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Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
Mc kinsey  – achieving the full potential of cooperative organizations
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Mc kinsey – achieving the full potential of cooperative organizations

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  • 1. International Summit of Cooperatives Improving cooperatives’ agility October 2012Any use of this material without specific permission of McKinsey & Company is strictly prohibitedCopyright © 2012. All rights reserved
  • 2. Executive summary – Improving cooperatives’ agility The cooperative model is particularly effective in creating organizational alignment and employee mobilization through a strong sense of ownership and shared values. Analysis of McKinsey’s proprietary employee survey data and interviews with coops reveals three areas in which they can improve their organizations to gain better agility ▪ Agility in decision making. The cooperative decision-making process is typically slower than in public companies due to its inherent democratic process – Exemplary coops strike a balance between their democratic nature and executive agility by better distinguishing the respective roles and responsibilities of executive officers and elected officials and creating transparency on performance to enable rapid course correction ▪ Agility in pursuing adjacent opportunities. Cooperatives typically prioritize current members’ needs; the resulting diminished focus on innovation and the external business environment means coops are less agile at pursuing adjacent opportunities and renewing themselves – Exemplary coops expose the cooperative to external perspectives and fuel innovation through better information sharing and collaboration between various parts of the organization ▪ Agility in developing and sourcing talent. Coops are less agile than public companies at developing and sourcing the talent and skills needed to execute their strategy, meaning they often have difficulty creating competitive advantage over publicly owned competitors – Exemplary coops address their attractiveness deficit among the young generation of workers and create best-in-class leadership development programs for their high- potential executives McKinsey & Company | 1 Copyright © 2012. All rights reserved
  • 3. ContentContext and methodologyManagerial best practices of cooperativesAn in-depth review of OHI McKinsey & Company | 2 Copyright © 2012. All rights reserved
  • 4. We set out to understand the differences between traditional corporationsand cooperatives Shareholders Members Corporation Cooperative Clients Members ▪ How does the difference in structure between coops and traditional corporations affect their agility? ▪ What different processes exist or should exist in coops? ▪ How can coops build on their strengths to best serve their members’ interests? McKinsey & Company | 3 Copyright © 2012. All rights reserved
  • 5. We used McKinsey’s Organizational Health Index to assess and comparethe “health” of cooperatives with existing data on more than 4,000 peopleat 136 similar publicly traded companies Internal alignment The organization has a compelling vision and Direction well-articulated strategy, which is supported by its Coordi- culture and values Account- nation and ability control Quality of execution The organization Innova- External demonstrates Leadership tion and orientation executional excellence learning against its strategy and in delivering its services Capa- Motivation bilities Capacity for renewal Culture The organization and effectively understands, climate interacts, responds, and adapts to its situation and external environment McKinsey & CompanySOURCE: McKinsey Organization Practice | 4 Copyright © 2012. All rights reserved
  • 6. We identified best practices for organizational agility from across thecooperative sector to illustrate how leading cooperatives are organized McKinsey & Company | 5 Copyright © 2012. All rights reserved
  • 7. ContentContext and methodologyManagerial best practices of cooperativesAn in-depth review of OHI McKinsey & Company | 6 Copyright © 2012. All rights reserved
  • 8. Coops have a strong ability to align their organization but struggle withtheir capacity to renew their value proposition and execute rapidly Cooperative quartile RepresentativePercentage of respondents who believe their Top quartile 2nd quartile market sampleinstitution does well on these dimensions 3rd quartile Bottom quartile Cooperatives 100 0 Given their democratic nature and processes, cooperatives are very Leadership successful at aligning their Alignment organization behind a common sense Direction of purpose and direction Culture and climate Motivation Cooperatives are just as capable as other organizations of executing against their strategic ambitions but tend to focus Execution Accountability on higher motivation and sense of Coordination and accountability to compensate for control looser control mechanisms and performance management processes Capabilities Coops are typically internally focused, Renewal External orientation less exposed and influenced by their Innovation and external environment, and are learning challenged to drive innovation for their members and communities. This may be due to their explicit focus on serving existing members McKinsey & CompanySOURCE: McKinsey Coop Organizational Health Index survey; interviews with coop leaders | 7 Copyright © 2012. All rights reserved
