Co-operative Management.

The missing element for success in membership based organisations.

The University of Leicester programme of research and teaching. *
*Draft only for personal use, not reproduction. This paper was presented at the
congress, Mapping Co-operative Studies in the New Millennium. Please contact the
author for permission to reference or quote this page. pd21051947@hotmail.com

By Dr Peter Davis
Introduction.
Co-operatives have been around a lot longer than the University Schools of Business and
Departments of Management most of which ignore their existence. There is an irony here as
the man that inspired co-operation was himself the first prototype of a successful manager.
Robert Owen was the product of the early wave of British industrialisation. Robert Owen and
the model factory he managed was built in New Lanark to the latest design in terms of
production and technology. But the social and environmental relationships between
management and the workers and their families was where the real revolution occurred. The
discipline of management, however, was not really developed until much later in the era of
industrial development known as Fordism. It did not take as its reference point the model of
management that was personified by Robert Owen.
In Owen we have the prototype for the Co-operative Manager as a value based professional
pursuing as their vocation the good of society. Capital is the instrument and people the
subject for the organisational and other methodological practises of Co-operative
Management. For example, Owen refused to use child labourers when such practises were
widespread in Britain (as they remain in many parts of the world today). For Owen the
holistic condition of the worker from their housing to the education of children as well as the
human conditions of production was the concern of management. (1) We can deduce from his
behaviour as a manager at New Lanark that Robert Owen saw management as an instrument
of human labour at the service of society in which production of wealth was the means not
the ends. Today the movement needs Co-operative Managers as never before. At Leicester
we have developed a co-operative value based post-graduate management development
programme by distance learning in an attempt to service this need. Our programme is based
upon four pillars which I will review in the following four sections in this paper. These
pillars are:
1. An analysis of the reason management has been such a difficult and problematic concept
for co-operatives and other organisations of labour.
2. An analysis of the development of mainstream Business School led management theory.
We point to its latest stages linking growth in value added to success in value based
management through an emphasis on organisational culture, attitudes and values. In this
context we shall also attempt to show the evolution of the concept of quality through
essentially four stages: quality management as an engineering specification; an
organisational commitment; a marketing led customer determined specification; to its most

recent development as a holistic corporate social and environmental auditing function

incorporating cultural values linked to new social and environmental standards.
3. The idea of Co-operative Value Based Management as both a legitimate humanistic and
creation centred strand of the new value based and holistic quality management. This
alternative approach to the mainstream management culture suited particularly to cooperatives and other social economy and stakeholder based organisations. We suggest that
the combination of the newly emerging holistic standards of quality with co-operative valuebased management can represent an enormous commercial and social opportunity for cooperatives. (2)
4. Low cost, easy access, through a distance-learning programme of studies, for managers
and members of co-operatives. We try to address the needs of co-operative and credit union
managers from all parts of the globe to study co-operative management and achieve an
internationally recognised validated management qualification. In this section I will share
some of the challenges we have faced in pioneering the first distance learning programme in
co-operative management and organisational development at masters level and our attempt
to define co-operative management as an integrated set of values and principles that
acknowledges management and leadership as integrated functions in the modern co-operative
context.
1. Why has management been such a difficult and problematic concept for co-operatives
and other organisations of labour?
Unfortunately for the co-operative movement and for those other membership based
associations of labour, trade unions, labour parties, and mutual associations Robert Owen was
more concerned to promote his twin passions for social justice and education than he was to
systematise his philosophy as to the practical implementation of management. Thus
Scientific Management Formulated in F.W. Taylor in his Principles of Scientific
Management (1911) was designed around a century later to serve the interests of the capital
based investor led business. Taylors ideas were left by default with a clear field to generate
the idea of management as a value neutral science. As a result this approach to management
was influential not simply in countries like the USA but also in Lenins Russia and Maos
China. (3)
Socialists, Co-operators and Trade Unionists have over the years by default mistaken the
process of democratic governance for that of management and management for that of
administration. The problem that Roberto Michels raised of the danger of the iron law of
oligarchy subverting the organisations of labour was never properly addressed from the side
of management. (4) Instead labour movements the world over have tried to use the
democratic process of governance as a policing function to control its own administration and
to generate the policies that administration was to pursue. As a result the experience of all
three organisations is littered with bitter recriminations, betrayal, disillusionment, broken
promises and missed opportunities.
Of course there have been many co-operatives that have flourished and grown and on such
occasions we always find a strong purposeful character at the head of the co-operative with
natural ability to manage and a charismatic personality capable of exercising leadership and a
vision that motivates people to work together to bring the vision to reality. The problem is
that these occasions are the result of a chance process not a matter of systematic

development and selection of the right candidate for the job of managing the organisations of
labour. Often well intentioned persons in positions of leadership have lost their way
becoming confused by the division established by Scientific Management between cooperatives social goals and values and the so called neutral economic and organisational
principles encompassed by what has become known as the discipline of management. In
fact what co-operatives need is a profession of management which is capable of drawing on
numerous disciplines at the service of co-operative values and purpose.
Co-operative Management needs to be seen as a statement of the implementation of Cooperative Identity and as criteria for the systematic development and selection of candidates
with whom the management of co-operative and other associations of labour may be
entrusted. (5) It is time we addressed the old challenge of Michels iron law of oligarchy
from the inside of management as a question of defining the goals and vocation of a
profession of co-operative managers whose professional association must be itself established
as part of the wider community of labour. In doing so we challenge the idea, central to
Scientific Management, that management is value free and neutral.
Given the track record of both western and communist managerial bureaucracies it is not
surprising that co-operators and other workers in the labour movement so often consider
management as a dirty word. The sacrifices and harsh conditions of labour under Stalin and
Mao continued in the so-called Socialist countries right up until their collapse. Communist
China today provides a pool of cheap controlled labour, which may not strike, for the
profitable elite corporations of the west to exploit. Nor should we forget that the
militarisation of labour was not Stalins but Trotskys idea originally. (6) Managerial elites
took over the communist states and this led to the collapse of State Communism both as a
serious contender to challenge capitalism and as a promise for the liberation of labour. One
of the earliest critics to chart the distortion of these revolutionary organisations of labour
Roberto Michels identified a number of factors that enabled this process to take place.
The first was the fact that information is power and that the leaders, or executive managers in
modern parlance, are in a position to access and filter this information to support their own
interests and power. Secondly their involvement and superior education gives them greater
ability to manipulate the organisation rules and regulations to their advantage particularly
during the conduct of meetings where challenges to their authority can be deftly headed off
by procedural means. The converse of this is the relative ignorance and lack of skill on the
part of the rank and file or ordinary members. In addition to these disadvantages Michels
noted a characteristic feature of the people that has constantly been complained about by
activists namely their apathy. (7) Michels hoped his book might awaken the masses to
defend their organisations. He too became disillusioned and ended up as an apologist for
Fascism as Professor in Economics at Perugia University. (8)
The work of Michels has led to a lot of studies suggesting this problem can affect all forms
of organisation. Certainly there have been other studies of popular movements the most
celebrated of these studies includes Lipset et al. Union Democracy (1956), Selznick, TVA and
the grass roots (1966) and in general the problem dealt with by this literature has became
referred to as the problem of goal displacement. (9)
An even earlier example of managerial complicity in subversion may well be found in the
celebrated British Rochdale Co-operative Society (founded in 1844) in the failure of its Flour
Mill experiment in co-partnership with flourmill workers in 1862. The facts are that external

