KK Taimni-What is Cooperative
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8/11/2019 KK Taimni-What is Cooperative
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I R A 4/1 .7
wilier wisp*
fr;
1 11
I PN 0
la
110 -st HI
b,r Pilot
Inside this Issue
Liberalisation
and The Cooperative
Sector
Whither Agri-coops?
Explanation
and Interpretation
of the Statement et
Cooperative
Workshop on
Gender Issues
in Development
Policy. Planning
and Practice
How to Fight
Fires Without
Burning Bridges
One Source.
Endless Solutions:
The Year 2000
Problem from a CFOs
Perspective
Chief Editor:
Prof . C Balaj i
Editoria l Assistance:
M s. A rc h a na Burd e
Secretaria l Assistance:
S hr i V S B hadr in ath
La yo ut :
Sh ri Ha ro o n S h a r i f f
C Mal
Inst i tute of Rural Management
PB N o: 6 0 , Ar lan d - 3 8 8 0 0 1
Ph on e: ( 02692) 40177 , 40181 , 40186
Fax: (02692) 40188
Em a i l: c b@ fa c . irm.em et . in
IRMA 's W eb Site:
t t p
/
/ irma. irm.ernet . in
i l l cooperat ives survive or wi l l they per ish?
re coopera t ives m ore e f f ic ient th t in inves tor
n e d f i rm s o r n o t ? S h o u l d c o o p e r a t iv e s
i gorous l y p r omot e d and s a f e guar de d or
l i s at ion and g loba l i s a t ion? A ns w e r s
ed to b eco m e
ount a in o f w or ds; and t he m ount a in w i ll
g r o w . L i k e a t ru e c o i n , th e r e a r e ,
ec t a b l y , tw o s i d es t o t h e a n sw ers : t h ere
es" and there are "Nays". But un l ike
co in - how ever
ue one m ay be - the answ er lie s somew here
y e " a n d t h e " N a y " . T h e re i s
w i n - di m e n s i o n t o t h e s e a n s w e r s .
f i c " p re m i s e . W h i c h e v e r o f t h e s e
n e a scr ib es t o , th e a n sw ers t o
d t o s uppor t the
" A y e s " a n d "N a y s " . U l t im a t e ly , t h e s e t o f
ers one pre fers seem s to essent ia lly bo i l
n t o o n e f a i t h
ere a re t h ree a r t ic l e s i n t h i s i s su e w h i ch
e re la ted to ques t ions in the gen re of tho se
ofessor Khusro's
ress a t IR M A 's 15th A nnual Convocat ion
oint o f a scholar who h as herdia.
e r at iv e s . S h y l e n d ra 's s u m m a ry o f t h e
c" v i ew a n d , i n t h e
einforces the f orm er art i c le ' s v iew s on
S t a t e . T h e s e t w o a r ti c l e s
e n t g o o d s u m m a ri e s o f m u c h o f t h e
e s on t he r e l e v anc e o f c oops . Ta i mni ' s
t ( form ally dec lar ing the v a lues and
n c i p l e s o f c o o p s ) s h o w s t h a t th e c o o p
o v e m e n t i s n o t s t ag n a n t in i t s d o g m a s : it
responds to the changing eco nom ic, cul tural
l condi t ions (one does , how ever ;
i s h t h a t su c h r e s p o n s e s w e r e q u i c ke r a n d
r).
s w e p ro c e e d in t o t h e n e x t m i ll e n n iu m ,
i s sues regarding gender can be hardly given .
a t t e n t io n . I s n 't i t n i c e t o n o t e
t ha t I R M A has be gun addre s s i ng the ge nde r
i s sues in r ight earnes t , a lbe i t a bi t la te? A
m a jo r e f f o r t i n t h i s reg a rd w a s a wo rk sh o p
h e l d at I R M A . W e c a rr y a s h o rt re p o r t o n
t h i s w o rk sh o p , an d s i n cere ly h o p e t h a t t h e
m o m e n t u m g e n e ra te d b y t h i s e f f o r t o n l y
gains.
The w hole m ankind is l ikely to greet the dawn
o f t he 2 1s t c e n t ur y w i th gr e a t e x pe c t a ti ons
and joy. However, for those in the
i n f o r m a t i o n t e c h n o l o g y f i e l d, th e n i g h t o f
D e c e m be r 31 , 1999- January 1 , 2 000 w i ll be
e i t h e r a s le e p l e s s o n e o r o n e f i l le d w i t h
nigh tm ares ( i they a t a l l s leep). For; loom ing
large before them is the Y ear 2000
P robl e m" (o r s im p l y "Y 2 K ") . A s I brow s e d
t he i n t e rne t on t h i s , 1 c ame ac r os s a w ho l e
l o t o f i n f o r ma t i on on t h i s "doom " and hav e
b e e n r e qu e s t in g m a n y o f t h o s e w h o h a v e a
be t t e r know l e dge o f I T t o w r i t e a s um m ary
of the i ssues. I m ust admit wi th a heavy heart
t h a t a l l t h ese p eo p l e seem t o h a v e b een so
busy in the i r ow n af fa i rs that they co uld not
take t ime o f f tow r ite ap iece for the Ne tw ork
(Inc identa l ly , th is is a com m ent tha t one can
m ake regarding con tr ibut ions to the N etw ork
i n ge ne r a l ) S i nc e I be l i e v e d (and c on t i nue
to do so) that the problem i s l ike ly to a f f ec t
many of us, I considered it necessary to bring
t o t he a t te n t ion o f t h e N e tw or k re ade r s a
gl anc e at the Y 2 K pr ob l e m . Th e p i e c e t ha t
we c rry
in th is issue i s f rom the perspect ive
o f a F i nanc e M anage r; bu t any on e e l s e t oo
can ge t acquainted w i th the problem through
th is art ic le . M y su ggest ion /request to anyo ne
w ho e v e n v ague ly s u s pe c t s t ha t s/ he o r he r/
his organisat ion m ay be a f f ec ted by the Y 2K
problem is this: don t lake i t l ight, and consult
e x pe r ts . For al l y ou know , y o u m i gh t hav e
alread y missed t h e b u s an d m a y h a v e t o
c h a r te r a m o r e C o s t l y f l i g h t t o r e ac h t h e
destination of
the Y2K free computer
nvi ronm nt
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LiberaliAat ion an d The Coo perat ive S ector*
In 1991, with much ado, India came to
adopt a liberlised policy of structural
reform. There are num erous areas, sectors
and sub-sectors in which liberalization has
not been adopted and the coop erative sector
is one of these areas which remains
subjected to over-regulation and in which
the rays of liberlised policy sunshine have
not been witnessed.
Cooperatives were conceived in this
country as the answer of the small man to
the moneylender-trader nexus and were
seen as an instrument of self-help among
the poorer segments of the population.
Other than the provision of economic
services, in terms of cheap availability of
goods to the cooperating community, the
cooperatives were conceived also as social
organisations which educated the people
in economic management and spread a
sense of togetherness among cooperators
and generated loyalty to the cooperative
movement.
One of the major recommendations of the
Rural Credit Survey Committee was that
as the cooperatives were unable to stand
on their own feet, the state should become
a partner in the cooperative system in order
to provide additional resources and to
strengthen the cooperative system.
Unfortunately, the effects of this seemingly
innocent recommendation turned out to
be disastrous for the independenbe and the
inner-resilience of the cooperative
movement. The cooperatives became
dependent exclusively on the crutches
provided by the state and lost their self-
resilience. The state, instead of being an
equal partner, came to dominate and dictate
terms. The best became the enemy of the
good. The Registrar of Cooperative
Societies in every state became the
dominant figure, over-controlling and
over-regulating the cooperative system -
although it must be admitted that there
have been many examples of really
dedicated and efficient Registrars in the
shape of ICS and IA S officers who tried to
sustain the cooperative movement. But,
on the whole, the domination of the
Cooperative Registrar did more harm than
good and curbed the inner-resilience of
the cooperative management. The other
serious negative develop ment was that on
the slightest pretext, the cooperative
organisations began to be superseded from
time to time and transferable and
bureaucratic officers began to be planted
in the movement to oversee and control it.