  • 9. Coops face particular challenges in seven areas related Cooperative quartileto agility, which fall into three major categories Top quartile 2nd quartile 3rd quartile OHI Coops’ spread Bottom quartile practices to market1 Sample behavioursConsultative 5 ▪ Leaders in the organization ask the opinions ofleadership others before making important decisions Agility in ▪ The organization’s financial control systems decisionFinancial monitor financial performance deep in its making -8management business unitsBusiness ▪ The organization pursues joint performance -5partnerships initiatives with external business partners Agility inKnowledge ▪ The organization’s systems and processes pursuing -5sharing facilitate cross-functional initiatives newCapturing opportunities -7 ▪ The organization uses external contacts toexternal ideas maximize the flow of ideas into the organizationTalent -6 ▪ The organization uses job rotation to broadendevelopment the experience and capabilities of its talent Agility in developingOutsourced ▪ The organization outsources functions or and sourcing -13expertise activities that can be better done by others talent1 Absolute percentage points difference between coops mean and overall mean McKinsey & CompanySOURCE: McKinsey Coop Organizational Health Index survey; interviews with coop leaders | 8 Copyright © 2012. All rights reserved
  • 10. Overall, we believe that three managerial best practices can helpcooperatives take advantage of their structural strengths Description Best practices ▪ The cooperative decision-making process is 1 Devise clear roles and typically slow relative to public companies due responsibilities to its inherent democratic process. Cooperatives 2 Create a more efficient processAgility in decision should therefore challenge themselves to for consulting with membersmaking devise methods for improving decision- 3 Improve performance making agility while remaining connected to members and their interests and needs management systems ▪ Cooperatives typically focus on current 1 Expose cooperative to external members’ needs, sacrificing opportunities to ideasAgility in to grow inOrganize pursuing renew themselves. There is therefore a need 2 Encourage collaboration acrossadjacentattractive adjacent for cooperatives to explore external different parts of the businessopportunitiesmarkets perspectives as the need arises, to devise 3 Protect growth capital systems for effective collaboration within the organization, and to ensure that they are prepared to explore emerging opportunities in a timely manner ▪ Coops place less emphasis on ensuring the 1 Effectively identify top talent and presence of appropriate talent to execute create leadership developmentAgility in on strategic objectives than public companies curriculadeveloping and do. They are therefore less agile at 2 Adopt recruiting and trainingsourcing talent developing and sourcing talent, which practices that change how the negatively impacts their ability to create younger generation of potential competitive advantage employees view coops McKinsey & Company | 9 Copyright © 2012. All rights reserved
  • 11. Agility in decision making: cooperative case examples – 1/3Examples of best practices Devise clear roles and responsibilities for executive officers and elected officials (e.g., board members) Coop Members Devise clear Case example: FrieslandCampina Council 1 roles and ▪ FrieslandCampina is the 5th largest Board responsibilities dairy company in the world 9 members The coop owns 100% of the shares ▪ Revenues (2011): EUR 9.6 billion of the company Board Coop board 4 external directors Executive board Create more Divisions efficient Company 2 processes for ▪ FrieslandCampina formed a separate operating company with consulting with its own Board. The coop remained a full owner of the new members operating company but, by creating a separate entity in the cooperative, it created a healthy distance between democratic processes and the day-to-day, rapid operating decisions required in the company to compete effectively in the market Improve ▪ The cooperative members appoint a Board of 9 members, who performance are also part of the operating company’s 13 Board members, 3 management giving them continued control over that company by virtue of systems their two-thirds majority vote on the Board ▪ However, the roles of the coop Board members and of the Company’s board members are well defined, and the latter in fact are identical to those of publicly traded companies’ board members under Dutch law. McKinsey & CompanySOURCE: Interviews with coop leaders; annual reports | 10 Copyright © 2012. All rights reserved
