Q.'A co-operative society cannot survive today merely on goodwill; it must be run with business skill.' Explain with reference to the lack of professional management.

Modern co-operatives are complex businesses that need the same skill as private companies, but many are run by untrained committees and staff.

This statement stresses that in the modern economy a co-operative needs business skill, not just goodwill — which is exactly why the lack of professional management is such a serious challenge.

The problem. Modern co-operatives — banks, sugar factories, large marketing societies — are complex business organisations that must be run as skilfully as any private company. But in a co-operative the managing committee is elected by members, and election makes a person a representative, not automatically a competent manager. Many committee members lack knowledge of finance, accounting, marketing, law and management, yet they take key business decisions; the paid staff, too, is often under-qualified and appointed through influence rather than merit.

What weak management causes:

• Poor decision-making on lending, pricing, purchases and investment, leading to losses;
• Inefficiency and waste, with over-staffing and idle capacity;
• Failure to modernise — slow adoption of technology and modern marketing;
• Weak financial control — poor book-keeping and lax supervision that let problems grow and open the door to corruption;
• Inability to compete with professionally run private firms. …