It would have been understandable if a
particular cooperative society or a group
of societies in a given area became
inefficient or a scene of malpractice and
embezzlement and, therefore, had to be
superseded by the state bureaucracy. But,
it was totally obnoxious that cooperatives
in a whole state - which is a very large unit
- were superseded by the state
administration and put under the tutelage
and control of bureaucrats. Sometimes,
the period of supersession lasted too long
or was repeated again and again. And
during all these periods, the cooperative
partners had nothing to do and an excellent
opportunity for public education in
democratic management and economic
development of public institutions was
lost.
Another grievous outcome of the state
domination was that the state, far from
being an equal partner, became an
autocratic provider. As a major part of the
financial support began to com e from the
state, the cooperators felt that they were
not managing their own money but were
depending on government money. To the
rural folk, the Reserve B ank of India and
the NA BAR D are just other names for the
government. Thus, an attitude of
resignation and irresponsibility was bred
among the members of the cooperatives
and these members ceased to play their
role in guiding, questioning and
controlling the cooperative functionaries.
Economic liberalization is predicated
basically on three things: (i) a shift from
administratively controlled prices to free
market prices determined by demand and
supply, (ii) a shift from administered
quantities to market determined quantities
of demand and supply, and (iii) a shift from
bureaucratic decision-making by
officialdom to decision-making by the
economic agents, viz., the consumers, the
producers and the suppliers.
It is obvious that until the over-control and
intervention by governmental authorities
is removed and structural changes are
brought about in the cooperative system,
there would be no hope for substantial
progress. Luckily, it can be hoped that the
days of over-control are over and in the
new policy of liberalisation and structural
reform that India has adop ted since 1991,
the cooperative system may stand to benefit
from the provisions of the new policy, if
the freedoms and restoration of initiative's'
are applied to the cooperative aector as well.
To build a new resilience and resource
richness in the cooperative system, the first
essential is to remove the domination of
the government through its officialdom and
hand-over the decision-making to the
cooperative managers at various levels.
Secondly, in determining the price of the
produc ts, like fertilizers, foodgrains, cloth,
clothing and various other wares, the
cooperative system, regulated by its own
organisations at the apex level and the
middle level, should be able to determine
the product prices based on costs, intended
profitability and market conditions and
should be able to change the prices in
accordance with the demand and supply
conditions. Also, in terms of how much te
buy, how much to sell and how much to`
stock as well as how much to borrow, how
much to lend and what liquidity to
maintain, the cooperative institutions
should be the masters of their own business.
In a decontrolled and liberlised structure,
there should be no room for official control
and interference. However, it should be
noted and stressed that every civilised
market arrangement, howsoever
deregulated, requires an over-seeing and
regulation by a superior managing
authority. This managing and regulating
authority need not be and should not be a
government but a professional and
technical organisation with an information
system and regulatory apparatus of its own.
Thus, market freedom does not mean
*Excerpts from the Convocation Address delivered by Prof. AM Khusro at the 15th Annual C onvocation of IRMA held on April 12, 1996.
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regulation but this regulation
rofessional bodies.
ear that the Indian cooperative
victim of old-time rules
future. The cooperative law and rules,
basically administered by the government
under the control of the Cooperative
Registrars,
overnment-appointed
Chairmen and Managing Directors of the
cooperative system and sub-systems, need to
be altered radically. But as government
bureaucracy is not an agent of dynamic
change, these rules and laws remain
unaltered or only marginally altersd. These
should now be revised radically and given a
direction required by the system.
Messages to the Graduating OYP 1995 and PRM 1994-96) Participants
Chairman s Mess age
What is happ ening around us must affect you in many different ways; it will open up new vistas for you; but it will also mean
that you will have to face new challenges and to face them you will have to make an d keep new promises to yourself and to
your country. I feel good about IRMA because I think it teaches students to place service to society over self-interest and
partnership over patriarchy; because it teaches that the true measure of achievement by which one judges oneself is not
merely the rewards and power one enjoys in the system but the contribution one makes to resolving critical anomalies in
one's social milieu.
I com mend to you to a life of action, initiative and responsibility over one of the p assivity and despond ency. In the arena of
human endeavour, the honours and rewards fall to those who show their good qualities in crisis and in action. You will do
well to remem ber that action springs not so much from thought as from the readiness to accept responsibility and to wield the
pow er that accompany respo nsibility with decency, dignity and decorum.
You will
no doubt experience, as we have done in our times, that every effective innovative attempt to reform generates
resistance from those who are hurt by the reform. Your biggest challenge will be to withstand such opposition and to turn
it into a source of internal strength. In this game, the best sailor is one who can steer closest to the wind and exact motive
power out of the greatest of obstacles.
So I adv ise you to persevere,
as
I have do ne for the last 45 years or so. For, success comes to only those who p ersevere, who
see their goal constantly and steadily and aim for it unswervingly; who persevere w ith dedication and faith the cause they are
fighting for. Faith in your cause, faith in your country and faith in yourself are of greatest importance in your profession.
True, you can do very little with faith alone, but you can do nothing without it.
Director s M essage
I would like to sound to you a note or two of caution. One, promoting sustainable and equitable rural development through
professional management is like a movem ent and wh en self-centered professionals jump on a mov ement, it loses its vigour,
its mission is side-tracked and it becomes like a rudderless boat. I can appreciate your desire to seek lucrative jobs in the
private and corporate enterprises and swim along with the main stream. But for a moment, think about the mission and
vision of IRMA articulated by its founding fathers and think about the problems of rural people and their institutions and
organisations and think about the gross misuse and mismanagement of India's natural resources of land, water, forests,
fisheries and so on an d so forth and then ask yourself this question: Where are m y services needed the most? The answer, I
am sure, w ill be : rural India and rural institutions and organisations. So I app eal to your conscience that you com mit a few
years of your service to help professionalise the management of rural institutions and organisations, rural resources, and
rural development projects and programmes. You owe this to your alma mater and to your society. In helping the rural
people realise their dreams, you may not get the best monetary rewards but you will certainly get the love and affection of
millions of them and the deep satisfaction that comes to only those who dedicate their lives to the cause of bettering the lives
of others, especially the poor and under-privileged.
Another important thing I would like to draw your attention to is the question of moral values and ethics in management.
There hav e been increasing violations of legal and ethical norms by business organisations, especially the big ones, all over
the world. For example, over the last ten years, two-thirds of America's five hundred largest corporations have been
involved in some type of illegal behaviour. Similarly, a survey of personnel Vice P residents across USA showed that one out
of every seven job candidates these days is likely to tell a lie about his or her background. Professionals once held in high
esteem by society are now blamed for abusing their autonomy and enriching themselves at the expense of their clients. In
face of m ounting scandals, corporations now are adopting codes of ethics, and business schools are developing ethics courses.
IRM A w ill start offering a course on "Ethics in M anagement" from the next academic session. It is my appeal to you all that
you follow legal and moral codes of ethics in whatever you do and wherever you work and uphold the values of integrity,
creativity and excellence throughout your careers an d in your lives.
W
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W hither Ag ri-coops?
H S Shylendra , IRM A
This note is an attempted summary of
the book 'Agricultural Cooperatives in
Transition" which I reviewed recently for
a journal. I wish to share the insights I
gained from the book, about the recent
performance of agri-coops in different
parts of the world. The varied insights
on the agri-coops which are rare to come
by, seem to hold useful lessons for all those
who are interested in their progress. The
book edited by two eminent agricultural
economists (Csaba Csaki and Yoav Kislev)
is a collection of the papers presented at
a Symposium of the International
Association of Agricultural Economists
held in Israel during 1992 on the same
theme.
M a j o r Is s u e s
Some of the main issues addressed in the
book are: the recent political changes in
the socialist countries and their impact on
the progress of cooperatives; the reasons
for the failure of collectivisation; the
relative efficiency of cooperative farms/
firms vis-a-vis other forms of business
organisation; factors determining the
organisational structure and performance
of cooperatives; the strategies adopted by
the cooperatives under liberlised economic
policies and uncertainties; and the possible
just grounds on which the cooperatives
should continue to get the favourable
public policy support. The m ost enriching
aspect of the book is the
ttempt
o
address the above issues, in varying
degrees, under modern theoretical
paradigms/approaches
uch
s
institutional economics, coalition theory,
agency theory, etc. The outcome is further
confirmation of the limitations of the pure
neo-classical approach in analysing
cooperative behaviour and n ewer insights
into understanding the process of
cooperative decision making.