  • 12. Agility in decision making: cooperative case examples – 2/3Examples of best practices Create more efficient processes for consulting with members, including using technology to expand reach Devise clear Case example: The co-operative 1 roles and ▪ The co-operative is the UK’s largest mutual and its 5th biggest responsibilities food retailer ▪ It has diversified offerings from banking to funeral services Members are asked where they want to see new food markets ▪ The co-operative food was planning to open Create more 300 new food stores over 3 years efficient ▪ The co-operative asked its members to 2 processes for suggest new sites online consulting with ▪ The initiative helped determine which locations generate the most interest among members members Members are asked to formulate an ethical investment policy that becomes binding for the whole group Improve ▪ These considerations are deliberated within the Regional Values and Principles performance 3 Committee, a forum for members to express management their points of view systems ▪ Based on member input, the co-operative Bank “lives its values” by publishing an ethical investment policy that informs its members about who it will and will not do business with McKinsey & CompanySOURCE: Interviews with coop leaders; annual reports | 11 Copyright © 2012. All rights reserved
  • 13. Agility in decision making: cooperative case examples – 3/3Examples of best practices Improve performance management systems to enable rapid mitigation of sources of underperformance Case example: BPCE Devise clear ▪ Groupe BPCE was formed in July 2009 through the alliance of Banque 1 roles and Populaire and Caisse d’Épargne responsibilities ▪ Groupe BPCE has 80,000 employees and generates revenues of EUR 23 billion ▪ With the aim of fostering local leadership while simultaneously fostering the operational discipline required to optimize member’s service level, Create more BPCE created a system permitting its regional coop banks to efficient compare their performance and to share best practices 2 processes for consulting with ▪ Key indicators included favoured transparency and internal members competition, alongside external benchmarks, to ensure the banks considered external best practices as well ▪ The system offers monthly dashboards, real-time updates, and benchmarks (internal and external), ranking banks on their performance compared to peers as well as following the evolution of Improve performance of individual business units performance 3 management ▪ Member banks are also measured on their contribution to investor systems relations and their engagement with the wider French economy ▪ This led to strong, dynamic branches and has partly fuelled annualized growth of 10.8% over 5 years, 2/3 of which came from market share gain McKinsey & CompanySOURCE: Interviews with coop leaders; annual reports | 12 Copyright © 2012. All rights reserved
  • 14. Agility in pursuing adjacent opportunities: cooperative case examples – 1/3Examples of best practices Expose cooperative to more external perspectives Case example: CBH Group Expose cooperative to ▪ CBH is an Australian grain 1 farmers’ cooperative more external perspectives ▪ It has more than 4,500 members and annual turnover of AUD 1.5 billion Encourage ▪ CBH Group complemented its Board and acquired the collaboration necessary expertise by electing external Board directors 2 across different parts of the ▪ The Board elects 3 independent directors based on the recommendation of the Remuneration and Nomination Board business Committee ▪ These 3 independent directors are chosen to provide expertise and skills that will broaden the overall experience of the Board of Directors, such as international business deal making and corporate affairs Protect growth 3 ▪ For example, as CBH was investing to reform its grain-rail network capital in Western Australia, external board members were able to help evaluate several technical questions and brought complementary expertise to the cooperative McKinsey & CompanySOURCE: Interviews with coop leaders; annual reports | 13 Copyright © 2012. All rights reserved
