OURbiz

A BENEFITS SOLUTION

Working Today is building a new delivery system for benefits in America.  Due to a shift in the American labor force, an increasing number of workers are unable to access basic benefits and protections.  Over 30 million individuals are now employed in nontraditional arrangements as freelancers, contractors, and temporary workers in industries ranging from media and technology to domestic childcare and taxi drivers, and all indicators suggest that these numbers are increasing.  These independent workers do not have access to employer-based health, life, and disability insurance, cannot access unemployment insurance, are prevented from seeking redress for workplace discrimination, are barred from unionizing, and are subject to regressive and onerous payroll taxes for self-employment.
 


In order to serve the evolving workforce, Working Today is both developing a vision of what the next safety net ! will look like and directly serving New York’s independent workforce with low-cost health, life, and disability insurance through the Portable Benefits Network (PBN).  For the first time, the PBN links benefits to individuals, rather than employers, so independent workers can maintain benefits as they move from job to job and project to project.

PBN benefits are so compelling, providing group-rate benefits through HIP Health Plan at less than half the price of the average HMO on the individual market, that Working Today has attracted a membership of over 17,000 individuals with over 11,000 receiving health insurance. In addition, Working Today has formed partnerships with 48 intermediary organizations, including community groups, professional organizations, staffing agencies, small businesses, and guilds, allowing us to reach a network of 45,000 independent workers in New York City.

Working Today truly addresses the problem of uninsurance: nearly half of our PBN members ! had no previous insurance coverage.
 
Working Today’s membership, in turn, serves as a vehicle for social change, both by acting as an organized constituency to advocate for change to public policy and by contributing to Working Today’s financial sustainability.  Working Today’s members are actively involved in our policy work and nearly 3,000 individuals participated in our most recent advocacy campaign to educate thought leaders, policymakers, and the public about the needs of the independent workforce.

Our gross revenue for 2005 was $27 million, with earned income of $2.9 million.  For 2006, our gross revenue is projected at $39 million, with earned income of $5 million. The organization will break even during 2006 and will fund its own advocacy and education work after that time.

Contact Working Today at their website in the sidebar.

A BIG, HAIRY, AUDACIOUS GOAL

By Jay W. Vogt

Equal Exchange, the fair trade coffee people, recently asked me to help them create a twenty to thirty year vision for their organization.  They already enjoyed a mission that they hope will guide them for one hundred years or more.  And they rigorously pursue a four-year planning process that consistently delivers them growth and success.  But the vast middle ground - a compelling vision toward which their four-year plans will take them, in alignment with their mission - remained unclear.

The good people at Equal Exchange had searched their cooperative networks for ideas and inspiration to help in creating such a vision, but had found little (hence the motivation for this article - to help any cooperatives who wish to follow their path).   Undaunted, they formed a Visioning Group of three board members, and set off on their own.  Here’s how they accomplished their goal.

First they engaged their worker owners in contributing to the process, asking them to envision a newspaper headline twenty years into the future that expressed some kind of success they’d like to see.  This is a great technique for releasing oneself from the limits of present day thinking, while still grounding the future image in something tangible like a newspaper headline.

The workers responded playfully, individually creating dozens of vivid images of an Equal Exchange enjoying a very positive future.  Among them were items like:

- “Equal Exchange Cooperative Adds 500th Memberâ€
- “Fair Trade Leader Launches Coffee Shops in 10 Major Citiesâ€
- “Equal Exchange Wine Surpasses Gallo in Gallons Soldâ€

This, after some delay, is where I came in.  The Visioning Group had lots of great data, yet needed to take it to the next level.  First we created a “plan to plan,†which mapped out the steps by which we’d engage the worker owners in further dialogue about the vision, involve the board in crafting it, and engage the worker owners once again in reviewing, approving, and embracing the final vision.

We turned next to the headline data, clustering it into roughly similar content groups expressing related, visionary scenarios.  Several, for example, imagined Equal Exchange as the largest worker cooperative in the country.  Others pictured Equal Exchange having an enormous economic justice impact.  Others saw Equal Exchange teaching corporate America a much-needed lesson in doing business ethically.

We presented the East Coast workers (in one ninety minute meeting) with this feedback on their ideas, and engaged them in a discussion about which future scenarios were most appealing.  Then, using adhesive dots, we asked them to multi-vote for their top three.  A few favorites clearly emerged. 

At this point the seminal work of Jim Collins, author of Good to Great and Built to Last, came into play. (see the sidebar)  Jim writes that successful companies share a vision-level goal, which he memorably calls a BHAG, or a Big Hairy Audacious Goal.  A BHAG is:

- A huge, daunting challenge with a ten to thirty year time horizon
- A clear and compelling catalyst for team spirit and unified effort
- A desired result that reaches out and grabs you, and requires little or no explanation

BHAGs are typically expressed in one of four forms.  They can be:

- Quantitative (WalMart once aimed to be a $125 billion dollar company by 2000)
- Qualitative (Citibank’s aim to be the most powerful, serviceable bank in the world)
- Competitive (Avis’s “We try harder†aimed at Hertz)
- Role Modeled (Stanford’s “Be the Harvard of the West†in the 1940s)

After presenting this concept, and these formats, we asked the workers to use them in drafting possible BHAGs inspired by the vision scenarios from the headlines.  They did this enthusiastically, posing some like:

- Equal Exchange has two million loyal consumers who actively choose fair trade
- Equal Exchange is at the center of the world’s largest network of fair trade
- Equal Exchange models a viable cooperative alternative to globalization

We then repeated this process for the West Coast workers using the web-based meeting platform WebEx.  We now had input from every worker owner who wished to participate.

The Equal Exchange board was now ready to do its part, meeting for a day, while having before them:
- The original envisioned headlines in the workers’ own words
- The vision clusters of similar headlines, and their ranking by the workers
- The workers’ proposed BHAGs in formats suggested by vision guru Jim Collins

The board experienced roughly the same process as had the workers - first reacting to the vision scenarios, and then doing their own multi-voting.  Next we reviewed Collin’s thinking, and they wrote their own BHAGs.  Finally, we posted all the proposed BHAGs, including those of the workers, and those just penned by the board.  Now we were ready for some great conversation about what the organization really wanted to be, and where it wanted to go.  Indeed, after some very creative and heartfelt give and take, and another round of multi-voting, a clear consensus vision emerged.  The day ended with each board member drafting a few words or phrases picturing how they’d know the vision had come to pass - what Jim Collins calls a “vivid description.â€

Equal Exchange’s vision statement - a preferred future described eloquently in just twenty-four words - was approved by the board at their next meeting.  A vivid description - a narrative picturing the vision as fulfilled in six concise paragraphs - was approved at the one just after.  Board members commented on the immediate, practical implications of the vision, and how it would surely shape the next four-year plan.

Then the Visioning Group met to craft definitions for pivotal terms used in the vision statement.  They hoped to clarify for the worker-owners what the board meant, and to act as a reference in the years to come, when future co-op members might wonder what more precisely the Board of 2006 had in mind with these key 24 words.  Those definitions were then shared with the broader board for their review and approval.

