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By Fredrick Wanyama, School of Development & Strategic Studies, Maseno University, KENYA. GOVERNANCE AND MANAGEMENT OF SOCIAL AND SOLIDARITY ECONOMY ORGANIZATIONS. INTRODUCTION. Social and solidarity economy organizations are diverse, but have some commonalities: Born out of necessity
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By Fredrick Wanyama, School of Development & Strategic Studies, Maseno University, KENYA. GOVERNANCE AND MANAGEMENT OF SOCIAL AND SOLIDARITY ECONOMY ORGANIZATIONS
INTRODUCTION • Social and solidarity economy organizations are diverse, but have some commonalities: • Born out of necessity • Economic ventures, but driven by social benefit motives • Operates on similar principles like: • Open and voluntary membership; • Collective identity and ownership; • Self-help and mutual assistance; • Independent and autonomous management; • Democratic member control; etc. • How do SSE organizations govern and manage their activities? • Purpose: • To draw generalizations on governance and management of SSEOs in order to explore possibilities for improving effectiveness
THE CONCEPTS GOVERNANCE AND MANAGEMENT • Governance • Exercise of authority to determine organizational activities and use of resources for service delivery • Management • The organization and coordination of people’s efforts to effectively carry out prescribed activities for achieving desired goals • Involves planning, organizing, leading and supervising people to perform tasks to achieve goals
DISTINCTION BETWEEN THE CONCEPTS • Governance: • Identifies and sets the framework for carrying out organizational activities to achieve goals • Management: • The day-to-day performance of organizational activities to achieve goals • Governance is broader than management: the former sets the policies that guide the latter • What is the nature of governance and management in SSEOs?
GOVERNANCE AND MANAGEMENT IN SSE ORGANIZATIONS • Performance of governance and management roles not strictly separated in most SSE organizations. • Governance and management in SSE dependent on operating principles: • Open and voluntary membership: members are free to join and exit the organization • Autonomy: created by a group of people who govern them without public or for-profit influence
Collective ownership by stakeholders: members, employees, users, beneficiaries, donors, etc. • Participatory governance: involvement of various (if not all) stakeholders in decision-making • Decision-making power not based on capital share ownership: “one member, one vote” rules – democratic? • What form of Governance & Management in SSEOs? • Three models: • Self-management • Collective management • Formal or hierarchical management
SELF-MANAGEMENT MODEL All members use negotiated rules and procedures to perform organizational activities Solidarity structures used to generate goods and services for members/stakeholders Each member assumes the responsibility of both governing and managing the organization A flat leadership structure: all members alternate as governors, managers, workers, users, etc.
COLLECTIVE MANAGEMENT MODEL Sharing of governance and management responsibilities among members without ceding the controlling authority of all The performance of assigned tasks does not enhance the power of one member over the others Flat leadership structure that is typical of self-management Members simultaneously play different roles in the governance and management of SSEOs
Leadership roles negotiated and agreed upon by all members Roles assigned either through simple elections or selection based on ability Leadership roles considered a service to all members who are equal A leader is a first among equals who does not command others, but consults, facilitates, etc. All members collectively participate in governance and management, playing different roles but exercising controlling authority
HIERARCHICAL MANAGEMENT • Distinction between governance and management roles • Members play the governance role (association side) while hired staff perform management functions (business side) to enhance efficiency • The result is a hierarchical structure of governance and management: • Members are the supreme policy-making authority through the General Assembly (GA)
A management board or committee elected by members is responsible for the implementation of policies • Management board or committee hires staff to execute the day-to-day management of the organization • Executive Director or General Manager answerable to the board or committee • Management staff under the supervision of Executive Director or General Manager
HUMAN RESOURCE MANAGEMENT IN SSEOs • Human Resource Management: • Process of recruiting, developing and motivating people to efficiently work for the achievement of organizational goals • Different SSEOs management models have varying human resource management practices • Self-management: • No assessment of staffing needs: members fit in the tasks • Members do all tasks for themselves: no staff recruitment • No formal training: SSEOs rely on members’ ingenuity • Members improve task performance through self-awareness and continuous reflection on what they do: self-supervision • The organization becomes a “learning hub” that develops its member-workers • Remuneration includes goods and services; not just money