The Failure of Collectivisation
To the q uestion
as
to w hy collectivisation
failed in socialist countries and why the
cooperative farming was inefficient, there
are some revealing answers. As regards
the former, the main reason ascribed is
the administrative command system in
these countries which did not allow the
emergence of true cooperatives
(Epshtein).
This is found true even in a
non-socialist country like Tanzania
(Kashuliza and Ngailo). The high
transaction cost of
roducers'
cooperatives in terms of decision making
vis-a-vis the hierarchical family farms
(Schmitt) and lack of proper incentive
system for the individual labour effort
(Lin) were the factors found responsible
for the inefficiency and the inevitable
collapse of cooperative farming. Does this
mean that reaping economies of large
scale agriculture is alw ays constrained by
the above factors? The Honduras and
Nicaragua case, however, suggests that
producers' cooperatives can operate
equally efficiently as comp ared to private
farms when organised voluntarily (Sanjak
and Luz).
The Puzzle of Reluctance
To the utter surprise of the western
economists, despite the failure of
collectivisation and the fall of communist
regime, the members were found not fully
inclined to quit the collective farms and
take up private farming. Unlike in China
where there was a rapid switch over to
private farming in the aftermath of the
disbanding of the collective farms, in the
former socialist countries
here was a
tendency to form new cooperatives. The
papers which have examined this puzzle
attribute it largely to the phenomenon of
market failure. The prevailing risk and
uncertainty outside the collective system,
due to the absence of any other
institutional mechanisms to meet the
inputs and other needs, have been found
largely responsible for the members'
reluctance to quit collective farms
(Machnes and Schnytzer).
t the same
time, sheer logistical difficulties involved
in distributing land to the respective
owners or to the new aspirants has also
come in the way of rapid privatisation
(Sebestyen). If anything, the puzzle seems
to suggest that a period of growing
uncertainty and perceived market failure
is also the most opportune time for the
emergence of true cooperatives.
The Lessons from Market
Economies
As compared to socialist countries, the
performance of cooperatives functioning
in other countries, particularly where they
are the result of voluntary c reation, though
not dismal, too is not without problems.
The cooperatives even in the market
oriented economies face certain theoretical
limitations to become fully efficient.
These limitations arise because of the
principal-agent problem which poses
difficulties in monitoring the managerial
performance or due to the horizon
problem leading to equity starvation and__
under investment. However, there arc.
many instances where agri-coops have
successfully overcome these limitations.
In the U SA, as per the available evidence,
the dairy cooperatives which are the most
widely studied were found to be no less
efficient than the for-profit firms (Sexton
and Iskow). Also, there is no evidence to
suggest that the successful cooperatives in
the USA survive only on government
support. For that matter, as against the
theoretical expectation, regional
agricultural cooperatives had not
borrowed more than the comparable
investor owned firms (IOFs) (Lerman and
Parliament). Further, in the USA there is
also the evidence of the success of
cooperatives dealing with some perennial
crops like tart cherries, almonds ands
raisins. These cooperatives, aided by the
federal marketing orders (which enable a
cooperative to act as a monopsony buyer),
had overcome to a great extent the
problem of imbalance by adopting an
effective dem and and supply coordination
strategy (Hinman and Ricks).
Outside the USA, in the Latin American
country of Argentina, the cooperatives
functioning in the grain marketing system
have been able to effectively cope with
the liberalised economic environment
through diversified vertical integration
mechanism (Guiguet and Campbell): a
strategy which certainly holds useful
lessons for the Indian cooperatives. On
the other hand, Moshavim and Kibbutzim
(once considered to be successful
I
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Though the crisis was
subsidies in credit had played
ithical attitude of the cooperative
embers. Cooperatives being 'high
of the corresponding
ethics (Oved), at the same time it
becomes necessary for the cooperatives to
follow appropriate policies which can
ensure members' commitment to the
ethical norms. For example, from the
equity point of view, it is important that
the producers' cooperatives should try to
ensure fairness in their income allocation
policies towards their members. In this
regard, one of the papers suggests a
method for multi-product cooperatives to
allocate net returns among members
without any cross subsidisation (Buccola
and Stokstad). The usefulness of this
method (which tries to identify the
marginal implicit contribution of each
member to net returns through hedonic
analysis), however, is constrained by the
availability of reliable data on revenue
and costs.
C o m p e t it i ve Y a r d s t ic k
Another issue which comes
ut
prominently is the need for identifying
valid grounds on w hich the public policy
support to cooperatives, be it tax
concessions or cheap credit or immunity
from anti-trust laws, is to continue. This
is an issue which has assumed
significance even in the USA particularly
in the light of arguments for curtailing
the favourable treatment to cooperatives
on the grounds of inefficiency. On
efficiency count, there is still not much
of evidence to prove the superiority or
otherwise of cooperatives vis-a-vis IOFs.
However, at least on competitive yardstick
function there appea rs to be a fairly strong
theoretical and empirical basis for
continuing such support.
he
cooperatives having the policy of open
membership seem to have induced IOFs
to behave more competitively to the
benefit of the farming comm unity (Sexton
and Iskow). If the competitive yardstick
function is indeed such a strong reason
for policy support, the performance of
dairy and other cooperatives in India too
need to be assessed afresh from their
angle, particularly in the context of the
ongoing liberalisation.
New Hopes for Cooperative
E n d u r a n c e ?
Though the failure of collectivisation in
the socialist countries was a set-back
for the agri-coops, the fall out of the same,
however, seems to hold new hopes for the
rise of true cooperatives. Besides,
he
record of survival and the resilience of
cooperatives in other parts of the world
is certainly also a redeeming feature.
f
the experience documented in the book
is any lesson, then the key to
he
endurance of the agri-coops (or for that
matter all cooperatives) lies in limiting
the state intervention to an optimal level
and in promoting flexible institutional
structure with strong cooperative ethics.
0
I. Agricultural
ooperatives
n
Transition, edited by Csaba Csaki
and Yoav Kislev, Westview Press,
Boulder, 1993. pp. xi+411, ($ 6230)
2.Because of limitation of space, the
papers in the book are referred only
by the name of the authors.
MENTOR
vs SUPERVISOR
Mentoring is fast catching up as an important role of organisational superiors, as organisations increasingly attend to
enculturing their employees. How does a "Mentor" differ from a "Supervisor"?
Mentor
+ counselor and confidant
+ has a developmental relationship with a longer
time reference and is future oriented
advising, coaching, and teaching by a mentor
is directed toward generic skills
+ affords opportunities for taking risks without
penalty
Supervisor
+ judge of performance
+ focused on current job requirements and the
pragmatic, direct management of tasks
+ advising, coaching and teaching by a supervisor
is directed toward imm ediate job
concerned with immediate job performance and
results
Based on an article in a discussion group in the intemet
C
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E x pl a n a t io n a n d I n t e r pr e t a ti o n o f t h e S t a t e m e n t o f C o o p e r a t iv e
KK Ta imni
E d i t o r' s n o t e : I n V o l 2 N o 4 of t h e N e t w o r k
we had carried the statement on the new
cooperative identity approved in ICA's
Manchester Conference in September
1 9 9 5 . In t h e f o l l o w i n g a rt ic l e , K K T a i m n i
provides some explanation about the
various pans of t h e i d e n t it y s t a t e m e n t a n d
gives his interpretation
A few preliminary remarks on the
statement will be in order here.
- The Statement of Coop erative Identity is
an attempt to reinterpret and explain the
core values, principles, essence and
traditions of cooperatives to relate
cooperatives to the contemporary context.
The Statement formally affirms and
welcomes as
equal all the traditions of
cooperatives,
ike consumers'
cooperatives, credit cooperatives,
agricultural cooperatives, workers
cooperatives, and service cooperatives
such as housing and health cooperatives.
