and feelings. The common denominator of everything can’t be money, and it should not be money. - Anil Ambani
Smooth and balanced relationship between the Board and General Manager is a very important factor essential for proper functioning and sustained progress in business operations. Even well-established cooperatives were ruined or their progress suffered when this relationship came under strain or got estranged.
USUAL AREAS OF FRICTION
· Interference in business operations
· Recruitment of personnel
· Matters pertaining to personnel
· Seeking special favours/treatment
· Assertion of Authority
· Transgression or encroachment in each other’s area of authority
CONDITIONS FOR SMOOTH AND BALANCED RELATIONSHIP
If it is desired to have a smooth and balanced relationship between Board and General Manager, both the parties have to sincerely work for it and respect the important of other’s role and functions. Here are a few suggestions for:
· Board of Directors
· General Manager
POINTS OF A CAUTION FOR A BOARD OF DIRECTORS
· Always consult your General Manager before making decisions.
· You should treat the General Manager as an Adviser and Consultant to the Board. You must listen to him/her carefully.
· Your decision should be such as may facilitate the job of the General Manager in actual implementation. Board decisions should be very clear and definite to avoid misinterpretation.
· Give your attention to important matters, important aspects of business and carefully watch the achievement of main objectives and results of business operations. Don’t waste time over petty matters and don’t get lost in details.
· Have regular meeting Board meetings and carefully examine operations and financial reports.
· Don’t transgress in the area of authority of the General Manager, if and when he discusses his problems with you.
· Acknowledge good work and express your appreciation and encouragement when due.
· Make an objective evaluation of performance of the General Manager at the end of each business year.
· You should trust the integrity and intentions of the General Manager.
POINTS OF A CAUTION FOR THE GENERAL MANAGER
· He must show due respect the elected representatives and spokesmen of the membership.
· He must always remember that he is an employee of the coop.
· He must accept without any mental reservation, the righteousness of the cooperative system and significance of democratic management.
· He has a right to be heard but the final decision is with the Board of Directors. Once a decision is made, he must implement it sincerely.
· He should make full, frank and frequent reports to the Board about achievement progress and problems.
· He must accept full responsibility for entire business operations of the coop.
· He should delegate his authority, train and instruct his staff, property, extend fair and equal treatment to all employees; cultivate good team-spirit and give them inspiring leadership.
· His relationship with the President of the Board should be open and business-like.
· He should not develop a sense of acquisition of or deep personal attachment with the coop.
· He must never take interest or involve himself in election of board members. He must keep himself aloof from functions or groupings in the Board of Directors.
BALANCED RELATIONSHIP NECESSARY
If a General Manager is a dominant type and does not show due regards to Board, the membership will lose contract, interest and confidence in the management. And also, if the Board of Directors is very aggressive and interferes in daily operations, a good and competent manager may find the working conditions difficult and leave the job. For sustained progress and growth, it is desirable that the relationship between the two should be smooth and balanced.
WHY BOARD- MANAGEMENT BREAK DOWN
A frequent reason for a breakdown in relations between the Board of Directors and Management in a Cooperative is due to a lack of communication, failure to communicate or not to understand their role in the management process. These are present in almost all of the following:
· Lack of understanding by the Board and Manager of the respective duties and functions of each. It is not enough that a General Manager idea exists- each must understand his own job and that of the other.
· Failure of the Manager to recommend and/or of the Board to establish and prove clear-out overall policies to serve as management guides.
· Establishing overall policies or operational policies without consultation between Board and Management.
· Surrendering of the policy- making function to management, thus encouraging a one-man organization.
· Failure of the manager to use the maturity and experience of the Board members in making important decisions.
· Failure of the Board, collectively and individually to focus on the really important affairs and results of the corrective action. It often happen that Board members focus on minor details that are interesting but not vital for the association’s general welfare.
· Failure of the Board or the Manager to insist on regular periodic accountability of the organization’s status.
· Differences in objectives and values between directors and managers.
· Extension of credit to Board members, manager, or employees.
· Inadequate training and indoctrination of new directors.
· Directors attempt to manage.
· Conflicts inherent in the directorate position.
Conclusion
Managers have a fiduciary relationship with the board. The manager should think of themselves as an extension of the board. As an extension, the manager has a duty to know their limits of expertise, educate the board, and always act with the board’s best interests in mind. By keeping a board in the dark, a manager is not protecting themselves from liability; they are endangering their career, and the well-being of the association. An effective manager should not overreach their delegated authority to administrate the affairs of the association. They should give competent, professional advice while being mindful of the limits of their expertise. They should voluntarily and freely educate their boards so the board can make knowledgeable and sophisticated decisions about their communities. By fulfilling these three roles, the manager protects themselves from liability and maximizes their utility to a board.
