- Generally it is seen that co-operative societies do not function efficiently due to lack of managerial talent. The members or their elected representatives are not experienced enough to manage the society. Again, because of limited capital they are not able to get the benefits of professional management.
- Every co-operative society is formed to render service to its members rather than to earn profit. This does not provide enough motivation to the members to put in their best effort and manage the society efficiently.
- The co-operative societies are formed with the idea of mutual co-operation. But it is often seen that there is a lot of friction between the members because of personality differences, ego clash, etc. The selfish attitude of members may sometimes bring an end to the society.
- The inadequacy of capital and various other limitations make cooperative societies dependant on the government for support and patronage in terms of grants, loans subsidies, etc. Due to this, the government sometimes directly interferes in the management of the society and also audit their annual accounts.
1.3.3 Case Data Analysis: Co-operative and Organisation’s Behavior Conflict
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 (Michels, 1992). Instead labour movement’s 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 (Davis, 1995).
According to Davis (1995), 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 (Davis, 1998) 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.
An 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 takeover himself. The last suggestion is quite probable given his later public position on the question of worker cooperatives and profit sharing (Davis and Donaldson, 1997).
Davis and Donaldson (1997) also identified that 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 ways 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 board’s 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.
1.4 Generating Alternatives
In order to generating alternatives of the given case data analysis, author can suggest the some motivational theories. According to Buchanan & Huczynsk (2004), motivation can be regarded as a broad concept, which includes preferences for particular outcomes, strength of effort (half-hearted or enthusiastic) and persistence (in the face of barriers). Wendy et.al (2003) suggest that motivation involves a conscious decision to perform one or more activities with greater effort than one performs other activities competing for attention. Porter and Lawler (1968 cited in Canales and Ku¨ster, 2008) believe that it is important to allow for the fact that extra levels of effort do not always lead to improved performance.
1.4.1 Maslow’s hierarchy theory
Maslow’s need hierarchy theory proposes that motivation should address five basic needs. They are physiological, safety, love, esteem, and self-actualization. According to Maslow’s beliefs these needs “generally emerge in a predictable stair-step fashion” (Kreitner & Kinicki, 2003). According to Kreitner & Kinicki (2003), Maslow’s given the hierarchy needs for employees expectation towards organisations, before starting about the employees’ expectation, the employees needs are important; usually they have some hierarchy needs which are; self actualization needs, esteem needs, belonging needs, safety and security needs and psychological needs .
The self-actualization needs: According to Robbins (2003), the term actualization means that the intrinsic growth of what is already in the organism, or more accurately, of what the organism is called self-actualization needs
Esteem needs: The term esteem means that need for things that reflect on self-esteem, personal worth, social recognition, and accomplishment.
Social needs: The social needs includes love of family or friends, for example, the boy loves his girl friend, the relationship between husband and wife, one child belongs to one family This is called belongingness or love (Andrzej and David, 2004)
Safety needs: The safety might include living in an area away from threats. This level is more likely to be found in children as they have a greater need to feel safe (Kreitner & Kinicki, 2003).
Physiological needs: It includes the very basic need air, warmth, food, sleep, stimulation and activity. People can die due to lack of biological needs and equilibrium common needs like food, water, oxygen and other common minimum needs are wanted for everyone to survive in the world (Wendy et.al, 2003).
1.4.2 Theory X and Theory Y
Douglas McGregor proposed two theories by which to view employee motivation. He avoided descriptive labels and simply called the theories Theory X and Theory Y. Both of these theories begin with the premise that management’s role is to assemble the factors of production, including people, for the economic benefit of the firm. Beyond this point, the two theories of management diverge.
According to Robbins (2003), “in theory X management assumes employees are inherently lazy and will avoid work if they can. Because of this workers need to be closely supervised and comprehensive systems of controls developed. A hierarchical structure is needed with narrow at each level. According to this theory employees will show little ambition without an enticing incentive program and will avoid responsibility whenever they can”.
According to Luthans (2005), “in theory Y management assumes employees may be ambitious, self-motivated, anxious to accept greater responsibility, and exercise self-control and self-direction”. It is believed that employees enjoy their mental and physical work duties. It is also believed that if given the chance employees have the desire to be creative and forward thinking in the workplace. There is a chance for greater productivity by giving employees the freedom to perform at the best of their abilities without being bogged down by rules.
1.4.3 ERG Theory
According to McShane and Glinow (2005), Clayton Alderfer expanded on Maslow’s hierarchical theory. He proposed three need categories and suggested that movement between the need levels is not necessarily straightforward. Failure to meet a higher-order need could cause an individual to regress to a lower-order need. These ERG theory categories are existence needs, which includes physiological and safety needs; relatedness needs, which includes affiliation and esteem needs; and growth needs, which includes self-actualization and self-esteem needs. All three needs categories can be presented at any one time, in contrast with Maslow’s “progression hypotheses”. Clayton added a “regression hypothesis”, arguing that we drop to a lower category when attempts to satisfy higher needs are frustrated.
1.4.4 McClelland’s Theory of Needs
McClelland’s (1991) motivation theory suggests that people are differently motivated towards achievement, power, affiliation and avoidance. Firstly, the achievement motive is a key to McClelland’s view of economic development. McClelland has identified four characteristics of people with a strong achievement need: a preference for moderate task difficulty; personal responsibility for performance; the need for feedback; and innovativeness. In considering employees’ needs in the workplace, managers can better understand the, “…psychological processes if they are to successfully guide employees toward accomplishing organizational objectives” (Kreitner & Kinicki, 2003). Managing resistance to change through motivation will require, “…managers to use a contingency framework to pick and choose the motivational techniques best suited to the people and situation involved” (Kreitner & Kinicki, 2003). Motivation through meeting employee needs, job design, and rewards systems can have positive affects in dealing with resistance to change.
