0916190 MLT025

STUDENT NUMBER: 0916190
MODULE CODE: MLT025
MODULE TITLE: Dissertation
COURSEWORK ASSIGNMENT: “Weathering the Capitalist
storm”: A study of Wales’ largest credit union
WORD COUNT: 17,001

ii
“Weathering the Capitalist storm”: A
study of Wales’ largest credit union
Peter Frederick Gilbey BSc. (Hons) MSc.
Cardiff University
Supervised by Professor Gordon Cumming
In contribution for a Master of Arts

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Abstract
Credit Unions operate for the benefit of their members and the community in which they are
based. They promote inclusion, prudential financial behaviour and education through socially
responsible practices. It is a worldwide phenomenon whose benefits are apparent in countries
such as the United States, Canada and Ireland. However, comparatively, the movement is weak in
the United Kingdom with poor penetration rates. The 2008 Great Recession placed great strain
on the financial industry with many well known institutions brought to their knees. The
subsequent austerity policy of the UK government has been felt particularly sharply in Wales,
where the public sector is the largest employer and a significant number of people rely on the
welfare state. As such, poverty has deepened and traditional financial services become out of
reach to many people. The Llanelli Save Easy Credit Union however has not only survived this
turbulent time, but has thrived. In reviewing the existing literature on conceptual frameworks for
organisational effectiveness, a new framework is produced: The Cambrian Model which is
applied to Llanelli Save Easy Credit Union. The Cambrian Model was found to be more suitable,
contemporary and user-friendly, compared to the other frameworks investigated. Through a
combination of growth in profit and members, an awareness of the micro and macro
environments and the establishment of trust and confidence through efficient and professional
internal processes, the modern Welsh credit union may survive and thrive.

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Acknowledgements
I would like to express my sincere gratitude and thanks to all who have helped me write this
dissertation; Prof. Gordon Cumming of Cardiff University, who not only guided me through this
dissertation, but has been a rock of support throughout the entire degree. Furthermore, I would
like to thank my family and friends for their kind words and actions of support. Finally, my
sincere thanks goes to Llanelli Save Easy Credit Union, for the access and cooperation they gave
me. Thank you.

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Table of Contents
1.0 Introduction.......................................................................................................................... 1
Research question.....................................................................................................................................2
Objectives..................................................................................................................................................2
The Credit Union Movement.................................................................................................................4
2.0 Literature Review ...............................................................................................................12
2.1 Credit Union Context and the Roles they Perform............................................................ 12
2.2 Organisational Structure and Effectiveness of Credit Unions ......................................... 19
3.0 Methodology.......................................................................................................................33
4.0 Findings ...............................................................................................................................39
4.1 Application of the Cambrian Model..................................................................................... 40
5.0 Conclusions.........................................................................................................................45
Reference List...............................................................................................................................47
Appendix 1....................................................................................................................................51
Appendix 2....................................................................................................................................52
Appendix 3....................................................................................................................................53
Appendix 4....................................................................................................................................54
Appendix 5....................................................................................................................................55
Appendix 6....................................................................................................................................56
List of Tables
Table 1: Credit Union penetration in each continent (Ibid.)..................................................................6
Table 2: Credit Unions in Wales in 2015...................................................................................................8
Table 5: Key Pearl Ratios, adapted from Cato et al. (2009: 20).......................................................... 20
List of Figures
Figure 1: Map illustrating the countries with credit union movements worldwide that reported
statistical data (green). (WOCCU, 2014)..........................................................................................5
Figure 2: Number of Credit Union members in Wales (Welsh Government, No Date)............... 10
Figure 3: Four Models of Effectiveness Values (Daft, 2001: 71)....................................................... 35

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1.0 Introduction
“The demand for credit is perennial and inelastic and unlikely to go away any time soon”
(Ellison et al., 2001: 6)
It can be argued that the objectives of a credit union are:
“the promotion of thrift…by accumulation of their savings; the creation of sources of credit…at a fair and
reasonable rate of interest; the use and control of the members’ savings for their mutual benefit; and the training
and education of the members in the wise use of money and in the management of their financial affairs” (Credit
Unions Act, 1979).
In addition to these principles, the structure of credit unions is stipulated here through
establishing clarity to the obscure concept of ‘common bond’.
“following a particular occupation; residing in a particular locality; being employed in a particular locality; being
employed by a particular employer; being a member of a bona fide organisation or being otherwise associated with
other members of the society for a purpose other than that of forming a society to be registered as a credit union”
(Ibid.).
Credit unions are essentially rudimental banks, similar in practice and operation to the banks and
building societies of old. They operate for the benefit of their members and the community in
which they are based. They promote inclusion, prudential, financial behaviour and education
through socially responsible practices. They are a worldwide phenomenon whose benefits are
particularly recognised in countries such as the United States, Canada and Ireland. However,
comparatively, the movement is weak in the United Kingdom.
Whereas most British banks and building societies have fared badly during the Great Recession
of 2008, the credit union movement has performed comparatively better, indeed some credit
unions are thriving such as Llanelli Save Easy Credit Union in South Wales.
The significance of the whole issue of access to credit as well as the functioning of credit unions
cannot be overstated at a time when poverty in Wales and the UK has reached unacceptable
levels, with 1 in 5 of the population living below the official poverty line1. Indeed, the number of
claimants of food bank support has seen unprecedented growth, growing from 347,000 to
1 “Poverty in the UK” http://policy-practice.oxfam.org.uk/our-work/poverty-in-the-uk

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913,000 between 2013 and 20142. Many forms of traditional financial services have moved out of
reach of many people as their financial situations deteriorate and they are forced to turn to
riskier, informal and sometimes dangerous means of accessing credit. These people often fall
prey to pay-day loan companies such as Wonga and loan sharks. Indeed the significance is
accentuated by the move by the Archbishop of Canterbury, Justin Welby to try to “put Wonga
out of business”3 through teaming up with credit unions. These findings also have particular
significance for Wales, against the backdrop of austerity policy on a population reliant on the
public sector for employment and on the welfare state for survival, also with the passage into law
of the ‘Well-being of Future Generations (Wales) Act 2015’ what enshrines the ‘pursuit for the
economic, social, environmental and cultural well-being of Wales’.
Surprisingly, given the importance of Welsh credit unions, there has, as will be seen in our
literature review, been comparatively little analysis of this topic. The existing literature on credit
unionism while useful, remains unfocused on the movement in Wales, in particular the
organisational effectiveness of such organisations. The need for credit unions has been argued
for in numerous pieces of literature prior to 2008, a period of economic boom. Therefore, since
the Great Recession, the gap between the rich and poor has widened, more of the population
slips into poverty and a largely public sector and welfare state dependent population such as
Wales comes to terms with austere economic policies from London, the literature requires
updating.
This dissertation seeks to fill this gap in the literature and shed light on the organisational
structure, workings and effectiveness of credit unions. Our research question is:
Research question
What organisational framework is required for survival and success in the modern Welsh credit union?
In order to ultimately answer this research question, objectives must be identified and set, it is to
this which we now turn to.
Objectives
2 “Food banks see ‘shocking’ rise in number of users” http://www.bbc.co.uk/news/business-
27032642
3 “War on Wonga: We’re putting you out of business, Archbishop of Canterbury Justin Welby tells
payday loans company” http://www.independent.co.uk/news/uk/home-news/war-on-wonga-were-
putting-you-out-of-business-archbishop-of-canterbury-justin-welby-tells-payday-loans-company-
8730839.html

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Objective 1: Identify a conceptual framework in which to test the working and organisational effectiveness of a
credit union
Objective 2: Test the identified framework against Llanelli Save Easy Credit Union
Objective 3: Refine this model in light of these findings and explore its wider applicability
Before proceeding with this analysis, it is worth sharpening its focus. Thus, while this study does
look at the organisational effectiveness of Welsh credit unions, it does so by measuring practices
and structures against authoritative yardsticks of ‘best’ or at least, agreed ‘good’ practice. It does
not investigate whether the credit unions themselves improved the lives of borrowers since
access to this type of sensitive financial data was not available. Second, this study looks at a
single, but important case study, the Llanelli Save Easy Credit Union. The advantages and
disadvantages of this approach are highlighted in our methodology chapter.
Finally, it is important to understand at the outset what a credit union is and is not. A credit
union is a “member-owned, not-for-profit financial cooperative that provides savings, credit and
other financial services to their members” (WOCCU, No Date).
Credit Unions are subject to the same regulation and the same scrutiny as banks, building
societies, insurers and major investment firms (Bank of England, No Date). The legislation by
which the regulator (Prudential Regulatory Authority) administers credit unions stems from the
Industrial and Provident Societies Act 1965 and more specifically, Credit Unions Act 1979 and
The Co-operatives and Community Benefit Societies Act 2014. The distinction of credit unions
can be observed within this legislation.
When defining a credit union, it is useful to describe what it isn’t. While the conventional
financial services such as banks and building societies are easily identified, other, less well known
forms of accessing credit will be presented. Firstly, home credit or “doorstep loan”, is where one
borrows money, the lender calls at the home of the client to collect the repayments. The loans
are usually for smaller amounts and one is charged a “high rate of interest” (CAB, No Date).
Doorstep loans are often used for they are familiar, convenient and deal in small sums of money.
However, its cost is relatively high compared to accessing credit from a credit union, the loaning
agents are often unreliable and corrupt in encouraging further borrowing which develops into a
state of ‘rollover loans’ (Collard & Kempson, 2005: 12).
Payday loans offer an “easy access to credit” for people with a regular income (Ibid.). A loan
“designed to be taken out over a short period of time… [they are] a means to fund unexpected
purchases that arise a few days before… payday” (Osborne, 2013). The attraction of this source

