Meaning, benefits, functions, and structure in Rwanda of cooperative management.

1. Cooperative Management

2. MEANING
Cooperative management, also co-
management, tries to achieve more
effective and equitable systems of
resource management.
In cooperative management,
representatives of user groups, the
scientific community, and government
agencies should share knowledge,
power, and responsibility.

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 The universal definition of
management is equally applicable to
the co-operative management.
 The survival and growth of a
cooperative organization depends
largely on the competence and
character of its management. Co-
operative management is the dynamic
life giving element in every
cooperative organization.

4. Benefit of Cooperative
Management
 (i) To achieve group goals,
 (ii) To utilize resources,
 (iii) To fulfill social obligations,
 (iv) To maintain economic growth,
 (v) To ensure the survival of a co-
operative society in a fast changing
environment,

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(vi) To improve the personality and
caliber of people to raise their
efficiency and
productivity,
(vii) To meet the challenge of change.

6. Functions of Cooperatives
Management
Functions are actions or activities
needed to perform a particular role.
The management functions of elected
directors are:
1. planning,
2. organizing,
3. directing,
4. coordinating, and
5. controlling

7. 1. Planning
 Planning is the decision making function
of management and requires sound
judgment. Collecting information
concerning business alternatives,
synthesizing the information, and
evaluating it are important parts of
decision making. Planning involves
deciding when, where, and how to take
action and projecting anticipated results.
The board is responsible for determining
and systematically arranging all the main

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 factors to achieve the goals and
objectives of the business. The
planning function by directors is
usually considered long-term and
broad in scope. Strategic planning and
preparation of a capital budget are
specific examples.

9. 2. Organizing
 When the planning is completed, all of
the cooperative’s resources, both
physical and human, must be grouped
according to function. Organizing
involves arranging all of the groups so
the business operates as a productive
unit. The group needing the most
consideration is human resources.
People are an important part of
successful cooperative operations.

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 The board’s role in human resource
activities is hiring a competent
manager and designing the overall
organizational structure. Board
approval of a competitive wage and
salary plan plus a benefits package is
a necessary component. The manager
hires, trains, and makes work
assignments for the employees.

11. 3. Directing
 The planning and organizing functions
must be accomplished for the directing
activity to be effective. Effective
directing requires setting well-defined,
clearly understood, and consistently
administered policies. For the
manager to function effectively, the
directors must delegate responsibility
with the appropriate authority and
predetermined measures of
accountability.

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 Directors engage in contract
negotiations, approve membership
applications, and make
recommendations on day to-day
operations. Directors focus on
approving short- and medium-term
plans of the manager, reviewing
reports, and making decisions about
long-term plans.

13. 4. Coordinating
 Directors coordinate all phases of the
business so that each supports the
other. The use of physical and
financial assets and personnel
activities must be integrated to
accomplish predetermined goals and
objectives. Specific examples include
overseeing facility use, arranging
timely financing, preparing the
manager’s job description, and
purchasing and selling assets to meet
members’ needs.

14. 5. Controlling
 Directors exercise control of the
cooperative by keeping themselves
informed of the progress of the
business, assuring acceptable
performance in all phases of the
business. They interpret trends and
results and know when to initiate
corrective action.

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 Directors are responsible for
preventing unauthorized actions and
keeping members informed of the
cooperative’s progress. Accepting and
approving management reports,
reviewing financial statements, and
reviewing physical facilities are
specific examples of director control.

16. Cooperative Structure in Rwanda
The cooperative organizations may
constitute among themselves unions,
federations and confederation for the
better management of their property
and the defense of their common
interests.

17. 1. Primary cooperatives
This is a primary basic type of a
cooperative where members
voluntarily decide to gather their
thoughts, strengths and assets with
the common purpose of maximizing
profit through providing any activity.

18. 2. Unions
Three (3) or more primary cooperatives may join
together to form a cooperative Union. Such a
Cooperative Organization shall be referred to as
a secondary Cooperative Organization. Only
primary Cooperative Organizations may be
members of a cooperative union. No primary
Cooperative Organization shall be a member of
two (2) cooperative unions at the same time.
Cooperative union by-laws shall provide for a
delegate representation and the mode of voting
in a General Assembly meeting.
A cooperative union may carry out
complementary economic and service activities
to those of its affiliates.

19. 3. Federation
Three or more cooperative unions may
join together to form a cooperative
Federation at national level. Such a
cooperative federation shall be
referred to as a tertiary cooperative
organization.

20. 4. Confederation
 Three or more cooperative
federations may join together to form a
cooperative confederation at the
national level. Such a cooperative
confederation shall be referred to as
the APEX cooperative organizations at
the national level.
Below is a diagram that reflects how
primary coops lead to unions, then
federations and finally confederations.

21. Cooperative Management
Tools
 Cooperative Management uses a
number of tools to carry out its
functions-accounting system, control
reports, security and safety, training
and evaluation, incentive programs,
communications, and strategic
planning.

22. 1. Accounting System
A complete and accurate accounting
system is vital for effective management.
It must produce several financial
statements needed in planning and
controlling, such as:
 (1) monthly and annual balance sheets
and operating statements;
 (2) functional or enterprise accounts
pertaining to departments or specific
lines of business; and
 (3) special accounts such as patronage
records, accounts receivable aging,
member equity, and patron financing.

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 An independent auditor periodically
verifies the accuracy of the cooperative’s
business records. This is especially
useful to directors in performing their
controlling and planning functions. It
helps the board determine the extent to
which the manager has followed financial
policies, and evaluate how the
cooperative is accomplishing its basic
objectives. The external audit is primarily
a board tool.

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 Larger cooperatives also use internal
audit reports. The internal auditor’s
primary duty is to monitor the
cooperative’s accounting policy. The
auditor checks the cost of prescribed
procedures, including their effect on
patrons and personnel, and suggests
ways to prevent errors. Usually, the
auditor reports to the chief accounting
officer, but sometimes to the general
manager or even to the board of
directors. Internal audits are primarily
manager tools.

25. 2. Control Reports
 Credit and inventory analysis include a
monthly aging of accounts and notes
receivable; selected financial and
operating ratios; and a monthly
accounting of selected inventories,
including shrinkage reports.

26. 3. Security and Safety
 To protect the cooperative, the board is
responsible for adequately insuring
employees and assets. Employees
handling funds should be bonded.
Facilities need to be appraised and
arranged internally and fenced to
minimize pilferage.
 The board should adopt programs to
protect the health and safety of
employees and patrons and measures to
comply with environmental protection

27. 4. Evaluation and Training
 Management will be evaluated even if
the process is not formally planned.
Member-owners continually evaluate
their hired management in terms of
how well the cooperative is serving
members. Regardless of cooperative
size, supervisory personnel are
evaluated on the basis of how they
perform day-to-day.

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 Larger cooperatives use professional
management consulting firms to assess
whether the cooperative’s management
structure is efficient, locate weaknesses
and strengths, and suggest what types of
management training are needed.
 A cooperative of any size can lay a
fundamental basis for evaluating its
management. The essential requirement
is to develop an evaluation plan and then
follow it