Act on early warning signs of co-operative failure and increase the chance of survival

The international co-operative movement has seen a series of catastrophic failures of large scale co-operatives in recent decades, such as the Saskatchewan Wheat Pool, retail co-ops in Germany, France and Atlantic Canada, banking in Austria and the near meltdown of the Co-operative Group in the UK.

‘When Big Co-ops Fail’ is a 2016 study by Peter Couchman (the Plunkett Foundation) and Professor Murray Fulton (Director of the Centre for the Study of Co-operatives, University of Saskatchewan).

It indicates that co-ops which fail present similar early warning signs. These include:

  • falling silent on co-op identity,
  • having managers with no interest or belief in the model,
  • over-confidence
  • and lack of board oversight

The paper suggests that the root of failure is being unable to understand the nature of a co-operative.

“The earliest sign is a co-operative which sees being a co-operative as a problem, not a solution”, they warn.

The research is based on analyses of crises at big co-ops. It found that directors who fail to understand their role in a co-op are likely to appoint managers who are not supportive fi the movement’s values and import mainstream solutions rather than adopt a co-operative one.

It ends by presenting the antidote to the problem

Acting on the earlier signs rather than waiting for the inevitable can dramatically reduce the loss of member value and increase the chance of survival. It can also reduce the damage to the co-operative movement of yet another cooperative going down in flames.

It is everyone’s business to raise the alarm when these signs are visible (Ed: as several of our readers did well before the 2013 crisis). Co-operatives do fail, and this should be acknowledged and discussed in a serious and thought-provoking way, in every context from day-to-day conversations to global conferences. 

 

 

 

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This entry was posted in Banking, Co-operative Group, Co-operative movement, Democratic participation, Ethics, Problems and tagged , , , , , . Bookmark the permalink.

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