The Manager’s Tightrope: How to Manage Employees Who Are Also Cooperative Owners

Human Resource Management in a cooperative society is very different from HR in a private company.

In a corporate organization, the reporting structure is usually straightforward. Employees perform their assigned duties, managers supervise the work and senior management takes strategic decisions.

A cooperative society operates differently.

Many employees may also be members of the society. As members, they have the right to participate in the democratic functioning of the organization. They may attend the Annual General Meeting, vote on important resolutions and elect the Managing Committee or Board of Directors.

This creates a unique situation for HR.

During office hours, the individual works as an employee and is expected to follow service rules, reporting relationships and organizational discipline.

Outside that role, the same individual may participate as a member in the governance of the society.

Managing these two relationships requires maturity, fairness and consistency.

For HR professionals working in cooperative institutions, this is one of the most challenging aspects of the profession.

Understanding the Dual Role of Member Employees

The first principle every HR professional should understand is that an employee and a member perform two completely different roles.

As an employee, the individual is governed by:

• Service Rules
• Standing Orders, where applicable
• HR Policies
• Employment Contract
• Code of Conduct
• Performance expectations

As a member of the cooperative society, the same individual derives rights from:

• The Cooperative Societies Act applicable to the State
• The Bye Laws of the Society
• Membership provisions
• Democratic governance principles

These two roles should never be confused.

A person's membership does not exempt them from complying with workplace discipline.

Similarly, disciplinary action taken against an employee should never affect their legitimate rights as a member unless specifically provided under the applicable law or bye laws.

This distinction should be clearly communicated to employees from the very beginning.

Why HR in Cooperative Societies Is More Challenging

Imagine a situation where an employee repeatedly reports late for work.

In a private company, the reporting manager may issue counselling, a warning or initiate disciplinary action according to company policy.

In a cooperative society, the situation may become more complicated.

The employee may also be an active member of the society.

They may personally know elected directors.

They may participate in committee meetings.

They may question management decisions during the Annual General Meeting.

If HR is not careful, a routine disciplinary matter can quickly become a governance issue.

This is why every HR decision in a cooperative should be based on facts, documented evidence and established procedures.

Personal opinions should never influence disciplinary decisions.

Fairness Is the Strongest Protection for HR

Employees may not always agree with HR decisions.

However, they are far more likely to accept a decision when they believe the process was fair.

Whenever disciplinary action becomes necessary, HR should ensure that:

• Rules are applied uniformly.
• Similar misconduct attracts similar action.
• The employee receives an opportunity to explain.
• Proper records are maintained.
• Decisions are supported by documentary evidence.

Transparency reduces unnecessary disputes and strengthens confidence in the HR function.

HRMIT Practical Insight

In cooperative societies, employees often question not only the final decision but also the process followed to reach that decision.

A fair process protects both the employee and the organization.

Performance Management Should Be Objective

Performance discussions can easily become sensitive when employees also participate in the democratic governance of the society.

For this reason, performance evaluation should rely on measurable criteria rather than personal impressions.

Clearly defined Key Performance Indicators, documented objectives and regular performance reviews help ensure that assessments remain objective and defensible.

Employees are more likely to accept constructive feedback when they understand how their performance has been measured.

Communication Builds Trust

One of the greatest strengths of the cooperative movement is participation.

HR should use this strength positively.

Whenever significant policy changes are proposed, employees should be informed about the reasons, expected benefits and implementation process.

Consultation does not mean every suggestion will be accepted.

However, listening to employees before introducing major changes often improves acceptance and reduces resistance.

People support decisions more readily when they understand why those decisions have been made.

By HR Mit