  • 15. Agility in pursuing adjacent opportunities: cooperative case examples – 2/3Examples of best practices Encourage collaboration across different parts of the business through company-wide systems and processes supporting cross- function cooperation and innovation Expose Case example: MONDRAGON cooperative to 1 ▪ Spanish cooperative with EUR 15 billion more external in revenues, 83,000 employees, and perspectives 281 enterprises and entities ▪ MONDRAGON has 4 core corporate values that shape its overall approach – Cooperation (“owners and protagonists”) Encourage – Participation (“commitment to management”) collaboration – Social responsibility (“distribution of wealth based on solidarity”) 2 across different – Innovation (“constant renewal”) parts of the ▪ Innovation and cooperation are reflected in a dedicated R&D business network that provides new lines of business – 14 technology R&D centres and R&D units specialized in fields relevant to MONDRAGON, such as lifting systems, packaging machines, home appliances, and thermoplastics ▪ Innovation poles provide a platform to generate interactions and create opportunities among stakeholders Protect growth ▪ Innovation is encouraged and stimulated by formal processes at all 3 levels of the organization capital – Cross-functional, cross-business unit innovation – Radical innovation outside the day-to-day environment – Daily innovation and continuous improvement ▪ Today, 21% of sales are from products that are <5 years old McKinsey & CompanySOURCE: Interviews with coop leaders; annual reports | 14 Copyright © 2012. All rights reserved
  • 16. Agility in pursuing adjacent opportunities: cooperative case examples – 3/3Examples of best practices Protect growth capital Expose Case example: MONDRAGON cooperative to ▪ Spanish cooperative with 1 more external EUR 15 billion in revenues, perspectives 83,000 employees, and 281 enterprises and entities Encourage collaboration ▪ To ensure continued growth and competitiveness over a sustained 2 across different period, MONDRAGON established funding mechanisms to ensure parts of the the survival and success of new initiatives business ▪ 10% of gross profits are placed in a “developmental fund” to finance innovation, research, and international business development ▪ Tactical and frequent investments are made in a range of research and education centres to promote new ideas Protect growth 3 capital McKinsey & CompanySOURCE: Interviews with coop leaders; annual reports | 15 Copyright © 2012. All rights reserved
  • 17. Agility in developing and sourcing talent: cooperative case examples – 1/2Example of best practices Actively identify top talent and create leadership development tracks for these individuals Actively identify Case example: Desjardins top talent and create leadership- ▪ Desjardins is North America’s 1 largest credit union with assets of development CAD 194 billion, 5.6 million tracks for these members and clients, and almost individuals 45,000 employees ▪ Mouvement Desjardins renewed the mandate for its “Institut coopératif Desjardins”, expanding its educational mission Adopt recruiting to include leadership development and technical skill-building and training prac- programs tices that change ▪ The Institute offers its courses to both elected and executive 2 how younger po- leaders, separately or jointly, depending on the topic. For example, tential employees in the organization’s “leadership and performance” program, the top view coops 400 executive leaders take a series of workshops and field-based training sessions focused on honing their leadership skills at the personal, team, and organizational levels ▪ Over approximately 2 years, the Institute launched 13 strategic talent-development programs, with many participants having taken on more senior leadership roles in the organization ▪ Formal feedback indicates that a majority found the Institute to be an invaluable contributor to their career development McKinsey & CompanySOURCE: Interviews with coop leaders; annual reports | 16 Copyright © 2012. All rights reserved
  • 18. Agility in developing and sourcing talent: cooperative case examples – 2/2Example of best practices Recruiting and training practices that change how younger potential employees Actively identify view coops top talent and Case example: Farmers Cooperative create leadership- 1 ▪ Farmers Cooperative is the largest development tracks for these farmer-owned agricultural coop in Iowa individuals with more than 5,300 members ▪ Farmers Cooperative (FC) was finding it difficult to attract the Adopt recruiting young talent that could help it feed its 23% annual growth rate and training prac- in 2008 tices that change 2 ▪ FC rolled out a recruiting campaign in collaboration with Iowa how younger po- tential employees State University. Every quarter, the CEO organizes events with view coops high-potential students and FC offers scholarships to increase its visibility among college students. The best students are given paid internships ▪ The organization even moved its headquarters close to the university to help make these programs accessible ▪ The move enabled FC to double its intern pools and improve first-year retention from 47% to 88% ▪ Overall turnover has dropped to 10% from 25% McKinsey & CompanySOURCE: Interviews with coop leaders; annual reports | 17 Copyright © 2012. All rights reserved
  • 19. ContentContext and methodologyManagerial best practices of cooperativesAn in-depth review of OHI McKinsey & Company | 18 Copyright © 2012. All rights reserved
