One possible approach to this dilemma, and one that is used quite often in practice, is outsourcing: hire professionals to do the books and other administrative work of the organization. ASMARE has often used this approach in the past, and several other members of the Cataunidos network are considering this as well as a way to help them reach our goal of standardizing financial management across the enterprises. If the catadores have trouble handling the administrative responsibilities of their organization, it makes sense to hire someone with that type of needed expertise. This is especially commonplace in organizations that began through the intervention of an outside actor, such as Pastoral da Rua.
The implications of this, however, are very significant to the cooperative model. If non-catadores are hired by the organization to handle management responsibilities, then you have the development of two tiers within the organization: catadores as the laborers, professional administrators as the managers. In that case, who really controls the cooperative? In ASMAC, for example, the municipal government provides financial support to contract several members of a local Catholic charity to do administrative work for the association. This provides the organization with greatly needed professional direction and managerial expertise, but it also raises the complex question of where the ultimate decision-making really lies within the group. And besides, if catadores begin to contract this work out, does this imply an acceptance that they will never be able to handle managerial duties themselves? And if this is indeed the case, will more and more management need to be hired as the cooperatives grow and develop? And will the cooperative turn into more of a traditional corporation? As of right now, I don’t think we have really fully considered what this outsourcing really signifies in the broader sense.
That is not to say, of course, that I am against the prospect of outsourcing managerial responsibilities. In fact, I think that having a greater level of professional expertise will certainly help the organizations grow and prosper. In a regular corporation, there are three principal actors: shareholders (those who actually own the business and have final say on decisions and strategic planning), managers (those contracted by the shareholders to actually run the business), and workers (hired by the managers to perform most of the daily tasks of the businesses). The idea of the cooperative is that these three roles are essentially blended into one: the workers themselves are the shareholders and managers, with an elected, rotating board assuming more specific administrative duties. Is it possible for a cooperative to outsource some management functions, thus assuming only the roles of laborers and shareholders?
I have a hard time imagining that this would work effectively in the long term. Managers run the business, making most of the day-to-day decisions, and they are expected to have some degree of authority over their workers. If workers were the shareholders as well, however, then they would have final authority over the managers. So why would they ever listen to what their manager tell them to do? Sounds like a classic example of a principal-agent problem.
In practice, though, some outsourcing may be necessary, simply because it is the least bad solution. By contracting out some management functions, catadores would still remain in control of most of their organization, but would be able to benefit from professional expertise. The question then becomes, what specific form should this outsourcing take? I have already mentioned the cases of ASMARE and ASMAC. Another interesting example is ACAMAR, in the municipality of Lavras. In practice, the association is managed by the supporting Fundação Pro Defesa Ambiental, with the catadores as the principal beneficiaries. I hope to visit this association and learn more about their specific model, so I will hold off on any commentary for now.
My main concern with outsourcing is as follows: to what extent is it a real, sustainable solution for the practical difficulties of management within the cooperatives, and to what extent does it represent an approach of mere muddling-through without creating a clear, replicable model to solve management difficulties within these organizations? That is a question I hope to better understand with time.
One interesting comparison is the Redesol network, a separate group of organizations of catadores in the metropolitan area of BH that is managed principally by the municipal government and partner organizations. One of the main criticisms I often hear of Redesol is that it is simply run by the government, has no independent character of its own, and does not represent any sort of meaningful social movement (it does not participate in the MNCR), but at the same time the Redesol network does seem to have achieved an enviable degree of managerial competence in its activities. As I continue my research, I hope to learn more through in-depth comparisons of Redesol and Cataunidos.
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