Incentive and monitoring schemes in co-operatives : an analysis

Abstract

Purpose: The objectives of this study were to ascertain and assess the major incentive and monitoring schemes currently being applied in Maltese co-operatives as well as to identify and assess those types of schemes that may be applicable. Design: These objectives were achieved by the conduct of 27 interviews, 10 semi-structured interviews with Committee of management members, a further 10 semi-structured ones with professional managers and 7 unstructured interviews with co-operative experts. Findings: There is a clear lack of application of both incentive and monitoring schemes in Maltese co-operatives. An overemphasis on cost effectiveness is resulting not only in few schemes being applied, but also in preventing new ones from being seen as applicable in the near future. Furthermore, the promotion of schemes, particularly monitoring ones, is perceived to possibly have negative implications on the level of trust between the monitor and the monitored. Additionally too few incentives are being promoted to advance co-operative principles despite the evidence found of respondents’ willingness to advance such principles. Conclusion: The study concludes that for the realisation of the potential of incentive and monitoring schemes a number of lacunas have to be overcome. These include a lack of awareness of co-operative objective and an insufficient determination to promote the co-operative principles despite the will to do so. If well-implemented both incentive schemes, particularly performance-related ones, and monitoring schemes should have no trust implications and should be seen to complement each other towards co-operative success. Value: This study hopes to provide useful insights towards a practicable manner of promoting corporate governance in Maltese co-operatives. Among its recommendations the study points to an updated CSA possibly with new, but not too many, obligatory monitoring schemes.