The Statement makes a clear distinction
between cooperative values (which are
absolute and must be adhered to by all
cooperatives) and cooperative principles
(which are in the nature of operating
rules, and therefore must be so framed
by each tradition/sector of the movem ent
as to demonstrate what the general
principles (as given in the statement)
mean for its operations, particularly in
the light of contemporary circumstances).
The Statement also attempts to capture
the enormous diversity of cooperatives
operating in all kinds of economic,
social and political circumstances. To
that extent, it is somewhat broad and
general in character and scope.
1. The D efinition of a Cooperative
This is for the first time that IC A has com e
out with a definition of a cooperative.
Earlier, definitions given by scholars and
others had often been used. The definition
given in the Identity Statement reads :
A
cooperative is
n autonomous
a s s o c i a t io n o f p e r s o n s u n i t e d v o l u n t a r i ly
t o m e e t t h e i r c o m m o n e c o n o m i c , s o c i a l
and cultural needs and aspirations
through a jointly owned and
d e m o c r a t i c a l l y c o n t r o l l e d e n t e r p r i s e .
The definition emphasises the following
characteristics:
The coop erative is 'autonomous'. That
is, it is as independent of government
and private firms as possible. The
autonomous feature of a cooperative
has come to be included because of
widespread
nterference
y
governments, particularly in the
developing countries inhe
managementnd working
f
cooperatives.
It is 'an association of persons'. Here,
a person may include a legal person,
including another cooperative, or a
company. The membership of the
cooperative should be free to decide
how it wishes to deal with this issue.
Generally, at the primary level only
individuals have been eligible for
membership, but now, this may change.
(c)The persons are united 'voluntarily'.
This means, membership of cooperative
should not be compulsory.
(d)Members of a cooperative 'meet their
common economic, social and cultural
needs'. Here the emphasis is on the
members' needs, for, satisfying such
needs is the central purpose for which
a cooperative exists. These needs may
be econom ic, or social or even cultural
or a com bination of these.
(e)The cooperative is 'a jointly-owned and
democratically controlled enterprise'.
There are two parts in this. The first
part ('jointly owned and democratically
controlled' ) makes it clear that
cooperatives are jointly owned by their
members, but at the same time these
are dem ocratically controlled - a clear
distinction from a public enterprise,
which m ay be jointly owned bu t is not
democratically controlled. The second
part ('an enterprise') implies that a
cooperative has to operate in the market
place and hence to be successful, it
must strive to serve its members
efficiently and effectively.
2. Values
This part of the statement although also
new, is really the core of the statement. It
draws its inspiration from the debate
initiated by Lars Marcus and Sven Ake
Book during the past 7 years or so. Thus
far, these values were assumed ; now they
are explicitly stated.
The first sentence on values reads:
C o o p e r a t i v e s a r e b a s e d o n t h e v a l u e s o f
self-help, democracy, equality, equity
a n d s o l i d a r i t y .
Self-help is based on the belief that all
people can and should strive to control
their own destiny. It emphasises that first,
each individual is responsible for his/her
own destiny, and second, each individual
must control his/her own destiny.
However, as an individual, one is limited
in what one can try to do, what one can
achieve; but through joint action and
mutual responsibility, one can achieve
more. Cooperatives also provide
opportunities to individuals to develop
themselves - hone their skills, improve
their understanding and continue the
process of their education.
Democracy is the very essence of
cooperatives; it means that cooperative's'
are, above all, governed on the basis
of
one-mem ber one-vote. But it also implies
that a cooperative provides op portunity to
its members to influence its direction, its
actions and its operations.
n a
cooperative, democracy is measured by
involvement of mem bers as well as by the
counting of votes.
A cooperative is based on
equality
-
equality of members, who are its basic
units. This basis in human personality is
one of the main features distinguishing a
cooperative from firms controlled
primarily in the interest of capital.
Members have rights of participation, a
right to be informed, a right to be heard,
and a right to be involved in making
decisions. Members should be associated
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ed equitably in how they are rewarded
on in the cooperatives,
erative is more than an association
bers have the responsibility to ensure
of members. In
in
the ethical values of
ethical values emanate from the
very purpose for which the Rochdale
Pioneers had set up their cooperative. These
values distinguish as well as underpin the
working and operations of cooperatives.
These values underscore the point that
cooperatives have a special tradition of
honesty and openness; cooperatives have
always aspired to have honest dealings with
their members, which in turn has led to
honest dealings with non-members.
It can be argued that honesty, openness,
social responsibility and caring for others
are values which can be found in all kinds
of organisations. But, these are particularly
cogent and undeniable within cooperative
enterprises.
Some scholars have raised the issue of
Oriental values v/s Western values in the
context
of defining the basic values of
cooperatives. Ki-Won Suh for instance, has
argued that there are marked differences
between the Western Society and the Asian
Society and thus the values each society
believes in, cherishes and upholds varies.
For instance, he claims that the human
factors are emphasised even in economic
activities in the Asian countries. This is,
however, an area which has yet to be fully
explored.
3. Principles
A few preliminary remarks need to be
made here.
The principles are not independent of
each other. They are subtly linked;
when one is ignored, all are diminished.
Cooperatives should not be judged
exclusively on the basis of any one
principle, rather, they should be
evaluated on how well they adhere to
the principles in entirety.
Of the seven principles, the first 3
essentially address the internal
dynamics typical of any cooperative;
while the last 4 affect the internal
operation and the e xternal relationships
of cooperatives.
The principles should be seen as
empowering frameworks - energising
agents - through which cooperatives
can grasp the future. These are not a
stale list to be reviewed periodically and
ritualistically. The vision and the
inspiration that each p rinciple provides
must be ingrained in the daily activities
of the cooperatives.
The 1st principle: Voluntary and
O pe n M e m b e r s h i p
This principle forms a part of the previous
six principles, and affirms the fundamental
importance of people choosing voluntarily
to make a commitment to their
cooperatives.
This principle also affirms a general
commitment basic to cooperatives since
their emergence: a commitment to
recognising the fundam ental dignity of all
individuals. It also acknowledges that
cooperatives are organised for specific
purposes, in many instance, they can only
effectively serve a certain kind or number
of memb ers. In other words, a cooperative
may impose a limit on membership.
Members, in turn, have obligations to their
cooperative. Such obligations, which may
vary, include exercising voting rights,
participating in meetings, using the
cooperative's services, and providing
equity as the need arises.
And, cooperatives should do ev erything to
encourage women to join as members; and
cooperatives do not discriminate, while
admitting members, on the basis of social,
cultural and racial basis. But, at the same
time, cooperatives based on ethnic (or
religious) considerations have every right
to exist as long as they do not impede
organisation of like cooperatives among
other cultural groups;
as long as they do
not exploit non-members in their
communities, and as long as they accept
their responsibilities for fostering the
development of the cooperative movem ent
of their areas.
The 2nd Principle: The Democratic
M e m b e r C o n t r ol
The principle stresses that members
ultimately control their cooperatives, it also
emphasises that they do so in a democratic
manner. It also affirms the right of
members to be actively involved in setting
policies and making key decisions.
This principle also reminds elected
representatives that they hold their offices
in trust for the immediate and long-term
benefits of members. Coop eratives do not
'belong' to elected officials any more than
they 'belong' to the employees w ho report
to those officials. They belong to the
members, and all elected officials are
accountable, at election time and
throughout their mandate, for their actions
to the membership.
That a primary cooperative should be
governed on the basis of one-member one-
vote is self-evident and has been
customary. But, in many secondary and
tertiary cooperatives, systems of
proportional voting have been adopted so
as to reflect the diversity of interest, the
size of membership in associated
cooperatives and the commitment among
the cooperatives involved. But care should
be exercised so that smaller cooperatives
are not pushed to the periphery.
The 3rd Principle: Member
E c o n o m i c P a r t i c ip a t io n
This principle was the most difficult to
evolve and finalise. It was in fact finalised
by the ICA Executive Comm ittee just five
days before its final approval. It com bines
nig
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the third and fourth principles of the
previous six principles.
The principle underlines the fact that
cooperatives operate so that capital is the
servant, not the master of the organisation.
