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THE DEMUTUALISATION OF CO-OPS & MUTUALS
Two fundamental problems are evident in many organisations, the first being that too often the essential purpose of the organization becomes lost within the vagaries of day-to-day operations and the second being that all organizations are prone to hi-jack by those individuals who contrive to ensure that the organization serves their objectives as individuals, rather than actively perusing the essential objectives of the organization. (All to often organisations are inhabited by 'corporate drones' - individuals that have no commitment to the purpose of the organization but are adept at using their position to maximise their own benefits, and where possible will hijack control of the organization.)
Throughout the world many co-ops & mutuals have been subject to demutualisation, the ultimate form of hijacking, within the UK building societies and agricultural co-operatives have been the main targets. In many parts of Europe consumer co-operatives have been lost to various forms of demutualisation, which occurred as a direct result of the loss of member-control. In most cases the organizations in question were at the first stage of the process effectively taken over by their professional managers.
In recent times UK retail co-operatives have avoided the fate of demutualisation, although an attempt to take over the CWS (now the Co-operative Group) in 1997 was foiled in what became known as ‘the Lanica affair’. Nevertheless, irrespective of more recent changes in the Industrial & Provident Societies Acts, demutualisation remains a constant threat whenever real control slips away from the membership. In practice, the effective control over many UK consumer co-operatives is now, to all intents and purposes, in the hands of professional managers.
DEMUTUALIZATION OF CO-OPERATIVES: REASONS AND PERSPECTIVES, by Zvi Galor. This study attempts to find out why cooperatives are demutualized. The article tries to define what is this process of demutualization in cooperatives. It shows cases of demutualization of cooperatives in various part of the world in order to find out common denominators for this process of demutualization of co-operatives.
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Co-operatives and mutuals - to be valued for what they deliver
last updated: February 2012 © Edgar Parnell 2012