1.4.5 Goal-Setting Theory
Goal-setting theory is a cognitive theory that is originally developed by Locke (1995). It uses many principles of information processing approaches and of reinforcement, most specifically social learning theory, to explain how goals motivate people. Wendy, Curtis and Phillip (2003) suggest difficult goals stimulate effort and commitment. The use of goals to motivate performance draws on two primary attributes: the content of the goal and the level of intensity in working toward it.
1.4.6 Reward System
Robbins (2003) thought the organization’s reward system influenced decision makers by suggesting to them what choices were preferable in terms of personal payoff. According to Robbins (1992), rewards can be divided into two types of monetary rewards and non-monetary rewards. The purpose of monetary rewards is to reward associates for excellent job performance through money. Monetary rewards include profit sharing, project bonuses, stock options and warrants, scheduled bonuses, and additional paid vacation time. Traditionally, these have helped maintain a positive motivational environment for associates. The purpose of non-monetary rewards is to reward associates for excellent job performance through opportunities. Non-monetary rewards include opportunity for achievement, giving of challenging responsibility, opportunity for advancement, and opportunity for growth in stature and peer recognition.
The following table illustrates the details of reward content:
Table 2.1: Reward Content Adapted from (Holbeche, 1998)
1.5 Evaluates Alternatives and Key Decision Criteria
In order to motivate co-operative member, six alternatives are discussed such as Maslow’s need-hierarchy theory, theory X and theory Y, ERG theory, McClelland’s theory of needs, Goal setting theory, Reward system in the previous section. However the author pointed out that co-operatives organisation’s motivation methods are in align with the Maslow’s hierarchy need theory, Clayton Alderfer’s ERG theory and Locke’s goal setting theory. According to Maslow, employees have five levels of needs (Maslow, 1943 cited in Robbins 2003): physiological, safety, social, esteem, and self actualizing. Maslow argued that lower level needs had to be satisfied before the next higher level need would motivate employees.
Thus a co-operative organisation can offer with standard salary scheme which fulfil their physiological needs. In terms of safety needs, co-operative organisation can provide its employees a safe working environment, which aligns with a strong organizational culture. Thirdly, to meet the social needs of the employees, co-operative organisation can arrange events such as travelling program. Next in terms of the esteem needs of the employees co-operative organisation can arrange recognition programs in order to make employees feel appreciated. Employees are also given importance of their position. Finally, in terms of self-actualization, employees are provided with proper training and promotion to reach their career potential.
However, there are some drawbacks of Maslow’s hierarchy need theory. According to this theory lower level needs had to be satisfied before the next higher level need would motivate employees. Hence some employees might feel the social needs before the safety needs. Also not all employees are motivated to satisfy only one need level at a time. In this current competitive workplace, employees aim to satisfy several need level at once.
To overcome the limitation of Maslow’s need hierarchy theory, Clayton Alderfer expanded on Maslow’s hierarchical theory. He proposed three need categories and suggested that movement between the need levels is not necessarily straightforward. These ERG theory categories are existence needs, which includes physiological and safety needs; relatedness needs, which includes affiliation and esteem needs; and growth needs, which includes self-actualization and self esteem needs.
Therefore at co-operative organisation, it is seen that management satisfies the employee needs simultaneously. Employees are offered with training which is the fifth level of Maslow’s need theory, before the other needs to make the employees competitive. In addition, employees are offered with wages to fulfil the basic needs but also at the same time they are provided with subsidy and not worked benefits which satisfy the safety needs. Thus co-operative organisation meets its employees multiple needs simultaneously in order to increase productivity.
Another theory discussed in the literature review is the goal setting theory developed by Locke. It uses many principles of information processing approaches and of reinforcement, most specifically social learning theory, to explain how goals motivate people. This relates to motivation system of co-operative organisation as all the stakeholders has target and by achieving them they are rewarded with commission, bonuses, salary increment or promotion. (Wendy et al. 2003).
1.6 Final Thoughts
Motivated, hard-working employees are crucial to the co-operative organisation’s success. When people lose their motivation, however, their job performance suffers hence they become less productive, less creative, less of an asset to the company. There are several factors that have been identified in the data analysis in order to motivate the co-operative members to minimize organisation conflict.
Firstly it is important to create a positive environment. An office atmosphere that makes all employees feel worthwhile and important can increase productivity.
Secondly it is critical to help employees improve their professional skills by providing on the job training. Employees will feel the company is investing in them, and this will translate into an improved job performance.
In addition it is also important strategy to acknowledge the contribution. It makes a huge difference in employee morale simply by taking the time to recognise each employee’s contributions and accomplishments.
Offering incentives to the sales people is also critical to increase sales performance. Performance based bonus and salaries can effectively motivate employees and it can impressively increase sales performance. For example co-operative organisation provides with salary increase and special commission to its salespeople in term of target achievement.
It would also be good strategy to help employees reach the next level professionally by providing onsite coaching. Individual counselling can help people learn how to overcome personal or professional obstacles on their career paths. For example at co-operative organisation, when sales people failed to perform the managers arrange to talk with the employee and find out the reason why the employee does not perform well. If the employees lack professional knowledge, the company will arrange the professional training for them. In summary, the motivating strategies mentioned above can maximize salespeople’s productivity, which can lead to effective increase organisational performance.
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