SOURCE : http://www.slideshare.net/jobitonio/board-management-relationship
LABOR LAWS AS APPLIED TO COOPERTIVES
Equal Justice Under The Law. That is a great goal. But that goal has not been realized - Arthur Joseph Goldberg
INTRODUCTION
Workers around the world, particularly in countries with notoriously anti-union governments such as Colombia and the Philippines, are being pushed into labor “cooperatives.” Labor cooperatives have become a common way for employers to put a positive sounding name on the ugly practices of subcontracting and outsourcing. Labor cooperatives are essentially employment agencies, owned by wealthy elites with business interests in mind over the interests of workers. They do not resemble worker-owned cooperatives which have been able to empower small coffee or cocoa farmers, for example. Workers often join cooperatives because they have no choice and many do not understand the implications of joining.
The International Labor Organization (ILO) views cooperatives as important in improving the living and working conditions of women and men globally as well as making essential infrastructure and services available even in areas neglected by the state and investor-driven enterprises. Cooperatives have a proven record of creating and sustaining employment – they provide over 100 million jobs today; they advance the ILO’s Global Employment Agenda and contribute to promoting decent work.
ILO activities are guided by the international standard on cooperatives, the ILO Recommendation on the Promotion of Cooperatives, 2002 (R.193), It Cooperative Branch (EMP/COOP) serves ILO constituents and cooperative organizations in four priority areas:
· Raising public awareness on cooperatives through evidence based advocacy and sensitization to cooperative values and principles;
· Ensuring the competitiveness of cooperatives by developing tailored tools to cooperative stakeholders including management training, audit manuals and assistance programs.
· Promoting the Inclusion of teaching of cooperative principles and practices at all levels of the national education and training systems; and,
· Providing advice on cooperative policy and cooperative law, including participatory policy and law making and the impact on cooperatives of taxation policies, labor law, accounting standards, and competition law among others
Workers cooperatives in the Philippines have gradually developed into traditional self-help communities where members are considered owners of the enterprise and at the same time users of the services and activities.
In the face of fierce global business competition and rapid technological advancement, alternative work arrangements are being tapped as effective mechanisms to keep pace with globalization. One of these work arrangements is the establishment of workers cooperatives.
Workers cooperatives are considered a unique and appropriate medium in the quest for balance between social justice and economic growth. They have economic and social objectives; they are values-driven and community-based; they are people-oriented; and, they develop people-based linkages.
Thus, the Cooperative Development Authority (CDA) reveals that many workers are indeed employed through cooperatives. Statistics from the Bureau of Local Employment (BLE) shows that from only 43 local manpower cooperatives registered as contractors and subcontractors in 2002, the number ballooned to 255 four years after.Workers cooperatives in the Philippines have gradually developed into traditional self-help communities where members are considered owners of the enterprise and at the same time users of the services and activities. Both members and non-members of cooperatives enter into an employer-employee relationship with the cooperative as a separate and distinct legal person. As in any stage of development, new ideas, concepts and patterns carry with it fresh issues, ambiguities and disputes. Thus, we again look up to the Supreme Court for resolution of these issues.
Workers Cooperatives and the Right to Collective Bargaining. In a case involving some rank-and-file employees of a cooperative bank who filed a petition for certification election, the latter opposed the petition and insisted that its employees are disqualified from forming labor organizations for purposes of collective bargaining, citing an Opinion rendered by then Solicitor General and Minister of Justice Estelito P. Mendoza.
The Court upheld the Opinion which held that an employee of a cooperative who is a member and co-owner thereof cannot invoke the right to collective bargaining. Basing its decision from an obvious practical perspective, the Court said that an owner cannot bargain with himself or his co-owners. However, the Court clarified in this case that employees of cooperatives who are not member’s co-owners are entitled to exercise the right to organize for purposes of collective bargaining. (Cooperative Rural Bank of Davao City, Inc. vs. Pura Ferrer-Calleja, et.al; G.R. No. 77951; September 26, 1988)
Enunciated in this case was the “fused personality doctrine.” Under this doctrine, an employee-member is said to have two distinct personalities fused into one: first, as an employee of the cooperative and second, as a member co-owner of the cooperative. Thus, said employee co-owner is not entitled to the right to organize for the purpose of collective bargaining. (Cacdac, Hans Leo J. and Chato, Rebecca C. on Should D.O. No. 18-02 Apply to Manpower Cooperatives? August 2006)
The Court affirmed this doctrine which involved common facts and issues on the cooperative member-employees’ right to organize for the purpose of collective bargaining. (Batangas-I Electric Cooperative Labor Union vs. Romeo Young; G.R. No. 62386; Bulacan II Electric Cooperative, Inc. vs. Peñaflor; G.R. No. 70880; Albay Electric Cooperative I vs. Cresencio B. Trajano; G.R. No. 74560; all dated November 9, 1988; San Jose City Electric Service Cooperative, Inc. known as SAJELCO, vs. Ministry of Labor and Employment; G.R. No. 77231; May 31, 1989)
Workers Cooperatives and Labor Standards Compliance. In another case, credit cooperative employees filed a complaint for illegal dismissal with claims for premium pay on holidays and rest days, separation pay, and wage differential. The credit cooperative sought to dismiss said complaint arguing that the complainants are members and co-owners of the cooperative and thus, there is no employer-employee relationship between the credit cooperative and the complainants. The crux of the issues in this case is whether or not said members co-owners are considered employees and thus covered by the Labor Standards Law.
