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Management Performance Tool jbb 6

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Cooperative management performance tools

Cooperative management performance tools

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  • 1. Management Performance Tool Cooperative Management & Governance Seminar Nueva Segovia Consortium of Cooperative Caoayan, Ilocos Sur October 5-7, 2011
  • 2. Management Performance 1. COOP PESOS C O O P Compliance with administrative and legal requirements. This includes set of questions which looks at whether the credit cooperative complies with the various legal requirements by Cooperative Development Authority, Bureau of Internal Revenue, Department of Labor and others. Organizational structures and linkages. This includes questions on the Cooperative’s governance and membership structure, affiliations and linkages with federations and other organizations promoting cooperative development. Operation and Management. This includes indicators that deter presence or absence of the necessary systems, policies and procedures for efficient and effective management of the credit cooperatives. Plans and Programs. This includes parameters to determine whether the credit cooperative has a developmental plan and an approved annual plan and budget.
  • 3. Management Performance P E S O S Portfolio Quality. It provides the officers to monitor the quality of portfolio of the Cooperative. The status of the health of the portfolio will either propel the Cooperative to grow more or imperil its whole sustainability program. Two indicators are included: (1) Portfolio at Risk; and (2) Allowance for probable losses on loan. Efficiency. The second group of indicators focuses on the operations and administrative efficiency of the delivery of financial services. Six indicators are included: (1) Asset yield; (2) Operational self-sufficiency; (3) Rate of return on member’s share; (4) Loan Portfolio profitability; (5) Cost per peso loan; (6) Administrative Efficiency. Stability. The stability of credit Cooperative is important to ensure that financial services are delivered to its members in a sustained manner. Stability indicators are: (1) Solvency; (2) Liquidity; and (3) Net Institutional capital. Operations. This indicator highlights the new thrust of Philippine Cooperative movement. Strong emphasis is given on mobilizing voluntary savings from members and less dependence on borrowings. Operation indicators includes: (1) Performance of membership growth; and (2) Trends in external borrowings. Structures of assets. These four ratios ascertain the quality and the structure of the assets of Cooperative: (1) Non-earning assets; (2) Total deposits; (3) Net Loan Receivables; and (4) Total members.
  • 4. a. Profitability Ratio Measure the capacity of the cooperative to generate surplus Net Operating Surplus --------------------------------------------------------------Gross Operating Revenue or Gross Margin 30% and above 5 points 25% to below 30% 10% to below 25% 5% to below 10% below 5% 4 points 3 points 2 points 1 point
  • 5. b. Earning per share Measure the capacity of cooperative to provide earnings to members' capital contribution Net Surplus ----------------------------------------------------Members' Equity - Treasury Share Php 2.50 and above Php 2 to below 2.50 Php 1.50 to below 2.00 Php 1.00 to below 1.50 below Php 1 to Php 0.75 5 points 4 points 3 points 2 points 1 point
  • 6. c. Profitability Growth Rate Measure the growth rate of profitability for the period Earning/share end – Earning/share beginning -----------------------------------------------------Earning per share beginning 100% and above 75% to below 100% 50% to below 75% 30% to below 50% 10% but below 30% 5 points 4 points 3 points 2 point 1 point
  • 7. d. Asset Efficiency Rate Measure the efficient use of assets to generate surplus Net surplus Total Assets 20% and above 15% to below 20% 10% to below 1% 5% to below 10% below 5% 5 points 4 points 3 points 2 points 1 point
  • 8. e. Rate of Interest on Share Capital (as prescribed in the by-laws; or if not provided, follow Rule 10 of IRR) Measure the return on members' share capital Amount of Interest on Share Capital Average Paid up Share Capital Higher than the inflation rate within the inflation rate 2 pts below inflation rate 3 pts or more below inflation rate 5 points 4 points 2 points 1 point
  • 9. f. Rate of Patronage Measure the rate of returns on members' patronage 30% & above of the NS for distribution to members 25% to below 30 % 15% to below 25% 10% to below 15 % 5% to below 10% 5 points 4 points 3 points 2 points 1 point Note: if the rate of patronage refund is more than twice the rate of interest on capital, the rating is zero
