Unit 2: Co-operative Management

Co-operative Management

Co-operative management means managing a cooperative organization in a way that maintains its democratic character, fulfills members’ needs, and follows cooperative principles.
It is different from ordinary business management because the goal is service to members, not profit.

Objectives of Co-operative Management

The main objectives (goals) of cooperative management are:

Objective	Explanation (in simple words)
1. Member Welfare	To improve the economic and social condition of members.
2. Democratic Management	To manage the cooperative based on democracy — one member, one vote.
3. Efficient Operation	To ensure proper planning, coordination, and use of resources.
4. Self-Help and Mutual Help	To encourage teamwork and collective growth among members.
5. Financial Stability	To maintain financial discipline and transparency in operations.
6. Education and Training	To educate members, employees, and board members about cooperative values and management.
7. Social Development	To support community welfare activities and sustainable growth.

In short:

“The objective of cooperative management is not to maximize profit, but to maximize member satisfaction and community welfare.”

Functions of Co-operative Management

The functions of cooperative management are similar to general management but with a democratic and social focus.

Function	Explanation (in simple terms)
1. Planning	Setting goals, preparing action plans for cooperative growth.
2. Organizing	Assigning roles and creating structure — board, committees, staff.
3. Staffing	Hiring and training employees like managers, accountants, clerks, etc.
4. Directing	Guiding and motivating staff and members to achieve cooperative goals.
5. Coordinating	Bringing all departments and members together to work efficiently.
6. Controlling	Checking performance, reviewing accounts, and ensuring laws are followed.
7. Reporting and Communication	Sharing information with members about activities, profits, and issues.

Example: In a dairy cooperative, management plans milk collection, organizes transport, trains farmers, controls quality, and reports to members regularly.

Democratic Structure in Cooperatives

A cooperative runs on democratic principles, meaning members are the owners as well as the decision-makers.

Key Features of Democratic Structure:

1. One Member, One Vote – Every member has equal voting rights, no matter how much capital they invest.
2. Elected Management – Members elect the Board of Directors through voting.
3. Accountability – The board and management are answerable to the general body (members).
4. Transparency – Regular audits and open meetings ensure fair decision-making.
5. Participation – Members participate in planning, decisions, and policy-making.

Organizational Structure of a Cooperative

A cooperative has four main components in its structure:

(a) Membership

• Members are the owners and users of the cooperative.
• They join voluntarily and invest share capital.
• Members enjoy rights (voting, profits) and have duties (attend meetings, follow rules).

(b) General Body

• It is the supreme authority of a cooperative.
• Includes all members.
• Meets at least once a year in the Annual General Meeting (AGM).

Approves:

• Annual report & accounts
• Election of the Board
• Amendment of bye-laws
• Auditor’s appointment
• Future plans

(c) Board of Directors (Managing Committee)

• Elected by the General Body.
• Usually 7–15 members.
• Responsible for policy decisions and supervision of operations.

Functions include:

• Approving loans (in credit cooperatives)
• Budget and investment approval
• Appointing CEO and staff
• Ensuring compliance with laws

(d) Chief Executive Officer (CEO) / Secretary

• The administrative head of the cooperative.
• Appointed by the Board.
• Responsible for day-to-day management.

Duties include:

• Implementing board policies
• Managing accounts, records, and staff
• Submitting reports to the board
• Maintaining communication between board and employees

Bye-laws of a Cooperative Society

Bye-laws are the internal rules and regulations that guide the working of a cooperative society.
They act as the constitution or rulebook of the cooperative.

Contents of Bye-laws

1. Name and address of the society
2. Area of operation
3. Objectives and functions
4. Membership rules (joining, resignation, expulsion)
5. Share capital and liabilities
6. Structure and powers of General Body and Board
7. Audit and accounting system
8. Procedures for meetings
9. Distribution of profits
10. Method of amendment of bye-laws

Amendment of Bye-laws

Sometimes, a cooperative society needs to change or update its bye-laws to meet new challenges or legal requirements.

Procedure (Step-by-Step)

1. Proposal: A proposal for amendment is prepared by the Board of Directors or at least 1/3 of the members.
2. Approval by General Body: The proposed amendment must be approved by 2/3 majority of members present at the General Meeting.
3. Submission to Registrar: The approved amendment is sent to the Registrar of Cooperative Societies for registration.
4. Registration and Effect: Once the Registrar approves and registers the amendment, it becomes legally valid and part of the society’s bye-laws.

7. Summary Table

Topic	Key Points
Objectives	Member welfare, democracy, efficiency, education, social development
Functions	Planning, organizing, staffing, directing, coordinating, controlling
Democratic Structure	One member-one vote, elected board, transparency, accountability
Membership	Voluntary, equal rights, responsibilities
General Body	Supreme authority; approves accounts, elects board
Board of Directors	Policy-making, supervision, appoints CEO
CEO	Day-to-day management, implements board decisions
Bye-laws	Internal rules of the society
Amendment	Needs 2/3 approval from members and Registrar’s registration

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8. Conclusion

Co-operative management is a blend of business efficiency and democratic control.
It ensures that a cooperative:

• Runs like a professional business, and
• Stays true to its social and moral values.

