Leadership in Co-operatives

Leadership plays an important role in the management of the co-operative societies. It is the quality of leadership that usually determines the failures and success of a business organization. It has been observed that most of the failures of co-operative societies have because of ineffective leadership.

Meaning of leadership.

Leadership has different meaning to different people. It is the ability to influence people to strive willingly for mutual objectives. It is the ability of a person to make people work in harmony and confidence towards the achievement of the individual, organization and community goals. Some people believe that leaders are born. Others believe that leaders are made through learning experience. Both beliefs are true to some extent. A combination of the two beliefs makes even better leaders. In co-operative societies the committee is the governing authority and is subject to any directions from a general meeting and by-laws of the society.

leaderLeadership styles

There are four different leadership practices which may be classified according to the philosophy of the leaders towards their followers.

  1. Autocratic leader- This type of leader centralizes authority and decision-making himself or herself. There is no participation by the subordinates. They have to do what they are told. The leader takes full authority and assumes full responsibility. This type of leader is usually negative because followers are uninformed, insecure and afraid of the leaders’ authority. Unlike the dictatorial leadership he motivates the subordinates by providing their need satisfaction if they do what they are told to do (I will help you members if you obey me.)
  2. Democratic leader-This type of leader decentralizes authority. He invites the subordinates to participate in tackling problems. This happens in such a way that the group and the leader act as a social unit. The leader hold consultations with the subordinates regarding all problems and adopts and suggestions made by them if they are of use. It is for this reason that the members of the group have regard for the leader (Do you members agree with my views?)
  3. Free reign leader-This type of leader depend largely upon the group to establish its own goals and work out its own problems. The group members provide their own motivation. The leader is passive and the initiative is with the subordinates. This type of leader can produce good and quick results if the subordinates are highly educated and brilliant people. They should also have sincere desire to go ahead and perform their roles with responsibility (What do members think we should do?)
  4. Dictatorial leader-In this type of leadership followers do their work out of fear. They do what they are told. Such a leader threatens the subordinates with penalties and punishment. As a temporary measure such leadership get results but in the long run it fails. This is because it leads to the dissatisfaction of the followers (Your members must do what I say!)

Qualities of a good leader

The characteristics of a good leader in co-operatives cannot be sharply defined but can only be generalized as:

  1. Self confidence – A good leader must have self-confidence based on self-knowledge. This enables the leader to win the confidence of the members.
  2. Ability to communicate- A leader should have the ability to communicate instructions and views to others. One may have good ideas unless he or she can communicate effectively then the members cannot gain from such a leader.
  3. Integrity- Leadership functions best when it is founded on integrity and sincerity. It is more than just being honest. It requires one to have moral soundness and uprightness.
  4. Ability to inspire-A leader should have the ability to exert influence upon his/her followers. Whatever the issue should be for the good of the members.
  5. Intelligence- A good leader should have high intelligence than his or her followers. This should however not be too much higher than that of the members. It is said that the members prefer to be led by the people they can understand.
  6. Courage-A leader must also have courage to do things which he or she believes are right. This means that the leaders should be in a position of making decisions and standing by them.
  7. Flexibility of mind-With a lot of changes taking place in the country socially and economically, it s desirable that a leader should have flexibility of mind. The leader should be in position of changing with circumstances.
  8. Good Judgement-A good leader should have ability to make good judgement and have wisdom to look into the future. This should be for the good of the members and the co-operative society as a whole.
  9. Age-Age to some extent plays an important factor. It is presumed that those that have lived longer have earned experience. It is also quite possible that a young person may assume leadership because of his or her talent/trade.
  10. Time for public service-The most important qualification of a leader is that he or she must have spare time for the co-operative society. A person, who is too busy and does not have enough time to get the problems of the members solved, is not recognized as a good leader.

Matatu Saccos Fiasco..how its fueled and propagated.

The new National Transport and Safety Authority Regulations had an axe to grind with matatu owners just recently. It ineptly, just like its many regulations and directives, said that matatu owners wishing to participate in matatu business, had to hand over their vehicles to Saccos/Companies. Handing over of the matatus to the Saccos under a contract or franchise agreements by the owners to be managed by the Sacco as seen in the draft of the regulations, was a death trap but thanks God it was removed or is it deleted? This industry is full of cartels and corruption plus immorality for your property to land on anyone’s  hands or is it pockets, let alone the Sacco. Why am I negative here and I am all about co-operatives? Probably the good question is, how is all these fiasco in matatu industry fueled and propagated?