  • 20. The OHI is a health diagnostic process that offers a deep understanding ofculture that extends beyond employee engagement The Organizational Health approach to assessment ▪ Focuses on the breadth and depth of organizational health. Identifies current levels of health (outcomes), methods to deliver health (practices), and the leadership beliefs and mindsets that limit performance improvement – not employee satisfaction ▪ Uses multiple data sources (survey, interview, focus groups, employee survey data) for a broader view ▪ Leverages world-class company benchmarks (sector specific) to help determine the strength or severity of the survey scores ▪ Assesses the drivers of current outcomes (practices and mindsets) to disaggregate “root causes” of an organization’s barriers to success ▪ Drills down from outcome to practice to mindset to understand “what do you do about it” ▪ Leverages analytics and findings from the database of over 1,200 surveys to help prioritize where to focus (based on the healthiest organizations) McKinsey & Company | 19 Copyright © 2012. All rights reserved
  • 21. Organizational Health is made up of outcomes and underlying ILLUSTRATIVEmanagement practices Outcomes Management practices ▪ Outcomes describe the current results ▪ Management practices describe the that an organization has achieved current actions that managers at an organization take to achieve results ▪ Each outcome shows the percentage of respondents who either agreed or ▪ A bar chart shows the percentage of strongly agreed with the statements respondents who either agreed or World Class strongly agreed with the statement Superior 88% Slightly above average 64% 54% Below average 74 86 68 53 64% 70% 49% Top-down Bottom-up Knowledge Capturing 75% 45% Innovation innovation sharing External Ideas 49% Innovation ▪ Example: “The company generates ▪ Example: “The company imports enough high-quality ideas to achieve its practices from other companies and business goals” industries” McKinsey & CompanySOURCE: McKinsey Organization Practice | 20 Copyright © 2012. All rights reserved
  • 22. COORDINATION AND CONTROLPeople development practices are perceived as a strength, butperformance management needs reinforcement Core belief on coordination and control: A top-tier organization aligns goals, targets, and metrics managed through efficient and effective processes, and measures and captures the value from working collaboratively across organizational boundaries Strong people development process and awareness of Advantage in not being slave to short-term important issues but need stronger performance performance, but leaders highlight need for improvement dialogue more performance transparency Gap to the mean Percent1 Interview quote Managers provide feedback to individuals to ensure that they have an accurate understanding of their The fact that we do not have to 18 strengths, weaknesses and development priorities publish quarterly reports is a real The organization ensures transparency and rapidly competitive advantage: we have the passes negative information up the command time to do things right chain so senior leaders are aware of important 20 issues as they arise I sometimes have this impression The organization uses standard operating that the fact that being a cooperative procedures to influence the way employees -10 comes with some managerial laxity do their work A great paradox with cooperatives is Business performance reviews in the organization rapidly identify the real causes of problems -17 that they are not as transparent as many publicly traded companies. The organization’s control systems enable us to This is true internally and externally minimize unexpected performance results -231 Relative difference between coops mean and overall mean (percentage points difference divided by mean) McKinsey & CompanySOURCE: McKinsey Coop Organizational Health Index survey; interviews with coop leaders | 21 Copyright © 2012. All rights reserved
  • 23. EXTERNAL ORIENTATIONDespite their proximity advantage, coops are generally too inwardlyfocused when it comes to their business environment Core belief on external orientation: A top-tier organization makes creating value for customers its primary objective, while focusing on creating value for all stakeholders Cooperatives are highly responsive to customers Importance of interacting more directly opinions but too inwardly focused relative to business with competitive and government environment environments Gap to the mean Percent1 Interview quote The organization is highly responsive 6 Many of our leaders believe that to customer opinions and needs because our organization is unique, it is not worth comparing ourselves to The organization has developed high -3 the competition levels of customer loyalty Despite the economical importance The organization effectively responds of the coops in our country, we to competitive market actions barely play a role in national regulation changes because we are The organization actively considers not uniting our voices the response of government regulatory bodies when making -23 decisions1 Relative difference between coops mean and overall mean (percentage points difference divided by mean) McKinsey & CompanySOURCE: McKinsey Coop Organizational Health Index survey; interviews with coop leaders | 22 Copyright © 2012. All rights reserved