The Court held that in determining the existence of an employer-employee relationship, the four-fold test is aptly considered: 1) the selection and engagement of the worker or the power to hire; 2) the power to dismiss; 3) the payment of wages by whatever means; and, 4) the power to control the worker’s conduct. Control assumes primacy in the overall consideration. The Court held that all these elements are present in the case.
The Court further explained that although there was no evidence presented to prove that complainants are members’ co–owners of the cooperative, the complainants by virtue of their being employees are still covered by the Labor Code of the Philippines. They are entitled to minimum wage, overtime pay, rest day, and due process before termination of employment.
In sum, the Court considered membership and ownership in a cooperative as irrelevant to the case. The existence of an employer-employee relationship entitles one to labor standards provided for under the Labor Code. This, in effect, sets aside the “fused personality doctrine” in cases involving labor standards compliance. (Perpetual Help Credit Cooperative, Inc. vs Faburada, et. Al;GR No. 121948; October 8, 2001.)
Manpower Service Cooperatives. Cooperatives in the Philippines now play a new role in the world of contracting or subcontracting. The existence of Asiapro and Staff Search Asia Service Cooperative, among others, shows the metamorphosis of this role. From the traditional organization formed for mutual benefit of its worker-members, workers cooperatives are now engaged in supplying manpower. Some manpower cooperatives supply their own members in their subcontracting business.
Last year, the Court decided a case involving a manpower cooperative. The case involved a shrimp processing company which entered into a contract with manpower cooperative to provide, among others, messengerial, janitorial, harvesting, sanitation, and washing services. Consequently, members of the cooperative were sent to perform said services to the company.
The members filed a complaint which sought to declare themselves as regular members of the principal. The principal opposed the complaint arguing that the members are employees of the independent cooperative contractor.
The Court held that the contention of the shrimp processing company holds no basis. Using the “substantial capital” doctrine and the “right of control test”, the Court found that the cooperative had no substantial capital in the form of tools, equipment, machineries, work premises and other materials to qualify it as an independent contractor. In addition, the shrimp processing company was found to have control of the manner and method on how the work was done. Thus, the complainants were deemed employees not of the cooperative but of the shrimp processing company. (San Miguel Corporation vs. Aballa et. al.; G.R. No. 149011; June 28, 2005)
Thus, what the Court tried to impress in this case is that labor laws find application so long as an employer-employee relationship exists, regardless of the nomenclature and nature of its organization, whether as a partnership, corporation, or cooperative.
(http://www.asiapro.coop/news_nexus.html)
Compensation and Fringe Benefits
A major challenge for all cooperatives is attracting and keeping productive people. Cooperatives must offer employees compensation commensurate with their experience and skills if they are to meet this challenge. Compensation can be both direct (e.g., salaries, wages) and indirect (benefits). It is important to provide a proper mix of direct and indirect compensations to attract and keep competent employees. Competent employees can enhance margins and membership savings for cooperatives.
Although there are no universal norms to guide the choice of what to pay any particular employee, some internal and external factors should be considered. Cost management (sales, operating expenses); job responsibilities; employee’s educational background, experience and/or skills; and the number of employees needed are some of the internal factors that may influence salaries and benefits for employees. External factors include Federal and State Government policies and regulations, the labor market, and geographical location.
Compensation for employees came in indirect and direct forms. Indirect compensation included benefits that ranged from paid vacations to educational assistance. Direct compensation included most exclusively salary, wages, pay, and bonuses. It should be noted that the questionnaire did not ask respondents to differentiate between base salary and additional bonuses. Some salaries probably included bonuses.
Benefits such as retirement; health, life, and disability insurance; and educational assistance can be paid for by the cooperative, the employee, or both parties. It is assumed that educational assistance may range from paid seminars to college courses. Most benefits across all job categories were either paid by the cooperative or shared by both.
Other benefits were “perks” or extras that an organization may offer to employees. Respondents were asked if their cooperative offered paid vacations/holidays and sick days, use of company car, social club membership, health club membership, first-class travel, and mileage (private car). Responses indicated that paid vacations/holidays, sick days, mileage (private car), and use of company car were more widely made available to employees.
Fringe benefits are a part of compensation. Compensation typically refers to your total employment benefits package, which would also include your base pay/salary. Fringe benefits typically include non-monetary benefits (e.g. cell phone/blackberry, laptop, car, medical insurance coverage, membership to a health club, etc.).