“Cooperative management is not just about managing money, but managing people with a shared purpose.”

Co-operative Leadership and Management

Special Features of Co-operative Leadership

Leadership in cooperatives is different from leadership in private companies.
In a cooperative, the leader is not just a boss — they are a guide, motivator, and representative of the members.

Key Features:

Feature	Explanation (in simple words)
1. Democratic Leadership	Cooperative leaders are elected by members, not appointed by owners. Every member has equal voting rights.
2. Service-Oriented	The leader’s goal is service before profit, focusing on the welfare of members and community.
3. Participative Decision-Making	Leaders involve members and the board while taking major decisions — not autocratic.
4. Ethical and Transparent	Leaders must be honest, fair, and transparent in all cooperative activities.
5. Educational Role	Leaders encourage education and training among members and employees.
6. Accountability	Cooperative leaders are answerable to the General Body for their decisions and actions.
7. Team-Building Approach	They promote teamwork and cooperation between board, staff, and members.
8. Long-Term Vision	Leaders focus on sustainable growth, not short-term profits.
9. Social Responsibility	They work for the development of the local community and society.

Example: In a dairy cooperative like Amul, leaders ensure fair milk prices for farmers, ethical marketing, and continuous member education.

Cooperative Elections

Since cooperatives are democratically managed, elections are an essential part of their governance.

Cooperative elections mean the process of electing members to the Board of Directors and other committees as per cooperative laws and bye-laws.

Features of Cooperative Elections

Aspect	Explanation
1. Democratic Process	Elections are held on the principle of one member, one vote, regardless of shareholding.
2. Regular Elections	Must be held at fixed intervals (usually every 3–5 years) as per the Cooperative Societies Act.
3. Fair and Free Elections	Conducted under the supervision of the Registrar of Cooperative Societies or an authorized election officer.
4. Eligibility	Only active members (who have used cooperative services and paid dues) can vote or contest.
5. Secret Ballot	Voting is done confidentially to ensure fairness.
6. Representation	Ensures representation of all sections — e.g., women, weaker sections, or specific groups if required by law.

Election Process (Step-by-Step)

1. Announcement: Election date is declared by the Registrar or Election Officer.
2. Nomination: Members file nominations to contest.
3. Scrutiny: Eligibility of candidates is verified.
4. Withdrawal: Candidates can withdraw nominations if they wish.
5. Voting: Members cast votes (usually by secret ballot).
6. Counting & Results: Votes are counted, and elected members are announced.
7. Formation of Board: The newly elected Board elects key office bearers like Chairman, Vice-Chairman, and Treasurer.

Importance of Cooperative Elections

• Keeps leadership accountable and transparent.
• Ensures fresh ideas and participation from all members.
• Maintains trust and democracy within the organization.

Need for Professional Management in Cooperatives

Even though cooperatives are democratic, they still need professional managers to handle daily operations efficiently — especially as they grow in size and complexity.

Reasons for Need of Professional Management:

Reason	Explanation (in simple words)
1. Increasing Business Volume	Modern cooperatives handle large-scale business (banking, dairy, marketing), which requires professional skills.
2. Technical Expertise	Professionals have knowledge of finance, marketing, HR, and IT — essential for modern business.
3. Efficiency and Productivity	Professionals ensure better planning, control, and coordination to increase output and reduce waste.
4. Member Satisfaction	Good management improves service quality and trust among members.
5. Financial Discipline	Professionals maintain proper accounting, budgeting, and auditing.
6. Competition	To compete with private companies, cooperatives need trained managers and modern systems.
7. Long-Term Sustainability	Professionals ensure that cooperatives remain stable and adaptable to market changes.
8. Balanced Decision-Making	They help bridge the gap between the democratic board and the operational staff.

Who are Professional Managers in Cooperatives?

These are qualified and trained personnel (like MBAs, accountants, or technical experts) appointed to assist the Board and CEO in day-to-day management.

They work under the policy direction of the elected board but bring efficiency, innovation, and professionalism to the system.

Summary Table

Topic	Key Points
Cooperative Leadership	Democratic, service-oriented, ethical, participative, transparent
Cooperative Elections	One member-one vote, periodic, fair and free, supervised by Registrar
Professional Management	Needed for efficiency, expertise, competitiveness, financial control

Conclusion

Cooperative leadership combines democracy with professionalism.
While elected leaders represent members’ voices, professional managers bring skill, efficiency, and innovation.
Regular elections ensure accountability, and together, they make cooperatives both member-driven and well-managed.

“Democracy gives cooperatives their heart; professionalism gives them their strength.”