investors gained a majority control and out voted the worker members and the Rochdale
Society shareholding. Their objective was that of abolishing profit sharing and reducing the
workers to little more than employees rather than partners in production that had been the
intention of the Rochdale Co-operative Society directors.
The general manager of the mill was JWT Mitchell who later becomes the general manager
of the British CWS and a fierce opponent of worker co-operation and any idea of profit
sharing with the workers. It was he along with Beatrice Potter (later Webb) who defined and
promoted the idea of Consumer Co-operation as the true form of co-operation. It is hard to
credit that Mitchell did not know what was happening in terms of the balance of power in the
Rochdale Mill even if he did not actually orchestrate the take over himself. The last
suggestion is quite probable given his later public position on the question of worker cooperatives and profit sharing. (10)
Had Mitchell acted to prevent the subversion of this experiment, which on all accounts had
been a brilliant success commercially, the Rochdale Society might not have been a celebrated
as the first consumer co-operative society. The Pioneers themselves had intended the Flour
Mill project as a practical expression of co-operation between consumer and producer uniting
all aspects of the economy to form a co-operative community. This was Owens vision but in
a more practical and modern industrial format as many of the early English Labour
Economists like John Francis Bray had urged. (11) Had Brays voice been heard and
understood the divisions that occurred within the Co-operative Union in the 1860s onwards
may have been avoided. (12) The Rochdale Co-operative Society may have been the most
celebrated co-operative to take managements commitment to its policies for granted to its
cost, but it certainly was not the only one. Hall and Watkins, historians of the British Cooperative Movement, found that in twelve studies of co-operatives failure six could be
attributed to management subversion or failure. (13)
Whilst fraud and embezzlement has been equally a feature of investor led businesses the cooperative form of business makes this a particular problem for three reasons. First, as
Michelle noted the owners (members) are in terms of intellectual ability, knowledge and
skills mainly at a disadvantage in relation to their managers. Second, the ownership structure
in a co-operative means that its non transferable shares are not subject to the external scrutiny
of the capital market where any concerns about the profitability of a listed company will
translate into a decline in share prices. Thirdly, the objectives of a co-operative are not
always easily clearly defined in quantifiable terms, particularly their social goals, which can
make accountability and performance measurement complicated and sometimes easy to
fudge. The insider attempt to subvert the former CWS Ltd, now the Co-operative Group, is
still a fresh memory.
Today the economic realities of globalisation are forcing the co-operative sector to merge and
even acquire new businesses. Under these conditions the lay boards dependency on
professional management can only grow. Given the disadvantages the lay boards will have
vies a vies their managers the need to revise the relationship and move from a civil service
model of division of powers to a value based model which incorporates a unified culture and
recognises the role and responsibility of management for the whole co-operative enterprise.
(14) I am not challenging the need for governance and accountability to the membership.
This cam is taken as read. The issue is that this is not enough. We must address the character
and quality of management in co-operatives and we must recognise the need for professional
co-operative leadership inside board, which is not only accountable in terms of rules but

participative and committed in cultural and value terms as well. Before we explore this
proposition in more detail let us first consider the evolution of mainstream management
thought in order to define the distinctive nature of Co-operative Management.
2. The four phases in the development of modern management.
The four phases that can be identified in the evolution of modern management are in
chronological order: Scientific Management; Human Relations Theories; Contingency
Theories; and currently Value Based Management. This forth phase is as yet not so clearly
established as a theme in the literature under this title but its contours are clearly evident in
the emphasis on Change Management, Culture Management, Learning Organisations, the
importance of Corporate Mission Statements, Human Resource Management, Relationship
and Stakeholder Management and the greater emphasis on Corporate Values in Customer
Care programmes, Marketing, Public Relations and Corporate Social Responsibility
programmes.
Shared values are critical within organisations in order to provide the empowerment and
devolution of decision making for staff so necessary for the implementation of Total Quality
Management. They are also critical for the management of the Intellectual Capital residing in
employees, customers, and suppliers. Management uses values to optimise those resources
and ensure organisations meet quality standards at least cost options to gain maximum
competitive advantage. What we have however in these four phases is not the rejection of the
previous phase so much as its incorporation to meet changing competitive and macro social
and economic environments. The past is repackaged but not rejected thus we argue
management retains continuity whilst developing new tools and strategies to meet changing
circumstances.
2.1 Scientific Management and Human Relations Theories.
The socio-economic context for the rise of Scientific Management can be summed up in
terms of four key factors; a) the closure of the American frontier; b) the growth of
industrialisation and with it the emergence to prominence of a middle class of technocrats
and engineers; c) the growth of Trade Unionism and industrial unrest; and, d) the continued
development and application of technology to increase specialisation, the division of labour
and mass production systems. (15) Taylors approach had four components to it. Firstly,
functional specialisation based on separate foremen to control gang work, speed, repairs
and what Taylor called a thinking department. The second component is work-study. This
was based on observation of the best workers from which an analysis and breakdown of the
elements involved in the task could be made. This was followed by the elimination of those
elements that were unnecessary and the selection of the quickest elements, which were, they
constructed into the most effective sequence. The third component was that of selecting and
training the worker. Physical and psychological profiling was seen as the means to get the
best fit between the job and the worker. This was then supported by training in the one best
method for the job in question. Finally, motivation was to be by piece rates to ensure
maximum productivity as income was to be clearly related to effort. (16) Littler (1982)
has summarised the Taylorite operating principles into the following;
1. A general principle of maximum fragmentation, which decomposes work into its simplest
constituent elements or tasks.

2. The divorce of direct planning and the doing the work, thus removing as far as possible
any discretion in how the work is to be performed.
3. The divorce of direct and indirect labour, which embodies the principle of task control.
Here a planning department was envisaged to plan and co-ordinate the manufacturing
process.
4. Minimising skill requirements and job learning time.
5. Reduction in the material handling to a minimum through mechanisation, finding the
single best way to do the job and by close supervision and work-study. (17)
Taylor saw the exercise of management as a positivistic science. As such there was
ironically a strongly ideological element to Taylorism. To be scientific is to be
progressive, true and ultimately legitimate. An ironic echo of Marxs own positivistic and
deterministic Scientific Socialism. Management and labour should according to Taylor be
in partnership where labour could rely on managements superior knowledge to support the
workers need to increase earnings. Thus industrial conflict would be eliminated by the
increased wealth that greater efficiency would bring. This point is taken up in a recent
review of Taylor by Wagner-Tsukamoto where the latter draws attention to Taylors
motives to establish a resolution of industrial conflict that would lead to a just distribution of
the wealth. The writer noting the failure of the concept of hearty co-operation does not view
this so much as an obvious failure for Taylors agenda but as a shift in perspective back
from behavioural to institutional frameworks. (18)
Wagner-Tsukamoto in his discussion of Taylor by fixing on the institutional economic and
organisational behavioural focus of Taylors work misses the impact of deskilling in terms
of the labour market. Here the only possible result could be to undermine the level of
market price of labour, which, added to the dehumanising content of the work, could not
hope to produce a reconciliation of industrial relations conflict. Taylor saw humanitys
involvement in work to be purely economistic and instrumental. The essence of Scientific
Management is standardisation through achieving best practice through careful selection,
rigorous training and close supervision based on a division of labour in which decision
taking is separated from the execution of tasks. The objective is to increase the productivity
of labour through control of the worker in terms of their time and motion by a mix of close
supervision and financial incentives and the destruction of all craft - based discretion on the
part of the worker. (19)
Scientific Management was challenged by a number of writers who began to draw upon
older ideas of 'welfare' and allied them with new discoveries in psychology and social
psychology. The psychological emptiness of Taylors approach with its instrumental and
one-dimensional model of the worker and the workers relation to work was an obvious area
for attack. Nevertheless, much of modern work-study, ergonomics, job design and not least
quality control, and quality assurance owes a great deal to Taylors. Some American union
leaders embraced Tailored philosophy whilst simply wanting the right to negotiate the rate
for the job. The crudity of Taylors economise and the barrenness of the social content in his
approach, however, was rejected by many academics and some social segments of
management more strongly influenced by an older paternalistic welfare oriented model of
management.
The 'Human Relations' approach to management argued that the social dimension in
organisation was the key to motivating workers, and that management approaches based
solely on formal technological, bureaucratic and market constraints was inadequate. The