This principle reinforces both the need for
mem bers to contribute capital to their
cooperative and for them to do so in an
equitable fashion. Generally, interest on
capital contributed by members, is very
limited, if any. But, when a cooperative
has to raise capital from members for
special investments in the future, it will
be app ropriate to pay interest on such
investments at a 'fair' rate - normal bank
interest rate. Members have the right to
own at least part of their capital
collectively, a reflection of what they have
accomplished as a collectivity.
When activities of cooperatives create
surpluses, members have the right and
obligation to decide h ow those surpluses
should be allotted; but a part of these
surpluses must be allotted to comm on
indivisible fund.
The 4th P rinciple: Autonom y and
I n d e p e n d e n c e
This is a new principle; and in a way
underscores a p art of the definition of
cooperatives explained earlier. The
principle has been included to clearly
emphasise the d istinctive character of a
cooperative vis-a-vis. the government.
In referring to 'other organisations', this
principle acknowledges the fact that
cooperatives are entering into joint
projects with private sector firms. The
principle stresses, however, how
important it is that cooperatives retain
their freedom ultimately to co ntrol their
own destiny whenever they enter such
agreements.
The 5 th Pr inc ip le : Edu cat ion ,
T r a i n in g a n d I n f o r m a t io n
This is also an old principle; it
underscores the cooperative movement's
long-standing and distinguished
commitment to education. Education
here transcends the usual concept of
transmittal of knowledge; it means
engaging the minds of members, elected
leaders, manager and employees to
comp rehend fully the complexity and
richness of cooperative thought and
action. Training means making sure that
all those who are associated with
cooperatives have the skills they require
in order to carry out their responsibilities
effectively. The principle also stresses
that cooperatives have a responsibility to
inform young people and opinion leaders
(politicians, public servants, media
representatives and educators) about the
nature and benefits of cooperation.
The 6th Pr inciple: Cooperat ion
A m o n g C o o p e r a t i v e s
This is also an old principle. If
cooperatives are to achieve their full
potential, they can do so only through
practical, rigorous collaboration.
Cooperatives around the world must
recognise more frequently the possibilities
of more joint business ventures. They
must enter into them in a practical
manner, ca refully protecting the interest
of members even as they enhance them.
Cooperatives must also recognise, even
more than in the past, the necessity of
strengthening their support organisations
and activities. This principle underscores
all these aspects.
The 7th Pr inciple: Concern for
C o m m u n i t y
This is also a new principle; and partly
redeems the relative neglect of general
social and community issues. The
principle emphasises that although
cooperatives primarily exist for their
members, they are also often closely tied
to their communities. They have a special
responsibility to ensure that the
development of their communities -
economically, socially, and culturally - is
sustained. They have a responsibility to
work steadily for the environmental
protection of those communities.
C o n c l u d in g . r e m a r k s
The new statement provides the necessary
framework for cooperatives to move into
the 21st century with a purpose and
direction. The cooperative principles
cumulatively are the life blood of the"
moveme nt; these, therefore, need to be
reviewed, expande d, and related to the
contemporary challenges and conditions.
The new statement precisely does so. The
new set of seven principles provide the
guidelines through which cooperatives
should strive to develop their cooperative
organisations. These principles are
inherently practical principles, fashioned
as much by generations of experience as
by philosophical thought. The p rinciples
are elastic, applicable with different
degrees of detail to different kinds of
cooperative in different kinds of situations.
The identity statement, on the whole,
embodies the essential qualities that make
cooperatives effective, distinct and
valuable. The statement also facilitates the`
positioning of cooperatives in the emerging
daunting, uncertain and competitive
environments of the 21st century.
IRMA is designing an integrated Programm e in Rural Management
leading to
Certificate in Rural Manageme nt for those who successfully complete the first year
and
Post-Graduate Diploma in Rural Management for those who successfully complete the two years
During the second year, alongwith specialisation in Cooperative Management, participants can
specialise in one
of
these streams:
Agri-business Management
Rural Development Management
N atural Resources and Environment Management
Details regarding this programme are being worked out and are likely to be firmed up shortly
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a t el an d S a r a A h m e d
ever, despite
situation of the vast majority
in rural and urban areas
ically changed. Deteriorating
al adjustment programmes hav e
-:ontext, mainstreaming gender in
en participate in and benefit from
Gender
logical techniques to devise
projects.
and
A during. April
1-19, 1996. It was jointly sponsored by
ind social justice in rural society by
oting partnership between rural
ly aware of the need to address
gender concerns in rural development.
This is gradually being reflected in its
teaching, training and research and also
at the organisational level, with the
members and women students.
The Gender W orkshop can be seen within
this broader context of institutionalising
gender concerns at IRMA. It is an attempt
to synthesize the insights gained from our
teaching, training and research work, and
to build upon them in terms of developing
further case studies, tools for analysis and
integrative conceptual framew orks so as
to further our understanding of gender
roles in sustainable developm ent. The
Workshop was also undertaken to assist
us in the future to organise short duration
MDPs and gender training programmes
for development planners and
practitioners.
Objectives
To broaden the conceptual
understanding about gender issues in
development.
To develop analytical skills for
designing and evaluating gender
sensitive p rojects and programmes.
lb provide space for reflection on ones's
attitudes, values and behaviour from a
gender perspective and exp lore the
meaning of gender sensitiveness at a
personal level.
Part ic ipants
The Workshop was planned for
developm ent professionals from non-
governmental organisations, development
organisations and international donor
agencies, which were committed to
integrating gender concerns in their work.
Specifically, participants of the Workshop
were development planners and
practitioners who were engaged in
planning, designing and implementing
development programm es and projects
whether for both women and men or
women only in rural areas.
Twenty-two participants (five men and 17
women) from B angladesh, Nepal and
India attended the Workshop for the entire
duration. There were six participants from
Bangladesh, two from Nepal and the
remaining 14 from I ndia. Participants
represented 16 organisations: Community
Development Centre (Chittagong),
Department of Women's Affairs (Dhaka),
Gonoshasthaya Kendra (Dhaka),
Mymensingh Aqua Culture Extension
Project
Mymensingh),
ural
Reconstruction Nepal (Kathmandu),
Dastkar (New Delhi), M. Venkata-
raganaiya Foundation (Secunderabad),
Prepare (Madras), Rural Development
Trust (Anantapur), Sampark (Bangalore),
Tangkhul Theological Association
(Manipur), Utthan Trust (Ahmedabad),
Women's Studies Research Centre, M.S.
University (Baroda), the National Dairy
Development Board (New Delhi), Swiss
Red Cross Programme C oaching Unit
(Patna), and United Nations Development
Programme (New Delhi). In addition, four
participants from the National Dairy
Development Board and one p articipant
from Tribhuvandas Foundation attended
the Workshop for a short duration.
R e s o u r ce P e r s o n s
Apart from the workshop coordinators,
teaching was shared by three IRMA faculty
(Prof. P. Thomas, Prof Sukhpal Singh and
Prof. Hitesh Ellett) and nine resource persons
from academic institutes and nongovernment
organisations. These included Ms. Nandita
Gandhi (Akshara, Bombay), Prof. Indira
Hirway (Gandhi Labour Institute,
Ahmedabad), Dr. Anita Dighe (National
Institute of Adult Education, New Delhi),
Dr. Leela Visaria (G ujarat Institute of
Development Research), Dr. Achyut Yagnik
(SEW , Ahmedabad), Ms. Nafisa Barot
(Utthan Mahiti Trust, Ahmedabad) and Dr.
Dipti Shethi (Janvikas). In addition, Ms.
Ranjani K. Murthy (Consultant, Madras) and
Ms.NityaRao(FredrickEbert Stifttmg,New
Delhi), both ex-IRMAN s, also lent their
whole hearted supp ort to teaching in the
Workshop.
P e d a g o g y
The Workshop wa s conducted in English
through lectures, small group discussions,
case study analysis and simulated
exercises. It was aided by the use of videos.
Pa rticipants were also taken to field trips
to a
dairy cooperative and IRNL k's Bidaj
Model Village Project to study how gender
concerns were being addressed in
development projects.