  • 10. a. Net Institutional Capital Measure the level of institutional capital after subtracting the allowance for probable losses (Reserves + APLL and/or A/R) – (Problem Assets + Past Due Receivables + Receivables Under Litigations + Restructured Receivables) ----------------------------------------------------------------------------------Total Assets 10% and above 8% to below 10% 6% to below 8% 4% to below 6% 2% to below 4% below 2% 6 points 5 points 4 points 3 points 2 points 1 point
  • 11. b. Appropriate Provisioning for Probable Losses b.1 Past due of more than one (1) year Measures the adequacy of provision for probable losses for past due accounts of more than one (1) year Allowance for probable losses on receivables Past due receivables over one (1) year 100% and above 90% to below 100% 70% to below 90% 50% to below 70% 30% to below 50% 10% to below 30% Below 10% but not zero 7 points 6 points 5 points 4 points 3 points 2 points 1 point
  • 12. b. Appropriate Provisioning for Probable Losses b.2 Past due of thirty one (31) days to one (1) year Measures the adequacy of provisions for probable losses for past due accounts 31 days to 1 year APL on receivables - allowance required for past due receivables one year and above Total past due receivables 31 days to 1 year 35% and above 30% to below 35% 25% to below 30% 20% to below 15% 15% to below 20% 10% to below 15% Below 10% but not zero 7 points 6 points 5 points 4 points 3 points 2 points 1 point
  • 13. a. Percentage of non-earning assets to total assets Measures the percentage of non-earning assets to total assets Non-earning Assets --------------------------------------Total Assets 10% and below Above 10% to 20% Above 20% to 30% Above 30% to 40% Above 40% 5 4 3 2 1 points points points points point
  • 14. c. Members' equity to total assets Measures the degree of participation of members' share to total assets Paid-up Share + Deposit for Capital Subscription ----------------------------------------------------Total Assets 40% to below 50% 50% to below 60% 30% to below 40% 60% to below 70% 20% to below 30% Below 20% or Above 70% 5 points 3 points 3 points 2 points 2 points 1 point
  • 15. d. Deposit liabilities to total assets Measures the percentage participation of deposit liabilities to total assets Total deposit liabilities Total Assets 30% to 40% Above 40% to 50% 20% to below 30% Above 50% to 60% Below 20% to 10% Above 60% to 70% Below 10% to 5% Above 70% or below 5% 5 points 4 points 4 points 3 points 3 points 2 points 2 points 1 point
  • 16. e. External borrowings to total assets Measures the dependence of cooperative to external borrowings Total external borrowings Total Assets No external borrowings 1% to 20% above 20% to 30% above 30% to 40 % above 40% 5 points 4 points 3 points 2 points 1 point
  • 17. a. Volume of business to total assets Measure the capacity of assets to generate business Total volume of business Total assets 100% and above 75% to below 100% 50% to below 75% 25% to below 50 % 5% to below 25% below 5% 5 points 4 points 3 points 2 points 1 point zero
  • 18. b. Solvency Measures the degree of protection that the cooperative has for members savings and share capital in the event of liquidation of coop's assets and liabilities (Assets + APL) - [ (Total liabilities - Deposit liabilities)+ (Past due receivables + restructured receivables + receivables under litigation)] --------------------------------------------------------------------------------Deposit liabilities + Share capital 110% and above 100% to below 110% 85% to below 100% 75% to below 85% 50% below 75 % 5 points 4 points 3 points 2 points 1 point
  • 19. c. Liquidity Measures the cooperative's ability to service withdrawal of members' deposit on time Liquid assets - Short term payables Total members' deposit 15% to 30% Below 15% to 10% Above 30 to 50% Below 10% to 5% Above 50% to 60% Below 5% to 1% Above 60 to 80% Above 80% or below 1% 5 points 4 points 4 points 3 points 3 points 2 points 2 points 1 point
  • 20. d. Efficiency d.1 Cost per volume of business Measures the efficiency in managing the cooperative's business Operating cost – (Members‘ Benefit Expense + Social Service Expense) ---------------------------------------------------------------------------total volume of business 25 cents and below 26 to 22 cents 33 to 39 cents 40 to 46 cents 47 cents and above 5 points 3 points 2 points 1 point zero
  • 21. d. Efficiency d. 2 Administrative efficiency Administrative cost – (Members Benefit Expense + Social Service Expense) ------------------------------------------------------------Average total assets 10% and above Above 10% to below 15% Above 15% to below 20% Above 20% to below 25% Above 25% 5 points 3 points 2 points 1 point zero
  • 22. d. Efficiency d.5 Turnovers Measures the number of times receivables or inventories are moving within the reporting period Receivables (trade &loans) Average Receivables 4 times and more 3 to below 4 times 2 to below 3 times Below 2 times 5 points 3 points 2 points 1 point
  • 23. 4. PEARLS Protection, Effective Financial Structure, Asset Quality, Rates of Return, Liquidity, and Signs of Growth, the PEARLS system was originally designed and implemented with Guatemalan credit unions in the late 1980s.