1. Most matatu Saccos have two faces. One is the Sacco and another is the Welfare/Self-Help Group. Sacco collects members’ contributions i.e. deposits. Welfare collects what they call ”service fees”. The members’ deposits belongs to the members and the same is refunded when one leaves the Sacco (for well run Saccos otherwise forget it) and is also used to secure loans from the society. The ‘service fees’ is used to pay route inspectors and those guys who make noise on the stage whatever we refer them to. Sometimes this money also pays for sitting allowance of the management committees/board of directors and to bribe various councils to allocate them  parking space “shimo” or where they pick passengers. This money is also used to bribe the police, that’s why some Saccos never stop at a police roadblock even when overloaded or when “battered,” battered here meaning a wreck. Of course you know those matatus that are not roadworthy and you have that feeling that it could just break into pieces while at 120 km/h!! :-) . Sometimes back I had sat between the driver and and the other passenger and there was so much heat coming from the engine that I literally felt my ‘fundamentols’ getting fried bila mafuta!!

2. Most Matatu Saccos did not wake up and say “lets form a Sacco”. They were FORCED to. We all remember the directive of forming a company or a Sacco if you wanted to invest in this industry. This is totally, my opinion, against the Constitution Chapter Four-Bill of Rights that states: 36. (1) Every person has the right to freedom of association, which includes the right to form, join or participate in the activities of an association of any kind. (2) A person shall not be compelled to join an association of any kind.

The constitution also states: 40. (1) Subject to Article 65, every person has the right, either individually or in association with others, to acquire and own property––(a) of any description; and (b) in any part of Kenya. (2) Parliament shall not enact a law that permits the State or any person— (a) to arbitrarily deprive a person of property of any description or of any interest in, or right over, any property of any description; or (b) to limit, or in any way restrict the enjoyment of any right under this Article on the basis of any of the grounds specified or contemplated in Article 27 (4).

But here we are and we cannot enjoy our properties as individuals but do enjoy though grudgingly through Saccos and companies. Co-operatives work well where its members have voluntarily and openly joined them and where members (read matatu owners) saw the need to form the Saccos. You cannot tell people that “you have to be in a group so that this and this can happen…..” where are the group dynamics, the trust, the willingness to participate fully in cash and ideas, the commitment, the faith, etc. I find the directive lazy and assuming too many things. It is like they sat down and said…okay Saccos have really worked well for so and so, so we can replicate the same and we might even end up not having work to do but sit and reap!!

3. And let us admit, Saccos after the directive were haphazardly registered. I remember meeting one where the chairman did not even own a matatu and some Saccos had the membership of below ten contrary to the Co-operative Societies Act Cap 490 Section 5(a). Also the matatu cartels registered Saccos and most of those fronting for registration did not own matatus or were the “route” owners!! Yes, people/cartels own routes and you have to part with a lot of money if you wanted your vehicle/s to operate on the routes.

4. Regulation 5 of the National Transport and Safety Authority (Operations of Public Service Vehicles) Regulations states: 5(1) A person desirous of operating public service vehicles shall be a member of a body corporate which shall (a) be licensed to operate if the body corporate owns a minimum of thirty serviceable vehicles registered as public service vehicles or in respect to which an application for a license has been or is to be lodged with the Authority.

This regulation forgot what Section 5(a) of the Co-operative Societies Act states…For a society to be registered under this Act, it must—(a) in the case of a primary society, consist of at least ten persons all of whom shall be qualified for membership of the co-operative society under section 14. This means ten people cannot form a matatu Sacco even if they have 29 matatus!! These Regulations were made by Cabinet Secretary for Transport and Infrastructure in consultation with the Authority (i.e. National Transport and Safety Authority). The Co-operative Societies Act  Cap 490 is an act of Parliament!! Your verdict is as good as mine!!! :-) Pecking order HAS ALWAYS BEEN-The Constitution of Kenya-Acts of Parliament/s-Regulations/Rules not the other way round. Regulations DO NOT TAKE PRECEDENCE OVER an Act of Parliament.

This tells you that National Transport and Safety Authority is at fault of not engaging all stakeholders and this only propagates the mess in this sector.

5. Police. A backache in this industry. Loose cannon. Reeks incompetence. No more words here.

6. Kenyans. Passengers. We are just there…….then accidents happens and we make noise and pray then we revert to just being there. I have never understood why we still enter a full matatu and still pay the same fare everybody else sitting comfortably is paying. I have never understood why saying NO is so difficult when an injustice is being propagated by driver and his conductor. I tried once making noise when the conductor demanded fare from a six year old who had been accompanied by a 13-year-old or so sister arguing that the kid had sat down. Mind you, the back seat where they were had three people plus the kid!!! I was almost dropped off and the painful thing is everybody kept mum!! I have never understood why when the conductor says “tusaidiane hapo” and passengers make “space” where there is none for another 120 kg plus human being!! I have never understood why we never say to the driver, stop overtaking on the wrong side or over-speeding or picking a call when he/she is driving.

Matatu Sacco management know this and fully exploit it. They know we cannot do anything. They know that we Kenyans feel that we are being given favour by them!! And they know we are always in a hurry and that we can sit anywhere there is space for a small-sized rat.

Police also know that we Kenyans cannot do anything. One, they have allowed not so roadworthy vehicles to operate as matatus therefore most likely they don’t have seat-belts and therefore we feel relieved when the police just checks us out and lets the matatu go when he/she gets the Ksh. 50. Two, the police own the vehicles too. Three, they implement the law, they starve…they have gotten so used to bribes that is part of their salaries and the good thing is that this is not taxed!! Four, we all like when police stops a vehicle and smiles or makes a joke, we are that easy :-)

Good day.