W o r k s h o p D e s i g n
The Workshop w as structured around five
thematic modules of varying lengths. Each
module consisted of a set of learning
objectives with recomm ended readings
and teaching notes.
a
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Module 1: Conceptual Overview
( A p r i l 1 - 3 , 1 9 9 6 )
The Workshop began with an overview
of key conceptual frameworks for
understanding gender issues in
development. First, it traced the shifts in
thinking from "women" as a category in
development to the concept of gender,
which seeks to situate women and men
in the context of their social relations.
Second it examined a range of
interdependent institutions which
determine the social construction of
gender relations: the state ( legal,
administrative and political systems), the
market (national and international), the
household (gender division of labour),
and community (class, caste and culture).
Finally, we looked at the conceptual and
analytical tools for understanding intra-
and inter-household gender relations,
defining women's practical needs and
strategic interests in development work
and understanding gender indicators to
assess the impact of social and economic
changes on men and women at macro-
and micro-levels.
Module 2: Gender Issues in
Development Sectors April 4-9,
1 9 9 6 )
This module traced gender concerns in a
range of development sectors such as
natural resources m anagement, livelihood
systems, literacy and reproductive health/
population. In each sector, we looked at
the interplay between different actors (the
state, non-government organisations and
intended beneficiaries) in the context of
changing socio-economic policies (SAP,
GATT, etc.). The issues examined were
women's access to and control over
critical resources, for their participation
in decision-making and for the
sustainability of the development
initiatives. Significant issues in this
module were illustrated through case
studies and videos.
Module 3: Gender Policy and
Planning Framework April 1 0 - 1 4 ,
1 9 9 6 )
The third module discussed the gender
planning frameworks (Harvard Case
Study Method, Moser Method, Gender
Analysis Matrix, and Social Relations
Framework), which are currently used as
gender sensitising tools for designing,
implementing,
onitoring
nd
evaluating development projects and
programmes. A critical analysis of each
of these frameworks was undertaken
through their application to specific
cases In addition, participatory research
methods were discussed to identify their
usefulness in gender planning. A one-day
field work at IRMA's Bidaj Model
Village Project enabled the participants
to get practical experience in using
gender planning frameworks and to
understand o rganisational and field-level
constraints in applying them. This
module also discussed key gender issues
in the project cycle.
Module
4:
Project Management
and Evaluation April 15-17, 1996)
The participants were introduced in this
module to the general principles and
techniques of project management that
can be applied in the context of
management of
ender sensitive
development projects. This module also
familiarised the p articipants w ith the key
concepts of the Logical Framework
App roach (LFA) in project identification,
evaluation, selection, implementation and
review and gave the participants a first
hand experience in using LFA through a
simulated group exercise.
Module 5: Managing Change
( A p r i l 1 8 , 1 9 9 6 )
In the last module, we attempted to
synthesize gender issues in development
planning and practice. Participants
examined gender concerns in their
organisations and work, and identified
ways of strengthening their skills and
capabilities in undertaking gender-
conscious work. We also discussed how
to create mutually enriching spaces
within the organisation to ensure more
participatory
nd
ustainable
development interventions and to
influence the direction of development
policy in order to attain the goal of
gender equality.
Feedback
The last day of the Workshop was spent on
the evaluation of the Workshop. Extensive
evaluation questionnaire and open feedback
session suggest that on the whole
participants were satisfied with the
Workshop. The range of topics covering
theory and practice along with a
comprehensive set of reading m aterials and
a fairly interactive pedagogy were
appreciated. Most of the participants felt
that they were going away with a clear
perspective on gender issues as well as the
ability to connect theory to practice and
relate it to their own lives and work
environments. Some hoped to pass on the
skills acquired to other colleagues in their
organisations through workshops and
group discussions or apply them in the
context of project design and evaluation.
They were aw are that they may encounter
constraints because of essentially
patriarchal structure of most organisations
and traditional values held on to by families
and other social groups. For some of the
participants, political barriers were equally
important, for example, the presence of
security personnel in Manipur which
hindered positive interaction.
On the other h and, participants felt that the).-
would have liked more time for the group
sharing of experiences andmutual learning.
Though there were several late evening
informal sessions, they we re not adeq uate.
Some felt that the Workshop was too
structured and that it was not flexible
enough to respond to needs and priorities
of a divergent group of p articipants. On the
whole, however, the participants concluded
that the Workshop was an important
beginning and that IRMA should continue
to offer similar short-term and long-term
programmes and orient them to specific
needs of different groups of participants.
As coordinators we were encouraged by the
responsiveness and interest of the
participants and their bonding as friends
and learners in this three weeks period.
I R M A I N TE R N E T U P DA T E
Hi folks This is your webman of the
IRM A H omePage cal ling
The IRMA HomePage is now on the
intemet You are most welcome to view
it. Don't forget to comment on it after
you have had a good look at it. Your
comments and suggestions will be
valuable for making the contents and
presentation better. Please note that
these pages have been constructed by a
few of us who are total amateurs and
we keep experimenting and learning all
the time. So these pages will keep
getting changed Get going to visit the
page at:
http://irmairm.emetin
(OR)
http:1/202.141.92.37
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to Fight Fires W ithout Bu rning B ridges
hen a couple began to occupy the
was nothing to lose and everything to gain.
It was in the husband's interest to sit in a
roomier, more comfortable seat. And I
was able to figure out that the flight
attendant had an interest as well; unless
she could get Bill in a seat, the plane could
not take off. It took a little work, but I
was able to convince the flight attendant
to move Bill into the only empty seat in
first class. No one lost face, everyone's
interest had been considered, and the
negotiation worked well for all.
s a
provider of negotiation training for
corporate clients, I felt pleased to see
benefits resulting from some of the
techniques I teach.
Resolving,
anaging,
nd
Preventing Conflicts
Whether you find yourself stressed out by
the direction to "never lose a deal because
of the price", department chiefs are
contending over budget issues, or changed
specifications or standards may threaten
relationships, the use of good negotiation
skills can resolve conflicts, manage
conflicts, and most importantly, prevent
conflicts.
According to the Rolling Stones, "You
can't always get what you want." The
question becomes; How many of the
stakeholders can get what is in their
interests? If a business is to succeed in
today's climate, everyone must be prepared
to negotiate to arrive at favourable results.
P i l la r s o f N e g o t ia t i o n a l W i sd o m
Negotiating is an art practised by virtually
everyone; it is a craft practised by a few .
There are many techniques to make
negotiation work. If you pay careful
attention to the following factors, which I
call the Eight Pillars of Negotiational
Wisdom, you should find that negotiating
with all the stakeholders clamouring for
your attention w ill yield m ore efficiency,
less stress, and greater long-term success.
1 Be conscious of the difference
between positions and interests. If
you can figure out why you want
something -- and why others want their
solution -- then you are looking at
interests. Interests are the building
blocks of agreements that last.
2 Be creative. Anyone can do things the
same old way; but using brainstorming
techniques, listening to outlandish
proposals, opening up to unanticipated
possibilities expands agreement
opportunities. If you respond with new
ideas, if you do the unexpected, you can
open doors to far greater gains than
when you behave predictably.
Creativity can make everyone look
good, and with all those stakeholders
looking over your shoulder, that can
make a big difference.
3 Be fair. If people feel the process is fair,
they are more likely to make real
commitments. They're not going to
walk away grumbling after the
negotiation is completed, planning to
find ways to wriggle out of the
agreement. Sometimes things are
helped when a neutral, external
authority is used to measure fairness:
a dictionary definition, a lab test, an
academic article.
4 Be prepared to commit. You cannot
make a commitment unless you can
fulfill it. And your commitment isn't
worth much unless the parties to the
negotiation are Drop-Dead Decision-
Makers. Moreover, commitment is not
likely to result unless the parties all feel
that the process has been fair.
5 Be
n
ctive
istener.
Communication takes place when
information passes from a source to a
receiver. If you spend all of your
listening time planning how you're
going to zing' the other party when
they finally stop talking, you're not
hearing them -- and they know it. Focus
on what others are saying, both the
words and the underlying meanings. It
will help you really understand the
interests upon w hich agreement can be
based. When your response makes it
clear that you've really been listening,
and the other party gets over his/her
shock, they may also be more prepared
to listen to you. Active listening can
change the rules of the game and raise
the level of civility in the negotiation.