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of credit is its nature of easy access, perceived cheapness compared to overdraft charges and a
perceived high control over spending. However, this is a highly expensive source of credit, and it
simply defers debt rather than eliminates debt, compared with credit unions who encourage
thrift, savings and eventual financial independence (Collard & Kempson, 2005: 12-13).
An unlicensed lender is a self-explanatory agent operating informally, unregulated and illegally.
This form of accessing credit is often seen as a last resort and even so, highly recommended.
There exists only one advantage to this form of credit and it is that applications are almost always
accepted. However, there exists an incredibly high cost of borrowing, with ‘benefit books’ being
taken as ‘security’ in most cases. Furthermore, evidence of intimidation and physical violence if
repayment is delayed or defaulted has been identified (Collard & Kempson, 2005: 13).
Otherwise known as a ‘budgeting loan’, credit from here aims to “help pay for essential things
like furniture, clothes, moving costs or hire purchase debts”. It is a service available through the
UK welfare system (Gov.uk, 2015). This form of credit is significantly more appropriate than
others examined previously. It is available to all people, with those excluded from traditional
credit due to religious beliefs able to access this service (Ibid.). It is comparatively straightforward
and easy to use, with prompt decisions. Default is minimised due to repayment taken out of
benefit payments. However, the potential users represent a low proportion of the financially
excluded, for only certain benefit claimants are eligible, a significant proportion of applications
are turned down due to its “cash-limited” nature, the full amount requested is likely not to be
granted and there exists high repayment rates. Perhaps this service’s only advantage compared to
credit unions is its appeal to those with strict religious rules to adhere to, however, generally
speaking the service credit unions offer is far more attractive and beneficial (Collard & Kempson,
2005: 13).
The Credit Union Movement
The desire to improve the welfare and position of the working classes are reflected in the
Operating Principles of the World Council of Credit Unions (WOCCU):
“The International Credit Union Operating Principles are founded in the philosophy of cooperation and its
central values of equality, equity and mutual self-help… at the heart of these principles is the
concept of human development and the brotherhood of man expressed through people working together to achieve a
better life for themselves and their community” (WOCCU, 2007)
The principles of credit unionism have appeared throughout history, including as primitive
communism. This refers to the “collective right to basic resources, egalitarianism in social
relationships, and absence of authoritarian rule and hierarchy” (Scott & Marshall, 2005: 597).

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Scott & Marshall continue, by citing Lewis Henry Morgan’s speculative history that described the
“ancient gentes” as containing principles of liberty, equality and fraternity.
The principles WOCCU set out in 2007 bear a striking resemblance to the national motto of the
French Republic, “Liberté, égalité, fraternité”. These three principles, allow for the testing of
society on the “quality of the human product rather than the size of the gross national product”
(Lane, 1979: 3). It has been argued that the principle of fraternity aims to advance “goals of
fairness and equity, trust and security, and brings an element of compassion and dedication”
(Gonthier, 2000: 569). These principles form the backbone of credit unionism and co-operation.
This phenomenon has spread across Europe, to Belgium in 1864 with Léon d’Andrimot’s
“People’s Bank”; to Italy in 1865 with Luigi Luzziatti’s People’s Bank of Milan and in turn across
the Atlantic Ocean to the Canadian province of Québec where the movement was continued by
Alphonse Desjardins founded the Caisse populaire de Lévis. The credit union tradition extended
on to the United States where Desjardins inspired similar developments.
Figure 1: Map illustrating the countries with credit union movements worldwide that reported statistical data
(green). (WOCCU, 2014).
The credit union movement is present throughout the world. It is interesting to note that while
Europe is arguably the cradle of credit unionism, it has one of the lowest levels of credit union
penetration in the world, as shown in Table 1.

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Continent Credit Union Penetration (%)
Africa 6.9
Asia 3
Caribbean 19.4
Europe 3.4
Latin America 8.3
North America 47.2
Oceania 20.8
Table 1: Credit Union penetration in each continent (Ibid.).
Within the UK, the credit union movement has continued under the legacy of the architects of
the wider cooperative movement. The first emergence of a credit unionism in its contemporary
form in the UK was in Northern Ireland in 1958 in Derry/Londonderry (Derry Credit Union,
2013). From here it spread to Glasgow and London eventually touching all the corners of the
UK. The British credit union movement eventually gained permanence when it received statutory
recognition and subsequent regulatory responsibilities in the form of the 1979 Credit Unions Act.
However, the movement has been comparatively weak with the WOCCU estimating that
penetration of credit unions in the UK at 3%, compared with 74% in Ireland (Ibid.).
Despite the low penetration of the population by credit unions, the movement has seen growth.
Data by the WOCCU shows that in 1995, credit union penetration in the UK stood at 0.36%,
with assets totalling £100 million. Nearly 20 years since, penetration has increased about 8 times
its size and assets are approaching the £2 billion threshold (WOCCU, 2011). Fuller and Jonas
have argued that over the past few decades, financial infrastructure withdrawal and community
economic decline have allowed for attention to be given to institutions such as credit unions;
organisations which provide an alternative way of addressing financial and social exclusion
(Fuller & Jonas, 2002: 85). The cooperative tradition the credit union movement was born out of
is present in each constituent country of Great Britain. Within the context of the UK, changes in
the state of financial services have been profound since the neoliberal revolution of the 80s. In
1999, Illsley and Jackson argued “over the past two decades, as poverty has grown and become
spatially more focused in particular localities, the likelihood of residents from such areas gaining
access to affordable financial services has declined, as banks and building societies have been
modernized and rationalized” (1999: 158).
Since the 2001 to 2005 Labour UK Government, significant changes have taken place. The 2008
Great Recession brought the financial sector (and the Labour Party) to its knees, thus, in 2010 a
Conservative-Liberal Democrat Coalition Government (The Coalition) was formed. This new
government affirmed its commitment to consumer protection and financial inclusion in the
Coalition Agreement in 2010:

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“The Government believes that action is needed to protect consumers, particularly the most vulnerable, and to
promote greater competition across the economy. We need to promote more responsible corporate and consumer
behaviour through greater transparency and by harnessing the insights from the behavioural economics and social
psychology” (HM Government, 2010: 12).
Indeed, continuing into the present 2015 to 2020 Conservative UK Government, rhetoric of
supporting fair access to responsible credit for the financially excluded continues where the Work
and Pensions Secretary was responding to questions in Parliament surrounding indebtedness in
low-income families. He responded:
“…in the last Parliament we put a significant amount of money into credit unions. It is our plan – we are
determined about this – to get credit unions to expand and to work with them so that they become the key element
for people on low incomes and others to be able to get decent support, including financial support. I recommend that
all hon. Members set an example by making sure that they are members of credit unions” (House of
Commons, 2015)
Within the Welsh context, the credit union movement has seen a noticeable growth since the
1979 Credit Union Act’s passing. Credit unions have been “transformed” from their grassroots,
fledgling organisations to a major player in financial services in Wales (Cato et al. 2009: 5). Wales
has a strong and distinct political and cultural heritage, being one of the key players in the
founding of the Labour Party, the birthplace of the great reformer, David Lloyd George and
distinct within the UK where two official languages exist. Furthermore, the relative poverty in
Wales compared with the rest of the UK is more severe, with 1 in 4 of the population living
below the poverty line4, compared with 1 in 5 for the UK as a whole. Even so, it is surprising
that credit union movement is as weak as it is, compared with Ireland just across the sea, and
even Scotland and England (McKillop & Wilson, 2008: 8). In their report in 2009, Cato et al.
seem to identify this weakness as stemming from the role of government in the movement. “In
Ireland, there is a mix of credit unions run by paid staff, and those run by volunteers. In contrast
to England, Scotland and Wales, credit unions in Northern Ireland have not received any
financial support from central or local government and, from the outset, appealed to a wide and
diverse socio-economic membership, adapting and re-shaping according to the needs identified
by community and members” (Cato et al, 2009: 8). “The cooperative movement grew out of
ideas formulated in the early 19th century by Robert Owen in Britain” (Scott & Marshall, 2009:
133). While the reality and understanding of the poverty, inequality and exclusion has changed
4 “Poverty in Wales” http://www.oxfam.org.uk/cymru/poverty-in-wales

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and developed since the Industrial Revolution, the “values and principles… [of the credit union
and cooperative movement] … still persist” (Jones & Decker, 2008: 29).
At present, the credit unions operating within Wales are as follows:
Credit Union
Merthyr Tydfil (Merthyr Tydfil Borough Credit Union)
Swansea (LASA)
Bridgend County Borough (Bridgend Lifesavers)
Rhondda Cynon Taf (Dragon Savers)
Cardiff and Vale of Glamorgan (Cardiff and Vale)
Bargoed Aberbargoed & Gilfach (BAG)
Caerphilly, Blaenau Gwent and Newport (Smart Money)
Blaenau Gwent & Caerphilly (Smart Money)
Powys (Brecon & District)
Llanelli, Carmarthenshire & Pembrokeshire (Save Easy)
Radnorshire (Red Kite)
Haven (Pembrokeshire) CLOSED
West Wales (Ceredigion, Pembrokeshire and Carmarthenshire)
North Wales (Anglesey, Conwy, Denbighshire, Flintshire, Gwynedd, Montgomeryshire
and Wrexham)
Table 2: Credit Unions in Wales in 2015
Of these organisations, Llanelli Save Easy Credit Union is one of the largest.
The distinction from a traditional cooperative in which burden is spread and resources are
pooled amongst members occurred in Germany, pioneered by Hermann Schulze-Delitzsch in the
mid 19th century (Moody & Fite, 1984) in which the cooperative principles were applied solely to
financial services. Credit unionism has been defined in a global context as a “member owned
not-for-profit financial cooperatives that provide savings, credit and other financial services to
their members”. These members are linked by a “common bond” such as living in the same
geographic region and it is from these common members that credit unions raise their funds.
(MarketLine, 2009: 7). The credit union movement therefore can be seen as an extension of the
“wider cooperative movement” (Moody & Gilbert, 1984: 1).
Moody & Gilbert continue, noting that the roots of the credit union movement are “obscure
(1984: 1). They argue that the development of credit unions and its wider cooperative movement
are linked to the onset of capitalism, citing that “the breakdown of feudalism [and by extension
the onset of capitalism], freed European farmers from traditional obligations to feudal lords and
gave them individualistic ownership of land” (Ibid.). The transformation of society and the
economy was brought about when “the great feudal lords created an incomparably larger
proletariat by the forcible driving of the peasantry from the land” (Marx, 1992b: 366) through