The vision and vivid description then went before the worker owners for their review and approval.  The worker owners embraced the vision by a vote of 45 to 2.  At this point in the process, the vision is private, as Equal Exchange internalizes the audacity of its chosen goal.  Some day you may be able to read it on their web site, and perhaps it will captivate you as it has EE’s board and worker-owners.

Some consultants argue that all any business really needs is a twenty-year goal and a ninety-day plan.  Everything else should fall into place.  True or not, if you are a cooperative that also feels the need for a clear, twenty-year vision, take these ten lessons to heart from the successful process at Equal Exchange:

1) Start with your board and engage their commitment to the process.
2) Learn more about what vision means by reading Jim Collins’ (and Jerry Porras’) article in Harvard Business Review entitled “Building Your Company’s Vision.â€
3) Be clear on why you need a vision, and how it fits into the other big ideas, like mission and values, that also guide your business.
4) Engage every worker in a process – like the headlines exercise - that inspires their imagination and creativity about a preferred future.
5) Work toward common ground through clustering of related ideas, and multi-voting of priorities.
6) Translate your most promising candidates into possible BHAGs, using the Collins/Porras formats, before clustering them and multi-voting among them yet again
7) Know you’ve found the vision when it is both too wonderful to turn away from, and almost too scary to face.
8) Make it come alive through vivid description.
9) Take whatever time you need to internalize your vision and make it your own.
10) Allow the compelling nature of the BHAG to draw you forward toward making it real.

Jay W. Vogt founded his organizational consulting practice - Peoplesworth - in 1982 and serves fast growth companies in the natural and organic world.  Clients include Stonyfield Farm, Applegate Farms, Annie’s Homegrown, Global Organics, EcoLogic Finance, Recycline, and The Natural Dentist.

DELIVERING BENEFITS

Working Today is building a new delivery system for benefits in America.  Due to a shift in the American labor force, an increasing number of workers are unable to access basic benefits and protections.  Over 30 million individuals are now employed in nontraditional arrangements as freelancers, contractors, and temporary workers in industries ranging from media and technology to domestic childcare and taxi drivers, and all indicators suggest that these numbers are increasing.  These independent workers do not have access to employer-based health, life, and disability insurance, cannot access unemployment insurance, are prevented from seeking redress for workplace discrimination, are barred from unionizing, and are subject to regressive and onerous payroll taxes for self-employment.
 


In order to serve the evolving workforce, Working Today is both developing a vision of what the next safety net will look like and directly serving New York’s independent workforce with low-cost health, life, and disability insurance through the Portable Benefits Network (PBN).  For the first time, the PBN links benefits to individuals, rather than employers, so independent workers can maintain benefits as they move from job to job and project to project.

PBN benefits are so compelling, providing group-rate benefits through HIP Health Plan at less than half the price of the average HMO on the individual market, that Working Today has attracted a membership of over 17,000 individuals with over 11,000 receiving health insurance. In addition, Working Today has formed partnerships with 48 intermediary organizations, including community groups, professional organizations, staffing agencies, small businesses, and guilds, allowing us to reach a network of 45,000 independent workers in New York City.

Working Today truly addresses the problem of uninsurance: nearly half of our PBN members had no previous insurance coverage.
 
Working Today’s membership, in turn, serves as a vehicle for social change, both by acting as an organized constituency to advocate for change to public policy and by contributing to Working Today’s financial sustainability.  Working Today’s members are actively involved in our policy work and nearly 3,000 individuals participated in our most recent advocacy campaign to educate thought leaders, policymakers, and the public about the needs of the independent workforce.

Our gross revenue for 2005 was $27 million, with earned income of $2.9 million.  For 2006, our gross revenue is projected at $39 million, with earned income of $5 million. The organization will break even during 2006 and will fund its own advocacy and education work after that time

Here's a link to the Working Today website.

Measuring Another Source of Wealth?

If you encounter many worker owners over time this remark is often heard:

“I can never work in a conventional firm again.  I’m spoiled.  I’m an owner.â€

Is this gut-level expression of job satisfaction a result of making a product, or providing a service that adds to the common good?  Or is the remark an as yet unmeasured variable inherently a part of the worker cooperative?

I doubt there is a definitive answer to these questions.  Why?

First, it is safe to say, few, if any, of the hundreds of managers at worker cooperatives record workplace happiness numbers for the annual shareholder meeting.

Second, while thousands of persons on any given work day are trying to “improve working life†in capitalist firms, I know of no attempt to compare happiness issuing from their work with the same size cooperatives in the same or similar industry.

Finally, one might ask, can happiness be measured?  Yes, happiness can be measured.  Measuring happiness – or job satisfaction – may reveal a new source of wealth in our cooperatives.

HAPPINESS: ANOTHER WAY TO MEASURE VALUE AT WORKER COOPERATIVES

The daily grind of keeping a cooperative prospering financially hardly leaves managers time to calculate more than the day’s gross receipts, determine if they’ll cover payroll plus all other expenses, then try settling any interpersonal spats that may happen.

Worker-owned cooperatives offer no guarantee that every workday is to be sweetness and harmony for every single owner.  There are too many external or in-house variables to make that pledge!

But what if owners make a point of measuring happiness on a regular basis?  Would such a policy signal that happiness at work is as important as cooperation between owners?  And if the cooperative decides happiness adds value to the days’ receipts, then one way to get owners to pay attention is to measure their own happiness on the job.

This can be done, according to Ed Diener, professor of psychology at the University of Illinois, Urbana-Champaign, by what he calls “experience sampling.† He and a research colleague, David G. Myers of Hope College, the Netherlands, cite studies showing that happy employees – in capitalist firms – are generally healthier and more productive than employees with a lower sense of well-being.

Could co-op owners be any less happy?  We do not know.  Diener and Myers have not studied the outcomes at worker cooperatives.

A “Satisfaction with Life Scale†Diener devised is a short, 5-item questionnaire, or scale, measuring “the global cognitive judgments of one’s life.† The scale takes about a minute to take, and is in the public domain.

The Survey Form –

Below are five statements that you may agree or disagree with.  Using the 1 – 7 scale below, indicate your agreement with each item by placing the appropriate number on the line preceding that item.  Please be open and honest in your responses.

•    7 – strongly agree
•    6 – agree
•    5 – slightly agree
•    4 - neither agree nor disagree
•    3 – slightly disagree
•    2 – disagree
•    1 – strongly disagree

____ In most ways my life is close to my ideal.

____ The conditions of my life are excellent.

____ I am satisfied with my life.

____ So far I have gotten the important things I want in life.

____ If I could live my life over, I would change almost nothing.

Would a worker owner threaten the financial well-being of a cooperative taking one minute each fiscal quarter to answer these five questions?  Or to have management tabulate and report annual to owners during the annual general membership meeting on the collective state of happiness within the cooperative?

Are worker cooperatives sources of unmeasured happiness?  If so, this or similar happiness sampling could explain why, as I’ve said, when talking with worker owners they say frequently, “I’m can never work for a conventional firm again.† Finding the means to measure yet another product from the worker cooperative will add great value to our firms.