6 B e
conscious of the importance of the
relationship. Most of your negotiation
is with 'repeaters', people you run
across time after time. Your spouse and
kids are people with whom you will
probably always negotiate. The same
is true for service chiefs, third party
payers, and representatives of affiliated
institutions.
f you understand the
relative priority of the
r e l a t i o n s h i p , it
can be easier to know w hen 'giving' on
a particular point may mean short term
costs yielding long term gains.
7 B e
aware of BATNAs. BATNA stands
for the
Best
Alternative To a
Negotiated Agreement
Your BATNA
is the situation you want to improve by
negotiating w ith a given party or set of
parties. If you can improve things on
your own, you don't need to negotiate
with them. Your BATNA is not your
bottom line; it is a measure of the
relative value of negotiating a particular
issue with a particular party -- or
whether you can fall back on better
alternatives.
Source: Internet; reproduced with the permission oldie author.
Vol 3 No 2
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8
Be prepared.
In order to negotiate
effectively, efficiently, and wisely, it is
crucial to prepare. Your job is not to
outline a perfect total solution; that
would be a positional approach.
Preparation means studying the interests
and BATN As of every possible party. It
means understanding the short- and
long-term consequences o f the process
you use and the substantive results you
pursue.
Doing your homework can help
you save lots of time.
Enhancing Negotiation Skills
Enhancing your negotiation skills is an
important element of personal and
professional development. It will save
time, reduce stress, and increase
productivity. The growing number of
entitled-feeling stakeholders means that
successfully negotiating the minefields of
business can be crucial for your own
health.
As you consider the brief lessons contained
here, it makes sense to remember the old
story about the tourist in New York. She
asked a passerby, "How do I get to Carnegie
Hall?" The response was very simple:
"Practice. Practice. Practice."
IRM A Announces its fifth VOLAG -MAP
M A N A G E M E N T A P P R E C IA T IO N P R O G R A M M E
for Senior Personnel from Voluntary Organisations
(August 19, 1996 to September 28, 1996)
The programme aims to:
provide a conceptual overview on the changing nature of development praxis;
ntroduce the participants to the principles and techniques of managem ent, which can be ap plied in the
context of management of a development organisation;
xpose the participants to a v ariety of ways in w hich development m anagers have tried to handle
various situations in different contexts; and
elp participants develop some skills, which are often required for the effective management of these
organisations.
Coordinators: Professor Sara Ahmed, (email: s a r a @ f a c k m . e r n e l i n ) and Professor Debiprasad Mishra
(email
dpm @ facirntemet.in)
IRM A Ann ounces its Third Programme on
M AN AG E M E N T O F AG R I -BU S I N E S S C O O P E R ATIV E S
for Chief Executives and Senior Managers from D eveloping Countries
(January 06
1997
to February 14, 1997) l
The programme aims to-
develop sensitivity to emerging challenges and opportunities for agri-business cooperatives;
update knowledge of various management tools and techniques for better decision-making;
uild societal, general management perspectives relevant for managing large-scale agri-business co-
operatives; and
nhance effectiveness in the work environment through better appreciation and awareness of one's
style of functioning
Coordinator: Professor Sukhpal Singh, (email: [email protected])
For further information about these programm es, please write to:
Programmes Officer
Institute of Rural Manag ement
PB 60 Arland 388 001
India
Fax: +91 2692 4 0188
_A
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One So urce, Endless S olut ions:
The Year 2000 P roblem f rom a CFO s Perspect ive
Many CFOs are unaware of the Year 200 0
risk to their company and have
underestimated their own fiduciary
danger.
As Chief Financial Officer of your
company, whether your business is in
banking, insurance, transportation or
manufacturing, you need to be concerned
about the upcoming century turnover.
Rather than a graceful transition into
another century, the year 2000 represents
the first automated date change in history,
and will adversely impact a society that
has pervasive two-digit date fields
throughout all of its information systems.
Any activities that rely on dates, such as
forecasting, insurance policies, train/
airplane schedules, retirement benefits,
etc., will be calculated incorrectly because
most of the current systems can only
accommodate date fields based on the
1900s. The year 2010, for example, will
be read as 1910. Consequently, your
fiduciary responsibilities to your CEO,
your employees, and ultimately your
stockholders demands that you take a
closer look at the im plications of this date
change on all aspects of your business. Not
just an internal application issue, the year
2000 needs to be evaluated from the
perspective of your suppliers and vendors
as well - all will have a pervasive impact
on your day-to-day business. Are you really
prepared?
What Exactly IS the Year 2000
Problem?
Most critical business applications rely
heavily on date-based calculations: loan
calculations, business forecasting,
insurance policies, retirement benefits, etc.
How ever, most business applications have
a 2-digit "year" field- "95" to refer to 1995,
for example. A calculation is accurate,
therefore, as long as the years fall between
1900 and 1999. The year 2000, which will
be entered as "00", will be interpreted as
1900. Therefore, a loan that starts in 1996
and ends in 2000 will be calculated as a -
96-year loan (00 minus 96) instead of a 4-
year loan, resulting in incorrect interest
and principle calculations.
T h e P r o b le m W o n ' t Go A w a y
There are many reasons why the year
200 0 problem has not been a major focus
of companies until now. Some Chief
Information Officers (CIOs) assumed that
by the century turnover date they would
either be retired, or at a different company.
Others underestimated the issue and
viewed it as a simple problem to solve -
merely changing a few subroutines. And
a few years ago, there was the prevalent
feeling that the mainframe would go
away, to be replaced by newer, client/
server systems. Thus, it was assumed, the
problem might be fixed in the normal
course of system development.
Today, however, we realise that many of
the same personnel will still be employed
by 2000, not retired, and will face the
problem regardless of which company
they work for We realise that the
mainframe is not going to go away
because there is intrinsic value in legacy
systems which can be re-used as part of a
smooth transition to new architectures. As
many client/server systems have not yet
proved to be the silver bullet, the problem
of how to deal with the date change
remains to be addressed.
Despite the realization that mainframes
will still be in op eration through the next
century, CIOs have found the topic a
difficult one to bring up with
management. Imagine that you are the
CIO, and you realise you have a $10
million problem. Furthermore, the
situation after you spend $10 million
doesn't significantly advance your cause
- it just means that you are able to
continue to operate the way you do today.
It's understandable that your inclination
may v ery well be to refrain from bringing
up the subject at all. It's admittedly not
the easiest message to deliver to a CEO,
CFO or board of directors. With January
1, 2000 rapidly approaching, however,
CIOs are beginning to realise that it's
better to break the bad news sooner rather
than later, to allow sufficient time to deal
with it. Has your company's CIO raised
this issue with you yet?
Why Should CFOs and
Professionals Care?
Why is this issue important to a CFO as
well as a CIO? In addition to the need to
budget dollars and personnel for the man-
years required to correct the date fields,
there is the inherent fiduciary
responsibility of a Chief Financial Officer.
If a comp any is not operational in the year
2000, or if its intrinsic value has severely
declined because of a failure to adequately
address the year 2000 problem, there's the
strong likelihood of significant lawsuits
from shareholders or other financial
suppliers to whom the company provides
services.
Capers Jones, Chairman of Software
Productivity Research, concurs
"Companies whose software does not
safely cross the boundary between the
years 1999 and 2000 can anticipate the
prospect of several kinds of possible
lawsuits. Two are particularly significant:
Lawsuits for damages by clients whose
accounts or business records have b een
affected adv ersely;
Lawsuits by shareholders of
companies whose software fails to
make the transition to the year 2000.
Either kind of lawsuit can damage a
company and the careers of its
executives. Either kind can also spell
potential bankruptcy. The worst
nightmare would be simultaneous
lawsuits of both kinds. Executives
whose fiduciary duties involve the
accuracy of software-related
information are well advised to exp lore
the impact of the year 2000 problem
long before it actually occurs."
A CFO needs to evaluate whether the
magnitude of the company's problem
requires disclosure in SEC filings to
minimize company and personal risk.