Managing Change in Co-operatives

The economic environment is dynamic and keeps on changing globally. It is therefore imperative for co-operative societies to keep abreast of the global changes or risk being irrelevant. Change is sweeping in nature and non response to change leads to being obsolete.

managing change is saccosIn order for co-operatives to manage change as it occurs the following factors need to be put in place:-

1. Awareness

It is of utmost importance for members of the co-operative to be aware of the changes affecting the economy as a whole i.e. potential socio-economical, technological including information technology and their effect on modern living. To do this the co-operative are required to set aside adequate funds for training and education not only for committee members but also for the general membership. It is the general membership that provides the leadership of the co-operatives and also an enlightened membership is an asset to the society.

2. Amendment of the co-operative society By-Laws

The current liberalized economy requires that co-operatives can rise up to the challenges and pressures of everyday living. The Co-operative Societies Act Cap 490 has made provisions for the amendment of the By-Laws of co-operative societies so that they can incorporate the changes that are occurring to suit current members needs.

3. Professionalism in the management of the co-operative societies

Co-operative societies are essentially business entities with various different products and services, but they are not alone in that line of business. There are other players in their diversified fields competing for the same business. It thus important that co-operatives are managed with utmost professionalism in this age of liberalization in order for them to survive. Other competitors are professional in approach and functioning. They employ the best professionals in their fields found in the open market, they adopt the most economical, cost effective methods and strive for the maximum profit in the market.

4. Marketing strategy as a manner of change in co-operatives

Marketing research is vital to all stages of the marketing plan:-

  • For decisions on the marketing mix, for example product research, pricing research, advertising research, etc.
  • For the implementation and control of the marketing plan, and
  • For assessing the extent to which objectives have been achieved.

Marketing research gives the following information inputs from the market:-

a) Environment audit

This reviews the organizations position in relation to changes in the external environment i.e. social, political, cultural, legal, economical and technological. The audit provides information which directly affects the setting of co-operative objectives. The market place is by definition, part of the “environment” and is a source of revenue and profit.

b) The Competitor audit

Provides competitor intelligence, competitor response models and so on, which again influence the co-operative objectives, strategy and contingency planning.

c) The customer audit

Assesses the existing and potential customer bases to provide information as to whether to develop new markets.

d) Product portfolio

This analysis provides inputs for decisions on whether or not to drop certain products and or add new ones.

e) Provides the basis for all other functional activities as well as marketing.

Information inputs from marketing to the co-operative society planning decisions perform a double duty, apart from planning they also provide objectives and strategies.

From the foregoing discussions, it is apparent that in order to manage change awareness, preparedness and implementation not to forget continuous market research are necessary components that cannot be ignored.

NEW PRODUCT DEVELOPMENT IN SACCO SOCIETIES

new

In view of the changing economic role of the co-operative societies, there is need to properly formulate investment policies for maximum returns to the members.

Prior to liberalization of the co-operative movement and the economy at large, our co-operatives had been too complacent and lacked innovative approaches in performance improvement.

These co-operatives have tended to operate under policies which have led to;

a)      Lack of creative innovation

b)      Reluctance to embrace change

c)       Over-reliance on traditional customer and products

d)      Inward looking policies, etc.

Co-operatives must strictly and urgently address their operational deficiencies. This involves;

a)      Improving service delivery

b)      Focusing on core customer needs

c)       Reducing on waste

Co-operative members are becoming more demanding and knowledgeable. This means that the management cannot assume that its products will be well received forgetting that the members have a wide choice. The co-operative therefore must offer its customers additional services and customised products. This can be achieved if:

-          There exist well thought out investment strategies

-          There is proper implementation of those strategies

Developing a new product

In developing a new product, the society needs to address the following aspects.

-          What product needs to be developed?

-          Who are the targeted customers?

-          What benefits will be derived from the consumption of the product?

-          How will the product be financed?

-          How will the product compare with existing products and harmonizes with the existing market structure?

-          What is the technical capability of the society in implementing the investment/product?

-          Will the implementation be in harmony with the existing legislative and regulatory controls?

In addressing the above the society shall move in the following direction:-

  1. Identify the most important service the members need;
  2. Identify the extend of the market for such need;
  3. Identify the sources of finance of the society;
  4. Conduct a cost benefit analysis to find out if the project/investment is justified and;
  5. Prepare the following:

a)      The staff skills;

b)      The system of implementation;

c)       Structure of the scheme and;

d)      System of evaluation and control.

Target market selection

The following guidelines should be followed by the Sacco when selecting target markets:

i)                    The target should be consistent or at least compatible with Sacco’s goals and image;

ii)                   The Sacco should seek markets that are consistent with its resources and;

iii)                 The Sacco should seek markets that will generate profitable volume of trade.

 

 

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