  • 24. INNOVATION AND LEARNINGCoops’ low capacity to change and innovate is hampering theirprogress Core belief on innovation and learning: A top-tier organization is able to capture ideas and convert them into value incrementally and through special initiatives, as well as to leverage internal and external networks to maintain a leadership position Cooperatives are challenged in creating, capturing, Cooperatives tend to innovate at inception, and converting new ideas into value but fail to reinvent on an ongoing basis Gap to the mean Percent1 Interview quote The organization changes/improves Much of the cooperative movement’s at a greater rate than its industry -21 genesis was to find innovative ways to does deal with underserved needs. Coops are innovative in their DNA… Management encourages different However, a root-based organization parts of the organization to work -13 was built from the bottom up over together to make improvements time; ends up with a silo culture where ideas hardly move from one division to the next, and new ideas don’t see The organization’s systems and -5 the light of day processes facilitate cross-functional initiatives1 Relative difference between coops mean and overall mean (percentage points difference divided by mean) McKinsey & CompanySOURCE: McKinsey Coop Organizational Health Index survey; interviews with coop leaders | 23 Copyright © 2012. All rights reserved
  • 25. CAPABILITIESCoops feel a competency and capability-building gap remains despiteemployee training and external hiring Core belief on capabilities: A top-tier organization builds the institutional skills required to execute its strategy, as well as distinctive capabilities that create a long-term competitive advantage Coops must overcome a perceived Capability management gap despite training and notoriety deficit and become external hiring strengths employers of choice Gap to the mean Percent1 Interview quote In the organization, people receive the 11 We are often perceived as too local training and development they need to be effective in their roles without enough career growth opportunities. This is a major structural The organization consistently hires disadvantage when trying to attract outside talent 11 young talent The organization outsources functions Some of our recent recruits left or activities that can be better done -21 because they were frustrated with the by others outdated technologies; this is very The organization uses job rotation to challenging for us broaden the experience and -24 It is challenging to attract talent to capabilities of its talent rural locations; we need to be more The organization has the necessary -15 thoughtful about people rotation and competencies to achieve its strategy career growth1 Relative difference between coops mean and overall mean (percentage points difference divided by mean) McKinsey & CompanySOURCE: McKinsey Coop Organizational Health Index survey; interviews with coop leaders | 24 Copyright © 2012. All rights reserved
  • 26. DIRECTIONCoops are effective at aligning the organization around a consensualdirection and organizational vision Core belief on direction: A top-tier organization crafts and communicates a compelling strategy, as well as providing purpose, engaging people around the vision Effective managerial practices to drive direction and Concern with achieving a broader member organizational alignment engagement for an even stronger direction Gap to the mean Percent1 Interview quote The organization’s vision is On paper, our democratic mechanisms communicated throughout the 6 are great. The reality is that only a organization minority of members are engaged I often wish that our members would be The vision for the organization’s more involved in shaping the [strategic] future is widely understood by its 3 agenda employees Management articulates a vision for the future of the organization that 9 resonates with my personal values1 Relative difference between coops mean and overall mean (percentage points difference divided by mean) McKinsey & CompanySOURCE: McKinsey Coop OHI survey; interviews | 25 Copyright © 2012. All rights reserved