Unfortunately, many CFOs are unaware
of the risk to their company and may hav e
underestimated their own fiduciary
danger. It 's a risk that increases with each
passing year.
Source: VIASOFT Inc; sourced from the Internet and reproduced with permission of VIA SOFT, Inc.
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Accounting firms are just beginning to
focus on the year 2000 issue as an
emerging b usiness
risk. Some
of
their
concerns will be:
Is the company going
to resolve
this
problem? Will it be a going
concern in the year 2000? Will the
company be able to continue to meet its
required financial ratios? Are there
adequate funding and pe rsonnel resources
to beat the deadline? Will the company's
key suppliers survive the transition? If
not, they need to be aw are of those issues
early in order to evaluate the need to
disclose them.
There is also the matter of suppliers.
While some companies' attention to the
year 200 0 transition has focused primarily
internally, in reality the issue is much
broader. If your company relies heavily on
vendors, strategic partners, or suppliers
who haven't yet solved their individual
year 2000 problems, eventually their
problem will become your problem. Their
loss of ability to supply product or serv ices
will have a critical and perhaps extremely
negative impact on your business. Is your
company beginning to assess the ability
of its strategic partners and vendors to
respond to meet the year 2000 challenge?
If not, have you overlooked a critical
component of your business?
W h a t S h o u ld Y o u D o ?
Now that you're aware of the problem,
what should you do? The keys are
communication, partnership, and
planning. Because it is an IS issue at the
core, you need to work closely with your
information services department. The year
2000 is not necessarily a complicated
issue, but it is a very large, time-critical
one that requires extensive planning and
manual effort. You should be thinking
about the source of funding to solve the
problem. Will the funding come from
internal cash flow or additional
borrowings? Over how many years? Other
factors to consider include looking within
your comp any's IS department to identify
productivity improvements to dev ote more
personnel resources to the manual effort.
For example, your company may be able
to improve its maintenance and
development processes in such a way that
it will free up budget dollars, personnel
resources, or both, that in turn can be
devoted to solving the problem - a problem
that could easily take two to three years
to fix.
The Future Need Not e leak
The bright side to the equation is that
you're not alone - hundreds
of
thousands
o
other businesses worldwide are facing
the same challenge. d
hoc user's groups
around the U.S. are forming in order to
address the problem. In St. Louis, for
example, Maritz has taken the initiative
to organise a Midwest 2000 Support
Group to share experiences across
different industries on how to approach
the year 2000 problem. The group meets
regularly to compare notes on their
progress and to choose representatives to
send to educational seminars and trade
shows. Like this group's members, you
may realise that CFOs can help each other
through the incredible task of facing the
century turnover, now less than 1,000
working days away.
Here in VIASOFT's own backyard,
banking leader First Interstate is already
aware of and working on the problem.
According to Regional Chairman and
Chief Executive Officer (CEO) John
Lewis:
"The year 2000 represents a significant
challenge to us as we work with our
customers, suppliers, and emp loyees. We
have built into our business and lending
practices a strategy to increase awareness
of the year 2000 issue, both with our
employees and our customers. Part of the
value we bring to customer relationships
is our ability to help customers identify
risks early in a transaction. This enables
them to strengthen their position which
in turn minimizes risk to our
organisation."
As a leading accounting and consulting
firm, Arthur Andersen has identified the
topic as an emerging issue for CFOs, top-
level management, and boards of
directors. M ichelle A xelson, Partner w ith
Arthur Andersen and their National
Software Industry D irector, notes that:
"It's an issue that's been in the backroom
for several years, and is only just now
beginning to come to the attention of
CFOs. Today, it's a budgeting and
resource issue for CFOs, but could become
a potential disclosure issue. Therefore, it
needs to be addressed early. Companies
need to look at the year 2000 issue with
the same sense of urgency and
thoroughness that they address capital
budgeting, and business acquisitions and
dispositions. If they don't, companies
could end
up
facing an enormous problem
with too little lime to solve it."
Make the
Decision to Outsource
E a r l y
You may want to consider outsourcing
some or all of the process. If you do, make
sure that you choose a company that is
knowledgeable about the year 2000
problem, has hands-on experience in
solving it, and has the technical and
financial resources available to assure you,
the CFO, that they can
g e t the job done.
Work with your vendor as a partner
throughout the process. Above all, make
sure that you choose your partner in
sufficient time to add ress the problem. The
available external resources are limited,
so if you do not address the problem early,.
you may find that there isn't anyone,
available with the knowledge or resources
to help you solve your problem in a timely
fashion, despite your best intentions.
SPR's Jones predicts that "the number of
COBOL programmers is still very large,
but may be decreasing in the United States
by about 1% per year. Other programming
languages such as Visual Basic, Ada95,
C++, and Smalltalk are on a fast growth
path, and many COBOL programmers are
moving toward other languages."
As we ap proach the year 2000, the number
of COBOL programmers will decrease
sharply. If you choose a year 2000 partner
early and wisely, you will have made a
solid fiduciary choice and a good business.,
decision which w ill help assure the future
integrity of your data and your company's
day-to-day operations.
Ideally, the year 2000 conversion effort
should be completed by January 1, 1999.
It is in your company's best interest to
have ev erything in place by then, allowing
you a full year to complete final testing
and provide adequate cushion to handle
unforeseen problems or issues. We have
found in typical projects that the average
number of programmes to be affected by
the date change is 85-90%, and that the
conversion effort requires approximately
200-300 staff months to complete. One
VIASOFT customer, for example, had
nearly 12 million lines of code, of which
it was determined that 82% of the
programmes would be affected by the date-
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cost to modify a
aster files. Clearly, the major pitfall to
Vho would have thought that the
uter systems? It is an issue that until
a timely plan of action to manage and
monitorthe progress of your company, your
customers, and your suppliers over the next
three years.
CFO Checkl ist for the Year 2000
To ensure that your business is on stable
ground for the century turnover, ask the
following questions of your CIO, your
outside suppliers and strategic partners,
and anyone else critical to your business's
daily operations in the year 2000 :
I What is my company doing
internally?
2 Hav e they begun to estimate the extent
of the problem?
3 Howmanyman-yearsisitgoingtotake?
4 What is the estimated amount of
dollars involved?
5 What is the plan for budgeting?
6 Where will the money come from?
7 What can be done internally to
provide resources without incurring
additional cost?
8 What can we do to streamline
the
development process to devote
resources to addressing the problem?
9 Should we outsource the process?
10 If we partner with someone outside,
do we know who they are, their
reputation, knowledge base and
financial strength?
11 Do we
have a plan in place to conduct
periodic, mini assessments of our
partners/suppliers?
12 What are the partners/suppliers
doing?
13 How are they looking at the issue?
14 Do they have a plan to solve the
problem?
15 Will we need to take steps to make
sure they are operational in the year
2 0 0 0 ?
16 Will we/they be completed by
January 1, 1999, leaving a full year
cushion to work out any bugs?
*
** *
SET S.M.A.R.T. GOA LS
W ayne R M orrison offered this simple but v ery effective recomm endation to set goals: "Set S.M.A.R.T. goals."
S.M.A.R.T. goals are those which are:
S
pecific and Simple
M
easurable and M eaningful to the one who sets the goal
chievable and As if N ow (i.e., stated in the present tense)
R
ealistic and Responsible
T
imed and Toward w hat the goal-setter wants (not what s/he does not want)
You can set S.M.A .R.T. goals not only in your w ork or career, but also in every other wa lk of your life
Based on Wayne Morrison's "Smart Goals" in the Tips from the Top feature of
S u c c e s s E x p r e s s J o u r n a l,
Vol
4 N o 4, 1996 (found in the intemet)
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Abs tract of Recent COR P AS P ublications
STRUCTURE, ACTION, OR GANI -
S A T I O N S
W P N O . 9 8
ash N Pandey
The paper tries to recapitulate the problem
of structure and human action as
confronted in organisation paradigms. It
questions the positivist reduction of
physical law-like relation between structure
and social action and the idealist rejection
of material relations altogether. Instead,
based on realist formulation of causality the
paper argues that the human action and
material conditions both make
organisations dialectically emergent
phenomena.
D I V E R G E N C E S W IT H