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phenomena such as the infamous Clearing of the Estates in the Scottish Highlands. The ‘free’
proletariat were “turned en masse into beggars, robbers and vagabonds” (Marx, 1992a: 373).
According to Marx,
…the industrial revolution brought about a similar change where the working classes
were stripped of further protections and security and faced a world “characterised by growing
competition and the need for greater capital” (Moody & Gilbert, 1984: 1). It is argued that all
types of cooperation have grown out of “an attempt by agrarians, craftsmen, and other small
producers to improve their position in a non-feudal, modern capitalistic society” (Ibid.).
The Great Recession sparked a sovereign debt crisis in Europe and the UK was one of the
countries hardest hit. Fourteen banks and building societies were brought to their knees by this
pivoting event in world history. Many required bailing out either through mergers and
acquisitions or through government bail out. This time was difficult for not just banks, but all
organisations; however, there has been a counter trend occurring in some credit unions in Wales,
a movement grown out of a ‘grassroots’ desire to improve one’s own financial position, in an
unforgiving and unemotional capitalist world. The Llanelli Save Easy Credit Union has enjoyed
noteworthy success despite a tough, economic situation. Whereas it’s neighbour based in
Pembrokeshire, the Haven Credit Union finally succumbed to the unfavourable market condition
and defaulted (FSCS, 2015). Indeed, the entire credit union movement in Wales has enjoyed
significant growth, as demonstrated by Welsh Government findings showing the number of
credit union members in Wales grow from 47,634 in 2010 to 78,600 members in 2014 and
illustrated in figure 2.

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Figure 2: Number of Credit Union members in Wales (Welsh Government, No Date)
The Welsh Government has a clear track record of supporting the credit union movement and
takes an active role in its development. The Welsh Government considers “Credit Unions to be
key contributors to our objectives [Programme for Government] on tackling poverty and
financial exclusion” and aim for Welsh credit unions to achieve 6% [143,000 members] of market
penetration by 2020 (Welsh Government, No Date). This state-commitment to achieving social
justice in access to credit and financial services has manifested itself in recent legislation. The
‘Well-being of Future Generations (Wales) Act 2015’ sets out priorities for public bodies to work
in “pursuit of the economic, social, environmental and cultural well-being of Wales” in
accordance with the principle of sustainability, i.e. the “needs of the present are met without
compromising the ability of future generations to meet their own needs”.
What therefore, are the key factors that determine the success or failure of a credit union? This
dissertation will aim to answer this through examining organisational effectiveness; effectiveness
with regards to business functions, not effectiveness in the tangible impact on people’s lives.
The methodology will be examined in chapter 3 and will review the available primary literature,
include interviews with key employees of a successful credit union and employ a case study
approach. These methods will then be used to triangulate the most relevant and useful
components of existing organisational frameworks.

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2.0 Literature Review
There exists an established literature on credit unions that provides valuable insights into the
credit union movement. However as will be shown below, there are gaps in this established
literature, particularly relating to the Welsh context, and the methods of evaluating organisational
effectiveness of those credit unions. Broadly speaking, the literature covers the context in which
credit unions operate and the roles they perform, and the studies which examine the
organisational structure and effectiveness of credit unions, particularly in Ireland and the UK
generally, with only a small number of largely descriptive accounts focusing specifically in Wales.
2.1 Credit Union Context and the Roles They Perform
As noted in the introduction, both the international and historical context have played a
significant role in the credit union movement in Wales and the UK. Financial exclusion is an
issue which crosses borders and cultures; it is a problem that is ever constant in times of
economic boom and economic hardship. Much of the literature has been written before the
colossal economic crisis that occurred in 2008 and the subsequent sovereign debt crisis in
Europe. The unwavering marching on of time constantly creates new pressures in the world, and
so, past studies on this subject can quickly become outdated and unhelpful. Furthermore, the
constant changing political landscape of Europe, the UK and Wales provide continual changes to
the credit union movement’s context. The first study we examine by Devlin, was written at a time
of economic boom, three UK governments ago and at a time of comparatively infantile Welsh
Assembly.
The research conducted by Devlin (2005) here is in response to an apparent void in the sector’s
research whereby each new contribution is “piecemeal in nature, with different models and
approaches being adopted to study exclusion in the context of a number of individual financial
services” (Devlin, 2005: 75-76).
Devlin’s study identifies that financial exclusion is a major issue and that access to finance and
credit can and should be enhanced. The significance of this study is made stronger by its age,
where, pre-financial crisis and at a time of the longest period of sustained economic growth since record
began to quote a former Chancellor of the Exchequer, the need for credit unions in addressing
financial exclusion was still badly needed. Logically, this situation only deteriorated after 2008.

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There exists four forms of financial exclusion, according to Devlin:
• Access Exclusion: restriction of access to services due to e.g. branch closures or
unfavourable risk assessments
• Condition Exclusion: excluded due to conditions attached to the product offering
• Price Exclusion: individuals are unable to afford financial offerings
• Marketing Exclusion: overlooking of certain groups by marketing activities of financial
services firms
• Financial exclusion can be a temporary or virtually permanent condition
(Devlin, 2005: 77)
Devlin continues and makes an important distinction between those who are financially excluded
and the “broader concept of non-use of financial services”. This larger concept can include the
types of exclusion seen above but include, voluntary non-use, a lack of resources or an inherent
quality in the individual to save. Voluntary non-use is termed self-exclusion (Ibid.).
Various demographic conditions were examined in relation to five different financial services
(e.g. current accounts), these conditions were: gender, social class, age, household status,
ethnicity, academic achievement, housing tenure and employment status. “Certain variables
exhibited a consistent and significant effect on exclusion from most or all of the financial
services” (Devlin, 2005: 96). It was discovered that the strongest influencers on financial
exclusion from the prescribed services were:
• Employment status
o Devlin argues this factor stems from resource exclusion, marketing exclusion,
condition exclusion and self-exclusion. Perhaps it is unsurprising that financial
services which are driven by the profit motive, view individuals and households
with unfavourable employment statuses as “potentially problematic and
unattractive in terms of cross-selling opportunities” (Devlin, 2005: 97). In
addition to this, there are often conditions required of customers to use
traditional financial services which would bar this type of account to the
unemployed such as minimum monthly payments. Finally, there is a perception
of general disenfranchisement with the system by the unemployed the state of
self-exclusion (Ibid.).
• Household income
o It is reasoned that “household income is instrumental in leading to exclusion
from transaction banking services” (Ibid.). Resource exclusion is strongest here;

14
a “lack of disposable income” acts as an obstacle for individuals seeking use of
standard services.
• Housing tenure
o Housing tenure was the final primary influence. “Those in local authority or
housing association accommodation” and a lesser extent, privately rented
accommodation are more likely to be excluded from the financial services
examined earlier, than owner-occupiers. As a result of this reality, properties
located in defined “deprived” areas contain “unattractive” Post Codes to
financial institutions. Marketing and condition exclusion are operating in this
situation; financial firms choose to not target such populations (Ibid.).
Devlin argues that the implications of his findings on policy include a requirement for a full
redesign to be able to tackle the complex network of wider issues which surround the central
problem of financial exclusion. It is argued that involuntary exclusion can be addressed by
government, policy makers, regulatory authorities, consumer groups, pressure groups
and industry representatives. Conversely, self-exclusion “can be addressed through education,
advice, and other confidence building measures” (Devlin, 2005: 101). Resource exclusion is
solvable through an earnest attempt to develop policies that lift, households out of poverty.
Efforts therefore involve action on both the supply side and the demand side. However, monitoring
policy changes presents the greatest challenge (Devlin, 2005: 102). Devlin argues that objective
based monitoring of all stakeholders should be undertaken by one single agency (Ibid.). While the
author acknowledges that policy changes and initiatives are occurring in the UK, there is a need
for governments to look out into the world to find best practice in tackling poverty and financial
exclusion.
A study undertaken by Collard and Kempson (2005) sheds further light on the context and role
credit unions play in our society, and indeed the relevance continued academic research has on
the movement’s development and improvement. However, much like the previous article by
Devlin, it was also written at a time when access to credit was virtually uninhibited (hence the
economic crash). Credit unions did indeed enjoy growth at this time, however their role in
society was arguably less vital or recognised due to the apparent ‘good times’ of the economy.
The requirement for a suitable regulatory and legislative framework in which credit unions may
operate fully, freely but with the suitable support is also argued for. This study also brings to the
contextual table the ways in which organisations can help improve the provision of credit to the
financially excluded.

