My experience of talking to finance people in worker co-ops is
that a fair bit of the orthodox methods of internal financial management and
reporting are not right for worker co-ops where the priority is communicating
with internal members, many of whom don’t understand these normal methods.
Much financial management is
designed to report financial performance and results to financially able senior
managers and external funders and investors who can
also call on expertise (or at least have a vested personal interest in
learning how to read a balance sheet and P&L).
There are accountants who say that normal financial management is
actually a tool for control by higher management with vested interests in
keeping control, rather than freeing up entrepreneurial behaviour; see http://www.slideshare.net/LESSConf/11-12-what-is-bb
BB seems more suitable for collectives
to me than the normal methods.
We may have to abide by certain
conventions in our external reporting but internally we can do whatever we think
is appropriate. Even externally, conventional reporting underplays the financial
and non-financial output benefits of worker co-ops. (Return On Capital Employed (ROCE) does not take into account profits distributed in premium
wages and therefore under reports the financial performance of our better
managed worker co-ops. Some of which are outperforming Apple in terms of the total financial outputs they are achieving.)
The American employee ownership
literature is full of articles about how to engender an ‘ownership culture’ and
much of that is 'How do you report financial results and forward plans in a way
that ordinary employee owners can understand?'. So that is why this topic is of
such interest to me. Money is the only undisputed common language inside our
co-ops (much as I dislike that) but only some members can speak it with all the consequences that flow from
that.
The worst of which is that the
finance people do their jobs and aren’t understood and other members blunder
around in their financial ignorance, not aligned behind one understanding, not able to intelligently argue a common case. Result - too many co-ops which are just surviving against the odds with inadequate
business and financial performance.
So, if we had forward planning or
coordination of finances which all member could understand (the reason for) and
could commit to and reporting of financial performance ditto, then we can have
more collective understanding of the business and what members have to do to
make it a success ( or just to survive).
It would help enormously with
collective performance management ( because members
would have their fingers on the pulse) and emergent business development ( where
groups of members identify and develop good new business development without a CEO master plan) and
contingency planning ( members would spot risks and react quicker if they had
easy to understand financial metrics).
There's a project here for a radical accountant. Volunteers?