advent of research into fatigue, the discovery of problems of monotony and the recognition
that sociological and psychological factors were leading to continued alienation of the
worker lent support to this position. Human Relations theorists were trying to respond to the
rootless ness, materialism and individualism of urban American life and the continued
industrial conflict that it had created. (21)
They accepted the Tailored view that rule by a technical elite was inevitable but saw
industrial conflict as a symptom of a maladjustment in industry that was required to be
corrected by a socially skilled management and working arrangements that reflected human
beings social needs. If the worker for Taylor was a brute only obsessed with making money,
in the work of Elton Mayo, the promoter of research into the Human Relations approach, the
worker now became somebody obsessed with belonging and togetherness. Since Mayo
social psychology has played an important role in developing theories of management
practice. Group dynamics, motivation studies, counselling/mentoring, team building,
leadership, welfare and employee communications all have developed within the Human
Relations school tradition. (22) The workgroup could now become an established focus for
maintaining quality standards and for their improvement.
The Human Relations paradigm, however, shared many of the goals of scientific
management including;
...Improving co-operation in the workplace, increasing productivity, and justifying
managerial authority.........The supporters of both scientific management and human relations
hoped to find one best way of organising, but the organisational techniques proposed
differed greatly... (23)
The importance of team work and the empowering of the group by giving it responsibility in
the search for continuous quality improvement and the elimination of waste was possible
thanks to the prior work and assumptions worked out in Human Relations Theory.
Five phases may be detected in the development of thinking on Quality Management. (24)
The first three of which draw heavily on Taylorite methods and approach (if in a more
refined or developed manner). The first development has been characterised as Quality
Control and involves essentially the detection of faults at the point prior to delivery at the
end of the production cycle. (25) These techniques were widespread by the 1920s. It was
essentially a process of setting standards and monitoring outcomes. The standards
themselves have been identified as deriving from two separate meanings given to the term
quality in this context. The first being in terms of the excellence or grade of specification in
terms of production and delivery. The second, a latter stage in the emerging understanding of
quality, saw performance measured in relation to the customers expectations or
specifications (TQM). (26)
Taylorite ideas informed the objectives and rationale of the former, and provided much of the
inspiration for the methodologies used in Quality Control and latter in Quality Assurance.
The latter is essentially a refinement of Quality Control that focuses on the process rather
than the results. It is concerned with the procedures for assuring that quality standards are met
through procedural compliance (one best way - Taylor) and conformity to specification.
Essentially BS 5750 and ISO 900 are quality assurance systems. (27) However, Quality
Assurance does get used more widely and can be used to describe systems that are more aptly
defined as Total Quality Control (24) With Total Quality Control we move into the area of

culture and attitudes. The focus moves to include all aspects of the organisation and whilst
including all the Quality Assurance features pursues the elimination of waste and non-value
added procedures; the search for continuous improvement through refinement of quality
control systems; and the use of computer aided techniques such as Just in Time. (28) Gaining
acceptance of support departments to collaborate and instilling a positive attitude and
commitment to waste elimination and the search for continuous improvement is more than
techniques, procedures and specifications it is a struggle for the hearts and minds of the
employees.
The Japanese Union of Scientists and Engineers and particularly their Quality Control
Research Group (commenced in the late 1940s) picked up the ideas implanted by American
production engineers lecturing in the 1950s like W.C. Deming and later by the total
approach advocated by A.V. Feigenbaum which led to the Japanese innovation (linking the
technical and social dimensions of work) of Quality Circles originally conceived as study
groups for foreman. These development led eventually to Total Quality Management
(TQM) (29) TQM has been defined as;
... 1) involvement of all functions
2) Involvement of all employees
3) Continuous improvement as a goal
4) The emphasis on the customers definition of quality. (30)
To these elements Graham (1991) adds that TQM is ...a process of habitual improvement
with control embedded in and driven by the organisational culture.....The foundation of this
theory is the generation of participation, involvement, pride in work and the removal of fear
from organisations (31)
In TQM we see the beginnings of the systematic integration of the insights of both schools
of thought. Scientific Management contributing most to the attainment of excellence or
grade specification and cost control elements in TQM. Whilst Human Relations contributed
to the involvement ( organisational behavioural aspects) of
employees in the search for
continuous improvement and waste elimination in TQM. The problem with the Human
Relations approach, however, lay not just in its one-dimensional emphasis on the work
group or in its failure, alongside Scientific Management, to emphasise the role of the
customer in the determination of standards. Its most damaging weakness lay in the
incomplete definition of its central premise, namely the nature of the social man it was
concerned to manage. Its micro level focus on the work-group ignored the macro level
determinants of social solidarity and social conflict. The relations of production and the
technical basis determining the labour processes in which those relations became articulated
were ignored by its business school promoters if not entirely by its founders (32). Labour
Relations are not ultimately determined by the dynamics of small work groups but by the
dynamics of the marketplace itself, both the markets for labour and the markets for shares,
and by the prevailing leading edge technologies available to the owners of the means of
production.
The further refinements leading to the development of TQM built on the idea of quality as
customer led and with it the recognition that standards of quality were themselves contingent

on the definition of the market niche being addressed. But putting the customer in the
driving seat still requires organisational behavioural responses in terms of customer care
programmes and engineering or IT solutions to ensure in scientific management terms that
managers find the least cost option to meeting customer requirements.
2.2 Structural Analyses and Contingency Theory of Management
If Scientific Management and Human Relations Management both had visions of an
improved or better tomorrow based on a unitary view of the organisation led by a managerial
elite, Structural Analysis can be said to be much less strident in its ideological
pronouncements. The increasing size and complexity of business organisations in the 1960s
and the increase in oligopolistic competition as more markets became dominated by giant
firms led to a sense of greater managerial discretion. With this discretion came greater
variety in organisational forms not least because of issues arising from alternative integration
and disinvestments strategies and the most appropriate structures for their management.
Modern structural thinkers argued that the analysis of the technology and the competitive
environment of the organisation could help to find the adequate organisational structure
within the framework of Weberian and structural functional sociology as well as modern
behavioural management theory. (33)
It was Joan Woodward in Management and Technology (1958) who is purported to have
made the first concise statement of contingency theory in management. Her studies indicated
that there was no one best way to manage but that it depended very much on the type of
productive context (unit, mass, or process production) coupled to the type of technology
available that determined how management would be structured and the methods it would
adopt. (34) Whilst both Taylors and Mayos work focuses upon the relationship of the
individual and their task (Taylor) or the individual in the task or work group (Mayo), the
Aston studies led by Prof. Derek Pugh considered the larger setting of the organisation as a
whole for developing a theory of Management. (35) Like Woodward the Aston studies
indicated that management could not be abstracted from its context. The structural analysis
approach recognises that management is contingent upon the constraints it has to operate
under. Its model of the organisation is a Functionalist one in which the organisation is
depicted as a complex amalgam of departments and divisions. The functions are mutually
interdependent and contributing to the maintenance of the whole and for the delivery of
Quality.
The constraints which determine management structure and behaviour can be characterised as
being under seven broad headings.
1. Competitive environment
2. Legal regulative environment
3. Level and type of Trade Union organisation
4. Prevailing Culture and Social Structure
5. International hegemony of a particular State or group of States.
6. Technology.
7. The prevailing rate of profit.
None of these objectives has been definitively achieved but this does not detract from the
great improvement in the level of sophistication in management science that this approach

represents over the Scientific and Human Relations Schools. The behaviour and control over
labour is, let it be noted, no longer a central issue in the Structural Management approach but
this could easily be changed, (if the environmental context of the labour market and its
regulation changes), without damaging the integrity of the Structural Analysis approach.
With the further development of technology and the opportunities for global sourcing that
exist today, labour has become more expendable and readily available. In the nineteenth and
early twentieth centuries business was driven by production but today marketing drives it.
This has not stopped the continued growth in size and complexity of modern organisations,
as any examination of the league table of the top 500 firms will confirm. Globalisation and
the realities of oligopolistic competition by organisations that are marketing led has,
however, created further pressures for;
a) costs to be held down across the whole logistics chain,
b) the need for increased responsiveness (flexibility) to changes in the marketplace, and,
c) strategic positioning of the organisation through Market Research, R&D, Mergers and
Acquisitions.
In order to respond to these pressures there is the need for ever - increasing levels of
intelligence of the business environment, and for rates of capital growth that can enable the
organisation to keep pace with rivals rather than be swallowed up by them. Under the
constraints identified by the Structural Analysis approach managerial co-ordination and
control becomes more complex. The implications for Total Quality Management of the
shifting boundaries between market mechanisms for co-ordination; traditional models of
bureaucratic control; new modes of governmental and supra governmental regulation; and
more fluid structuring of organisational sourcing and employment, has been profound. It has
created a need to mesh various modes of co-ordination into a networking based system of
information exchange and co-ordination. (36)
This has led to the need for management to engage with values and culture management to
ensure communication and common commitment to shared goals within the network and
right across the organisations supply chain.
2.3 Value-based Management
The greater flexibility in managing labour arising out of increasing unemployment has
enabled Human Resource Management to become a valuable parallel enabling strategy that
meshes in well with the TQM approach.
TQM appears to be consistent with a move towards human resource management, not only
in the emphasis on employee commitment rather than compliance, and in the underlying
unitary philosophy, but also both identify line managers as having a key responsibility for
the management of people. (37)
Also, just as TQM is about the matching of quality specifications to customer expectations
or needs so HRM is about the matching of human resources to the needs of the organisation.
Ultimately the HRM configuration in a TQM driven organisation will be one determined by
the customers requirements for products and services at a given level of conformity to
uniform standards and predictable performance. In the same way Just in Time (JIT) methods
aim to match output to consumption. It is unthinkable to introduce JIT without HRM.