One nation’s citizens think measuring happiness is important enough for a survey to be taken annually!

For over 30 years, Bhutan, the tiny Himalayan nation, measures Gross National Happiness, in addition to Gross National Product. This unconventional yardstick rests upon “the Four Pillars of Successâ€:

“The promotion of equitable and sustainable socio-economic development, preservation and promotion of cultural values, conservation of the natural environment, and establishment of good government.â€

Imagine!  A way to take the blinders off the widely used Gross National Product and the Gross Domestic Product, the more widely used of the two economic gauges, neither of which account for volunteer work, housework, the value of vacation time, or the loss of natural resources due to environmental degradation, or global warming.

“It would take a huge shift in the way policymakers think,†Diener says if “Satisfaction with Life Scale†were to be use in the United States.
    - Frank T. Adams

BEST PRACTICES IN CO-OP DEVELOPMENT

Starting co-operatives is a challenging task.  Fortunately, Canada has a rich treasury of experienced co-operative developers whose insights and advice can be called upon in helping people who want to start co-operatives to meet their economic and social needs. However, despite the long Canadian experience with co-ops, the efforts of many developers and the large size of the Canadian co-operative movement, people in communities and researchers have not had access to information on the most effective practices for developing new co-operatives under diverse conditions in Canada.

This project, coordinated by the British Columbia Institute for Co-operative Studies (BCICS), will help in addressing this gap through listening to the insights of co-op developers across the country in order to learn from their experiences. We want to work closely with developers to assist in documenting what you have learned from working with fledgling co-ops. This will ensure that this vital knowledge is available for other people developing co-ops and for future leaders in the cooperative community. It will be useful for policy makers, accountants, lawyers and other professionals who are called upon to assist in the development of new co-operatives. 

This project is funded by a grant from the Co-operative Development Initiative and administered by the Co-operatives Secretariat. This information gathered will be made available through an array of educational tools and resources including: two publications, a half hour educational video, and a variety of training resources. It will be widely disseminated through numerous venues including the websites of CoopZone, BCICS and other co-op organizations.

This is an 18-month project that began in the late fall of 2005 and has three stages.

During the first phase of the project, we identified a core group of peer nominated, experienced developers from across the country who reflected a high level of geographic, gender, and sector diversity. They were chosen through an open process: from December 2005 through to February 2006, we sent out a call across the country for nominations of outstanding co-op developers. Thirty-seven nominations came in and from this we selected a core sample of 11 people so as to ensure a range of regional and sector experiences.  We wish to acknowledge that the names of many highly qualified developers were put forward and this made the selection process difficult. We also wish to thank everyone who submitted nominations.

In early May, 2006, we met with these 11 developers for a two day meeting in Toronto (just before the CoopZone Forum).  The meeting generated a great deal of discussion around the challenges developers face, the critical issues connected to developing co-ops, the steps in the development process and the particular approach of each developer.  We also had the opportunity to share some reflections at the CoopZone meeting, and to gather insights and recommendations from those present at the Forum.

The 11 developers who met with us in Toronto have been asked to write some of their reflections, insights and practices around starting new co-ops; i.e. what they see as crucial issues that affect the creation of new co-ops, some of the essential steps typical of the early development and the important practices that contribute to their successful launching. These reflective pieces will form the bases of the publications that will come out of the project as well as the useful tools, resources, case studies and success stories we will create.

Recognizing that there are many other developers who have important contributions to make, we also want to welcome comments and written reflections drawn from their experiences. (See contact information at the end of this article).

Our two-day gathering in Toronto was video taped with the intent of developing a 30 to 40 minute educational video that will be available in French and English.

In the second stage of the project we want to carry out in-depth phone surveys with more developers in order to tap the broader wealth of experience in our co-operative community. We recognize that there are many diverse conditions and distinct communities and we will be doing our best to honor these differences. We will be doing this survey in the fall of 2006. We hope to talk to as many of you as possible and find out about your experience and what you feel is key to the success of the co-op projects you have worked on.

In the final stage of the project the task will be to bring everything together and generate the publications, resources and tools that will come out of the project.  Finally, in the spring of 2007, we plan to have several “best practices†panel presentations at appropriate national events, as another way of disseminating the insights gleaned from this collective work.

The key to the success of this project is working together with you, as developers, to generate resources that reflect your experiences and that will enhance your practices and the work of future generations of developers. We recognize that what works in one situation will not work in all others, but we can none-the-less learn from our own experiences and be stimulated by the insights of others, so that no one has to re-invent the wheel – especially not the co-operative one.

We welcome your input and hope that working together we can make a valuable contribution to the co-op movement in Canada and beyond.

If you would like to be a part of the broader survey, contribute to the publications or resource materials, or have other suggestions please let us know by contacting Joy Emmanuel at joybcics@uvic.ca or (250) 472-4976.

  This group included: Glen  Fitzpatrick-  Newfoundland; Peter Hough - Nova Scotia; Russ Christianson – Ontario; Marie-Joelle Brassard – Quebec; Christian Savard – Quebec; Joel Lebossé  - Quebec; Lynn Hannley – Alberta; April Roberts – Saskatchewan; Melanie Conn – British Columbia; Marty Frost – British Columbia; and Greg O’Neill – NWT and Alberta.

  Please note that all materials from the project will be available at cost and are not about making a profit!

THE REAL OWNERSHIP SOCIETY

In the last issue we discussed the complexity of corporate financing as it relates to ownership and governance. It’s no small issue. The folks at Good Vibrations are struggling with it, Others have as well.

Now comes Tom Cobb some interesting ideas for both solving the problem and continuing worker ownership and control. With 23 years experience in corporate finance and consulting, Tom has observed the design flaws of the modern corporation from all sides. Out of those observations has come the inspiration for creating better corporations, and by extension, a better world.

To that end, Tom has authored A Real Ownership Society. He contributes the synopsis below. We hope to review the book for you in the near future. Meanwhile, click on the link in the sidebar to get more information (and buy the book if you’d like).

THE REAL OWNERSHIP SOCIETY
For the party of No New Ideas, here’s one for the Democrats to try on for size:  Restructure our corporations so that workers would be given voting control in exchange for becoming the last bearers’ of business risks.  In turn, absentee investors would enjoy roughly the same investment returns as they get now, while holding less risk.  The good that would come from such reforms would be far-reaching. 

Before we can describe how to bring about these reforms, the doubts of the dubious must be spoken to first.  The most dubious are those who think first of United Airlines’ recent experience with worker ownership.  As a corporation majority-owned by workers, United Airline’s early collapse into bankruptcy after 9/11 has been interpreted by many as proof that worker ownership doesn’t work.  In actuality, United Airline’s experience was merely just another case study in how the current system allows corporate insiders and agents to exploit absentee investors. 

