There Is Room for Education Beyond School of Hard Knocks

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For credit union management, this year has been like going to school and learning the lessons as they occur. The CU managers class of 2009 has earned a Bachelor's in Balancing, a Masters in Milk of Magnesia, and a Doctorate in Damage Control.

I would suspect most credit union CEOs and senior managers feel there's no need to enroll in college again; if anything, they should be teaching a new generation about all the credits they have compiled in the School of Hard Knocks this year.

The actual academic credentials of credit union management run the gamut of degrees and disciplines, but most fall into a broad business/management/accounting category. What is rare, however, is anyone who has matriculated in "cooperatives," despite the fact that's just what every credit union is. There is a university in Halifax, Nova Scotia, that would be happy to help you change that.

St. Mary's University offers a post-graduate course of study and degree more CU leaders might want to consider in the 21st century: a Master of Management--Cooperatives and Credit Unions program. The program took root at St. Mary's in 2001 when John Charmard, chair of the Management Department at St. Mary's expressed interest in the idea. That led to a group of cooperatives, including Credit Union Central of Prince Edward Island, creating (appropriately enough) the Co-operative Management Education Co-operative) to partner with Saint Mary's to develop the program. The goal, according to the program's current manager, Tom Webb, was to "respond to the lack of business school attention to or understanding of cooperative business throughout the English speaking world."

"What university courses there were tended to be lone courses in departments of economics, sociology or history," said Webb. "Research on cooperatives in business schools was very limited and only 30% of basic texts on the types of business mentioned cooperatives, and fully half of those references were negative."

Compounding the problem, added Webb, was the lack of education lack of education on cooperatives among their management, who were often drawn from investor-owned companies, which only led to "self doubts about the value of the cooperative business model."

"The cooperative values and principles are widely respected and admired around the world and appeal to the best of the human spirit," Webb said. "They are not a drag on the business but the source of its power and potential."

In creating the program Webb explained St. Mary's did not want to simply offer a typical MBA program with a "bit of cooperative content thrown in. We deliberately built a program dedicated to the cooperative business model. All courses were built from the ground up. Several courses place cooperatives within the context of the political economy and examine the political economy of cooperation. Even the functional business disciplines like accounting, finance, marketing, and people management would be taught with an analysis based on the cooperative business difference."

The program's first students were accepted in September of 2003, and immediately faced a "dearth of written material that speaks directly to the management of co-operatives." To resolve that, St. Mary's began holding symposiums where specialists from academe and practitioners could present the latest thinking on cooperative business issues. Today, the program consists of 12 one semester courses and a final paper. It begins with an orientation week in early August at the university, where the purpose is to "create of each group of entrants, a cooperative learning community, whose members will support each other throughout the program," according to Webb. The entire program takes about three and a half years, with the work done online, with the exception of a 10-day study visit to a cooperative business.

But why not just earn the standard MBA? Webb points to recent events, noting, "The question of how cooperative and credit union experience differed from that of banks and investor-owned companies during the recent financial melt down and recession would not be explored in an MBA program or even likely seen as being of interest. Understanding it is vital to a credit union or cooperative business manager."

He reiterated that unlike what is suggested in other courses and texts, the MMCCU emphasizes there is no conflict between being a cooperative and being successful. "MBA programs often are a poor investment for a credit union and other cooperatives because they simply encourage managers to move to the banks or other investor owned financial institutions," Webb said.

That the Masters in Management of Cooperatives program is offered at a Canadian university is not really a surprise; most U.S.-credit unions rarely perceive of themselves as cooperatives. Webb said that if American CU managers were to visit several large and successful cooperatives in other parts of the world "they would quickly realize the enormous business opportunity they are passing up. If for some reason credit unions imagine a benefit from being isolated from the other businesses in their world that understand, support share their ideas, isolation might be chosen. It is however a position of weakness." He added that the 245,000 cooperative businesses in Europe have an out put equal to the ninth largest GNP in the world, while the 300 largest cooperatives in the world have a similar output. Cooperatives employ more than the largest 500 multinational corporations combined.

Webb said cooperatives can be productive without paying their CEOs "1,000 times" what their lowest-paid employees take home. Yet credit unions and cooperatives in general continue all too often to belive they are "inferior."

"Why do we believe the banks?," Webb asked. "Perhaps because there is so little study of cooperative business and credit unions. Perhaps because many of our own managers do not believe in the power of the cooperative business model. Perhaps because our education system does not allow people to learn about cooperatives nor does our media cover them except when they fail. Perhaps because we are a relatively small percentage of the GNP in Canada, the USA and the UK. The business alternative we offer is much more important to our world after September 2008. We need to catch up to the opportunity. Managers who have an MMCCU degree are ready."

What is the state of cooperatives right now in North America and the world, and where might growth opportunities lie? According to Webb, "We are batting below our weight. That said what we have performed better than the investor owned business model. North America needs a business model focused on human need and less susceptible to human greed. If you look carefully our model has a lower failure rate whenever the comparison has been done, albeit not near often enough. Our model is far from the perfect answer to human need but it performs better. We need to develop managers who can create better credit unions and cooperatives.

"Our greatest opportunity is to become much better at cooperation among cooperatives and cooperatives and credit unions," Webb continued. "If it makes sense for credit union members to get financial services from a service provider they know and control the same logic would suggest it is better for our credit unions and cooperatives to do the same when possible and when it makes business sense. It always makes sense to deal with excellent co-operative businesses and they are not an accident. Our next greatest opportunity is to look at our members and communities and evaluate the needs being most poorly met at present. There are many opportunities."

Over the course of the program it has evolved based on feedback from its students, with some of the changes "substantial," said Webb. "There is one market request we have not responded to yet and that has been the request to have an 'American' rather than an international program or a sector-specific one for 'silos' of cooperatives, as opposed to a sector inclusive one. The learning in our sector inclusive, international program is far too rich to retreat. While we understand the request and are tempted, the global threats and opportunities are too important in an age when all of our businesses exist in a global economy."

Frank J. Diekmann can be reached at

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