15
The issue of ‘credit’, combined with its relative price and availability to the economically poor is
the “greatest strain” when it comes to budgets (Collard & Kempson, 2005: 1). Such is this strain,
many individuals and households borrow from loan sharks and pay-day lenders, “where annual
percentage rates range from 100 to 400%” (Ibid.).
State recognition of the importance of tackling societal problems of financial exclusion and its
associated poverty is well established. The government White Paper, Fair, clear and competitive
(DTI, 2003) was examined by Collard & Kempson; it enabled the expansion and support of the
credit union movement and efforts to tackling; such measures included but were not limited to:
o “The provision of key financial and other information in a standardised format”
o “the provision of better post-contractual information to borrowers, including
regular statements”
o Expand the ‘extortionate credit’ provisions to include “unfair terms and
practices as well as the cost of credit”
o A “cross-departmental strategy to tackle… over-indebtedness”
(Collard & Kempson, 2005: 7)
The White Paper aimed to examine “the scope for widening access to affordable credit, and
assessing the most appropriate and viable ways of ensuring sustainable nationwide provision”
(Collard & Kempson, 2005: 8).
An evaluation of the forms of accessing credit other than through high street banks and building
societies, and credit unions undertaken by Collard and Kempson is outlined in chapter 1. These
include: home credit, payday loans, unlicensed lenders and social fund budgeting.
In their interpretation of their findings, Collard and Kempson identified a number of key
characteristics and realities of consumer credit in low-income populations. Firstly, that a high risk
loan equates to high cost for the consumer i.e. high charges or subsidies. These high costs are
incurred mostly to the “people on the lowest income” (2005: 25) further strengthening the state
of price exclusion outlined earlier by Devlin. In addition to this, it was identified that the need for
affordable credit is greatest among those high risk individuals. These individuals are often
characterised by being out of steady full-time employment (the financially excluded).
At the time of the report by Collard & Kempson, there existed “6.2 million people aged between
18 and 64 who live in the poorest 20% (quintile) of UK households” (Ibid.), these people were
unable to meet modest additional expenditure without the need for borrowing, often from

16
disreputable vendors. Of this 6.2 million, 3.3 million were excluded from traditional and
mainstream financial services, due to their poverty. These excluded individuals and families are
then forced to turn to less traditional forms of credit outlined in the first chapter. Often, due to
their innocence, ignorance and relative circumstances, they often opt for informal, dangerous and
abusive sources of credit. most of the forms of credit outlined in sections 3.2.1 to 3.2.8 do not
“fully meet the needs identified by people on low incomes” (Ibid.). As of 2011, 69% of low-
income households are in demand of credit equating to 10.55 million individuals. 3% (0.5
million) of this population only use social credit such as credit unions (Ellison et al., 2011: 6). As
such, there existed at the time of this report, a potential 10.5 million individuals to whom credit
unions are yet to penetrate.
Through exploring avenues of access to the excluded by credit unions, it is argued that “the key
to lending to people on low incomes lies with managing the risk of default in the most cost-
effective way” (Ibid.).
In addressing the apparent situation where competition seems to be delivering more affordable
credit, the authors identify two trends in the sub-prime commercial market. Firstly, there is a
move towards “risk-based pricing”. Secondly, there is a trend towards new types of lending “such
as rental purchase, to have low APRs but hidden additional costs” (Ibid.). In addition to this, the
not-for-profit lender sector offer much more preferable interest rates, however fail incredibly in
offering any “real competition to commercial lenders” (Ibid.). It is argued that growth in the
credit union movement is not among people on the lowest incomes, suggesting therefore that the
endemic problems of the financially poor and excluded, continue and a change of strategy among
reputable organisations such as credit unions is required.
Since 2002, credit unions have been brought under the same regulation as traditional financial
services, firstly under the Financial Services Authority and later split between the Prudential
Regulation Authority (PRA) and the Financial Conduct Authority (FCA) in 2013. As a result,
“financial requirements…are more rigorous… In addition, credit union members now enjoy
greater protection should their credit union become insolvent” (Collard & Kempson, 2005: 31).
This new state of affairs for the credit union movement is somewhat a double-edged-sword whereby,
the promotion of the service to the regulatory standard enforced upon high-street banks offers
consumer protections, there have been casualties. “Some smaller credit unions have closed”,
resulting in consolidation (and therefore expansion) into larger credit unions. Thus, the
grassroots nature type of credit union identified in section 3.1 is ‘lost’ to the Instrumental form of a
credit union.

17
For the authors, the avenue to a solution to financial exclusion and lack of access to affordable
credit for the financially poor lies in reform and building on the existing services, rather that
developing a completely new credit product. The services identified to build on are as follows:
• Home credit companies
• Credit Unions
• The Social Fund
Specifically regarding the credit union movement, Collard and Kempson argue that “despite
recent expansion… we are still a long way from having a national, coordinated and sustainable
network of lenders that meets the needs of people on the lowest incomes” (2005: 34). With
savings from economies of scale combined with the following methods of reducing the cost of
commercial credit, the likelihood of sustainability, rapid growth and ultimately survival will be
enhanced:
• Moving to monthly repayments, rather than weekly
• Using automated payments, rather than in person
o E.G. Direct Debits – however, many low income users would not have access
to such facilities and failed direct debit payments are likely
• Encouragement of transparency of the borrower, if they encounter difficulty “they are
told to contact the lender” to allow for reschedule of payments
Collard & Kempson argue that intervention by socially conscious institutions such as credit
unions is vital for the financial sector. “Left to its own devices, the commercial market will
continue to move away from lending to the poorest people” (Collard & Kempson, 2005: 36). It is
argued that an area which would have a large impact on tackling the problem of the 6.2 million
financially excluded involves, “guaranteed automated payments” through direct deductions from
income (e.g. welfare payments) or direct debits (Collard & Kempson, 2005: 37). This type of
reform is argued, would allow for savings to be made in the credit union itself, with these savings
being passed on to consumers and indeed contribute to the credit union’s long term
sustainability. The authors are particularly keen for government support for the growth and
expansion of credit unions to continue and strengthen (Ibid.).

18
Finally, turning to the challenges within this context; McKillop and Wilson (2015) conduct a
discussion on the challenges to the future development of credit unions. They also examine the
regulatory changes that are required by government to improve this context. This paper has a
significant advantage on others for it was written after the 2008 Great Recession and therefore
reflects more accurately the new world credit unions find themselves in.
Due to space constraints, the latter findings and discussion of this paper will be used in this
literature review, for the development and evolution of credit unions has been covered
sufficiently already.
McKillop & Wilson in their analysis contribute to the recurrent issue for modern credit unions
that has been identified several times previously in this document – ‘the capitalist’s problem of
existence’. “As credit unions mature some of these distinguishing features [not-for-profit; social
responsibility] become diluted” (McKillop & Wilson, 2015: 102).
With regards to the principle of a ‘common bond’, the authors argue that one may observe that
modern credit unions and mature credit union movements have “undergone a loosening in its
definition… [allowing] permissive interpretation of the activities and membership scope”
(McKillop & Wilson, 2015: 102). While this is seen as a positive change in the development of
credit unions, its implications for its economic democracy is problematic. It is argued that multi-
product, professional credit unions experience “low attendance (around 2%) at the Annual
General Meeting” and find difficulty in attracting appropriately skilled directors (Ibid.).
Expanding the Capitalist Problem of Existence, the future implications for a credit union’s position
as a not-for-profit but for service organisation are negative. The pressures an existence in a capitalist
world has on an entity are such that credit unions creates a situation where they may be “forced
to behave as constrained profit maximisers when exposed to intense competition from other
financial institutions” (McKillop & Wilson, 2015: 104). The antagonism which exists between
social responsibility and the profit motive is a reality that will not go away. However, while in some
instances, the pure social justice arm of a credit union may weaken, there is opportunity for
innovative evolution in a credit union’s social responsibility. This opportunity stems from the
situation many consumers find themselves in with a modern, deregulated financial market (which
at first glance appears to be in the consumer’s interest for it allows greater choice and flexibility),
in which the “burden and responsibility on consumers to manage their own financial affairs” is
increased (Ibid.). It is argued by the authors that consumers often make poor decisions relating to
their financial affairs as a result of low levels of financial literacy. The credit union’s social
responsibility therefore is able to extend to “activities and initiatives in financial education and
literacy” (Ibid.). It is in this capacity that it is argued that credit unions should seize the

19
opportunity provided by the recent financial crisis and implement a financial literacy strategy for
their communities. While this would require significant resources, it would “deliver significant
social benefit and would of course have the secondary benefit of placing credit unions centre
stage” (McKillop & Wilson, 2015: 109).
With regards to the future success of the credit union movement, the authors submit that the
movement’s success and resilience thus far is due to certain, intrinsic strengths. “The credit union
ethos has allowed credit unions to carve a niche in the market and differentiate themselves from
mainstream financial service providers” (McKillop & Wilson, 2015: 108). In addition to
maintaining their competitive advantage, McKillop & Wilson argue that in order for their
continued existence, it is “important that the membership itself exercise their democratic rights”
(2015: 109). However, as the world has evolved and credit unions’ structures have become more
complex, the democratic governance of a credit union has become somewhat of a myth.
Therefore, “new mechanisms” should be identified to enable effective governance regimes to be
put in place that continue to utilise its membership. It is suggested that a “Governance
Committee” directly elected and accountable to the members can behave essentially as a proxy
for the governance functions traditionally associated with members (Ibid.).
Regulatory changes are argued to be required in order to ensure the survival of the credit union
movement. One such change involves the easing of restrictions on the ability of credit unions to
raise capital. An appropriate and adaptive regulatory framework is essential, for a strict
framework may stifle development but a too lax environment might engender systemic risks
(McKillop & Wilson, 2015: 110). Finally, McKillop and Wilson agree with other research in this
area by advocating a centralised body to provide services such as “mortgages and other high0risk
and high-value loan products”, this would enable the credit union movement to compete to a
greater degree in the market and move the organisations away from a reliance on government
funding (Ibid.).
2.2 Organisational Structure and Effectiveness of Credit Unions
This section of the literature review will aim to enlighten the reader about what a credit union
can do in order to survive and thrive and explore the debate surrounding what constitutes the
most useful and successful organisational structure and effectiveness of credit unions, particularly
in Ireland and the UK more generally. There will be only a small number of largely descriptive
accounts focusing specifically on Wales. The literature relating to Welsh credit unions is thin and
limited, and for the most part, dated. Therefore, studies examining the situation in Wales will be