In the case of United Airlines, the insiders happened to be the workers, an ownership group that had taken majority control of the company in exchange for wage concessions.  Once business conditions improved, they used their insider position to extract from other shareholders a contract that paid wages far above those paid by others in the industry.  In this regard, workers appropriated the wealth of absentee shareholders in essentially the same way that executive insiders at Enron, Worldcom, and so many others did.  This appropriation of wealth can be thought of as a tax imposed on small investors by the agents and insiders who control corporate boards.  Its myriad forms are far too extensive to describe here, but they extend all they way from the executive suite to every corner of Wall Street.

In addition to this tax, there is a second levy placed on all individuals who deal with corporations.  By granting the entitlements of limited liability, absentee ownership, and pooled capital to our corporations, they instantly gain a bargaining advantage against the individual.  Whether as workers or consumers, an individual is nearly always at a disadvantage when negotiating with a corporation for the value of the labor they seek to sell, or the value of the goods they seek to buy.  As a result, some discount is implicit in the price of our work wages, and some premium is implicit in the price of nearly everything we buy.

The fact that these separate taxes affect interests groups with normally opposing interests creates the opportunity for reform.  By adopting a new corporate ownership structure, each group could help the other alleviate their tax burden.  The structure that could accomplish this would have absentee shareholders exchange their current shares for a new class of shares called Total Value Added shares, or TVA shares.  Workers would be issued shares of these as well.  The percentage share each group would get would be negotiated between the two groups, but it would no doubt be directed by past history and some accounting for the increased business risks assumed by workers.

A share would not represent a stake in profits, but rather a stake in the total of all value created by the corporation.  Looked at another way, this can be thought of as profits before wages are paid.  In this respect workers and investors would be partners, sharing in the last dollar of value earned or lost by the corporation.  Absentee shareholders would cede operational control of the organization to corporate work forces by allowing the creation of a separate class of voting stock solely owned by workers.     The equity value of these shares would be nominal, but the voting rights would allow them to select their own leadership, and direct the growth goals and strategy of the corporation.  The voting rights would not, however, allow workers to set wages to their advantage (as occurred at United Airlines).  Instead, workers’ share of corporate revenue would be established by the percentage split set through the issuance of the TVA shares.

Under this revised arrangement, executive management would no longer be thrust into the duplicitous role of leading a work force to act against their personal interests.  Instead of workers being asked to assist the corporation in, say, outsourcing their own jobs, executives would be rated on their ability to keep a worker’s job.  The influence these changes would have on workplace effort, productivity and morale would be profound.

    Gross returns on investments would be reduced, but net returns for small investors would remain essentially the same.  This would occur as our financial markets were transformed from the casinos they are now, to markets dedicated to the legitimate purpose of providing investors liquidity and portfolio diversification.  As a result, the monies now paid by investors to Wall Street for the impossible purpose of delivering above-market returns would be dramatically reduced.  With these savings in hand, absentee investors would enjoy roughly the same net returns as they now get while incurring less risk.

Bringing these reforms into being requires a means for EOC conversions to come to life.  Tax incentives could be used to facilitate this process.  First, a tax breaks could be granted to those who invested in mutual funds chartered for the sole purpose of backing EOCs.  In turn, corporations would be incented or mandated to create an employee-ran trust responsible for representing workers in the event the corporation was targeted for conversion.  The conversion funds would defer control of their voting rights to the employee trusts, and commit their investments to any conversion efforts.  Once a syndicate of funds accumulated a sufficient ownership stake, they could tender offers for specific corporations.

On economic matters, the divide between liberals and conservatives is typically said to center upon philosophical differences over the merits of free markets.  In reality, conservatives are fully comfortable with governmental interventions in the marketplace, so long as they extend the entitlements of incorporation.  Liberals should come to see this bit of hypocrisy as the Achilles heel of contemporary conservatism.  Why not take conservatives at their word about the virtues of free markets, but take them to task for their hypocrisy?  On this front, we need only have the imagination to ask of them this simple question:  “Why not?† Why don’t we even up the balance of power that exists between the corporation and the individual?  Why don’t we take back the concentrated power we’ve given over to unattended corporate agents?  And since the corporation is merely a social invention created to provide us the social benefits of pooled capital, why don’t we let those who produce the majority of the value created by our corporations control them?  Why not, indeed?

    Tom Cobb

DISPUTE RESOLUTION IN A WORKER COOPERATIVE

Clearly one of the most difficult tasks in worker-owned enterprises is how to settle differences, not only between individuals, but between groups within the organization. Here’s a case study of dispute resolution in a cooperative. The articles also does an extensive review of the literature and history of dispute resolution. It’s available as a download from Look Smart at this link. . Give the link a little time. The article is quite extensive.

A "DO" and a "DON'T" from Ellerman

Dos & Don’ts for Co-op Consultants & Their Employers:

   Eight Great Thinkers on the Five Common Themes

Second Do: Seeing Through the Doers' Eyes
Albert Hirschman on the Second Do: Seeing Through the Doers' Eyes
But word soon came from World Bank headquarters that I was principally expected to take…the initiative in formulating some ambitious economic development plan that would spell out investments, domestic savings, growth, and foreign aid targets for the Colombian economy over the next few years. …

My instinct was to try to understand better their patterns of action, rather than assume from the outset that they could only be 'developed' by importing a set of techniques they knew nothing about. (Hirschman, Albert O. 1984. A Dissenter's Confession: "The Strategy of Economic Development" Revisited. In Pioneers in Development. Gerald Meier and Dudley Seers ed., New York: Oxford University Press: 87-111, pp. 90-1)

E. F. Schumacher on the Second Do: Seeing Through the Doers' Eyes
If the people cannot adapt themselves to the methods, then the methods must be adapted to the people.  This is the whole crux of the matter." (Schumacher, E. F. 1973. Small is Beautiful: Economics as if People Mattered. New York: Harper and Row, 192)

Saul Alinsky on the Second Do: Seeing Through the Doers' Eyes
An organizer can communicate only within the areas of experience of his audience; otherwise there is no communication....Through his imagination he is constantly moving in on the happenings of others, identifying with them and extracting their happenings into his own mental digestive system and thereby accumulating more experience. It is essential for communication that he know of their experiences. (Alinsky, Saul 1971. Rules for Radicals. New York: Vintage, 69-70)

Paulo Freire on the Second Do: Seeing Through the Doers' Eyes
I repeat: the investigation of thematics involves the investigation of the people's thinking—thinking which occurs only in and among men together seeking out reality.  I cannot think for others or without others, nor can others think for me. (Freire, Paulo 1970. Pedagogy of the Oppressed. New York: Continuum, 100)

John Dewey on the Second Do: Seeing Through the Doers' Eyes
When the parent or teacher has provided the conditions which stimulate thinking and has taken a sympathetic attitude toward the activities of the learner by entering into a common or conjoint experience, all has been done which a second party can do to instigate learning.... In such shared activity, the teacher is a learner, and the learner is, without knowing it, a teacher—and upon the whole, the less consciousness there is, on either side, of either giving or receiving instruction, the better. (Dewey, John 1916. Democracy and Education. New York: Free Press, 160)

