Thursday, 4 January 2018

The False Choice Between Ownership and Membership. True Coops Need Both.

Ownership/Membership? Which is the Most Important in Coops?
A weird shift to emphasise member ownership and governance, and a downplaying of the importance of cooperative membership, seems to be abroad at present.  Especially amongst some US proponents of worker coops and platform coops. History tells us this is a dangerous trend that often results in the loss of cooperative capital.

Jam Today
 The highly successful Scottish Agricultural Organisation Society is a classic example of how prioritising cooperation can cooperativise even the most fiercely independent people, Scottish farmers. If it works there, it works anywhere. But as SAOS say, you have to hold the principles and the long term determination to stick with them when the dominant ideology rubbishes and ridicules those principles and encourages private, individualistic ownership.  Which in agricultural coops as anywhere, more often than not,  results in demutualisation, a curse for most farmers coops and most 'consortium' coops of small business people (eg InterFlora). When a sufficiently large cohort reach retirement age, they want the money for themselves regardless of the loss of collective benefit that ensues. 

Eternal Paradox
The struggle is always between individual benefit now and deferred collective benefit. The eternal unresolved and unresolvable human dilemma. We just have to hold the paradox unresolved and keep the balance actively and dynamically. Opting for one or the other destroys the whole. The paradox is the organisation!

More Jam Today
If the emphasis is on ownership alone, there is no loyalty and therefore no long term sustainability.  In the UK in the 19th century, producer coops (early versions of worker coops) either failed commercially or were privatised, hundreds of them, leaving a mere handful to stagger into the 20th century. The members had no collective loyalty when an investor came along offering money for their shares, picking them off one by one.

The 19th century worker investor built and owned cotton mills of Oldham, Lancashire, (which weren't cooperative societies but used the little known One Shareholder One Vote variant of a company. Still exists I'm told but no one uses it.) with individual worker ownership of shares (and fierce fighting over dividends), were lost in wholesale mass panic recession sell outs to private investors, and the entire worker owned sector disappeared in a very short time.

The same with the spun out local council bus companies of the 1980s, when Thatcher forced British councils to sell their buses and many Labour authorities sold them at big discounts to union sponsored Employee Owned companies.  In every single case staff sold their shares to investors.  The same happened in every formerly state owned business in the former USSR, countless thousands of them, where ownership shares were given to the workers. They all sold, from the Baltic to the Balkans.

None of these emphasised membership or democratic participation and often, bizarrely, barred worker owners from the board (19th century producer cooperative societies) for reasons long forgotten. But they did emphasise  and celebrate 'employee ownership' at congresses etc.

EBTs, a Sort of Solution
The buses and Baltic examples prompted Job Ownership Ltd., which became the Employee Ownership Association, to invent the Employee Benefit Trust owned company. This trust structure (copied I think from John Lewis Partnership) is controlled by external trustees and prevents the employee 'owners' selling their 'birthright' for a 'mess of pottage'. But it institutes a paternalistic culture in which the 'owners' can't be trusted and have to have the 'great and the good' trustees controlling them.

Quite at odds with cooperative self help principles and more akin to charity culture (the rich doing things to the poor). The EOA and employee ownership sector talk about employee 'voice', rather than membership rights and responsibilities as we do in worker coops.  Studies have shown this type of EO does result in significant business improvements (compared to investor ownership) but the improvements stall a few years after the Employee Buy Out. 

Cooperative Collectives
Our concept of a worker owned and controlled cooperative is quite different. And more in keeping with 21st century platform and network cooperatives.  In most of our British worker coops, we talk about worker members, not employees (which suggests a subservient role). Our members are at the same time - workers, employees (legally), managers, directors (often) and owners (much as the members of an internet based platform coop must be). 

People are Adults; Trust Them
A common criticism is 'How do you juggle all those hats? Surely its simpler to just do one or two of those roles?' but that idea comes from the dominant systems ideology which says that workers in businesses should be treated as  chidren or dehumanised resources to slot into a pre-conceived (by the 'adult' executives) structure in simple, narrow and controllable job descriptions.  But in society outside of work, humans do juggle multiple roles quite well, eg in families, friendship groups, clubs etc. Humans, in general, and worker coop members know when to prioritise particular roles, and can do that much better if there is collective training, agreement and alignment on a membership agreement or member job description. It is not a coincidence that the 'stand out' high performing worker cooperatives invest time and money in membership discussion and development.

Deferred Gratification; How To Encourage It
The important point is that engaging with your work in this complex, multi-factorial (but natural) way creates emotional engagement and loyalty to the group (by the expenditure of a lot of emotional labour) and thereby encourages participants to go for the deferred collective benefit option rather than the selfish individualistic 'jam today' option.

It's a lot cheaper than expensive employee engagement programs too, and can yield astonishing productivity and wealth creation, enabling 'that's impossible' salaries and benefits. Performance which does not fade over time.

So 'ownership' may be an easy option but it has potentially self-defeating ramifications.

I'll finish with two examples that top the argument. Both emphasised ownership and deliberately underplayed a sense of membership, except perhaps, in the second in a perverted way, a club of pirates.    United Airlines, went from majority ESOP to alienated staff striking against their own management and bankruptcy in 5 years.  And Enron, which was a 70% employee owned business but zero employee control.

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