Co-ops get the message on communication risks

By PHILIPPA STEVENSON

Burgeoning giant cooperative companies are struggling to stay in touch with their suppliers, creating problems that rank with competing in a global marketplace or finding enough capital, says a specialist agribusiness adviser.

Anne Burgi, a veteran of agribusiness communications in Australia, told a seminar of cooperative directors at the weekend that it was easy for growing cooperatives to lose touch with the masses.

The two-day seminar at Melbourne's Monash University was attended by New Zealand dairy co-op directors, including Dairy Board chairman Graham Fraser and his deputy, Harry Bayliss.

Her address reflected many of the concerns raised by New Zealand dairy farmers as the size of their companies increased through takeovers and mergers.

Ms Burgi said many co-ops under-valued their member support base. They often found the communication issue hard to pigeonhole, sometimes regarding it as the "soft side of the business, a bit of a pain, not real business, and too touchy-feely for real businesspeople to become involved with."

But co-ops had to earn members' support or risk losing them, she said.

"Many co-ops seem to under-value their intrinsic base for support. When was the last time you heard of a co-op running a corporate image campaign?"

Yet advertising agencies around the world would drool at the idea of starting with a core target market consisting of a membership base, and some private-enterprise companies envied the potential of cooperatives' member relations, Ms Burgi said.

Cooperatives had much to offer in terms of popular appeal, conjuring up positive, folksy images of people helping each other.

She cited the "phenomenon" of the Bendigo Bank, which had built a major market niche and public profile by supporting communities that wanted to set up their own banks, usually in a backlash against one or all of Australia's big four banks.

Ms Burgi said that after the "greed-is-good" 1980s and the internet-fixated late 1990s, people expected more from the companies they worked for and bought from.

"Many of the attributes of cooperatives fit well with this shift - it's just that not many people make the link."

The "rawest" benefit to a cooperative of good communications was "not having to watch your back the whole time."

"If you have to also battle to get the support of your members at every turn, it's that much harder to win the war. If your relationship with your members is badly handled, you may survive, indeed prosper, in good times, but you will end up expending too much time, energy and money trying to claw back support in a crisis - the very time when your efforts could be better used addressing the real problems."

Possibly the primary reason for good communication and a solid relationship with members was the efficient use of limited resources, she said. "Communications, particularly in good times, is an investment, not a cost."

Ms Burgi said there were basically two approaches to communications - that of managed corporations and that of governed corporations.

"In a managed corporation, shareholders are treated as if they cannot assess corporate policy for themselves, but must depend on managers and directors to do so for them. Under a strong, market-focused management, directors themselves can also be very much on the outer.

"In a governed corporation, directors and managers actively seek the input of shareholders ... and ... all three critical constituencies - shareholders, directors and management - have a voice so that decisions and policies aren't just whatever the management decide."

Ms Burgi said it was integral to the cooperative structure that members had the right to know how their co-op was performing, and those running it were obliged to communicate.

"If the members are to support the directors and the management, they need to keep the members informed. I think confidentiality is often over-rated and is an excuse for hiding poor performance."