10

It is these challenges of size and the complexity of sourcing in a global context that has been
the instigator of the last major development of Quality management thinking taking TQM
and transforming it into World Class Manufacturing (WCM). WCM may be described as
TQM applied by the organisation right across its logistics chain. Developing positive
supplier customer relationships based on quality driven imperatives becomes a key aspect of
the WCM approach. Personal contact at all levels is important to identify and eliminate
problems. The objective is to get the matching of service / commodity to need in use by the
final customer. For Quality under TQM is not an absolute term but a contingent one that
merely refers to a conformance to customer requirements for a predictable uniformity and
dependability in standards.
There is less need for support services as flexibility reduces the demands that are put on
support staff. The aim of WCM is more for less or as one writer on WCM puts it .
Because WCM keeps things direct and simple...it has leverage effects on support staff. (38)
This leverage on staff results in higher levels of productivity in the non-value adding
departments as their functions become more involved with the value added departments
themselves. Thus there are better results with fewer staff in departments such as
Maintenance, Accounting, Quality Assurance, Production Control, Materials Management,
Data Processing and Personnel/HRM. Involvement in the production or service delivery
area by the non value adding functions means greater focus on problem solving that is
defined by the quality objective of achieving fitness for use and responsiveness to customer
needs (39)
Within divisional level and functional levels TQM and HRM enable the organisation to
devolve the responsibility for customer led quality improvement while maintaining an
overall strategic emphasis enabling the divisions to find a competitive advantage within their
particular market(s).
Gerry Johnson maintains that values determine how management perceives and responds to
the environment. (40) What co-operative value - based management insists on are that those
values are themselves subject to critical analysis and justification against human centred
macro level criteria. It is not just what our values are, it is how well they relate to the human
centred needs of society in our time and place. Without an insistence on this proposals for a
stakeholder driven approach to management (41) will remain devoid of content and remain
dependent on the countervailing power of the partners.
There are, therefore, three reasons why this human centred co-operative approach to Value
Based Management is the future for all management.
Firstly, it represents what the consumer wants and, when the consumer gets the opportunity,
what s/he will invariably choose.
Secondly, it is the future for management because it represents the logical development of
management into a true profession. Up to now senior management have been depicted either
as Taylors technologically led economic man driven by the need to enhance personal
wealth, or as extroverted egotists bent on power and position; in both cases, however, they
end up presented as neutral manipulators or administrators of tools of analysis and various
techniques with the aim of meeting the ultimate criteria of competitive rates of Capital
growth. It is in this neutral context that the label professional is most often attached to

11

managers. Here again we have an echo of Taylors Scientific Manager as a positivistic

creation following the value free revealed truths of science.
What most managers want and probably try to be, however, is what a real professional has
to be - not value neutral but value led. A truly professional manager exercises a position of
genuine leadership based on superior knowledge of the needs of those being led or otherwise
served. Thus professional management can only be a management based on human centred
values and needs. Those being led are not just the employees of course. In a critical way it
includes the consumers who are being asked to choose a particular life style and future in the
selling proposition. Leadership has always to consider the broad community of interests
interacting with the organisation. From the co-operative standpoint this commitment is both
a key organising principle (solidarity) and a good or end in itself.
Thirdly value - based co-operative management is better placed to respond to the economic
reality of the world as it enters the 21st Century. The fastest rate of Capital growth is no
longer the only or even primary criterion for economic performance today. Such notions are
being challenged at the highest levels of economic policy development. (42) Resource
constraints require that sustainable development replace capital growth as the lead criteria
for economic performance. The focus of economic endeavour is not to resolve problems of
wealth creation but problems of access to wealth creation opportunities and the general
allocation of resources in a sustainable manner.
High technology is driving down unit costs in manufacturing and services and driving down
the price of labour. The result will not be the triumph of Capital as the senior partner in the
relations of production but with the triumph of Labour (in both its intellectual and physical
dimensions). Paradoxically the more science and technology exercise power and control
over nature including human beings themselves, the more the moral question becomes the
question. Thus what is required is a human centred criteria for the analysis and development
of managerial / organisational values to lead the economic process. This provides the
grounds for the achievement of a genuine management - led community of labour.
Management serving people rather than capital will truly empower and legitimise the
process of management and the persons involved in that process. We will have a genuine
managerial revolution that reunites human labour as it participates in the conception,
implementation and realisation of economic welfare.
2.4 The market and ownership structural constraints that are restricting modern
management
The TQM/WCM approach appears to have realism, market sensitivity, and some positive
values in terms of employee involvement, supplier relations and customer satisfaction. This
being the case why has Quality Management had such a rocky history? Why are there still so
many dissatisfied customers, so many poor contractor - supplier relationships, so many poor
insecure employment contracts, and so much general concern about the perceived lack of
ethical or social responsibility in the management of business?
.....the changes in philosophy engendered by TQM, JIT........have not been enough because
in many instances they continue to encourage an internal focus. (43)
The internal focus for all capital based organisations is that of establishing a competitive rate
of profit that protects share valuation and market rating. The stakeholder model requires all

12

those with stakes in the organisation, including shareholders, workers, suppliers, customers
and the wider community to fair and equitable treatment of their interest. This ideaq comes
up against the tension of the real conflicting interests of the parties under conditions in
which one of the parties has the major power. The organisation is made up of various
components which are interdependent with a wide range of outside bodies and organisations.
The power and authority within organisations, however, upon which the business schools
focus is vested in its executive management operating on behalf of the shareholders. This is
the case no matter how flat or devolved the organisational structure is. As for external
relations often the organisation itself vis a vis the supplier or customer is so large that it has a
dominating position. In the case of many suppliers and workers as well as not a few
customers it is they who are in a position of dependency not the large business corporation.
There are further problems that undermine the objectives of TQM and WCM. Firstly what is
the real content of TQM as practised as customer led? Knowing the customer helps
determine a competitive advantage for the organisation in the marketplace. This is not to say
that no benefits accrue to the customer as a result of this process but it does suggest that the
customers overriding interests may not be the ones being served by a TQM system operated
by a capital based business.
Secondly, there is the question of whether the customer has any responsibility for our
understanding of Total Quality? We have management theories driven by an outmoded
economic concept (but one that legitimises the status quo perfectly) that falsely proposes that
the economy is determined primarily by demand registered in the marketplace. The validity
of the demand and means of determining its shape are never questioned. The customer is
supposed to drive the whole and what the driver wants is what must be provided. The driver
being defined as an individual, never society or community of course. The stakeholder
model suggests that other interests in addition to those of consumption need to be
considered. It is unlikely that they will be, however, given the twin realities of the real locus
of organisational power and the customer led ideological imperative that seeks to justify it?
Fortunately for the continuation of the planet and our human existence increasing numbers
of consumers in their associations and one or two businesses are recognising the end users
responsibility for Quality and the interests of other stake-holders.
Clearly, the WCM aspiration of establishing a partnership between Suppliers, Carriers, and
Customers - Partners in Profit, as Schhonberger (1986) refers to it, cannot be fully realised
given the realities of market power in todays dual economy. In any case this is not an
adequate expression of the stakeholder model, the acceptance of which is central to the
validity of the whole TQM/WCM agenda. It is inadequate on two grounds. Firstly, it ignores
the fact that the overwhelming majority of individual customers do not benefit from profits
but from wages and prices and the use values incorporated in the products or services they
consume. Secondly, it does not involve all the stakeholders. The employees are allowed no
separate interests beyond the organisation that employs them in this model and the wider
community or society is similarly ignored in this partnership that is beginning to look
suspiciously like a cartel. The decision making about resource allocation by management has
crucial consequences for a wide range of identifiable stakeholders among the most
significant being: customers, suppliers, employees, small firms, small farmers, communities
and the natural environment upon which we all ultimately depend.
All four mainstream strands of management theory have a number of crucial elements in
common and are used together in various combinations as suites the context. All are

