Last week I attended the Tools to Measure Performance and Impact at St. Mary’s University in Halifax. The conference was part of a several year research CURA known as the Measuring the Cooperative Difference. Part of my role with this group involves reporting out of the conference–this will be done by the end of June in time for the ICA Research Committee’s conference in Croatia.
The central question and scope of the work has been to find viable measurement tools for cooperatives and credit unions that specifically address the nature of cooperatives as democratic social enterprises. Using standard data such as debt/equity ratios and return on equity may tell us how coops fare when compared to the investor owned businesses, but they don’t tell us how coops are doing as coops.
Vancity Credit Union in British Columbia found the need to create new measures since they invest in what might be called the “real economy”. When using data around local investments in actual businesses (not artificial constructs such as the derivatives of 2008 fame), credit unions tend to out-perform banks. They are part of the Global Alliance for Banking on Values (GOBV).
One of the speakers from Cooperatives America, argued that we need to stop using tools designed for capitalist market economy and create tools for the social market economy. Others argued that we in the cooperative community should quit trying to compare ourselves to the investor -owned competitors, and start presenting ourselves as the model and let the investor-owned organizations compare themselves to us and justify their existence. It was a bit of a feisty crowd for Canadian academics!
In all seriousness though, a number of incredible tools have been created to measure cooperatives as sustainable and resilient organizations. That last bit is important as one of the presentations presented the harsh realities of climate change and carbon in the atmosphere. It is unlikely that anything will stop humans from permanently altering the environment in a way that is quite negative for the species that have adapted for its current format. Today, as I post this, I see headlines that North America has hit the 400 ppm mark for carbon in the atmosphere (450 ppm is the “point of no return” mark). It is unlikely that coops can scale up to a point to reverse this trend, but we can be there for the aftermath.
The tools being developed now will be able to assist us in tracking our success and helping to point the way forward. It won’t be on the maximize profit model, but on the maximize community model. Over the next several posts I will discuss some of the models.
I am currently at the Canadian Association for Study in Cooperatives (CASC). It is being held at Brock University (just west of Niagara Falls) and named for Isaac Brock the Canadian general who gave his life repelling the US army when they attempted to invade Canada during the War of 1812. More to come!
Such a measurement would be dependent upon what it is that cooperatives are trying to do. Or, to put it in economic terms, “what they’re trying to maximize”. Traditional Corporations are looking to maximize profit, pure and simple. As such, the metrics are calibrated to express the components of profit.
Let’s say that we decided that what we wanted to maximize is democratic participation. Then what we would want to measure is level of attendance at meetings, number of people included in the actual decision making process of the firm and how that varies by income level, and perhaps the amount of participation per member – measured perhaps by the number of posts in a e-democracy version of cooperative governance. Actually…I just typed that as an illustration but those might actually be good metrics. One of the few consistently touted advantages are that they give power to the people. But what good is this power if they never take hold of it. So what we want to see is how much are the people participating?
Perhaps there can even be measures of ethics. Each cooperative lists a number of basic ethical principles they mean to uphold and then measure the adherence level to that according to some predefined metrics…