Douglas McGregor on the Second Do: Seeing Through the Doers' Eyes
Perhaps the most critical point—and the one hardest to keep clearly in mind is that help is always defined by the recipient.  Taking an action with respect to someone because 'it is best for him,' or because 'it is for the good of the organization,' may be influencing him, but it is not providing help unless he so perceives it. (McGregor, Douglas 1960. The Human Side of Enterprise. New York: McGraw-Hill, 163)

Carl Rogers on the Second Do: Seeing Through the Doers' Eyes
This formulation would state that it is the counselor's function to assume, in so far as he is able, the internal frame of reference of the client, to perceive the world as the client sees it, to perceive the client himself as he is seen by himself, to lay aside all perceptions from the external frame of reference while doing so, and to communicate something of this empathic understanding to the client. (Rogers, Carl R. 1951. Client-Centered Therapy. Boston: Houghton Mifflin, 29)

Søren Kierkegaard on the Second Do: Seeing Through the Doers' Eyes
Instruction begins when you, the teacher, learn from the learner, put yourself in his place so that you may understand what he understands and in the way he understands it, in case you have not understood it before. (Kierkegaard in: Bretall, Robert, Ed. 1946. A Kierkegaard Anthology. Princeton: Princeton University Press, 335)

First Don't: Don't Try to Impose Change on Doers

Albert Hirschman on the First Don't: Don't Try to Impose Change on Doers
I reacted against the visiting-economist syndrome; that is, against the habit of issuing peremptory advice and prescription by calling on universally valid economic principles and remedies—be they old or brand new—after a strictly minimal acquaintance with the 'patient.'… I tried to identify progressive economic and political forces that deserved recognition and help.  This position put me at odds with those who judged that the present society was 'rotten through and through' and that nothing would ever change unless everything was changed at once.  But this utopian dream of the 'visiting revolutionary' seemed to me of a piece with the balanced growth and integrated development schemes of the visiting economist. (Hirschman, Albert O. 1984. A Dissenter's Confession: "The Strategy of Economic Development" Revisited. In Pioneers in Development. Gerald Meier and Dudley Seers ed., New York: Oxford University Press: 87-111, pp. 93-4)

E. F. Schumacher on the First Don't: Don't Try to Impose Change on Doers
[If] the rural people of the developing countries are helped to help themselves, I have no doubt that a genuine development will ensue,... [But it] cannot be 'produced' by skilful grafting operations carried out by foreign technicians or an indigenous elite that has lost contact with the ordinary people. (Schumacher, E. F. 1973. Small is Beautiful: Economics as if People Mattered. New York: Harper and Row, 204)

Saul Alinsky on the First Don't: Don't Try to Impose Change on Doers
If you respect the dignity of the individual you are working with, then his desires, not yours; his values, not yours; his ways of working and fighting, not yours; his choice of leadership, not yours; his programs, not yours, are important and must be followed; except if his programs violate the high values of a free and open society. (Alinsky, Saul 1971. Rules for Radicals. New York: Vintage, 122)

Paulo Freire on the First Don't: Don't Try to Impose Change on Doers
Unfortunately, those who espouse the cause of liberation are themselves surrounded and influenced by the climate which generates the banking concept, and often do not perceive its true significance or its dehumanizing power. (Freire, Paulo 1970. Pedagogy of the Oppressed. New York: Continuum, 66)

John Dewey on the First Don't: Don't Try to Impose Change on Doers
We are even likely to take the influence of superior force for control, forgetting that while we may lead a horse to water we cannot make him drink; and that while we can shut a man up in a penitentiary we cannot make him penitent. ... When we confuse a physical with an educative result, we always lose the chance of enlisting the person's own participating disposition in getting the result desired, and thereby of developing within him an intrinsic and persisting direction in the right way. (Dewey, John 1916. Democracy and Education. New York: Free Press, 26-7)

Douglas McGregor on the First Don't: Don't Try to Impose Change on Doers
[The manager's] task is to help [workers] discover objectives consistent both with organizational requirements and with their own personal goals, and to do so in ways which will encourage genuine commitment to these objectives. … He will not help them if he attempts to keep direction and control in his own hands; he will only hamper their growth and encourage them to develop countermeasures against him. (McGregor, Douglas 1960. The Human Side of Enterprise. New York: McGraw-Hill, 152)

Carl Rogers on the First Don't: Don't Try to Impose Change on Doers
The scientist with the divided sea urchin egg ... could not cause the cell to develop in one way or another, but when he focused his skill on providing the conditions that permitted the cell to survive and grow, the tendency for growth and the direction of growth were evident, and came from within the organism.  I cannot think of a better analogy for therapy or the group experience, where, if I can supply a psychological amniotic fluid, forward movement of a constructive sort will occur. (Rogers, Carl R. 1980. A Way of Being. Boston: Houghton Mifflin, 120-1)  We cannot teach another person directly; we can only facilitate his learning.... 'You can lead a horse to water but you can't make him drink.' (Rogers, Carl R. 1951. Client-Centered Therapy. Boston: Houghton Mifflin, 389)

Søren Kierkegaard on the First Don't: Don't Try to Impose Change on Doers
A direct attack only strengthens a person in his illusion, and at the same time embitters him.  There is nothing that requires such gentle handling as an illusion, if one wishes to dispel it.  If anything prompts the prospective captive to set his will in opposition, all is lost. (Kierkegaard in: Bretall, Robert, Ed. 1946. A Kierkegaard Anthology. Princeton: Princeton University Press, 332)

David Ellerman

SIX FUNDAMENTALS FOR NEW CO-OPS; PART ONE

Introduction
Organizing a new worker-owned cooperative is challenge.  Greater still is the conversion of a conventionally organized business, or the buyout of a business by employees. Old command and control habits used by many a conventional business firm die hard. Most demanding, however, are the questions that surface after any labor-based enterprise is open for business. 

Let’s assume the new owners are confident they have positive answers to these commonly asked questions, plus the dozens of others that unfold as due diligence is done:

•    Is there a market for the goods or services being offered large enough to pay living wages, plus pay lenders and vendors, and assure profits? 
•    Beyond what each worker invests to finance a start-up or buyout, is working capital available to pay for start-up or buy-out, plus working capital for operating costs? 
•    Can the cooperative make enough money to re-pay banks or other lenders the loans almost always needed, plus interest charges? 
•    Are experienced managers and workers willing to make investments, and to learn new skills as needs dictates?

In other words, for the sake of this essay, we assume the business concept is sound, there is access to necessary capital, market prospects look bright, and the owning workforce has the needed skills.

Yet, feasibility studies, along with other necessary and carefully prepared plans, seldom, if ever, ask the following questions before owners open their doors for business:

•    Do all owners (not just the managers, and a board of directors, if there is such a governing body) have a regular role in decision making?  If so, is the process for participatory decisions written, clearly defined and widely understood?  Were the responsibilities each owner accepts in this written document approved by a consensus of individual opinion?
•    How will workers be compensated? Is there a clear, written statement detailing the compensation plan? Is the entire workforce familiar and comfortable it?
•    Does the new cooperative have a plan for ways in which individuals, or groups of owners, are encouraged to learn new skills associated with their current job, or even entirely new jobs?   
•    Are there entrepreneurs among the owners who are willing to assume responsibility and accept accountability?  Characteristics possessed by most successful entrepreneurs include good health, self-confidence, a sense of urgency, and a comprehensive awareness of what is going on around them.  They are realistic, have above average conceptual abilities, a low need for status, the ability to be objective, emotional stability, and are attracted to challenges, not unnecessary risks.
•    When conflicts arise, either between individuals due to personality clashes, or owners with managers with differing views on wages, hours, working conditions, or some policy of the cooperative, are there pre-agreed upon procedures to resolve disputes? 