13

concerned with; increased productivity; the reduction of conflict; (two out of three have this
at centre stage); the legitimisation and maintenance of managerial control over the execution
of work, and finally, they all ignore or abstract the wider social and economic structure
focusing instead on the micro setting of either the task in the labour process (Scientific
Management); relationships within the workplace (Human Relations) and the co-ordination
of organisational responses to business needs within the competitive environment (
Structural Analysis). The legitimacy of the ends being pursued and the means by which they
are pursued is assumed.
Values and culture are also either assumed in the case of Scientific Management or in the
other two approaches brought into the concept of management as simply one more
management tool amongst many others which have been selected to legitimise and support
managerial ends rather than as a means to question and define the ends themselves. Most
Important of all management has for the most part incorporated and updated the tools of
each strand into the current focus on quality assurance, TQM and WCM. And values are an
added dimension for managing relationships with employees and customers in particular.
3. Co-operative Value Based Management
With such an inadequate theoretical basis the goals encapsulated in the stakeholder model
for managing organisations and the pursuit of Total Quality Management will remain
illusive. Co-operation was born from recognition of precisely the way the market mechanism
failed the individual. All co-operatives exist to give their members market leverage that
without the co-operative they could never hope to achieve alone. Co-operative leverage
comes from three sources central to co-operative organisation. Firstly the leverage of
collective procurement, whether in employment by providing a job, or in credit unions by
providing finance for loans, or in housing, agriculture and consumer societies by providing
the cheapest sourcing of materials for production and consumption. Secondly, the leverage
of collective marketing particularly important in the agricultural sector but available to
worker and other societies as well. The third source of leverage is the building of both
collective and individual ownership of capital by the membership themselves giving
individuals and their communitys genuine autonomy.
All three means depend for their success on the quality of the community which lies at the
heart of association and the goods and/or services it provides. Central to Co-operative
success is, therefore, the unity of action and purpose of its members together with the quality
of its products and services. It was the late Will Watkins who wrote in his last book that for
Co-operatives unity was more important than democracy. (44) Without unity we cannot
achieve the market leverage or the social community that are central to the co-operatives
core purpose.
Co-operative Societies and other Mutuals are uniquely placed to implement a genuine
stakeholder model that will be credible with the consumer because they have a genuinely
representative structure. Paradoxically, however, it is the Co-operatives themselves that have
largely failed to utilise their human - centred values dynamically in their communications
with their members, customers and employees. The reason for this is I believe because the
Movement has paid little attention as to what its values mean for management. (45) The cooperative literature betrays this in its emphasis on democratic responsibility for policy and
managerial responsibility for the execution of policy. The practise of Co-operative
Management has in fact been left to be determined by inappropriate managerial ideologies

14

that has created a lack of vision on the part of management in co-operative societies and a
closure to members of the real decision making processes within their co-operative. The
view that democracy is about managerial accountability rather than member participation
leaves members without influence and managers without information. It makes for a divided
house of mutual suspicion not a united community of labour serving the needs of the wider
society to the mutual benefit of all.
Draheims (1955) concept of the double nature of Co-operatives sums up this approach
exactly. ....... co-operatives are characterised by.........the association of persons with
external economic components and social features on the one hand, and the economic
undertaking to be managed like all other private enterprises in the market economy on the
other hand (46) Two recent publications ( Edgar Parnell, 1995 and Isao Takamura,(1995)
also reflect this established view of a polarity between social and commercial aspects of the
co-operative. In Edgar Parnells book Co-operatives are seen as being organisations formed
as a result of the market economy as with capital - based investor - owned organisations but
distinguished by their members being the cardinal stakeholders in the organisation. This
makes them people centred rather than capital centred businesses. The problem for cooperatives identified by Edgar is;
a) the loss of focus on the provision of benefits to members and,
b) the loss of control by the cardinal stakeholder group (members defined by the functional
services provided by the co-operative, i.e. consumers, farmers etc.) to a variety of other
stakeholders or interest groups. This is identified by Edgar as the main cause of failure in the
co-operative sector. There is a lot of truth in this proposition as in his proposition that cooperatives lack focus and clarity as to their objectives.
Edgars further proposition, however, that co-operatives be defined by their objectives or
purpose is to be read in the narrow sense of immediate business activities rather than cooperative purpose as I define it. (47) For Edgar this lack of clarity is due to over reliance on
co-operative principles. Edgar tries to avoid the contingency model of management with the
additional grounding for management decision - making in the notion of benefits for
members. Edgar insists that it is benefits to members that provide the core rationale for cooperatives and are the touchstone for defining co-operative purpose. (48)This may not,
however, be as clear-cut as Edgar appears to believe. If we take an example from a UK
consumer co-operative the need for the right goods at the right price at the right time is not
the question. What are the right goods and what is the right price in the members interest? Is
it the cheapest, the one least environmentally damaging, the one with additional features?
What about products the members have never heard of, fulfilling needs they didnt know they
had? How are we to determine appropriate benefits without discussing the role of marketing
and market research in the context of a membership-based organisation? Surprisingly, Edgar
omits any discussion of these topics.
I have, however, a more fundamental objection to Edgars formulation. Benefits to members
are too general and actually can be completely unrelated to the notion of Co-operation at all.
Edgar must recognise this problem otherwise he would not, along with many others, seek to
restrict the rights of members to dispose of the co-operatives assets in any way they might
wish to. He is of course right to suggest restrictions on what any particular group of members
may wish to do with their society and its assets. This is because Co-operatives are not just
about membership and the benefits of membership in abstraction. Co-operatives are about
the benefits of membership in association. The associations purpose is to provide market
leverage and access to resources (including information) that would not be otherwise readily

15

available to the individuals who join and without which they would remain at best
disadvantaged, and at worst poor and excluded. This applies to all sectors and regions of cooperative activity.
Thus social justice and community are central to an understanding of Co-operative purpose
and in understanding and evaluating the propriety of those activities, products and services
providing benefits to members. It is upon the values and principles that emerge from this
macro level analysis of social need that the truly distinctive co-operative "framework for
rules of behaviour" that Edgar Parnell calls for in chapter 2 (and particularly develops in his
discussion of leadership in chapter 4 and corporate governance in chapter 11) can be
established.
Specific Co-operative activities provide employment, fair priced good quality products,
decent housing, cheap credit and other financial services, fair priced utilities, fishing boats
and many other specific goods and services including education. It is the overarching macro
level purpose, however, of social justice and the common strategy and end of community
building that has the potential to unite all co-operatives into one socio - economic movement.
This movement is not about delivering this or that benefit but about mobilising economic and
social resources to deliver economic and social justice and destroy dependency in the global
marketplace. I do not disagree with Edgar Parnells insistence that co-operatives must
produce benefits to members. I do urge, however, that we do need to understand very clearly
what the nature of the benefits is and how they are to be achieved within the co-operative
context. In Edgars formulation there is the danger of parochialism and materialism leading to
the fragmentation and dissipation of Co-operative assets when all the competitive pressures
today require us to conserve, accumulate and collaborate in order to achieve the required
critical mass in the marketplace.
It is when Edgar discusses the importance of establishing clear definitions and divisions of
labour within co-operative organisation that his analysis conforms most closely to the
double nature model of co-operatives. It is in these areas of Leadership and Corporate
Governance within Co-operatives that his analysis most closely conforms to the Civil Service
view of Management. The myth is that the elected board of directors is exclusively
responsible for the direction and leadership at the highest level of the co-operative. Edgar
rightly points out that leadership can be exercised in many different contexts and levels
within organisations. His emphasis, however, on the distinction between primary leadership
(who develops the plans of action) and secondary leadership (required to lead those who
organise the delivery of co-operative services) is misguided. (49) Edgar reduces management
to business administration. His solution to the central problem of Co-operative Organisation
today - which is how to develop professional leadership of co-operative businesses operating
in increasingly complex business environments, is structural rather than cultural.
By concentrating on the division of functions management is down - graded by Edgar to a
civil servants role and the members are down graded to an elected members council which
appoints really qualified people to act as Directors to manage the business on the members
behalf (50). This additional layer of policy making is unlikely to be a solution that
recommends itself to many co-operative managers or members. It carries real risks of further
fragmentation and conflict within co-operative organisation. Unity and a sense of
involvement is the most essential grounding for successful association. This requires that
effective leadership be brought to bear on the development of the organisational and
management culture.

