Category Archives: Governance

Governance is a critical determinant of the success or failure of organizations. The Centre is producing a new synthesis of knowledge and theory about co-operative governance.

Top Co-op Issues 2017

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Nora Russell

In our second annual survey of Top Co-op Issues, we asked co-operative leaders across Canada to identify the most pressing concerns facing co-operative organizations today. According to CEOs, board members, managers, and academics in virtually every region and sector, the number one issue for co-op leaders is public awareness of the co-operative model — the lack of it, that is. As one person commented, “Raising the profile of co-ops in a noisy marketplace is difficult.”

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We conducted the survey as part of our mission to understand the world of co-ops and make that knowledge accessible. The results published here hold a mirror to the co-op sector, not only identifying important issues but also providing clear areas for collaboration for both advocacy and research. We selected our informants based on their specialized knowledge about co-ops. The 2017 survey included a sample similar to last year’s — CEOs, board members, managers, and academics balanced by region, sector, and role within the co-op. Their knowledge is invaluable because it is extensive, detailed, and privileged. Continue reading →

Member Representation

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Brett Fairbairn and Murray Fulton

Image credit below

In our Two-Hats post, we argue that directors of a second-tier co-operative must put the interests of that organization first when they are actively engaged with the board. This, in turn, means they cannot act as a “representative” of their first-tier organization while sitting on a second-tier board. But, if this is the case, where does representation occur?

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Crowding In and Crowding Out

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Murray Fulton

In a previous post, I outlined how a failure to find the right balance between intrinsic and extrinsic motivations can lead to a crowding-out effect in which the introduction of more extrinsic incentives results in poorer, rather than better, performance. With the right balance, however, extrinsic motivations can significantly enhance performance — the crowding-in effect.

Crowding-in and crowding-out effects can have a real impact on how decisions are made, on the effectiveness of policy, and on the performance of organizations, including co-operatives. Here are a couple of examples. Continue reading →

The Two-Hat Problem

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Murray Fulton and Brett Fairbairn

fedora-and-pimp-hat-copy

Images courtesy clipart-library.com

The following question was recently posed to us regarding governance models for second-tier co-operative organizations such as federated wholesalers and financial centrals: Is there an expectation that board members must think about the interests of the second-tier organization or should they represent their home organization?

This question nicely encapsulates what Glen Tully, chair of the Centre’s Management Advisory Board, calls the Two-Hat Problem. When board members have two hats they can wear, which one should they put on? Continue reading →

Extrinsic and Intrinsic Motivations

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by Murray Fulton

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In a recent post on future options for the credit union system in Canada, Dionne Pohler and I argued that to be effective and meet the needs of a wide variety of stakeholders, the new system must rely on a mix of both extrinsic and intrinsic incentives. What are these two types of incentives? And why are they important?

Extrinsic motivations are monetary rewards or penalties such as pay-for-performance schemes and financial payments for not complying with rules and regulations. Extrinsic incentives work, it is believed, because people make decisions based on the financial costs and benefits of the options they face.

Intrinsic motivations, in contrast, can be observed in the desire to undertake activities simply because they are enjoyable or because they generate satisfaction — the wish to do a job well or to undertake a task because it leads to some greater good. The mission motivation that drives the behaviour of many people is a good example of an intrinsic incentive. Continue reading →

If Not Now, When?

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Murray Fulton and Dionne Pohler

dionne-pohler

Dionne Pohler

Murray Fulton

The question posed above is the entirely appropriate title of an October 2016 report by Central 1 on possible futures for the centrals in the Canadian credit union system (read the report here). As the report indicates, low margins, increasing competition, rapid technological change, increasingly diverse expectations for member services, and new and often unfavourable regulatory environments make it clear that the status quo is unsustainable and change is required at the second-tier level. Continue reading →

Governance Issues in European Co-ops: Are There Lessons Here for Their Canadian Cousins?

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Markus Hanisch

The Centre’s second annual MacPherson Talk featured Dr. Markus Hanisch, managing director of the Institute for Research on Co-operatives at Humboldt University in Berlin.

Hanisch’s presentation — “Changing Governance in European Co-operatives: Simply Shifting or Losing Control?” — outlined a series of innovations occurring in European co-operative governance and the impact of these changes on co-operative performance. Based on data from 571 farmer co-operatives in the European Union, Hanisch concluded that co-operatives that have implemented certain governance innovations — professionalising and allowing outsiders to join their boards of directors, recruiting larger boards, and creating a governance model in which the co-op acts as a holding structure — have improved their performance. The research also notes, however, that these shifts towards corporate governance structures may affect member control. Continue reading →

Co-ops Make Markets Work Better

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Murray Fulton, director, Centre for the Study of Co-operatives

The Role of Co-operatives in the Economy
Murray Fulton

In a StarPhoenix/Leader Post op-ed piece published on 7 December 2016, Brett Fairbairn, Dionne Pohler, and I outlined why a mix of business types is required for a well-functioning market. As we said,

Achieving the correct balance of different types of business forms is critical.… Just as biological environments benefit from a rich mix of different organisms, so, too, do markets benefit from a diversity of business types. Consumer interests and a desire for local control can be met with co-operatives; niche markets can be served by entrepreneurs; and employment opportunities can be generated through employee ownership. Established chains have a role to play, given their brand identification and experience.

While we were commenting specifically on the privatization of liquor stores in Saskatchewan, the argument is a general one and applies to all markets in the economy. It is particularly relevant for co-operatives and credit unions. Continue reading →

Will Credit Union Branches Disappear?

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The Future of Credit Union Branches in a Digital World

Brett Fairbairn

Brett Fairbairn

Brett Fairbairn

A conference recently made me think about the future of credit unions as connecting points between the real world and the digital world. The conference was in Luzern, Switzerland, where mainly German-speaking co-op leaders and academics came together to discuss co-op identity and growth. One of the working groups was on co-operative banking and digitization, and it was their report that got me thinking.

Co-operative banking is one of the most mobile and digital lines of business any co-op could be in. We have come to understand that money, deposits, loans, and so on — many of the “products” credit unions deliver — are essentially information. They are numbers in databases — numbers that can be transferred or changed at computer speed. Today, the digital world is the real world of banking commodities.

Only occasionally does the virtual world of banking services take material expression. An automated banking machine (ABM), when you think about it, is a machine that converts information into physical monetary bills when you need them. An ABM is a small, specialized material outpost of an unseen digital world.

Which brings me to credit unions, especially their distributed physical facilities. What is a credit union branch? What will it be in the future? In an increasingly digital world, such branches could go at least two ways. Continue reading →