Lack of Professional Management

3. Lack of Professional Management

Modern co-operatives, especially banks, sugar factories and large marketing societies, are complex business organisations that need to be run with the same skill as any private company. A major challenge is that many societies suffer from a lack of professional, trained and efficient management.

In a co-operative, the managing committee is elected by the members. Election makes a person a representative of the members — it does not automatically make them a competent manager. Many elected committee members have little knowledge of finance, accounting, marketing, law or modern management, yet they take key business decisions. The paid staff, too, is often under-qualified, poorly trained and appointed through influence rather than merit.

Problems caused by weak management:

• Poor decision-making — decisions on lending, pricing, purchases and investment are taken without proper analysis, leading to losses.
• Inefficiency and waste — resources are not used economically; over-staffing and idle capacity are common.
• Failure to modernise — untrained managements are slow to adopt new technology, computerisation, and modern marketing, so the society falls behind competitors.
• Weak financial control — poor book-keeping, delayed audits and lax supervision allow problems to grow unnoticed and open the door to corruption.
• Inability to compete — against professionally managed private firms, a poorly managed co-operative simply cannot hold its own. …