16

Edgar does acknowledge that manager leaders can emerge that successfully provide the
primary leadership role but for Edgar this is an exception not the rule. For Edgar the
problem of technical incompetence in lay Boards is resolved by placing another tier of
experts between them and the managers. Why can we not accept that the managers are the
experts and they need to be as close to the membership as possible? Takamura does
acknowledge this need but does not seem prepared to give managers the position of
responsibility for the decisions leaving them rather as expert advisors whose advice the Board
will be well advised to pay attention to. His formulation of the division is between
management in a broad sense conducted by the Board and in a narrow sense by the
Executive Board of management (51). In times of change .....the top management of the cooperative must always have the ability and will to introduce reform from within.....(52)
Takamura recognises the qualities required by management but appears unable to recognise
the organisational culture and values necessary to ensure a management that will have the
authority and ability to embrace them. However Takamura does recognise that Co-operative
Managers are required to exert leadership and judgement and in addition Co-operative
managers, are....not only required to settle business problems but are also expected to have a
sense of humanity and a fully developed character.(53) Character was of course one of the
founding issues for the Owenites and the English Labour Economists for without appropriate
character people would not be able to build a true co-operative community.
Co-operative management clearly needs high ethical standards but it also needs an analysis
of the needs and values of society as they affect the co-operative customers and members.
These ethical standards must not remain the preserve of the top few but be reflected in the
culture, relationships and behaviour of the whole organisation and be communicated as such
to the outside world. Both Parnell and Takamura recognise the human - centred basis of cooperatives and the need for ethical values to inform management practice. The membership,
however, is viewed as abstracted rather than integrated into the wider society and the
managements relationship is formalistic and separate from the membership. Rather
management needs to be an integrated part of the community of labour whose business
strategy is driven by a human centred analysis of social needs. Duelfer (1986) comes closest
to recognising the importance for management of the social integration of the individual
members. In his notion of co-operative combine links are established between the cooperative organisations decision-making and that of their members household economies.
(54) Unfortunately this insight is not developed as a focus for determining the macro level
social needs of the customers and members. These needs form the focus for the core idea of
co-operative value - based management. The aggregate socio-economic needs of members
/customers/community households are the material data affecting co-operatives management
decision making and the foundation for the legitimate exercise of leadership within the cooperative community.
Directly elected Boards of lay members must be the right grounding for co-operative
governance and management but Boards need a mix of skills and the co-option principle used
by many company boards should re-enforce the elected board by the inclusion of two or three
of the top management team as full board members including the CEO. I leave open the
possibility of one or two further co-opted appointments from outside the organisation, but
only when a real need is identified, otherwise the appointment will be open to abuse and
manipulation. Lay leadership alone can only exceptionally provide the necessary skills to
lead a modern co-operative society. Co-operatives need Co-operative managers who

17

recognise that the Co-operative enterprise must be managed as a whole without the totally
false distinction between the business and the social sides.
Far from being as Edgar claims, a risk ...too great to be contemplated. (55) We desperately
need Managers who have the qualities to take responsibility for leading and building the
whole community of members and employees into a social and value based business seeking
the fulfilment of the co-operative purpose. Value - based management does not replace one
member one vote democracy in the Co-operative. What it does is to demand that the
professional responsibility for the quality of that democratic content is managements.
Management has the responsibility to consult, survey and research members needs and the
needs of the society to which they all belong. Management has the responsibility to lead and
develop a united membership. The members will always have the right to challenge and
dismiss a management that acts unprofessionally. As I have suggested elsewhere, when
management operates real participative strategies on behalf of staff and members based on a
TQM approach informed by a holistic perspective co-operatives will also have much clearer
criteria for making judgements and more information and real involvement than the
formalistic rituals that forms much of the content of the so - called democratic process today.
(56) Thus value-based management is the essential goal for co-operative management and
organisational development today. Value - based management will not be unique to the Cooperative Movement but the Co-operative Movement is uniquely placed to take full
advantage of its insights and contemporary relevance as it goes forward into the next century.
3.1 Utilising modern management methodologies for competitive advantage for cooperatives.
The competitive advantage for the co-operative society lies in the fact that its structure and
trading philosophy matches more closely the real mutuality required to establish the ideal of
partnership required to Implement a WCM strategy . This is because co-operatives are human
centred and community based commercial organisations whose purpose is ultimately one of
service, community development and social justice.
Co-operatives are service driven not profit driven. They have to make a return on capital to
match the needs of their competitive environment to grow and develop In line with their
competitive context and their customers / members expectations for service levels. All firms
must do the same. The investor led firms in addition must generate surpluses sufficient to
meet the demands of the market for capital as they operate with tradable shares. If the return
to capital does not meet the capital markets expectations they will experience a drop in share
prices that will cause a take over in the medium to longer term.
In addition two further potential co-operative competitive advantages may be identified.
1.Externally. The co-operatives values meet closely the real social context of the people they
serve. This is particularly true for their customers /members through members ownership and
democratic control of their society and their share in its profits or surpluses. As an
organisation rooted in community the co-operative is concerned with the identification of
customer needs in their social context. The product or service element will be enhanced by
the social added value the co-operative can bring to the standard of quality and excellence
and customer care it brings to the marketplace.

18

For example the British Co-operative Bank introduced its Ethical Code based on customer
requirements. The bank stopped investing in the arms trade and in firms failing to meet
environmental standards. It stopped investing in firms using animals for experiments for
cosmetics. Its business grew dramatically enhancing its profits partly as a result of the extra
custom the banks ethical policies attracted. The key to its success was that the Co-operative
Bank used the values of its customers and potential customers. These values the bank found
closely fitted into the banks co-operative ethos. British private sector banks have not been
able to do the same because of their need to satisfy investor demands ahead of their
customers.
2.Internally. The social objectives and mutual status enables co-operation within the
organisation to be maximised. Employees will identify with an organisation that works for
and reflects the values and interests of the community because often the employees
themselves will be part of that community as well as serving it. The application of WCM
requires a sensitivity to and knowledge of the latest scientific information concerning
replenishing raw materials, waste management technologies, and other individual and
community health, safety , welfare and environmental issues if the social added value is to be
genuine.
Mutuality enables the customer to accept responsibility for quality as well as demand it from
others. This is not a matter of lecturing the customer but of informing them of the
environmental ethical and social/economic conditions and standards to which their WCM
programme is working towards. Applying high standards that reflect social and community
needs at all stages in the particular logistic chain enables the customer to relate as a consumer
to those engaged in the process as producers and distributors. In mainstream TQM customers
needs focus on the product or service as it adds to the life style of the individual consumer
abstracted from their society and environment In the case of Mutuality the customer lifestyle
meets that of the producer and distributor in the context of their shared society and
environment.
Communicating standards and values to customers requires a careful analysis and
understanding of the customers values, attitudes and perceptions. These and only these can
inform the starting point in the design and marketing of the product or service. It is these
values that must inform the co-operative organisations development and culture. It is these
values that must be transmitted to other stakeholders up and down the logistics chain. How
can we be sure that our final end user customers values and attitudes will provide a
satisfactory basis for the development of WCM in terms of our principle of mutuality ?
The answer is of course that we cant be sure, although its fairly safe to assume that as people
centred organisations co-operative are likely to be more grounded in the values and attitudes
of those they serve. What helps of course is the questions we ask in drawing out what those
customer values and attitudes are. If we remember that customers are also citizens and we ask
them questions that fall outside the immediate specific product / service focus we get a
different and more accurate, because less narrowly focused, view of what the customer
requires in general. If we reproduce our response to these general concerns in terms of our
specific product or service we have added value for those customers to that product or service
in addition to the technical and price utilities that our usual market research and product/
service development processes help determine. We refer to this as social added value which
may be measured in terms of ethical, environmental or social/community inputs

19

Once customers become aware of the wider stake-holder context involved in the provision of
the goods and services they consume so they become more willing and may even be eager to
take responsibility for the mutuality based quality standards built into the Co-operative WCM
product or service. This itself will help to encourage continuous improvement in quality
standards right across the logistics chain. A recent Mori poll undertaken for the British Cooperative Bank showed that one in six British consumers now took ethical issues into
consideration before making a purchase. (57) Modern quality and value based management
methodologies could have been invented for the mutual sector. What co-operatives lack is
enough Co-operative Managers with the commitment, knowledge and skill to implement
them.
3.2 How to attain a Co-operative Value based management to lead the Co-operative
Movement?
First we need to identify the operating principles that inform the techniques and strategies of
management. This has been attempted by Davis and Donaldson (1998) in the their book Cooperative Management . A Philosophy for Business. The authors identify seven principles that
they claim distinguishes Co-operative Management. (58) These are namely;
1. Pluralism
The need for choice and diversity in the market and in all aspects of society. The respect for
difference within the organisation and the understanding that solidarity is not to be confused
with conformity.
2. Mutuality
The recognition that all stakeholders are entitled to benefit from the contracts and
relationships that form the dealings and activities within the co-operative and its supply
chain. The interests of the majority are no grounds for a continuation of permanent
disadvantage for a given minority.
3. Individual autonomy
Respect for individuals and the recognition that within the bounds of their contract and
responsibilities they have the right to as much self-government and empowerment in the
conduct of their relationships with the co-operative as possible.
4. Distributive justice
Ensuring fair shares of wealth for all members of the community based on a balance between
the rewards for individual and collective contribution to wealth creation and the needs that
individuals and their families may exhibit for access to that wealth.
5. Natural justice
Ensuring within the governance and rules of the Co-operative that these are implemented on
the principles of Natural Justice i.e. no one can be judge and jury in their own case and that
all matters are dealt with impartially, that individuals are entitled to have full knowledge of
that case and an opportunity to make representations concerning any matter involving them
or their rights as stakeholders.
6. People centeredness