A fringe benefit is a benefit provided to an employee (or an associate of an employee, such as a spouse) by the employee's employer, an associate of the employer (eg. a related company) or by a third party under an arrangement with the employer.
To be a fringe benefit, the benefit:
· must be 'provided' to the employee (or to someone related to the employee) — the employer must do something, or allow something to be done, that results in the employee receiving the benefit, and
· must be 'in respect of employment' — a benefit provided for another reason, eg for family reasons (the employee being related to the employer), would not satisfy this.
(http://www.ehow.com/info_8351727_compensation-fringe-benefits.html)
Working Hours and Conditions
Working conditions in the Philippines are closely related to one's social class. Those belonging to the upper class enjoy the best opportunities in terms of job satisfaction, facilities, advancement, and choice of career. Those from the middle class are usually able to land white-collar jobs with some room for advancement by capitalizing on education, company loyalty, and hard work. Those belonging to the lower class, due to their lack of education or capital, largely engage in poorly paid manual labor or blue-collar jobs, viewed as menial in Philippine society.
The unemployment rate in the Philippines rose to 10.1 percent in October 2000 during a political crisis provoked by President Estrada's impeachment trial on charges of graft (illegal or unfair gain) and corruption. The performance of the manufacturing industry sank to an historic low and investor confidence hit rock-bottom. Nearly 3 million Filipinos were unemployed and the unemployment rate in Metro Manila reached 17.8 percent.
The Department of Labor and Employment is the main agency making and implementing labor policies and government programs. Guidelines set by the Labor Code of the Philippines guarantee equal work opportunities to all, equal compensation for work of equal value, secure work tenure, overtime and vacation benefits, safe working conditions, the right to collective bargaining, and social-security benefits.
Hours of Work
Normal hours of work in the Philippines
The normal hours of work of any employee shall not exceed eight hours a day. Hours worked shall include all time during which an employee is required to be on duty or to be at a prescribed workplace and all time during which an employee is suffered or permitted to work. Rest periods of short duration during working hours shall be counted as hours worked.
Meal periods
Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every employer to give his employees not less than 60 minutes time-off for their regular meals.
Night shift differential
Every employee shall be paid a night shift differential of not less than 10% of his regular wage for each hour of work performed between ten o’clock in the evening and six o’clock in the morning.
Overtime work
Work may be performed beyond eight hours a day provided that the employee is paid for the overtime work, an additional compensation equivalent to his regular wage plus at least 25% thereof. Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least 30% thereof.
Under-time not offset by overtime
Under time work on any particular day shall not be offset by overtime work on any other day. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required.
Emergency overtime work
Any employee may be required by the employer to perform overtime work in any of the following cases:
a. When the country is at war or when any other national or local emergency has been declared by the National Assembly or the Chief Executive;
b. When it is necessary to prevent loss of life or property or in case of imminent danger to public safety due to an actual or impending emergency in the locality caused by serious accidents, fire, flood, typhoon, earthquake, epidemic, or other disaster or calamity;
c. When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the employer or some other cause of similar nature;
d. When the work is necessary to prevent loss or damage to perishable goods; and
e. Where the completion or continuation of the work started before the eighth hour is necessary to prevent serious obstruction or prejudice to the business or operations of the employer.
a.
Service charges
All service charges collected by hotels, restaurants and similar establishments shall be distributed at the rate of 85% for all covered employees and 15% for management. The share of the employees shall be equally distributed among them. In case the service charge is abolished, the share of the covered employees shall be considered integrated in their wages.
SOURCE Legislation/acts,https://www. labour.gov.za
Right to service incentive leave
a. Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.
b. This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay of at least five days and those employed in establishments regularly employing less than ten employees or in establishments exempted from granting this benefit by the Secretary of Labor and Employment in the Philippines after considering the viability or financial condition of such establishment.
c. The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or any court or administrative action.
Holidays, Service Incentive Leaves and Service Charges
Right to holiday pay
a. Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than 10 workers;
b. The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate; and
c. As used in this Article, "holiday" includes: New Year’s Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and thirtieth of December and the day designated by law for holding a general election.
When employer may require work on a rest day
The employer may require his employees to work on any day:
a. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disaster or calamity to prevent loss of life and property, or
imminent danger to public safety;
b. In cases of urgent work to be performed on the machinery, equipment, or installation, to avoid serious loss which the employer would otherwise suffer;
c. In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be expected to resort to other measures;
d. To prevent loss or damage to perishable goods;
e. Where the nature of the work requires continuous operations and the stoppage of work may result in irreparable injury or loss to the employer; and
f. Under other circumstances analogous or similar to the foregoing as determined by the Secretary of Labor and Employment.
a.