20
looked at first, then expanding to a UK context, with comparisons to the movement in Ireland,
and finally to a solely Irish study on organisational effectiveness.
The first study was written and published during the 2008 Great Recession and was
commissioned by the Welsh Government; tasked with investigating the credit union movement
in Wales. The investigation involved conducting an assessment employing the PEARLS
framework. While Llanelli Save Easy Credit Union is included, assessment is brief and kept to
half a page. The model employed is over elaborate and outdated, however it still provides useful
insights into the organisational structures and provides a model which will be drawn upon later.
Cato, Bickle & Myers (2009) identified the framework of PEARLS as suitable to assess a credit
union’s operations in terms of financial structure and growth. The PEARLS systems creates an
acronym for the monitoring system:
o Protection – ability of provision for loan loss to cover actual and bad debts
o Effective financial structure – loans, assets, savings deposits and reserves as a
proportion of total assets
o Asset quality – level of loan delinquency & non-earning assets
o Rates of Return and Costs – net income of a credit union
o Liquidity – level of liquid investments & reserves against potential savings
withdrawals
o Signs of growth – growth rates of total assets, loans, savings, capital reserves &
membership
(Cato et al., 2009: 19).
The following are the indicators of goal achievement with regards to the framework above:
P-E-A-R-L-S RATIOS Goals (Excellence)
Protection Cover 35% of all delinquent loans outstanding
between 1-12 months
Minimum 11% solvency
Effective financial structure 70-80% of assets to be out on loan
70-80% of assets to be saving deposits
Institutional capital to make up 10% of total
assets
Asset quality Delinquency to be ≤5% of Gross Loan
Portfolio
Rates of Return and Costs Operating expenses = ≤5% of Average Assets
Other income is kept minimal
Liquidity Short Term Payables at 15-20% of Total
Deposits
Signs of growth Membership growth of a minimum of 12%
Total Assets growth rate higher than inflation
+ 10%
Table 3: Key Pearl Ratios, adapted from Cato et al. (2009: 20)

21
The authors of this study put forward the following aspects to illustrate a ‘successful’ credit
union:
o Management and financial competencies and skills throughout the credit union
o Sound governance procedures
o Management and operational efficiency and financial discipline
o Development of a sustainable business model
o Balance between social and financial goals
o Technical and targeted financial support
o Supportive infrastructure (e.g. trade association, development agencies)
o Supportive and external inspection and audit of operational and financial
systems (as is practices in the Canadian credit union movement)
(Cato et al., 2009: 28).
In addition to these, the following, qualitative key success factors were identified by the authors
during focus groups:
o High levels of trust between credit union and community
o High membership level relative to size of common bond
o Focus on lending money in parallel to saving
o Strategic and goal focussed approach
o Professional and entrepreneurial attitude
o Local authority support
(Cato et al., 2009: 30).
Cato et al. argue that all levels of government (UK, Welsh and Local) have a role to play in the
future of the credit union movement in Wales. While this could include continued grants and
‘other income’, the support could and should develop into a “non-income generating work such
as financial education (in schools)” (Cato et al., 2009: 41). Welsh Government has certainly
played its part in investing in the future success of the Welsh credit union movement, McKillop,
Ward & Wilson (2007) identified government support of credit unions in Wales manifesting itself
in the form of over £4 million in structural funds in contribution to a wider agenda to develop
the social economy of Wales (McKillop et al., 2007: 39). Indeed, the curse of government support has
been argued to “undermine their [credit unions] self-help cornerstone and weaken the future
development of the movement” (Thomas et al., 2008: 111; McKillop & Wilson, 2003: 119).

22
As such, credit unions must endeavour to rely less on grants and so must focus on business
development to become self-sustainable. An integral part of a credit union’s success according to
the authors lies in finding “board members and staff with the requisite business expertise
and skills” (Ibid.). In addition to this, the introduction of a ‘third tier agency’ to “provide
support in technical and business development” (Ibid.) is argued to be a welcome development
in the movement in Wales.
It is predicted that mergers will form an important part of the future of the movement, as such it
is “important that members and local communities do not feel they have lost their ‘local’ credit
union” (Ibid.) when mergers occur.
While significant time has passed since the publication of this report, the recommendations made
by Cato et al. remain significant in a comparative capacity for this dissertation. Key points of
these recommendations are as follows, with the full recommendations available in Appendix 1.
o Ensure financial support is directed at implementing sustainable capabilities
o Funding should be contingent on transparent and rigorous management criteria
and achievement of financial and operational targets
o Take account of ‘best practice’ of successful credit unions elsewhere in the UK
and internationally
o Develop the sense of a common Welsh movement by maintain biannual
meetings with individual Welsh credit unions
o Commission further research into feasibility of a central credit union association
for Wales
o Ensure penetration by credit unions into Welsh speaking and ethnic minority
communities
o Ensure knowledge transfer targeting for young people does not only occur in
school
o Credit unionism should form part of the core curriculum for Maths and PSE in
schools
(Cato et al., 2009: 42 – 45)
The following is a summary of the recommendations by the authors to the credit unions
themselves:
o Strategically plan implementation of practices to allow for competitiveness in
the market

23
o Regular appraisal of managers on the basis of: leadership, strategy, business and
financial management
o Prioritise recruitment of skilled board members
o Constant vigilance and assessments of regulatory and legislative changes
o Exercise ‘due diligence’ when making important decisions such as mergers
o Ensure appropriate opportunity of accredited training of staff
(Cato et al., 2009: 46-47).
The other major study on Welsh credit unions is written by Cato, Myers and Howlett (2013), and
takes the form of a case study, and examines a single credit union. However, the study suffers
from its reliance on the PEARLS model which is too elaborate and focuses too much on
financial indicators. In addition to this, comparatively with the rest of the literature, it is a very
short article and the credit union it examines, whilst anonymised, is significantly smaller than
Llanelli Save Easy Credit Union.
In light of the tough economic times since the 2008 Great Recession, Cato et al. (2013) in their
study, offer a profile of one Welsh credit union which has thus far, survived a much harsher
marketplace. The credit union examined here was chosen for its location. Based “in one of the
most deprived areas in the UK: the South Wales Valleys” (Cato, Myers & Howlett, 2013: 540),
this credit union is labelled Valleys Credit Union (VCU).
The paper identifies recent legislative changes (Legislative Reform (Industrial and Provident Societies and
Credit Unions) Order 2011; Cop-operative and Community Benefit Societies and Credit Union Act 2010)
allowed for loosening of restrictions on ‘common bonds’. This allowed for the extension of
credit union services to a wider community.
Cato et al. revive the Capitalist’s Problem of Existence for credit unions as still present in the
movement and is hampering its growth. In relation to this, the “duality of purpose for credit
unions to take into account of and balance both economic and social objectives has made it
difficult for some to develop” is cited (Cato et al. 2013: 542). As a point of comparison in
difficult times, Canada, is noted where credit unions have developed into professional
organisations with linked ATM access and “centralised support services” (Ibid). This
development allowed for the building of a diverse customer base and increase their
competitiveness. The credit union movement in Germany also has a “broad, heterogeneous
clientele” (Cato et al., 2013: 542).

24
Focusing on the VCU, “research took place between April and June 2011” (Ibid.). Demographic
research of the area demonstrated the communities to “have some of the highest rates of long-
term disability and illness in the UK and are also heavy users of public services” (Cato et al.,
2013: 543). The common bond area where VCU operate included at the time of the study,
200,000 individuals and about 28% of this number designated as “economically inactive” (Ibid.).
While deprivation statistics may paint a bleak picture of a chronically ill population, Cato et al.
cite the “resilience and resourcefulness” of the communities (Ibid.).
Since the founding of VCU, mergers with other credit unions have occurred, the introduction of
paid staff and huge volunteer support has developed. The VCU was a recipient of the DWP
Growth Fund, but has since withdrawn from the scheme citing unreliableness and difficulties.
Funding and service diversification has been put forward as the reason for the credit union’s
buoyancy, but has since reverted to primarily savings-based lending. The similarities with Llanelli
Save Easy Credit Union are striking, but for their relative sizes.
In order to assess the situation of VCU, the authors employed the PEARLS framework
examined earlier. The findings of this application on VCU are as follows:
o VCU performed well above the target of 35% in protection of assets indicating
cautious debt management
o Underperformance was observed with less than 60% of assets on loan
o High liquidity levels in VCU are expensive to maintain
o VCU is performing healthily with regards to the ratio of savings to assets
o Effective bad debt management has strengthened the credit union
o There still exists however a reliance on ‘other income’ in VCU
o VCU has improved its position of building its institutional reserves following
mergers, however its statutory reserves are a cause for concern
o Growth in members has resulted from mergers, however many of these are
inactive members and so a “healthy clearance” is recommended
(Cato et al., 2013: 548-549).
Cato et al. reason that by employing the PEARLS framework, it was observable that VCU has
“shown some resilience to the difficulties it has faced” (2013: 549). However, its geographic
position and the demography of its available customers will limit its ability to develop
professionally and in turn act as an obstacle in its journey to fulfil its social goals. In addition to
this, VCU was urged to reduce its reliance on support from the Welsh Government. The authors
argue that “All Wales’ credit unions rely on support from the Welsh Government.

