Building Loyalty, Thinking Mutually?

Richard SimmonsUniversity of Stirling

Is Organisational Form Important?

• No: Businesses/enterprises with generic measures of success

• Yes: A different way of doing business based on ‘the idea of membership’

• “A Conceptual Framework for Research into Co-operative Enterprise” with Tim Mazzarol and Elena Mamouni-Limnios (UWA)

FOCUS HERE!

Building LoyaltyClosely linked to value and identity

• Know what value you provide: (financial, functional, social, emotional) - evaluation

• Let people know what value you provide – information, e.g.- Newsletters, annual reports, etc- Personalised member feedback reports

• Support the development of member identity- Pride in membership- Participation

How are Democratic MBOs Different?

• Basis in membership

• Four dimensions:

• Ownership• Belonging• Control• Benefits

(Simmons & Birchall, 2009)

Member Interests

• Meeting needs

• Economic benefits

• Influence over decision making

Member Identities

• Belonging?

• Ownership? .

‘I belong here, this belongs to me’

Making Membership Meaningful

• Reinforce all four dimensions

• Importance of democracy:

(i) symbolises inclusion in the collectivity and reinforces ownership

(ii) provides tangible control mechanism and ability to have influence e.g. in the distribution of benefits

• Member democracy is a key component of the ‘co-operative advantage’: manage tensions, build member commitment and loyalty

Member Commitment

• Normal distribution of member commitment

Highly com

mitt

ed

Supportive in principle

Sceptical

Resistant/disinterested

positive negative

= co-operative advantage?

Advantages?• Commitment > > >- Productivity? (management gains marginal?

membership gains exponential?)- Trading commitment? (v. opportunism)- Agreement? (e.g. production standards)- Investment? (inward e.g. £; outward e.g. training)- Trust? (e.g. for collective action and investment)- Sustainability? (lock-in)- Resilience? (e.g. solidarity in face of adversity)- Wider benefits (e.g. community dividends, social

capital)

Basis for Co-operation

Resources Mobilisation Motivations

‘Participation Chain’

Mutual Incentives Theory

Motivations:

Individualistic - ‘Me’ mentality- Free riding?

v. Collectivistic

Collectivistic Motivations• Shared goals- Unifying purpose

• Sense of community

- ‘we’ mentality, win and lose together

• Shared values

- e.g. John Lewis

- ‘Be Honest’, ‘Give Respect’, ‘Recognise Others’, ‘Show Enterprise’, ‘Work Together’, ‘Achieve More’

- Behaviours expected in all relationships at all times

• Collective motivations reinforce member identities

Values and Value

• ‘Value and values are closely linked. Inappropriate values may lead to the destruction of value’

• Organizational systems are strategic resources - innovative organisations have begun to see organizational design and management processes proactively as necessary facilitators of success

Linking Values and Value

• ‘Co-operative value’ requires balancing of some competing values

• Political

• Governance, participation and value creation

• Organizational design

• Reinforce ‘co-operative citizenship’

Organisational Democracy as a Comparative Advantage

• Flexible - can deal with uncertainty, ambiguity and unexpected change

• Enables people to co-operate and make choices on the basis of something beyond the individualism of the market

• Can move beyond the distribution of benefits to bring interests together to achieve common purposes

• Imbues co-operative action with the imprimatur of the membership (as a signal about the desired response)

Stakeholder Relationships

“Mutuality may do a better job of aligning stakeholder incentives than some alternative forms of corporate governance”Andrew Haldane (2009)

Debating Mutual Models

• Mutual ‘ideal’ may not be how it works in practice

• Dangers in either losing ‘sharp’ business focus or of providing too-thin support?

• Practical strategies:– Building stakeholder commitment– Communication and mutual reassurance– Evaluation/Research

Research and Evaluation- Good evaluation is a continuous (not just one-off) process

informing planning and delivery

- Track down and translate the preferences of members > what is ‘valuable’ requires ‘validation’

- Good evaluation:- involves all those with an interest in the organisation in

defining the questions they want answered

- highlights and celebrates successes and achievements

- encourages an honest appraisal of progress, so that we can learn from what has not worked as well as what has

Research Project

• UWA research project• Next phase – survey research• Co-operation with SAOS and University of

Stirling• We welcome your participation!

Finally…

• Focus on USPs• Core values• Systems and practices• Be aware of challenges at all levels• Manage stakeholder relationships• Communication and constituency building• Role of evaluation and research to provide

evidence of added value