Collective management: • Reliance on members/stakeholders to carry out tasks overshadows any (if at all) staff recruitment • No formal training: peers contribute their skills • Self-supervision and awareness results into self-assessment for improved task performance • Collective responsibility brings along peer pressure to accomplish tasks • Motivated to work not just by a wage, but the goods and services generated as well as peer pressure
Hierarchical management: • Like in formal capitalist enterprises, there is assessment of organizational staff needs • Use of professional recruitment process that follows a typical procedure of job description; advertisement; short-listing; interviewing; and selection • Training of staff; e.g. Kenya, Tanzania and the UK have cooperative colleges for training cooperative staff and members • Remuneration mainly financial • Lower wage rates have caused high turnover for skilled & competent staff
RESOURCE MONITORING • Diverse sources of resources: • Members’ share contributions • Members’ periodic subscriptions • Material contributions by members • Voluntary work • Philanthropic donations or bequests • Returns on goods and services • Subsidies from local & national governments • Official development assistance from developed countries to the South • How do SSEOs ensure proper use of resources?
Accounting • Gathering, compiling, reporting and archiving information on an organization’s activities and resources (to inform decision-making) • Varying accounting practices in SSEOs: • Self-management & collective management • Use basic bookkeeping to record transactions like sales, purchases, payments and income • Keep minutes of meetings as records of their activities • Reliance on individual memory to generate and report information on activities and resources • Little recorded information on assets and liabilities
Hierarchical management: • Use of international accounting standards to annually report assets and liabilities to members • This includes: • Revenue reports • Expenditure reports • Annual budgets • Variance reports • Cost projections • Assets and liabilities • Financial statements (income statement, balance sheet, statement of cash flows, etc.)
Auditing The evaluation of the organization’s operating and financial procedures for accuracy, validity and reliability in meeting members’ goals Sparingly applied in the management of SSEOs External auditing commonly done by cooperatives, social enterprises and foundations Rarely used in mutual benefit societies and associations that rely on members’ oversight Internal auditing rare in most SSEOs, except in cooperatives (mainly by the Supervisory Committee) Social audits being embraced to report on impact and progress towards achieving objectives
Monitoring • All members and stakeholders monitor the performance of the organization • Different management models have varying mechanisms for monitoring • Self-management model: • Worker-members directly monitor performance • Collective management: • Peer pressure and mutual responsibility provides the required oversight • Hierarchical management: • General assembly and management committee or board monitors performance using audit reports
REGULATIONS ON GOVERNANCE AND MANAGEMENT OF SSEOs • No uniform regulatory framework for all types of SSEOs in most countries • Anglophone African countries: • Legal framework for governance and management of cooperatives enforced by regulatory agencies • No such framework for mutual benefit societies, associations and community-based organizations
Francophone African countries: • Legal recognition of mutual benefit societies and cooperatives • No uniform regulations on governance & management of SSEOs • Regulations on the provision of specific services, like health insurance, tend to exclude small SSEOs • In the EU, there are efforts to develop a balanced legal framework that can be applied to the different forms of social economy
KEY FINDINGS Governance and management a function of operating principles Different governance and management models: self, collective and hierarchical Different human resource management practices based on the management model Innovations in resource management and financing, while remaining people-centered Absence of, or a weak regulatory framework
QUESTIONS FOR YOUR SUGGESTIONS What strengths and weaknesses are discernible in the governance and management of SSEOs? What needs to be done to improve the management and governance of SSEOs? Should SSEOs adopt governance and management practices in capitalist enterprises? How can SSEOs be competitive in the provision of goods and services? What are the best practices in SSEOs that can be replicated elsewhere?