25
There is cause for concern in the inability of VCU to compete with payday loans and doorstep
lenders where the credit union is “less flexible” than such rivals. The quality of advertising of
these competitors with their apparent flexibility are a risk to the credit union’s relative
performance in the market and indeed the individuals they seek to help. The authors argue that
the Welsh Government should go further in their support of the credit union movement and
intervene in the market. They argue that “when banks are threatened with collapse government
feels obliged to intervene and with considerable quantities of public money” (Ibid.). With the
failure of credit, loan sharks and pay day lenders see “an opportunity” to profit from this failure
in poorer communities, communities that “are already facing increased hardship” (Ibid.). The
authors argue that there exists a situation in the UK therefore of “one rule for the rich and
another for the poor… preaching to the very poorest in our society the need for financial
probity… [but to the rich] a wildly irresponsible approach to credit creation” (Cato et al., 2013:
550). They call out the notion that “we are all in this together” citing UK government policy of
indirectly relieving bailed out institutions of their bad debts” while Welsh credit union members
are “still required to pay back their [comparatively] tiny debts” (Ibid.).
The VCU is a resilient organisation, with the ability to withstand financial shock (with a
government support framework). This resilience stems from a behaviour which exercised
“prudence… and locally based knowledge about the credit risk of members”. Perhaps, given the
deprived and economically struggling nature of this area means that there exists “skill in
managing economic shocks that has ensured survival in the past may be valuable also in times of
economic crisis” (Ibid.).
In addition to these Welsh focused studies, the UK in general has been examined by Thomas,
Cryer and Reed (2008). This study, just like the Welsh ones earlier, focuses on organisational
effectiveness, but draws inspiration from a comparatively much more successful Irish community
led model. This study does refer to Wales, however this is only very brief and mainly focuses on
the UK movement as a whole. This perspective has its limitation due to the heterogeneous
economic and cultural landscape that exists within the UK. A prominent strand of Thomas et
al.’s argument is the importance of community in the movement. Specifically, Thomas et al. point
to the importance of social responsibility and religion as particularly linked to success of a credit
union. Some of these factors are relevant to Wales and will be looked at later in this study.
Despite similarities in their environments and chronology the Irish movement has enjoyed
significantly more success than its British counterpart. The article therefore examines how the

26
British movement can replicate such success while maintaining the core, founding values of a
credit union (Thomas et al., 2008: 107).
The entire premise and utility of this article is founded upon the axiom that the success of Irish
credit unions lies in their development being closely linked alongside the communities in which
they operate, their adaptability and the societal benefits for their members. This is in apparent,
direct contrast to the movement in the UK where Thomas et al. argue that British credit unions
aim to tackle poverty and social exclusion prematurely without becoming “entrenched enough in
the communities which they serve” (Ibid.).
Capitalistic pressures are particularly felt in British credit unions according to Thomas et al. due
to the nascent stage they find themselves in; credit unions must balance the membership and
asset base with development investment and professionalism (2008: 109). Therefore, according
to the authors, many credit unions in the UK find themselves reliant upon government support
for their survival. Contrast this with the movement in Ireland, where the organisations are self-
sufficient and form the fabric of every day life (Ibid.).
Focusing on the services offered, the authors identify the professionalism that is apparent in Irish
credit unions, where members are able to enjoy services on par with a high-street bank. Such
services included foreign exchange, ATM schemes, mortgages and home, car and travel insurance
(Ibid.). It is in this situation where Irish credit unions find their strength; by offering services
typical of a high-street bank, the organisation can attract not just the ‘excluded’ but the included,
the middle class. “One of the credit unions visited had over 14,300 members, 70% of whom
were classed as dual customers…they had an account with the credit union and their local bank”
[emphasis not in original text] (Ibid.). It is acknowledged that credit unions in the UK do indeed
provide services that are also on offer in high-street banks and it is encouraged therefore for
continued investment in development and professionalism in credit unions in the UK.
A constant feature of analyses of credit unions is the emphasis and importance the organisations
place upon their staff. “An important part of developing the credit union movement is the
provision of well trained members of staff” (Thomas et al. 2005: 110). Maintaining and
enhancing the education of staff, according to Thomas et al. allows the credit union to project a
professional image and strengthen member confidence. The authors continue and cite how this
practice is “not mirrored in Great Britain”, where there exists an absence of this practice.
The main source of difference between the Irish and British credit union movements according
to Thomas et al. lies in the level of involvement of government. “While credit unions in Ireland

27
are entirely self-sufficient and benefit only from a tax break from the government, those in the
UK receive substantial funding” (2008: 111). It is perhaps surprising at first glace that an
enterprise with the backing of the state can result in a significantly less successful situation than
its equivalent with minimal government support. Perhaps however, this illustrates the slow
workings and bureaucracy of government support, compared with fast, adaptable, market
sensitive organisations, such as Irish credit unions. The problem of unsustainability from
government reliance is engendered by the role the UK traditionally sees credit unions as fulfilling,
compared with the role they play in Ireland. “Instead of promoting the value of credit unions as
key community institutions and as genuine and safe alternatives to banks for all members of
society, they are, instead, seen as a solution to the problems of social and financial exclusion in
the UK” (Thomas et al., 2008: 111).
An interesting finding of the research carried out by Thomas et al. include the revelation of a new
kind of social responsibility. While most of their respondents from credit unions “spoke of a
commitment to their members and their sense of social responsibility” (2008: 112), some went
further to elaborate that this social responsibility “included being financially successful and
viable” (Ibid.). Again, we can see the surfacing of the Capitalist’s problem of existence: “if one is
neither profitable or employable, then one has no hope of existence in a capitalist world”. While
there was no doubt that commercially successful credit unions in Ireland had not abandoned
their social ethos, it is pertinent to note that contrary to the state of the movement perhaps 50
years ago, where all members would be utterly devoted to this social ethos there is a minority in
the movement who feel a responsibility “to make sure that this business makes money” (Thomas
et al, 2008: 113).
The success of the movement in Ireland has been linked by the authors to the roles community and
religion play. It is argued that “the Irish credit union movement has been particularly forward in
terms of providing support for local communities” (Ibid.). To illustrate this point, Thomas et al.
cite the following passage:
“In Irish credit unions, this is manifested not only through the provision of local financial services, but also through
sponsorship of local charitable and sporting events, support to community initiatives such as childcare and eldercare
facilities, participation in social action groups and involvement in local job creation initiatives” (Thomas et al.
2008: 113; Byrne, McCarthy & O’Connor, 2004: 402).
In addition to community, religion has been linked to the movement’s success. The authors argue
that the moral ethos of the movement “reflects Catholic social principles” (Ibid.). Engrained
trust between the population and the priest/church was instrumental in converting individuals

28
from traditional banks to credit unions. In addition to this, it is argued that the establishing a
common bond through the Catholic Church was a “fundamental building block of each credit
union” (Thomas et al., 2008: 114). Conversely, the movement “did not reach out to other
community institutions in this way” in Wales (Ibid.). This argument is supported by the reality in
Northern Ireland where there is a strong divide between the Catholic and Protestant
communities. The authors supported this by citing the work by Sibbald, Ferguson and McKillop
(2002)5 “the Credit Union Movement in Northern Ireland was concentrated almost exclusively
within Catholic communities, with the parish system providing fertile roots for its development”
(Thomas et al., 2008: 114).
In addition to this, research by Thomas et al. found agreement with previous studies which
placed great importance upon the members, including workers, directors and volunteers. In
addition to the quality of its constituents, the public image of the credit union was vitally
important also. Supporting this image and its members requires constant training and education.
Education in this regard is simply not just “well-trained staff”, it involves raising awareness of the
social and economic reality in the community and of the individual’s ability, in communion with
others, to change said reality, for the better (Thomas et al. 2008: 114).
The following conclusions illustrate the significance of this study on the wider research:
• The UK movement is immature and underdeveloped compared to the Irish movement
• Religious and community partnership contributed to the success of the Irish movement
• The use of credit unions in the eradication of social and financial exclusion cannot be
forced
• The UK movement may only be successful when it becomes self-sustaining and an
integral component of the communities they operate
(Thomas et al., 2008: 115).
The final study which examines the organisational structure and effectiveness of credit unions is
by McCarthy, who examines the movement in Ireland. The premise of McCarthy’s work is based
upon the hypothesis that a positive relationship exists between member participation and
organisational effectiveness within Irish credit unions. This piece of research has significant
implications for the area of study for, in providing “a starting point for measurement of the
effectiveness of Irish credit unions in Ireland… [will enable them] …to identify and improve on
that effectiveness (McCarthy, 2005: 4). The key points in McCarthy’s study are:
5 Sibbald, A., Ferguson, C. & McKillop, D. (2002). ‘An examination of key factors of influence in the
development process of credit union industries’. Annals of Public and Cooperative Economics. 73(3), pp.
399-428, doi: 10.1111/1467-8292.00198.

