Mater Dei College | Tubigon, Bohol | (038)508-8106

College of Accountancy, Business and Management - Business Department

Course Title COOPERATIVE MANAGEMENT Course No. FMEL03
Instructor Maria Jeannie Balatucan Curay Schedule

Week 9
Course Learning Outcome This aims to understand democracy in cooperatives and its structure.
Student Learning Outcomes 1. Define what is democracy.
2. Understand how democracy is defined in cooperatives and its
role in cooperative management.

Learning Content
UNDERSTANDING COOPERATIVES: DEMOCRACY

Introduction
We are all familiar with the term “democracy” and we relate this term to freedom. In this lesson, we will
learn what is democracy and how it works in cooperative management.

Lesson Content

DEMOCRACY

Democracy is a form of government in which all eligible citizens participate equally – either directly or through
elected representatives – in the proposal, development, and creation of laws. It encompasses social, economic, and
cultural conditions that enable the free and equal practice of political self-determination.

Direct Democracy:

Direct Democracy is that form of government in which people directly participate in the affairs of the State. In this
system, public opinion is expressed directly in Assemblies meetings. All the adult citizens have the right to
participate in the meetings of the Assembly where all the laws are passed, taxes are assessed, and appointments
to execute, the decisions taken in the Assembly are made.

Since this system is possible only in those states where the population is small and it is possible for all the citizens
to participate directly in the affairs of the state, nowadays, this system exists only in a few cantons of Switzerland
and some states in USA.

Indirect Democracy:

Since the modern states are much larger in size and population, it is not possible for all the citizens to participate
directly in the affairs of the state; indirect democracy has been established in almost all the modern states. Under
this system, people elect their representatives for a period who run the administration.

If they do not work according to the wishes of the people and for their welfare, they are changed at the time of next
elections. People do not directly take part in the affairs of the state. They elect their representatives who conduct
the affairs of the state.

Indirect democracy exists in India, England, USA, and France, etc.

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COURSE LEARNING MODULE | 2nd Semester, 2021-2022
 Mater Dei College | Tubigon, Bohol | (038)508-8106
College of Accountancy, Business and Management - Business Department

Democracy in Cooperatives

Aside from the public sphere, similar democratic principles and mechanisms of voting and representation have been
used to govern other kinds of groups. Many non-governmental organizations decide policy and leadership by voting.
Most trade unions and cooperatives are governed by democratic elections. Corporations are controlled by
shareholders on the principle of one share, one vote.

Cooperatives are democratic enterprises where both ownership and decision-making power are democratically
shared. As a result, they keep money and power in the hands of the community. Each member has a share of the
organization, which makes them co-owners of the cooperative. When decisions need to be made that affect the
group, each member has one vote to say how the cooperative is run – a mix of democracy and representational
structures.

The Democratic Structure of the Cooperative

Within the cooperatives, specific decisions are in the hands of the general assembly. The cooperative society Acts
provide the foundation for this authority by law, however, the cooperative society’s bylaws may also provide that
specific policy decisions, such as wage rates, may require approval by the members’ meeting. Importantly, the
bylaws of the cooperative society, which regulate the life of the cooperative society, must be approved by the
members and can only be changed by a meeting of the members.

One of the key legal responsibilities of the members is to elect the board of directors of the coop. The bylaws will
specify the number of directors, their qualification and length of terms. Directors, by law are responsible for the
affairs of the cooperative. Their duty is always to make decisions in the best interests of the coop as a whole. The
directors, once elected, in turn elect other officers like president, vice-president, secretary, and treasurer. These
officers of the cooperative society will have specific duties outlined in the bylaws. In small coops, members often
serve in more than one capacity and often all members also directors.

Good collective decisions require well-researched information and good communications between the board of
directors, manager and membership. Cooperative societies may operate democratically, but you can’t stop in the
middle of the workday to discuss every decision which must be made. The directors are responsible to ensure that
an effective operational structure is in place that it is supported by the members. This may take many forms,
depending upon the desires of the members and on the type of enterprise that the cooperative society operates.

Within most cooperative societies, the following structures are usually in place and are the forum for the following
types of decisions.

The general assembly comprises all members and constitutes the supreme deliberation and decision-making organ
of the cooperative society. Its decision binds all the members.

Decision – Making

A cooperative’s future will be determined by the goals the members of the cooperatives set and how effectively they
make decisions, and solve problems as a group. Establishing common personal, business and social goals right
from the start, and sticking to them, can help this process immensely. This not only keeps their decisions focused,
but also helps to avoid misunderstandings that can lead to conflict. Then, the decision-making process is one of
identifying the specific goal or problem to be addressed, gathering the best available information on the options and
their outcomes and risks and making the choice with the best chance of providing an effective solution. Easily said,
but challenging to do.

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 Mater Dei College | Tubigon, Bohol | (038)508-8106
College of Accountancy, Business and Management - Business Department
THE STEPS IN DECISION-MAKING PROCESS

Step 1 Identifying/clarifying the decision to be made.

If the decision has not yet been isolated, it should be identified as a first step. The decision-making process begins
when a manager identifies the real problem. The accurate decision of the problem affects all steps that follow; if the
problem is inaccurately defined, every step in the decision-making process will be based on an incorrect starting
point. One way that a manager can help determine the true problem in a situation is by identifying the problem
separately from its symptoms.

Step 2 Identifying possible decision options.