Compensation for rest day, Sunday or holiday work
W
a. Where an employee is made or permitted to work on his scheduled rest day, he shall be paid an additional compensation of at least 30% of his regular wage. An employee shall be entitled to such additional compensation for work performed on Sunday only when it is his established rest day.
b. When the nature of the work of the employee is such that he has no regular workdays and no regular rest days can be scheduled, he shall be paid an additional compensation of at least 30% of his regular wage for work performed on Sundays and holidays.
c. Work performed on any special holiday shall be paid an additional compensation of at least 30% of the regular wage of the employee. Where such holiday work falls on the employee’s scheduled rest day, he shall be entitled to an additional compensation of at least 50% of his regular wage.
d. Where the collective bargaining agreement or other applicable employment contract stipulates the payment of a higher premium pay than that prescribed under this Article, the employer shall pay such higher rate.
Computation of additional compensation
For purposes of computing overtime and other additional remuneration as required by this Chapter, the "regular wage" of an employee shall include the cash wage only, without deduction on account of facilities provided by the employer.
Weekly Rest Periods
Right to weekly rest day
a. It shall be the duty of every employer, whether operating for profit or not, to provide each of his employees a rest period of not less than 24 consecutive hours after every six consecutive normal work days.
b. The employer shall determine and schedule the weekly rest day of his employees subject to collective bargaining agreement and to such rules and regulations as the Secretary of Labor and Employment may provide. However, the employer shall respect the preference of employees as to their weekly rest day when such preference is based on religious grounds.
OTHER LAWS AND REGULATIONS AFFECTING COOPERATIVES
(BIR, SSS, PHILHEALTH, PAGIBIG, LGU’S)
COOPERATIVES MUST APPLY FOR BIR TAX EXEMPTION WITHIN 60 DAYS FROM REGISTRATION UNDER R.A. 9520, OR ELSE…
All cooperatives which were issued a new certificate of registration by the Cooperative Development Authority in compliance with Article 144 of R.A. 9520 and subsequent cooperatives to be registered under the same Act, are required to apply, within sixty (60) days from the date of the issuance of their CDA certificate of registration, with the BIR in their area for their certificate of tax exemption.
Otherwise, for failing to apply within the prescribed period, the cooperative shall be subjected to internal revenue taxes prior to the issuance of the certificate of tax exemption being applied for.
This is according to BIR Revenue Memorandum Circular No. 12-2010 dated February 11, 2010.
The circular contains the Joint Rules and Regulations Implementing Articles 60, 61 and 144 of Republic Act No. 9520, otherwise known as the “Philippine Cooperative Code of 2008, in relation to Republic Act No. 8424, or the National Internal Revenue Code, as amended.
The Joint Rules were signed last February 5, 2010 by the Department of Finance, the Bureau of Internal Revenue and the Cooperative Development Authority. (Pls. see full text of the Joint Rules, in this blogsite: www.cooperatives-society.blogspot.com).
However, late applicants for certificate of tax exemption, who were subjected to internal revenue taxes, can apply for tax credit/refund of taxes previously paid from the date of registration with the CDA up to the issuance by the BIR of the certificate of tax exemption, the Circular says.
The certificate of tax exemption shall be valid for a period of five (5) years from the date of issue or date of effectivity as provided under Section 13 of the Joint Rules, and during such period that the Cooperative is in good standing as ascertained by the CDA on an annual basis.
For this purpose, a copy of the certificate of good standing issued by the CDA to the cooperative, shall be submitted to the BIR on or before the 15th day of the fourth month (April 15) following the close of the calendar year, together with the Income Tax Return and Audited Financial Statements, the Joint Rules cited.
In applying for the certificate of exemption, the cooperative shall submit to the BIR Revenue District Office which has jurisdiction over the principal office of the cooperative he following documents:
a. A certified true copy of the Certificate of Registration issued by the CDA under the new Cooperative Code;
b. A certified true copy of the Articles of Cooperation and By-Laws of the Cooperative;
c. A certified true copy of the current certificate of good standing from CDA, effective on the date of application. No application for exemption will be processed in the absence thereof;
d. A copy of the BIR certificate of registration of the cooperative.
The BIR circular also informed that the application for exemption by a qualified cooperative is a pre-requisite for availment of tax exemption by said cooperative. The certificate of tax exemption shall be issued only after determination by the BIR that the cooperative has complied with all the necessary documentary requirements for entitlement under R.A. 9520, as listed above.
Later on, for the renewal of the tax exemption certificate, the application shall be filed at least two (2) months prior to the date of expiration of the existing certificate of tax exemption. The certificate shall be for a period of five (5) years, unless sooner revoked for cause, the BIR added.
According to Collection Agency Agreement (Cooperative) for SSS:
SECTION 2. Coverage
(a) Accreditation - The SSS hereby designates and appoints the COOPERATIVE as its collecting agent or collector of the SSS payments from its members, and the latter hereby accepts such designation and appointment in accordance with the terms and conditions hereof.