29
• Organisational effectiveness
• Membership
• Internal Processes
• Unclear definition of organisational effectiveness
McCarthy’s study made the following conclusions. Firstly, “there is no clear definition of what
constitutes organisational effectiveness” (McCarthy, 2005: 70). There are three circumstances in
which organizational effectiveness varies, and therefore its definition becomes unclear. The agent
who is conducting the evaluation of effectiveness, the type of organization that is being analysed
and the audience in which the evaluation is for all have scope to change the meaning of what
constitutes ‘effectiveness’.
The second conclusion on organizational effectiveness reached by McCarthy reasons that one
must employ a multidimensional approach to evaluation, taking into account both objective and
subjective criteria. Organisational effectiveness criteria “may also be considered in terms of
subjective measures and objective measures [SIC]” (McCarthy, 2005: 48). Subjectivity can reflect
perceptions of an organisation’s constituencies with indicators including training and
development emphasis, control, internalisation of goals and flexibility. However, “some
researchers, rejecting subjective measures as unreliable, use standard economic indicators, such as
net profit, return on investment and earnings per share to measure” organisational effectiveness,
argues McCarthy (2005: 49). However, sole use of objective criteria may neglect to measure
organisational processes and do not take into account, human dimensions6.
Thirdly, the criteria used to assess effectiveness should be both financial and non-financial in
nature. “Neither financial nor-non-financial controls alone can give a complete picture of an
organisation’s effectiveness/performance” (McCarthy, 2005: 70). It is argued that “internal
control procedures in some credit unions are not always to a sufficiently high standard”
(McCarthy, 2005: 20). As such, it is argued that member-centred controls and corporate-centred
controls are important. Finally, that “those who are directly affected by the organization
should be consulted as to what they perceive effectiveness to be” [emphasis in text] (Ibid.).
It is put forward that “things get done more effectively when the people using the organization
are knowledgeable, conscious of the nature of their needs and problems, and actively involved in
seeking effective solutions” (Briscoe & Ward, 2005: 37 in McCarthy, 2005: 80).
6 Through analyses and comparison of this credit union with others, McCarthy was able to identify
the following as the criteria of what constitutes organisational effectiveness in a credit union: Staff,
services, growth, premises, communication, training & education, planning management & leadership,
relationships between personnel, community, perceived overall performance, values & philosophy,
members’ views, humanity of the credit union, image, financial (McCarthy, 2005: 285).

30
It was established that two-way communication is vital for a co-operative, for members are the
“origins of actions who need to be equipped with the knowledge and skills required to make
decisions, to run their co-operative effectively” (McCarthy, 2005: 103).
McCarthy identified that there existed a “difference between the way in which credit unions
ranked themselves regarding OE [organisational effectiveness] and their reputation for being
effective organisations” (McCarthy, 2005: 286). It appeared that Irish credit unions were “not
fully attuned to their own degree of effectiveness” (Ibid.).
The methodological implications of McCarthy’s work demonstrate that research into measuring
organisational effectiveness in credit unions is “far from complete” (McCarthy, 2005: 289). The
issues and difficulties encountered in measuring organisational effectiveness in credit unions are
explained through defining two broad types of credit unions: instrumental and idealistic. The
distinction between the two are threefold:
1. The structure of the union is of a “standard constitution involving a Board of Directors
in charge of policy, a loans Committee…and a small Supervisory Committee to ensure
that the other two bodies keep within the rules” however the idealistic type often have a
“single committee responsible for all aspects of the credit union’s operation”
2. The perception of each type of credit union of the role of the wider national
organisation is a point of difference. Traditionally, the idealistic type would not favour
the influence of the Association of British Credit Unions (ABCUL), favouring an
independent, grassroots programme. However, as will be seen in analysis of Llanelli Save
Easy Credit Union, this distinction does not apply to all cases
3. The view of growth differs between the idealistic and instrumental types of credit
unions. Instrumentalists view it as “important that existing credit unions should build up
their membership and their assets to reach a sounder financial footing and take a larger
share of the savings and credit market”. The idealistic type however prefer membership
to be kept under 100 and expansion to take the form of an increase in the number of
independent unions in more communities, rather than consolidation of communities
under a large credit union
(Berthoud & Hinton, 1989: 22-23).
Moving forward, there are four implications for the research of organisational effectiveness in
credit unions as a result of the work carried out by McCarthy:

31
1. Serious consideration needs to be taken to understand who is the most appropriate agent
to assess organisational effectiveness. Most important stakeholder? The ordinary
member? An outsider?
2. Consideration and acknowledgement of the subjective influences of the chosen assessor.
How can they be controlled?
3. Will organisations with different values and influences have different views of
organisational effectiveness? How can these differences be identified?
4. Due to the nature of credit unionism that there is no homogenous, standard type, future
credit union research should aim to identify different types of unions and examine if
different criteria of organisational effectiveness emerges
(McCarthy, 2005: 294).
With regards to the role member participation in the organizational effectiveness of Irish credit
unions, McCarthy cites the assertion by Briscoe and Ward that “things get done more effectively
when the people using the organization are knowledgeable, conscious of the nature of their needs
and problems, and actively involved in seeking effective solutions” (Briscoe & Ward, 2005: 37 in
McCarthy, 2005: 80). McCarthy cites the work of Pestoff in participation research in which the
phenomenon is defined as “being that of citizens as co-producers whereby the clients of personal
social services participate in the production of those services they demand and consume”
(Pestoff, 1995 in McCarthy, 2005: 81).
McCarthy found from literature that the significance of member participation in cooperatives
can’t be understated. Briscoe viewed the role of member participation as a “means of ensuring
that the co-operative’s services continue to be designed to meet members’ needs” (McCarthy,
2005: 84). Through her own discussion of member participation, McCarthy found that “co-
operatives which actively engage their members in designing the co-operative for use by these
members are likely to perform better and to have significant competitive advantages in the
marketplace” (Ibid.).7
The credit union movement in Ireland is significantly more prominent than in Wales, it is seen as
“just another financial service provider” (McCarthy, 2005: 315). For the author, the success of
the credit union movement is rooted in the degree to which the credit union utilizes the
“potential of their membership” (McCarthy, 2005: 316). In order to utilise its membership, it
7 McCarthy’s research demonstrated that member participation can take the following forms:
potential members are actively approached and recruited, credit unions need to develop their HR
processes, involve members in generating new ideas for services, involve members in the design of
premises, proactive rather than reactive approach to the community’s needs, genuine two-way
communication, education & training of all members. (McCarthy, 2005: 305-309).

32
must attract new members by ensuring a highly effective and smooth operation on which to
build trust and confidence in the community.
This literature review has demonstrated that there exists no up-to-date studies of Welsh credit
unions which provide an accessible model for gauging organisational effectiveness. There are also
no case studies of one of the largest credit unions in Wales, namely Llanelli Save Easy Credit
Union. However, there is extensive literature on who’s insights this review has drawn, with
reference to the general Irish and UK movements.
The key points to be taken from this review are two fold. Firstly, that the context in which a
credit union operates is vitally important to understanding its role, functions and contribution in
and to society. The issue of financial exclusion is an issue that has been present throughout
Wales’ recent history, through good and bad economic times, and spanning most demographics.
The legislative and regulatory framework in which a credit union operates is as relevant to the
success of credit unions as capitalistic forces are, the correct combination and types of
regulations can be the difference between success or failure. Furthermore, the context that credit
unions make for themselves is important to their success, the maintenance and correct
development of certain, intrinsic strengths plays a central role here. Secondly, the organisational
structure and effectiveness of a credit union plays an invaluable role in the relative strength,
resilience and professionalism of the organisation. Differing scales of case studies were examined
for their contribution to study of organisational effectiveness in credit unions.
It is important now to provide a methodological framework which can enable evaluation of
Welsh credit unions in order to better respond to our research question. The importance of
professionalising staff, the special relationship between credit union and community, services
offered and adherence to the profit line were all discovered to be important factors contributing
to proper organisational effectiveness.

33
3.0 Methodology
Having set out our aims and established that there is a gap in the literature, particularly relating to
Welsh credit unions, this chapter will provide a methodological framework for testing the
organisational effectiveness of Welsh credit unions, specifically Llanelli Save Easy Credit Union.
Before doing so, this chapter will set out a range of methods that will also be employed with the
view to responding to our research question. These include:
• Review of primary literature
o The author has examined non-academic materials including information from
credit union trade associations, speeches in parliament, manifestos and
programmes for government
• Interviews with key employees of Llanelli Save Easy Credit Union
o In order to corroborate the claims in the primary material and literature review,
interviews have been conducted with senior staff at Llanelli Save Easy Credit
Union. Whilst anonymity is granted, the date interviews were conducted were at
15:00 on the 26th of August 2015 at the head office of the Credit Union
o Purposive sampling of interviewees was undertaken, of which the resulting
interviews helped with triangulation of knowledge
• Case Study Approach
o The area examined is the catchment for the Llanelli Save Easy Credit Union,
this catchment area follows largely the same boundaries as Carmarthenshire,
with the addition of the City and County of Swansea. This credit union was
chosen for the following reasons:
§ Accessibility: The author is currently based near this locality and
therefore, it is most feasible to examine this area, as opposed to for
example, the North Wales Credit Union
§ Representatively: Llanelli Save Easy Credit Union’s common bond area
spans from the City of Swansea to Carmarthenshire and
Pembrokeshire, it is one of Wales’ largest credit unions
o A Small-N case study was chosen. A single case study is used due to word, time
and financial constraints, however this case is one of the largest credit unions in
Wales. Furthermore, Llanelli Save Easy has potential of being a proto-typical
case, rich in detail with a possibility of generating theories. The Small-N in this
case, is a significant case due to the sheer numbers of people it can affect. The