  • 24. 5. CAMEl (C) CapitaL (A) Asset quality (M) Management (E) Earnings and (L) Asset Liability management
  • 25. 6. Gawad Pitak Given by Land Bank of the Philippines LANDBANK also has its own Cooperative Accreditation Criteria or CAC, based on the seven pillars of cooperativism - membership, capital build-up and savings, leadership and management, business operations, books of accounts and financial statements, and affiliations. Using these criteria, LANDBANK annually rates co-ops and classifies them A, B, C, D, and F according to their maturity levels
  • 26. Primary Cooperative Eligibility and Qualifying Criteria • Must be duly registered with the Cooperative Development Authority (CDA); • Must be in Good Standing for the past three (3) preceding years; • Must be existing for at least 5 years and must be operationally gainful for the last three (3) years– for Medium/Large Cooperative;
  • 27. CDA Gawad Parangal CRITERIA for PRIMARY COOP 1. Organization, Leadership and Management WEIGHT/ POINTS 40 2. Financial Mgt. and Business Operation 35 3. Social Relevance 20 4. Awards and Recognition 5
  • 28. Eligibility/Qualifying Criteria for Federation • Must be duly registered federation with the Cooperative Development Authority (CDA); • Must be in Good Standing for the past three (3) preceding years; • Must be existing for at least 5 years and must be operationally gainful for the last three (3) years • Compliant with the legal and administrative requirements of CDA and other government agencies
  • 29. CRITERIA 1.Organization, Leadership and Management WEIGHT/ POINTS 40 2.Financial Mgt. and Business Operation 35 3.Social Relevance 20 4.Awards and Recognition 5
  • 30. Eligibility/Qualifying Criteria for Union • Must be duly registered union with the Cooperative Development Authority (CDA); • Must be in Good Standing for the past three (3) preceding years; • Must be existing for at least 5 years and must be continuously operating for the last three (3) years • Compliant with the legal and administrative requirements of CDA and other government agencies
  • 31. CRITERIA 1.Organization, Leadership and Management WEIGHT 40 2.Services Rendered 35 3.Social Relevance 20 4.Awards and Recognition 5
  • 32. Eligibility/Qualifying Criteria for Cooperative Leaders • Must be a cooperative member in good standing for the past ten (10) years immediately preceding the nomination – With share capital not exceeding 10% of the total subscribed capital – Actively participating in the SMCBU program of their cooperative – Regularly attending General Assembly Meeting – Patronizing the services of cooperatives • Presently or had been an officer of cooperatives for at least five (5) years whether elective or appointive
  • 33. • Eligibility/Qualifying Criteria • With no derogatory record / No administrative or criminal record • With exemplary contributions to cooperative development • Must be nominated/endorsed by at least four (4) different type of organizations from the following : cooperative, government organizations, local government units, private sector, other institutions
  • 34. Eligibility/Qualifying Criteria CDO-LGU • • • • • • Must come from a province/chartered or independent city or components cities and municipalities Formally organized/established/created office With Cooperative Development Officer duly appointed With staff and budget Must have relevant cooperative development program/s. Must be endorsed by CDS and at least one (1) cooperative in the area
  • 35. CRITERIA 1.Organization, Management & Leadership WEIGHT/ POINTS 40 2. Program Implementation 60 TOTAL 100
  • 36. 8. Balanced Scorecard The balanced scorecard (BSC) is a strategic performance management tool – a semi-standard structured report, supported by proven design methods and automation tools, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions.
  • 37. 8. Balanced Scorecard It is the most widely adopted performance management framework reported in the annual survey of management tools undertaken by Bain & Company, and has been widely adopted in English-speaking western countries and Scandinavia in the early 1990s). Since 2000, use of the Balanced Scorecard, its derivatives (e.g., performance prism), and other similar tools (e.g., Results Based Management) has also become common in the Middle East, Asia and Spanish-speaking countries.

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