In the usual rush to start, or re-start a business as a cooperative, these matters and others, unfortunately, can be overlooked, or put off as issues to deal with “…after we get started…†Certainly, paying jobs are urgent needs.  Failure to invest the time and energy required to plan for the fiscal future can, and does, derail any attention to planning for the conversion of employees to owners.

In this series or articles we will look at these and other issues in detail. The chart below is a rough outline for the series.

Part One: Decision-making
Everyone’s dream of being an owner differs.  For some persons being included in daily decisions fulfills expectations.  Many others rightly see ownership as the fulcrum to work in a bias-free organization. Employees get swept away, genuinely believing they are ready to make money by combining their own skills, on their own terms, while enlarging democracy in their workplaces.

The matter and manner of deciding crucial things that will impact the company and its workers, if left unattended, will raise countless related problems.  The sum can quickly leave owners feeling they are employees, not owners, plus they now have money at risk!

This realization, if it becomes widespread on the shop floor, or the showroom,
or the sales force, at the very least, throws a cloak of mistrust over every manager’s decisions, or policies adopted by the board.

Earlier on, designated managers may unintentionally leave workers out of the loop when writing job descriptions, working conditions, overtime pay, and vacations.  That’s what they have been schooled to do.  This second common phenomenon can ignore the necessity of creating both the spirit and the skills of labor entrepreneurship.

Feeling left out of the decision-making loop, or never being asked by managers how they might improve their jobs before commencing to do those jobs, the expectation to take regular part in decisions often leads worker owners to clamor for democracy.  Yet, aren’t worker cooperatives billed often as one-person, one-vote business democracies?

In truth, we, Americans know very little about civic democracy, in practice or in theory.  The professional political class fosters our ignorance by gerrymandering, ballot fraud, even using the U.S Supreme Court to pick leaders, thus rendering our ballots null.  Further, as citizens, we’ve yet to expand the Bill of Rights, or to remove a major impediment to representational democracy, the Electoral College, or to organize to direct elections at the city, state or federal level.  Are we really satisfied with a limited, two-party system that routinely offers up as candidates the lesser of two evils, or the evil of two lessers? 

Should we try to apply democratic practices that do not work in our civic lives to the workplace?  Or should we re-imagine democratic practices?  How much time can we spend on such a challenge?  After all, if we are to earn a living, there is great pressure for profits rather than philosophizing.

Finally, we must be careful what we ask for, keeping in the back of our minds what H.L. Mencken, the iconoclastic author and editor, once wrote, “Democracy is what the people think they want, and they deserve to get it good and hard.†  

MONDRAGON
We must look to the Mondragon Cooperative Group in the Basque provinces in Spain to learn where democratic decision-making applied to the workplace with care and forethought without hampering profits or growth. Economist David Ellerman, who has kept close watch on the Mondragon Cooperatives for nearly 30 years, writes:

“Democracy is a method for people to govern themselves, not a method for property owners to govern their property.  Democracy must be people based, not property-based or capital-based.  Hence in a democratic workplace, the people hire the capital, not vice-versa.  And if labor hires capital, then the residual net income after all costs [including interest on capital] is a return to labor, not a return to capital.â€

The voting and other citizenship rights in a democratic polity are personal or human rights, not property rights that may be bought or sold.  Property rights are marketable so they can become highly concentrated in huge accumulations of wealth and power. 

Personal or human rights cannot be "bought" or "sold"; they are automatically distributed on a one-vote per-person basis.  Hence if any democracy, political or industrial, is to endure, the basic citizenship or membership rights should be assigned as personal or human rights, not as marketable property rights.â€

Nowhere in the world are these distinctions made as clear, nor have they been practiced as long.  A brief look at the typical Mondragon cooperative business model helps frame these conceptual underpinnings:

In general, each Mondragon cooperative’s owners, make the larger entrepreneurial decisions using both the processes of representational and direct democracy.  On the job, most workers, either as individuals or in teams, have explicit discretionary authority over production decisions, or service delivery decisions. 

The worker’s labor contribution gives her the right to vote for one person, or for one slate of persons, to their cooperative’s board of directors who are expected to frame financial, strategic plans, market plans, etc. which are then presented to owners during annual general membership meetings.

When it comes to voting on any proposals related to wages, hours, working conditions, policies, or whether or not to close the firm, owners use the direct ballot to elect persons from every department in the cooperative to serve on Social Policy Groups.  The Social Policy Group in each cooperative also prepares owners for dispute resolution, and ways to lessen bias toward women in the workplace, for example.

CONCLUSION
Mondragon, it must be remembered, is a model developed in a particular context at a particular time. It’s not a one-size-fits-all arrangement. Every new co-op faces a whole series of questions about decision-making, the answers to which will be conditioned by its context.

In some cooperatives, as in Mondragon, policy decisions will be vested in an elected Board of Directors; in others they will be made as a committee-of-the-whole, all members voting.

In some, operational decisions are the purview of managers reporting to an Executive. Others make operational decisions in small, functional work teams built around the business’s profit centers. Still others delegate operational decisions to smaller groups that handle decisions across the entire business with committees on marketing, personnel, finance, staffing, conflict resolution and others.

A bedrock of all cooperatives is one-member-one vote. But there are many options for determining the relative weight of a member’s vote. Some require consensus decision-making at all or some levels; others require a majority vote (of varying percentage).

Each of these questions (policy decisions, operational decisions, and voting thresholds) present a continuum of possibilities. Each cooperative must decide for itself how each will be handled. That task needs to be complete and widely understood by all potential members prior to the decision to go ahead with the business. If new, democratic skills are required of members, there should exist a plan for acquiring and practicing them … starting with the decision buy an existing or start a new firm.

Next time: What are the options for handling worker investment and compensation? Your comments are always welcome. Just click on the comment link below.
Frank T. Adams
______________
1. Wall Street Journal, "Workplace Upheavals Seem to Be Eroding Employees' Trust," June 21, 2000, p. 21.
2. Ibid.

