In a recent post on future options for the credit union system in Canada, Dionne Pohler and I argued that to be effective and meet the needs of a wide variety of stakeholders, the new system must rely on a mix of both extrinsic and intrinsic incentives. What are these two types of incentives? And why are they important?
Extrinsic motivations are monetary rewards or penalties such as pay-for-performance schemes and financial payments for not complying with rules and regulations. Extrinsic incentives work, it is believed, because people make decisions based on the financial costs and benefits of the options they face.
Intrinsic motivations, in contrast, can be observed in the desire to undertake activities simply because they are enjoyable or because they generate satisfaction — the wish to do a job well or to undertake a task because it leads to some greater good. The mission motivation that drives the behaviour of many people is a good example of an intrinsic incentive. Continue reading →
Like many countries, Canada is looking for green-energy alternatives in response to climate change. Germany presents an interesting case study that Canada could use. The “Energy Transformation” (Energiewende) in Germany has increased renewable energy to more than 30 percent of consumption to date and aims for 60 percent by 2050. The country has accomplished this thanks to innovative legislation coupled with the response of civil society and the business sector. A key mechanism was the creation of nearly nine hundred energy co-operatives in less than a decade.
Brett Fairbairn outlined the strategy in his lecture titled “Citizen Energy: Social Innovation, Public Policy, and the German Energy Transformation.” In partnership with Markus Hanisch from the Berlin Institute of Co-operative Studies, Brett examined the role of community-level social entrepreneurship and innovation in achieving green-energy targets. Continue reading →
The question posed above is the entirely appropriate title of an October 2016 report by Central 1 on possible futures for the centrals in the Canadian credit union system (read the report here). As the report indicates, low margins, increasing competition, rapid technological change, increasingly diverse expectations for member services, and new and often unfavourable regulatory environments make it clear that the status quo is unsustainable and change is required at the second-tier level. Continue reading →
Hanisch’s presentation — “Changing Governance in European Co-operatives: Simply Shifting or Losing Control?” — outlined a series of innovations occurring in European co-operative governance and the impact of these changes on co-operative performance. Based on data from 571 farmer co-operatives in the European Union, Hanisch concluded that co-operatives that have implemented certain governance innovations — professionalising and allowing outsiders to join their boards of directors, recruiting larger boards, and creating a governance model in which the co-op acts as a holding structure — have improved their performance. The research also notes, however, that these shifts towards corporate governance structures may affect member control. Continue reading →
Murray Fulton, director, Centre for the Study of Co-operatives
The Role of Co-operatives in the Economy
In a StarPhoenix/Leader Post op-ed piece published on 7 December 2016, Brett Fairbairn, Dionne Pohler, and I outlined why a mix of business types is required for a well-functioning market. As we said,
Achieving the correct balance of different types of business forms is critical.… Just as biological environments benefit from a rich mix of different organisms, so, too, do markets benefit from a diversity of business types. Consumer interests and a desire for local control can be met with co-operatives; niche markets can be served by entrepreneurs; and employment opportunities can be generated through employee ownership. Established chains have a role to play, given their brand identification and experience.
While we were commenting specifically on the privatization of liquor stores in Saskatchewan, the argument is a general one and applies to all markets in the economy. It is particularly relevant for co-operatives and credit unions. Continue reading →
The Future of Credit Union Branches in a Digital World
A conference recently made me think about the future of credit unions as connecting points between the real world and the digital world. The conference was in Luzern, Switzerland, where mainly German-speaking co-op leaders and academics came together to discuss co-op identity and growth. One of the working groups was on co-operative banking and digitization, and it was their report that got me thinking.
Co-operative banking is one of the most mobile and digital lines of business any co-op could be in. We have come to understand that money, deposits, loans, and so on — many of the “products” credit unions deliver — are essentially information. They are numbers in databases — numbers that can be transferred or changed at computer speed. Today, the digital world is the real world of banking commodities.
Only occasionally does the virtual world of banking services take material expression. An automated banking machine (ABM), when you think about it, is a machine that converts information into physical monetary bills when you need them. An ABM is a small, specialized material outpost of an unseen digital world.
Which brings me to credit unions, especially their distributed physical facilities. What is a credit union branch? What will it be in the future? In an increasingly digital world, such branches could go at least two ways. Continue reading →
Murray Fulton, director, Centre for the Study of Co-operatives
Contemplating Co-ops will tackle the critical issues facing co-ops and credit unions today
Co-operatives and credit unions play a critical role in the economy and society, meeting needs and allowing for the expression of interests and values that are often not satisfied by other organizations. While informal co-operation has been a part of human interaction since time immemorial, the development of formal co-ops took place largely over the last two hundred years. The impetus for co-ops was, not surprisingly, the onset of the Industrial Revolution in the 1800s and the economic, social, and political changes it unleashed. We are living today in a world that is once again seeing massive changes in technology, which in turn are leading to a major reshaping of the economy and society. As they have done over the past two hundred years, credit unions and co-operatives of all kinds are playing a role in this change.
The purpose of Contemplating Co-ops is to explore what co-operatives and credit unions are doing today (and occasionally what they did in the past). In this blog, Continue reading →