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