SIX ESSENTIALS FOR AN OWNERSHIP BUSINESS

Six Necessary Components of a Self-Managed Businesses

                            and Workplace Issues Which They Must Address

               Workplace Issue                                     Specific Component

1.   Internal individual relationships.                1.   Regular role in decision-making.
      Sharing power & influence.
      Ways to deal with conflict.
      Distribution of labor & responsibility.
      Allowing individuals, groups to change
      & develop new skills.
______________________________________________________________________
2.    Individual/group work performance.         2.   Frequent economic return to
       Internal relations between employees.           employees in form of profit-
       Conflicting ideological values.                       sharing, bonuses, stepped wages,
                                                                                fringe benefits
                                                                                and commissions.
                                                                                          
                                                                                Assure distributive fairness.
______________________________________________________________________
3.   Internal & external relationships                3.   Routine access to and sharing
      with customers, suppliers & in                        of management information.
      firm   
      
______________________________________________________________________
4.    Guaranteed individual rights                     4.   Assure administrative fairness.
       that correspond to civil rights
       guaranteed by Bill of Rights
       & U.S. Constitution.      
______________________________________________________________________
5.    Independent board of appeals                    5.   Assure procedural & legal
       to settle disputes.                                         fairness.

______________________________________________________________________
6.    Build workplace culture on                         6.   All of the above.
      on applicable principles
      of cooperation & self-
      management.

      Prepared by The Southern Appalachian Center for Cooperative Ownership, Inc.

DO' AND DONT'S FOR CO-OP CONSULTANTS

Starting a workers’ cooperative presents significant challenges.  So does converting a business that has been operating for years typically as a sole proprietorship, or a division of a corporation.  There are too many well-known challenges to describe here to say nothing of unexpected hurdles.  Discouragement, weariness, even abandonment of the dream happens.

When this happens, the word goes out for an experienced consultant:  Help!

Often, too often, in fact, particularly when experienced consultants, or helpers, are hired to use their experience in creating the cooperative.  They bring their tested routines, then use the formulas they know work to create a cooperative.  Watching them take the workers out of the process to create a workers’ cooperative is to see the dreamers, the men and women who have the idea as well as hopes, pushed to one side.  The helpers do the work for them rather with them.

What happens when the helpful consultant leaves town, or the money to pay him runs out?  The dreamers are back on their own again, having heard but not having done a preliminary feasibility study, a business or market plan, the financial plan, nor have they gained much in the way of learning how to harness their experience, skills, as well as individual gifts, without ego clashes.

What to do?  Take a lesson from A. J. Liebling, among America’s most renowned magazine reporters and authors.  One of his editors at The New Yorker where much is work was published writes Liebling could “get a story out of anyone:â€

“He would park himself in a chair across from his prey, his face creased in smiles and good will – and never say a word.  Total silence.  After three or four minutes of this, the victim would be seized by the universal abhorrence of a conversational vacuum and start singing like a bird.â€

Together, the eight thinkers quoted below on five themes advise doing much the same as Liebling, and thus getting persons needing “help†on the road to “helping themselves,†determining their own fates as worker owners.  For one, I am deeply indebted to David Ellerman for the work he’s allowing OurBiz.biz to reprint Appendix 8 of his most recently published book, Helping People Help Themselves, published in January, 2006, in paperback by the University of Michigan Press.
-    Frank T. Adams

See the next post for the first part of the "Do's and Don'ts" article.The entire article will be available as a download when the last article in the series is published.

ELLERMAN'S FIRST "DO"

This Appendix simply pulls together quotations from eight thinkers on the five themes so that one can directly see the parallels in autonomy-respecting assistance across a range of helper-doer relationships.  For each thinker, the helper-doers appear in a different role:

-    development advisor-government for Albert Hirschman,
-    development agency-developing country for E. F. Schumacher,
-    organizer-community for Saul Alinsky,
-    educator-community for Paulo Freire,
-    teacher-learners for John Dewey,
-    manager-workers for Douglas McGregor,
-    therapist-clients for Carl Rogers, and
-    spiritual teacher-learners for Søren Kierkegaard.

David Ellerman

First Do: Start From Where the Doers Are

Albert Hirschman on the First Do: Starting From Where the Doers Are
I began to look for elements and processes…that did work, perhaps in roundabout and unappreciated fashion.  [T]his search for possible hidden rationalities was to give an underlying unity to my work. …[T]he hidden rationalities I was after were precisely and principally processes of growth and change already under way in the societies I studied, processes that were often unnoticed by the actors immediately involved, as well as by foreign experts and advisors. (Hirschman, Albert O. 1984. A Dissenter's Confession: "The Strategy of Economic Development" Revisited. In Pioneers in Development. Gerald Meier and Dudley Seers ed., New York: Oxford University Press: 87-111, pp. 91-3)

E. F. Schumacher on the First Do: Starting From Where the Doers Are
It is quite wrong to assume that poor people are generally unwilling to change; but the proposed change must stand in some organic relationship to what they are doing already, and they are rightly suspicious of, and resistant to, radical changes proposed by town-based and office-bound innovators….'" (Schumacher, E. F. 1973. Small is Beautiful: Economics as if People Mattered. New York: Harper and Row, 200)

Saul Alinsky on the First Do: Starting From Where the Doers Are
As an organizer I start from where the world is, as it is, not as I would like it to be.  That we accept the world as it is does not in any sense weaken our desire to change it into what we believe it should be—it is necessary to begin where the world is if we are going to change it to what we think it should be.  That means working in the system. (Alinsky, Saul 1971. Rules for Radicals. New York: Vintage, xix)

Paulo Freire on the First Do: Starting From Where the Doers Are
In contrast with the anti-dialogical and non-communicative 'deposits' of the banking method of education, the program content of the problem-posing method—dialogical par excellence—is constituted and organized by the students' view of the world, where their own generative themes are found. (Freire, Paulo 1970. Pedagogy of the Oppressed. New York: Continuum, 101)

John Dewey on the First Do: Starting From Where the Doers Are
Is it the pupil's own problem, or is it the teacher's or textbook's problem, made a problem for the pupil only because he cannot get the required mark or be promoted or win the teacher's approval, unless he deals with it? ..Is the experience a personal thing of such a nature as inherently to stimulate and direct observation of the connections involved, and to lead to inference and its testing?  Or is it imposed from without, and is the pupil's problem simply to meet the external requirement? (Dewey, John 1916. Democracy and Education. New York: Free Press, 155)

Douglas McGregor on the First Do: Starting From Where the Doers Are
It is one of the favorite pastimes of headquarters groups to decide from within their professional ivory tower what help the field organization needs and to design and develop programs for meeting these 'needs.' .If the staff is genuinely concerned with providing professional help to all levels of management it will devote a great deal of time to exploring 'client' needs directly…. (McGregor, Douglas 1960. The Human Side of Enterprise. New York: McGraw-Hill, 168-9)

Carl Rogers on the First Do: Starting From Where the Doers Are
I have not found psychotherapy or group experience effective when I have tried to create in another individual something that is not already there; I have found, however, that if I can provide the conditions that allow growth to occur, then this positive directional tendency brings constructive results. (Rogers, Carl R. 1980. A Way of Being. Boston: Houghton Mifflin, 120)

Søren Kierkegaard on the First Do: Starting From Where the Doers Are
That if real success is to attend the effort to bring a man to a definite position, one must first of all take pains to find HIM, where he is, and begin there.  That is the secret of the art of helping others.  Anyone who has not mastered this is himself deluded when he proposes to help others. (Kierkegaard in: Bretall, Robert, Ed. 1946. A Kierkegaard Anthology. Princeton: Princeton University Press, 333)

The second of five articles on this subject will be published in the next OURbiz issue.

