HomeEditorial CommentPillars of co-operative governance: Part II

Pillars of co-operative governance: Part II

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IN last week’s instalment the discussion introduced co-operative governance as a form of corporate governance since co-operatives are also corporate entities albeit of a specialised form.

It was the thrust of last week’s contribution that some of the basic principles that govern the operations of co-operatives (especially private sector co-operatives), may also be applied to other corporate entities with fair results in terms of firm success and sustainability.

Teaming or teamwork was put forward as a philosophy which makes the work environment not only productive, but also congenial for the generation of ideas and for selfless and socially optimal forms of organisational behaviour.

Democracy
It is important to observe that one of the fundamental reasons why most business concerns that succeed at the early stage collapse later under the heavy burden of corporate mal-governance is because of power dynamics and inability of the same to harness the diversity of skills and abilities that they have at their disposal.

The second pillar of co-operative governance is democracy or what some cynically call the dictatorship of the majority. Most of the organisations that collapse under their own weight normally have as one of the chief attributes lack of diversity in thinking which is associated with a truly democratic dispensation in an organisation.

It is an obvious fact that not all personnel or people in an organisation must have the same level of power and authority because if that was the case, projects would fail to be achieved in the chaos and confusion that usually prevails in entities without a clear line of command.

Even when people vote in those societies that are considered to be (or consider themselves to be) paragons of democratic virtue and excellence, they vote for people whom they expect to later exercise authority and power over them.

In a typical company or organisation power usually emanates from access to key resources such as money, technical skills or know-how, while in some instances power may emanate from the informal organisation within a firm.

It is the ability of those in authority to harness the different voices and skills that exist in an organisation that ensures the success of an organisation.

This can only be achieved by creating a company specific democratic dispensation which allows for the cross pollination of ideas through brainstorming sessions and informal arrangements through which those in power in a company meet and interact with those who form the rank and file.

It is amazing how before a large corporate entity gets into serious trouble, the rank and file are able to perceive that the firm is headed in a wrong direction and some discuss among themselves the causes of the problems and their potential solutions because usually such people are on the ground or form what is known as the “grassroots” of an organisation.

When such people start to leave the organisation in a steady stream (if they are able to), a management scholar automatically knows that something is not right even though they may not have intimate details of the day-to-day dealings of a particular organisation.

Unfortunately most managers or company executives who love power for power’s sake do not realise the destructive and unsustainable nature of centralisation of authority and control. Society (any society) is normally patient, but it judges very harshly if it decides that a particular company or organisation has gone too far in its excesses.

Strategic leadership
Most organisations fail because of a lack of a clear strategy pertaining to what they desire to be in future. A wise person first calculates the costs before building a mansion and similarly prudent leaders start by doing a strengths, weaknesses, opportunities and threats (SWOT) analysis of themselves before embarking on a voyage or a war.

Since nearly all of business activity is a contested territory, it is imperative that the leadership of any organisation think strategically in order to score meaningful success.

A strategy means a method or plan chosen to bring about a desired future, such as achievement of a goal or solution to a problem.

Strategy is also defined by the online business dictionary as the art and science of planning and marshalling resources for their most efficient and effective use.

The term strategy is from a Greek word for generalship or leading an army.

From the foregoing explanation of strategy, it is abundantly clear that a bank which for instance practices chronic related party or incestuous lending cannot be said to be adhering to any meaningful strategy because such behaviour is inimically to the sustainable profitability and long term survival of the same financial institution.

Strategic leadership implies that those who are in leadership must be able to capture the soul of an organisation and articulate to the rank and file the value system, vision and long-term desires or goals of a firm. This can only be done by people or leaders with integrity.

Integrity does not connote sinless perfection since no living human being is perfect, but it implies being true in one’s belief system and actions to the core values or the value system of an organisation.

A genuine legacy cannot be effectively built through self-aggrandisement by people in authority, but by deploying servant leadership to all echelons or levels of an organisation. Obviously, managers and leaders that award themselves a large proportion of a company’s revenue as allowances and perquisites cannot by any stretch of imagination be called servant leaders.

Strategy involves a lot of sacrifice on the part of the senior leaders in a firm or organisation. Sacrifice cannot be dictated to others, it is a selfless behaviour which is best demonstrated by those leading a firm.

Examples of leaders who temporarily sacrificed their personal desires for wealth in favour of their firm’s survival and long-run sustainability include Strive Masiyiwa the founder of Econet, Larry Elison of Oracle and Eric Schmidt of Google.

These leaders were able, at different phases of their firms, to sacrifice their right to proper and commensurate remuneration for their entrepreneurial and organisational skills in favour of the long-term sustainability of their respective companies.

Accountable empowerment
Over the past three years Zimbabwe has been abuzz with empowerment terminology mainly related to the restoration of ownership and control of national resources and assets to the predominantly indigenous black majority. The question is: What does empowerment in a business sense really mean or imply?

Ian Ndlovu is an economist based at the National University of Science and Technology skilled in data analysis using SPSS, Gretl, Stata, Eviews and Microsoft Excel software packages.

His research interests cover business, development, economic and e-commerce issues. He writes in his personal capacity.

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