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That people are the subject not the object of business activity in the co-operative context. The
well being of all stakeholders is seen as a priority in the exercise and development of business
policy within the co-operative.
7. The Multiple roles of work and labour.
Work is recognised as central for the development and well being of humankind and that the
co-operative seeks to include all members and other stakeholders in the processes of creation
and recreation connected to the co-operative. Work is about the identity and spirituality of
people. It is a part of their uniqueness and its enrichment is a determining factoring the
quality of life. Work in the Co-operative embraces paid and volunteer activities and finds
equal value in all forms of work both in the money and in the domestic economies. (59)
3.3 A manifesto for the development of Co-operative Management
What is needed, however, to overcome the central problem raised by Michels is not simply
the development of a set of principles to inform management practice. We need three further
elements. First, we need a development programme that genuinely seeks to integrate these
principles into the operational aspects of the various functions of management, strategy,
marketing, operations management, logistics, finance and accountancy, human resources etc.
(60) Second we need a professional association of co-operative managers with its own codes
based on these principles that can help to overcome the sense of cultural isolation cooperative managers can experience as managers operating in a context very different to that
of the vast majority of managers with whom they would otherwise look to as peers. The
professional association would also be able as is the case with all professional associations to
police the standards of its membership. The third element is the most important of all - the
selection of appropriate candidates. Co-operative managers must be drawn from people with
a vocation to serve the community the model of servant leader is an entirely appropriate one
for the personality and value profile that co-operatives need to evolve to support their
selection procedures for co-operative managers. (61)
Co-operatives need to sell their social goals and the values that inform them as a core part of
the co-operative enterprise. Co-operative Management Values and Principles are part of the
Co-operative managers tool kit. The vocational aspect of managing on the basis of the seven
principles of Co-operative Management lies in recognising that sustainability and social
justice are as much in the interests of consumers as they are in the interests of producers.
Raising the awareness of co-operative members at all stages in the supply chain of the
various links and the relevance of those links can only enhance understanding, increase
motivation, and improve the delivery of customer led quality. Co-operatives must add value
like any business but thats where co-operatives start not where they finish. Co-operatives can
add monetary and social values at all stages in the supply chain. Co-operative management is
ultimately about the challenge of leadership. Co-operative Managers challenge their coworkers and partners to get excited, to see a bigger picture and to become not simply a
customer but to belong as a member / stakeholder in the community of labour.
4. Co-operative Management Development by Distance Learning
There are a number of problems that we face in the development of this programme which
we do not claim to have complete solutions to as yet.
4.1 Patchy institutional support from the co-operative sector

21

The programme has been welcomed by the ICA who have done their best to provide
promotional opportunities. We have also received substantial and welcome institutional
support from co-operative colleges in many parts of the world, most particularly in the cases
of Co-operative College, Moshi, Tanzania and Co-operative College Kenya, in Nairobi and
with the SNCF and NTUC Income in Singapore, the Co-operative College Malaysia in Kuala
Lumpur, FEKOSCAN in the Netherlands Antilles and Cipriani College of Labour and Cooperative Studies in Trinidad. The fact is that in the developed world co-operative
institutional support has not been forth coming. As a result we have only attracted around an
average of forty students per year from around 20 countries. This compares with our
University MBA programme which is twice the cost and operating in an overcrowded and
competitive market yet it attracts around 800 to 1,000 students year from around forty
countries.
4.2 Market resistance.
Many management/staff do not see there is long-term future being in the co-operative sector
and some even doubt there will be a co-operative sector. Thus there is reluctance to take up
even generous offers of subsidy that are offered in Singapore and Malaysia in the General cooperative sector. Managers and Board members are often hostile to the idea of Co-operative
Managers as leaders and full members of the board. Managers because they often feel it
suites them not to be on the board to both avoid responsibility and
because keeping the
board at arms length gives them more rather than less real power. Board members often like
to feel that they run the show and dont like to admit to their dependency. Boards have also
expressed reluctance to spend money on management development preferring to keep the
education budget for the boards use particularly if the training can be located outside their
country of origin.
4.3 Lack of bursary funds
As co-operatives are reluctant to spend on managers and in many parts of the world even our
half price programme is a huge expense we are dependent on funding agencies to support
students particularly in the southern hemisphere such as in Africa. So far DFID we have
attracted DFID funding for Africa, and Vietnam, and Cadbury Trust funds and for our UK
Credit Union students Lloyds TSB have supported those credit unions in areas of social
deprivation. These institutions be in noted all took time to revue our teaching materials before
committing themselves to provide our students with funds. Despite extensive initial mail
shots to the co-operatives we have found the response disappointing so far.
4.4 Lack of development funds
So far the University of Leicester has produced 12 postgraduate level modules dedicated to
supporting the co-operative movements management development capacity. We have
achieved this by the judicious use of small internal research grants and a lot of good will from
one or two co-operative enthusiasts and some self-exploitation. As yet have had no donors
from without or from within the co-operative movement. I doubt any institution of higher
education has done so much for the movement with so little resource. As a result our
materials are entirely paper based although extensive use of the internet is the case in the
provision of tutorial support.

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We have up and running two masters programmes now one for General Co-operative
Management and one for Credit Union Management. We intend to develop another dedicated
to consumer co-operatives in the future and we are seeking collaboration with a major cooperative retailer to support this development. Our existing two projects currently under way
are the development of an access programme for non graduates and the development of a
Virtual Learning Environment for our students to support but not replace their paper based
materials.

5. Growing a research base to support teaching and management development

We intend to publish in abridged versions our students MA dissertations to provide a series of
readings and case studies dealing with a wide variety of co-operative management issues. In
addition to this we have established a modest co-operative PhD programme with three parttime and one full-time student in place. The Management Department is commercially very
successful being the 15th biggest in Europe in terms of student numbers. This makes us cash
rich - hence I have been able to develop co-operative programmes. The money is now under a
new leadership being turned into research capacity of a high order and the department has
grown this year from two to eight professors. This is good news as some of the new staff
including the new head of department is positively
supportive of the co-operative project
rather than merely tolerant as in the past.
The other initiative, which is happening thanks to the first sponsorship we have had directly
from the movement, is a new International Journal in Cop-operative Management. It is our
ambition to generate a world class publication which will attract academic interest in the cooperative movement and be a much needed extra platform for academics interested in cooperative management and related problems, topics and contexts to be able to get their work
published and distributed to a wide audience. Our sincere thanks to NTUC Income,
Singapore, Co-op Atlantic, and
Desjardin, in Canada and Mr Thoby Mutis from Indonesia. I am also particularly grateful to
Mr Robby Tulus who is a first class ambassador for the projected journal.

6. Our student profile

If there is one factor above all that has kept me persevering with this project it is our students.
With only one or two exceptions these are all dedicated practising managers, board members,
trainers and development workers actively pursuing the co-operative enterprise development.
The exceptions include two MPs. On average out students tend to be older, more senior and
less well qualified than our MBA student profile and perhaps not surprisingly they are taking
a little longer to complete their programme. There is no doubt that in many cases the personal
circumstances of individual students adds greatly to the challenges of distance learning.
Small numbers and slower throughput squeezes further slender administrative resources as
we strive to keep costs within acceptable bounds. I had expected around 300 students per year
and believe that once the movement awakes to the importance of management development
at this level that the market will grow substantially and this will be helped as more postgraduate co-operative management programmes appear.

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Attracting bright educated idealistic young people into co-operative management will require
the movement to take management development and graduate entry much more seriously and
for there to be a real collaboration between the small and medium sized societies to create
opportunities for management development to support their own development. We believe
that this is inevitable and we intend to be remaining in the leading position as a provider of
this level of management development.

