In Search of Cooperative Management by Tadit Anderson May 15th 2009
Often “mangement” in cooperatives has been a liability relative to the ability of a business to produce wealth on a sustainable basis and relative to its effect on its community. Even so, these difficulties do not really distinguish the management of cooperatives from management perpetrated elsewhere. Personalizing the faults of prior management after the fact does not address why management with in name only prior experience was accepted at the time and doesn't do anything toward changing the concept of management within cooperatives. If cooperative management remains at the level of sand box politics or corporate charades, we will never represent much more than a glinting possibilty and a lot of trauma. In the next breath let's also admit that much of what passes for management out of business schools is more ideology and imagined entitlements, than a skill set.
When the two word roots, “oikos” and “nomia,” are combined the definition of the resulting word would be “household management” or “community management.” If we suppose that the meaning of a word could be derived from its application, then by measuring the success of “economic” policies in favor of wealth accumulated by the few, and by the extraction of wealth from communities, then the field has been mis-named. If the term describing these policies was changed to better reflect both the actual outcome of those policies then it should be something like olig-nomics or crony-nomics, as management in the interest of the few. If a political system routinely produced such policies under the category of “economics,” then “oligarchy,” “not democracy,” would be an accurate description. The economics of cooperatives needs to be closer to the original meaning of economics, as in management by the community in the interest of the community. There needs to be a type of management and commerce which is different from the elitism and naked class warfare of the financialized version of economics.
If the word “mangement” is to be true in its practice to the original meaning of “economics” then the processes of community would be central to its functions and priorities. Progressive management treats management as a function which can be shared within a community in the interest of perhaps a larger community. This would press for the reintegration of labor in the reproduction of an open community. Conventional corporate management treats “manager” as a position somewhere in a sometimes complex hierarchy of elite management functions.
Progressive management depends upon its ability to support an active form of group cooperation toward goal oriented problem solving and production. It tends to value knowledge, communication, imagination, and the facilitation of cooperation. Decision making based upon objectives and outcomes is favored over decision making based on rank, the promotion of competition, and other structural violence. It values both social skills and technical facility. The use of financial data and analysis is equally important within both management paradigms, with adaptations to the different ways of structuring the priorities, work and costs of the business.
Typically management within cooperatives has been confused, ad hoc, or invested in the authoritarian version of corporate management. Few cooperative managers show any evidence of being aware of progressive management as a different perspective on the process of management. And most cooperative board members seem to be even less informed. A few cooperatives have had individuals whose personal styles and values as managers have caused them to lean toward a progressive sort of world view. Even so it is doubtful that they were aware of the progressive management perspective. Lacking an appreciation for progressive management, its organizational culture will often revert to the corporate form of management and “leadership.”
Conventional management tends to move accountability downward and the power of decision making upward. Conventional management is risk adverse and this will limit its capacity for problem solving. In moments of distress or crisis the practicalities of cooperation and community are often pitched over the rail in favor of the comforting superstitions and the fig leaf of authoritarianism. The alternative to conventional decision making is not decision making based upon majority rule, but upon outcome focused decision making.
Progressive management in its extension has proven itself to be more nimble toward adapting to changing markets and more effective in the utilizing of employee capacites and experience. Progressive management relates to employees who work as a part of any particular business as a part of its community of interests. Anyone familiar with the nature of successful small businesses will recognize the pattern.
Consumer cooperatives are by their traditional structure composed by members who are both owners and patrons, and the employees who are often attracted to the value placed upon community look to find it also in daily practice. Progressive management is known for a number of techniques which were later abused by conventional management. This list includes “management by objectives,” "just in time" inventory control, "quality circles," the virtual organization, and team building. In using management based upon the process of community the contributions of each employee are respected.
A major factor of the temporary success of the generation of cooperatives established in the 70s around natural foods and various related production was that they began in a niche market that was not strongly contested. Those cooperatives made major contributions to the development of those markets, and then proceeeded to lose market share to businesses which were less prone to self inflicted damage, less conflicted about the nature of management, and often better capitalized. The corporate investment in this market doesn't necessarily mean that they are better managed overall or that their services and products are necessarily produced in a more ecological or just manner. We don't have a such an open niche to occupy at this time, and thereby we have less latitude to avoid taking what we are doing seriously.
Conventional management tends to be committed to reducing the costs of labor and other inputs such as raw materials and energy in favor of maximizing the return on a short term basis. Another part of this strategy shifts certain expenses such as, the cost of maintaining the infrastructure necessary to sustain an economy and the costs of waste, pollution, and related health hazards shifted onto the public. All of this is intended to increase the return on the investment held by stock holders and private equity holders, and to increase the benefits to management in the way of salaries, stock options, and other benefits. If the concept of “community” is used within this strategy, it is posed as being the recipient of trickle down benefits from the few. It is strongly biased toward conformity to authority, supposed elite professionals, and other versions of shut up and shop.
Other negatives include that financialized management tends to reduce improvements in related production technologies, to decrease the development of new products, and to limit financial analyses to short term profits. The possibility of sharing the management function and that non-management staff might have significant contributions toward operational efficiency and effectiveness are regarded at this level as being ridiculous or worse socialist. The financialization of business is more about wealth extraction and the reproduction of corporatist authority and class divisions, than wealth production. As such, it is fundamentally unsustainable in several different ways.
Cooperatives have tended to place themselves in the contradictory stance of imitating the authority structures of corporate management, without even having enough financial competence or even knowledge of basic good business practices to increase the retained earnings of that business without massively exploiting both non-management staff and the members. With just a little bit of imagination and curiosity the management of cooperative businesses would look more and more like progressive management. The Rochdale Pioneers created a model not just for cooperatives, but also for progressive management.