Recent developments in cooperative operations indicated the need to revisit the powers of the Board of Directors as provided in the Philippine Cooperative Code (RA 9520), its Implementing Rules and Regulations and in the cooperative by-laws. The tendency of some Board of Directors (BOD) to decide and take over operations of cooperatives through appointment of a member of the Board or its Chairperson tickles the mind of every vigilant person. It did not only happen once but that it became a practice of some cooperatives in the region.
Allow me to lift from the provisions of Code and by-laws of cooperatives to guide us in knowing the powers and functions of the BOD. The board of directors shall be responsible for the strategic planning, direction-setting and policy formulation activities of the cooperative (Article 38, RA 9520). Under the latest template for cooperatives, the functions of the Board are as follows: a)Provide over-all policy direction; b)Formulate development plan; c) Review the annual plan and budget and recommend for the approval of the General/Representative Assembly; d) Evaluate the capability and qualification and recommend for the approval of the General/Representative Assembly the engagements of the services of an External Auditor; e) Appoint and terminate, based on just cause, the General Manager or Chief Executive Officer (CEO); f) Review, monitor and evaluate the effectiveness of the programs, projects and activities; g) Formulate and review the vision, mission and goals of the Cooperative; h)Establish risk management system; i) Establish performance evaluation system at all levels; j) Review and approve the organizational and operational structures; k) Establish policies and procedures for the effective operation and ensure proper implementation of such; l) Appoint the members of the Mediation and Conciliation Committee, Ethics Committee, Education and Training Committee and other Officers as specified in the Code and By-laws of the Cooperative; m) Decide election-related cases involving the Election Committee and its members; n) Act on the recommendation of the Ethics Committee on cases involving violations of the Code of Governance and Ethical Standards; o) Ensure compliance by the Cooperative with the regulations of the Authority and other statutory requirements of appropriate government agencies; p) Report to the General/Representative Assembly the performance and achievements of the Cooperative; q) Present to the General/Representative Assembly policies which require confirmation as provided under the law, the Cooperative By-laws, and regulations; r) Present to the General/Representative Assembly the financial, social and performance reports; and s) Perform such other functions as may be authorized by the General/Representative Assembly.
As provided above, there was no mention of the Board of Directors to appoint a member or its Chairperson to become the Acting Chief Executive Officer or General Manager of the cooperative in case of vacancy created by resignation or firing, unless the decision was based on letters e and s? There could be other sources of information that guided them in their decisions like approved manual of policies and management concepts.
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The issue on next in line managers is crucial to cooperative operations. It is part of the cooperative human resource management to prepare would be manager in case of vacancy. I guess the practice of appointing people from the Board to become the CEO or GM reflect some gray areas in policy or can be viewed by others as an act in bad faith?
Elected BODs were trained to perform the three critical powers. As part of the decision-making process, a resigned Board that volunteered or nominated to assume vacancy put a cloud of doubt on the motive of such appointment. Considering that he/she had been involved in the deliberations of such vacancy prior to appointment manifest a motive known to the appointing authority. Besides, officers are restricted to be involved in day to day operations of cooperatives. The justification that the said officer resigned from his/her position before assuming the function seems confusing if not demoralizing on the part of the management staff. In some instances, hired CEO/GM came from the outside instead of promoting people within the cooperative manpower.
As I understand, vacancies can be filled up with an officer-in-charge or in an acting capacity. Using the organizational structure the people with ranks closest to the Manager could be appointed as Acting CEO/GM. In cooperatives the four next-in-line persons include the Bookkeeper, Loan Officer, Cashier and Human Resource Management Officer. If cooperative has an Assistant GM or Branch Manager then they are contenders to such position.
I don’t intend to question the decision-making of some cooperative Board of Directors. This write up was prepared to stimulate discussions on real events involving some cooperatives in the Cordillera. As an observer there is need to address issue on the usual practice of BOD becoming the CEO/GM. Is it ethical or acceptable given the presence of other personnel in the organization?
Drawback of such decision to appoint a BOD as CEO boils down to how people run the affairs of the cooperative. From a decision-maker to operations manager entail a lot of adjustment especially on the processes involved in the day to day operations. Another disadvantage can be the impression that staff has no assurance to climb the ladder as promotion is not practiced in the organization.
When staffs feel that they have the chance to be promoted higher tendency of quality and productivity is assured. The chance to lead motivate employees perform their functions and introduce new ideas. When the notion that nobody from the personnel is qualified poor performance and demoralization of staff is expected. Such scenario should be taken into consideration by officers when confronted by resignation of a member of core management team. The challenges of cooperative operations require skilled people that understand the dynamics of the enterprise. Traditional leadership style can be employed but must be modified to fit the call of the present environment.
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