SEVEN PRINCIPLES OF COOPERATIVES AT C-MAC

The seven cooperative principles are a vital part of any cooperative.  In an employee-owned cooperative, these principles have to be understood and accepted.  This is a big difference between employee-owned cooperatives and other employee ownership models.

C-Mac’s Board, management team and Staff Committee’s response to the Seven Principles of Cooperatives and values has been slow.  Although they did not have prior understanding of these Principles, it was essential that when exposed to them, they would accept them as a reflection of their own personal values.  Most of the members, after two years still need to sense merit in the Principles.  Over time as members become more exposed to the cooperative principles and values, I am hoping they will come to view them as an operational foundation in all areas of the business.

Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity.  In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility and caring for others.

About three months before signing the “Sale & Purchase of Business Agreement” the employees came aware of the Seven Principles and started to associate them with cooperatives.

One of the many reasons for this was that the original owner wanted to retain the old antique Bundy-card clock that had been on display in reception for many years.  Upon removing it from the wall, the anchor holes and the faded, dirty wall surface behind it were exposed.  A large laminated poster of the Seven Cooperative Principles was positioned to cover the offending wall area, not only solving the problem but strategically placing the Principles in a prime position for all to see.

Seven principles of Cooperatives as set by the International Co-op Alliance, ICA and practised by C-Mac:

  1. Voluntary and Open Membership
  2. Democratic Member Control
  3. Member Economic Participation
  4. Autonomy and Independence
  5. Education, Training and Information
  6. Cooperation among Cooperatives
  7. Concern for Community and Environment

In the formation stage of the cooperative, discussing and agreeing on the first three principles was achieved in building the business model.  Principle 4 was automatic, principles 5 and 6 & 7 ran into the problem of cost control.

The reason for a slow takeup at C-Mac was again the tension between profits and making time for training.  Attempts at training out of work hours were poorly attended and just didn’t work out.

Overtime after going through the “storming stage” of development, workshop employees started to appreciate the benefits and satisfaction of working as a member-owner.  Without perhaps realising it, their changing attitudes gradually emerged as they developed an intuitive response to the values and principles that underlie the employee-owned cooperative.

One of the roles of the Staff Committee in the C-Mac Cooperative is to monitor, encourage and promote these Principles, and report progress to the Board.  Now that the dust has settled, awareness of the Principles and associated rules are starting to surface at Board meetings, impacting decision making.

We haven’t fully developed all these principles; however, they are on our agenda.  Below are examples of a few of the principles in action, which wouldn’t usually apply in other types of employee-owned companies:

Democratic member control – A  new internal director for the Board was needed.  This was organised and done in a very democratic and thoughtful manner by the members themselves without input from the Board.  All members have equal voting rights “one member, one vote”.

Member economic participation – All members were involved in the decision on what percentage of the profits should be retained and distributed to their Internal Capital Accounts (I will write another blog about ICA’s later).  To make this discussion, everyone had to be aware of the cooperative financial position and how the economy was forecast to perform over the next 12 months.

Education, training and information –  Having elected internal directors on the Board one being a sheet metal tradesman and the other a bookkeeper learning and taking responsibility raised their level of understanding and education substantially.  When their terms end, others will be elected raising education standards and appreciation levels of business intricacies that can only benefit the business in the long run.

Cooperation between cooperatives – In the build-up to incorporating the cooperative our manufacturing manager, now our new CEO stated: “ I get it now.  It’s by working together that we will get this up” and “The cooperative is perfect for us, it’s about unity”.

Being no other employee-owned cooperatives around C-Mac Industries (Aust) Cooperative Ltd has taken a proactive step in the promotion of employee-owned cooperatives through presentations with industry groups, chamber of commerce groups, and politicians.  The book “Swapping Desks” is part of the promotional initiative to create more employee ownership and employee-owned cooperatives.

Concern for Community and Environment – 10% of C-Mac’s profits are allocated to charities and support of social enterprises.  In the first year of trading, the cooperative supported the Melanoma Research Foundation, carried out pro bono work for elderly members of the community and helped a railway steam society.  Also, assisted with internships for a migrant mechanical engineer and a student school teacher wanting to gain workplace experience.

The incorporation of the cooperative principles into the workings of the business is the “X” efficiency that delivers sustained competitive advantage.  Morris Altman, Dean & Head, Newcastle Business School 2020

As many are now realising after their on-the-job experience, we must all enjoy the rewards and share the risks…TOGETHER.

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