(b) Authority to Collect - The authority of the COOPERATIVE to collect shall be limited to its members who are Self-employed and Voluntary Members of the SSS and who have agreed in writing to avail the services of the COOPERATIVE under the terms and conditions set herein.
(c) SSS Payments to be collected - The COOPERATIVE is allowed to collect from its members the following:
(1) Social Security Contributions;
(2) Educational, Salary, Calamity, and Stock Investment loan amortization;
(3) Housing loan amortization; and
(4) Miscellaneous payments.
SECTION 3. Accepting Payments and Remittance of Payments/Collections Made
(a) Issuance of Receipt - The COOPERATIVE shall acknowledge the receipt of any payment it receives from its members under this AGREEMENT by issuing the Official Receipts that it issues on its regular business transactions.
(b) Receipt Guarantee - In accepting the payments of its members, the COOPERATIVE does not guarantee that the amount paid by any member is the right amount due to the SSS, but the COOPERATIVE guarantees that the amount paid tallies with the amount appearing on the Original Receipt.
(c) Place of Remittance - All Payments/Collections received by the COOPERATIVE from its members shall be remitted to any of the SSS branches with Tellering Function or to any of the SSS Depository Banks.
(d) Time of Remittance - The remittance of the Payments/ Collections of the COOPERATIVE must be made on or before the 10th day of the month following the applicable month or quarter, as the case may be, or on such dates and schedules as the SSC may specify in the future through rules and regulations.
In case the last day of payment falls on a Saturday, Sunday or holiday, payment may be made on the next working day.
(e) Effect of Payment to the COOPERATIVE - Payment to the COOPERATIVE shall be considered as payment to the SSS; Provided, that should the COOPERATIVE fail for whatever reason to remit its collections on the date set in Section 3, (d) hereof, the COOPERATIVE shall be liable to pay a Liquidation Fee in the amount set in Section 4, (b) of this AGREEMENT.
(f) Responsibility over the Collections - Until its remittance pursuant to Sec. 3 (c) hereof, the COOPERATIVE shall be responsible for losses due to robbery, theft, pilferage, fraud, or fire committed or caused by its members, employees, agents or representatives.
source : RULES, http://bir.gov.ph/webadmin 1/pdf
COOPERATIVE ANNUAL PERFORMANCE REPORT (CAP-R)
The 2010 fiscal year for cooperatives had ended. It's time for to prepare the required reports for submission to the Cooperative Development Authority (CDA).
As a matter of fact, the CDA had made the call for the submission of such reports by all registered cooperatives. In his briefing on the salient features of the proposed amendments to the charter of the CDA, Atty. Niel Santillan, CDA executive director reminded cooperatives of their annual compliance requirements with the CDA.
He said, "You need to submit 5 reports to the CDA, pursuant to R.A. 9520. These are: Audited Financial Statements; Cooperative Annual Performance Report; Social Audit Report, Performance Report, and a report by the cooperative's Conciliation and Mediation Committee. The latter is a semi-annual report on the controversies or issue that have been brought to the committee, for its conciliation and mediation action."
A perusal of the provisions of Article 53 of R.A. 9520, shows, and we quote: "..Every cooperative shall draw up regular reports of its programs of activities, including those in pursuance of its socio-civic undertakings, showing their progress and achievements at the end of every fiscal year...
The reports shall be made accessible to its members and copies thereof shall be furnished to all its members of record...
...These reports shall be filed with the Authority (CDA) within one hundred twenty days from the end of the calendar year. The form and contents of reports shall be as prescribed by the rules of the Authority..
...Failure to file the required reports shall subject the accountable officer/s to fines and penalties as may be prescribed by the Authority and shall be ground for the revocation of authority of the cooperative to operate as such...”
Another interesting information that Atty. Santillan revealed is that of the some 18,629 cooperatives which registered with CDA under R.A. 9520, as of December 31, 2010, only one-third are affiliated with any federations or unions. He reported that because of this, the officers and directors of many cooperatives are not undergoing the training, as required under the new law.
As a direct implication of this, is that only less than one-third of all cooperatives registered are remitting their cooperative education training funds to these federations and unions. Hence, they could not conduct the trainings due to lack of support. This is some kind of vicious cycle.
What could be more revealing, if not altogether shocking, is the fact that as of January 12, 2011 (the date Atty. Santillan delivered his report) not one cooperative federation or union which conducts trainings for cooperative officers has filed for the accreditation of their training programs with the CDA.
The Cooperative Annual Performance Report (CAPR) is a cooperative reporting instrument that consolidates the requirements currently contained in the Annual Report (AR), Inspection Working Paper (IWP) and General Information Sheet (GIS).
The CAPR applies to all types and categories of cooperatives nationwide. The accomplished CAPR shall be submitted to the Central Office or Extension Offices that has jurisdiction over such cooperative.