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References
1.John Siraj-Blatchford, Robert Owen: Schooling the Innocents, Educational Heretics Press,
1997,pp2-3.
2. See Davis, P. Co-operative Management and Co-operative Purpose: Values, Principles
and Objectives For Co-operatives into the 21st Century, Discussion Papers in Management
and Organisations Studies, N0 95/1, University of Leicester, January, 1995 and Davis, P and
Donaldson, J. Co-operative Management. A Philosophy of Business, New Harmony Press,
Cheltenham, 1997
3.Peter Wheale, Chapter 11 in People, Science and Technology, Wheatsheaf, ed. Boyle,
Wheal and Sturgess,1984, p199.
4. Roberto Michels. Political Parties, Basle 1915 reproduced with an introduction by
Seymour Martin Lipset by The Free Press, New York/Collier Macmillan Ltd., London,
1962.
5. Peter Davis, op cite Co-operative Management and Co-operative Purpose: Values,
Principles and Objectives for Co-operatives into the 21st Century,
6. Issac Deutcher, The Prophet Armed (Vol. 1 of his trilogy on the life of Leon Trosky)
7.Catherine Webb, Industrial Co-operation, Co-operative Union, Manchester, 1929, p 59.
8.Martin Slattery, Key Ideas In Sociology, Nelson, 1991, pp205-209.
9.Amitai Etzioni, Modern Organisations, Prentice Hall, 1964, pp10-12.
10. Peter Davis, Ch 16. Rochdale; A Re-evaluation of Co-operative History, In
Towards the Co-operative Commonwealth, Ed. Bill Lancaster and Paddy Maguire, The Cooperative College, Stanford Hall, Loughborough,1996,pp109-123.
11. John Francis Bray, Labours Wrongs and Labours Remedies, Leeds, 1838. Bray criticised
Owens idea of self-sufficiency and called instead for the co-operatives to accept the
industrialisation and division of labour and organise to defeat capitalism by developing cooperatives within industrial sectors.
12. In fact the Leeds Redemption Society tried to put into practise Brays call of using
incremental accumulation of capital to raised funds but unfortunately they used the money to
set up a self-sufficient colony in Wales which lasted 6 years until 1852. The one person who
read and understood Bray was Marx (the latter took 148 pages of notes from Bray which
remain in the Brussels manuscripts. In the excellent book by Phillip N. Backstrom, Christian
Socialism and Co-operation In Victorian England, Croom helm, London, 1974, pp164-165.
Backstrom takes up the fall out of this period where instead of unity and investment of
surpluses the whole period was marred by an intensive debate about how the surplus should
have been distributed.
13. F. Hall and W.P. Watkins, Co-operation, Co-operative Union Ltd. Manchester, 1934,
p100.
14.Peter Davis, Towards a Value-Based Management Culture for Membership-Based
Organisations, Journal of Co-operative Studies, Vol. 29 No. 1, May 1996, pp93-111.
15. Mario F. Guilen, Models of Management, Chicago U.P., Chicago,1994, pp31-58.
16. Harry Braverman, Ch 4, Scientific Management in Labour and Monopoly Capital,
Monthly Review Press, 1974.
17. Craige T. Littler, The Development of the Labour Process, H.E.B., 1982, pp51-52.
18. Sigmund Wagner-Tsukamoto, An Institutional Economic Reconstruction of Scientific
Management: On the Lost Theoretical Framework of Taylorism, Working Paper 2000/14
December 2000, Management Centre, University of Leicester, UK.
19. Harry Braverman, op cit. pp135-137.
20. Mario F. Guillen, op cit, p38, and p65.

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21. Mario F. Guillen, ibid., p13.

22. ibid., p12.
23. Graham James, Quality of Working Life and Total Quality Management, Work
Research Unit, ACAS, WRU Occasional Paper, No 50, November, 1991, p2.
24. Dip. Man. M3.U3-Ver.1 Workbook Resource Three, Quality Themes.An adaptation of
Bone C. Modern Quality Management Manual, Longman, 1991. p3.3
25. ibid. p 3.2
26. Graham James op.cit. p2.
27. The literature generally acknowledges the lack of precision in terminology. See various
consultants and writers such as Richard J. Schonberger, World Class Manufacturing. The
Lessons of Simplicity Applied, Free Press,1986, p123. See for a further example the
consultants Goldcrest Communications training materials, The Quality Assurance System
5.6 System Checklist, which involves market analysis and selection of suppliers as key steps
in their definition of a Quality Assurance System. These are seen in Schonberger and Graham
(op.cit.) as elements of either WCM or TQM.
28. Graham James op. cit. p3.
29. Richard Rose, Industrial Behaviour. Theoretical Developments Since Taylor, Penguin
Books, 1978.
30. Adrian Wilkinson, Total Quality Management and Human Resource Management
Paper to the Industrial Relations Research Unit Workshop, University of Warwick, April,
1992. pp 4-5.
31. Graham James, p5. (quoting Garvin,1988)
32. Mario Guillen op cit., p63
33. ibid. p13
34. ibid., p257.
35. ibid, p 258.
36. Mitchel, Levacic and Thompson, Chs 1-3 in Managing the United Kingdom, ed. Richard
Maidment and Graham Thopmson, Sage,1993.
37. Adrian Wilkinson, op cit. p14.
38. Richard J. Schonberger, World Class Manufacturing. The Lessons of Simplicity Applied,
Free Press,1986, p 40.
39. ibid. pp 41.
40. Gerry Johnson, Corporate Strategy and Strategic Management in Introducing
Management ed. Elliot and Lawrence, Penguin, 1985, p426.
41. Stakeholder approaches are not of course new but can be traced back one suspects to the
desire to blend insights from the Human Relations approach with that of Structural Analysis.
42. See Bulletin of the European Communities, ch10 Thoughts on a new development
model for the community, Growth, competitiveness, employment. The Challenge s and ways
forward into the 21st century, Commission of the European Communities, Brussels, 1993,
Supplement 6 /93.
43. Paul Sparrow and Jean-M. Hiltrop, European Human Resource Management in
Transition, Prentice Hall,1994, p 645.
44. W. P. Watkins, p19
45. An illustration of what can be achieved , however, does exist in the remarkable growth
rates experienced by the U.K, Co-operative Banks
successful experiment with ethical banking led by clear research into its customers values
and concerns.
46. Eberhard Duelfer, A system Approach to Co-operatives in Co-operatives Today, ICA,
Geneva, 1986, p132. Prof. Duelfers quote is drawn from Draheim G. Die genossenschaft als
Unterehmertyp, Goettingen, 1955, p18.

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47. Peter Davis, op cit. Co-operative Management and Co-operative Purpose: Values,
Principles and Objectives for Co-operatives into the 21st Century.
48. Edgar Parnell, Reinventing the Co-operative. Enterprises for the 21st Century , Plunkett
Foundation for Co-operative Studies, Oxford, 1995, p15.
49. ibid. p54.
50. ibid. p103.
51. Isao Takamura, Principles of Co-operative Management, Co-op Publishing Company
Ltd., 1993, p82.
52. ibid. p85.
53. ibid. p86.
54. Eberhard Duelfer, op cit. p134
55. Edgar Parnell, op cit. p136.
56. Peter Davis op cit. Co-operative Management and Co-operative Purpose: Values,
Principles and Objectives for Co-operatives into the 21st Century. p14.
57. Co-operative Bank plc, Who are the Ethical Consumers, 2000 and Ethical Purchasing
Index, 2001 show that the ethical consumption whilst a modest proportion of total spending is
a rapidly growing sector.
58.Lack of space prevents a more thorough description of the principles here. See Peter Davis
and John Donaldson, Ch 5 Seven Principles of Co-operative Management in Co-operative
Management. A Philosophy for Business, New Harmony Press, Cheltenham, 1998
59. The significance of the relationship between the money and the domestic economy for the
conduct of co-operative associations is explored in Peter Davis,
Labour and the Family. New Directions for the Co-operative Associations of Labour.
Ed. C.D. Apostolopoulos, Harokopio University , Athens, 2000.
60. The University of Leicester, Unit for Membership Based Organisations in the Department
of Management has launched the first distance learning based Masters programme in Cooperative Management and Organisational Development.
61 . For further development of this idea see Peter Davis, Ch 6 Co-operative ManagersServants or Leaders? Towards a New Model of Co-operative Leadership. in The World of
Co-operative Enterprise, The Plunkett Foundation, 1998 and Ch 13. Co-operative
Management as a Catholic Vocation in On the Threshold of the Millennium, Vol VI of
Business Education and Training. A Value Laden Process,
Ed. Samuel M. Natale, University Press of America, 2000.

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