WHAT SHALL WE BE CALLED?

NAMES MATTER! WHO ARE WE?

The United States has one of the most anemic movements toward workplace democracy  in the industrialized world. Can we afford to exclude ownership organizations that cannot comfortably relate to the names we call ourselves? Here’s the second of a series of articles we ran back in June addressing the subject of what we should call this movement we’re all involved in. Conclusion: none of the names we historically have used really fill the bill. Read why below. We’ll publish the last installment in the next issue.

A ROSE BY ANY OTHER NAME
Part Two: How do our current names stack up?

The purpose of this article is to examine how well our most commonly-used labels (worker cooperative, worker-owned business and collective) meet those tests.

“Cooperativeâ€
Internal Test. A cooperative is a legal entity distinguished by how it distributes profit and how that profit is taxed. Rather than a salary/profit-share method, distribution is made to owning members based “patronage†on the firm’s performance.

Many of us are not and cannot be cooperatives because not all states recognize this legal construct. In the case of North Carolina, which has a fairly open cooperative statute, the use of the word in a business title is forbidden unless the company qualifies as “agricultureâ€. While the IRS regulations (in Sub-Chapter T) allow a corporation to treat itself as a cooperative for tax purposes, many of us are not corporations.

Further, some of us are unable or unwilling to accept patronage as a means of distributing profit, preferring to pay regular wages. This is especially true in enterprises that have a large number of workers who are not yet or may never be, for various reasons, owning members of the organization. In order to support the cooperative format, these outfits would be required to adopt a dual pay and taxation system.

Additionally, some companies that function like cooperatives deliberately do not identify themselves as cooperatives, either because the psyche of the company does not embrace the term or because they perceive that the term is too easily misunderstood by the public.

External Test: There are segments of our society that react negatively to “cooperative†even when they understand and react positively to other forms of cooperation than ours (energy, agriculture). That may be an effect of attaching “worker†to the name (see below).

“Collectiveâ€
What distinguishes a collective seems to be some combination of 1.) equal-pay-for-equal-work (defined in terms of hours-worked with a 2.) flat management structure in which all members participate in operational decisions and in which there is no one who can be identified as the boss.

Internal Test. This term applies to our practice even less than does “cooperativeâ€. Some democratic workplaces prefer not to call themselves collectives, but still practice the some of the distinguishing marks of this form. Many others practice a layered operational style (managers) and pay based on the labor market in their region and pegged to normal labor market pressures.

External Test.  Because of its association with totalitarian socialism, the public is even more suspicious of this term than it is of “cooperativeâ€.

“Workerâ€
Internal Test: The problem is with the word “worker†in any of its combinations (worker-owned, worker cooperative). There are some cooperative organizations that would not naturally apply the word “worker†to their owners, especially schools (preferring “facultyâ€), social service organizations (“staffâ€), orchestras (“artistsâ€), consulting and other professional enterprises (“associatesâ€, “partnersâ€).

External Test: The word “workerâ€, for all we know better, presumes and implies a hierarchic and adversarial structure and connotes exclusion of folks who are managers and owners. What we are trying to create is a business model that dissolves those distinctions. Using words that imply the old business model or set it up as a straw man is potentially counter-productive in convincing the public that what we do is proactive, legitimate and desirable. We need a new language that says what we are for, not what we are against.

Additionally, in the public mind “worker-owned†is confused with “employee-ownedâ€, a phrase more often associated with Employee Stock Ownership Plans (ESOPs), many of which are undemocratic both in ownership and operation.

“Businessâ€
The major difficulty with using the term†business†(as in “worker-owned businessâ€) is that it excludes non-profits (even though some carry on commercial activities) and other organizations specializing in educational, artistic and charitable work.

“Democratic Workplacesâ€
Of all the terms applied to us, this one comes closest to meeting both tests. It is both accurate and fairly inclusive. The one shortcoming is that there are lots of companies that tout themselves as “democratic†especially those that are experimenting with “self-managing work teams†and/or “worker participationâ€. While these companies tend to be somewhat less authoritarian and hierarchic, they do not carry it so far as to vest their staffs with exclusive ownership.* There is a danger that the distinction will be lost on the public.

Additionally, the word “democratic†can easily be associated with one of the major political parties. Consciously or not, this could have the effect of making it harder for at least 50% of our population to relate positively to our efforts.

In our next issue we look at some possible ways to address this issue. Your comments are welcome. Return to OURbiz.biz and click on the comment link with this post.

_________
* As our economy segues from a manufacturing base, the old worker/manager dichotomy is breaking down. Traditional companies are more savvy in their use of “worker participation†(using words as “associate†to describe line staff and “team leader†and “coach†to refer to managers). This change in perspective is welcome and we can learn from some of the sincere attempts to involve all staff in decision-making. But too often it is window dressing; a manipulative way to: 1.) increase productivity and shareholder return by reducing the need for middle managers, 2.) hoodwink employees, potential employees and the public into thinking that the old worker/manager/stockholder paradigm has really changed and, 3.) head off concerted efforts by employees to alter the conditions of their employment (by unionizing, for example). In others it’s a transparent attempt to retain the current operational and power arrangements by simply giving the players new titles. It is notable that most companies using this terminology are still oriented primarily to shareholder return with employees participating only marginally, if at all, in profit/risk and policy determination. We have the experience and the ability to enliven a different paradigm and we need to create a language that can accurately communicate it clearly to the general society.

SELF-INTEREST OR COMMON INTEREST?

How is it possible to manage the many competing levels of interest in an ownership organization? Frank Adams, from his long career consulting with numerous worker-owned companies, lines out the multiple layers of interest experienced by various members of ownership organizations and suggests how managing those interests relates to their respective fiduciary responsibilities. This is Adams' second article on fiduciary responsibilities. The first is available from Recent Posts in the sidebar.

FRANK ADAMS DISCUSSES THE FINANCIAL TRUST OBLIGATIONS OF A BOARD OF DIRECTORS

Every Director of a worker-owned firm organized as a corporation (for-profit or not) ought to have a copy of this discussion, by Frank T. Adams, in their company’s Board manual. Being a Board member is a serious moral and legal trust and Board members need to be fully aware of their obligations under the law. This document will help. This is the first of two articles. Look for the second article in our next issue due on or about October 3.

Frank Adams is an owner of The Southern Appalachian Center for Cooperative Ownership (SACCO), which produces this weblog.

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New IRS accounting rules may cut the number of employee owned firms

The Internal Revenue Service issued new accounting rules on deferred equity compensation late last year. The rules may slow the growth of employee-owned firms or reduce their number.

Corey Rosen, founder of the National Center for Employee Ownership in Oakland, CA, has written a clear, concise essay explaining IRS Notice 2005-1: "Update for December 27, 2004." While directed chiefly at S Corporations, the IRS regulations are extremely complex, and, since some worker cooperatives are chartered as S Corporations, Rosen's essay is important reading. Further, it provides attorneys or CPAs places for their own research.