The next step requires the decision maker to spell out, as clearly as possible, just what the decision alternatives
really are. In fact, the more ideas that comes up, the better. In other words, there are no bad ideas. Encouragement
of the group to freely offer all thoughts on the subject is important. Participants should be encouraged to present
ideas no matter how ridiculous they seem, because such ideas may spark a creative thought on the part of someone
else.

Step 3 Gathering/processing information and analyze the alternatives.

Next, the decision maker collects or processes information that can help guide the decision. If such information is
already at hand, then it simply needs to be processed; that is, studied and understood by the decision maker. If
there is no relevant information available, or if there is insufficient information, then such information must be
collected so it can be processed. The purpose of this step is to decide the relative merits of each idea. Managers
must identify the advantages and disadvantages of each alternative solution before making a final decision.
Evaluating the alternatives can be done in numerous ways. Here are a few possibilities:
1. Determine the pros and cons of each alternative.
2. Perform a cost-benefit analysis for each alternative.
3. Weight each factor in the decision, ranking each alternative relative to its ability to meet each factor, and
then multiply by a probability factor to provide a final value for each alternative.
4. Regardless of the method used, a manager needs to evaluate each alternative in terms of its:
a. Feasibility – Can it be done?
b. Effectiveness – How well does it resolve the problem situation?
c. Consequences – What will be its costs (financial and nonfinancial) to the organization?

Step 4 Select the best alternative.

After a manager has analyzed all the alternatives, she must decide on the best one. The best alternative is the one
that produces the most advantages and the fewest serious disadvantages. Sometimes, the selection process can
be fairly straightforward, such as the alternative with the most pros and fewest cons. Other times, the optimal solution
is a combination of several alternatives.

Sometimes, though, the best alternative may not be obvious. That’s when a manager must decide which alternative
is the most feasible and effective, coupled with which carries the lowest costs to the organization. Probability
estimates, where analysis of each alternative’s chances of success takes place, often come into plat at this point in
the decision-making process. In those cases, a manager simply selects the alternative with the highest probability
of success.

Step 5 Making/implementing the decision.

After the information has been considered according to its relevance and significance, a decision based on that
information should be made and, thereafter, implemented.

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COURSE LEARNING MODULE | 2nd Semester, 2021-2022
 Mater Dei College | Tubigon, Bohol | (038)508-8106
College of Accountancy, Business and Management - Business Department
Step 6 Evaluating the decision.

In recognition of the fact that not all of one’s decisions are likely to be defensible, the final step in the five-step
decision-making process is to determine whether the decision was appropriate. Ordinarily, this will be done by
ascertaining the decision’s consequences. Ongoing actions need to be monitored. An evaluation system should
provide feedback on how well the decision is being implemented, what the results are, and what adjustments are
necessary to get the results that were intended when the solution was chosen.

In order for a manager to evaluate his decision, he needs to gather information to determine its effectiveness. Was
the original problem resolved? If not, is he closer to the desired situation than he was at the beginning of the
decision-making process?

If a manager’s plan hasn’t resolved the problem, he needs to figure out what went wrong. A manager may
accomplish this by asking the following questions:

a) Was the wrong alternative selected? If so, one of the other alternatives generated in the decision-making
process may be a wiser choice.
b) Was the correct alternative selected, but implemented improperly? If so, a manager should focus
attention solely on the implementation step to ensure that the chosen alternative is implemented
successfully.
c) Was the original problem identified incorrectly? If so, the decision-making process needs to begin again
starting with a revised identification step.
d) Has the implemented alternative been given enough time to be successful? If not, a manager should
give the process more time and re-evaluate at a later date.

Teaching – Learning Activities

This will be your Performance Task. You are going to learn how to improve consequences by improving
how we go about choosing what to do. Using the Activity Sheet separately provided, you will perform the
Decision-Making Wheel. Two (2) scenarios will be given, thus, two (2) Decision-Making Wheels will be
prepared.

Scenario 1:
It is recess. Everyone is out on the playing fields, including the teacher. You have to go the toilet. On the
way to the toilet, you pass your class and notice that there is someone in the room. You stop and peek
in out of curiosity. Just as you do, you see one of your best friends reach into another person’s desk and
take something out of it. You quickly move past the door before you are seen. Just before the lunch bell
rings, the students whose desk you saw your friend reach into, walks up to the teacher. A moment later
the teacher announces that this student’s entire pencil case with pencils, pens and lunch money in it has
been stolen. What do you do?

Scenario 2:
You are alone with your best friend at your best friend’s house. He/she goes to a drawer in his/her
wardrobe and pulls out a pack of cigarettes. He/she lights up and invites you to do the same. What do
you do?

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COURSE LEARNING MODULE | 2nd Semester, 2021-2022
 Mater Dei College | Tubigon, Bohol | (038)508-8106
College of Accountancy, Business and Management - Business Department

Analysis

Is democracy relevant in our lives as it is relevant also in the business models, specifically, cooperatives?
What role does decision-making play in cooperatives? How about in your daily lives?

Assessment

Pick three (3) scenarios in your life today that you need to undergo decision-making. No fiction, no
plagiarism. This is all about you. Use the decision-making wheel to present it. After which, as a closing
statement, answer this question, “How democracy affects your decision-making?”

Create a short video presenting your output. You should be able to show yourself talking in the video.

Synthesis

We are living in a democratic country and we aim to enjoy the freedom we have. But how do we use that
democracy in our lives, in managing cooperatives, in managing every business? We need to use that
freedom wisely, properly, and correctly especially in our freedom to decide. In a cooperative, it is on the
General Assembly or its members where decision-making rests.

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COURSE LEARNING MODULE | 2nd Semester, 2021-2022