LO3. FORMULATE EFFECTIVE POLICIES FOR IMPLEMENTATION
Policy process. What process? The problem is that new policies, and policy decisions, can arise in, and are handled in, a multitude of different ways, as is made clear by Mark Turner and David Hulme:
What must be banished is any lingering idea that policy is some highly rational process in which expert technicians are firmly in control using highly tuned instruments to achieve easily predicted outcomes. Such an image is inappropriate for OECD countries let alone the developing world . . .
But it is often possible to discern a number of separate stages, including
- identify a problem
- research,
- consultation and gaining knowledge,
- exploring options,
- more consultation and
- taking a recommendation through to Ministerial agreement.
However, it is important to realise that the individual stages do not operate sequentially, but overlap as policies become firmed up.
To begin at the beginning, someone has to identify a problem or an issue or an opportunity. That ‘someone’ can include a political party (especially when in opposition and writing a manifesto), a Minister, the media, a pressure group, a think tank, a trade association, an ‘expert’, a member of the public or a civil servant. The difficulty, therefore, is not that there are too few ideas, but that there are far too many, and it is quite impossible to run with more than a fraction of them. The natural result is that both Ministers and officials are forced to spend much of their time in defensive mode, either explaining why nothing will be done or just avoiding the issue.
Some generators of ideas are more likely than others to be listened to. Ministers, obviously, are in pole position – as long as they concentrate on a small number of initiatives and do not come up with a new idea every day. Outside experts and pressure groups can also be very effective, as long as they are truly respected by their peers. And so can civil servants, but only once they have earned the respect of their Ministers.
So there are some lessons in this for the civil servant. First, try not to be over defensive.
The world is full of good ideas, hidden amongst even more bad ones. Your job is to help Ministers identify the good ones, even if they are counter‐intuitive, from an unusual source, or from a highly critical pressure group.
Second, take every opportunity to gain the respect of your Ministers before espousing a novel idea. New Ministers bestow power on those they trust. To begin with, they will prefer to deal with their political advisers and others that have previously supported them through thick and thin. They will come to trust you, as well, and bestow power on you, but only if you earn that trust over a period, and by responding positively to their agenda.
Second, take every opportunity to gain the respect of your Ministers before espousing a novel idea. New Ministers bestow power on those they trust. To begin with, they will prefer to deal with their political advisers and others that have previously supported them through thick and thin. They will come to trust you, as well, and bestow power on you, but only if you earn that trust over a period, and by responding positively to their agenda. Third, seize an opportunity when it presents itself. Don’t let it slip by. The best moments of your career will be when you have put an idea to a Minister, or a Minister has put an idea to you, and you jointly see the possibility of achieving real change. You will dash off to gather colleagues around you, and map out a dramatic and challenging strategy. You will write your ideas up that evening, re‐write them when you have calmed down in the morning, and get back to the Minister, with a really positive program, within 24 hours – and then you really are on your way.
There is a nice example, told by Sir Geoffrey Holland, a former Permanent Secretary in the Education Department, which illustrates much of the above. Every year – a good time ago – the British Safety Council used to send a telegram to the Prime Minister drawing attention to the accident rate in factories and saying that the situation warranted an enquiry. Every year the telegram was passed from Downing Street to the Secretary of State for Employment, and then down through the department until it reached the desk of a middle manager who each year drafted the same defensive reply: ‘The Prime Minister thanks the Safety Council for their telegram, the contents of which have been noted’. But one year the telegram was accidentally seen by a senior official called Charles Sisson who recognized the truth of the point that was being made, and penned a minute agreeing with the Council.
Out of this came the Health & Safety Executive and our whole approach to health and safety at work was modernized.
Gaining Knowledge
It cannot be emphasized strongly enough that our advice to Ministers must be based upon experience and knowledge. It should be the aim of every one of us to be the acknowledged expert in our policy area. Once we have been in the job for some time, it should be a matter of professional pride that no‐one else should understand our patch better than us – and that includes Ministers and our line managers, even if they have the advantage of seeing a wider picture. Conversely, senior officials do not need to be familiar with all the detail that ought to be at the fingertips of others. But they should be able to hold their own in any discussion of the major issues, trends and currents that affect their policy area.
The besetting sin of civil servants is to mix too much with each other. - Sir William Beveridge
It follows that we cannot be effective if we never get out from behind our desks. We must find a way to experience for ourselves the problems or issues with which we are dealing. Seeing, after all, believes. We also need to be familiar with the political context of our work, and to be conscious of the world outside our own environment. Not everyone is a white‐collar worker, not everyone has GCSEs and not everyone lives in the South East of England. Indeed, 99 per cent of the world’s population, and 96 per cent of economic activity, is outside the UK. We need to be aware of opportunities, trends and ideas outside our immediate experience. Without such experience we will never fully understand the arguments, emotions and undercurrents which condition the people and businesses with whom we deal. And only with such experience can we avoid the trap of recasting reality in our own image, and believing that our elegant and logical view represents the only possible view of the issue under consideration.