34
common bond area in which the Credit Union operates can be seen as ‘typically’
Welsh, but not one that is ‘bog-standard’. The case contains important critical
mass, and indeed is a successful case (which continues to succeed). Thus, it
provides an ideal candidate in which to answer the question of how an
organisation can survive in economically difficult times, and indeed, to thrive
Each of these methods are used in conjunction with a methodological framework, however there
is no parsimonious, easily accessible model for testing credit unions in Wales or beyond. As such,
the remainder of this chapter will identify elements of existing frameworks that have resonance
in the Welsh case, that can be used in the elaboration of this model. As noted in the literature
review, the model that has been most heavily applied in the Welsh case is PEARLS. Details of
this model can be found in Table 5 of section 3.2 of the literature review. The PEARLS
framework contains wide ranging benefits, it also allows wide ranging financial variables to be
brought together. However, this framework contains a plethora of variables and does not in
anyway attempt to rank them. As such, it is of limited usefulness in identifying the key criteria
that determine the success or failure of a credit union. Despite its broad-brush approach, the
PEARLS framework does not take adequate account of internal processes or the external
environment. It is easy to see how this model has limitation both as a tool for government and as
a source of recommendations for credit unions themselves. However, a particularly positive
aspect of PEARLS is its emphasis on Rates of Return and the signs of growth in this regard,
which my own interviews reveal is a core determining factor in ensuring organisational
effectiveness. In and of itself, the Rate of Return is too narrow a criterion against which to judge
the performance of credit unions, it is important therefore to look in the wider literature on
organisational effectiveness for additional criteria with which to build this new model.
Richard Daft is arguable, one of the most recognised authorities on organisational effectiveness
in businesses. He identified five separate frameworks of assessing organisational effectiveness,
the first was devised by Quinn & Rohrbaugh. It will be argued here that the last two frameworks
(Resource-Based Approach & The Internal Processes Approach) are the most relevant for this
dissertation. As such, our discussion of the first three models will be brief.
The Competing Values Approach was devised by Robert Quinn and John Rohrbaugh in which
two general dimensions of effectiveness were discovered (Quinn & Rohrbaugh, 1983).
1. Focus

35
a. Are the dominant values of organisational effectiveness internal or external to
this organisation? Internal values represent employee concerns and external
values represent the well-being of the organisation as a whole
2. Structure
a. What is the dominant structural consideration? Is stability valued whereby
management regard top-down control and efficiency as important or flexibility
which represents a priority for the organisation to continually learn and change
Figure 3: Four Models of Effectiveness Values (Daft, 2001: 71)
This model’s strength lies in its adaptability to different organisations and
different stages of an organisation’s life cycle; the model demonstrates how
competing values may exist in one organisation at one time and management decide which values
to pursue and which (to an extent) sacrifice (Daft, 2001: 72-73). This model is useful; however, it
is vague with regards to how to operationalise a study using it.
The Goal Attainment Approach is both the most extensively used and widely criticised out of the
five models. It examines the extent to which the organisation achieves or makes progress towards
its goals (Daft, 2001: 65). This approach makes the following assumptions:
• That goals are identifiable and clearly understood
• These goals are few enough in number to be manageable
• The progress an organisation makes towards these goals is measurable
Human Relations
Model
• Goal values: human
resource development
• Subgoals: cohesion,
morale, training
Open Systems
Model
• Goal values: growth,
resource acquisition
• Subgoals: flexibility,
readiness, external
ecaluation
Internal Process
Model
• Goal values: stability,
equilibrium
• Subgoals: information
management,
communication
Rational Goal
Model
• Goal values:
productivity, efficiency,
profit
• Subgoals: planning, goal
setting
FOCUS
Flexibility
Control
ExternalInternal
STRUCTURE

36
While achieving certain goals may well have the potential to demonstrate organisational
effectiveness, it makes no provision to rank multiple goals. It fails in indicating effectiveness
using a single indicator as an organisation arguable has more than one; the approach also fails to
explore the inputs or the processes that resulted in the end ‘goal’.
The Strategic Constituencies Approach, also known as the “Stakeholder Approach”, focuses on
an organisation’s environment and the stakeholders who occupy it. The stakeholder’s on-going
support is essential for the organisation’s survival. “A stakeholder is any group within or outside
an organisation that has a stake in the organisation’s performance” (Ibid.). Traditional and
generic stakeholders include but are not limited to: creditors, suppliers, employees and owners8.
Tsui argues that the Strategic Constituencies Approach offers a viable alternative to the
limitations of the Goal Attainment Approach (1990: 458). The usefulness of this approach
however is limited as argued by Salancik who maintained that constituency preferences are in
fact, un-measureable; “any weighting [of individual constituencies] is arbitrary. There are no
unitary objective criteria” (1984: 617). This approach for this study insofar as it reinforces the
importance of communities, however it focuses on too many stakeholders to be testable within
the confines of this study.
The next two approaches are of particular relevance to this study, therefore will contain more
detail than the previous approaches.
Otherwise known as the “Systems Approach”, the Resource-Based Approach “assumes
organizations must be successful in obtaining and managing valued resources in order to be
effective” (Daft, 2001: 67). Therefore, to asses an organisation’s relative effectiveness, one should
examine whether it is internally consistent; one should ask whether its resources are being
distributed judiciously.
Daft puts forward four dimensions that the Resource-Based Approach encompasses:
8 Stakeholder and their corresponding effectiveness criterion, as summarised by Daft (2001: 69)
Stakeholder Effectiveness Criteria
Owners Financial Return
Employees Worker satisfaction, pay, supervision
Customers Quality of goods and services
Creditors Creditworthiness
Community Contribution to community affairs
Suppliers Satisfactory transactions
Government Obedience to laws, regulations

37
1. Bargaining position – the ability of the organisation to obtain its resources (financial, raw
materials, human resources, knowledge and technology)
2. Ability of the organisation’s leaders to correctly interpret their external environment
3. The ability of managers to use tangible (people) and intangible (knowledge) resources in
organisation operations
4. Ability of the whole organisation to respond to changes in its environment
(Ibid.).
Daft identifies this method as particularly useful for organisations which are not-for-profit or
focus upon social welfare and therefore appears particularly relevant for a study on credit unions.
The second dimension – “Ability of the organisation’s leaders to correctly interpret their external
environment”, is particularly useful in this study, for the link between a credit union and its
community has been found from interviews to be extremely important to an organisation’s
performance. However, this approach is unsuitable for this study is not focusing on the
processes of procurement and organisational investment. This approach will be used for it is
useful due to its reference to the ability of the organisation’s leaders to interpret their external
environment.
Finally, the Internal Processes Approach allows the organisation to measure its effectiveness
through examining its internal health and efficiency. Proponents of this approach can be found
in the area of human relations approach to organisations (Argyris, 1964; Likert, 1967). Daft
suggests that an “effective organisation has a smooth, well-oiled internal process” where
employee satisfaction is high and inter-departmental processes mesh smoothly (Daft, 2001: 68).
This approach is of particular relevance to this study for the importance of the processes in the
‘back-office’ were found to be set at a high priority, from the interviews.
Daft identified seven indicators of effective organisation in the Internal Processes Approach. Of
particular relevance is the indicator – “Confidence, trust, and communication between workers
and managers”. The other six indicators include: strong culture & positive work climate, healthy
team spirit, decision making near sources of information, undistorted horizontal and vertical
communication, growth and development for employees and interaction between the
organisation and its parts (Daft, 2001: 68; Cunningham, 1977: 466).
Workforce happiness and a healthy corporate culture are well established indicators of an
effective organisation (Daft, 2001: 69). However, this approach fails with regards to the
organisation’s relationship with the external environment and its total output – they are not

38
evaluated. Failure to maintain oversight of an organisation’s profitability can be detrimental if not
fatal in today’s society9.
Following the review of the various frameworks and approaches to organisational effectiveness
in organisations, the Cambrian Model of organisational effectiveness in credit unions may be
proposed. The conceptual framework are as follows:
Criteria Indicators
Return on Investment • Profit
• Membership
Environment • Regular monitoring of locality’s needs
• Performance of ‘door-step lenders’ in locality
Confidence and Trust • High proportion of professionalised staff
• Thorough, human internal auditing of all activity
This chapter has examined the methods and the numerous methodological frameworks which
has inspired this study. The author is conscious that a number of factors have been excluded, the
reason is all the former frameworks have included too many criteria and therefore present as
inaccessible. A conceptual framework has been produced with these methods. These methods
and this framework will be applied to the case of Llanelli Save Easy Credit Union.
9 Summary of Organisational Effectiveness models discussed, adapted from Cameron (1986: 542)
Model Definition When Useful
An organisation is effective to the extent
that…
The model is most preferred when…
Goal Attainment It accomplishes its stated goals Goals are clear, consensual time-bound,
measurable
Systems It acquires needed resources A clear connection exists between inputs and
performance
Strategic
Constituencies
All strategic constituencies are at
least minimally satisfied
Constituents have powerful influence on the
organisation, and it has to respond to
demands
Competing Values The emphasis on the criteria used
meets constituency preferences
The organisation is unclear about its own
criteria, or change in criteria over time are of
interest
Internal Process It has an absence of internal strain
with smooth internal functioning
A clear connection exists between
organisation processes and performance

0916190 MLT025

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