Winning the
demutualisation war – after the battle.
David Griffiths
Various co-operatives in
Sometimes members reject
board proposals for demutualisation and sometimes the board accepts this and
sometimes the board persists in re-presenting demutualisation proposals.
On
The defeat of the board’s
proposal to demutualise WCBF is a short-term victory for co-operation.
But, how does a short-term
battle win become a long-term victory for demutualisation?
The fundamental problem for
WCBF remains irrespective of the vote on
The board’s solution was
that profitable growth was necessary through demutualisation. The board did not propose whether the
necessary profitable growth could be achieved without demutualisation. It did
not, therefore, provide an alternative to demutualisation. Demutualisation was
presented to the members as a crash through or crash option – the only viable
option.
Co-operative Failure
WCBF is an example of
co-operative failure. Co-operative failure lies behind the demutualisation
proposal and its rejection.
Co-operatives are owned and
controlled by their members. A majority of WCBF directors are farmer members
elected by farmer members.
What is crucial about member
ownership and control is that co-operative democracy is not only through the
election of farmer directors but also how the directors are accountable to
their members in-between elections.
In theory, a co-operative
board and management know what its members want and would recommend
demutualisation on the knowledge that this would be supported by the members.
When there is a dichotomy
between a demutual board and a mutual membership this creates a contradiction
within a co-operative.
Demutualisation Proposals
Of course, it is the
prerogative of a board to present a demutualisation proposal to members as
being in the best interests of a co-operative.
When a board recommends
demutualisation there may be one or more assumptions involved:
Members will accept
the “superior” knowledge and, therefore, the demutualisation recommendation of
the board.
In the debate
leading to and at the general meeting the ‘superiority’ of board’s
recommendation will become apparent.
The argument for
demutualisation is self-evident as expressed in the documentation provided to
support demutualisation.
In the absence
of a documented case for profitable growth without demutualisation, there will
be a fait accompli for demutualisation.
Co-operative Challenge
The challenge for any
co-operative when the members reject demutualisation is to ask the following
questions:
Is member
rejection of demutualisation an affirmation of a commitment to co-operative
values and principles?
Can this
affirmation be converted into an ongoing practice of co-operative values and
principles?
To what extent
does the constitution and structure of the business reflect and reinforce
co-operative values and principles?
Does the business
have a policy for and provide ongoing co-operative education programs for
directors, members, managers and staff?
Does the
business have a policy for and facilitate co-operative democracy?
Does the
business’ marketing of its products and services explicitly recognise that
there is a co-operative difference that creates a marketing advantage?
Are employees
systematically informed about the co-operative option?
Are the members
of the co-operative active and well-informed?
Does the
business explicitly acknowledge that it is a co-operative?
Does the
business practice co-operation between co-operatives?
Are all
shareholders of the business users of the products and services of the
business?
The willingness to ask and
address these questions will determine whether a battle victory will become a
win against demutualisation.