Gaining experience can also be great fun. For a start, it often involves travel. And although you might be criticized for travelling to interesting places at the taxpayer’s expense, you will be criticized even more strongly – and with more reason – if you never get out at all. And you do not necessarily need to travel very far. I will certainly never forget my pre‐dawn start, sorting and delivering the Royal Mail, or the time when my secretary and I worked together on the production line at Longbridge. Both experiences taught me great respect for those who do such jobs, day in day out, without letting quality standards slip. For instance, it would have been all too easy, with a new car coming along every eighty seconds, to let a mistake go uncorrected in order to be ready for the next vehicle, but no‐one did so. Such experiences also taught me the difficulty of managing in non‐office environments, in out‐dated buildings, and at times of day when none of us are at our best.
By the way, a good place to look for information is in the minds of front‐line staff in departments and local authorities, and in the minds of others to whom the policy is directed. They will very often have a clear idea about why a situation is the way it is and why previous initiatives have failed. You should certainly never rely on middle or senior managers. For instance, Deutsche Bank asked 2.4 million customers and their branch managers and their junior branch staff, to rate branch performance. There was a very high correlation between the junior staff’s perception and that of their customers, while there was almost no correlation with the branch managers’ perceptions and the customers’.
Analysing What You Have Learned
You should not, of course, simply accept all the ‘facts’ that are presented to you.
Statistics can be particularly misleading.
Aggregated statistics can look very different to the underlying figures. For instance, vehicle accident statistics generally include young and accident-prone drivers, as well as injuries to pedestrians and cyclists. Indeed, I understand that a middle‐aged car driver in good weather may well be just as safe, over most long journeys in the UK, as if he or she were flying, which is a very safe form of transport.
Different organizations will record data in different ways. The classic example is in France where, if an elderly person is found dead without evidence of health problems, it is acceptable to attribute the death to ‘old age’, thus reducing the apparent incidence of heart attacks. But crime statistics can be similarly unreliable, as are many others.
The fact that there have been no incidents does not mean that something is safe. It is possible that fewer children are now killed on our roads, not because they are inherently safer than decades ago, but rather because they are so dangerous that many children are not allowed near them.
Death and injury rates can look very different when presented as a number (e.g. number of children killed in an incident) rather than as a proportion of the exposed population per annum.
A report of deaths caused by, for example, air pollution might include a high proportion of those whose death was already imminent, rather than deaths from amongst an otherwise healthy population.
Isolated statistics can give a misleading impression. For instance, the radioactivity of a beach near a nuclear plant may be higher than many others, but is it also lower than other beaches which are nowhere near such a plant?
It is easy, too, to frighten people with ‘science’. 76 per cent of one group of adults, presented with a number of true facts about the chemical di‐hydrogen monoxide, concluded that Government should regulate its use. The other 24 per cent presumably knew that the chemical’s other name is ‘water’.
Scientific ‘facts’ are also often anything but ‘facts’ as you or I would understand the term. Indeed, you can always tell good scientists by the way in which they acknowledge uncertainties, make assumptions explicit, distinguish between what is true and what is speculative, and present options.
By the way, do not be tempted, when faced with a hostile press or a one‐sided lobby, to assemble your own dodgy statistics – or dodgy science – to fight them off. The inevitable result would be that those with whom you are trying to communicate would then see you as prejudiced and/or adversarial, and you might also then fail to pay insufficient attention to perfectly reasonable arguments from ‘the other side’.
Moving beyond science and statistics, you must remember that it is unfortunately in the nature of our society that most correspondents, and most of the people that we meet, will present a one‐sided view of an issue, drawing attention to all the relevant facts and arguments which support their case but failing, either deliberately or through sheer conviction, to take account of inconvenient facts or opposing arguments. But as you gain experience, you will quickly learn to detect the pure advocate or a non-sense.
Take care, therefore, not to be too trusting and bear in mind the famous warning that ‘He would say that, wouldn’t he!’ No one who is applying for a grant will tell you that they will in fact go ahead even if they do not get it, and no businessperson will tell you that the principal purpose of their latest acquisition is to build market power. Similarly, most people are reluctant to admit their errors, and their reluctance will be in proportion to the seriousness of their error. Therefore, if you are questioning the propriety of someone’s behavior, be cautious about attaching significant weight to the views of the person being questioned. Find out the facts and let them speak for themselves.
The same applies, but less strongly, to professional advisers. Lawyers, accountants and merchant bankers are employed by their clients to persuade you to do certain things. They will usually tell you the truth, but not necessarily the whole truth. They will also sometimes imply, and indeed believe, that their opinion (e.g. about the viability or prospects of a company) is a fact. If your instinct is to the contrary, then rely upon your instinct, at least to the extent of probing further.
SOURCE : Civil Servant, http://www.civilservant.org.uk
.POLICY FORMULATION AND PROCESSES