  • 27. LEADERSHIPLeadership style is inclusive and caring, but decision-making is slow Core belief on leadership: A top-tier organization shows care toward subordinates and sensitivity to their needs (i.e., high support), sets stretch goals, and inspires employees to work at their full potential (i.e., high challenge) Cooperative leaders appreciate consensus Strong inclusive, caring, and coherent leadership but but aspire to more speed and slow decision making assertiveness in decision making Gap to the mean Percent1 Interview quote Managers ask the opinions of others The great thing about our leadership 18 style is that it is consensus-based; the before making important decisions flip side is that… it is consensus-based, which takes time, a lot of time, to arrive Leaders are steering the organization at a decision 10 in the right direction Leadership is almost taboo in our world. Leaders role model the values of the We will not see a coop leader on the organization 9 cover of Times magazine anytime soon I hear a lot of my peers mention that they would like coops to play a larger role in the global economy, but we need Leaders make decisions in a timely more ambitious plans if we are to reach -22 manner these aspirations1 Relative difference between coops mean and overall mean (percentage points difference divided by mean) McKinsey & CompanySOURCE: McKinsey OHI cooperative survey; interviews | 26 Copyright © 2012. All rights reserved
  • 28. CULTURE AND CLIMATECooperatives enjoy a positive culture and working climate butstruggle with creating a sufficiently performance-focused culture Core belief on culture and climate: A top-tier organization creates a baseline of trust within and across organizational units and a strong, adaptable organization-wide performance culture Positive culture and climate but not sufficiently Clear pride in the culture but desire to instil performance-focused a more performance-driven culture Gap to the mean Percent1 Interview quote There is a good atmosphere within the For most of our employees, it is simply 14 unthinkable to work for another type of organization business than a cooperative. There is The organization’s culture and values are something unique about the ambiance that 6 is not replicable elsewhere clearly defined We should start by clearly defining The organization’s culture positively ‘performance’ for us, and how to make 7 short-term ROE tradeoffs vs. our long-term influences the way people behave priorities Management emphasizes the importance The one element we have to improve is to of efficiency and productivity -7 work as a whole entity. Our culture is really root-based, and we must start thinking about Managers encourage employees to ourselves as a coherent group so our experiment with new ideas to improve -17 members get the advantage of dealing with a multi-billion dollar business performance1 Relative difference between coops mean and overall mean (percentage points difference divided by mean) McKinsey & CompanySOURCE: McKinsey OHI survey; interviews | 27 Copyright © 2012. All rights reserved
  • 29. ACCOUNTABILITYEmployees are clear on their roles and objectives but see an opportunity in betterindividual accountability and performance-based consequences management Core belief on accountability: A top-tier organization creates clear roles and responsibilities, links performance and consequences, and encourages an ownership mindset at all levels Employees feel ownership and have challenging Commitment but limited consequence targets but do not see the link between results and management consequences Gap to the mean Percent1 Interview quote Managers create a sense of ownership or 17 The majority of our staff is keen on belonging to the organization doing what it takes to satisfy our Employees receive clear explanations of what has 16 members to be achieved in their jobs It is very hard to deal with poor The organization sets performance goals for 11 performers. It is not part of our culture, individuals that are challenging and we wait too long The organization has created clear links between -9 performance and consequences The organizational structure helps create clear accountability -10 Employees within the organization feel they are accountable for the results they are expected to 0 deliver1 Relative difference between coops mean and overall mean (percentage points difference divided by mean) McKinsey & CompanySOURCE: McKinsey Coop OHI survey | 28 Copyright © 2012. All rights reserved
  • 30. MOTIVATIONMotivation is high, but a gap exists with regards to the credit they receive inthe community Core belief on motivation: A top-tier organization motivates through incentives, opportunities, and values, and taps into employees’ sense of meaning and identity to harness extraordinary effort Employees relate to the values and mission of their Challenge in getting broad credit in the cooperatives community Gap to the mean Percent1 Interview quote Our employees get motivated by the The organization’s employees are highly impact we have in our community 23 motivated Our employees see the impact we have in our community, but our community Leaders in the organization motivate doesn’t see it; we have a notoriety employees to perform by providing 18 deficit and this threatens long-term encouragement and support motivation In the organization, employees are 16 generally enthusiastic about their jobs1 Relative difference between coops mean and overall mean (percentage points difference divided by mean) McKinsey & CompanySOURCE: McKinsey Coop OHI survey | 29 Copyright © 2012. All rights reserved

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